Taxation – Testimony Not Allowed – Constitutional

In re: Appeal of Marathon Holdings LLC. (Lawyers Weekly No. 11-07-0338, 8 pp.) (Linda Stephens, J.) Appealed from the Property Tax Commission. N.C. App. Click here for the full text of the opinion.

Holding: The Property Tax Commission did not err when it refused to allow the taxpayer’s motion to allow a commission staff member to testify, and the commission was not required to make findings in its decision.

Affirmed.

Taxpayer Marathon Holdings filed applications contesting the valuation of three aircraft in 2008. The county board affirmed the decision of the state Department of Revenue, and the taxpayer then filed applications for hearings before the Property Tax Commission sitting as the state Board of Equalization and Review.

Prior to the hearings, taxpayer filed a motion to permit testimony from a commission staff member. The commission heard and denied the motion.

In 2010 the commission issued its final decision upholding the county board’s decision. Taxpayer claims the relevant taxation statute is unconstitutional because it violated the uniformity requirements of the N.C. Constitution and the equal protection clause of the U.S. Constitution, and says the commission erred by refusing to allow testimony from the commission member.

The taxpayer first argues that the commission erred by not allowing the commission staff member to testify. We disagree.

The commission’s rules provide that no member of the staff may be called as a witness unless the commission first shall find that the testimony is necessary to prevent a manifest injustice. The taxpayer contends the commission erred in summarily denying its motion without comment.

There is no case in this state holding that the commission must make findings when denying such a motion.

The taxpayer asserted that the staff member’s testimony was necessary because he taught classes to county tax assessors and could testify that the tax statutes were applied inconsistently across the state, supporting the equal protection argument.

In oral arguments, a commission member asserted that the staff member’s teaching experience did not give him first-hand knowledge about how counties handle property valuation. The commission then recessed briefly and then returned and denied the motion.

The commission’s rule does allow discovery to present relevant evidence; the taxpayer could have used this rule to depose tax assessors from various counties to develop evidence about alleged inconsistencies. Since the taxpayer failed to avail himself of this opportunity, we do not believe the staff member’s testimony was necessary to prevent manifest injuries.

The taxpayer argues that G.S. § 105-274(a) is unconstitutional but states in its brief that it raises this issue in “preservation” and that the issue may be only fully considered and argued after the testimony of the commission staff member. The taxpayer does not cite any authority or argument in support of this contention.

Affirmed.