Opinion ID: 1092110
Heading Depth: 2
Heading Rank: 3

Heading: The Claims Against the State Procedure[14]

Text: Plaintiffs argue that the Claims Against the State procedure found in LA.REV.STAT. 47:1481-86 is a statutory remedy whereby a taxpayer can seek to recover taxes paid without protest pursuant to an unconstitutional statute. [15] The State, on the other hand, argues that LA.REV.STAT. 47:1481-86 is a claims procedure existing solely for the purpose of giving to plaintiffs who have judicially enforceable claims the option to settle their claims without having to go to court. If the claim lacks merit under the law as would be applied in a court, then it would lack merit before the BTA. Thus, because plaintiffs failed to protest the payment of the taxes under LA.REV.STAT. 47:1576, the State argues they could not recover under Section 1576 and therefore cannot recover as a claim against the state. Whether or not the Claims Against the State procedure may be used to recover taxes paid voluntarily and without protest has been addressed before by the courts of this state. In Sperry Rand Corp. v. Collector of Revenue, 376 So.2d 505 (La.App. 1st Cir.), writ denied, 376 So.2d 156 (1979) plaintiff paid a use tax without protest from 1973 to 1975. In 1976, plaintiff sought a refund from the Collector of Revenue for $31,000.00 on the ground that the Collector erred in his definition of cost price under the taxing statute. The Collector denied the refund, and plaintiff filed a petition with the Board of Tax Appeals. The Board entered an order directing the Collector to refund the taxes to plaintiff, and the State sought judicial review. The district court affirmed. The court of appeal noted that plaintiff did not protest the payment of the tax and therefore had no right of action under 47:1576. However, the court found that the Board of Tax Appeals has the authority to grant a refund regardless of whether the provisions of 47:1576 had been followed: We think [R.S. 47:1481] was intended to give the Board of Tax Appeals the authority to grant claims for taxes erroneously paid to the state, when principles of justice and equity so require, even though a refund might not otherwise be permitted by law. There is certainly no abuse of that authority in this case, in which a tax, later found to be unconstitutional, was paid. 376 So.2d at 507. This court addressed the viability of using the Claims Against the State procedure to recover taxes voluntarily paid without protest in Williams v. State, 538 So.2d 193 (La.1989). A taxpayer paid a license tax/handling fee without protest. He later brought an action directly in the district court seeking a judgment declaring the tax unconstitutional and a refund of the tax. The court stated: Article VII, § 3 of the 1974 Constitution provides in relevant part: It [the Legislature] shall provide a complete and adequate remedy for the prompt recovery of an illegal tax paid by a taxpayer. The Legislature has complied with this constitutional mandate by creating two alternative mechanisms by which an aggrieved taxpayer may obtain a refund of taxes paid when he feels a tax collector has acted illegally. In La.R.S. 47:1481 et seq., the Legislature established an administrative procedure for challenging taxes through the Board of Tax Appeals. In La.R.S. 47:1576, the Legislature created a legal remedy and right of action for the adjudication of tax questions and the refund of moneys improperly collected. 538 So.2d at 197 (emphasis added) (footnote omitted). [16] The court found that because Williams made a judicial challenge to the tax, he was constrained by the provisions of 47:1576. Because he had not paid the tax under protest nor given notice at the time of payment of intent to file a suit, Williams was found to not be entitled to recovery under 47:1576. The court went on, however, to note that Williams was not totally deprived of relief. Mindful of the Claims Against the State procedure available under LA.REV.STAT. 47:1481 and citing Sperry, the court held that Williams could properly seek a judgment declaring the tax unconstitutional. [17] The court stated: Absent a clear statement of legislative intent to the contrary, we will not read R.S. 47:1576 so narrowly as to deny an aggrieved citizen an otherwise permissible vehicle to challenge judicially the constitutionality of a tax. [18] We agree with the Williams and Sperry approach. While the Payment Under Protest procedure found in 47:1576 is clearly intended to provide a postdeprivation remedy for the recovery of taxes, nowhere therein does the statute state that it is the sole remedy. The Claims Against the State procedure set forth in 47:1481 allows any person who has a claim against the State of Louisiana for money erroneously paid into the State Treasury, or for any other claim to present such claim to the Board of Tax Appeals. It is easily apparent that a tax voluntarily paid pursuant to an unconstitutional statute is money erroneously paid into the State Treasury by the taxpayer. A taxpayer has erred when he has paid taxes pursuant to an unconstitutional statute because he failed to notice the statute was unconstitutional and therefore paid taxes which were not legally due. At the very least, such a situation falls under the term any other claim. LA.REV.STAT. 47:1481 et seq. provides a proper vehicle for the recovery of taxes paid without protest pursuant to an unconstitutional statute. [19] Additionally, any plaintiff whose rights are actually in controversy, i.e. not prescribed under 47:1481, may seek a judgment declaring the tax statute unconstitutional, with such judgment to be used in plaintiff's case before the Board of Tax Appeals.