Cass Cnty. v. Dir. of Revenue

550 S.W.3d 70

CASS COUNTY, Missouri, Appellant,

v.DIRECTOR OF REVENUE, Respondent,City of Lee’s Summit, Missouri, Intervenor-Respondent.

No. SC 96731

Supreme Court of Missouri, en banc.

Opinion issued May 22, 2018

Cass County was represented by Michael G. Berry, Marshall V. Wilson and Theodore L. Lynch of Berry Wilson LLC in Jefferson City, (573) 638-7272.

The director was represented by State Solicitor D. John Sauer, Deputy Solicitor Julie Marie Blake, Deputy Attorney General Michael Martinich-Sauter and Spencer A. Martin of the attorney general’s office in Jefferson City, (573) 751-3321.

Lee’s Summit was represented by Zachary T. Cartwright, Brian W. Head and Jacqueline S. McCormick of the city’s offices, (816) 969-1400.s

W. Brent Powell, Judge

Cass County seeks review of an administrative hearing commission decision allowing the director of revenue to redistribute tax revenue owed to the city of Lee’s Summit but erroneously paid to Cass County. Cass County argues the commission’s decision is not authorized by law because this is a refund matter and no application for a refund was filed. Because this is not a refund matter, Cass County fails to demonstrate the commission’s decision is not authorized by law, and the commission’s decision is affirmed.

I. Factual and Procedural History

The city of Lee’s Summit is split between two counties, Cass County and Jackson County. Both Lee’s Summit and Cass County impose a sales tax on utility service for domestic use, as allowed by § 144.032.¹ Jackson County does not impose such a tax. Consequently, sales tax revenue from utility service collected from Lee’s Summit residents in Cass County is distributed by the department of revenue to Lee’s Summit and Cass County, while sales tax revenue from utility service collected from Lee’s Summit residents in Jackson County is payable only to Lee’s Summit.

Kansas City Power & Light ("KCP&L") sold electricity and gas services to Lee’s Summit residents located in both Cass and Jackson counties. These residents paid sales taxes to KCP&L and, in turn, KCP&L remitted the taxes along with monthly tax returns to the department of revenue. KCP&L’s tax returns from December 2008 through November 2011 mistakenly coded all sales taxes received from Lee’s Summit residents as Lee’s Summit/Cass County and failed to code any sales taxes received as Lee’s Summit/Jackson County. As a result, revenue from sales taxes received for utility services from Lee’s Summit residents in Jackson County during that period was mistakenly distributed to Lee’s Summit and Cass County rather than paid only to Lee’s Summit.

The director of revenue discovered this mistake and notified Cass County that, because of KCP&L’s erroneous tax returns, Cass County had been paid approximately $966,692 in tax revenue that should have been paid to Lee’s Summit. The director further informed Cass County this erroneous distribution of tax revenue would be corrected over a three-year period via monthly amended tax returns filed by KCP&L. Based on these amended tax returns, the director would withhold a certain amount of monthly sales tax revenue from KCP&L utility service normally owed to Cass County and distribute this revenue to Lee’s Summit. This would occur each month until the total amount of tax revenue erroneously distributed to Cass County was redistributed to Lee’s Summit.

Cass County responded by seeking a writ prohibiting the director from withholding the tax revenue and redistributing it to Lee’s Summit The Cole County circuit court granted the requested writ relief, and the director appealed. The court of appeals reversed and directed the circuit court to quash its writ of prohibition, holding a writ was inappropriate because Cass County had an adequate remedy by appeal to the administrative hearing commission. State ex rel. Cass Cty. Mo. v. Mollenkamp , 481 S.W.3d 26, 31 (Mo. App. 2015).

In accordance with the court of appeals' decision, Cass County appealed to the commission, arguing the director lacked legal authority to withhold tax revenue owed to Cass County and redistribute it to Lee’s Summit. The commission disagreed, and Cass County filed a petition for review in this Court. This Court has jurisdiction pursuant to article V, § 10 of the Missouri Constitution.²

II. Cass County’s Argument

"This Court will uphold the Commission’s decision when it is authorized by law and supported by competent and substantial evidence upon the record as a whole unless clearly contrary to the reasonable expectations of the General Assembly." New Garden Rest., Inc. v. Dir. of Revenue , 471 S.W.3d 314, 317 (Mo. banc 2015) (internal quotations omitted); see also § 621.193. Cass County argues the commission’s decision is not authorized by law in that the director has no legal authority to withhold tax revenue owed to Cass County and redistribute the revenue to Lee’s Summit. According to Cass County, the only remedy to correct the improper distribution of tax revenue required KCP&L to file a refund with the department of revenue and distribute the refunded tax revenue to Lee’s Summit. Cass County argues, because KCP&L did not seek a refund, the $966,692 in tax revenue improperly distributed to Cass County cannot be redistributed to Lee’s Summit.³

Cass County argues the director has only two options pursuant to § 67.525-pay the tax revenue to Cass County; or authorize a refund. Because the director is not paying the tax revenue to Cass County, Cass County concludes a refund is the only option. This argument ignores § 67.525, which specifically applies to "county sales taxes collected by the director of revenue under sections 67.500 to 67.545 ." Section 67.525.1 (emphasis added). This case concerns taxes collected pursuant to § 144.032, not §§ 67.500 to 67.545.⁴

Nevertheless, Cass County argues this is a refund matter and, as such, KCP&L is required to apply for a refund pursuant to § 144.100.4, which it has not done. Cass County specifically relies on § 144.190.2 to conclude this is a refund matter. Section 144.190.2 states in relevant part:

If any tax, penalty or interest has been paid more than once, or has been erroneously or illegally collected, or has been erroneously or illegally computed, such sum shall be credited on any taxes then due from the person legally obligated to remit the tax pursuant to sections 144.010 to 144.525, and the balance, with interest as determined by section 32.065, shall be refunded to the person legally obligated to remit the tax....

No party disputes KCP&L remitted the correct amount of taxes to the department of revenue. In other words, there is no claim the department erroneously or illegally collected or computed the amount of taxes, nor is there any claim KCP&L is owed any credit or balance based on overpayment of taxes. The issue is not with the amount of taxes computed and collected from KCP&L—which would be the subject of a refund—but rather the amount of revenue distributed from such taxes to Lee’s Summit and Cass County. Simply put, this is not a refund matter contemplated by § 144.190.2.

Therefore, Cass County’s refund argument is unavailing, and it does not otherwise refute the commission’s basis for its decision, namely § 32.087.6 (providing "the director of revenue shall perform all functions incident to the administration, collection, enforcement, and operation of [any local sales tax]") and article IV, § 15 of the Missouri Constitution (providing all nonstate funds "shall be promptly credited to the fund provided by law for that type of money"). Accordingly, Cass County has failed to demonstrate the commission’s decision is not authorized by law. See New Garden Rest. , 471 S.W.3d at 317 ; § 621.193.

III. The Director’s Arguments

The director also challenges the commission’s decision, arguing the commission was not authorized to review the director’s actions and, contrary to the court of appeals' decision in Cass County , the proper legal remedy for Cass County is a writ rather than an appeal to the commission.⁵ The director argues this is not a matter the commission is authorized to review and attempts to frame the argument in terms of the commission lacking "subject matter jurisdiction" to hear Cass County’s appeal. However, the commission is "an adjunct executive agency," not a court vested with judicial power. State Tax Comm'n v. Admin. Hearing Comm'n , 641 S.W.2d 69, 75-76 (Mo. banc 1982) ; see also Mo. Const. article V, § 1. "[A]n administrative body or even a quasi-judicial body is not and cannot be a court in a Constitutional sense." Id. at 75 (internal quotations omitted). The commission is not constitutionally vested with subject matter jurisdiction, as the courts of this state are; rather, it is merely conferred statutory authority to take certain actions. This authority statutorily granted to the commission should not be equated to the subject matter jurisdiction constitutionally granted to courts. Cf. J.C.W. ex rel. Webb v. Wyciskalla , 275 S.W.3d 249, 254 (Mo. banc 2009) ; see also McCracken v. Wal-Mart Stores E. , 298 S.W.3d 473, 478 (Mo. banc 2009) (noting "sloppy references" to "subject matter jurisdiction" lying with an administrative body rather than a court). The director’s attack on the commission’s decision is not jurisdictional in nature but is instead an argument that its decision was not "authorized by law." See § 621.193.

A party seeking to review a decision by the commission may certainly argue the decision was not authorized by law. See id. But the director did not file a petition or cross-petition for review of the commission’s decision. Therefore, the director is merely a respondent in the matter before this Court. While a respondent is entitled to advance any argument in support of the decision being reviewed, Rouner v. Wise , 446 S.W.3d 242, 249 n.5 (Mo. banc 2014), that entitlement does not extend to separate arguments challenging the decision.

"The general rule of appellate procedure is that, in the absence of a...