567 A.2d 1264 | Conn. Super. Ct. | 1989
The plaintiff, Control Module, Inc., moves for summary judgment in this appeal from an assessment of additional corporation business taxes that the defendant commissioner of revenue services (commissioner), determined to be due under General Statutes §
The following facts are either stipulated or undisputed: Control Module, a Delaware corporation with its principal business office in Enfield, engaged in the business of manufacturing, selling and servicing optical scanners and related equipment during the relevant fiscal years of 1981, 1982 and 1983. The plaintiff conducted its business in Connecticut and in other states, but, in fiscal year 1981, it was subject to a corporation business, net income or franchise tax only in Connecticut and Virginia. In fiscal years 1982 and 1983, *272
it was subject to such taxes only in Connecticut, Virginia and California. As a corporation conducting business in, and subject to such taxes in several states, Control Module was subject to General Statutes §
For all of Control Module's fiscal years that are relevant to this appeal, §
On its Connecticut corporate tax returns for its 1981, 1982 and 1983 fiscal years, Control Module used the apportionment formula provided in §
For all of Control Module's fiscal years that are relevant to this appeal, §
After an audit of Control Module's returns for the fiscal years in question, the department of revenue services issued a determination letter, dated October 31, 1985, in which it concluded that the §
The consequence of the department's recalculation was to assess the plaintiff with a tax deficiency and interest through February 28, 1989 as follows:
Tax Deficiency Interest
1981 $10,832 $16,096 1982 30,947 39,798 1983 439 477 ------- ------- TOTAL $42,218 $56,371
TOTAL $98,589
The plaintiff appeals the department's determination pursuant to General Statutes §
The plaintiff asserts two grounds in its motion for summary judgment: (1) §
On the other hand, in Holmes v. New York City HousingAuthority,
Significantly, §
The act, drafted in 1957 by the national conference of commissioners on uniform state laws, has been enacted by twenty-five states. 7A U.L.A., p. 331 (1985). In addition, two states and the District of Columbia have enacted the act by becoming parties to the multistate tax compact. 1 J. Hellerstein, State Taxation, Corporate Income and Franchise Taxes (1983) p. 498. No court in any of those states has declared the implementation *276 of § 18 of the act or the comparable article IV (18) of the multistate tax compact dependent on the prior adoption of regulations. Id.
It has been held that § 18 of the act should be narrowly construed; Deseret Pharmaceutical Co. v. StateTax Commission,
In Northwest Airlines, Inc. v. State Tax AppealBoard,
Metromedia, Inc. v. Director, Division of Taxation,
In fact, the New Jersey Supreme Court specifically approved the wide discretion granted the tax director. The court said: "Clearly, the language of the statute vests broad authority in the Director to determine what income-producing activity of the taxpayer is reasonably referable to its business in New Jersey, so that this income can appropriately be used in the measure of the franchise tax. The statutory scheme recognizes that this is a highly specialized decision that entails considerable discretion. . . . The Director's discretion is bound by standards of `sound accounting principles.' . . . It is nonetheless as broad as necessary to enable the Director to determine the fair value of the taxpayer's net worth . . . as well as the percentage of net worth and net income that can be attributed to New Jersey." (Citations omitted.) Id., 324.
Hellerstein concludes that § 18 of the act "clearly sets up adequate standards for administrative action." 1 J. Hellerstein, supra, p. 605. Further, in F. Keesling J. Warren, "California's Uniform Division of Income for Tax Purposes Act," 15 U.C.L.A. L. Rev. 156, 170 (1967), the observation is made that precise bounds for applying § 18 are neither feasible nor desirable because of the variety of situations in which equitable apportionment *278 may be appropriately made. The authors say: "In the allocation of income, unusual situations, which should be excepted from the application of general rules, frequently arise. Such situations may be impossible to anticipate or difficult to describe with sufficient precision to permit drafting of a provision in the statute setting forth precisely the rules to be applied." Id.
In Connecticut, a law granting an administrative agency the power to do what is "equitable" has been upheld without the prior adoption of regulations. InNorwalk v. Connecticut Co.,
In its summary judgment motion, the plaintiff seeks to have this court hold that the commissioner, statutorily authorized to act "equitably," violates administrative law unless he first adopts regulations setting forth standards to define and restrict his discretion. No Connecticut cases so construe §
In light of the manner in which the issue is presented here, this court is not prepared to render such a decision as an abstract proposition. The issue is better left to a determination after a trial, in which all the facts will be elicited in their full complexity as to the interrelationship between §
The Uniform Administrative Procedure Act, General Statutes §
In Salmon Brook Convalescent Home v. Commissionon Hospitals Health Care,
Likewise, in Walker v. Commissioner,
In the present case, there is no evidence that the "throw-out rule" has been applied by the commissioner in the past, or that it is consistently being applied in the present, or that it will have a substantial impact on the rights and obligations of those corporate taxpayers who may appear before the commissioner in the future. Whether the "throw-out rule" is one of general applicability within the meaning of §
On the basis of the foregoing, the plaintiff's motion for summary judgment is denied.
Because this court has spent many hours researching the issues here involved, it will retain jurisdiction of this case for trial. Counsel are urged to agree among themselves upon a trial date and this court will endeavor to make itself available on that date.