B-163120, MAY 9, 1969

B-163120, MAY 9, 1969

TO MR. SECRETARY:

A LETTER OF JANUARY 5, 1968, FROM THE DEPUTY GENERAL COUNSEL, DEPARTMENT OF THE AIR FORCE, REQUESTED OUR OPINION CONCERNING PAYMENTS IN LIEU OF STATE AND LOCAL REAL PROPERTY TAXES WITH RESPECT TO THE FORMER AIR FORCE PLANT NO. 26, INDIANAPOLIS, MARION COUNTY, INDIANA, WHICH, ON OCTOBER 17, 1966, WAS SOLD TO THE ALLISON DIVISION OF THE GENERAL MOTORS CORPORATION.

IN MARCH OF 1967 THE DEPUTY TREASURER OF MARION COUNTY, INDIANA, SUBMITTED BILLS TO THE DEPARTMENT OF THE AIR FORCE FOR THE PAYMENT PURSUANT TO PUBLIC LAW 388 OF THE 84TH CONGRESS, AS AMENDED (40 U.S.C. 521 -524) OF $115,855.98 IN LIEU OF REAL PROPERTY TAXES. THE PAYMENT REQUESTED WAS FOR THE FIRST HALF OF THE CALENDAR YEAR 1966 AND WAS CERTIFIED TO REPRESENT THE TAXES WHICH WOULD BE IMPOSED WERE LEGAL TITLE TO THE AIR FORCE PLANT HELD BY A PRIVATE CITIZEN.

THE AIR FORCE, WHICH IN PRIOR YEARS HAD MADE SUCH PAYMENTS WITH RESPECT TO PLANT NO. 26, DENIED THE CURRENT REQUEST OF THE COUNTY TREASURER FOR TWO REASONS. THE FIRST WAS THAT THE AIR FORCE DID NOT HAVE TITLE TO PLANT NO. 26 ON THE DUE DATE OF THE TAXES FOR THE FIRST HALF OF CALENDAR YEAR 1966. THE SECOND, NOW WITHDRAWN BECAUSE OF THE AMENDMENT OF PUBLIC LAW 388 EXTENDING ITS LIFE TO THE END OF 1968 (PUBLIC LAW 90-50, APPROVED JULY 7, 1967), WAS THAT ONLY PAYMENTS IN LIEU OF TAXES BECOMING DUE PRIOR TO JANUARY 1, 1967, WERE AUTHORIZED UNDER THE ACT, WHEREAS THE TAX BILLS OF MARION COUNTY REPRESENTED PAYMENTS DUE IN 1967.

THE DEPUTY TREASURER OF MARION COUNTY PROTESTED THE DENIAL AND IN MAY OF 1967, AFTER AFFIRMATION BY THE AIR FORCE OF ITS POSITION, SUBMITTED REVISED BILLS FOR THE PAYMENT OF $186,326.59 IN LIEU OF TAXES, COVERING THE PERIOD JANUARY 1 TO OCTOBER 17, 1966, WHEN THE AIR FORCE PLANT NO. 26 WAS CONVEYED TO THE ALLISON DIVISION OF GENERAL MOTORS CORPORATION. SUBMITTING THE REVISED BILLS THE DEPUTY TREASURER CONTENDS THAT UNDER INDIANA STATUTES THE TAX FOR A CALENDAR YEAR IS DUE MARCH 1ST OF THAT YEAR, AND THUS THE PAYMENT SOUGHT WAS DUE PRIOR TO THE SALE OF PLANT NO. 26 SO AS TO BE AUTHORIZED UNDER PUBLIC LAW 388. TO THE SAME EFFECT IS AN OPINION DATED OCTOBER 9, 1967, OF THE MARION COUNTY ATTORNEYS TO THE COUNTY TREASURER, A COPY OF WHICH WAS FURNISHED BY THE DEPUTY TREASURER. THAT OPINION, WHICH WILL BE SUBSEQUENTLY DISCUSSED, CONCLUDES AS FOLLOWS:

"THEREFORE, MY OPINION, THE UNITED STATES IS PROPERTY CHARGEABLE WITH AN IN LIEU OF TAXES CONTRIBUTION WITH RESPECT TO TAXES FOR CALENDAR YEAR 1966, NOT PAYABLE UNTIL 1967, BECAUSE SUCH TAXES DID IN FACT UNDER THE INDIANA STATUTES BECOME THE LIABILITY OF PROPERTY OWNER ON MARCH 1, 1966. THE SIMPLE FACT THAT THE OWNERS OF NON-EXEMPT PROPERTY HAD UNTIL SOMETIME IN 1967 BEFORE PENALTY AND INTEREST WOULD BE CHARGED WITH RESPECT TO SUCH TAXES DOES NOT CHANGE THE FACT THAT THE TAXES BECAME A PERSONAL LIABILITY OF THE PROPERTY OWNER ON MARCH 1, 1966.' THE DEPARTMENT OF THE AIR FORCE, HOWEVER, MAINTAINS THE POSITION THAT THE REQUIREMENTS OF PUBLIC LAW 388 HAVE NOT BEEN MET AND THUS IT IS WITHOUT AUTHORITY TO MAKE THE REQUESTED PAYMENT. IN THE DEPARTMENT'S LETTER OF DECEMBER 5, 1967, TO THE DEPUTY TREASURER, IT IS STATED:

"PUBLIC LAW 84-388, AS AMENDED, AUTHORIZES PAYMENTS IN LIEU OF TAXES WITH RESPECT TO CERTAIN PROPERTY TITLE TO WHICH IS HELD BY THE UNITED STATES -. . . ON EACH DATE . . . ON WHICH REAL PROPERTY TAXES LEVIED BY ANY STATE OR LOCAL TAXING AUTHORITY WITH RESPECT TO ANY PERIOD BECOME DUE . . .- (40 U.S.C. 523). THE TAXES IN LIEU OF WHICH YOU NOW REQUEST PAYMENT REPRESENT TAXES FOR CALENDAR YEAR 1966; THEY THUS BECOME -. . . DUE AND PAYABLE IN TWO 2 EQUAL INSTALLMENTS ON OR BEFORE THE FIRST MONDAY IN MAY AND THE FIRST MONDAY IN NOVEMBER OF THE NEXT YEAR- (IND. ANN. STAT. SEC. 64-2058 (BURNS 1961) ). ACCORDINGLY, ONE-HALF OF THE 1966 TAXES ON PLANT NO. 26 BECAME DUE ON MAY 1, 1967 AND ONE-HALF OF THE TAXES ON NOVEMBER 6, 1967. ON NEITHER DATE DID THE UNITED STATES HOLD TITLE TO THE PROPERTY IN QUESTION, AS REQUIRED BY THE STATUTE. CONSEQUENTLY, THE DEPARTMENT OF THE AIR FORCE IS WITHOUT AUTHORITY TO MAKE THE REQUESTED PAYMENT.'

THE UNDERLYING QUESTION HEREIN IS THE MEANING OF THE TERM "BECOME DUE" AS USED IN PUBLIC LAW 388 WITH RESPECT TO THE DATE OF REAL PROPERTY TAXES LEVIED BY ANY STATE OR LOCAL TAXING AUTHORITY. THE ACT PROVIDES:

"SEC. 523. PAYMENTS IN LIEU OF TAXES TO STATE AND LOCAL TAXING AUTHORITIES.

"WHERE REAL PROPERTY HAS BEEN TRANSFERRED ON OR AFTER JANUARY 1, 1946, FROM THE RECONSTRUCTION FINANCE CORPORATION TO ANY GOVERNMENT DEPARTMENT, AND THE TITLE TO SUCH REAL PROPERTY HAS BEEN HELD BY THE UNITED STATES CONTINUOUSLY SINCE SUCH TRANSFER, THEN ON EACH DATE OCCURRING ON OR AFTER JANUARY 1, 1955, AND PRIOR TO JANUARY 1, 1969, ON WHICH REAL PROPERTY TAXES LEVIED BY ANY STATE OR LOCAL TAXING AUTHORITY WITH RESPECT TO ANY PERIOD BECOME DUE, THE GOVERNMENT DEPARTMENT WHICH HAS CUSTODY AND CONTROL OF SUCH REAL PROPERTY SHALL PAY TO THE APPROPRIATE STATE AND LOCAL TAXING AUTHORITIES AN AMOUNT EQUAL TO THE AMOUNT OF THE REAL PROPERTY TAX WHICH WOULD BE PAYABLE TO EACH SUCH STATE OR LOCAL TAXING AUTHORITY ON SUCH DATE IF LEGAL TITLE TO SUCH REAL PROPERTY HAD BEEN HELD BY A PRIVATE CITIZEN ON SUCH DATE AND DURING ALL PERIODS TO WHICH SUCH DATE RELATES.'

IT IS THE APPARENT VIEW OF THE COUNTY, ALTHOUGH PUBLIC LAW 388 IS NOT SPECIFICALLY MENTIONED IN THE OPINION OF THE COUNTY ATTORNEYS, THAT THE PAYMENT SOUGHT BY THE COUNTY IS IN LIEU OF TAXES WHICH "BECOME DUE" ON MARCH 1, 1966, PRIOR TO DISPOSAL BY THE AIR FORCE OF PLANT NO. 26, SINCE ON THAT DATE PRIVATELY HELD PROPERTY WITHIN THE STATE IS "SUBJECT TO ASSESSMENT AND TAXATION" (BURNS INDIANA STATUTES, SECTIONS 64-401 AND 64- 302) AND THE OWNER ON THAT DATE IS "LIABLE FOR THE TAXES ASSESSED FOR THAT YEAR ON SUCH PROPERTY" (SECTION 64-403). THE AIR FORCE ON THE OTHER HAND LOOKS TO THE INDIANA STATUTE WITH RESPECT TO THE PAYMENT OF TAXES AND IS OF THE VIEW THAT THE TAXES FOR WHICH PAYMENT IS SOUGHT BECAME DUE IN TWO INSTALLMENTS, ON MAY 1, 1967, AND NOVEMBER 6, 1967, SINCE THE INDIANA STATUTE PROVIDES: "TAXES FOR THE YEAR 1963 AND EACH YEAR THEREAFTER SHALL BE DUE AND PAYABLE IN TWO 2 EQUAL INSTALLMENTS ON OR BEFORE THE FIRST MONDAY IN MAY AND THE FIRST MONDAY IN NOVEMBER OF THE NEXT YEAR.' SECTION 64-2058.

IN ESSENCE, THE COUNTY CONSIDERS THE TERM "BECOME DUE" AS REFERRING TO THE TIME WHEN LIABILITY ARISES, AND DISMISSES THE TAX INSTALLMENT PAYMENT PROVISION AS MERELY FIXING THE DATES AFTER WHICH INTEREST AND PENALTIES ARE IMPOSED. THE AIR FORCE, ON THE OTHER HAND, EQUATES "BECOME DUE" WITH ,DUE AND PAYABLE" IN THE INDIANA STATUTE, AND AS THE ONLY SPECIFIC TAX PAYMENT DATES REFERRED TO IN THAT STATUTE ARE THE FIRST MONDAYS IN MAY AND NOVEMBER OF THE YEAR FOLLOWING THE TAX YEAR, CONSIDERS THOSE DATES TO BE THE DATES WHEN THE TAXES "BECOME DUE" WITHIN THE MEANING OF THE FEDERAL STATUTE.

PUBLIC LAW 388, AS IS APPARENT FROM ITS PROVISIONS AND EMPHASIZED BY ITS LEGISLATIVE HISTORY, IS A TEMPORARY LIMITED PROVISION FOR MAKING PAYMENTS IN LIEU OF STATE AND LOCAL REAL PROPERTY TAXES. THE PAYMENTS ARE RESTRICTED AS TO THE PROPERTIES COVERED, THE PERIOD OF TAXES AND, MORE IMPORTANT HEREIN, THE DATE THE TAXES "BECOME DUE.' AND AS "BECOME DUE" IS USED IN CONNECTION WITH THE MAKING OF PAYMENTS, WE CANNOT ESCAPE THE CONCLUSION THAT THE TERM, READ IN THE CONTEXT OF THE STATUTE PARTICULARLY SEC. 523, REFERS TO THE TIME FOR THE PAYMENT OF TAXES AND NOT THE MERE DATE OF ASSESSMENT OR THE DATE FOR THE FIXING OF LIABILITY WITH RESPECT TO OWNERSHIP. SEE 46 COMP. GEN. 706. SEE ALSO CASARETO V JOHNSON, 260 N.W. (1935) 705, 707, WHEREIN THE SUPREME COURT OF SOUTH DAKOTA, WITH REFERENCE TO THE WORD "DUE" STATED:

"* * * IT HAS A NUMBER OF MEANINGS, DEPENDENT UPON THE CONNECTION IN WHICH IT IS USED. 19 C.J. 818. THIS TERM AS USED IN THE STATUTES PERTAINING TO THE COLLECTION OF TAXES HAS REFERENCE TO THE INTERVAL OF TIME WHEN TAXES ARE PAYABLE AND THE LIEN THEREOF MAY BE DISCHARGED WITHOUT INTEREST AND PENALTY. * * *" WE THEREFORE CONSIDER IT APPROPRIATE IN DETERMINING WHEN THE 1966 TAXES BECAME DUE TO LOOK TO THE INDIANA STATUTORY PROVISION FOR TAX INSTALLMENT PAYMENT, SECTION 64-2058. OTHER GENERAL STATE OR LOCAL STATUTE AS TO THE PAYMENT OF TAXES HAS BEEN FOUND OR BROUGHT TO OUR ATTENTION.

SECTION 64-2058, INDIANA STATUTES, PROVIDES THAT THE TAXES FOR EACH YEAR SHALL BE DUE AND PAYABLE IN TWO EQUAL INSTALLMENTS ON OR BEFORE THE FIRST MONDAY IN MAY AND THE FIRST MONDAY IN NOVEMBER OF THE NEXT YEAR. WHILE THE PERIOD WITHIN WHICH AN INSTALLMENT IS DUE AND PAYABLE IS NOT SPECIFICALLY PRESCRIBED EXCEPT FOR THE TERMINAL DATE, THERE CANNOT BE IGNORED THE PHRASE "OR BEFORE.' NOR DOES THE PURPOSE OF PUBLIC LAW 388 WARRANT SUCH ACTION SO AS TO LIMIT THE DATE TAXES "BECOME DUE" TO THE TERMINAL DATE OF A STATE STATUTORY PERIOD FOR THE PAYMENT OF TAXES.

THE PHRASE "OR BEFORE" MUST BE REASONABLY APPLIED IN THE LIGHT OF THE RELATED STATE STATUTORY PROVISIONS FOR THE COLLECTION AND PAYMENT OF TAXES. PARTICULARLY PERTINENT ARE SECTIONS 64-2042, 64-2056 AND 2057, INDIANA STATUTES, WHICH PROVIDE THAT THE COUNTY AUDITOR SHALL PREPARE AND DELIVER TO THE COUNTY TREASURER BEFORE DECEMBER 31 OF EACH YEAR A PROPERTY TAX ROLL, DESIGNATED ,TAX DUPLICATE" UPON RECEIPT OF WHICH THE COUNTY TREASURER PUBLISHES FOR THREE CONSECUTIVE WEEKS THE TAX RATE AND OTHER GENERAL TAX INFORMATION, AND, AT LEAST 15 DAYS PRIOR "TO THE DATE ON WHICH AN INSTALLMENT IS DUE AND PAYABLE," MAILS A STATEMENT OF CURRENT AND DELINQUENT TAXES TO EACH PERSON LIABLE FOR TAXES AS SHOWN ON THE TAX DUPLICATE. FROM THE FOREGOING IT DOES NOT APPEAR THAT THE PHRASE "OR BEFORE" CAN BE EXPANSIVELY APPLIED; AND, THEREFORE WE FEEL IT REASONABLE TO CONCLUDE THAT THE INDIANA PROPERTY TAXES FOR THE YEAR 1966, DUE AND PAYABLE IN TWO EQUAL INSTALLMENTS ON OR BEFORE THE FIRST MONDAY IN MAY AND THE FIRST MONDAY IN NOVEMBER OF 1967, DID NOT "BECOME DUE" WITHIN THE MEANING OF PUBLIC LAW 388 PRIOR TO THE EXPIRATION OF THE TAX YEAR 1966. THAT VIEW IT MAY BE POINTED OUT IS REFLECTED IN THE INITIALLY SUBMITTED TAX BILLS WHICH CONTAINED THE LEGEND: "FIRST INSTALLMENT STATE, COUNTY, TWP., SCHOOL AND CORPORATION TAXES, IF ANY, FOR YEAR OF 1966 PAYABLE IN 1967.'

CONSEQUENTLY, YOU ARE ADVISED THAT WE CONCUR IN THE POSITION TAKEN BY THE DEPARTMENT OF THE AIR FORCE, THAT THE REQUIREMENTS OF PUBLIC LAW 388 HAVE NOT BEEN MET TO AUTHORIZE THE DEPARTMENT'S MAKING THE REQUESTED PAYMENT IN LIEU OF TAXES FOR THE PERIOD JANUARY 1 TO OCTOBER 17, 1966.

THE LETTER OF THE DEPUTY GENERAL COUNSEL ALSO PRESENTED FOR CONSIDERATION THE QUESTION OF WHETHER A REFUND SHOULD BE SOUGHT OF THE SECOND INSTALLMENT PAYMENT FOR THE TAX YEAR 1965, WHICH WAS DUE AND PAYABLE ON OR BEFORE THE FIRST MONDAY IN NOVEMBER 1966. THE QUESTION ARISES BECAUSE THE UNITED STATES NO LONGER HAD TITLE TO AIR FORCE PLANT NO. 26 ON THE FIRST MONDAY IN NOVEMBER OF 1966 AND THE DEPARTMENT ENTERTAINS THE VIEW THAT THAT DATE SHOULD BE CONSIDERED THE DUE DATE FOR THE PURPOSE OF PUBLIC LAW 388. AS MAY BE GATHERED FROM THE PRIOR DISCUSSION, WE DO NOT VIEW AS WARRANTED, FOR THE PURPOSE OF PUBLIC LAW 388, THE ADOPTION OF THE RESTRICTIVE CONCEPT THAT THE TERMINAL DATE OF A TAX PAYMENT PERIOD IS THE SOLE DATE ON WHICH A TAX PAYMENT IS TO BE CONSIDERED AS HAVING BECOME DUE. WE THEREFORE ARE OF THE OPINION THAT A REQUEST FOR REFUND OF THE TAX INSTALLMENT PAYMENT WOULD NOT BE JUSTIFIED.