Opinion ID: 2610922
Heading Depth: 1
Heading Rank: 4

Heading: recovery of lost taxes

Text: The County's counterclaim against Kennecott seeks a judgment for back taxes based on an alleged undervaluation of Kennecott's mining properties. The trial court ruled on summary judgment that the County could not have Kennecott's property reassessed under the escaped assessment statute, Utah Code Ann. § 59-5-17 (1974), even if § 59-5-57 were unconstitutional. In a different legal context, Rio Algom Corp. v. San Juan County, 681 P.2d 184 (Utah 1984), held that for the plaintiff mining companies in that case to recover for overpayment of taxes, they had to prove two elements: (1) the amount of undervaluation of county-assessed properties and (2) the true value of their own properties. 681 P.2d at 197. We recognized that a court could in those circumstances retroactively determine the true value of the plaintiffs' state-assessed properties and noted that state-assessed properties, in general, did not appear to be valued at full value. Rio Algom Corp. also held that any recovery the taxpayers obtained for an alleged overpayment of taxes could be reduced by the amount their own properties were shown to be undervalued. 681 P.2d at 197. Here, Kennecott no longer claims that it has overpaid its taxes. The taxpayers who originally brought the action in Rio Algom Corp. did so pursuant to the statutory method for recovery of taxes paid under protest. See Utah Code Ann. § 59-2-1327 (Supp. 1984). Because Kennecott does not now claim an overpayment, the County cannot now rely on the right to attack a past assessment on the theory that the taxpayer itself, in effect, opened the issue. On remand of this case, the issue may therefore arise as to whether the County may recover back taxes from Kennecott if the net proceeds formula in § 59-5-57 as applied produced an unconstitutional assessment. The County relies on § 59-5-17, the escaped assessment statute, as authority for its right to recover underassessed taxes. At the time relevant to this action, § 59-5-17 provided: [5] Any property discovered by the assessor to have escaped assessment may be assessed at any time as far back as five years prior to the time of discovery, and the assessor shall enter such assessments on the tax rolls in the hands of the county treasurer or elsewhere... . Kennecott argues that this section does not apply to state-assessment properties because, in its view, the word assessor in the statute means only county assessor. However, Union Portland Cement Co. v. Morgan County, 64 Utah 335, 341, 230 P. 1020, 1022 (1924), held that the state board of equalization could assess property omitted from assessment, even though an analogous statutory provision only referred to the assessor. In keeping with Union Portland Cement, we hold that the term assessor includes both county assessors and the Tax Commission. To justify a reassessment under § 59-5-17, the County must be able to show that unassessed or underassessed property escaped assessment and was not just undervalued. County Bd. of Equalization v. Utah State Tax Comm'n, 789 P.2d 291 (Utah 1990); County Bd. of Equalization v. Nupetco Assocs., 779 P.2d 1138, 1139 (Utah 1989); Builder's Components Supply Co. v. Cockayne, 22 Utah 2d 172, 450 P.2d 97 (1969). In this case, the County claims that the method of assessing Kennecott's mining properties constituted an escaped assessment. When real property has been incorrectly assessed on a comparable sales basis, that ordinarily constitutes an undervaluation and not an escaped assessment under § 59-5-17. The County's counterclaim for taxes may, in effect, assert an undervaluation, or it may possibly assert an omitted or escaped assessment. The specific facts of this case, when proved, may be determinative of whether an incorrect assessment, if such be the case, results in an undervaluation or an escaped assessment. In determining that question, it may be significant that the method of state assessment is different from the methods employed by county assessors and that the degree of taxpayer participation in the state assessment procedure suggests a different analysis, particularly if the Tax Commission relies on the taxpayer's own records for the assessment data. Such differences might call for a different definition of escaped assessment under § 59-5-17 than we adopted in the cases cited above, which are based on fair market value. [6] Clearly, we cannot resolve the issue here, because we have no factual foundation for doing so and we have had no briefing on the issue. In any event, the County is entitled to a declaratory judgment as to the constitutionality of the statute. Accordingly, the case is remanded to the trial court to allow the County to adduce its proof and for the issue to be resolved. For the foregoing reasons, we reverse and remand for a trial on the merits. HALL, C.J., HOWE, Associate C.J., and DURHAM and ZIMMERMAN, JJ., concur.