Opinion ID: 1280823
Heading Depth: 1
Heading Rank: 2

Heading: Misapplication of the Refund Statute.

Text: The Tax Commission argues that the municipal and county sales taxes cannot be refunded without putting some cities into bankruptcy, drastically reducing sales tax allocations to other cities and thereby causing a reduction of services necessary for the health and safety of those residents. This argument is based upon the amount of current sales tax revenues and the following language of § 225 that identifies the source of tax refunds: (d) Such refunds and interest thereon shall be paid by the Tax Commission out of monies in the Tax Commission clearing account from subsequent collections from the same source as the original tax assessment, provided that in the event there are insufficient funds for refunds from subsequent collections from the same source, the refund shall be paid by the Tax Commission from monies appropriated by the Legislature to the special refund reserve account for such purposes as hereinafter provided. There is hereby created within the official depository of the State Treasury an agency special account for the Tax Commission for the purpose of making such refunds as may be required under this section, not otherwise provided. This account shall consist of monies appropriated by the Legislature for the purpose of making refunds under this section. 68 O.S.Supp. 1989 § 225(d). This statute requires refunds to be paid from the Tax Commission clearing account. If that account is insufficient to pay the refund then subsequent tax collections from the same source shall pay it. If subsequent collections are insufficient then the refund is paid from an appropriation by the Legislature. Section 225(d) cannot apply to tax refunds from municipalities and counties for the following reasons: (1.) The statute would unconstitutionally use state revenues on the behalf of counties and municipalities. [3] (2.) A judgment in a Tax Commission protest is against the Tax Commission and is, according to § 225 of Title 68, paid by the Tax Commission, at least until the majority's pronouncement today. (3.) Judgments against counties and municipalities are paid from a sinking fund or taxes levied to pay the judgment. [4] Section 225 does not give the Tax Commission authority to withhold current sales tax revenues from the counties and municipalities involved. The majority opinion requires naming counties and municipalities as parties to a Tax Commission protest when revenues from those sources are at issue. The tax statutes do not require naming the political subdivisions as parties and the result of such a requirement conflicts with the principle that tax remedies are liberal in giving the taxpayer an opportunity for a refund when the taxpayer complies with the tax procedure and taxes are paid under protest. Exchange Oil Co. v. State, 193 P. at 1002. The § 221 protest is a special statutory proceeding, as opposed to a proceeding before a court of record, and as such, does not result in a true judgment against the taxpayer, although it may have the effect of a judgment. See, Excise Bd. of Pottawatomie County v. French, 201 Okla. 380, 206 P.2d 203 (1949), (payment of a worker's compensation claim by county was not an action in a court of record for a money judgment against the county) and 68 O.S.Supp. 1989 § 221(h), (properly filed and docketed final assessment has same force as judgment of district court). Because there is no provision in § 225 for creating an administrative award or judgment against named political subdivisions, such as counties and cities, I believe that requiring their inclusion in the administrative process without Legislative action violates 62 O.S. 1981 § 365.1. This statute prohibits money judgments against counties and municipalities unless such occur in a court of record. See also, Excise Bd. of Pottawatomie County v. French, supra, and the explanation that the Legislature may require a county to pay a worker's compensation award arising from an administrative proceeding.