RNK, Inc. v. Board of Assessors of the Town of Bedford (July 16, 2008)

 COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD
  

RNK, INC. 				v.      BOARD OF ASSESSORS OF
							   THE TOWN OF BEDFORD

Docket No. F281946                    Promulgated:
							   July 16, 2008


	This is an appeal under the formal procedure, pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, from the refusal of the appellee Board of Assessors of the Town of Bedford ("appellee" or "assessors") to abate taxes on certain personal property in the Town of Bedford owned by and assessed to Siemens Information & Communication Networks, Inc. under G.L. c. 59, §§ 2 and 18, for fiscal year 2005. This appeal is being prosecuted by RNK, Inc. ("appellant") as the lessee of the subject personal property. 
	Commissioner Gorton heard this appeal. With Commissioner Gorton materially participating in the deliberations of this appeal, Chairman Hammond and Commissioners Scharaffa, Egan, Rose and Mulhern joined in the decision to dismiss the appeal for lack of jurisdiction.
	These findings of fact and report are made on the Appellate Tax Board's ("Board's") own motion under G.L. c. 58A, § 13 and 831 CMR 1.32 and are promulgated simultaneously with its decisions.
Leah Williams, Esq. and Lynn Castano, Esq., for the appellant.

Lela Rhodes, assessor, for the appellee.


FINDINGS OF FACT AND REPORT
	On January 1, 2004, Siemens Information and Communication Networks, Inc. ("Siemens") was the assessed owner of personal property consisting of digital telecommunications equipment (the "subject personal property") situated in the Town of Bedford. On or about February 9, 2004, the Telecommunications Finance Group of Siemens filed a Form of List for fiscal year 2005 with the assessors. The following information about the subject
personal property appeared on the Form of List:
Property 
Details	Year
New	Depreciation	Item 
Cost	Replacement
Cost	Total 
Value	
Phone
Equipment	1999	    50%	$1,502,556	$1,502,556	$ 751,280	
Switching
Equipment	1999	    50%	$  160,338	$  160,338	$  80,170	
Switching 
Equipment	2000	    50%	$1,111,107	$1,111,107	$ 777,770	
Switching
Equipment	2001	    50%	$  871,462	$  871,462	$ 784,320	
Grand Total					$2,393,540	

	For fiscal year 2005, the assessors assessed the subject personal property at a total value of $1,267,930. A tax was assessed to Siemens at the rate of $25.45 per $1000 in the total amount of $32,230.02. 
	Appellant timely paid the taxes due. On January 28, 2005, Siemens filed an Application for Abatement of the tax assessed on the subject personal property for fiscal year 2005. By a vote of the assessors on April 26, 2005, the application was denied. Appellant's Petition Under Formal Procedure was mailed to the Appellate Tax Board ("Board") through the United States Postal Service with a postmark bearing the date July 26, 2005, the last day allowed for appealing the denial of abatement. RNK, Inc. filed the petition in its own name.  

A document was appended to the Petition Under Formal Procedure captioned "Lease Agreement," between the Telecommunications Finance Group of Siemens and appellant RNK, Inc. The Lease Agreement appeared to apply to the subject personal property. The Lease Agreement recited an effective date of "July 3, 2000." The term of the lease was specified in the Lease Agreement as 36 months from the "Commencement Date", which was described as the "2nd day of the month following the date on which Acceptance occurs at a site provided by Lessee." Lease Agreement at ¶4. Pursuant to ¶11(a) of the Lease Agreement, appellant was obligated to pay any personal property taxes due and owing to the Town of Bedford with respect to the leased personal property. 
Attached to the abatement application was a document captioned "Purchase and Sale Agreement," which appeared to relate to the subject personal property. The Purchase and Sale Agreement was accompanied by a cover letter from Siemens accountant Nikki Tuttle addressed to an attorney for appellant, dated August 31, 2004. The letter recited that the Lease Agreement "expires September 2, 2004." The Purchase and Sale Agreement bore what appeared to be the signature of Richard N. Koch, President of appellant, with  a date of September 8, 2004; and the signature of Jeffrey D. Boggs, "Director, Credit, Leasing &A/R Services" for Siemens, with a date of December 10, 2004. Under the terms of the Purchase and Sale Agreement, appellant agreed to purchase telecommunications equipment from Siemens for a price of "$200,000 plus sales tax of $10,000 for a total amount due of $210,000…." 
At the trial of this matter, appellant presented no witnesses, relying instead on an affidavit made by Neal Hart, a resident of Framingham and Vice President of Technical Operations for appellant since 1999. The affidavit purported to offer evidence that the subject personal property was overvalued. No foundation was laid at the trial for the documents appended to the abatement application and the Petition Under Formal Procedure. There was no full description of the subject personal property in the evidence received at trial. Appellant failed to establish such important facts as the actual time period to which the Lease Agreement applied.
Testifying for the assessors, Lela Rhodes called into question appellant's standing to bring this appeal. She indicated that the assessment was based on the Form of List filed by Siemens. A depreciation factor was applied to the value estimates reflected in the Form of List to arrive at the assessed value of the subject personal property. Ms. Rhodes testified that Siemens owned the subject personal property as of January 1, 2004. She stated that appellant paid the taxes due. Ms. Rhodes also pointed out that the purchase of the subject personal property occurred roughly nine months after the valuation date. Ms. Rhodes observed that the sale occurred pursuant to a purchase option provided for in the Lease Agreement and was not an arms-length transaction. 
On the basis of the foregoing, the Board, relying on the hearing officer as to matters of witness credibility, found and ruled that appellant was not a "person aggrieved by the refusal of assessors to abate a tax on personal property…" with standing to pursue the instant appeal. See G.L. c. 59, § 64. Siemens, the assessed owner of the subject personal property, was the party aggrieved by the denial of abatement, but did not timely file a Petition Under Formal Procedure to seek review in this Board. This appeal was accordingly dismissed for lack of jurisdiction. 

OPINION
The authority of the Board to hear and decide appeals relating to the assessment of taxes on property is wholly a function of statute law. See Stilson v. Assessors of Gloucester, 385 Mass. 724, 732 (1982). As the Supreme Judicial Court explained in Commissioner of Revenue v. Marr Scaffolding Co., 414 Mass. 489, 493 (1993), "[a]n administrative agency has no inherent or common law authority to do anything. An administrative board may act only to the extent that it has express or implied statutory authority to do so." Accordingly, "[t]he case law is abundant in stern pronouncements requiring strict adherence by the taxpayer to the timelines and other procedural commands of the taxing statutes." Tambrands, Inc. v. Commissioner of Revenue, 46 Mass. App. Ct. 522, 525 (1999). 
To review the decisions of municipal boards of assessors denying the abatement of taxes, the Board derives its authority from G.L. c. 59, §§ 64 and 65. The statute provides, in relevant part, as follows:
A person aggrieved by the refusal of assessors to abate a tax on personal property at least one-half of which has been paid … may, within three months after the date of the assessors' decision on an application for abatement … appeal therefrom by filing a complaint with … the board authorized to hear and determine such complaints … and if on hearing the board finds that the property has been overrated and that the complainant has complied with all applicable provisions of law, it shall make a reasonable abatement…

G.L. c. 59, § 64.
	"[A]n application [for abatement filed with the assessors] in the form prescribed [by law] is a prerequisite to the jurisdiction of the [Appellate Tax Board over] a case like the present." Assessors of Boston v. Suffolk Law School, 295 Mass. 489, 494 (1936). See also Cohen v. Assessors of Boston, 344 Mass. 268, 271 (1962) ("G.L. c. 59, § 59 … makes the filing of an application for abatement with the assessors a foundation of jurisdiction in the board….") "These prerequisites [also] include being one of the persons authorized by statute to bring an appeal, that is a 'person aggrieved.'" Bubier v. Assessors of Lynn, Mass. ATB Findings of Fact and Reports 2001-12, 2001-18, citing Donlon v. Assessors of Holliston, 389 Mass. 848, 854 (1983). 
It follows from these principles that 
limitations upon the class of persons who may apply to assessors for abatements and the conditions upon which such persons may apply for abatements are to be read into the provisions governing appeals. No person is entitled to appeal unless he is 'aggrieved by the refusal of the assessors to abate a tax'….

Boston Five Cents Savings Bank v. Assessors of Boston, 313 Mass. 762, 770 (1943). 

	Accordingly, jurisdictional requirements for an appeal under G.L. c. 59, §§ 64 and 65 incorporate the statutory conditions regulating the filing of applications for abatement at G.L. c. 59, § 59. Only a person with standing to apply to the assessors to abate a tax may in turn pursue an appeal from a decision to deny abatement. See Donlon, 389 Mass. at 853-54. See generally Household Retail Services, Inc. v. Commissioner of Revenue, 448 Mass. 226, 229-30 and n.6 (2007).
	G.L. c. 59, § 59 provides in relevant part that: 
A person upon whom a tax has been assessed … may … on or before the last day for payment … apply in writing to the assessors, on a form approved by the commissioner, for an abatement thereof, and if they find him taxed at more than his just proportion … or upon an assessment of any of his property in excess of its fair cash value, they shall make a reasonable abatement.

G.L. c. 59, § 59. Relevant also is G.L. c. 59, § 18, which "provides general authorization for the taxation of [personal] property where it is located" to the owner subject to exceptions not relevant here. See RCN-Beco-Com, LLC v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2003-410, 2003-454, aff'd, 443 Mass. 198 (2005). Accordingly, the disputed tax on the subject personal property was assessed to the owner, and the owner alone was statutorily authorized to apply to the assessors for an abatement on grounds of overvaluation. 
G.L. c. 59, § 59 enumerates exceptions under which tenants and others with an interest in subject property may apply for abatement in particular circumstances. See Donlon, 389 Mass. at 853-54; Bubier, Mass. ATB Findings of Fact and Reports at 2001-18-19. However, these provisions "by which the class of persons entitled to apply for abatement was enlarged" pertain only to taxes on real property. See American Institute for Economic Research v. Assessors of Cambridge, Mass. ATB Findings of Fact and Reports 1944-19, 1944-25. "The Legislature in enacting this statute made no reference to a tax on personal property." Id. 
	In American Institute for Economic Research, Mass. ATB Findings of Fact and Reports at 1944-22-23, the beneficial owner of personal property held in trust, which was not assessed for the tax, brought an appeal. It was held that "where the tax relates to personal property, the person assessed, and no one else has the right to apply for an abatement, and, since the appellant was not the person assessed, it had no right to apply and therefore was not aggrieved by the refusal of assessors to abate the tax."
Id. Since the owner of the subject personal property was assessed under G.L. c. 59, § 18, only the owner was entitled to apply for abatement and correspondingly prosecute an appeal before the Board. See generally One Boston Place LLC v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2007-40, 2007-43 ("A person cannot be 'aggrieved' by an assessment of tax unless the person was also the one assessed.")
	In the instant case, there is no dispute that Siemens owned the subject personal property on January 1, 2004 and was assessed for the tax in dispute. As the assessed owner of the subject personal property, Siemens was the party with standing to request an abatement under the provisions of G.L. c. 59, § 59. Siemens in fact filed the Application for Abatement from which the present appeal is being taken. The jurisdictional defect arose because Siemens, the party aggrieved by the denial of abatement, did not act to pursue an appeal. The appellant, which was not assessed for the disputed tax, was not an "aggrieved party" entitled to commence an appeal. It was immaterial in these circumstances that appellant was a lessee in possession of the subject personal property as of January 1, 2004, or bore responsibility for payment of taxes under the terms of the lease. "[T]he Supreme Judicial Court has ruled that the 'person aggrieved' by the imposition of a tax" with standing to appeal to the Appellate Tax Board "is not the party that bears its economic burden, but rather the one charged with its legal incidence." Daimler Chrysler Corp. v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2007-270, 2007-284, citing Supreme Council of the Royal Arcanum v. State Tax Commission, 358 Mass. 11, 112-13 (1970). 
	 "Since the remedy of abatement is created by statute, the [B]oard lacks jurisdiction over the subject matter of proceedings that are commenced at a later time or prosecuted in a different manner from that prescribed by statute." Nature Church v. Assessors of Belchertown, 384 Mass. 811, 812 (1981), citing Assessors of Boston v. Suffolk Law School, 295 Mass. 489, 495 (1936). "Adherence to the statutory prerequisites is essential to an effective application for abatement of taxes." Stilson, 385 Mass. at 732. The Board found and ruled that appellant, which did not own the subject personal property and was not assessed for the disputed tax, was not a "person aggrieved by the refusal of assessors to abate a tax on personal property" for purposes of G.L. c. 59, §§ 64 and 65. The Board accordingly dismissed this case for lack of jurisdiction. 



                     APPELLATE TAX BOARD



				 By:	___________________________________	      			 Thomas W. Hammond, Jr., Chairman






	      
A true copy,

Attest: _______________________________
	         Clerk of the Board

  On September 11, 2006, Commissioner Gorton was sworn as a temporary member of the Appellate Tax Board pursuant to G.L. c. 58A, § 1, his status as a member of the Board having terminated on that date with the appointment and qualification of his successor. See G.L. c. 30, § 8. This appointment was renewed for an additional year commencing September 11, 2007. Commissioner Gorton's material participation in the deliberation of these appeals included, inter alia, drafting and distributing proposed Findings and giving a detailed report on the evidence and his observations as to witness credibility. He also made oral presentations of his recommendations to the Board members. 
 The title "Telecommunications Finance Group" is a d/b/a name for Siemens.
 July 26, 2005 "shall be deemed to be the date of delivery [where the petition] was mailed in the United States … first class postage prepaid … properly addressed to the … board…." G.L. c. 59, § 64.
 There was no claim that appellant filed the Petition Under Formal Procedure as an agent of Siemens.
 The affidavit constituted hearsay and the opinion of value contained therein received no weight. Azfali v. Assessors of Plymouth, Mass. ATB Findings of Fact and Reports 2008-508, 2008-517.
  Had the assessors treated the subject personal property as "machinery used in the conduct of the [appellant's] business", appellant might have been assessed as a "person having possession of the same on January first." G.L. c. 59, § 18. In that circumstance, the Board would have jurisdiction over appellant's claim for abatement. See Pal's Café, Inc. v. Assessors of Westfield, Mass. ATB Findings of Fact and Reports 1998-600.
  G.L. c. 59 § 59 has not changed in relevant part since the Board decided the American Institute for Economic Research case 64 years ago. The precedent remains an authoritative exposition of the jurisdictional requirements governing appeals to the Board. Cf. Springfield Sugar & Products Co. v. State Tax Commission, Mass. ATB Findings of Fact and Reports 1979-185, 1979-188 (applying "[t]he maxim 'stare decisis'"), aff'd, 381 Mass. 587 (1980). 

ATB 2008-893