Auction Company’s Excise Tax Disputes can be Contested in Washington Superior Courts only after the Taxes are Paid in Full

The Washington Court of Appeals of Third Division held in Booker Auction Co. v. State, Dept. of Revenue, 241 P.3d 439, 158 Wn.App. 84 (Wash.App. Div. 3 2010) that the superior court does not have jurisdiction to hear auction company’s case until an auction sale occurs or excise tax is paid. Id. To be clearer, a tax dispute can be contested only after the taxes are paid in full.    
    
In this case, Booker Auction Co (“Appellant”) petitioned the Washington Department of Revenue’s (“Department”) Appeals Division seeking exemptions from the Department’s prospective reporting instruction. On reviewing the Appellant’s financial records, the Department’s auditor discovered that Appellant had been claiming a tax exemption for auction items sold on its property. The auditor concluded that the exemption did not apply because Appellant’s primary business on the land was not farming. The Department decided not to assess Appellant for back taxes because of apparent confusion about the application of the exemption. Instead, the Department issued prospective reporting instructions, stating, " Prospectively sales tax will be collected on sales from the auction yard” and asked the Appellant to pay excise tax on farm equipments sold at its future auctions. The Appeals Division affirmed the auditor’s determination and held that the Appellant could not be exempted from paying taxes for future sale. Consequently, the Appellant moved to the Board of Tax Appeals, which dismissed the appeal for lack of jurisdiction. Then the Appellant petitioned in the Franklin County Superior Court under the Administrative Protection Act, seeking review of the Department’s instruction. The Franklin County Superior Court dismissed the petition. The superior court granted the Department's dismissal request, finding the Department's determination “is not subject to judicial review under the Administrative Procedure Act. This appeal followed.
    
The appellate court analyzed whether or not the superior court erred in dismissing the auction company's appeal based on lack of subject matter jurisdiction.  The appellate court of Washington found that, “Judicial review of a decision of the board of tax appeals shall be de novo ... [but] no review from a decision made pursuant to RCW 82.03.130(1)(a) may be obtained by a taxpayer unless within the petition period provided by RCW 34.05.542 the taxpayer shall have first paid in full the contested tax.” Booker Auction Co, 158 Wn.App. at 88.
    
The court also observed that according to RCW 82.32.150, an aggrieved party may bring an action contesting taxes, penalties or interests only after all taxes, penalties, and interest that are due are paid in full.  Any restraining order or injunction shall not be granted or issued by any court or judge to restrain or enjoin the collection of any tax or penalty if the tax assessment does not violate the federal or state constitution.  Booker Auction Co, 158 Wn.App. at 88.
    
Based on the statutory provisions discussed above, the court found that the superior court does not have jurisdiction until the auction sale occurs and the excise tax is paid in full.  Booker Auction Co, 158 Wn.App. at 89.
    
The court also stated that application of APA provisions to contest judicial review for prospective tax payment, without payment of tax in full would directly lead to the direct conflict with RCW 82.32.150 and RCW 82.32.180. 50. Tax disputes in superior courts are specifically governed by RCW 82.32.150 and RCW 82.32.180 Booker Auction Co, 158 Wn.App. at 88. When a general statute addresses the same matter as a specific statute and if the two cannot be harmonized, the specific statute prevails over the general. AOL, LLC v. Dep't of Rev, 149 Wash.App. 533, 542,205 P.3d 159 (2009).) Thus, the APA's general provisions cannot overcome RCW 82.32s specific provisions. The APA does not provide for superior court review of an excise tax challenge. Thus the superior court does not have jurisdiction to hear Booker’s case until an auction sale occurs or excise tax is paid i.e. taxes to be paid and then contested.  Booker Auction Co, 158 Wn.App. at 89-90
    
The Washington Court of Appeals affirmed lower court’s decision and decided the appeal in favor of Department. Therefore, Appellant is bound to pay excise tax. Booker Auction Co, 158 Wn.App. at 87-89