Opinion ID: 2464737
Heading Depth: 2
Heading Rank: 3

Heading: Chapter 84.12 RCW Authorizes Imposition of the Property Taxes at Issue

Text: ¶ 21 Flight Options contends that the Department lacks statutory authority to assess the challenged property taxes. Specifically, Flight Options contends that (1) it is not an `[a]irplane company,' as defined by RCW 84.12.200(3); (2) the airplanes are not situate in Washington, as required by RCW 84.12.200(12); and (3) it does not own the airplanes as it argues is required by RCW 84.40.020 and RCW 84.12.210. Each of these arguments requires that we engage in statutory interpretation. When interpreting a statute, our fundamental objective is to discern and implement the intent of the legislature. State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003). We do so by giving effect to the plain meaning of a statute, which may be gleaned from all that the Legislature has said in the statute and related statutes which disclose legislative intent about the provision in question. Dep't of Ecology v. Campbell & Gwinn, LLC, 146 Wash.2d 1, 11, 43 P.3d 4 (2002). If, after this inquiry, the statute is susceptible to two or more reasonable interpretations, the statute is ambiguous. Burton v. Lehman, 153 Wash.2d 416, 423, 103 P.3d 1230 (2005). However, a statute is not ambiguous merely because two or more interpretations are conceivable. Id. We have long held that any ambiguity in a tax statute is construed in favor of the taxpayer. Vita Food Prods., Inc. v. State, 91 Wash.2d 132, 134, 587 P.2d 535 (1978). ¶ 22 We begin our interpretation with the context in which the relevant statutes appear. Chapter 84.12 RCW requires that the Department annually assess the operating property of certain utilities and transportation companies. RCW 84.12.270. One type of [o]perating property subject to assessment by the Department is aircraft owned, controlled, operated, or managed by an `[a]irplane company.' RCW 84.12.200(3), (12). Personal property must be situate within the state of Washington, and, for personal property used in more than one state, the value to be assessed must be in proportion to the property's use in Washington. RCW 84.12.200(12), .300. Construing these statutes together, chapter 84.12 RCW requires, generally, that the Department assess taxes against an apportioned value of the aircraft of airplane companies, so long as those aircraft are situate in Washington. ¶ 23 Flight Options is undoubtedly an airplane company within the plain meaning of the definition of that term set forth in RCW 84.12.200(3). An airplane company is any person or entity owning, controlling, operating or managing. . . personal property, used or to be used for or in connection with or to facilitate the conveyance and transportation of persons and/or property by aircraft, and engaged in the business of transporting persons and/or property for compensation, as owner, lessee or otherwise. RCW 84.12.200(3), (10). To satisfy the first requirement, the person or entity need only do one of the four options listed: own, control, operate, or manage personal property. The record leaves no doubt that Flight Options manages all the airplanes in its fleet; it maintains the entire fleet at its headquarters and determines which specific airplane will be dispatched to which customer. Though we do not find the characterization binding on our inquiry, we find further support for our conclusion in the fact that Flight Options refers to itself as the Manager and charges a Monthly Management Fee in the Management Agreement it requires participants in the fractional ownership program to sign. CP at 146, 171. Because Flight Options manages the airplanes, we need not determine whether it also owns, controls, or operates them. ¶ 24 Flight Options does not dispute that its airplanes are used for the conveyance and transportation of persons, nor could it. Instead, it argues that it is not engaged in the business of transporting persons . . . for compensation, RCW 84.12.200(3), because it is actually engaged in the business of selling fractional ownership interests. This is not, however, an either-or distinction. While Flight Options may well be in the business of selling fractional ownership interests in airplanes, it is also engaged in the business of transporting persons for compensation. This is obvious in the context of the JetPass program, in which customers pay Flight Options an hourly rate in exchange for transportation. Precisely the same thing occurs in the context of the fractional ownership program. Fractional owners pay Flight Options an hourly rate in exchange for transportation on an airplane. From this it is apparent that Flight Options is engaged in the business of transporting persons for compensation. Flight Options therefore falls squarely within the definition of an airplane company subject to assessment by the Department. ¶ 25 The next question is whether Flight Options' airplanes were situate within the state of Washington. RCW 84.12.200(12). There is nearly universal agreement that personal property is `situated' for tax purposes at its tax situs. Mesa Leasing Ltd. v. City of Burlington, 169 Vt. 93, 96, 730 A.2d 1102 (1999). Situate and situated are synonyms, Bryan A. Garner, A Dictionary of Modern Legal Usage 811 (2d ed. 1995), and we therefore construe situate to mean having a tax situs. We have never held that the statutory requirement that property have a tax situs in Washington is more extensive than the due process clause requirement. In Canadian Pacific, we relied exclusively on United States Supreme Court cases to determine the situs of railroad cars. 90 Wash. at 43-44, 155 P. 416. Similarly, in United States Whaling Co. v. King County, 96 Wash. 434, 436-37, 165 P. 70 (1917), we noted that Washington cases establishing tax situs are to the same effect as United States Supreme Court cases. The last case relied on by Flight Options, Guinness v. King County, 32 Wash.2d 503, 506, 202 P.2d 737 (1949), applied the since-abandoned home port doctrine, see Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 443, 99 S.Ct. 1813, 60 L.Ed.2d 336 (1979), under which moveable personal property could only be assessed at the home port of the owner. The home port doctrine has given way to a scheme allowing for fair apportionment of tax revenues among the states. Id. at 442, 99 S.Ct. 1813; see Alaska Freight Lines, Inc. v. King County, 66 Wash.2d 360, 363-64, 402 P.2d 670 (1965) (noting that situs requirements for non-oceangoing vessels had been relaxed to permit . . . tax apportionment between states and citing to federal cases). We conclude that the requirement in RCW 84.12.200(12) that property be situate within the state of Washington is coextensive with the due process clause requirement that property have a tax situs in Washington before it can be taxed. As discussed above in the context of the due process clause, the Flight Options fleet of airplanes has established a tax situs in Washington. ¶ 26 The final question in this case is whether the Department may assess property taxes against a nonowner of the airplane. We assume, without deciding, that Flight Options does not own the airplanes in its fleet. [3] Nonetheless, neither of the statutes cited by Flight Options, RCW 84.40.020 and RCW 84.12.210, precludes the Department's assessment of taxes at issue here. ¶ 27 RCW 84.40.020 provides, in relevant part, that [a]ll personal property in this state subject to taxation shall be listed and assessed every year, with reference to its value and ownership on the first day of January of the year in which it is assessed. As Flight Options argues, that statute provides that all personal property is only assessable to the owner of the property. RCW 84.12.270, however, when construed in light of the definitions set forth in RCW 84.12.200, is a more specific statute that plainly permits the Department to assess property tax against a nonowner that controls, operates, or manages the property. It is well settled that a more specific statute prevails over a general one should an apparent conflict exist. Residents Opposed to Kittitas Turbines v. Energy Facility Site Evaluation Council, 165 Wash.2d 275, 309, 197 P.3d 1153 (2008). This interpretation gives effect to the plain language of a number of statutes expressly permitting taxation of nonowners of property. See, e.g., RCW 84.12.270; RCW 84.40.065 (permitting assessment of nonowners who possess or control ships or vessels); RCW 84.16.040 (permitting assessment of nonowners who operate private railway cars). Because a more specific provision governs assessment of the operating property of airplane companies, RCW 84.40.020 does not preclude assessment of the property tax on the fractionally owned airplanes against Flight Options. ¶ 28 RCW 84.12.210 is no more helpful to Flight Options. That statute provides that [p]roperty used but not owned by an operating company shall, whether such use be exclusive or jointly with others, be deemed the sole operating property of the owning company. RCW 84.12.210. By its terms, this provision only applies where there are two companies (i.e., an operating company and an owning company). The term `[c]ompany' is defined to mean, as relevant here, airplane company. RCW 84.12.200(11). Fractional owners of the airplanes cannot be airplane companies, however, because they are not engaged in the business of transporting persons and/or property for compensation. RCW 84.12.200(3). The master interchange agreement specifically prohibits this. CP at 192 (Participant [(fractional owner)] . . . will not use such Interchange Aircraft . . . to provide transportation of passengers or cargo in air commerce for compensation or hire except in accordance with the provisions of Section 91.501 and 91.321 of the [federal aviation regulations].). [4] Because the fractional owners cannot be airplane companies, Flight Options is the only company, as that term is defined by RCW 84.12.200(11), and RCW 84.12.210 is inapplicable.