Opinion ID: 1917346
Heading Depth: 2
Heading Rank: 3

Heading: Mandamus Relief from Tax Paid Through Mistake

Text: Additionally, in two former Code sections the Legislature provided an avenue of relief where the taxpayer had not received a final assessment. See Ala.Code 1975, § 40-1-34, repealed and superseded, Act No. 92-186, 1992 Ala. Acts 349, codified at Ala.Code 1975, § 40-2A-1 et seq.; and Ala.Code 1975, § 40-18-43, repealed and superseded, Act. No. 92-186, 1992 Ala. Acts 349, codified at Ala.Code 1975, 40-2A-1 et seq. Section 40-1-34 provided: Where any taxpayer in the payment of taxes or licenses which are paid directly to the department of revenue, by a mistake of fact or law has paid an amount in excess of the amount due or has made an erroneous payment, the comptroller is authorized to draw his warrant on the treasurer in favor of such taxpayer, and the treasurer is authorized to pay such warrant for the amount of such overpayment or erroneous payment. Before any refund under this section can be made, the taxpayer, his heirs, successors or assigns shall file in duplicate a petition directed to the department of revenue, setting up the fact relied on to procure the refunding of the money erroneously paid. Such application must be made within three years from the date of such payment. The department of revenue shall examine said petition and the records of the department of revenue, and if the facts set forth in the petition are such as to entitle the petitioner to the refunding of the money as prayed for and the department of revenue, upon the evidence adduced, is satisfied that the petitioner is entitled to the refund as prayed for, he shall so certify to the comptroller stating the amount to be refunded by the state, the particular fund on which such warrant shall be drawn and forward to the comptroller a copy of the petition with the certificate attached and if the comptroller shall be satisfied that the petition is in form required by law, he shall draw his warrant on the treasurer as hereinbefore provided for the amount certified to him by the department of revenue. (Emphasis added.) Section 40-18-43, which provided for a refund of income tax paid through mistake or error, defined the duties of the Department and the comptroller in a manner and with specificity similar to the description in § 40-1-34. Section 40-18-43 also specifically provided: In the event the department of revenue fails or refuses to certify to the comptroller the amount of tax due to be refunded, or if it certifies a lesser amount than the taxpayer deems he is entitled to have refunded, the taxpayer may institute a proceeding in the circuit court of Montgomery county in the nature of a mandamus proceeding to require the department of revenue to certify, to the comptroller, the amount due to be refunded to such taxpayer. (Emphasis added.) The duties imposed on the Department, the comptroller, and the treasurer by §§ 40-1-34 and 40-18-43 were ministerial in nature. See Sparks v. Louisville & Nashville R.R., 277 Ala. 25, 28, 166 So.2d 865, 868 (1964). However, the right of taxpayers to invoke those statutes depended on the filing of refund petitions within three years of the payment of the challenged taxes. Southern Natural Gas Co. v. State, 261 Ala. 222, 228, 73 So.2d 731, 736-37 (1953); see also Curry v. Johnston, 242 Ala. 319, 6 So.2d 397 (1942). Thus, for relief by a writ of mandamus, compliance with these sections was mandatory. In short, nothing in the refund statutes discussed above, or in this Court's caselaw construing those statutes, suggests to the reasonable taxpayer that anything less than strict statutory compliance is sufficient to support a right to a tax refund from the State. This refund scheme was held to provide taxpayers a plain, speedy and efficient remedy, within the context of the Tax Injunction Act, 28 U.S.C.A. § 1341. Melof v. Hunt, 718 F.Supp. 877 (M.D.Ala.1989). In apparent reliance on the rationale of Sparks, the Taxpayers contend that this action merely seeks the performance of a ministerial act, a species of relief not barred by § 14. See Aland supra. A duty is ministerial, when the law, exacting its discharge, prescribes and defines the time, mode and occasion of its performance, with such certainty that nothing remains for judgment or discretion. Grider v. Tally, 77 Ala. 422, 425 (1884) (emphasis added). Official action, the result of performing a certain and specific duty arising from fixed and designated facts, is a ministerial act. Id. During oral argument, counsel for the Taxpayers stated: If it is a ministerial act for the Commissioner of Revenue to calculate the refund and issue the check, under the Taxpayer Bill of Rights and thus you are outside the prohibition of sovereign immunity, certainly, the same analysis has to hold true in the context of a direct action for a refund, because it is the same act. It is either a ministerial act and it is [permitted by § 14] or it is not. At first glance, this argument seems plausible. Closer scrutiny, however, reveals its inherent weakness, namely, the Taxpayers' determination to ignore the TBOR and proceed outside the statutory scheme. To be sure, refunding taxes paid through a mistake or error isin some contextsa ministerial act, but it is so only because the statutes make it so. It is ministerial because of the specificity with which the Legislature defined the duties of the taxing officials. The Taxpayers cannot have it both ways. They cannot bring themselves within the statutory framework for one purpose and exclude themselves for other purposes. If they would reap the benefits of the TBOR, they must likewise bear its burdens. Thus, the Taxpayers' reliance on the ministerial-act exception to sovereign immunity is misplaced. The cases the Taxpayers cite are not contrary to these principles. Specifically, they cite Mingledorff v. Vaughan Regional Medical Center, Inc., 682 So.2d 415 (Ala.1996); White v. Sims, 470 So.2d 1191 (Ala.1985); Eagerton v. Williams, 433 So.2d 436 (Ala.1983); and Thorn v. Jefferson County, 375 So.2d 780 (Ala.1979). Those cases are distinguishable, because they all involved disputes with counties over ad valorem taxes. However, counties do not enjoy immunity under § 14. Ex parte Sizemore, 611 So.2d 1069, 1070 (Ala. 1993) (Houston, J., dissenting from quashing writ of certiorari to the Court of Civil Appeals). They also cite Graves v. McDonough, 264 Ala. 407, 88 So.2d 371 (1956). Graves, however, was a declaratory-judgment action arising out of a taxpayer's claim for a refund of taxes paid ... on an erroneous escape assessment made by the tax assessor on certain improvements to real estate owned by the taxpayer. 264 Ala. at 408, 88 So.2d at 372. Moreover, the Court particularly noted: [The attorney general] is not insisting that this is a suit against the state in violation of section 14 of the Constitution. 264 Ala. at 409, 88 So.2d at 373 (emphasis added). The Taxpayers also rely on two recent opinions of the Court of Civil Appeals. Monroe v. Valhalla Cemetery Co., 749 So.2d 470 (Ala.Civ.App.1999), cert. denied, 529 U.S. 1022, 120 S.Ct. 1426, 146 L.Ed.2d 317 (2000); and Sizemore v. Rinehart, 611 So.2d 1064 (Ala.Civ.App.1992), writ quashed, 611 So.2d 1069 (Ala.1993). Monroe and Rinehart were direct class actions seeking refunds from the State. In Monroe, the Court of Civil Appeals reached the merits of a challenge to the constitutionality of Act No. 97-301, 1997 Ala. Acts 522, which retroactively barred taxpayers' rights to refunds of use taxes paid on goods purchased from out-of-state vendors and delivered into Alabama, 749 So.2d at 473, over the Commissioner's objection that that court lacked jurisdiction because the taxpayer had failed to comply with the Act. The court stated: There are exceptions to the requirement that a taxpayer exhaust his administrative remedies. Where `[q]uestions of law and of statutory and constitutional construction preponderate over questions of fact,' a taxpayer is not required to exhaust its administrative remedies. Mingledorff v. Vaughan Regional Medical Center, Inc., 682 So.2d 415, 416 (Ala. 1996). Because Valhalla challenged the legal validity and the constitutionality of the use tax and Act No. 97-301, it was not required to exhaust its administrative remedies before resorting to the courts. The trial court had subject-matter jurisdiction of this action. 749 So.2d at 473 (emphasis added). The Commissioner did not challenge that holding, because the court held in favor of the Department on the merits. Nevertheless, she contends that the jurisdictional issue in Monroe was wrongly decided. The plaintiff class in Rinehart was comprised of all former members of the United States Armed Forces or their survivors, who were subject to payment of Alabama state income tax on their military retirement benefits and survivor benefits, or who had previously paid [such tax]. 611 So.2d at 1065. The action challenged the constitutionality of State statutes taxing the benefits received by the class differently than retirement benefits received by individuals due to their state employment. Id. The trial court held that the statutory scheme was void and illegal as a violation of the constitutional doctrine of intergovernmental tax immunity. 611 So.2d at 1066. It ordered refunds of all [such] taxes paid within three years prior to the date that the class filed its complaint. Id. The Court of Civil Appeals affirmed. This Court initially granted the Commissioner's petition for certiorari review. Subsequently, however, over the strenuous dissent of Justice Houston, the Court quashed the writ as improvidently granted. Ex parte Sizemore, 611 So.2d at 1070 (Houston, J., dissenting). Justice Houston reasoned that an action seeking a refund of income taxes paid on retirement benefits was an impermissible action against the state, seeking as a remedy funds from the state treasury. Id. at 1070. It is a familiar principle of law that [a] denial of certiorari should never be considered as an expression by the reviewing court on the merits of the controversy. Ex parte Jefferson County Dep't of Human Res., 555 So.2d 1077, 1077 (Ala.1990); Ex parte Buse, 549 So.2d 1344, 1344 (Ala.1989); Ex parte Ford, 514 So.2d 1060, 1060 (Ala.1987); Ex parte Glasco, 513 So.2d 61, 61 (Ala.1987); Ex parte McDaniel, 418 So.2d 934, 935 (Ala.1982); Causey v. State, 374 So.2d 413, 414 (Ala. 1979). See also Hamilton-Brown Shoe Co. v. Wolf Bros., 240 U.S. 251, 36 S.Ct. 269, 60 L.Ed. 629 (1916). Litigants who rely on opinions of intermediate appellate courts that conflict with opinions of the jurisdiction's highest court do so at their own risk. Cf. Brinkerhoff-Faris Trust & Sav. Co. v. Hill, 281 U.S. 673, 682 n. 9, 50 S.Ct. 451, 74 L.Ed. 1107 (1930); Stone Container Corp. v. United States, 229 F.3d 1345, 1351 (Fed.Cir.2000), cert. denied sub nom., Smurfit-Stone Container Corp. v. United States, 532 U.S. 971, 121 S.Ct. 1601, 149 L.Ed.2d 468 (2001). Moreover, Monroe was decided in 1999. Thus, it could provide no basis for an action commenced in 1996, as this one was. We hold that compliance with the TBOR is the exclusive means to a franchise-tax refund, and we hereby overrule Monroe and Rinehart to the extent that they are inconsistent with this holding. Our holding is compelled by our sovereign-immunity jurisprudence and does not constitute a Reich bait-and-switch. The reasonable taxpayer contemplating a forum for franchise-tax refunds had no reason to believe that a direct action against the State was permitted under Alabama law. The TBOR is jurisdictional on its face. See § 40-2A-7(c)(5)c.; § 40-2A-9(g)(1). In this connection, the Commissioner asserts that approximately 2,500 foreign corporationsincluding the plaintiffs in South Central Bell Telephone Co. v. Alabama, 526 U.S. 160, 119 S.Ct. 1180, 143 L.Ed.2d 258 (1999)have properly invoked the TBOR in their quest for refunds. For all that appears, ACC may still prosecute its individual claim for refunds in the proceeding it commenced under the TBOR before it joined this action. What the Taxpayers may not do is prosecute this action. Federal due process does not require Alabama to permit a direct action against the State for a tax refund. South Cent. Bell Tel. Co. v. State, 789 So.2d 147, 149 (Ala.2000) (under McKesson Corp. v. Division of Alcoholic Beverages & Tobacco, 496 U.S. 18, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990), it is not a violation of due process for a State to bar[] a refund to a taxpayer that did not follow a state procedural law in seeking the refund). Cf. Waldron v. Collins, 788 F.2d 736 (11th Cir.1986) (Tax Injunction Act does not require states to provide taxpayer relief through a class action); Melof v. Hunt, 718 F.Supp. 877, 884 (M.D.Ala.1989) (same).