Opinion ID: 2611958
Heading Depth: 1
Heading Rank: 1

Heading: interest on delinquent taxes

Text: In certified question number one, we are asked: Is Campbell County School District entitled to its proportionate share of the delinquency interest on taxes collected pursuant to Wyo.Stat. § 39-3-101, (Supp.1990)? In Laramie County School Dist. No. One, we considered the problem of interest with respect to seventeen or more different funds belonging to school districts. Laramie County School Dist. No. One, 884 P.2d at 951 n. 2. We held that interest earned from taxes constituting elements of the county school fund and interest from taxes resulting from levies by the school district must be distributed by the county treasurer to the school district according to the mandate of Wyo.Stat. § 21-13-207 (1992). Laramie County School Dist. No. One, 884 P.2d at 952. In Laramie County School Dist. No. One, we identified interest from taxes and other revenues, the disposition of which was not specifically provided for by statute. Id. at 952. The disposition of interest on delinquent taxes, Wyo.Stat. § 39-3-101, is not specifically provided for by statute. In Laramie County School Dist. No. One, 884 P.2d at 952, we determined that the disposition of interest not specifically provided for by statute, including delinquency interest, was an accretion or increment to the fund earning such interest and follows those funds. Tacoma School Dist. No. 10 v. Hedges, 13 Wash. 69, 42 P. 522 (1895) supports our determination. The Washington Supreme Court, after stating the general rule that absent any statute to the contrary, the penalty and interest follow the tax, succinctly stated: It follows that the rule first stated must obtain, and that it must be held that the penalty and interest are a part of the tax collected, and must be disposed of with it. Id. at 523. A function of the legislature is to allocate and direct the payment of interest on delinquent taxes. Riverton Valley Drainage Dist. v. Board of County Com'rs of Fremont County, 52 Wyo. 336, 74 P.2d 871, 875 (1937). In Riverton Valley Drainage Dist., 74 P.2d at 873 ( quoting 61 C.J. 1528), we held that `unless otherwise directed, interest, penalty and costs collected on delinquent taxes follow the tax, and go to the state, county or city, according as the one or the other is entitled to the tax itself.' That has been held to be true in the case of a drainage or similar district. The Wyoming legislature, however, has made no provision for any allocation of the interest on delinquent taxes in Wyo.Stat. § 39-3-101 or in any related provisions. Absent that direction, the general rule applies which, logically, is that the interest on the delinquent taxes follows the tax. The reason for the rule that the interest follows the tax is that the entity entitled to the tax monies suffers the loss of revenue from nonpayment of taxes. The rule was addressed in an action involving the allocation of interest on delinquent taxes between the State of Colorado and a county within Colorado. The Court of Appeals of Colorado followed the general rule in stating: As the state owns the tax withheld, as it suffers the loss and inconvenience through its being in default, as our statute makes no express disposition of the interest accruing during the delinquency, we think it reasonable, just, and in accordance with the legislative intent that the interest should follow, and does follow, the tax   . Board of Com'rs of County of Prowers v. People, 17 Colo.App. 519, 69 P. 73, 74 (1902). The interest on the delinquent taxes is not the revenue of the county and the county is without authority to withhold this interest from the school district. On those taxes assessed for separate entities such as the school district, the county merely acts as a trustee and agent for collection. As trustee and agent for collection, it must pay over all sums collected. City of New Orleans v. Fisher, 180 U.S. 185, 195-98, 21 S.Ct. 347, 352, 45 L.Ed. 485 (1901); Board of Educ. of Granite School Dist. v. Salt Lake County, 659 P.2d 1030, 1035 (Utah 1983). Wyo.Const. art. 15, § 13 states: No tax shall be levied, except in pursuance of law, and every law imposing a tax shall state distinctly the object of the same, to which only it shall be applied. Taxes must be applied for the purpose for which they are levied. As the authority cited herein establishes the general rule that the interest is part of the taxes, the interest on the taxes must be applied for the same purpose. Courts in other states have applied similar constitutional provisions and set aside the diversion of interest on school district funds as being improper. Mears v. Little Rock School Dist., 268 Ark. 30, 593 S.W.2d 42 (1980); Independent School Dist. No. 1 of Tulsa County v. Board of County Com'rs of Tulsa County, 674 P.2d 547 (Okla.1983). These cases, although not distinguishing between general school taxes, school bond taxes, or addressing interest on delinquent taxes, held that interest, whether it be earned on the tax while held by the treasurer or paid with delinquent taxes by the taxpayer, is part of the tax levied and should be applied in the same manner. Mears, 593 S.W.2d at 44; Independent School Dist. No. 1 of Tulsa County, 674 P.2d at 550. The Board contends that the express mention of the payment of interest to community colleges in Wyo.Stat. § 39-4-101(a)(v) (1994) is a directive to not pay interest to the school districts. [2] This argument overlooks the fact that Wyo.Stat. §§ 21-13-207 and 39-4-101 were both a part of the same act, i.e., Wyo. Sess.Laws ch. 136 (1983). The legislature provided for payment to the school districts with interest earned thereon at the same time it provided for payment of property taxes in accordance with Wyo.Stat. § 21-13-207. The School District contends that it would have been redundant to include interest in Wyo.Stat. § 39-4-101(a)(iv). Litigants and courts frequently employ convoluted, strained, and anomalous reasoning and theories in an effort to fathom and explain the doings of the legislature. We often impute some intent to the legislature when there was no intent one way or another. Stated another way, the legislature just did not think about the problem that the litigants or courts conjured up. It may be more honest if we are straightforward about what the legislature intended and simply say we do not know. There is no useful legislative history in Wyoming. The simple reading of Wyo. Stat. §§ 21-13-207 and 39-4-101 does not suggest to us any manifest intent with respect to the disposition of interest on taxes. Approaching these statutes from another direction, we may get a better idea what the legislature did not intend. We do not think it intended to countermand the common law rule that interest follows the tax funds that earned the interest. Nor do we believe that the legislature intended to create a special rule with respect to community colleges' entitlement to interest to the exclusion of other entities entitled to tax funds and interest or penalties by way of interest that may accrue. There is no rational reason for making a special rule for community colleges unless they have a more effective lobby. Laramie County School District No. One, 884 P.2d at 956. We answer certified question number one as: Yes, the School District is entitled to its proportionate share of the delinquency interest collected pursuant to Wyo.Stat. § 39-3-101. In certified question number two, we are asked: If the answer to Issue 1 is in the affirmative, is Campbell County School District entitled to judgment against the Board of County Commissioners of Campbell County for its proportionate share of interest received by the county since July 1, 1989? We have recognized the propriety of judgments regarding tax allocation questions between governmental entities. Simons v. Laramie County School Dist. No. One, 741 P.2d 1116, 1117 (Wyo.1987); Board of Com'rs of Big Horn County v. Byron Drainage Dist., 52 Wyo. 417, 75 P.2d 759, 764 (1938); Riverton Valley Drainage Dist., 74 P.2d at 876. A judgment against the Board would be proper in this case except we have decided, for reasons we will explain, that our decision here should be prospective. In Laramie County School Dist. No. One, 884 P.2d at 956, we determined that the school district was entitled to interest earned by tax revenues and delinquencies. In that case, however, we determined our decision should be prospective. In support of the prospective application, we considered restitution principles set out in Restatement of Restitution §§ 62 and 142 (1937). Laramie County School Dist. No. One, 884 P.2d at 957-959. We also considered a variation of the so-called budget defense. Id. at 959. Finally, we took into consideration the financial burden on the county and the potential for a proliferation of litigation. Id. at 957-959. A combination of these principles caused us to determine that our decision regarding interest be prospective. Id. at 959. In addition to the combination of principles contained in Laramie County School Dist. No. One, we must consider the good faith reliance by the County Treasurer upon advice from the Attorney General to the effect that the County Treasurer was in fact distributing monies in compliance with the law. We conclude, therefore, a fortiori that our opinion here be prospective. In certified question number three, we are asked: If the answer to Issue 2 is affirmative, is Campbell County School District entitled to prejudgment interest? We have not provided for a money judgment in this case; it necessarily follows that prejudgment interest need not be considered.