Opinion ID: 1367804
Heading Depth: 3
Heading Rank: 1

Heading: Interpretation of AS 29.45.500(c)

Text: The legislature enacted subsection (c) in 1985 when it recodified former AS 29.53.390 as AS 29.45.500. Unfortunately, the legislative history sheds no light as to the specific purpose of this subsection. We must therefore examine the plain language of AS 29.45.500(c) in light of its overall purpose and in accordance with common sense and good policy. [4] See Langdon v. Champion, 745 P.2d 1371, 1372 n. 2 (Alaska 1987). Subsections (a) and (b) set forth two different procedures under which a taxpayer may obtain a tax refund. Under subsection (a), a taxpayer may bring a suit against the municipality in superior court to seek a refund of taxes paid under protest. Under subsection (b), a taxpayer may file a claim for a refund with the municipality when in payment of taxes legally imposed, [the] remittance by [the] taxpayer through error or otherwise exceeds the amount due. AS 29.45.500(b). A claim under subsection (b) must be filed within one year of the tax due date or it is forever barred. Id. Subsection (c) provides that the governing body may correct manifest clerical errors at any time but does not specifically authorize the refund of taxes overpaid as the result of such an error. [5] AS 29.45.500(c). Judge Rowland construed subsection (c) to empower the Assembly to correct clerical errors, regardless of how ancient they may be, but ruled that it did not empower the Assembly to refund money erroneously paid as a result of such errors after the one-year limitations period had run. The municipality urges us to adopt this reading and claims that interpreting AS 29.45.500(c) as providing an adjudicatory avenue for relief would negate the one-year limitation in AS 29.45.500(b). We disagree. In our view, the one-year limitations period should only apply to overpayments resulting from taxpayer error and not to overpayments resulting from the municipality's error. [6] In cases of taxpayer error, taxpayers who discover their own mistake and make a timely claim are entitled to an automatic refund once the overpayment is verified by audit. We believe that this one-year limitations period makes good sense when the taxpayer is solely responsible for the overpayment. In contrast, we believe that the language of subsection (c) clearly grants the governing body the discretionary authority to correct clerical errors by the municipality and to refund overpayments resulting from such clerical errors without any prescribed limitations period. This reading accords with this court's policy to liberally construe remedial statutes. See State ex rel. Smith v. Tyonek Lumber, Inc., 680 P.2d 1148, 1157 (Alaska 1984). General principles of equity also support this reading. See Frost v. Fowlerton Consol. Sch. Dist. No. 1, 111 S.W.2d 754, 756-57 (Tex. App. 1937) (holding that school district had no equitable right to retain moneys paid by taxpayer under mutual mistake of fact); State ex rel. Pabst Brewing Co. v. Kotecki, 163 Wis. 101, 157 N.W. 559, 560 (1916) (permitting taxpayer to recover tax overpayment resulting from clerical error, and declaring that if the city kept the money, a breach of honesty and fair dealing would result). This is particularly true where the error lies with the taxing body. See Pabst, 157 N.W. at 660 (payment of excess tax due to error by city constitutes a fraud which entitles taxpayer to recover the overpayment); Betz v. City of New York, 119 A.D. 91, 103 N.Y.S. 886, 887 (1907) (where mistake originates with city official resulting in tax overpayment, it is wholly unjustifiable for the city to retain the excess tax). These fairness concerns outweigh the municipality's interest in administrative convenience. We therefore decline to rule that the limitations period in subsection (b) applies generally to all claims for refunds under AS 29.45.500. [7]