waring, 94 *1 Idaho [50] at
[896] at 899; Boesiger v. Freer, 85 Idaho
[551] at 559, 381 P.2d [802] at 806-807. of Mr. West did not constitute
The conduct representation false or a conceal-
either a qualified at all times
ment of facts. West representations manager to the Bank
his (West) only
by telling him that he would loan to Brown if the terms
guarantee the “tight” only then for this one
were
$5,000 Notwithstanding this state- loan.
ment, guarantee the bank sent West a guaran- which did not limit the
agreement $5,000, rather, loan of it was
tee to the one “continuing guarantee”
a standard form guaranteed payment past
which also made the Bank to
future advances The district court’s reliance on the
Brown. estoppel theory misplaced.
equitable appel-
Reversed and remanded. Costs to fees awarded on
lants. No
peal.
DONALDSON, C.J., and BAKES
HUNTLEY, JJ„ concur.
SHEPARD, J., in the result. concurs P.2d BOGNER,
Plaintiff-Respondent,
STATE of Idaho DEPARTMENT OF TAXATION,
REVENUE AND STATE COMMISSION, Defendant-Appel
TAX
lant.
No. 15300. of Idaho.
Dec. *2 Jones, Gen., Atty.
Jim William A. Von Tagen, argued, Gen., Deputy Atty. Thomas, Gen., Lynn Boise, E. Sol. for de- fendant-appellant. Aanestad,
Douglas Hogue, James Aanestad, Ketchum, Speck, & plaintiff- respondent.
BISTLINE, Justice.
HISTORY plaintiff-respondent, Bog- ner, is a West German citizen and has been a resident of Idaho princi- since 1981. Her pal source of income is derived from a family business in Germany. West As a residing German plaintiff citizen is taxed on her German income three governmental Germany, the entities: West United and Idaho. 1982, plaintiff 1981 income filed a
return with Internal Revenue Service. return, On this she claimed a credit for Germany West § 901. Internal Revenue Code At about time, plaintiff the same filed her Idaho return, tax return. state income On this she claimed deduction for paid pursuant her interpretation of I.C. § 63-3022 and Internal Revenue Code §
An auditor for the State Tax Commission subsequently disallowed the claimed for- eign According tax deduction. to the audi- tor, once chose to take the federal credit, longer she could take a for- eign tax deduction under Idaho law. 22(f) interprets Regulation findings Tax the auditor’s protested Plaintiff § 63-3022(1) in the manner: by the a redetermination asked for The Commission Tax Commission. 63-3022 of the of Section Subsection case, plaintiff’s taxpayers considered ar- individual reviewed Code authorizes posi- auditor’s and affirmed the on their Idaho guments, itemize deductions *3 elect, took paid they may then the tax and without tion. Plaintiff tax return as they In a memo- itemize regard to the district court. to whether or not her case (Emphasis returns. opinion dated October on their randum federal Kramer, court, Judge entered a district reversing the Tax Commis- Thus, Idaho resi it is clear that an court, Thereafter, Judge sion. form his or her state income tax dent on Becker, ruling that the Tax Phillip N. a itemized from taxable income can deduct frivo- pursued had this case Commission as defined various sections deductions unreasonably and without founda- lously, Code, including the Internal Revenue tion, pay that the Tax Commission ordered § 164, regardless they of whether choose and related costs plaintiff’s attorney’s fees is returns. This to do so on their federal The Tax Commission’s expenses. Accord exactly plaintiff what has done. challenges judg- this both peal to err in hold ingly, the district court did not ment and order. of her ing the Tax denial that Commission’s improper.
deduction was I. argues plain- that Tax The Commission first issue deals with whether a state tax deduction tiff cannot take tax credit for plaintiff can take a federal paid instead her because paid while at foreign income taxes she took a taking a federal tax deduction tax deduction for proposition, time take a state a same federal tax credit. Such however, wording that she was paid. We hold face of the those flies regulations. applicable do so. statutes and entitled to stated: I.C. 63-3022 63-3022(7) a state tax allows are payer expenses means “taxa- to deduct that “taxable income” The term defined law. The itemized deductions federal defined in Section 63 as income” as ble Code, require taxpayer to does not adjusted as section Internal Revenue deduction. Idaho actually have taken the follows: 22(f) clearly indi Regulation Income interpre The Tax cates this. Commission’s (1) persons, of natural there In the case § 63-3022(i) nothing more tation of gross from allowed as deductions shall be rewriting attempt at the statute. than an following at the either income courts the Tax Commission nor the Neither (1) standard taxpayer: option of authority. C.J.S. Constitu have such See Inter- defined section 63 as § 169 and cites therein. The tional Law Code, itemized deduc- nal Revenue is to enforce Tax Commission’s function 16j____ in sections tions as defined written, it is law written. And as as (Emphasis add- Code. that was within the law clear ed.)1 doing what she did. the Internal Revenue 164 of Section argues, The Tax how taxes as foreign income defines specifically ever, plaintiff ought get state that not a Income Idaho deduction.2 an allowable (a) Rule.—Except as otherwise General of this section con- Subsequent amendments 1. section, provided in this definition. a similar tain the taxable shall be allowed as a deduction for year or accrued: within which 164(a) reads as fol- Revenue Code Internal local, prop- foreign, real State and' lows: erty taxes. 5102(8); deduction, 3420(b)(2)(c). by taking the feder- 72 Penn.Stat. because § 275(a) Idaho’s, the Internal Reve- These states al tax credit are far different from also a precludes by starting nue Code defines taxable argument This federal tax deduction.3 “gross income” federal is, 275(a)’s convincing. Section making adjustments and then numerous prevent a federal purposes, set forth in I.C. Idaho federal paid foreign taxes from taxpayer who has nearly always “taxable income” is different gaining by taking both a a double benefit from federal income” “taxable because of deduction for the federal tax credit and adjustments unique to Idaho. 275(a) expense. says nothing same Section contrary, On the Rhode Island’s tax laws denying about his or her very similar Idaho’s. G.L. 1956 level; options choice of at the state the fact (1980 Reenactment) 44-ll-ll(a)(3) pro- § 275(a) requires vides that reduce his or her elect between one of two federal alterna- reported income as on federal income *4 taxpayer tives does not mean that the must tax by return “all items deductible under option use that same for his or her state applicable the federal income law tax to the income tax return. year.” Island, taxable Rhode like the Tax incorrectness of Commis by determines taxable income mak- position highlighted by sion’s is further the ing statutory adjustments to federal provi fact that Idaho state law has no then, surprising, income. It is not that in a Thus, following sion for tax credits. the us, considering case the exact issue before of reasoning, Commission’sline a state the Rhode Island Court decided as taxpayer only get could a deduction for we do that the state can take a foreign paid if or she he also took a foreign deduction for even when federal tax instead of a federal pur- a federal tax for credit federal support tax credit. We find no for this poses. Norberg, 444 George, Inc. v. A.2d reasoning in relied upon by the cases (R.I.1982). 868 Tax Commission jur which from other isdictions:- Caterpillar Tractor Co. v.
Lecksos,
102,
329,
84 Ill.2d
49 Ill.Dec.
417
II.
(1981);
N.E.2d 1343
Albany International
The second
is whether
issue
the trial
Halperin,
(Me.1978);
v.
Pennsylvania Westinghouse Electric plaintiff. 12-121 states in any Corp., (Pa. 478 A.2d 386 A.2d 491 may civil judge action a award reasonable 1978). inapposite Each case is to the issue attorney’s proviso fees with the that this with dealing. which we are In all three appeal section any shall not alter on statute states, the state taxpay tax law defines a provides which otherwise for the award of er’s taxable income to be that which is attorney’s fees. properly reported for income tax purposes. See Ill.Rev.Stat. 1977 ch. 120 68-30494 is the section 112-203(e)(l); governs judicial Me.Rev.State.Ann.Tit. which review of State 275(a) (a) by reads as fol- Judicial Redetermination review. — may lows: the state tax commission be reviewed in County the district court for Ada or the coun- (a) General rule.—No deduction shall be ty taxpayer resides or in which the has his allowed for the taxes: principal place of office or business a complaint taxpayer against filed Income, profits, profits war and excess thirty days within state tax commission imposed by authority any foreign receipt after the of notice of the decision of country possession of the United if denying, the state tax commission in whole or take chooses to extent the or, part, any protest in within (relating benefits of section 901 to the (30) day period, by thirty filing the same an credit). appeal appeals. Upon with the of tax board serving upon 4. That statute reads: the state tax summons we in The Tax Com- While find no evidence
Tax Commission decisions. is argues that because 63-3049 record that the Tax was mission dilato costs, attorney’s a unprepared, agree as to fees and ry silent we do making court, such judge precluded however, district that the Tax Com words, In other awards. silence mission has defended this case without of such is said to constitute a denial statute unreasonably misreading foundation and §§ can authority fees. We know of misinterpreting 63-3002 logical support reason such a think of no advantage. to its These statutes proposition. An to district court unambiguous. are clear action, for a civil hence within certain argues that The Tax Commission also purview I.C. incorrectly trial court awarded at- attorney’s judge’s A discretion to award legal incurred for torney’s fees costs 12-121 is fees under in turn modified at representation the administrative reme- 54(e)(1), judge states that I.R.C.P. dy stage, prior and hence to the actual such the case only award fees when filing complaint. For the reasons frivo- “brought, pursued or defended below we she is so stated hold that entitled. foundation; unreasonably or lously, without Developers, In Minich v. Gem 54(e)(2) Rule states that whenever 99 Idaho awards fees (1979), we stated: “The clear § 12-121, findings make it shall written ... is to reimburse the suc 12-121] [I.C. making reasons such a to the basis and party legal fees cessful incurred *5 Here the the follow- reward. court stated legal rights.” his or prosecuting her We ing awarding the in fees: § nothing in find 12-121 which establishes pursued has this action The Defendant legislature deny the intended to that frivolously, unreasonably and without attorney’s of fees for costs in awards in that misread and foundation it has pursuing reme curred an administrative misinterpreted Idaho 63- Code Sections instigating very to civil dy prior the action regula- related 3002 and 63-3022 the necessarily when that effort resulted tions, been and dila- unprepared and has failed. discussing the at an infor- tory in issues § interpretation of Our 12-121 is hearing with at other mal Plaintiff and legislation the of supported by recent pursuing times while Plaintiff was § remedies. 12-117: assessed, deficiency together proceed as other as with interest commission the case shall thereon, may by judge in penalties cases but be heard the civil in lieu thereof file or appealed If the to the chambers. case is the clerk court sufficient and of the appeals, hearing that of tax the before board adequate bond in the amount of the double body proceed as the act set forth in penalty shall due and interest claimed from the creating that such board. If the court finds taxpayer, by surety company li- executed due, judgment any for tax is it shall .enter censed and authorized to do business in the tax, any including penalties or such interest payment upon the state of conditioned owing, against may due the also be that taxpayer. tax, any penalty may and interest that be of taxes, Any penalties or interest act, by due No order or found the court. by paid, the of that found court to be in excess proceeding the shall be valid until after time assessed, legally shall be or- which can be court action has ex- allowed such to the with interest dered refunded finally pired deter- or such court action payment. case of the time of In the mined. corporate or use tax and income tax sales (c) may Any party proceedings ap- to the commission, by the state when decisions peal the to the Court from dispute time the notice the amount at the regu- under the rules of deficiency of determination/overassessment prescribed appeals. appeal If the lation twenty-five dollars is issued exceeds ($25,000), thousand commission, by he the shall be taken state tax to board of tax undertaking required give any or to not be to peals be allowed. shall any deposits the cost of such make to secure (b) any by appeal may such be filed Before appeal. taxpayer, pay tax or shall fees, Attorney’s pursuant Bogner that witness ex- fees and § 63-3022(1)(2) penses for foreign a deduction awarded tax- certain instances. —(1) may pur- be taken for state tax In es judi- administrative or civil agree. cannot poses. I proceeding involving cial par- as adverse agency ties a state person, and a determining Bogner’s whether deduc- person court shall award the reasonable be taken to I.C. tion 63- fees, witness fees and reason- 3022(Z)(2),this Court must be mindful of expenses, able if the court in favor finds 63-3002. I.C. states: person and also finds legislature of by intent “It is the state agency acted without a reasonable adoption Act], of Idaho Income Tax [the basis in fact or law. possible provi- to make insofar believe the the Idaho act identical We sions to the that statute provisions two-fold: Federal Internal to serve as Reve- a deterrent relating nue groundless action; the measurement of arbitrary or agency ...; taxable to achieve this re- provide who remedy persons application sult the various have unjustified borne financial unfair and provisions the Federal Internal Reve- defending against groundless burdens of relating nue Code to the definition of charges attempting to correct mistakes income, therefrom, exceptions deduc- agencies should had made. Accord never (personal otherwise) tions Oregon Van Gordon v. State Board of (Emphasis Examiners, 561, 666 Or.App. Dental (1983). mandate, P.2d legislative 63- 3022(Z)(2) must interpreted be so as to be interpret- Those fulfilled consistent with the Internal Revenue Code. ing uphold lower 12-121 to To this achieve result the entire Federal granting attorney’s fees while court’s Internal Revenue Code must be examined. plaintiff attempted at the administrative stage Code, to correct mistakes the Tax Under the Bog- Commis- should have ner is sion avoided. not entitled to a 164 deduction. I.R.C. 164 allows a to take a For *6 foregoing reasons the for foreign paid. deduction taxes How- the district affirmed. The order § ever, 164(f)specifically I.R.C. cross refer- allowing attorney’s fees is affirmed. Costs § taxpayer ences the 275. I.R.C. I.R.C. attorney's respon- fees on § 275 states: dent. “(a) No deduction shall be allowed for taxes: HUNTLEY, JJ., SHEPARD and concur. C.J., DONALDSON, part concurs in “(4) income, profits, prof- war excess part.
dissents in I dissent as to imposed by authority its taxes fees allowed at the level. possession any foreign country or BAKES, Justice, dissenting: taxpayer the United choos- if Plaintiff es to take extent the respondent, Bogner, benefits of § (relating foreign upon section 901 63-3022(1)(2) relied to claim credit).” (Emphasis foreign deduction for paid. taxes § 63-3022(1)(2)allows a taxpayer § to deduct 901 a elect to Under I.R.C. “(a.) itemized deduc- foreign paid. claim credit for a tax 164, 163, as defined in tions sections ... statutory scheme thus forces 165, 166, 170, 171, 211, 212, 216, 213, to choose deduction between 218, Internal Revenue Code Al- paid. If or a credit though Bogner not take did a federal tax chooses to take a tax credit under § § 901, here, pursuant to for- Bogner I.R.C. 164 for did the tax- I.R.C. eign paid, majority agrees payer simply has no deduction available
860
under
I.R.C.
164.
Since
ple disagreement party’s with a the award of ample justification for if 12-121. Even attorney fees under I.C. accept did not
the district court statutory reading of the lan-
commission’s reading and rea-
guage, the is defensible Further, majority as the acknowl-
sonable. not indicate that the
edges, the record does dilatory unprepared
tax commission Thus, I would re- pursuing this cause. attorney court’s award of
verse
fees. I find error in the district court’s
Lastly, attorney under fees
allowance during incurred the ad- 12-121 for costs proceedings. Although the
ministrative opens of I.C.
1984 enactment assessing attorney fees incurred
door for proceedings,
during administrative it does *7 retroactively apply to this case. See (“No part compiled 73-101. of these
I.C. retroactive, expressly unless so de-
laws
clared.”) clearly The new statute was en- provide previous- for situations not
acted to § 12-121, its
ly addressed actions,” applies only “civil
terms proceedings.
not to administrative Accord-
ingly, agree I cannot
supports majority’s interpretation contrary, enact- 12-121. On the 12-117 indicates that attor-
ment
ney during fees incurred
proceedings may awarded under not be