Opinion
No. 53138-7-I
Filed: February 28, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 02-2-24600-1. Judgment or order under review. Date filed: 09/26/2003. Judge signing: Hon. Charles W. Mertel.
Counsel for Appellant(s), Carlton W. M. Seu, Seattle City Attorneys Office, PO Box 94769, Seattle, WA 98124-4769.
Cynthia Unwin Seu, Attorney at Law, 6216 Grandridge Dr SE, Port Orchard, WA 98367.
Counsel for Respondent(s), Scott M. Edwards, Perkins Coie LLP, 1201 3rd Ave Ste 4800, Seattle, WA 98101-3099.
Corporate Express Office Products, Inc., sells products in Washington and maintains a regional warehouse and its main Washington sales office in Renton. During the times relevant to this lawsuit, Corporate Express also maintained a Seattle location that was regularly used by several of its sales representatives to communicate electronically with customers and with the Renton office. This lawsuit arose after the City audited Corporate Express's business and operations (B O) tax returns for the period January 1997 through June 2001, and assessed more than $226,000 in additional tax and interest over what Corporate Express had paid initially. Corporate Express paid the additional amount and then brought this lawsuit seeking a full refund. At issue is which of two subsections of former Seattle Municipal Code (SMC) sec. 5.44.422 governed Seattle's assessment of taxes for the period covered by the tax audit. The issue turns on the nature of the facility in Seattle, i.e., whether it was an "office, store or other place of business" within the City, within the meaning of the former code section and an accompanying business tax regulation defining "office" for revenue allocation purposes. If the telecommuting facility was not an "office within the city" as defined by the allocation rules, Seattle could assess a larger tax under SMC sec. 5.44.422 A, because in that event none of the taxpayer's gross sales having a nexus with Seattle could be allocated to the Renton facility for purposes of calculating the tax owed to Seattle.
But if the facility was an "office within the city" for allocation purposes, the taxpayer could allocate a portion of its revenues to the Renton office under SMC sec. 5.44.422 C.
The trial court granted summary judgment to Corporate Express, thereby ruling as a matter of law that the taxpayer's telecommuting facility was a place of making sales using an office within the city for revenue allocation purposes. The court ordered the City to refund the additional tax that Corporate Express had paid, and entered a final judgment in favor of Corporate Express. The City appeals, arguing that the telecommuting facility was not an "office within the city" under former SMC sec. 5.44.422 C because the taxpayer did not maintain "another equivalent facility elsewhere in Washington," so that it could not properly allocate a portion of its revenues to such other facility for purposes of calculating the tax.
The City also argues that even if the trial court properly construed the applicable code subsection and business tax regulation, it erred by denying the City's post-judgment motion seeking to clarify that the summary judgment resolved only the question of which subsection of the former code provision applied, and that the taxpayer had yet to meet the remainder of its burden under current SMC sec. 5.55.140 B — that is, to establish the correct amount of the tax.
We affirm the trial court's summary judgment ruling that subsection C of the former code section applies to the audit period in question. But we reverse the order denying the City's request to clarify that the amount of tax actually due had yet to be determined, and remand for a determination of the amount of tax actually due.
FACTS
Corporate Express Office Products, Inc., a Colorado-based supplier of office products, sells products in Washington and maintains a warehouse and sales office in Renton. Corporate Express also maintains a Seattle facility for the convenience of several sales representatives who regularly work from there instead of commuting through heavy traffic to the Renton office every day. When a customer telephones one of these sales representatives by dialing the Renton telephone number shown on the representative's business card, the call rings directly through to the representative's desk at the Seattle facility. The sales representatives can also communicate with customers and co-workers by way of telephone, fax, and computer, directly from the Seattle facility. The Seattle facility contains eight workstations, a conference room, five computer terminals, file cabinets, a photocopier, a fax machine, and a water cooler. From January 1, 1997, through June 30, 2001, four or five sales representatives regularly used the Seattle location to place and receive telephone calls, check voice mail, send and receive e-mail, and access the company computer system.
The majority of orders from all of Corporate Express's customers in Washington were transmitted from the customer directly to Renton — bypassing sales representatives altogether — although sales representatives could and did place orders for customers using the Seattle facility. Most orders they transmitted to Renton from the Seattle facility were sent by fax rather than by computer. All Washington orders, regardless of origin, were approved and accepted by the main office in Renton, not by the Seattle office. Decisions regarding the extension of credit were made at the Renton facility. Most products delivered in Washington were filled from the inventory in Renton. All payments were made either to the Renton office or to a lock box in Chicago, Illinois. Corporate Express asserted that the majority of its sales in Western Washington were attributable to the Renton office, for purposes of revenue allocation under former SMC 5.44.422 C.
The Seattle facility is located at 306 Westlake Avenue North, Suite 205, the same street address as shown on Corporate Express's Seattle business license. Although there is a mailbox on the premises marked with Corporate Express's name, customers are given only the Renton mailing address. And although there is a sign at the building entrance identifying Corporate Express as a tenant, sales representatives do not see customers at the Seattle facility — which is quite austere. Personal visits with customers served by the telecommuting sales representatives generally take place at the customers' places of business.
In addition to serving Corporate Express's Seattle customers, telecommuting sales representatives also serve customers that are located outside Seattle.
The telecommuting sales representatives all report to supervisors located in Renton. When company meetings or training sessions are held, they are held in Renton, and the telecommuting sales representatives must attend in person.
Seattle's Department of Executive Administration, previously known as the Executive Services Department, is the agency that administers the City's tax ordinances. The Department audited Corporate Express's B O tax returns for the period January 1997 through June 2001. Before commencing the audit, tax auditor Rosalie Morgan sent a letter to Corporate Express informing the company of the audit, requesting access to various records, and requesting information about the Seattle business location. Prior to the audit, Corporate Express had reported $7,631,843.47 in gross receipts on its business activities in Seattle and had paid $16,408.45 of Seattle B O tax for the period covered by the audit. The auditor concluded that four of the sales representatives who consistently used the Seattle facility had generated $10,405,491 in Seattle sales, and that other Corporate Express employees had generated $80,814,430 in Seattle sales, for a total of $91,219,920 in gross receipts that the auditor believed should be attributed to business in Seattle. Based on this, the City issued an assessment for additional taxes due of $179,714.38 plus interest of $47,071.80, for a total assessment of $226,711.18. These calculations assumed that Corporate Express did not maintain an office, store or other business facility within the City, and thus that the tax should be assessed in accordance with former SMC sec. 5.44.422 A.
Corporate Express timely paid the assessment as required by ordinance and then, as permitted by current SMC sec. 5.55.140, filed this lawsuit seeking a refund of the entire amount. Corporate Express claimed that its tax should have been calculated under former SMC sec. 45.44.422 C, which expressly permitted taxpayers who maintained separate offices in Washington, one inside and one outside the City, to allocate the gross revenues from sales to the office "where the predominant selling activity occurs." Corporate Express also asserted that the City improperly assessed the additional tax "based solely on the place of delivery," in violation of former SMC sec. 5.44.400.
The City answered that the Seattle facility was not an "office, store, or other outlet" within the meaning of former SMC sec. 5.44.422 C or Seattle Business Tax Rule 5.44.194(d) sufficient to allow for allocation of gross proceeds between the Renton and Seattle facilities; thus the tax was properly calculated under subsection .422 A rather than .422 C. And by way of affirmative defense, the City alleged that even if the Seattle facility were an "office, store, or other outlet" within the City, former SMC sec. 5.44.422 C required Corporate Express to show which sales should be allocated to which office, and that the company had failed to do this. The City asserted that since Corporate Express had not shown that it had paid "an amount of tax, penalty, and interest in excess of that due" as required by former SMC sec. 5.44.100, it was not entitled to a refund. By way of further affirmative defense, the City also alleged that under former SMC sec. 5.44.030, Corporate Express would owe even more tax than the City had assessed as a result of the audit, for contracts executed inside Seattle with purchasers located outside the City — sales that the City had not included in the taxpayer's gross revenues for purposes of the audit.
Both parties moved for summary judgment, Corporate Express arguing that the assessment was invalid, and the City asserting that it had used the proper tax provision and, alternatively, even if the City used the wrong code section, Corporate Express had failed to show which sales should be allocated to Seattle and which to Renton. The City also argued that the plain meaning of former SMC sec. 5.44.422 C required that the two offices at issue be "equivalent facilities" and that the small Seattle rental space and the huge Renton location, which contained the sales office, warehouse, accounting facilities, and management office, were not equivalent to each other. Thus, the City argued, sales to Seattle customers could not be allocated based on where the predominant selling activity occurred, in any event; thus subsection .422 A was the only applicable subsection.
The trial court granted summary judgment to Corporate Express for the additional tax paid, together with prejudgment interest and $125 in statutory attorney fees, for a total money judgment of $259,456.88. In an oral ruling, the court explained that the Seattle facility "is an office in Seattle in the plain sense of the word," and that former SMC sec. 5.44.422 C required that the tax assessment be based on where each predominate sales activity occurred. The court additionally concluded that the City had assessed the tax based solely on deliveries into Seattle, in violation of former SMC sec. 5.44.400. Although the City asserted that Corporate Express had the burden of proving the correct tax under current SMC sec. 5.55.140, the court made no finding as to where each predominant sales activity occurred, stating that it could not do so on the record then before it, and inviting the parties to schedule a subsequent hearing if they could not reach agreement. Nevertheless, the summary judgment order, which the court signed at the conclusion of argument on the cross-motions for summary judgment, appears on its face to be a final judgment.
The City promptly moved for clarification, asking the court to amend the summary judgment to clarify that it was not yet a final order in that Corporate Express had yet to meet its burden of showing the amount of tax it actually owed. The court ultimately denied this motion; thus, the order on summary judgment was in fact the final judgment. The City timely appealed both the grant of summary judgment and the denial of its motion asking the court to clarify and amend the judgment to preserve the allocation issues for later disposition.
DISCUSSION I. Appeal of Summary Judgment; Standard of Review
Corporate Express first asserts that the City's failure to expressly assign error to the trial court's peripheral determination, by way of oral ruling during the summary judgment hearing, that the City's tax assessment was based solely on deliveries into Seattle in violation of former SMC sec. 5.44.400, prevents the City from appealing this portion of the summary judgment. Corporate Express also asserts that this failure renders the entire appeal moot because this court may affirm the trial court solely on this basis, without considering whether the trial court may otherwise have erred. We reject this argument.
This court reviews summary judgments de novo, engaging in the same inquiry as the trial court and viewing the facts and inferences in a light most favorable to the non-moving party. Trimble v. Washington State Univ., 140 Wn.2d 88, 92-93, 993 P.2d 259 (2000) (citations omitted). Summary judgment is only appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Trimble, 140 Wn.2d at 93 (citing Clements v. Travelers Indem. Co., 121 Wn.2d 243, 249, 850 P.2d 1298 (1993)); CR 56(c)). De novo review necessarily assumes this court will make its own objective determination based on the record and the applicable law, without regard to the trial court's oral rulings or any written findings of fact and conclusions of law. Thus, "[f]indings of fact and conclusions of law are not necessary on summary judgment and, if made, are superfluous and will not be considered on appeal." Concerned Coupeville Citizens v. Town of Coupeville, 62 Wn. App. 408, 413, 814 P.2d 243 (1991) (hereinafter Concerned Citizens) (citing Donald v. Vancouver, 43 Wn. App. 880, 883, 719 P.2d 996 (1986)). Further, a litigant need not assign error to superfluous findings. Concerned Citizens, 62 Wn. App. at 413. Therefore, the City's failure to specifically assign error to one basis on which the court may have granted summary judgment does not render the summary judgment unavailable for review or otherwise affect our review of the case.
II. Former SMC sec. 5.44.422
At issue in this case is the proper interpretation and application of the provisions of former SMC sec. 5.44.422, which permitted the City to tax the gross proceeds of the sales of persons doing business within the City, but also allows those persons to reduce their tax burden by allocating gross proceeds of sales to another "office, store or outlet in Washington where the predominate selling activity occurs." See former SMC sec. 5.44.422 A and .422 C. The United States Supreme Court has said, "the activity of wholesaling — whether by an in-state or an out-of-state manufacturer — must be viewed as a separate activity conducted wholly within Washington that no other state has jurisdiction to tax." Tyler Pipe Indus., Inc. v. Washington State Dep't of Rev., 483 U.S. 232, 250, 107 S. Ct. 2810, 97 L. Ed. 2d 199 (1987). See also General Motors Corp. v. City of Seattle, 107 Wn. App. 42, 60, 25 P.3d 1022 (2001). Even if a wholesaler has no place of business in a state, the state may tax all sales where "the activities performed in the state on behalf of the taxpayer are significantly associated with the taxpayer's ability to establish and maintain a market in the state for the sales." Tyler, 483 U.S. at 250-51.
This principle also applies to cities. Even if a wholesaler has no place of business in Seattle, the City may nonetheless tax all sales with a "substantial nexus" to Seattle. General Motors, 107 Wn. App. at 60. Because discrimination in intrastate commerce is not prohibited by the Federal Commerce Clause or the Washington Constitution, the City of Seattle may also tax goods from an in-city business that are received out-of-city but within the state of Washington. City of Seattle v. Paschen Contractors, Inc., 111 Wn.2d 54, 58-61, 758 P.2d 975 (1988). However, the City of Seattle is not permitted to tax any sales of goods based on their simple delivery into Seattle where the seller has no physical presence in or no significant contacts with Seattle. Quill Corp. v. North Dakota, 504 U.S. 298, 309-19, 112 S. Ct. 1904, 119 L. Ed. 2d 91 (1992).
During the tax period in question, Seattle's B O tax provisions governing revenues from retail sales having a nexus with Seattle, then codified at SMC Ch. 5.44., were consistent with these principals. Although Seattle could tax gross revenues from the sale of goods by Seattle businesses that were delivered out-of-city but within Washington, where the Seattle taxpayer had businesses both within and without the city, former SMC Ch. 5.44 permitted the allocation of "proceeds of sales to the office, store or outlet in Washington where the predominant selling activity occurs." Former SMC sec. 5.44.422 C.
The tax code provisions at issue here provided:
sec. 5.44.422 Person in wholesaling/retailing both within and without the City.
A. No Place of Business Within the City. A person who is subject to tax under subsections C or D1 of Section 5.44.400 and has no office, store, or other place of business within the City, shall allocate to the City the gross proceeds of all sales in which the taxpayer's business activity within the City is either a determining element in the transaction or, under the facts and circumstances, a significant factor in making or holding the market here. Mere delivery of goods, without accompanying efforts to maintain an economic market, shall not constitute a determining element in affecting a transaction.
B. . . . .
C. Place of Business Both Within and Without the City. A person who engages in the business of making sales at wholesale or retail using an office, store or other outlet within the City and maintains another equivalent facility elsewhere in Washington, may allocate the gross proceeds of sales to the office, store or outlet in Washington where the predominant selling activity occurs
SMC sec. 5.44.422 A and .422 C (emphasis added) (the entire section has since been repealed and replaced by SMC 5.45.080 (Ord. 121266 Section 5, 2003; Ord. 120668 Section 2 (part), 2001)).
Corporate Express argues that because it engaged in making retail sales using two offices, one in Seattle and one in Renton, it was permitted to allocate its gross revenues under former SMC sec. 5.44.422 C between the two facilities, in proportion to where the predominant selling activity occurred. The City argues that the trial court erred in concluding that Corporate Express's Seattle facility was an "office" and also in ignoring the term "equivalent facility" within the terms of former SMC sec. 5.44.422 C. The parties appear to agree that there are no genuine issues of material fact regarding what takes place at the Seattle facility; therefore, the proper application of the law to the undisputed facts is a question of law.
A. Definition of "Office" Under former SMC sec. 5.44.422 C
The City points to Seattle Business Tax Rule (SBTR) 5-44-194 which was in effect during the time period at issue and defined "place of business or office" for purposes of the allocation ordinance.
SBTR 5.44-194 provided, in relevant part:
(d) Place of Business or office defined for apportionment and allocation purposes
(i) A place of business or office means the following:
(A) Maintaining, occupying, or using a permanent building or facility, or fixed location as an office or location for conducting business; and
(B) A location where the regular business of the taxpayer is conducted and which is either owned by the taxpayer or over which the taxpayer exercises legal dominion and control; and
(C) A location which includes a business sign, mailing address, and permanent phone; and
(D) Place where the taxpayer holds himself or herself out to do business with the public by obtaining any appropriate state and local business licenses and registrations.
Because we agree with the trial court that SBTR 5-44-194(d) described the Seattle facility exactly, we do not need to address Corporate Express's contention that SBTR 5-44-194(d) was invalid at the time of the tax audit in this case. Thus, for purposes of this opinion, we will assume that SBTR 5-44-194(d) provided the definition for "office" for "allocation and apportionment purposes" under former SMC sec. 45.44.422 C.
As required by SBTR 5-44-194(d)(i)(A), Corporate Express maintained, occupied and used a permanent building at a fixed location as an office for conducting business. It is true that customers did not come to the office but it is undisputed that sales representatives called customers from there, answered customer calls from there, placed some orders from there, and otherwise used the location for conducting business.
As required by subsection (B) of the rule, the sales representatives who worked out of that office conducted the regular business of Corporate Express — not some other business — and it is undisputed that Corporate Express exercised legal dominion and control over the premises.
As required by subsection (C) of the rule, the location included a business sign, a mailing address and mailbox, and a permanent telephone. The rule does not say that the business sign and mailbox must be for the sole or ancillary purpose of attracting customers and actual mail delivery.
Another legitimate purpose, that of identifying the location stated on the Seattle business license and verifying its corporal existence to taxing authorities, is certainly served by this subsection of the rule.
And finally, as required by subsection (D) of the rule, Corporate Express held itself out to do business with the public at that place "by obtaining [the] appropriate state and local business licenses and registrations." No other means of holding oneself out to do business with the public at that place is listed in the rule. Again, subsection D of the rule seems to serve more as a signal to the taxing authority rather than to the general public. Nevertheless, returning full circle to subsections (A) and (B) of the rule, sales representatives did do business with the public at that place: four to five sales representatives used the facility as a staging point for their sales activities, they used the facility to make and receive calls from customers, to fax orders, to send and receive e-mail messages, and to enter orders on the Corporate Express computer system. While most of the ordering, credit, purchasing, and warehousing activities probably occurred in Renton, sales could be and were made at the Seattle facility.
The City counters that this situation is very similar to that presented in In re Jackpot Convenience Stores, Hearing Examiner File #B-97-016 (October 31, 1997). In Jackpot, the City Hearing Examiner considered whether Jackpot, which had its main business office in Seattle, was improperly assessed for gross income generated from rental agreements purportedly made in other locations. The examiner determined that small rental spaces that were utilized by Jackpot area representatives to review franchise books, inventories and operations, were not "offices" under SBTR 5-44-194(d) so as to allow for allocation of income under former SMC sec. 5.44.422 C to the outside locations because the locations were not staffed, had no separate listing in the phone book, were never used as mailing addresses, and were not used to sign equipment rental agreements or to store such agreements. The facts here are quite different from those in Jackpot. No evidence was presented in Jackpot that the actual business of Jackpot was conducted at any of the rental locations, whereas the evidence here shows that regular business was conducted at the Seattle facility, on a regular basis.
Further, in contrast to the situation in Jackpot, the Seattle facility had telephones and numbers, a permanent mailing address and mailbox, and the company name "Corporate Express," appeared on the directory located at the entrance of the building, and on the mailbox. Although the Jackpot hearing examiner may have concluded otherwise, there is no requirement in SBTR 5-44-194(d) that the telephone number be listed in the phone book or that the "business sign" be other than a listing on a building's directory at the entrance of the building. SBTR 5-44-194(d)(i)(C).
The City does not contest Corporate Express's assertion, based on declarations by its sales representatives, that the "sign" is at the entrance to the building. This is consistent with the Webster's Dictionary definition offered by the City that a "sign" within the context of a business is "a lettered board or other public display placed on or before a building, room, shop, or office to advertise the business there transacted or the name of the person or firm conducting it." Webster's Third New International Dictionary 2115 (1969).
In sum, we conclude that Corporate Express's Seattle facility is an "office" within the meaning of SBTR 5-44-194(d). Moreover, under the plain meaning of the term "office," the Seattle facility was an office. Webster's Third New International Dictionary 1567 (1969) defines "office" as "a place where a particular kind of business is transacted or a service is supplied." The Seattle facility is clearly this type of place. Thus, the trial court did not err in finding that the Seattle facility was an "office" under the plain meaning of that term.
B. "Equivalent Facility" Under Former SMC 5.44.422 C
The City argues that the trial court erred in ignoring the term "equivalent facility" within former SMC sec. 5.44.422 C when it granted summary judgment to Corporate Express. Subsection .422 C permits allocation where the taxpayer engages in business at an office within Seattle and maintains another "equivalent facility" elsewhere in Washington. Certainly we agree with the City that the Renton facility is the main office, and that the Seattle office is not nearly as big as the Renton office, and that it does not provide the same quantity and degree of customer service as the Renton office. The Seattle facility was merely an office where some sales were made, whereas the Renton facility functioned as the main sales office, an accounting center, a warehouse, and a distribution center.Former SMC sec. 5.44.422 D provided that "[w]hen comparable selling activity and a complete transaction occurs there, a warehouse, distribution center, or other place for storage of goods may be considered the equivalent of an office, store, or other outlet." Thus, the Renton office may be considered an "equivalent facility" to the Seattle office. We disagree with the City's proposed construction that would require the Seattle office to perform all the same functions as the Renton office, in order to be deemed an equivalent facility. If both facilities had to be "equivalent" in that sense, it seems unlikely that there would be a provision for allocation of gross proceeds to the office in Washington "where the predominant selling activity occurs." This is because neither facility would need to depend upon selling activities performed at the other facility — each facility being absolutely comparable to the other in all respects.
As the City has taken considerable pains to point out, Seattle's legislative authority could have elected to deny allocation altogether, without violation of constitutional principles; thus allocation is a matter of legislative grace. We think it also is a matter of legislative practicality. If companies such as Corporate Express were not permitted to allocate, there likely would be double taxation of those transactions performed partly at one in-state facility and partly at another, and the result would be that one taxing authority or the other soon would lose the taxpayer altogether — the taxpayer would simply move the business elsewhere.
In sum, the trial court did not err in concluding that Seattle assessed Corporate Express for the period of the audit under the wrong subsection of the former tax code.
II. Burden of Proof Under Current SMC sec. 5.55.140
Finally, the City argues that the trial court erred by denying its motion to clarify that the resolution of the above issue did not end the case. On this we agree with the City. Current SMC sec. 5.55.140 A provides that a person who disagrees with a tax assessed by the City may, having paid the tax, file a complaint in Superior Court for a refund. The code section also provides: "The Director's assessment or refund denial shall be regarded as prima facie correct, and the person shall have the burden to prove that the tax assessed or paid by him is incorrect, either in whole or part, and to establish the correct amount of tax." SMC sec. 5.55.140 B (emphasis ours). Corporate Express has fulfilled the first part of its obligation — it has proved that the tax assessed and paid was calculated based on the wrong subsection of the former tax code. Thus, the presumption that the assessment was correct has been overcome. But now, Corporate Express must prove the correct amount of the tax. By inference, Corporate Express claimed in the complaint to have paid the proper amount of tax in the first place, in that Corporate Express sought a full refund of the assessed amount. But the City affirmatively defended on the basis that even if the City audited the company under the wrong subsection of the former code, Corporate Express was not entitled to a full refund. Those issues were not part of the cross-motions on summary judgment, and we think it unlikely that they are the kinds of disputes that could be resolved on summary judgment in any event.
The trial court invited the parties to see whether they could agree with respect to allocation and the amount of tax that actually was due. But Corporate Express took the position that the proper remedy was a full refund of the assessment, followed by a reassessment by the City under the proper code section if the City still believed that more tax was due than Corporate Express initially paid. Corporate Express relied upon City of Seattle Executive Serv. Dep't v. Visio Corp., 108 Wn. App. 566, 31 P.3d 740 (2001). There, a hearing examiner, after rejecting the Department's position that a taxpayer was subject to taxation as a manufacturer, declined to hear the Department's alternative taxation theory because the record did not contain facts to support it and because the assessment had been based on a different ground. This court affirmed the hearing examiner's ruling. The applicable code provision was former SMC sec. 5.44.129(D) which said that the "Hearing Examiner may reverse or modify an action of the Director and ascertain the correct amount of the tax, fee, interest, or penalty due if the Director's assessment or refund denial violates the terms of this chapter." (Emphasis ours). Because the operative word was "may" rather than "shall" and the hearing examiner had a tenable basis for the ruling, the Visio court affirmed the ruling. 108 Wn. App. at 579-80. The court also noted: "Our decision does not preclude the Department from initiating a new assessment against Visio under the general business tax theory within the City tax code's limitations." Id. at 580.
Similarly here, the record is not sufficient at this juncture to determine the actual tax due, and the City performed the audit under the wrong section of the then-applicable tax code. Accordingly, Corporate Express argues that the trial court did not err in ordering the full refund, leaving the City to perform a new audit if it chooses to seek additional taxes over and above what Corporate Express paid when it filed its tax returns. We would fully agree if former SMC sec. 5.44.120(D) were still the operative code section. But that section has been repealed, and Corporate Express brought this lawsuit under current SMC sec. 5.55.140 B, which provides that the taxpayer shall have the burden to establish the correct amount of the tax. And subsection .140 D provides that the methods for obtaining review of a tax assessment are exclusive and must be strictly complied with.
Corporate Express also argues that because SMC sec. 5.55.140 purports to prescribe to the superior court the practices and procedures the City expects the court to follow, it is improper, citing City of Tacoma v. Mary Kay, Inc., 117 Wn. App. 111, 115, 70 P.3d 144 (2003). We disagree with the conclusion that this section purports to prescribe superior court practices and procedures. The Mary Kay court addressed a Tacoma ordinance that purported to grant superior court jurisdiction for trial de novo following a hearing examiner's decision in a tax assessment case where an aggrieved party files a notice of appeal — rather than a complaint — in superior court. But original jurisdiction in superior court is invoked by filing a complaint (or a writ). Id. The Seattle ordinance now at issue requires a complaint. SMC sec. 5.55.140 A(2). Thus, it does not suffer from the same shortcoming as the Tacoma ordinance in Mary Kay. And unlike the Spokane ordinance at issue in City of Spokane v. J-R Distributors, Inc., 90 Wn.2d 722, 724, 585 P.2d 784 (1978), the Seattle ordinance does not purport to prescribe rules regarding the admissibility of evidence or otherwise invade the province of the courts with respect to practice and procedure.
Instead, SMC sec. 5.55.140 sets down explicit refund provisions which courts have strictly enforced for decades. See, e.g., Longview Fibre Co. v. Cowlitz County, 114, Wn.2d 691, 790 P.2d 149 (1990); Oda v. State, 111 Wn. App. 79, 84, 44 P.3d 8 (2002) (addressing whether all claimants met the requirements of RCW 82.32.180 such that they could make up a class for purposes of a class action). In Oda, we noted that the Washington Supreme Court had held that tax statutes allowing refunds are narrowly construed, that the Legislature intended excise tax refunds to be made only as prescribed by the statute, and that RCW 82.32.180 "requires each individual taxpayer to satisfy the conditions specified before maintaining an appeal." Oda, 111 Wn. App. at 85 (citing Lacey Nursing Ctr., Inc. v. Dep't of Rev., 128 Wn.2d 40, 905 P.2d 338 (1995)).
Like RCW 82.32.180, SMC sec. 5.55.140 B is a code provision allowing a refund of a tax and, as such, should be narrowly construed. A tax refund claimant must satisfy all the code's conditions, including the requirement that he or she establish the correct amount of tax.
CONCLUSION
We affirm the trial court's summary judgment ruling that the City performed its audit of Corporate Express's tax returns under the wrong code section. We vacate the trial court's order denying the City's motion to clarify or amend. We remand so that the court can, after such additional discovery as may be necessary before trial or other disposition, determine the amount of tax that actually was due for the period of the audit.
APPELWICK and AGID, JJ., Concur.