Court Opinion

ID: 9789898
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:43:38.503329+00
Date Added: 2024-06-11T07:37:25.018105
License: Public Domain

SHEPARD, Justice,
concurring in part and dissenting in part.
I concur in the majority opinion, except that portion which imposes interest in the amount of $105,495 on the tax liability of $47,935. As I view the record, there is no question but that Union Pacific filed its 1942 tax return in a timely manner. No proceedings were undertaken by the State to determine or assess a deficiency on that return. For some period of time and until 1977, there were proceedings to resolve the federal income tax question. In 1977, the taxpayer finally prevailed in that federal proceeding. Thereafter, the taxpayer, as required by statute, notified the Idaho State Tax Commission of the final determination of federal taxes. Thereafter, and only upon the taxpayer’s claim of refund from the State, did the State Tax Commission determine a deficiency as to the taxpayer’s 1942 tax return.
Hence, it is my belief that the taxpayer has been blameless in this matter, at least until the date that the Tax Commission, on March 6,1978, issued its notice of deficiency determination.
The majority opinion, utilizing a narrow statutory interpretation approach, overturns the decision of the district court that as a matter of equity, interest on the deficiency assessment should not be imposed. That decision of the district judge is well reasoned, is supported by authority, and, in my view, should be affirmed. Where, as here, suit was instituted for a refund of taxes, the action is governed by equitable principles. Goodwill Industries v. Los Angeles County, 117 Cal.App.2d 19, 254 P.2d 877 (1953). See also Burhans v. County of Kern, 170 Cal.App.2d 218, 338 P.2d 546 (1959). As was stated in a somewhat similar case, Dravo Contracting Co. v. James, 114 F.2d 242, 247-248 (4th Cir.1940), cert. denied, 312 U.S. 678, 61 S.Ct. 450, 85 L.Ed. 1117 (1941):
“The hearing below was an attempt to make the apportionment; and as heretofore indicated an incorrect basis of apportionment was used. In the meantime no action has been taken by the state officials toward assessing the tax on the correct basis, and the amount of the liability of the taxpayer has not been determined. Until the amount of the tax is fixed, so that the taxpayer may know with certainty what amount he is required to pay, we think it would be inequitable to ■charge him with interest. Particularly is this true in view of the fact that taxpayer has been furnished no opportunity under the law of paying the tax under protest and suing for the recovery of the illegal portion.”
*477In the instant case, the taxpayer reported income and paid tax for the year 1942. Such return was not challenged until 1978 and until that time the taxpayer had no opportunity to pay any assessed additional tax. Considering the enormous lapse of time and the inaction of the Tax Commission, the strict statutory construction approach of the majority brings about a highly inequitable result.
I would affirm the decision of the district court in its entirety.