Opinion

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

November 13, 2012 Session

ESTATE OF JOSEPH OWEN BOOTE, JR.,

HELEN BOOTE SHIVERS AND LINDA BOOTE, CO-EXECUTORS

v.

RICHARD H. ROBERTS, COMMISSIONER,

TENNESSEE DEPARTMENT OF REVENUE

An Appeal from the Chancery Court for Davidson County

No. 11-1037-IV Russell T. Perkins, Chancellor

No. M2012-00865-COA-R3-CV - Filed March 28, 2013

This appeal involves a claim for interest on inheritance and estate tax refunds. In 2002, the

decedent’s estate filed a Tennessee inheritance tax return and paid an estimated amount of

taxes due. Over the next several years, the estate was embroiled in litigation; the litigation

expenses diminished the size of the estate. Once the litigation concluded, the estate became

entitled to more deductions on its inheritance tax return. To obtain the benefit of the

deductions, the estate filed two amended Tennessee inheritance tax returns, one in 2009 and

one in 2010, claiming that it was entitled to substantial tax refunds based on its overpayment

of inheritance and estate taxes in 2002. The defendant Commissioner of the Tennessee

Department of Revenue paid the refunds claimed in the estate’s amended returns, plus a

pittance of interest on the refunds. The estate filed this lawsuit against the commissioner,

claiming that it was entitled to additional interest on the inheritance and estate tax refunds

under the applicable law. The parties filed cross-motions for summary judgment; each

agreed that the facts are undisputed and each claimed that it was entitled to judgment as a

matter of law. The trial court granted summary judgment in favor of the commissioner. The

estate now appeals. We affirm the decision of the trial court.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court is Affirmed

H OLLY M. K IRBY, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,

W.S., and D AVID R. F ARMER, J., joined.

Andree S. Blumstein and Linda R. Koon, Nashville, Tennessee, for the Plaintiff/Appellant

Estate of Joseph Owen Boote, Jr., Helen Boote Shivers and Linda Boote, Co-Executors

Robert E. Cooper, Jr., Attorney General & Reporter; William E. Young, Solicitor General;

and R. Mitchell Porcello, Assistant Attorney General, for the Defendant/Appellee Richard

H. Roberts, Commissioner, Tennessee Department of Revenue

OPINION

F ACTS AND P ROCEEDINGS B ELOW

Background

Joseph Owen Boote, Jr. (“Mr. Boote”), died testate on September 12, 2001, leaving a sizable

estate. He was survived by his wife, Mrs. Martha M. Boote (“Wife”), and two daughters

from a previous marriage, Helen Boote Shivers and Linda Boote. Mr. Boote’s Last Will and

Testament was duly probated in the Chancery Court for Marshall County, Tennessee, and his

daughters were appointed as the co-executors of his estate (“the Estate”).

This appeal involves a dispute over the amount of interest due to the Estate for overpaid

inheritance and estate taxes. The parties do not dispute the underlying facts involved in this

controversy. They submitted to the trial court a document entitled “Joint Stipulations of

Material Facts” with their respective motions for summary judgment. Those stipulated facts

are the basis for our analysis of the issues on appeal.

Tennessee Inheritance and Estate Taxes

A general overview of Tennessee’s inheritance and estate taxes, sometimes rather

unflatteringly termed “death taxes,” is helpful to an understanding of the issues on appeal.

Under the Tennessee Inheritance Tax Statute, an inheritance tax is imposed upon the

beneficiary of an estate for the privilege of acquiring an estate by succession. Woods v.

Paschall, 547 S.W.2d 575, 577 (Tenn. 1977); see Tenn. Code Ann. §§ 67-8-301 to 67-8-507

(2011 & Supp. 2012). Tennessee inheritance taxes are imposed on an estate if the value of

the net taxable estate exceeds the maximum single exemption allowed on the date of the

decedent’s death.1 See Tenn. Code Ann. § 67-8-314 (Supp. 2012) (tax rates). The value of

the net taxable estate may be reduced by certain deductions, such as administrative costs, the

1

In 2001, the year Mr. Boote died, the maximum single exemption was $675,000. Tenn. Code Ann. § 67-8-

316(b) (Supp. 2012). The net taxable estate of Mr. Boote exceeded this exemption.

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bequest to the surviving spouse (referred to as the “marital deduction”), and other things. As

the deductions reduce the monetary value of the estate, the amount of Tennessee inheritance

tax due is also reduced. See Tenn. Code Ann. § 67-8-315 (2011).

“The Tennessee Inheritance Tax Law is supplemented by the Tennessee Estate Tax Law.”

2 Jack W. Robinson, Sr., et al., Pritchard on Wills and Administration of Estates § 978 (5 th

ed. 1994); see Tenn. Code Ann. §§ 67-8-201 to 67-8-217 (2011). The Tennessee estate tax

is imposed “upon the transfer of the Tennessee estate of every decedent, the amount of which

Tennessee estate tax shall be equal to the extent, if any, of the excess of the credit over the

aggregate of state taxes . . . .” Tenn. Code Ann. § 67-8-204. In other words, the estate tax

is essentially a tax measured by the difference between the Tennessee inheritance tax due and

the maximum federal state death tax credit available on the federal tax forms. The Tennessee

Supreme Court has described the estate tax as a “pickup” tax, the purpose of which is “to

divert to state revenue funds which otherwise would have been payable to the United States

Government under the federal estate tax law and to assure that the state received the

maximum amount allowable as credit to a decedent’s estate under the federal statute.”

Woods v. Campbell, 584 S.W.2d 451, 453 (Tenn. 1979). Thus, in order to determine

Tennessee estate tax liability for a given estate, the estate’s Tennessee inheritance tax liability

and the federal state death tax credit must first be determined.

An estate is not required to file a separate estate tax return. Rather, the amount of estate tax

due is included as a line item in the Tennessee inheritance tax return.

Joint Stipulation of Material Facts

Original Inheritance Tax Return – Filed December 2002

The Boote Estate’s inheritance tax return was due to be filed on June 12, 2002.2 On June 10,

2002, the Estate filed for an extension to file its inheritance tax return. At the time it

requested the extension, the Estate paid Defendant/Appellee Richard H. Roberts,

Commissioner of the Tennessee Department of Revenue (“Commissioner”) $4,010,000 for

the estimated inheritance and estate taxes due.

On December 12, 2002, the Estate filed its original Tennessee inheritance tax return. On that

return, the Estate determined that it owed $2,698,342 in inheritance taxes and $1,400,295 in

2

An inheritance tax return must be filed nine months after the death of the decedent, but an extension of one

year may be granted if certain documents are filed with the request before the expiration of the nine-month

period. See Tenn. Code Ann. § 67-8-419 (2011). If an extension is granted, the estate must pay the resulting

tax liability plus interest on that amount from the date that the taxes were originally due.

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estate taxes, for a total tax liability of $4,098,637. Because the Estate had paid $4,010,000

in June 2002, it paid the difference of $88,638 to the Commissioner when it filed its return.

In calculating the taxes due on the original return, the Estate reduced the amount of the

taxable estate by estimated funeral expenses and administrative expenses of $1,618,977.

This amount included an estimated executor’s commission of $750,000; estimated attorney

fees of $759,000; estimated accountant fees of $30,000; estimated court costs of $3,981; and

an estimated cost of the executor’s bond of $58,650. Additionally, in its original return, the

Estate used an estimated marital deduction of $624,200.50, even though by that time the

amount of Wife’s share of the Estate had already become the subject of litigation.

Because the additional $88,638 inheritance tax payment had been actually due in June 2002,

interest was due on that additional payment in the amount of $3,885.87. On May 23, 2003,

the Commissioner billed the Estate for the $3,885.87 in a Notice of Assessment. On June

9, 2003, the Estate paid the Commissioner $3,885.87 in accordance with the notice.

Thus, in total, the Estate paid the Commissioner $4,102,523.87 in inheritance and estate taxes

plus interest in 2002 and 2003: $4,010,000 (June 2002 – advance taxes), $88,638 (December

2002 – additional taxes), and $3,885.87 (June 2003 – interest).

The First Amended Inheritance Tax Return — Filed January 2009

Almost from the moment of Mr. Boote’s death in 2001 until 2010, the Estate was ensnarled

in complex litigation. Perhaps not surprisingly, the litigation generated substantial

administrative expenses for the Estate. In turn, the Estate was entitled to a deduction on its

inheritance taxes for those sizeable administrative expenses. The litigation also resulted in

the Estate becoming entitled to a larger marital deduction. As noted above, both the

deductions for administrative expenses and Wife’s marital share had been estimated in the

Estate’s original tax return filed in December 2002. As the litigation progressed, however,

it became apparent to the Estate that the estimated deduction amounts used in its 2002 return

were insufficient. Although it was foreseeable in 2002 that the Estate would incur these

expenses, their final and exact amount could not have been determined in 2002. In 2002, the

Estate opted to pay the taxes owed using conservative estimates for those deductions, and

thereby overpaid its Tennessee inheritance and estate taxes.

In November 2008, the litigation over Wife’s marital share was finally settled. Once the

amounts related to this litigation became ascertainable, the Estate sought to take the

allowable deductions for those expenses. To that end, the Estate filed its first amended

Tennessee inheritance tax return (“First Amended Return”), mailed to the Commissioner on

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January 23, 2009.3 On that return, the Estate reported an increase in the marital deduction

of $3,000,000, an increase in the legal expenses of $1,776,394.70, and an increase in the

bond expense of $7,499. The previously claimed deductions from the original return were

also included in the return. Based on these deductions, the Estate requested a refund of

$746,158.51 in overpaid inheritance and estate taxes.

Included with the First Amended Return was a copy of an Agreed Order dated November 6,

2008. The Agreed Order related to a meditation agreement in the underlying litigation over

Wife’s share of the Estate. It stated in relevant part that any tax refund due to the Estate as

a result of an increased marital deduction was contingent upon the “receipt of written

confirmation from the Internal Revenue Service that a marital deduction will be allowed.”

The order included alternate distribution instructions “if a marital deduction is not allowed

for part or all of [the] distribution to [Wife].” Additionally, the Agreed Order noted that

payments for “an Executor’s fee” and “attorneys’ fees” were “reserved for further

proceedings.” Thus, the distribution of funds in the Estate was contingent upon the decision

by the Internal Revenue Service (“IRS”) on how the increased marital deduction would be

treated.

Upon the receipt of the Estate’s First Amended Return, the Commissioner contacted the IRS

to determine what deductions it had accepted and allowed for the Estate at the federal level.

On September 29, 2009, the Commissioner received the IRS response. The IRS allowed the

claimed marital deduction and some attorney fees, but it disallowed the executor’s

commission of $750,000. The IRS also disallowed the $759,000 in claimed attorney fees

“until the exact amounts are determined.”

The response the Commissioner received from the IRS indicated that it had tentatively

allowed deductions and expenses at the federal level, so the Commissioner processed and

issued a tentative refund for the Estate. On approximately November 25, 2009, the

Commissioner issued a refund to the Estate in the amount of $516,246. This was

considerably less than the amount claimed by the Estate. The refund the Commissioner

issued to the Estate was comprised of the following:

Inheritance tax refund: $346,805.63

Estate tax refund: 164,531.82

Interest refund: 3,885.87

Interest paid on refunds: 1,022.68

TOTAL: $516,246.00

3

The Stipulated Facts state that the First Amended Return was dated December 29, 2008, but was mailed to

the Commissioner on January 23, 2009.

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The Second Amended Inheritance Tax Return — Filed December 2010

At the time the Estate filed its First Amended Return in early 2009, there was still ongoing

litigation related to a claim for fees by a former executor and attorney fees for counsel

retained by the executor. Almost two years later, in December 2010, the Estate filed a second

amended inheritance tax return (“Second Amended Return”), which took into account the

additional administrative expenses incurred by the Estate in that litigation. In the Second

Amended Return, the Estate sought a refund of $261,997.13 for overpaid inheritance and

estate taxes. This Second Amended Return was based on additional executor fees, legal

expenses, and fees of $1,637,486. The Commissioner received the Second Amended Return

on December 27, 2010.

On April 1, 2011, the Estate forwarded to the Commissioner the IRS Estate Tax Closing

Document for the Estate. This document showed the final amount of federal estate tax due

for the Estate. The Commissioner determined that this document was necessary to determine

the amount of the federal net estate tax and the state tax credit available and, therefore, the

final amount of Tennessee inheritance tax and estate tax due from the Estate. On May 23,

2011, the Commissioner issued a refund to the Estate based on the Second Amended Return.

The refund was in the total amount of $263,279, comprised of the following:

Inheritance tax refund: $155,540

Estate tax refund: 107,322

Interest paid on refunds: 417

TOTAL: $263,279

Commissioner’s Interest Calculations

As we have indicated, the Commissioner paid the Estate a total of about $1,440 in interest

on the $778,085 in inheritance and estate tax refunds under the First and Second Amended

returns. The Commissioner calculated this amount of interest on the inheritance refunds in

accordance with Tennessee Code Annotated § 67-1-801(b), which addresses how interest

should be calculated on “any tax collected or administered by the commissioner.” Tenn.

Code Ann. § 67-1-801(b) (2011). Section 67-1-801(b) states in relevant part:

(b)(1) When it is determined by administrative review that a person is entitled

to a refund or credit of any tax collected or administered by the commissioner,

. . . interest shall be added to the amount of refund or credit due, beginning

forty-five (45) days from the date the commissioner receives proper proof to

verify that the refund or credit is due and payable.

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Tenn. Code Ann. § 67-1-801(b)(1) (2011). Thus, under this statute, interest on a tax refund

begins to accrue 45 days after “proper proof” is received by the Commissioner. The rate of

interest is determined by the Commissioner according to the formula rate of interest last

published in the Tennessee Administrative Register. See Tenn. Code Ann. § 67-1-801(b)(3).

The Commissioner also applied this general interest statute, Section 67-1-801(b), to calculate

the interest on the Estate’s estate tax refunds. This was done pursuant to the directive of

Tennessee Code Annotated § 67-8-208(d), which specifically applies to the rate of interest

on a Tennessee estate tax refund. In its current version, it directs that an estate tax refund

must be paid “together with interest thereon as provided in Section 67-1-801(b),” the above-

quoted general interest provision. Therefore, the Commissioner calculated the interest on the

inheritance tax refund as well as the estate tax refund pursuant to Section 67-1-801(b), the

general interest statute.

In applying Section 67-1-801(b), the Commissioner determined that it had received “proper

proof” of the refund for the First Amended Return on September 29, 2009, the date of the

IRS’s response to the Commissioner’s inquiry about the federal tax treatment of the proposed

deductions. Based on that premise, interest on the first refund began to accrue 45 days after

September 29, 2009, i.e., on approximately November 13, 2009. Because the first refund

check was written on approximately November 25, 2009, and interest was paid at a rate of

7.25%, the Commissioner paid the Estate $1,022.68 in interest, broken down as follows:

$688.38 (interest on inheritance tax) plus $326.59 (interest on estate tax) plus $7.71 (interest

on 2003 interest payment).

For the Second Amended Return, the Commissioner concluded that a final determination of

the inheritance and estate taxes was made on April 1, 2011, when the Estate forwarded to the

Commissioner the IRS Estate Tax Closing Document for the Estate. Based on this, the

Commissioner determined that interest on the second refund began to accrue 45 days after

April 1, 2011, which was on May 15, 2011. Because the second refund check was written

on May 23, 2011, the Commissioner paid the Estate $417 in interest: $247 (interest on

inheritance tax) plus $170 (interest on estate tax).

Lawsuit

Unhappy with the Commissioner’s calculation of the amount of interest paid on the tax

refunds, on July 28, 2011, the Estate filed this lawsuit against the Commissioner. The Estate

sought additional interest on the inheritance and estate tax refunds, alleging that the

Commissioner misapplied the law in calculating the amounts of interest paid on both the First

and Second Amended Returns.

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As to the interest on the estate tax refunds, the Estate claimed that the Commissioner

erroneously calculated the amount of the interest due by retroactively applying the current

version of Section 67-8-208(d). The Estate asserted that the Commissioner should have

applied the version of subsection (d) of the statute that was in existence in 2002, when the

Estate made the estate tax overpayments. The version of Section 67-8-208 in effect at the

time the payments were made in 2002 provided:

(a) If the amount of federal estate tax is, upon the final determination of the

federal estate tax, increased or decreased as affecting an estate the transfer of

any part whereof is taxable hereunder subsequent to the payment of the

Tennessee estate tax, the Tennessee estate tax imposed shall be changed

accordingly. . . .

(b) In the event that there shall be a decrease in the federal estate tax, the

executor shall file with the commissioner of revenue an affidavit in such form

as is prescribed by the commissioner . . . .

...

(d) The commissioner shall thereupon cause to be paid to the executor from

the fund retained by the commissioner, as provided in § 67-8-210, the amount

of refund found to be due, together with interest thereon at the rate of six

percent (6%) from the date of payment of the Tennessee estate tax . . . .

Tenn. Code Ann. § 67-8-208 (2009). Thus, under this previous version of the statute, the

Estate would have been entitled to interest on its estate tax refunds based on an interest “rate

of six percent (6%) from the date of payment of the Tennessee estate tax.” Using this rate,

the Estate claimed, would have resulted in interest of $121,920 on the estate tax refunds.

The Estate conceded that the Commissioner was correct in calculating the amount of the

interest on the inheritance tax refunds in accordance with the method set out in the general

interest statute, Section 67-1-801(b). It argued, however, that the Commissioner improperly

calculated the interest by erroneously using the dates on which it received information about

the federal estate tax — September 29, 2009, and April 1, 2011, respectively — in

determining the accrual date for the interest payments. Instead, the Estate argued, interest

should have begun to accrue 45 days after the Commissioner received the First and Second

Amended Returns. It claimed that the First and Second Amended Returns, along with all of

the supporting documentation, constituted “proper proof” on which the Commissioner could

have verified and paid the tax refunds within the meaning of the statute. Therefore, the

interest on the two inheritance tax refunds should have begun accruing 45 days from the

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dates on which the Commissioner received the First and Second Amended Tax Returns; the

Estate claimed that this would have resulted in interest on the inheritance tax refunds in the

amount of $23,104. Thus, in total, the Estate sought compensatory damages of $145,024,

less the approximately $1,440 in interest already paid, plus attorney fees and costs.

On December 20, 2011, the Estate filed a motion for summary judgment, asserting that the

facts were undisputed and that it was entitled to a judgment as a matter of law. The Estate

attached to its summary judgment motion the affidavit of Helen Shivers, as well as numerous

exhibits that included all of the tax returns filed, correspondence between the Commissioner

and the Estate, and other relevant documentation.

On February 1, 2012, the Commissioner filed a cross-motion for summary judgment,

maintaining that the amount of interest paid on the estate and inheritance tax refunds was

correct. The Joint Stipulation of Material Facts to which we have referred was also filed on

that day. The Commissioner attached to his summary judgment motion the affidavits of Amy

Green, an employee with the Tennessee Department of Revenue, and Wendy McCormack,

an attorney in the Attorney General’s office, as well as relevant exhibits. The Commissioner

argued in his motion that the former version of Section 67-8-208(d), on which the Estate

relied, was inapplicable in this case. The Commissioner reasoned that, at the time he made

the first refund payment to the Estate, no “final determination of the federal estate tax” had

been made within the meaning of Section 67-8-208(a), which triggered the Estate’s

entitlement to a refund under the statute. By the time a “final determination” had been made

in 2011, the Commissioner argued, Section 67-8-208(d) had been amended to its current

form, and the 2011 version of the statute was properly applied. In the alternative, the

Commissioner argued that 1986 Pub. Acts Ch. 749, codified in Section 67-1-801(b) in 1986

and commonly known as the “Wilder Bill,” implicitly repealed and superseded any older,

conflicting interest provisions, including Section 67-8-208(d). Therefore, the Commissioner

argued, the general interest statute — Section 67-1-801(b) — controlled the interest paid

on both refunds in their entirety.

Regarding the accrual date for the calculation of interest under Section 67-1-801(b), the

Commissioner argued that it did not have proper proof to verify the amount of the refunds

until he received the information about the IRS conclusions regarding the federal estate tax.

Therefore, he claimed, because “proper proof” to verify the two refunds was received by the

Commissioner on September 29, 2009, and April 1, 2011, respectively, it was appropriate to

measure the interest on the Estate’s refunds from those dates.

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Trial Court Decision

On February 24, 2012, the trial court conducted a hearing on the parties’ cross-motions for

summary judgment.4 On March 21, 2012, the trial court issued a memorandum and order

granting the Commissioner’s motion for summary judgment and denying the Estate’s motion.

At the outset, the trial court rejected the Commissioner’s argument that Section 67-8-208(d)

was either expressly or impliedly repealed by the enactment of the Wilder Bill in 1986,

because the statutes were not in conflict, and the legislature expressed no intention to repeal

the interest provision in Section 67-8-208(d) when it promulgated the general interest statute.

The trial court nevertheless concluded that the Commissioner had properly calculated the

interest on the Estate’s two estate tax refunds. It held that calculation of the interest under

the current version of Section 67-8-208(d), and thus pursuant to the general interest statute,

was correct because interest under Section 67-8-208(d) was triggered only “upon the final

determination of the federal estate tax.” The trial court held that the“final determination”

requirement in subsection (a) was a prerequisite to the interest calculations in subsection (d):

“[A] comprehensive review of the structure of the entire statute reveals that the subsection

(d) language addressing interest simply cannot be separated and applied to a refund claim

when none of the other earlier requirements of the statute have been met.” Because the

Estate’s federal estate tax liability was not finalized until 2011, the trial court held, the

version of the statute in effect at that time governed the calculation of interest on the

Tennessee estate tax refund. For this reason, the trial court found, the application of the

current version of Section 67-8-208(d) was proper, and it did not constitute retroactive

application as argued by the Estate.

The trial court also held that the Commissioner had properly calculated the interest owed to

the Estate on the inheritance tax refunds. It held: “The calculation of Tennessee’s

inheritance tax requires a determination of several federal estate tax deductions and

expenses.” The trial court found that the amended returns themselves did not provide the

Commissioner with the information necessary to “verify” and issue a refund, because the

refunds were reliant on information outside of the returns, and the amounts ultimately paid

were different from the amounts claimed by the Estate. Thus, the trial court held, the

Commissioner correctly determined that proper proof to verify the Estate’s entitlement to

refunds, as well as the amount of the refunds, was received on September 29, 2009, and April

1, 2011, when the Commissioner received documentation on the IRS’s federal estate tax

decisions. Therefore, it concluded, the Commissioner properly calculated the interest on the

inheritance tax refunds beginning 45 days after it received that federal documentation. The

trial court commented that it was concerned “with the equities associated with the State being

allowed to have the use of the taxpayer’s funds for so long without incurring a corresponding

4

A transcript of that hearing was not included in the appellate record.

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interest obligation,” but ultimately determined that its decision was compelled by the statutes

that were in effect.

In addition, the trial court held that the Commissioner, as the prevailing party, was entitled

to reasonable attorney fees and expenses pursuant to Section 67-1-1803(d), but it reserved

that issue “until all appeals are concluded.” The trial court certified the March 21, 2012

order as final and appealable pursuant to Rule 54.02 of the Tennessee Rules of Civil

Procedure. From this order, the Estate now appeals.

ISSUES ON A PPEAL AND S TANDARD OF R EVIEW

On appeal, the Estate challenges the trial court’s grant of summary judgment in favor of the

Commissioner, making the same legal arguments it made to the trial court. On appeal, the

Estate raises two specific issues:

1. Whether the 2011 version of Section 67-8-208(d) may be applied

retroactively to interest on refunds of estate taxes that were paid in 2002?

2. Whether the receipt by the Commissioner of the First and Second Amended

Returns constituted “proper proof” within the meaning of Section 67-1-801(b)

to verify that the refund of inheritance tax was due and payable, thereby

triggering the date on which interest began to accrue on that refund?

The Commissioner raises an additional issue in his appellate brief, namely, whether the trial

court erred in holding that Section 67-8-208(d) was not repealed by the Wilder Bill, either

expressly or by implication. Arguing in the alternative, the Commissioner asserts that this

is an additional reason supporting the trial court’s grant of summary judgment on the estate

tax issue.

The trial court’s resolution of a motion for summary judgment is a conclusion of law, which

we review de novo on appeal, according no deference to the trial court’s decision. Martin

v. Norfolk S. Ry. Co., 271 S.W.3d 76, 84 (Tenn. 2008). Summary judgment is appropriate

only when the moving party can demonstrate that there is no genuine issue of material fact,

and that it is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04; see Hannan v.

Alltel Publ’g Co., 270 S.W.3d 1, 5 (Tenn. 2008); Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn.

1993).

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This action was filed on July 28, 2011. Therefore, the trial court was required to apply the

summary-judgment standard set forth in Tennessee Code Annotated § 20-16-101.5 That

statute provides:

In motions for summary judgment in any civil action in Tennessee, the moving

party who does not bear the burden of proof at trial shall prevail on its motion

for summary judgment if it:

(1) Submits affirmative evidence that negates an essential

element of the nonmoving party’s claim; or

(2) Demonstrates to the court that the nonmoving party’s

evidence is insufficient to establish an essential element of the

nonmoving party’s claim.

Tenn. Code Ann. § 20-16-101 (Supp. 2012).6

In this case, the parties stipulated to the pertinent facts, and the only issues presented are

questions of law. “Summary judgments are appropriate in virtually any civil case that can

be resolved on the basis of legal issues alone.” CAO Holdings, Inc. v. Trost, 333 S.W.3d

73, 81 (Tenn. 2010). As the trial court recognized, “[b]ecause legal disputes involving the

payment of taxes are frequently based on stipulated facts, they generally lend themselves to

disposition by summary judgment as issues of law.” Id. Nevertheless, “the well-understood

principles generally governing the review of summary judgments are equally applicable to

summary judgments in proceedings involving tax disputes.” Id. at 81-82. Furthermore,

when both parties move for summary judgment on undisputed facts, such cross-motions “are

no more than claims by each side that it alone is entitled to a summary judgment. The court

must rule on each party’s motion on an individual and separate basis.” Id. at 83 (citation

omitted).

5

Section 20-16-101 is applicable to all cases filed on or after July 1, 2011.

6

Section 20-16-101 was enacted to abrogate the summary-judgment standard set forth in Hannan, which

permitted a trial court to grant summary judgment only if the moving party could either (1) affirmatively

negate an essential element of the nonmoving party’s claim or (2) show that the nonmoving party cannot

prove an essential element of the claim at trial. Hannan, 270 S.W.3d at 5. The statute is intended “to return

the summary judgment burden-shifting analytical framework to that which existed prior to Hannan,

reinstating the ‘put up or shut up’ standard.” Coleman v. S. Tenn. Oil Inc., No. M2011-01329-COA-R3-CV,

2012 WL 2628617, at *5 n.3 (Tenn. Ct. App. July 5, 2012).

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The issues presented in this appeal involve statutory construction, which are questions of law

to be reviewed de novo. U.S. Bank, N.A. v. Tenn. Farmers Mut. Ins. Co., 277 S.W.3d 381,

386 (Tenn. 2009). In construing a statute, our duty “is to ascertain and give effect to the

intention and purpose of the legislature.” Jordan v. Knox County, 213 S.W.3d 751, 763

(Tenn. 2007). Whenever possible, this intent is gleaned from the plain and ordinary meaning

of the statutory language. Id. A statute should be read naturally and reasonably, presuming

that the legislature says what it means and means what it says. See In re Samaria S., 347

S.W.3d 188, 203 (Tenn. Ct. App. 2011). If the language of a statute is clear, we apply the

plain meaning of the statute without complicating the task and without giving it “a forced

interpretation that would limit or expand the statute’s application.” Eastman Chem. Co. v.

Johnson, 151 S.W.3d 503, 507 (Tenn. 2004).

A NALYSIS

Retroactive Application of Tennessee Code Annotated § 67-8-208(d)

The Estate first argues that the trial court erred in applying the 2011 version of Section 67-8-

208(d) retroactively in determining the interest due on its estate tax refunds. It points out that

the former version of the statute, allowing for 6% interest “from the date of payment of the

Tennessee estate tax,” was in effect in 2001 when Mr. Boote died, in 2002 when the estate

taxes were paid, and in 2009 when the first estate tax refund was paid. The amendment to

the special provision did not become effective until July 1, 2010, after the Estate’s right to

a refund had already vested. For this reason, the Estate argues, the Commissioner improperly

applied the amended version of Section 67-8-208(d) retroactively to its estate tax refund.

In response, the Commissioner argues that the trial court correctly applied the version of

Section 67-8-208(d) in effect in 2011, because “the Estate failed to meet the requirements

to trigger an interest payment under the old version of Tenn. Code Ann. § 67-8-208(d).” In

accord with the trial court’s decision, the Commissioner claims that Section 67-8-208

addresses an adjustment of the Tennessee estate tax “upon change in federal tax payment,”

and only after “the final determination of the federal estate tax” has been made. Because “the

final determination of the federal estate tax” was made in 2011, the Commissioner argues,

2011 was the year in which the Estate became entitled to a refund under the statute; there was

nothing to trigger the statute prior to that time. Therefore, the former version of the statute

never became applicable to the Estate, and the trial court’s application of the 2011 version

of the statute did not constitute a “retroactive application” of the statute.

“In Tennessee, amendments to tax statutes are presumed to be prospective in application

unless an intention to the contrary is clearly expressed.” Northwest Airlines, Inc. v.

Tennessee State Bd. of Equalization, 969 S.W.2d 911, 913 (Tenn. 1998). This presumption

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arises in part from an age-old rule of law: “The repeal of a statute does not affect any right

which accrued, any duty imposed, any penalty incurred, nor any proceeding commenced,

under or by virtue of the statute repealed.” Id. (quoting Nashville Ry. & Light Co. v.

Norvell, 124 S.W. 613, 614 (Tenn. 1910) (quoting statute now codified at T.C.A. § 1-3-

101)).

The Court in Northwest Airlines recognized this principle. In that case, the petitioner airline

and railroad businesses sued the Tennessee State Board of Equalization in federal district

court, challenging the board’s assessment of certain property taxes for the years 1990 through

1995. The parties reached a settlement as to most of the issues; pursuant to the settlement

agreement, the petitioners owed taxes to some counties and municipalities and were due

refunds from others. The only issue in Northwest Airlines that remained unresolved was the

appropriate interest rate to be applied to the refunds and additional payments due pursuant

to Section 67-5-1512(b)(2). Id. at 912. For the tax years in question, the relevant statute

provided that the rate of interest was the composite prime rate. On April 22, 1996, however,

the statute was amended to lower the interest rate to the composite prime rate minus two

points. The issue then became whether the interest on any of the refunds or additional

payments for the tax years 1990 through 1995 — all of which were made after April 22, 1996

— should have been calculated under the former version of the statute or the newer version.

The federal district court certified the question to the Tennessee Supreme Court, which

accepted certification. Id. at 911.

The taxpayers in Northwest Airlines argued that the lower, post-amendment rate should

apply, even to interest that accrued prior to the effective date of the amendment. They

asserted that, because the certification of a final assessment by the state board of equalization

for each taxable year would not occur until after April 22, 1996, application of the 1996

amendment would not be a retroactive application. In the alternative, the taxpayers argued

that the post-amendment rate should be applied retroactively. Id. at 913. Addressing the

certified question, the Tennessee Supreme Court held that retroactive application of tax

statutes is impermissible unless the statute includes express language providing for its

retroactive application. Because the statute contained no express language providing for its

retroactive application, the Supreme Court held that “[t]he answer to the certified question

is that only the interest on payments or refunds of property taxes accruing after April 22,

1996 are to be calculated” under the post-amendment version of the statute. Id. at 914.

In the instant case, the Estate argues that Northwest Airlines supports its position that the

trial court is not permitted to apply the 2011 version of Section 67-8-208(d) retroactively.

The Estate claims that its entitlement to the interest on the refund vested when it made the

tax overpayment in 2002, and that application of the 2011 version of the statute violated the

rule against retroactive application of a tax statute absent any statutory language indicating

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that it is to be applied retroactively. The Estate argues: “The duties and rights that existed

in 2002 are the duties and rights that the Boote Estate retains, even after the law was

amended.” It further asserts that when it paid the estate taxes in 2002, “it did so in reliance

on the fact that any overpayment would be refunded with interest at a rate of 6% from the

payment date” under Section 67-8-208(d) as it then existed. For these reasons, the Estate

argues, the 2002 version of the statute is applicable, and the Commissioner should have paid

interest on the estate tax refund pursuant to that version of the statute.

The Commissioner has pointed to no language in the July 2010 amendment to Section 67-8-

208(d) indicating that the amendment was intended to be retroactive in nature, so the Estate

rightly maintains that we are to presume that the amended statute must be applied

prospectively. The Commissioner, however, does not argue that the statute should be

retroactively applied. Rather, he claims that the trial court’s application of the current

version of the statute does not constitute retroactive application of the statute at all. The

Commissioner asserts that the Estate’s right to a refund of any estate tax paid is triggered

under the statute only by “the final determination of the federal estate tax” indicating that the

Tennessee estate tax would be reduced thereby. In other words, the Estate’s right to a refund

did not vest until after this final determination of federal estate tax was made. We agree.

As this Court has noted: “There is no common-law or equitable cause of action to recover

taxes voluntarily paid in error.” SunTrust Bank, Nashville v. Johnson, 46 S.W.3d 216, 223

(Tenn. Ct. App. 2000). Instead, the recovery of such a voluntary overpayment is “a matter

of legislative grace.” Id. Thus, because an action to recover a tax refund, along with the

interest on the refund, is based entirely on statute, the statutes entitling a taxpayer to a refund

must be strictly followed. Id.

The Estate cites no authority to support its contention that its right to a refund vests when the

tax overpayment is made, and we have found none.7 In our view, the plain language of

Section 67-8-208(a) clearly directs that the taxpayer is entitled to an estate tax refund only

where “the amount of federal estate tax is, upon the final determination of the federal estate

tax, increased or decreased . . . .” This language indicates that the Estate’s right to a refund

accrues when the amount of federal estate tax has changed upon “final determination.”

In this case, the final determination of the federal estate tax was made and conveyed to the

Commissioner in 2011; this in turn resulted in a decrease in the Estate’s Tennessee estate tax

7

The Estate claims that the Commissioner’s reliance on the “final determination” language in subsection (a)

is misplaced because “[t]here is nothing in subsection (a) that deals with interest or with accrual dates for

interest.” We respectfully disagree that subsection (a) and subsection (d) are unrelated. To the contrary,

subsection (a) provides the conditions under which all of the other subsections become effective.

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liability. At this point in time, the Estate became entitled to a refund of its overpaid estate

taxes. Thus, based on the plain language in Section 67-8-208(a), the Estate’s right to a

refund did not accrue when the overpayment was made in 2002, but rather in 2011 when a

final determination of the federal estate tax was made. For this reason, we agree with the

trial court’s reasoning, that its application of the 2011 version of the statute was not in fact

a retroactive application of the statute. Rather, it was simply an application of the statute in

effect when the Estate’s right to the refund vested.

The Estate insists that the Commissioner should be obligated to pay interest from the time

that the tax payments were made in 2002 because “the State has had the use of the funds

since 2002.” This is a valid point, noted by the trial court when it expressed concern about

the length of time the State has had the use of the taxpayer’s funds. However, it amounts to

a policy argument in a case in which the rights of the Estate are entirely circumscribed by

statute. We agree with the trial court that, regardless of where the equities lie, we are bound

by the plain language in Section 67-8-208(d), indicating that the right to interest on a

Tennessee estate tax refund under that statute does not vest until a final determination of the

federal estate tax obligation shows that such a refund is due. Therefore, because the Estate’s

entitlement to a refund of its estate taxes vested in 2011, the 2011 version of the statute was

applicable, and the trial court’s application of it in this case did not constitute a retroactive

application of the statute. See State v. McDougal, 648 S.W.2d 254, 257 (Tenn. Ct. App.

1983) (holding that the right to increased interest began to accrue on the effective date of the

amended interest statute, so the application of the amended interest statute did not constitute

a retroactive application).

As a further alternative argument, the Estate contends that, even if the Commissioner’s

position is otherwise accepted, the 2009 version of Section 67-8-208(d) should apply to the

refund of the estate taxes that were paid pursuant to the First Amended Return in November

2009, when the statute still provided for 6% interest from the date the estate taxes were paid.

In making this argument, the Estate claims that, at that point, the IRS had provided for a

tentative estate tax refund. It argues that there can be more than one “final determination”

regarding different aspects of the federal estate tax under subsection (a), as evidenced by the

fact that the Commissioner issued two estate tax refunds in this case. We respectfully

disagree. It is undisputed that the refund paid to the Estate by the Commissioner in

November 2009 was tentative, based on the information available at the time. In addition,

the IRS had not at that time made a final determination of the Estate’s federal estate tax

obligation; it was clear that a final determination would be forthcoming. Thus, in November

2009, the IRS had not made a “final determination of the federal estate tax” under subsection

(a) so as to implicate the interest provision in subsection (d). Therefore, although the

Commissioner chose to pay a partial refund to the Estate in 2009, at that time there had been

no final determination of the federal estate tax within the meaning of Section 67-8-208(a),

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and the Estate’s right to interest on the refund of estate taxes in Section 67-8-208(d) had not

yet been triggered.8

“Proper Proof” for Verification of Refund

The Estate concedes that the interest on the Estate’s inheritance tax refunds should have been

calculated under the method set out in Section 67-1-801(b). It argues, however, the First and

Second Amended Returns and the attached documentation filed in January 2009 and

December 2010, respectively, constituted the “proper proof” necessary for the Commissioner

“to verify that the refund or credit [was] due and payable.” Tenn. Code Ann. § 67-1-801(b).

Therefore, the Estate argues, the interest on its inheritance tax refunds should have begun to

accrue 45 days after the two amended returns were filed. This calculation would have

resulted in a few more months of interest to the Estate on its inheritance tax refunds. The

Estate notes that “proof” is defined as an “attested document that constitutes legal evidence,”

and that “proper” is defined as “adapted or appropriate to the purpose or circumstances,

suitable.” Because the First and Second Amended Returns were attested documents, sworn

under penalty of perjury, and because they included all of the information necessary to verify

that a refund was due and the amount of the refund, so the argument goes, the returns

themselves must be considered to be “proper proof” under Section 67-1-801(b). The Estate

points out that, where there is doubt about the interpretation of a tax statute, the statute must

be construed strictly against the government and liberally in favor of the taxpayer. See Home

Builders Ass’n of Middle Tenn. v. Williamson County, 304 S.W.3d 812, 817 (Tenn. 2010).

In response, the Commissioner acknowledges that the Estate’s amended inheritance tax

returns were attested documents and provided some information regarding the refunds. He

argues, however, that they did not constitute “proper proof” from which the entitlement to

and amount of refunds could be verified. Thus, the Commissioner asserts, the amended

returns in and of themselves do not constitute “proper proof” to verify the refunds. The

Commissioner notes that the amount of the refund actually paid to the Estate for the First

Amended Return was significantly less than the refund amount claimed by the Estate, and

the amount of the refund for the Second Amended Return was slightly more than the amount

claimed. In addition, the Estate’s entitlement to the refund claimed in the First Amended

Return was specifically made contingent upon the IRS’s treatment of the claimed deductions;

thus, the federal tax treatment of the information in the Estate’s amended returns was critical

to a determination of the amount of any state inheritance tax refund due. The fact that the

IRS disallowed some of the claimed deductions and notified the Commissioner of this fact

8

To the extent that the Estate asserts a due process violation as a result of the retroactive application of

Section 67-8-208, we decline to address this argument because the Estate has not shown that it was raised

in the trial court proceedings below. See Barnhill v. Barnhill, 826 S.W.2d 443, 448 (Tenn. Ct. App. 1991).

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on September 29, 2009, demonstrates that the returns are not “proper proof” in and of

themselves to verify the amount of the refund due. The Commissioner maintains: “This case

presents a textbook example of why the Commissioner of Revenue requires verification from

the IRS to substantiate a taxpayer’s claims of federal deductions and expenses.”

We have found no authority describing what constitutes “proper proof” to verify an

inheritance tax refund. In this case, we agree with the Commissioner that the First and

Second Amended Returns, without more, did not constitute the “proof” necessary to verify

the entitlement to and amount of inheritance and estate tax refunds due to the Estate. As the

Commissioner pointed out, the filing of the First Amended Return included the order from

the underlying legal dispute over the amount of Wife’s marital share. The order stated

specifically that the Wife’s share (and, consequently, the amount of the Estate’s inheritance

tax refund) was contingent upon the federal tax treatment of the additional claimed

deductions. Without any documentation regarding the IRS treatment of the additional

deductions claimed by the Estate, it would have been impossible to determine the amount of

inheritance tax refund to which the Estate was entitled. Although the Estate argues that the

inheritance tax refund is unrelated to the federal estate tax determination,9 the order included

with the First Amended Return linked the federal government’s treatment of the claimed

deductions to the inheritance tax refund due in this case. Therefore, the IRS response to the

Commissioner’s inquiry was necessary for a determination of the refund from the First

Amended Return.

Moreover, the refund from the Second Amended Return was dependent on the “final

determination” from the IRS. The Commissioner requested the IRS Estate Closing

Document to assist it in verifying the information included with the Second Amended Return

to determine or test the accuracy of the Estate’s claim. The Estate indicated that the estate

tax refund was requested as a part of the amended inheritance tax return. Even though the

inheritance tax refund may not have been affected by the IRS determination of the federal

estate tax (the Commissioner does not concede this), the estate tax refund could not be

determined until the IRS issued a “final determination of the federal estate tax.” This final

determination was not provided to the Commissioner on April 1, 2011. Therefore, proper

proof to verify the entire refund on the Second Amended Return was not provided to the

Commissioner until that date.

9

In its reply brief, the Estate cites an Attorney General Opinion, No. 84-114, 1984 WL 186176 (Tenn. AG

Apr. 4, 1984), for the proposition that the “calculation of the Tennessee inheritance tax is made pursuant to

Tennessee law and is independent of the calculation of federal death taxes . . . .” That opinion, however,

involves issues not related to those presented here, and we decline to adopt that reasoning on this issue.

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In sum, we find that, although the documentation included in the First and Second Amended

Returns provided the Commissioner with much of the information necessary to calculate the

amount of refunds due, these returns were insufficient to verify the entitlement to and amount

of the refunds due to the Estate. Under these circumstances, the Commissioner acted

properly in measuring the amount of interest due from the date that it received the response

from the IRS on September 29, 2009, and the date that the Estate forwarded to the

Commissioner the federal Estate Tax Closing Document.

Our conclusion herein pretermits all other issues raised in this appeal.

C ONCLUSION

For the foregoing reasons, we hold that the Commissioner properly calculated the interest due

on the Estate’s inheritance and estate tax refunds. Accordingly, we affirm the trial court’s

grant of summary judgment in favor of the Commissioner and also the denial of the Estate’s

motion for summary judgment. The cause is remanded to the trial court for further

proceedings consistent with this opinion.

The decision of the trial court is affirmed and the cause is remanded for further proceedings.

Costs on appeal are to be taxed to Appellant Estate of Joseph Owen Boote, Jr. (Helen Boote

Shivers and Linda Boote, Co-Executors), and its surety, for which execution may issue, if

necessary.

_________________________________

HOLLY M. KIRBY, JUDGE

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