True v. Heitkamp

VANDE WALLE, Justice,

concurring and dissenting.

I concur with the majority that the True Businesses did not constitute a unitary business on the record before us. Because, as the majority opinion observes, we should defer to agency expertise in construing “a law which is of a complex and technical nature,” I agree we should affirm that determination. But it is because of the complexity of the law that I cannot agree with the majority’s disposition of the second issue, i.e., whether or not the Trues abandoned their claim for a refund based on their first amended returns.

There is nothing inherently evil in taxpayers attempting to reduce their tax obligations through the use of existing statutes and rules and regulations. When the Trues attempted to claim a refund based on separate entity formulary apportionment, those claims were denied. The denial was noninformative except to advise the Trues of their right to file an administrative complaint “which must state in detail the factual and legal basis for your claim for refund.” The Trues could have filed a complaint challenging the denial of the refund claim which they based on a separate entity formulary appointment; rather, they filed a complaint seeking a refund based on unitary principles.

Waiver and abandonment of an appeal is a voluntary relinquishment of a known right and must be made intentionally and with knowledge of the circumstances. Bindel v. Iowa Manufacturing Co. of Cedar Rapids, 197 N.W.2d 552 (Iowa 1972). Had the law regarding these various provisions been clear; had the Commissioner adopted formal rules and regulations setting forth her interpretation of those laws and had her denial of the first refund claim been informative rather than formalistic, I would agree that the Trues abandoned their first refund claim by filing a second claim based on the unitary combined method of reporting. None of those conditions existed.

Rather than written administrative rules, the Commissioner relied on “long-standing” policies. The law is not clear and, as the majority opinion concedes, there is little published authority addressing the unity of ownership requirement of the three-unities test, the primary factor in the first issue before us. Although I agree that the lack of written rules should not be used as a weapon against the Commissioner in her construction of the statute, neither do I believe the Commissioner should use it as a weapon in her argument that the Tax Department’s unwritten policies were so well known to the Trues that their filing of the administrative complaints constituted an abandonment of the first claim for refund. The only thing made apparent in the denials of the claims for refund was that whatever the claim, or the basis of the claim, it would be denied by the Commissioner. In this respect the Trues might well have believed they were involved in a shell game in which, only after picking the shell they believed appropriate, would the Commissioner reveal her interpretation of the law contained under that shell.

I cannot agree that under the facts of this case, involving statutes that were not previously construed and unwritten policies, the action of the Trues in filing the formal complaint constitutes an abandonment of their prior position. I do not know if the Trues are entitled to a refund under the separate entity formulary apportion *594 ment method but equity demands they be permitted to pursue that claim for a refund. I would remand with direction that the Trues’s formal complaint be construed to include that claim for refund or that they be permitted to file a complaint based on that claim and that the procedures for consideration of that complaint proceed before the Commissioner.