Opinion ID: 1092110
Heading Depth: 1
Heading Rank: 4

Heading: board of tax appeals

Text: Plaintiffs explain in their petition and in briefs to this court that they filed claims with the Board of Tax Appeals pursuant to LA.REV.STAT. 47:1481-86 (the Claims Against the State procedure) on June 17, 1988 seeking in pertinent part recovery of beer excise taxes paid voluntarily and without protest from 1974 to 1987, a period during which they contend the Beer Tax Statute was unconstitutional. Plaintiffs further explain that they later filed the petition in district court seeking a judgment declaring the Beer Tax Statute unconstitutional because such a finding is an integral part of their case and administrative agencies do not have the jurisdiction to find state statutes unconstitutional. [8] Conversely, the State argues that the Claims Against the State procedure cannot be used to recover taxes paid without protest because the sole post-deprivation remedy for a taxpayer to recover taxes is found in LA.REV.STAT. 47:1576 (the Payment Under Protest procedure). [9] In order to determine whether plaintiffs' claim for the recovery of taxes is prescribed so as to preclude standing, we must determine what prescriptive period applies to such a claim. To do this, we must first determine whether the Claims Against the State procedure can be used, as plaintiffs assert, for the recovery of taxes paid without protest.
In McKesson v. Division of Alcoholic Beverages & Tobacco, 496 U.S. 18, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990), the United States Supreme Court set forth the federal constitutional parameters imposed on the recovery of taxes. The Court explained that a state has two options: Because exaction of a tax constitutes a deprivation of property, the State must provide procedural safeguards against unlawful exactions in order to satisfy the commands of the Due Process Clause. The State may choose to provide a form of predeprivation process, for example, by authorizing taxpayers to bring suit to enjoin imposition of a tax prior to its payment, or by allowing taxpayers to withhold payment and then interpose their objections as defenses in a tax enforcement proceeding initiated by the State. However, ... it is well established that a State need not provide predeprivation process for the exaction of taxes.... [Alternatively, a State may provide post-deprivation refund relief.] To satisfy the requirements of the Due Process Clause, therefore, in this refund action the State must provide taxpayers with, not only a fair opportunity to challenge the accuracy and legal validity of their tax obligation, but also a clear and certain remedy, for any erroneous or unlawful tax collection to ensure that the opportunity to contest the tax is a meaningful one. .... [With regard to the post-deprivation relief], [t]he State might, for example, provide by statute that refunds will be available only to those taxpayers paying under protest or providing some other timely notice of complaint; execute any refunds on a reasonable installment basis; [or] enforce relatively short statutes of limitation applicable to such actions.... The State's ability in the future to invoke such procedural protections suffices to secure the State's interest in stable fiscal planning when weighed against its constitutional obligation to provide relief for an unlawful tax. Id. at 36-39, 45, 110 S.Ct. at 2250-51, 2254 (citations omitted) (footnotes omitted). Thus, Due Process requires that a state provide either predeprivation relief or post-deprivation relief for the recovery of taxes. First, the state can afford predeprivation relief such that taxpayers have the ability to meaningfully challenge the tax before having to pay the tax. [I]f a State chooses not to secure payments under duress and instead offers a meaningful opportunity for taxpayers to withhold contested tax assessments and to challenge their validity in a predeprivation hearing, payments tendered may be deemed voluntary. The availability of a predeprivation hearing constitutes a procedural safeguard against unlawful deprivations sufficient by itself to satisfy the Due Process Clause, and taxpayers cannot complain if they fail to avail themselves of this procedure. Id. at 38 n. 21, 110 S.Ct. at 2251 n. 21. Second, the state can choose to employ financial sanctions and summary remedies such as distress sales, thus collecting the taxes under duress. [10] If a state chooses this option, to comport with Due Process it must provide meaningful post-deprivation relief. That relief must afford an opportunity to challenge the validity of the tax obligation and a clear and certain remedy. Because providing refunds might undermine the State's ability to engage in sound fiscal planning, [11] a state would be free to impose various procedural requirements on actions for post-deprivation relief. The Court specifically approved of two requirements: (1) that only taxpayers paying under protest would be entitled to relief and (2) the actions could be subject to short statutes of limitation. [12] Concerning taxes collected by the Collector of Revenue, as are the taxes in this case, Louisiana appears to have made an effort to provide both pre- and post-deprivation relief. See, e.g., LA.REV.STAT. 47:1434, 1561-74 which purport to provide predeprivation relief. The legislature has also attempted to afford taxpayers with what would constitute meaningful post-deprivation relief under the U.S. Constitution. It is clear that the scheme found in LA.REV.STAT. 47:1576, the Payment Under Protest procedure, is intended to provide post-deprivation relief for the recovery of taxes paid under protest when a statute is later found unconstitutional. At issue in this case, however, is whether the legislature has provided any other statutory post-deprivation remedy for the recovery of taxes. We reach this issue because it is clear plaintiffs did not pay under protest the beer taxes owed from 1974-1987 which they now seek to recover. Therefore, they cannot avail themselves of the mode of recovery found in the Payment Under Protest procedure under LA.REV.STAT. 47:1576.
The Payment Under Protest procedure provided for in LA.REV.STAT. 47:1576 has not changed in substance since its origin. [13] It provides that if a taxpayer protests the payment of any tax or enforcement of any tax law, he must pay the amount due and at that time give notice of intention to file suit for recovery of the tax. The amount paid is then placed in escrow for 30 days. If suit is filed within that period, the funds will be further held pending outcome of the suit. If suit is not timely filed, courts have held the taxpayer no longer has a right to proceed in district court for the recovery of taxes. Bagneris v. City of New Orleans, 130 So.2d 421, 424 (La.App. 4th Cir.1961).
Plaintiffs argue that the Claims Against the State procedure found in LA.REV.STAT. 47:1481-86 is a statutory remedy whereby a taxpayer can seek to recover taxes paid without protest pursuant to an unconstitutional statute. [15] The State, on the other hand, argues that LA.REV.STAT. 47:1481-86 is a claims procedure existing solely for the purpose of giving to plaintiffs who have judicially enforceable claims the option to settle their claims without having to go to court. If the claim lacks merit under the law as would be applied in a court, then it would lack merit before the BTA. Thus, because plaintiffs failed to protest the payment of the taxes under LA.REV.STAT. 47:1576, the State argues they could not recover under Section 1576 and therefore cannot recover as a claim against the state. Whether or not the Claims Against the State procedure may be used to recover taxes paid voluntarily and without protest has been addressed before by the courts of this state. In Sperry Rand Corp. v. Collector of Revenue, 376 So.2d 505 (La.App. 1st Cir.), writ denied, 376 So.2d 156 (1979) plaintiff paid a use tax without protest from 1973 to 1975. In 1976, plaintiff sought a refund from the Collector of Revenue for $31,000.00 on the ground that the Collector erred in his definition of cost price under the taxing statute. The Collector denied the refund, and plaintiff filed a petition with the Board of Tax Appeals. The Board entered an order directing the Collector to refund the taxes to plaintiff, and the State sought judicial review. The district court affirmed. The court of appeal noted that plaintiff did not protest the payment of the tax and therefore had no right of action under 47:1576. However, the court found that the Board of Tax Appeals has the authority to grant a refund regardless of whether the provisions of 47:1576 had been followed: We think [R.S. 47:1481] was intended to give the Board of Tax Appeals the authority to grant claims for taxes erroneously paid to the state, when principles of justice and equity so require, even though a refund might not otherwise be permitted by law. There is certainly no abuse of that authority in this case, in which a tax, later found to be unconstitutional, was paid. 376 So.2d at 507. This court addressed the viability of using the Claims Against the State procedure to recover taxes voluntarily paid without protest in Williams v. State, 538 So.2d 193 (La.1989). A taxpayer paid a license tax/handling fee without protest. He later brought an action directly in the district court seeking a judgment declaring the tax unconstitutional and a refund of the tax. The court stated: Article VII, § 3 of the 1974 Constitution provides in relevant part: It [the Legislature] shall provide a complete and adequate remedy for the prompt recovery of an illegal tax paid by a taxpayer. The Legislature has complied with this constitutional mandate by creating two alternative mechanisms by which an aggrieved taxpayer may obtain a refund of taxes paid when he feels a tax collector has acted illegally. In La.R.S. 47:1481 et seq., the Legislature established an administrative procedure for challenging taxes through the Board of Tax Appeals. In La.R.S. 47:1576, the Legislature created a legal remedy and right of action for the adjudication of tax questions and the refund of moneys improperly collected. 538 So.2d at 197 (emphasis added) (footnote omitted). [16] The court found that because Williams made a judicial challenge to the tax, he was constrained by the provisions of 47:1576. Because he had not paid the tax under protest nor given notice at the time of payment of intent to file a suit, Williams was found to not be entitled to recovery under 47:1576. The court went on, however, to note that Williams was not totally deprived of relief. Mindful of the Claims Against the State procedure available under LA.REV.STAT. 47:1481 and citing Sperry, the court held that Williams could properly seek a judgment declaring the tax unconstitutional. [17] The court stated: Absent a clear statement of legislative intent to the contrary, we will not read R.S. 47:1576 so narrowly as to deny an aggrieved citizen an otherwise permissible vehicle to challenge judicially the constitutionality of a tax. [18] We agree with the Williams and Sperry approach. While the Payment Under Protest procedure found in 47:1576 is clearly intended to provide a postdeprivation remedy for the recovery of taxes, nowhere therein does the statute state that it is the sole remedy. The Claims Against the State procedure set forth in 47:1481 allows any person who has a claim against the State of Louisiana for money erroneously paid into the State Treasury, or for any other claim to present such claim to the Board of Tax Appeals. It is easily apparent that a tax voluntarily paid pursuant to an unconstitutional statute is money erroneously paid into the State Treasury by the taxpayer. A taxpayer has erred when he has paid taxes pursuant to an unconstitutional statute because he failed to notice the statute was unconstitutional and therefore paid taxes which were not legally due. At the very least, such a situation falls under the term any other claim. LA.REV.STAT. 47:1481 et seq. provides a proper vehicle for the recovery of taxes paid without protest pursuant to an unconstitutional statute. [19] Additionally, any plaintiff whose rights are actually in controversy, i.e. not prescribed under 47:1481, may seek a judgment declaring the tax statute unconstitutional, with such judgment to be used in plaintiff's case before the Board of Tax Appeals.