AGO 98016.

• Court: Nebraska

Nebraska Attorney General Opinions 1998. AGO 98016. DATE: March 3, 1998SUBJECT: Authority of County Board to Refund Property TaxesFollowing Judicial Decision Invalidating City Annexation Ordinance.REQUESTED BY: Linda A. Bauer, Jefferson County AttorneyWRITTEN BY: Don Stenberg, Attorney General L. Jay Bartel, Assistant Attorney General You have requested our opinion on several questions concerning property taxation which have arisen as a result of a recent judicial decision invalidating an annexation ordinance adopted by the City of Fairbury. You state you desire our views on these issues to aid you in "advis[ing] the County Board on these matters." By way of background, you relate that the City of Fairbury [City] adopted an ordinance in 1994 which annexed additional area to the corporate limits of the City. Several landowners in the annexed area brought an action against the City challenging the validity of the annexation. During the pendency of the lawsuit against the City, some of the affected landowners paid property taxes (including, of course, taxes resulting from the City levy imposed as a result of the annexation). Other taxpayers sought to pay their taxes "under protest", while still others tendered partial payments (taxes assessed less the amount of the levy from the annexation), which were refused. Some property owners paid no part of their property taxes. In November, 1997, the Jefferson County District Court entered a judgment declaring the annexation "null and void". In the wake of the District Court's decision, the County has received requests from some taxpayers for a refund of the portion of taxes paid based on the additional levy resulting from the annexation. In addition, you state that property owners who had not previously paid property taxes now desire to pay the "appropriate" amount of tax, which, we assume, means the taxes due less the amount attributable to the levy resulting from the annexation. In light of the foregoing, you have asked us to address these questions: 1. Whether the refund provisions contained in Neb. Rev. Stat. §§ 77-1734.01 or 77-1735 (1996) are applicable, and, if so, what period of limitations is applicable to refund claims under these provisions; 2. Whether interest should be assessed if partial tax payments were tendered but rejected; 3. Whether interest should be paid on refunds to taxpayers who paid taxes "under protest" on the portion of taxes resulting from the levy made based on the annexation; and 4. Whether, if refunds are granted and taxpayers receive a credit for levies made as a result of the annexation, the County Assessor may then "calculate [the] levy for rural fire protection which would have been assessed absent city assessments and charge taxpayer[s] for [the] same?" Our conclusions with respect to each of these questions are set forth separately below. A. Authority of County Board to Refund Property Taxes. Your initial question requires consideration of the authority of the County Board to refund property taxes. "It is elementary that a county board has only such powers as the Legislature grants. . . ." State ex rel. Agricultural Extension Service v. Miller, 182 Neb. 285, 287, 154 N.W.2d at 469, 471 (1967). As you recognize in your request letter, there are two statutes authorizing county boards to act on requests for property tax refunds: Neb. Rev. Stat. § 77-1734.01 (1996) and Neb. Rev. Stat. § 77-1735 (1996). As these are the only statutory provisions which could authorize the County Board to refund property taxes in this instance, we will examine, in turn, the potential application of each statute. 1. Neb. Rev. Stat. § 77-1734.01 (1996) - Refunding of Property Taxes Paid as a Result of "Clerical Error or Honest Mistake or Misunderstanding." Neb. Rev. Stat. § 77-1734.01(1) (1996) provides: In case of payment made of any property taxes or any payments in lieu of taxes with respect to property as a result of clerical error or honest mistake or misunderstanding, of which the taxpayer had no notice, on the part of a county or other political subdivision of the state or any taxpayer, the county treasurer to whom the tax was paid may refund or credit that portion of the tax paid as a result of the clerical error or honest mistake or misunderstanding. Before the refund or credit may be made, the county treasurer shall receive verification from the county assessor or other taxing official that such error or mistake was made, and the claim for refund or credit shall be submitted to the county board. The county board shall pass upon the claim as any other claim made against the county. The refund shall be made in the manner prescribed in section 77- 1736.06. The claim for a refund of credit pursuant to this section shall be made in writing to the county treasurer to whom the tax was paid within two years from the date the tax was due. The ordering of a refund or credit by the county board pursuant to this section shall not have a dispositional effect on any similar claim for refund or credit made by another taxpayer. This section may not be used to challenge the valuation of property, the equalization of property, or the constitutionality of a tax. (emphasis added). The Nebraska Supreme Court construed the scope of the portion of § 77-1734.01(1) permitting the refund of taxes paid as the result of a clerical error in School Dist. of Minatare v. County of Scotts Bluff, 189 Neb. 395, 202 N.W.2d 825 (1972). The Court held that a mistake in the taxpayer's return caused by misappropriations by its employees, resulting in an overstating of value on its return, was a clerical error under that section. In discussing the meaning of the term "clerical error" within this provision, the court stated: The statute does not limit the "clerical error" to an error made on the return or to an error in the amount of tax paid. Neither does it limit the "clerical error" to one made in computing the value of the property listed. In view of this legislative history and the language of the statute itself, we do not think the Legislature intended to require proof of what caused the individual to make a clerical error or what motivated his action when he made it. The only requirement of the statute is that some portion of the tax was paid as a result of the "clerical error." The statute requires that the county assessor or other taxing officer verify the fact that a "clerical error" has been made, and also requires the approval of the county board. No one disputes the fact that an error was made by the taxpayer in its inventory records as a result of which an erroneous and excessive tax was paid. Nevertheless, plaintiff contends that no refund was authorized because the error was not a clerical error within the meaning of the statute. Under the provisions of...