Opinion
110,395 110,844.
12-05-2014
In the Matter of the APPEAL OF PICANSO, Tracy M. From an Order of the Division of Taxation of Assessment of Drug Tax.
Jennifer E. Bazin, Legal Services Bureau, of Kansas Department of Revenue, for appellant. Troy D. Renkemeyer, of Renkemeyer Law Firm, LP, of Overland Park, for appellee.
Jennifer E. Bazin, Legal Services Bureau, of Kansas Department of Revenue, for appellant.
Troy D. Renkemeyer, of Renkemeyer Law Firm, LP, of Overland Park, for appellee.
Before LEBEN, P.J., PIERRON and STEGALL, JJ.
MEMORANDUM OPINION
PER CURIAM.
The Kansas Department of Revenue (KDR) issued a notice of assessment to Tracy Picanso for failure to pay the drug tax on approximately 39 pounds of K2. Picanso filed a request for an informal conference with KDR 38 days after service of the notice. KDR denied the request on the grounds that Picanso had failed to make her request within the 15 days specified in K.S.A.2013 Supp. 79–5205(d). Picanso appealed to the Court of Tax Appeals (COTA). KDR moved to dismiss the appeal arguing that the 15–day limitation period was jurisdictional and deprived KDR of the legal authority to grant Picanso's request. COTA disagreed, relying on Chelf v. State, 46 Kan. App 2d 522, 263 P.3d 852 (2011). COTA remanded the matter back to KDR to determine whether Picanso had “good cause” excusing her out-of-time request.
KDR now appeals arguing: (1) KDR had no jurisdiction to grant Picanso's out-of-time request for an informal conference; and (2) That COTA's crafted remedy—a remand to determine whether “good cause” existed to excuse Picanso's late request—exceeded COTA's authority. We find that COTA properly interpreted and applied the law and affirm.
Analysis
At the outset, we note a number of ancillary arguments made on appeal that we have declined to consider. Picanso argues that the tax assessment can be directly challenged on appeal pursuant to COTA's general jurisdiction statute (K.S.A.2013 Supp. 74–2438 ) and that the informal conference described in K.S.A.2013 Supp. 79–5205 can be bypassed altogether. But Picanso chose to request an informal conference pursuant to K.S.A.2013 Supp. 79–5205. KDR denied that request on the grounds that it had no legal authority to consider it. Picanso then appealed the denial of that request to COTA. Picanso did not choose to invoke COTA's general jurisdiction and file a direct appeal of the assessment. Therefore, the underlying tax assessment is not on appeal. The only KDR decision on appeal is its denial of Picanso's request for an informal conference. As such, we expressly leave to another time and another case the question of whether a taxpayer may bypass the informal conference entirely and directly appeal an assessment pursuant to COTA's general jurisdiction.
Similarly, Picanso argues the underlying merits of her claim—that KDR misclassified K2 as a controlled substance rather than as synthetic marijuana resulting in a 58–fold increase in the assessed tax. However, the only avenue remaining to Picanso for a presentation of the merits of her claim is an informal conference with KDR. If, in the future, she gains such an audience with KDR, appellate review of the merits of her claim may subsequently be possible.
Finally, the parties make arguments concerning whether Picanso's failure to make a timely request for an informal conference should be excused for “good cause.” But because KDR concluded it had no legal authority to consider Picanso's request out of time, it never solicited or weighed the equitable considerations necessary to a decision on Picanso's out-of-time request. As with the merits, we reserve review of the parties' equitable arguments for potential future appeals as this matter progresses.
Subject Matter Jurisdiction
We may grant relief from an agency action if we determine that the agency has erroneously interpreted or applied the law. K.S.A.2013 Supp. 77–621(c)(4). Whether jurisdiction exists is a question of law over which this court exercises unlimited review. State v. Ellmaker, 289 Kan. 1132, 1147, 221 P.3d 1105 (2009). Likewise, statutory interpretation involves questions of law over which we exercise unlimited review. In re Tax Appeal of LaFarge Midwest, 293 Kan. 1039, 1043, 271 P.3d 732 (2012).
A person receiving notice of a drug tax assessment may request an informal conference with the assessing agency to seek reconsideration of the assessment. The process is described in K.S.A.2013 Supp. 79–5205(d) :
“Within 15 days after the mailing or personal service of such notice of assessment pursuant to subsection (a), the taxpayer may request an informal conference with the secretary of revenue or the secretary's designee relating to the tax, penalties and interest assessed by filing a written request with the secretary or the secretary's designee. Such written request shall set forth the taxpayer's objections to the assessment. The purpose of such conference shall be to review and reconsider all facts and issues that underlie the assessment.... “The secretary or the secretary's designee shall issue a written final determination within 270 days of the date of the request for informal conference unless the parties agree in writing to extend the time for issuing such final determination. A final determination issued within or after 270 days, with or without extension, constitutes final agency action subject to administrative review by the state court of tax appeals pursuant to K.S.A. 74–2438, and amendments thereto.”
Based on this court's decision in Chelf, 46 Kan. App 2d 522, COTA held that the 15–day limitation period in K.S.A.2013 Supp. 79–5205(d) is a procedural step in an administrative remedy process—i.e., a claims processing rule—not a jurisdictional bar. Because failure to follow claims processing rules can be excused for equitable reasons, COTA remanded Picanso's request to KDR to determine whether the equities justified excusing the 15–day requirement. In reviewing COTA's decision, then, we start with Chelf.
In Chelf an inmate injured in a forklift accident attempted to bring a personal injury suit against the State. 46 Kan.App.2d at 523–24. However, Chelf had failed to comply with a special claims procedure mandated in the Internal Management Policies and Procedures of the correctional facility and the district court dismissed his suit for want of jurisdiction. 46 Kan.App.2d at 524. The Chelf court noted that “the district court had good reason to assume that an inmate's failure to exhaust administrative remedies deprived the court of subject matter jurisdiction”—because “we have said as much before.” 46 Kan.App.2d at 530. However, the Chelf court went on to analyze
“a number of significant [United States Supreme Court] opinions over the course of the last few years that discuss the frequency with which courts, such as ours, have confused jurisdictional constraints with nonjurisdictional concepts. Concerned about the vanishing distinction between the mandatory requirements of a cause of action and jurisdiction over that cause of action, the Court in 2006 drew the following ‘administrable bright line’ between the two:
‘If the Legislature clearly states that a threshold limitation on a statute's scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue. [Citation omitted.] But when [the Legislature] does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character.’ Arbaugh v. Y & H Corp., 546 U.S. 500, 515–16, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006).” Chelf, 46 Kan.App.2d at 530–31.
In addition to Arbaugh, the Chelf court relied on the United States Supreme Court's statements in Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 161, 130 S.Ct. 1237, 176 L.Ed.2d 18 (2010) :
“While perhaps clear in theory, the distinction between jurisdictional conditions and claim-processing rules can be confusing in practice. Courts—including this Court—have sometimes mischaracterized claim-processing rules or elements of a cause of action as jurisdictional limitations, particularly when that characterization was not central to the case, and thus did not require close analysis. [Citations omitted.] Our recent cases evince a marked desire to curtail such ‘drive-by jurisdictional rulings,’ [citations omitted], which too easily can miss the ‘critical difference[s]’ between true jurisdictional conditions and nonjurisdictional limitations on causes of action. [Citations omitted.]
“In light of the important distinctions between jurisdictional prescriptions and claim-processing rules, [citation omitted], we have encouraged federal courts and litigants to ‘facilitat[e]’ clarity by using the term ‘jurisdictional’ only when it is apposite. [Citation omitted].” 559 U.S. at 161
Applying the rule of Arbaugh and its progeny, Chelf found the procedural requirements in that case did not “have the hallmarks of a jurisdictional decree” and thus, while “mandatory,” they were also “subject to certain equitable defenses.” 46 Kan.App.2d at 532–33. Such defenses include waiver, estoppel, futility, and equitable tolling. 46 Kan.App.2d 522 Syl. ¶ 4, 532–33; Lozano v. Montoya Alvarez, 572 U.S. ––––, 134 S.Ct. 1224, 188 L.Ed.2d 200 (2014) (equitable tolling is available to a litigant who has pursued his rights diligently but has been prevented from meeting a time limitation by some extraordinary circumstance); Irwin v. Department of Veterans Affairs, 498 U.S. 89, 96, 111 S.Ct. 453, 112 L.Ed.2d 435 (1990) (equitable tolling is not available in “garden variety claim of excusable neglect”). The hallmarks of a jurisdictional decree require the statute to “ ‘speak in jurisdictional terms.’ “ Chelf, 46 Kan.App.2d at 533.
We agree with the reasoning and result of Chelf and find that COTA properly applied its holding to K.S.A.2013 Supp. 79–5205. The statute does not speak in jurisdictional terms. It is an optional procedure claimants may avail themselves of in order to seek reconsideration by KDR. The time limit is a mandatory prerequisite to an informal conference but, as a claims processing rule, it is subject to the available equitable defenses.
COTA's Remedy
KDR next contends that even if the 15–day time limitation is not jurisdictional, COTA exceeded its authority in devising a remedy, namely, a remand to KDR to determine whether “good cause” exists to excuse Picanso's late request. KDR suggests that devising such a remedy on remand was not properly before COTA on appeal. We agree that COTA's order leaves “good cause” as an ill-defined standard that gives little guidance. However, in these circumstances “good cause” is synonymous with Picanso's burden to convince KDR, in the exercise of its discretion, that one of the available equitable defenses exists to a sufficient degree to excuse her tardily filed request for an informal conference. If Picanso can meet that burden, then she has shown good cause.
Affirmed.