Millard County v. Utah State Tax Commission Ex Rel. Intermountain Power Agency

Citations: 823 P.2d 459; 176 Utah Adv. Rep. 5; 1991 Utah LEXIS 156; 1991 WL 270124Docket: 890100, 900285

Court: Utah Supreme Court; December 16, 1991; Utah; State Supreme Court

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Millard County petitions for a writ of review regarding two orders from the Utah State Tax Commission: the denial of its motion to intervene in a proceeding that redetermined the sales tax liability of Intermountain Power Agency (IPA) and the denial of access to certain Commission records related to IPA. The case involves the Local Sales and Use Tax Act, which allows local governments to impose a local option sales tax, collected by the state and remitted to the local entity. Millard County imposed such a tax, and IPA, which conducts significant transactions in the County, filed for a redetermination of its tax liability in May 1988. The County attempted to intervene and review records in June 1988, but its requests were denied in February 1989 after a stipulation between the Commission and IPA regarding IPA's tax liability.

Millard County argues it has the right to access the records based on a statutory contract with the Commission, which mandates that authorized County personnel can examine relevant records. The Commission counters that Utah law requires confidentiality of sales tax returns. However, a related case (Salt Lake City v. Tax Comm’n) established that similar contractual provisions granted access to records, and this precedent applies here. The Court agrees with Millard County, stating the Commission erred in denying access to the records. Additionally, the Court clarifies that a denial of a motion to intervene is a final decision and thus appealable, confirming the County's right to challenge that ruling.

Counties have the standing to challenge Commission determinations that impact their budgeting and tax functions, as established in Kennecott Corp. v. Salt Lake County. Millard County is deemed to have standing to intervene due to its interest in the local option sales tax proceeds collected by the Commission. The Commission and IPA argued that their resolution of IPA's tax liability rendered the County's intervention petition moot. Generally, final settlements between all parties can make a permissive intervenor's motion moot. However, a motion to intervene as of right is not rendered moot by a settlement reached prior to adjudication of that motion. This principle is supported by case law, which indicates that allowing settlements to moot intervention appeals could undermine the interests of justice. The same rule applies even when the parties involved include governmental entities. Here, the County's motion to intervene was filed before the Commission and IPA settled, and the Commission denied the motion six months post-settlement. If the motion were deemed moot, it would enable the Commission to bypass statutory intervention rights. Thus, the Commission's settlement did not moot either the motion to intervene or the County's appeal regarding the denial of that motion. The merits of the County's motion to intervene will now be considered under Utah Code Ann. 63-46b-9(2), which allows intervention if a petitioner's legal interest may be substantially affected and if justice and orderly proceedings are not materially impaired.

The right to intervene in administrative proceedings is conditioned on not impairing the interests of justice and orderly conduct. The County has a legitimate legal interest in IPA's sales tax liability, as the resolution could significantly affect the County's share of local option tax revenues. The Commission's discretion to deny intervention is not unlimited; it must provide substantial reasons. In denying the County's motion to intervene, the Commission argued it would complicate and burden the administrative process, fearing that allowing the County could lead to similar requests from approximately 250 other taxing districts. However, this assertion was found to be exaggerated, as Millard County's intervention concerns only a single taxpayer and specific transactions, not a comprehensive review of all sales tax collections. The legal issues raised by the County are more complex and impactful than routine audits, indicating a legitimate reason for its involvement. The Commission settled with IPA for less than initially claimed, and the County's participation could have influenced a more favorable outcome. The Legislature likely intended for local agencies to participate in significant tax liability cases to enhance enforcement. While intervention may complicate proceedings, the Commission should develop procedures to facilitate participation while minimizing burdens. In cases with multiple interested taxing agencies, allowing one agency to represent others may adequately address concerns about administrative efficiency.

Millard County has satisfied the legal criteria for intervention in the tax assessment dispute involving IPA, as the facts and legal issues are intertwined with those of both the County and the Commission. The County's interests are significantly impacted, and the Commission's claim that allowing intervention would disrupt justice and proceedings lacks merit, particularly since there is only one taxpayer and one local entity involved, with substantial tax revenue at stake. Denying intervention would undermine the purpose of the intervention statute. Consequently, the Commission's denial of the County's motion to intervene is deemed erroneous, granting Millard County the right to participate in the reopened proceedings regarding IPA's tax liability.

Regarding the County's claim that the Commission lacks authority to settle IPA's tax liability, the Commission asserts its exclusive jurisdiction over the assessment and collection of sales taxes, as supported by Utah Code Ann. 59-12-203 and related provisions. These statutes generally empower the Commission to determine tax liability and potentially resolve disputes. However, the question of whether the Commission can settle a case despite an intervenor's objection remains unresolved. The order denying the County's intervention and access to tax records is reversed, and the matter is remanded for further proceedings. The ruling is supported by Chief Justice Hall and Associate Chief Justice Howe, along with Justices Durham and Zimmerman.