United Orthodox Services, Inc. v. Board of Assessors of the Town of Brookline (December 6, 2004)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD




UNITED ORTHODOX		  v.   	BOARD OF ASSESSORS OF 
SERVICES, INC.					THE TOWN OF BROOKLINE


Docket No. F267640			     Promulgated: 
							December 6, 2004

This appeal is filed pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the appellee, Board of Assessors of the Town of Brookline ("Assessors" or "appellee"), to abate real estate taxes assessed against the appellant ("United Orthodox" or "appellant") under G.L. c. 59, § 75 for fiscal year 2003. 
Commissioner Gorton heard the appeal and was joined in the decision for the appellant by Commissioners Scharaffa, Egan, and Rose.
These findings of fact and report are promulgated at the request of the appellant pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

	Morris N. Robinson, Esq., for appellant.	
	Jennifer Dopazo, Esq., for appellee.

FINDINGS OF FACT AND REPORT
	Based on the testimony and exhibits entered into evidence at the hearing of this appeal, the Appellate Tax Board ("Board") made the following findings of fact.
United Orthodox
	Organized under G.L. c. 180, United Orthodox is a Massachusetts charitable corporation and is qualified as a 501(c)(3) entity for Federal tax purposes.  On the basis of its function and purpose, United Orthodox receives exemptions specific to charitable and non-profit organizations from the Internal Revenue Service and the Massachusetts Department of Revenue ("DOR") with respect to sales tax. Further, United Orthodox annually files a financial report with the Division of Public Charities of the Office of the Attorney General pursuant to G.L. c. 12, § 8F. In addition, the United States Postal Service approved United Orthodox's application for non-profit standard mail-rate mailing privileges. 
According to its Articles of Incorporation and By-Laws, United Orthodox was established to fulfill three general purposes: 
(1) to serve the Jewish community by furthering Jewish observance and assisting Jews in the traditional practice of their religion; 
(2) to serve as a coordinating council of religious Jewish organizations, namely with respect to administrative needs; and
 
(3) to function as a referral service for members of the Jewish community at large. 

In practice, these functions fall within two broad categories of service: educational and travelers' aid.  Specifically, the educational component entails:
(1) encouraging people to experience a traditional Jewish Sabbath or Festival as guests of United Orthodox; (2) encouraging people to marry in accordance with the rites and rituals of the Jewish faith through pre-marital counseling and other means; (3) fostering traditional Jewish prayer services; (4) fostering traditional Jewish customs such as Torah learning on the eve of the Festival of Shavuos, when the Torah was given at Mount Sinai; and (5) public lectures.

Moreover, travelers' aid services consist of:
(1) helping travelers find kosher food in over 50 locales throughout the world; (2) helping travelers find minyanim (Jewish prayer services) in over 50 locales throughout the world; and (3) providing hospitality to travelers, including meals and overnight accommodations.

On or about October 16, 2001, United Orthodox acquired a parcel of real estate located at 102 Salisbury Road in Brookline, Massachusetts.  During the relevant period, two United Orthodox officers, Ira and Nancy Axelrod, and their children occupied the property.  The appellee points to this living arrangement as support for assessing tax on the property based on its value as a single family home.  Specifically, the appellee contends that the dominant use of the property is residential and that any charitable use is merely incidental thereto.  In contrast, the appellant maintains that since many of its activities are designed "to foster a traditional [Jewish] lifestyle and observance through education and through travelers' aid" and that "Mr. Axelrod and his family demonstrate a traditional lifestyle by living their personal lives among strangers on an almost daily basis," such a living arrangement is a necessary means by which its charitable mission is furthered.  
Form 3ABC and the Omitted Assessment
On March 1, 2002, the appellant filed a Form 3ABC, Return for Property Held for Charitable Purposes ("Form 3ABC"), with the Assessors in a timely fashion.  Since the appellant purchased the subject property in October of 2001, this submission was the first interaction between the parties regarding this property.  Ira Alexrod, the appellant's President, personally delivered the Form 3ABC directly to the Chairman of the Assessors, George F. Moody, who proceeded to write the word "Exempt" in the top left corner followed by his initials.  On that particular day, Mr. Moody was working at the front desk in order to assist with the heavy demand on the office due to a number of statutory deadlines.  Ordinarily, as Chairman of the Board, Mr. Moody does not participate in the intake process of the filings.  
In answering appellant's interrogatories, which were admitted into the record, Mr. Moody stated that, in ascribing those particular notations, he had assumed that the property was a temple or a synagogue and that Mr. Axelrod was a rabbi.  Furthermore, he also acknowledged that he failed to read the entire application prior to making this determination.  Subsequently, the Assessor's clerk, who was responsible for reviewing and reading the Form 3ABC, processed it in accordance with what she understood to be Mr. Moody's determination of exempt status for the subject property.  
Despite this exempt classification, a preliminary tax bill was issued in June 2002 for the August 1st first-quarter payment, which was calculated based on the property's value as a single family home.  In the normal course of business, the appellant's mortgage company paid this tax bill automatically upon receipt.  Once aware of the payment, Mr. Axelrod presented the Form 3ABC notated "Exempt GFM" to the Assessors' office, which resulted in an abatement and an internal change of the property's tax code to exempt.  
By a letter to the Assessors dated November 4, 2002, a neighbor questioned the validity of the exemption granted to United Orthodox.  As a result, the Assessors re-examined the application and determined that, since United Orthodox was "neither a temple nor a synagogue and that Mr. Axelrod, who has filed this application on behalf of this organization, is not a rabbi," it did not fulfill the requirements for an exemption. Accordingly, the Assessors sent United Orthodox a letter, dated November 21, 2002, denying the exemption and stating their intention to issue an omitted tax bill for fiscal year 2003 in the amount of $9,363.71, based on a valuation of $835,300.  
In response, United Orthodox filed an application for abatement on December 13, 2002, to which the Assessors responded with a Notice of Inaction dated March 11, 2003.  On May 13, 2003, the omitted tax bill was mailed, and United Orthodox paid the tax of $9,226.95 in a timely manner.  Thereafter, United Orthodox filed this appeal with the Board on May 16, 2003.  On the basis of these facts, the Board determined that it had jurisdiction to hear and decide this appeal. 
Other than the statement "[t]he Appellees satisfied the procedural requirements of G.L. c. 59, s. 75," the Assessors did not submit any evidence regarding the submission of a statement to the Commissioner listing the additional amounts assessed pursuant to § 75.  In fact, the appellant submitted a letter from the Department of Revenue, Division of Local Services, dated October 24, 2003, that stated that it "did not receive the Town of Brookline's fiscal year 2003 Omitted and Revised Assessment report."  Further damaging to the appellee's case is an admission that they understood "the requirement to report the tax to the Commissioner is directory, not mandatory and the failure to submit the report to the DOR does not invalidate the tax."  
On the basis of the foregoing, and for the reasons detailed in the following Opinion, the Board ruled that the assessment is invalid under G.L. c. 59, § 75.  As a result, the Board issued a decision for the appellant and granted an abatement in the amount of $9,226.95.

OPINION
This case involves the appellant's appeal of its fiscal year 2003 local property tax assessment.  In its petition, the appellant alleges that it is aggrieved by the appellee's refusal to abate the taxes on two grounds: 1) the property is exempt from taxation pursuant to G.L. c. 59, § 5 cl. 3; and 2) the Assessors failed to establish a proper factual basis for invoking the provisions of either §§ 75 or 76, rendering the omitted assessment invalid.  Since the Board determined that the omitted assessment was invalid and void, the Board need not, and did not, address the subject property's qualifications for the charitable exemption with respect to fiscal year 2003. 
Omitted assessments are not part of the normal process by which taxing authorities assert their power to tax.   Rather, it is a special right conferred by the Legislature to enable assessors to correct "unintentional" omissions "due to clerical, data processing or other good faith reason."  G.L. c. 59, § 75. Recognizing that these assessments are departures from the normal course, the Legislature conditioned this grant of power on the taxing authorities meeting certain threshold requirements.  Toward that end, the Board has held that these requirements are mandatory, requiring strict adherence:  
These assessments are not in the normal course of the annual taxation of real and personal property, but rather, they are allowed by specific statutory remedies available to assessors in carefully defined circumstances.  Therefore, taxing authorities must adhere to the specific requirements of the statutes granting the right to make these additional assessments.  

Sithe New Boston LLC & Boston Edison Co. v. Boston, 27 Mass. App. Tax Bd. Rep. 154, 157 (2001).  "But for this special enactment, there could be no remedy for the omission of property from assessment." Cabot v Commissioner of Corps. & Taxation, 267 Mass. 338, 341 (1929).  Accordingly, for the Assessors to validly proceed with the omitted assessment, it is incumbent upon them to strictly adhere to the statutory requirements of § 75. 
Applicable Statutory Requirements
G.L. c. 59, § 75 sets forth a number of substantive and procedural requirements that must be met before
an omitted assessment may be properly committed.  In pertinent part, G.L. c. 59, § 75 states that:

If any parcel of real property . . . has been unintentionally omitted from the annual assessment of taxes due to clerical or data processing error or other good faith reason, the assessors shall in accordance with such rules, regulations and guidelines as the commissioner may prescribe, assess such person for such property; provided, however, that in no event shall such assessment be made later than June twentieth of the taxable year or ninety days after the date on which the tax bills are mailed, whichever is later, and that the assessors annually, not later than June thirtieth of the taxable year or the hundredth day after the date on which the tax bills are mailed, if mailed after March twenty-second, return to the commissioner a statement showing the amounts of additional taxes so assessed. . . .

Based on the statutory requirements, from a substantive standpoint, the appellee must show that its omission of the United Orthodox property from the annual assessment of taxes was (1) "unintentional;" and, (2) "due to [a] clerical or data processing error or other good faith reason."  Procedurally, the appellee must also: (1) assess the taxpayer no later than June 20, 2003; (2) submit an annual statement to the Commissioner indicating the amount of additional taxes assessed under § 75 no later than June 30, 2003; (3) ensure that the taxes are entered on the tax collector's list; and (4) deliver to the tax collector warrants for all taxes listed for collection.
Substantively, the appellee failed to adequately support its contention that the initial classification as exempt was unintentional and the result of a clerical, data processing or other good faith reason.  Procedurally, by not submitting a statement with the Commissioner, the appellee failed to comply with all notice and timing requirements of § 75.  
Substantive Requirements
The appellee argues that the exempt classification began with Mr. Moody's erroneous assumption that Mr. Axelrod was a rabbi and that the property was a synagogue, assumptions that the appellee contends Mr. Axelrod failed to correct through his silence.  Furthermore, the appellee states that this initial error was compounded by a clerk's reliance on Mr. Moody's notation of "Exempt GFM."	
	The Property Tax Bureau of the DOR released Informational Guideline Release No. 90-215 ("IGR 90-215") in 1990, after the Legislature amended G.L. c. 59, §§ 75 and 76 by adding the language that the omission be "unintentional" and "due to [a] clerical or data processing error or other good faith reason," and by eliminating the requirement that assessors obtain the Commissioner's approval prior to implementing an omitted or revised assessment.  For present purposes, IGR 90-215 helps clarify the type of omission that falls within the ambit of these statutory provisions.  The omission or error: 
must be unintentional or inadvertent.  This means there must be some clerical, data processing or other type of good faith reason for the omission or error.  The assessors cannot simply change their minds about the value or taxable status of the property after the commitment.  Typical examples are inadvertent mistakes made in the assessment administration process such as mistakes made in updating property records or applying valuation methodology. (Emphasis in original) 

By way of further elucidation on the matter, IGR 90-215 provides the following relevant example of an omitted assessment: "[a] parcel was incorrectly identified as exempt because the incorrect code was entered in the assessors' records or information on the new owner was not received from the registry of deeds."
The evidence before the Board fails to support the Assessors' contention that the original classification of the property as exempt was unintentional and due to a clerical, data processing, or other good faith reason.  Rather, the Chief Assessor made a conscious and, presumably, considered decision before ascribing the notation "Exempt GFM" on the top of the Form 3ABC.  Furthermore, all subsequent clerical or data processing acts were direct results of separate and intentional acts.  
As their main justification for subsequently denying the exemption, the Assessors offer the statement that United Orthodox was "neither a temple nor a synagogue and that Mr. Axelrod, who has filed this application on behalf of this organization, is not a rabbi."  While this argument may be relevant to a claim of exemption under G.L. c. 59, § 5, Eleven, it is not to the claim advanced by this appellant, namely that its property qualifies for the charitable exemption under G.L. c. 59, § 5, Third.  Had either Mr. Axelrod been a rabbi or the property been a synagogue there would have been no need for the appellant to file a Form 3ABC, since "[a] religious organization must file a Form 3ABC only if it is seeking exemption for property other than a house of worship or parsonage."  See Taxpayer's Guide to Property Exemptions in Massachusetts, Property Tax Bureau of the DOR. 
Furthermore, the appellant's Form 3ABC was presented a second time to the Assessors when Mr. Axelrod inquired as to the reason his property was classified and taxed as a single family home.  For a second time, the issue of the correct classification of the property was brought to the attention of the Assessors and the exempt classification remained.  In fact, the Assessors abated the first preliminary tax bill paid by the appellant's mortgage company.
The Legislature provided taxing authorities with a tool by which unintentional errors of a clerical or data entry nature may be rectified.  The intent was not to provide local assessors with an opportunity to reconsider and change their own assessment decisions.  There exists no statutory authority that permits the Assessors to simply change their mind regarding either the classification or valuation of property, once they have issued the actual tax bills for a given fiscal year.  Rather, the Legislature articulated clear statutory requirements that the taxing authority must follow in specifically defined circumstances to change an assessment determination.  "The Board has previously indicated that assessors need to satisfy the specific conditions of § 75 in order to validly make an omitted or revised assessment." See Sithe at 158.  See also, Wakefield Ready-Mixed Concrete Co., Inc. v. Board of Assessors of the Town of Billerica, 17 Mass. App. Tax Bd. Rep. 101, 103-104 (1995)(before turning to the substantive issues, the Board reviewed the evidence for any procedural defects); New England Deaconess Association v. Board of Assessors of the Town of Concord, 23 Mass. App. Tax Bd. Rep. 65, 68 (1997) (ruling that an omitted assessment was invalid when the omission was not unintentional and, therefore, "the threshold qualifying conditions of § 75" were not met).  
The appellant's Form 3ABC was presented to the appellee on two separate occasions and, in both instances, affirmative actions were taken by the appellee to ensure that the property was classified as exempt.  These facts support the Board's finding that the Assessors' actions were intentional and considered, rather than unintentional or inadvertent.  Accordingly, the subject omitted assessment was invalid.  
Procedural Requirements
	In addition, the appellant also maintains that the Assessors failed to submit a statement to the Commissioner by June 30, 2003, regarding the subject omitted assessment, as required by § 75.  As support, the appellant offered into evidence a letter from the DOR, Division of Local Services, dated October 24, 2003 that states, "[i]n response to your public record request of October 23, 2003, the Division of Local Services did not receive the Town of Brookline's fiscal year 2003 Omitted and Revised Assessment report."  In response, the appellee argued in a brief filed with the Board that "[a]ccording to the Department of Revenue the requirement to report the tax to the Commissioner is directory, not mandatory and the failure to submit the report to the DOR does not invalidate the tax."  The appellee cited no statute, case law, regulation or other legal authority to support this argument.
	The statutory language of § 75 is clear and unambiguous regarding the requirement that the taxing authority submit a statement to the Commissioner listing all omitted assessments.  The Legislature granted the Assessors the right to issue omitted assessments "provided, however, that in no event shall such assessment be made later than June twentieth of the tax year. . . and that the assessors annually, not later than June thirtieth of the taxable year . . . return to the commissioner a statement showing the amounts of additional taxes so assessed."  G.L. c. 59, § 75 (emphasis added)
Applying the plain language doctrine to this section, the Board found and ruled that the definitive phrase, "provided, however, that in no event," indicates that the times for making the assessment and returning the statement to the Commissioner are both conditions precedent to the validity of an omitted/revised assessment. See Sisk v. Assessors of Essex, 426 Mass. 651, 654 (1998) ("Following well-established principles of interpretation, we give effect to the 'usual and ordinary' meaning of
words in a statute.") (citing Horst v. Commissioner of Revenue, 389 Mass. 177, 179 (1983)).  

Sithe at 940.
Similarly, IGR 90-215 states simply "[t]he assessors in all cities and towns must submit an 'Omitted and Revised Assessment Report' to the Property Tax Bureau each year."  Furthermore, IGR 90-215 states clearly that the purpose for such submission is not perfunctory; rather, it is "to ensure that all assessments were made within the applicable deadline and that the additional amount assessed is not excessive." 
	The appellee admits readily that it did not submit the required statement to the Commissioner by June 30, 2003.  Accordingly, the appellee failed to comply with all the requirements precedent to a valid omitted assessment pursuant to § 75 and, therefore, the subject assessment is invalid for this reason, as well.
Conclusion
The evidence before the Board does not support the appellee's contention that its actions were either unintentional or "due to clerical or data processing error or other good faith reason."  Rather, the appellant's Form 3ABC was properly and timely submitted and contained all requisite information.  Mr. Moody deliberately and intentionally wrote the words "Exempt GFM" on the Form 3ABC.  Furthermore, the Assessors admit that a statement was not filed with the Commissioner regarding the subject omitted assessment by June 30, 2003.  Both statutory language and prior Board decisions articulate clearly and unambiguously that the timely filing of the return with the Commissioner is mandatory.  Failure to comply with this requirement renders the omitted assessment invalid and void. Accordingly, for all of the foregoing reasons, the Board found and ruled that the omitted assessment was invalid and, therefore, decided the appeal for the appellant, granting an abatement in the amount of $9,226.95.  

					APPELLATE TAX BOARD
				
				By:													Donald E. Gorton, III, Member




A true copy,


Attest:				_____
       Clerk of the Board

 During the period at issue, the eldest Axelrod child resided at college.
 Although both parties advanced arguments concerning the validity of the assessment under § 76 as well as § 75, both the November 21, 2002 letter from Mr. Moody, which refers to an "omitted tax bill," and the Assessors' warrant to the Collector, which refers to "Property Omitted" and § 75, indicate that the subject assessment was an omitted assessment under § 75, rather than a revised classification under § 76.  However, because the substantive and procedural analysis under both sections are the same, the Board's analysis is equally applicable to an assessment under § 76.  

ATB 2004-519