Opinion
C.A. No. 06C-02-158-FSS.
Submitted: April 9, 2007.
Decided: July 31, 2007.
Upon Plaintiff's Motion for Summary Judgment — DENIED.
MEMORANDUM OPINION
This is Plaintiff's Motion for Summary Judgment in a tax refund case. Plaintiff bought real estate in Wilmington after the seller already paid the property taxes for the entire year. Now, because Plaintiff is a tax exempt organization, it wants a refund for the taxes, which seller paid, covering the months that Plaintiff owned the property.
I.
The facts are undisputed. The Wilmington Parking Authority is a tax exempt organization. On September 19, 2005, WPA bought land, located at 1007 Washington Street, in Wilmington, Delaware, from WSFS REIT, Inc. The property had already been assessed for that tax year, and WSFS had already paid real property taxes for the entire tax year to New Castle County and the City of Wilmington. As part of the real estate settlement, as any other buyer would have done, WPA reimbursed WSFS a prorated portion of the property taxes that WSFS paid for the property. The prorated portion was from when WPA bought the property, September 19, 2005, to the end of the fiscal tax year, June 30, 2006. The prorated taxes were $35,610.42 for NCC, and $30,410.35 for the city.
WPA contacted both NCC and the city requesting refunds because WPA is statutorily exempt from property taxes. The city refunded the prorated city taxes to WPA. NCC refused. On February 16, 2006, WPA sued for a refund. Then on January 10, 2007, WPA filed this motion for summary judgment.
II.
As suggested above, WPA argues that, because it is a tax exempt organization, the property was exempt from taxes starting September 19, 2005, when WPA bought it. Therefore, NCC cannot keep any taxes paid on the property after WPA acquired it.
NCC argues that "the record owner of a property becomes liable on July 1 to pay in their entirety the taxes levied for the tax year that begins on that date." Therefore, "WSFS was liable for payment of the entire year's taxes from the time they were levied." And "once a parcel's property taxes are assessed for the year, it remains on the roll for the year unless it meets the criteria in [9 Del. C.] Section 8338," which is inapplicable in this case.
III.
The simple answer to WPA's argument is that WPA did not pay the tax. The seller paid the tax and WPA, as part of its settlement, merely reimbursed the seller for the money seller paid to NCC. The payment was part of WPA's deal with the seller, a deal to which NCC was not a party.
Furthermore, although WPA "shall not be required to pay any taxes or assessments upon any property acquired or used by them. . .," most jurisdictions have established that the assessment date determines whether the property will be exempt for that entire tax year. Therefore, "if property is taxable on the date of the assessment, the tax for the entire year must be paid even if the property becomes tax-exempt during the year." And, "even if during the year the property is transferred to an owner in whose hands it is exempt, the exemption is not retroactive, but on the contrary does not commence until the next following date of assessment." Although no Delaware case law has dealt with this issue, the majority of jurisdictions, not having a statute to the contrary, follow this principle.
22 Del. C. § 514.
See, e.g., Appeal of Title Services, Inc., 252 A.2d 585 (Pa. 1969); N.J. Turnpike Auth. v. Monroe Tp., 2 N.J.Tax 371 (N.J.Tax 1981); County of Ramsey v. Lincoln Fort Road Housing Ltd. Partnership, 494 N.W.2d 276, 281 (Minn. 1992.).
Appeal of Title Services, Inc., 252 A.2d at 586. See also Majob Realty Corp. v. City of Hoboken, 55 A.2d 163 (N.J.Dept.Tax 1947); New Orleans Bank Trust Co. v. City of New Orleans, 147 So. 42, 45 (La. 1933).
In re Appeal of Sports Exhibition Authority of Allegheny, 789 A.2d 316, 318-19 (Pa. 2001) (citing William G. Halkett Co. v. City of Philadelphia, 175 A. 299 (Pa. 1934)). See also Majob Realty, 55 A.2d at 163; New Orleans Bank, 147 So. at 45.
WPA cites cases and statutes that are inapplicable. For example, 14 Del. C. § 1917(c)(2)b grants tax credits to citizens over 65 years old. And, National Railroad Passenger Corp. v. New Castle County concerns a federal law exempting only Amtrak from taxation. Here, there is no similar law requiring a refund. If the General Assembly cares to, as a policy matter, it can enact a law directing taxing authorities to make refunds in situations like this. Meanwhile, the seller paid this money to NCC, and NCC does not have to give it to WPA.
633 F.Supp. 354 (D.Del. 1986).
For the foregoing reasons, Plaintiff's Motion for Summary Judgment is DENIED. The parties have stipulated to all material facts. NCC has leave to file a cross-motion for summary judgment, nunc pro tunc.