Court Opinion

ID: 9536858
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:08:19.273839+00
Date Added: 2024-06-11T14:55:25.422313
License: Public Domain

ZIMMERMAN, Chief Justice:
Harper Investments, Inc., Harper Sand and Gravel, Inc., Harper Excavating, Inc., and Harper Contracting, Inc. (collectively referred to as “Harper Companies”), appeal from a decision of the Utah State Tax Commission (“Commission”) that assessed them $582,273.93 in sales taxes arising from the sale of sand and gravel. The Harper Companies argue that this assessment was in error because it did not arise from actual sales, but from an erroneous in-house accounting treatment of the transactions in question. We agree and reverse.
The material facts are not in dispute. Harper Excavating, Inc., operated a business involving excavating, cleaning, hauling, and distributing sand, gravel, and other materials. In 1986, for reasons not relevant here, Harper Excavating restructured by transferring its assets to three new wholly owned subsidiaries — Harper Sand and Gravel, Harper Investments,1 and Harper Contracting. Harper Excavating, the new parent corporation, later changed its name to Harper Investments.
These corporate changes required a restructuring of the manner in which the new group of companies accounted for transactions with third parties and among themselves. Controller Steven Goddard, who was solely responsible for setting up the new accounting procedures, distributed on the books the various assets owned by the former Harper Excavating to the three subsidiaries. Goddard thought he was distributing these assets.in accordance with underlying legal and physical realities. However, he erred. He accounted one of those assets, a group of sand and gravel sales agreements, as property of Harper Sand and Gravel. In fact, the sales contracts had already been assigned to Harper Contracting. As a result of this error, every time material covered by those contracts was delivered by Harper Contracting, the books reflected a sale from Harper Sand and Gravel to Harper Contracting. The Harper Companies did not discover Goddard’s error until the Commission reviewed the companies’ books in 1988 and assessed liability for unpaid taxes on “intra-unit” sales.
The Commission gave notice of the tax deficiencies on September 28, 1990. On October 26, 1990, the Harper Companies petitioned for redetermination, and a hearing was held on July 30, 1991. On January 9, 1.992, the Commission issued findings of fact, conclusions of law, and a final decision affirming the original sales tax assessment. Although the decision affected each individual company, a copy was mailed only to Harper Investments in care of its counsel, Van Cott, Bagley, Cornwall and McCarthy. None of the four individual petitioners or their counsel received a copy of the decision until February 20th, forty-two days after it was issued. As a result, the twenty-day period provided in the Code for filing a petition for reconsideration had expired. See Utah Code Ann. § 63-46b-13(l)(a). The Harper Companies then sought an extension *815of time within which to file their petition for reconsideration. That extension was granted under authority of section 63 — 46b—1(9), and the Harper Companies filed a petition for reconsideration on May 4, 1992. The Commission, however, denied the petition in a final order dated June 3, 1992. The Harper Companies filed a petition for review of agency action with this court on July 1, 1992, claiming that the Commission erred in assessing sales taxes that were based solely on a good faith error in an accounting procedure.
We first address the standard of review. The Commission’s decision raises questions of law. “We grant the Commission no deference concerning its conclusions of law, applying a correetion-of-error standard, unless there is an explicit grant of discretion contained in a statute at issue before the appellate court.” Utah Code Ann. § 59-1-610(l)(b) (Supp.1993); see also Board of Equalization v. State Tax Comm’n ex rel. Benchmark, Inc., 864 P.2d 882, 884 (1993) (holding that section 59-1-610 applies to actions commenced before its effective date). The statutes at issue do not grant the Commission any discretion in their interpretation. See 49th Street Galleria v. Tax Comm’n, 860 P.2d 996, 999 (Utah Ct.App.1993) (“[Section 59-12-103[ ] does not contain language which would even arguably constitute an explicit grant of discretion to the Tax Commission-”). Therefore, the no-deference standard applies.
The Commission asserts that the Harper Companies missed the statutory deadline for obtaining judicial review under section 63^46b-14. That provision requires a request for review to be made within thirty days from the date the agency decision is issued or deemed to have been issued. Utah Code Ann. § 63-46b-14(3)(a). Because the final decision was dated January 9,1992, and review was not sought until July 1, 1992, the Commission claims that section 63-46b-14 bars our consideration of the matter. The Commission further argues that it did not extend the time limit for seeking judicial review when it granted an extension of time for filing a petition for reconsideration. For this argument, the Commission relies on section 63-46b-l(9), which provides, “Nothing in this chapter may be interpreted to restrict a presiding officer, for good cause shown, from lengthening or shortening any time period prescribed in this chapter, except those time periods established for judicial review.” Utah Code Ann. § 63-46b-l(9).
We do not agree with the Commission’s position. The Commission did not purport to extend the thirty-day limit for seeking judicial review. Rather, it extended the time for petitioning for reconsideration. The Code allows a petitioner to seek reconsideration of an agency decision within twenty days or to seek immediate judicial review within thirty days of a final decision and forego any further agency action. Utah Code Ann. §§ 63-46b-13(l)(a)-(b), —14(3)(a). In this case, the Harper Companies sought a “good cause” extension of time to seek reconsideration, which the Commission granted. This extension operated to extend the date on which the agency decision became “final” by tolling the thirty-day period for seeking judicial review. Because the Commission did not deny the petition for reconsideration until June 3, 1992, we conclude that the July 1st filing for judicial review was timely.
In the alternative, the Commission argues that the Harper Companies were tardy in seeking judicial review because the Code provides that a petition for reconsideration is “deemed denied” if no action is taken by the agency within twenty days of the petition. See Utah Code Ann. § 63-46b-13(3)(b). The Commission claims that the thirty-day period for seeking judicial review began to run on May 25, 1992, twenty days from the day on which the Harper Companies petitioned for reconsideration. As a result, the Commission argues, the July 1st filing for judicial review was past the thirty-day period.
This issue was specifically addressed in 49th Street Galleria, 860 P.2d at 998-99. There, the court of appeals held that a petition for judicial review was timely filed because the agency involved had issued an order denying reconsideration after the twenty-day “deemed denied” period. Id. at 999. The court noted that section 63-46b-14(3)(a) allows a party to file a petition for judicial *816review within thirty days after the date on which an order was issued or was considered to have been issued. Id. The court found that if an agency chooses to issue an order denying a petition for reconsideration after the twenty-day presumptive denial period, the actual date of issuance would mark the beginning of the thirty-day time period. Id.
We agree with the court of appeals’ interpretation of section 63-46b-14(3)(a). When the Harper Companies chose not to file their petition for review within the twenty-day period, they assumed the risk that there would be no order from the Commission. They would have missed the deadline if the Commission had never issued its final decision of June 3, 1992. However, because the Commission chose to consider the petition for reconsideration and to act on it by issuing an order, the period for seeking review did not begin to run until the date of that final opinion. As a result, once the order was issued, the Harper Companies had an additional thirty days to file, and they did so.
We now turn to the Harper Companies’ argument that the Commission wrongly assessed a sales tax on transactions that were reflected in the accounting records but did not have any legal reality. The Harper Companies argue that the underlying facts of ownership should govern, not the manner in which the transactions were accounted for, at least when, as here, the accounting was a result of an indisputably good faith error by the accountant. We agree. As the United States Supreme Court has observed, accounting records “are no more than evidential, being neither indispensable nor conclusive. The decision must rest upon the actual facts.” Doyle v. Mitchell Bros. Co., 247 U.S. 179, 187, 38 S.Ct. 467, 470, 62 L.Ed. 1054 (1918). In apparent recognition of this principle, even the Commission’s final decision found that the sand and gravel sales contracts had been “mistakenly assigned” to Harper Sand and Gravel. Therefore, there is no dispute on the record that the accounting records were prepared in good faith but reflected a transaction that did not exist. We therefore hold that the Commission cannot assess a sales tax on those nonexistent transactions.
Reversed.
STEWART, Associate C.J., and DURHAM, J., and RUSSELL W. BENCH, Court of Appeals Judge, concur.
HALL, J., does not participate herein; BENCH, Court of Appeals Judge, sat.

. Harper Investments later changed its name to Harper Excavating.