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A-Fab Engineering v. Property Tax Division of Utah State Tax Commission

Court of Appeals of Utah

May 23, 2019

A-Fab Engineering, Appellant,
v.
Property Tax Division of the Utah State Tax Commission, Appellee.

          Second District Court, Farmington Department The Honorable David M. Connors No. 170700397

          Lynn Kingston, Attorney for Appellant

          Sean D. Reyes, Erin T. Middleton, and Chauntel M. Lopez, Attorneys for Appellee

          Judge David N. Mortensen authored this Opinion, in which Judges Jill M. Pohlman and Diana Hagen concurred.

          MORTENSEN, JUDGE.

         ¶1 "[I]n this world nothing can be said to be certain, except death and taxes."[1] Nearly as certain is the procedural bar attendant to court challenges when a party has failed to exhaust administrative remedies, resulting in an absence of jurisdiction. A-Fab Engineering (A-Fab) challenges two property tax assessments levied in 2012 and 2013 by the Utah State Tax Commission (Commission). The Commission dismissed A-Fab's administrative appeal as untimely. A-Fab then petitioned the district court for review of the Commission's decision. The district court summarily dismissed the petition because (1) A-Fab did not timely exhaust its administrative remedies; and therefore, the court lacked subject matter jurisdiction; and (2) A-Fab was not entitled to equitable tolling of the deadline to file an administrative appeal. We affirm.

         BACKGROUND[2]

         The Property

         ¶2 A-Fab is a Utah corporation that fabricates, refurbishes, and sells equipment. In or before 2007, A-Fab acquired and rebuilt a "long-wall mining system" (Property). In September 2007, A-Fab sold the Property to C.W. Mining (CW). The sale was financed through a capital lease. In January 2008, however, CW involuntarily entered into bankruptcy, and the bankruptcy court asserted jurisdiction over the Property.

         ¶3 In December 2008, A-Fab filed a proof of claim in the bankruptcy proceeding, asserting that it owned the Property, and sought "substantial amounts for lease rejection damages." The trustee of the bankruptcy estate responded by filing a complaint against A-Fab that included, among eleven claims for relief, a claim of ownership over the Property. In 2010, while the Property dispute was still pending, the bankruptcy court ordered that A-Fab could take possession of the Property, but that the Property would still be subject to the bankruptcy trustee's authority before it could be sold or transferred in any way. A-Fab took possession of the Property shortly thereafter.

         ¶4 A-Fab regained full ownership rights to the Property in 2014 when it entered into a settlement agreement with the bankruptcy estate. Under the terms of the settlement, the bankruptcy estate relinquished any and all claims to the Property in return for a $225, 000 payment from A-Fab. The bankruptcy court approved the settlement agreement in November 2014.[3] In the motion to approve the settlement agreement, the bankruptcy trustee noted that "A-Fab asserted that it owned the [Property] and was leasing it to [CW] under a purported September 1, 2007 lease" and "A-Fab has asserted that it incurred substantial removal, storage and preservation costs, including the payment of personal property taxes, in connection with . . . the [Property]." (Emphasis added.)

         The Property Tax Assessments

         ¶5 As required by Utah Code sections 59-2-201 and 59-2-202(1), A-Fab completed and filed its 2012 annual return for assessment of personal property (Return) with the Commission on March 1, 2012. A-Fab's 2012 Return listed the Property as being "subject to assessment by the State Tax Commission."[4]Based on the 2012 Return, the Commission prepared a notice of assessment and mailed it-to the address provided by A-Fab on its 2012 Return-on May 1, 2012.

         ¶6 On February 27, 2013, A-Fab filed its 2013 Return and again listed the Property as being "subject to Assessment by the State Tax Commission." A-Fab attached to the 2013 Return a letter requesting that the Commission reconsider the value of the Property. In this letter, A-Fab included an independent appraisal of the Property and "urge[d] the Tax Commission to reconsider its 2013 assessment of the value of [the Property]." The Commission prepared a notice of assessment and mailed it on May 1, 2013, to the address provided by A-Fab on the 2013 Return. A-Fab did not appeal or pay the 2012 and 2013 assessments (Assessments) within the prescribed tax years.

         ¶7 A-Fab appealed the Assessments in December 2016. Earlier that year, A-Fab had "inquired of Carbon County whether there were any taxes owed [on the Property] before 2014"-when A-Fab's ownership rights to the Property were restored-and Carbon County responded that there were not. On June 15, 2016, however, Carbon County mailed a delinquent tax notice, based on the Assessments, to the address provided by A-Fab on its Returns. A-Fab initially raised a challenge to the delinquent tax ...


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