Opinion
No. 34845.
January 26, 1942.
1. TAXATION.
Under statute imposing corporate franchise or excise tax equal to $1 for each $1,000 of value of capital used, an assessment of corporation's property, involving the two steps of listing and valuing the property, was required before payment of tax could be compelled (Laws 1934, ch. 121, secs. 2, 4).
2. TAXATION.
Under statute imposing corporate franchise or excise tax based on value of property in which corporation's capital was invested and providing that assessment of property should be made by Chairman of the State Tax Commission, ascertainment of value of property by method set forth in statute was exclusive, and value could not be ascertained and tax due collected in a judicial proceeding without such an assessment (Laws 1934, ch. 121, secs. 2, 4).
3. TAXATION.
The prescribed method for making tax assessment must be followed whether provided by constitution or by a statute.
APPEAL from the circuit court of Oktibbeha county, HON. JOHN C. STENNIS, Judge.
J.W. Backstrom, of Leakesville, and Frank A. Critz, of West Point, for appellant.
The tax levied and assessed by this act is a personal debt.
The tax here sued for is an excise tax or franchise tax.
The very language of the statute itself imposes the tax, levies the tax and assesses the tax. It is not a case of any assessment being required because there is no assessment other than that made by the law.
The tax imposed, levied and assessed by the act is an annual tax calculated on the basis of the value of the capital employed in the state for the year preceding the date of the filing of the return.
There is no assessment of the tax here, but the tax is measured and calculated upon information furnished by, or obtained from, the taxpayer.
The privilege tax laws provide a remedy and provide the machinery for the collection thereof. That remedy is not exclusive and the State Tax Collector, as has been repeatedly held by this court, has the right to sue. The remedy provided for the collection of the privilege tax is not any more exclusive than the remedy provided for the collection of the franchise tax.
A franchise tax is an excise tax and not an ad valorem tax. Appellee, in its brief, has tried to confuse this with an ad valorem tax. If it is an ad valorem tax his argument is good, but it is not an ad valorem tax.
This tax is measured by the capital employed. It is not a matter of an assessment. There is no assessment to be made by the Chairman of the Tax Commission; it is only a matter of determination or of determining the amount of tax due. The same provisions run through all of our privilege tax laws. In our privilege tax laws it is not a matter of the officer whose duty it is to collect the tax of making an assessment as the assessment is made by law, but is a matter for the collecting officer to determine the amount of tax due.
The court will observe that insurance companies are required by Section 111b of Chapter 89, Laws of 1932, to report to the commissioner of insurance the amount of gross premiums, calculate and pay the tax of two and one-half per centum. Under the franchise tax law the organization or corporation shall report the amount of its capital investment, calculate and pay the tax. It was held by this court in Gully v. Lumbermens' Mutual Casualty Co., 176 Miss. 388, 166 So. 541, and in Gully v. Pilot Life Ins. Co., 174 Miss. 834, 165 So. 610, that the State Tax Collector had the right to sue for this privilege tax. If the State Tax Collector had the right to prosecute the above suits against the insurance companies, why has he not the right to maintain and prosecute the suit at bar?
This is a tax for the privilege of doing business and is to be placed in the same category as our privilege tax laws. The legislature certainly had this in mind when they inserted Section 28 making the tax a personal debt.
It is not a matter of an assessment; it is a matter of a determination of the amount of tax due upon the capital employed as represented by the taxpayer. The book value is prima facie correct, and upon this book value the appellee has filed sworn reports disclosing its corporate investment, and to arrive at the correct amount of tax is a mathematical calculation.
Owen Garnett, of Columbus, R.C. Stovall, of Okolona, Rufus Creekmore, of Jackson, and Will E. Ward, of Starkeville, for appellee.
Two issues arise from the pleadings in this case: First, was the State Tax Collector empowered, by the statutes of Mississippi, to maintain a suit for an alleged balance due for the franchise tax, under Chapter 121, Laws of 1934? Second, had there been any such determination of a balance due, by an additional or deficiency assessment of the frachise tax, with notice to the defendant, and opportunity to be heard, and to appeal to the circuit court, as is a necessary prerequisite to the collection of an additional amount under Chapter 121, Laws of 1934? If the answer is "No" to either or both of these issues, the State Tax Collector's suit must fail.
Chapter 121 of the Laws of 1934 is a complete plan for levying, assessing and collecting of the franchise tax. It clothes the Chairman of the Tax Commission with large inquisitorial and quasi-judicial powers in arriving at a determination of the amount of the tax; and gives finality to his finding, so far as the state is concerned, no appeal by the state being allowed. He is by law placed under a bond for one hundred thousand dollars, and the large powers conferred upon him are exclusive of any interference with his office and his duties by the State Tax Collector.
The Tax Collector cannot be fitted into the terms of Chapter 121. The general statute under which he seeks to get himself into the picture deals with his powers in general terms; and Chapter 121 is a special statute providing a complete plan for determining a particular matter — the franchise tax, its estimation, and how and by whom it shall be collected; and under established rules of construction, buttressed by many decisions, it must be construed as a qualification or modification of any general statute touching the same subject matter. The authorities as to that are overwhelming.
Chapter 121 provides what must be done by the Tax Commissioner when an organization makes a return; what he must do if no return is made; what he must do to increase the amount of the tax, with notice to the taxpayer, and right to be heard, and to appeal to the commission "in formal session," and to the Circuit Court of Hinds County. It is not pretended that any of these prerequisites to an additional assessment or increased amount were given the taxpayer; and it cannot be said that they may be ignored, and the taxpayer denied the right to insist upon compliance with them. It cannot be said that the Tax Collector is a revisory board empowered to crack down upon the taxpayer in court and thus shut it off from the provisions to safeguard its rights contained in Chapter 121.
The amount of the tax must be ascertained and fixed by the method prescribed by the act itself. This power to calculate and ascertain the amount of the tax, which is based on values, is granted in a complete method by the terms of the act and is vested in the Tax Commissioner. The general law of this state, at the time of the enactment of Chapter 121, was to the effect that such a special method adopted by the legislature would be termed an exclusive method. To change this general rule it would have been necessary for the legislative act to have so stated by reasonably clear intent or by express terms; this was not done and therefore the general rule, adopted and reiterated by this court over a period of many years, in many cases, applies.
The Tax Collector is without power to maintain the suit, and it is not for a recoverable debt lawfully calculated and ascertained to be due by the taxpayer; and therefore the two pleas in abatement were well-grounded and should be sustained by affirmance of the judgment of the court below.
Section 2, Chapter 121, Laws of 1934, imposes a franchise or excise tax upon corporations of the class in which this appellee falls "equal to $1.00 for each $1,000.00, or fraction thereof, of the value of the capital used, invested or employed in the exercise of any power, privilege or right enjoyed by such organization within this state." Section 28 thereof provides that "The tax . . . shall become, from the time it is due and payable, a personal debt, from the organization liable to pay the same, to the state of Mississippi."
Section 3122, Code of 1930, makes every lawful tax assessed, levied or imposed by the state a debt recoverable by action, and Section 6986 thereof authorizes the State Tax Collector to institute such an action.
The appellant sued the appellee for what he alleges is unpaid balances due by the appellee on its franchise taxes for the years 1935 to 1940, inclusive. His authority so to do was challenged by the appellee by two pleas in abatement. The first of these pleas alleges that the State Tax Collector is without authority to sue for the collection of the tax imposed by Chapter 121, Laws of 1934. The second alleges that the defendant made a return, for each of the years involved, to the Chairman of the State Tax Commission of its property and the value thereof on which its franchise tax must be based as required by the statute and paid the tax appearing thereby to be due; that no additional assessment of its property or its value was made by the chairman of the commission without which no action will lie under the statute for the collection of an additional franchise tax from the defendant. If the court below was correct in sustaining either of these pleas, its judgment must be affirmed. We will pretermit any discussion of the first of these pleas and come at once to the second.
Section 4 of the statute makes the tax thereby imposed due and payable on or before the 15th day of July of each year to be "based upon the capital of the organization as at the close of the preceding calendar year." By other sections of the statute, a complete, elaborate and carefully worked out plan for the ascertainment and collection of the franchise tax due by a corporation is set forth. Among other things, it charges the Chairman of the State Tax Commission, designated therein as the commissioner, with the duty of ascertaining and collecting the tax in the following manner: A corporation subject to the tax must file with the commissioner each year a return disclosing its property on which the tax is to be computed and the value thereof and such other information as may be required by the commissioner. If, after examining into this return, the commissioner finds it to be correct, he approves it and collects the tax due thereon, a check for which must accompany the return. If the commissioner finds the return to be incorrect as to the property of the corporation on which the tax is to be computed or as to its value, he makes an additional assessment thereof, notifies the corporation that he has so done, and it has thirty days thereafter within which to appear before the commissioner and show why the additional assessment is incorrect. If dissatisfied with the final action of the commissioner on the assessment, the corporation may appeal to the State Tax Commission which shall hear and determine the corporation's objections to the assessment. If dissatisfied with the commission's decision thereof, the corporation may then appeal to the Circuit Court of Hinds County or if it be a domestic corporation of the county of its domicile, "or in case of a foreign organization to the circuit court of the county of the residence of the agent upon whom service of process may be had." After the assessment has become final but not before the commissioner is authorized to "issue a warrant to the sheriff of any county of the state commanding him to levy upon and sell the real and personal property" of the corporation for the payment of the tax.
The appellant's contention in this connection is that the method provided by the statute for ascertaining the property in which the capital of the corporation subject to this tax is invested and its value, provided by Chapter 121, Laws of 1934, is not exclusive and that this property and its value may be ascertained and the tax due thereon collected in a judicial proceeding without any assessment of the corporation's property having been made by the Chairman of the State Tax Commission.
While this tax is not on property as such, it is based on the value of property in which the corporation's capital is invested. Consequently, of what this property consists and its value must be ascertained before the payment of the tax can be coerced in any manner by any officer charged with that duty. In other words, there must be an assessment by this property, the two steps in which are the listing and valuing of the property. State Revenue Agent v. Tonella, 70 Miss. 701, 14 So. 17, 22 L.R.A. 346; Johnston, State Revenue Agent, v. Puffer Mfg. Co., 111 Miss. 240, 71 So. 377. How and by whom this assessment is to be made is for the determination of the legislature, and since it has here directed that it be made by the Chairman of the State Tax Commission according to the method set forth in the statute, it can be made by him only and in accordance with the method prescribed. This is so obviously correct that authority for so holding would seem to be unnecessary; but, if desired, see State Revenue Agent v. Tonella, supra; Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 88 So. 4, 25 A.L.R. 748; Enochs v. State, 128 Miss. 361, 91 So. 20; Johnston, etc., v. Puffer Mfg. Co., supra; 2 Cooley on Taxation (4 Ed.), Section 864, 3 ib., Section 1046; 61 C.J. 620. That some of these cases deal with assessments required by the Constitution and not by a statute is of no consequence for the governing rule in either case is the same. Enochs v. State, supra.
Whether an action will lie for the collection of this tax under Section 3122, Code of 1930, after the assessment of the property on which it is based has been made, is not before us and we express no opinion thereon.
Affirmed.