Taxpayers, Barbara and Donovan Pendell, appeal a judgment of the Oregon Tax Court, setting aside the Department of Revenue’s (DOR) order and remanding the case to the department with instructions to provide taxpayers with a refund, without interest, of excess taxes paid on federal retirement income for the year 1989. Taxpayers claim that interest should be paid on the amount refunded and that they should receive attorney fees and costs.
In
Davis v. Michigan Dept. of
Treasury,
Taxpayers are federal retirees who, in 1989, paid state income taxes on their federal pensions under protest. They filed a complaint seeking a refund. The DOR rejected taxpayers’ arguments and taxpayers filed a complaint in the Oregon Tax Court. While the appeal was pending, this court handed down its
decision in Ragsdale v. Dept. of Rev.,
Interest on the Refund
The general tax refund statutes provide for interest on tax refunds that are delayed. ORS 305.270(1); ORS 314.415(l)(a). However, ORS 305.765 to 305.785 specifically apply to refunds such as this one, where the taxes are refunded as a result of an invalidated law.
Ragsdale v. Dept. of Rev., supra,
“If an appeal from or petition for certiorari to review a decision of the Supreme Court of Oregon, holding a tax law or any part thereof invalid, is taken to the Supreme Court of the United States and that court does not reverse or modify the decision of the Supreme Court of Oregon, the refund of the invalid taxes shall include interest on the amount paid at the rate of six percent from the date of the last decision of the Supreme Court of Oregon in the matter to the date of filing with the Secretary of State of the report and list of taxpayers entitled to the refunds as required by ORS 305.770.”
That is the only provision for interest in the statutes concerning refunds of taxes imposed by laws that this court invalidates. The legislature expressly provided for interest only when an unsuccessful appeal to the Supreme Court of the United States claims that the law was valid. That limitation suggests that the legislature’s failure to expressly grant interest in other situations involving such refunds was intentional.
See
ORS 174.010 (when interpreting a statute the court shall not “insert what has been omitted”);
Smith v. Clackamas County,
*612 “There hereby is appropriated out of the moneys in the General Treasury, not otherwise appropriated, the amounts necessary to carry out ORS 305.770 to 305.775, not exceeding the amounts paid to and received by the State of Oregon, together with interest as provided in ORS 305.775, under and by virtue of the law or laws, or parts thereof, declared to be invalid.” 2 (Emphasis added.)
ORS 305.775 expressly provides for interest only in the situation of unsuccessful appeals to the Supreme Court of the United States. The statute confirms that interest is not payable in other situations related to an invalidated tax law.
The state is not required to pay interest unless self-imposed by statute.
Seton v. Hoyt,
We now turn to taxpayers’ contentions that they are entitled to an award of interest for constitutional reasons.
*613
They first argue that they are entitled to interest for the money “taken” by the government.
3
However, this present case involves the taxation power, not the eminent domain power of the government. The takings clauses of the state and federal constitutions are not dispositive nor the appropriate basis for starting an inquiry. As to the taxpayers in this case, government’s action was to tax, not to take.
Hughes v. State of Oregon,
Next, taxpayers argue that they are entitled to interest under the Due Process Clause of the Fourteenth Amendment. Due process requires that states give a “clear and certain remedy” when taxes are collected in an unconstitutional manner.
McKesson v. Division of Alc. Bev.,
*614
Neither
McKesson
nor other Supreme Court cases applying
McKesson’s
principles mention the subject of interest, much less indicate that interest would be required.
E.g., American Trucking Assns. v. Smith,
Taxpayers also argue that the failure to pay interest violates their right to equal protection guaranteed by the Fourteenth Amendment to the Constitution of the United States and to the equal privileges and immunities guaranteed by Article I, section 20, of the Oregon Constitution. 4 To demonstrate unequal treatment, taxpayers compare themselves to two classes of people: (1) the class of state retirees who can bring actions based on their Public Employes’ Retirement System (PERS) contract and potentially obtain interest on the sums due under their contract claims, and (2) other state income taxpayers who are entitled to interest under the general refund statutes. The general refund statutes cover those who have paid a tax 5 calculated according to provisions of law, but who have overpaid it. That overpayment and the legal obligation to make a refund usually will occur within the same fiscal period, unlike the case here. See n 2, supra.
*615
No Oregon taxpayer who receives a refund due to invalidated laws will receive interest; therefore, the law applies “upon the same terms” to all citizens as Article I, section 20, of the Oregon Constitution requires. The alleged classifications are the result of generally applicable law. They do not arbitrarily deny recovery to only some members of the same class.
Sealey v. Hicks,
Because no fundamental right or suspect class is involved, the classifications challenged by taxpayers will not violate their rights to equal protection under the Fourteenth Amendment if the classifications rationally further a legitimate state interest.
Nordlinger v. Hahn,
505 US_,
Costs and Attorney Fees
Taxpayers contest the tax court’s judgment awarding costs and attorney fees to neither party. Taxpayers were the prevailing party before the tax court as they obtained a refund even though they did not obtain interest on the refund. Although the tax court could have awarded taxpayers costs and disbursements under OTCR 68B, it was entitled to direct that no costs or disbursements be allowed.
Benj. Franklin Savings and Loan v. Dept. of Rev.,
ORS 305.490(2) provides that, when an individual taxpayer obtains a refund, the Oregon Tax Court “may” award attorney fees. It does not appear herein whether taxpayers incurred attorney fees. The tax court did not abuse its discretion in failing to award
pro se
taxpayers attorney fees in this case.
See Parquit Corp. v. Ross,
This court, although affirming the refund ordered by the tax court, also declines to award costs, disbursements, and attorney fees under ORS 305.447 on this appeal. Taxpayers have obtained no further relief from this court by this appeal.
The judgment of the Oregon Tax Court is affirmed.
Notes
The 1989 legislature attempted to amend ORS 316.680 to eliminate the tax exemption for state retirees. Or Laws 1989, ch 906. However, before that amendment became law, it was referred under Article IV, section 1(3), of the state constitution and rejected by the voters.
Hand v. Roberts,
Because the obligation to pay a refund provided by ORS 305.765 may well come after the end of the state budget period in which those funds were received as taxes and because of balanced-budget constraints imposed on Oregon government by Article EX, sections 2 and 6, of the Oregon Constitution, refunds of taxes imposed by laws later declared invalid are a direct expenditure of the state for which a separate appropriation is required.
Article EX, section 2, in part provides:
“The Legislative Assembly shall provide for raising revenue sufficiently to defray the expenses of the State for each fiscal year * *
Article EX, section 6, provides:
“Whenever, the expenses, of any fiscal year, shall exceed the income, the Legislative Assembly shall provide for levying a tax, for the ensuing fiscal year, sufficient, with other sources of income, to pay the deficiency, as well as the estimated expense of the ensuing fiscal year.”
Taxpayers rely on the Fifth and Fourteenth Amendments to the Constitution of the United States; Oregon Constitution, Article I, section 18; and
State Highway Com’n v. Deal,
“No person shall * * * nor shall private property be taken for public use, without just compensation.”
The Fourteenth Amendment, section 1, of the United States Constitution, provides:
“All persons bom or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”
Article I, section 18, of the Oregon Constitution, provides in part:
“Private property shall not be taken for public use, nor particular services of any man be demanded, without just compensation; nor except in the case of the state, without such compensation first assessed and tendered * *
Article I, section 20, of the Oregon Constitution, provides:
“No law shall be passed granting to any citizen or class of citizens privileges, or immunities, which, upon the same terms, shall not equally belong to all citizens.”
Even the general refund statutes provide for no interest until 45 days after “the due date of the return or the date the tax was paid, whichever is later.” ORS 314.415(l)(a).
Taxpayers also appear to be arguing that they are due interest as part of contract damages that they would be entitled to as third-party beneficiaries of the state’s PERS contract with state employees. Federal retirees were not intended
to
benefit from this contract and therefore are not third-party beneficiaries to the contract.
Aetna Casualty & Surety Co. v. OHSU,