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SJC-12328
WORLDWIDE TECHSERVICES, LLC vs. COMMISSIONER OF REVENUE & another1 (and three consolidated cases2).
Suffolk. November 7, 2017. - February 22, 2018.
Present: Gants, C.J., Gaziano, Lowy, Budd, Cypher, & Kafker, JJ.
Taxation, Abatement, Sales and use tax. Practice, Civil, Abatement, Intervention. Administrative Law, Intervention. Due Process of Law, Intervention in civil action.
Appeal from a decision of the Appellate Tax Board.
The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.
Edward D. Rapacki for the intervener. John A. Shope (Michael Hoven also present) for the taxpayers.
1 Econo-Tennis Management Corp., intervener, doing business as Dedham Health and Athletic Complex. 2 BancTec Third Party Maintenance, Inc. vs. Commissioner of Revenue & another; QualxServ, LLC vs. Commissioner of Revenue & another; and Dell Marketing L.P. vs. Commissioner of Revenue & another. Banctec Third Party Maintenance, Inc., is now known as QualxServ Third Party Maintenance, Inc.; and QualxServ, LLC, is now known as WorldWide TechServices, LLC. 2
Daniel J. Hammond, Assistant Attorney General (Daniel A. Shapiro also present) for Commissioner of Revenue. Ben Robbins & Martin J. Newhouse, for New England Legal Foundation, amicus curiae, submitted a brief.
KAFKER, J. Fifteen years and three Supreme Judicial Court
decisions ago, this protracted case commenced regarding taxes
imposed on computer service contracts. The litigation began
when purchasers of the service contracts filed a putative class
action against the sellers,3 claiming under G. L. c. 93A that the
imposition of these taxes was unlawful and an unfair and
deceptive practice. The sellers successfully moved to compel
arbitration pursuant to the terms of the computer service
contracts, and a judge in the Superior Court eventually
confirmed the award. The next chapter in this tax saga, and the
one we are required to decide today, then ensued.
For the sole and express purpose of hedging their bets in
response to the class action, the sellers had applied for tax
abatements from the Commissioner of Revenue (commissioner)
beginning in 2004. The commissioner denied the applications,
and the sellers petitioned the Appellate Tax Board (board). The
appellant, Econo-Tennis Management Corp., doing business as
Dedham Health and Athletic Complex (Dedham Health), one of the
consumers who purchased these service contracts, moved to
3 We refer to BancTec Third Party Maintenance, Inc., QualxServ, LLC, and Dell Marketing L.P., the corporate appellees in the present litigation, collectively as the "sellers." 3
intervene in the proceedings, which the board allowed.
Thereafter, the board, with certain exceptions, reversed the
decision of the commissioner and allowed the abatements,
ordering the parties to compute the amounts to be abated. Taxes
totaling $215.55 were imposed on the service contracts purchased
by Dedham Health.4 After the class action litigation on the
claims under G. L. c. 93A ended in the sellers' favor, the
sellers withdrew their tax abatement petitions with prejudice.
Dedham Health moved to strike the withdrawals. The board denied
the motion to strike the withdrawals and terminated the
proceedings, deciding that "any pending or further motions . . .
[were] moot" and that it would "take no further action on these
appeals." Dedham Health now appeals from that order. We
transferred Dedham Health's appeal to this court on our motion
and now conclude that although the board did not err as a matter
of law in allowing the sellers' withdrawals, the board's
termination of the proceedings in their entirety, after
permitting Dedham Health to intervene and allowing the
abatements, was an error of law. After the sellers' withdrawals
were allowed, Dedham Health should have been allowed to proceed
4 The sellers note that the evidence in the record before the Appellate Tax Board (board) only reflects that Dedham Health paid a total of $45.60, not $215.55. For the purposes of this opinion, we need not address this issue. 4
as an intervener on its own claim to recover the taxes imposed
on the service contracts it purchased.5
1. Background. The instant cases arise out of the same
tax dispute at issue in Feeney v. Dell Inc., 454 Mass. 192
(2009) (Feeney I); Feeney v. Dell Inc., 465 Mass. 470 (2013)
(Feeney II); and Feeney v. Dell Inc., 466 Mass. 1001 (2013)
(Feeney III). As we summarized in Feeney I, supra at 194, "Dell
Catalog Sales Limited Partnership (Dell Catalog) and Dell
Marketing Limited Partnership (Dell Marketing), wholly owned
subsidiaries of Dell Inc. (formerly Dell Computer Corporation),
sold computers and related products to consumers and businesses
and, in connection with such sales, also sold optional computer
hardware service contracts under which [the sellers] agreed to
provide onsite computer repairs to the purchasers." Dell
Catalog and Dell Marketing collected tax on the optional service
contracts from their customers and remitted the tax to the
Department of Revenue. Id. at 194 & n.6. Under these service
contracts, "BancTech, Inc. . . . ; QualxServ LLC; or Dell
Marketing agreed to provide onsite computer repairs to the
purchasers."6 Id. at 194. Dedham Health was one such consumer
who purchased Dell computer hardware and the accompanying
5 We acknowledge the amicus brief submitted by the New England Legal Foundation in support of the sellers. 6 As noted in note 2, supra, the names of two of these companies have since changed. 5
service contracts. Id. Dedham Health asserted that the tax on
the optional service contracts was improper. Id. at 193.
Dedham Health and one other plaintiff who bought Dell
hardware and service contracts7 commenced a putative class action
against Dell Computer Corporation (Dell Computer) in 2003,
alleging that it had improperly collected and remitted tax on
the service contracts that the plaintiffs purchased, and that
collecting the tax violated the Massachusetts consumer
protection act, G. L. c. 93A. Id. at 193, 196. "The 'Dell
Terms and Conditions of Sale' . . . in effect at the time of the
plaintiffs' purchases contain an arbitration clause compelling
arbitration of any claim against Dell . . . and mandating that
any such claims be arbitrated on an individual basis" (emphasis
in original; footnote omitted).8 Id. at 194-195. In July, 2003,
7 The other plaintiff was John A. Feeney, now deceased, who is not a party to the present litigation. 8 The relevant portion of the "Dell Terms and Conditions of Sale" provides:
"ANY CLAIM, DISPUTE, OR CONTROVERSY (WHETHER IN CONTRACT, TORT, OR OTHERWISE, WHETHER PREEXISTING, PRESENT OR FUTURE, AND INCLUDING STATUTORY, COMMON LAW, INTENTIONAL TORT AND EQUITABLE CLAIMS) AGAINST DELL, its agents, employees, successors, assigns or affiliates (collectively for purposes of this paragraph, 'Dell') arising from or relating to this Agreement, its interpretation, or the breach, termination or validity thereof, the relationships which result from this Agreement (including, to the full extent permitted by applicable law, relationships with third parties who are not signatories to this Agreement), Dell's advertising, or any related purchase SHALL BE 6
Dell Computer moved to compel arbitration, and a judge in the
Superior Court allowed the motion. Id. at 196-197. "[The
plaintiffs] each filed a claim of arbitration 'under protest' in
November, 2004." Id. at 197. The arbitrator denied the
plaintiffs' request for class certification, and ruled in favor
of the defendants on the merits in 2007. Id. at 198.
"In February 2008, the plaintiffs moved in the Superior
Court to vacate the arbitration award," but their motion was
denied and the case was dismissed with prejudice. Id. The
plaintiffs appealed, and we granted their application for direct
appellate review. Id. In Feeney I, this court held that the
arbitration clause was void as against public policy, and
reinstated the Superior Court action. Id. at 205, 214. Less
than two years later, the United States Supreme Court ruled in
AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 351-352 (2011),
that the Federal Arbitration Act precludes invalidating class
waiver provisions in arbitration clauses on the basis of State
public policy favoring class actions. In response to
Concepcion, we held in Feeney II that "a court may still
RESOLVED EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION ADMINISTERED BY THE NATIONAL ARBITRATION FORUM (NAF) under its Code of Procedure then in effect (available via the Internet at http://www.arb-forum.com, or via telephone at 1-800-474-2371). The arbitration will be limited solely to the dispute or controversy between Customer and Dell. Any award of the arbitrator(s) shall be final and binding on each of the parties, and may be entered as a judgment in any court of competent jurisdiction." 7
invalidate a class waiver" post-Concepcion where, as here,
"class proceedings are the only viable way for a consumer
plaintiff to bring a claim against a defendant." Feeney II, 465
Mass. at 501-502. One week later, the United States Supreme
Court held in American Express Co. v. Italian Colors Restaurant,
570 U.S. 228, 238-239 (2013) (Amex), that an arbitration
agreement's class waiver is enforceable even if the class waiver
effectively precludes the plaintiff from vindicating his or her
Federal statutory rights. In light of the Supreme Court ruling
in Amex, we held in Feeney III that the class waiver in the
present case could not be invalidated for effectively denying
the plaintiffs a remedy, and remanded the case to the Superior
Court. Feeney III, 466 Mass. at 1003.
On remand, the Superior Court granted the sellers' motion
to confirm the original arbitration award dismissing the
plaintiffs' claims. Feeney vs. Dell Inc., Mass. Superior Ct.,
No. 2003-01158 (Middlesex County Oct. 24, 2013). The Appeals
Court affirmed in a memorandum and order pursuant to its rule
1:28, 87 Mass. App. Ct. 1137 (2015), and this court denied the
plaintiffs' application for further appellate review in October,
2015, ending the putative class action litigation.
While the putative class action was still ongoing, the
sellers brought abatement claims against the commissioner for
the taxes collected on the service contracts. The sellers 8
indicated in their abatement filings that they only sought
abatement in the event that the class action litigation resulted
in a judgment requiring the sellers to refund the taxes to their
customers. The sellers' filings stated that if they prevailed
in the class action, they would withdraw their abatement
applications.
The commissioner denied the sellers' abatement requests.
The sellers filed timely petitions with the board challenging
the commissioner's denial of their abatement requests, and the
petitions were consolidated. In their petitions to the board,
the sellers again emphasized that they sought abatement to
protect against a possible judgment against them in the putative
class action litigation.
Dedham Health filed motions to intervene in the sellers'
petitions before the board, arguing that it and "other similarly
situated customers" were the "real parties in interest" because
the customers were entitled to be refunded in the amount of any
abatement paid out to the sellers. Dedham Health also asserted
that the commissioner prohibits customers from pursuing
abatement claims themselves "where the challenged 'tax' was paid
to, and remitted by, the seller." However, Dedham Health did
not ask for class action certification before the board because,
as it conceded in its motion, "there is no procedure for
certifying a class action to the [board]." The board granted 9
Dedham Health's motions to intervene, concluding that it had
alleged "sufficient facts . . . to support its claims that the
parties may not be adequately representing Dedham Health's
interests" and that Dedham Health had "a substantial interest in
the subject matter of this litigation." In allowing Dedham
Health's intervention, the board noted that it "in no way
extends or expands the limitations contained in G. L. c. 62C,
§ 37," the statute that sets forth the procedure for pursuing
abatement.
The parties submitted a joint statement of facts and a
joint evidentiary record to the board. The board ruled in
December, 2013, that, with certain exceptions, the transactions
did not fall within the statutory or regulatory framework for
taxation and thus the sellers had not been required to collect
the taxes at issue, and were therefore entitled to an abatement
of all such taxes they had remitted. The board directed the
parties to "compute the amounts to be abated based on the
foregoing findings and rulings." Because computing the
abatement amounts would be a complex and expensive task, the
board granted the sellers' motion to stay the board proceedings
until all appeals in the putative class action litigation had
been exhausted.9
9 As grounds for their motion to stay, the sellers cited the significant expenses they would incur to compute the abatement 10
After the final dismissal of the putative class action in
favor of the sellers, the sellers withdrew all of their
petitions before the board. Dedham Health filed a motion to
strike the sellers' withdrawals, arguing that allowing the
withdrawals would leave consumers without a forum to pursue a
tax refund. In July, 2016, the board denied Dedham Health's
motion to strike. Instead, the board ordered the proceedings
closed in light of the sellers' withdrawals, ruling that "any
pending or further motions and discovery are moot." The board's
ruling did not include a rationale for its decision. Dedham
Health did not request findings and a report, available pursuant
to G. L. c. 58A, § 13.10
amounts, particularly in light of the sellers' anticipation that the Superior Court litigation would be resolved in their favor, at which time they intended to withdraw their petitions. 10 The relevant portion of G. L. c. 58A, § 13, provides:
"[T]he board shall make such findings and report thereon if so requested by either party within ten days of a decision without findings of fact and shall issue said findings within three months of the request . . . . Such report may, in the discretion of the board, contain an opinion in writing, in addition to the findings of fact and decision. If no party requests such findings and report, all parties shall be deemed to have waived all rights of appeal to the appeals court upon questions as to the admission or exclusion of evidence, or as to whether a finding was warranted by the evidence. . . . The decision of the board shall be final as to findings of fact. Failure to comply with the time limits, as outlined above, shall not affect the validity of the board's decision." 11
On appeal, Dedham Health argues that the board (1)
improperly denied Dedham Health's motion to strike the sellers'
withdrawals, (2) incorrectly ruled that the withdrawals rendered
all pending and future motions moot, and (3) violated Dedham
Health's right to due process by terminating the proceedings.
We examine each of these arguments in turn.
2. Discussion. Pursuant to G. L. c. 58A, § 13, when the
board issues a final order without findings of fact, within ten
days a party may request that the board issue findings of fact
and a report. By failing to request findings and a report here,
Dedham Health has "waived all rights of appeal . . . upon
questions as to the admission or exclusion of evidence, or as to
whether a finding was warranted by the evidence." G. L. c. 58A,
§ 13. See Assessors of Lynn v. Zayre Corp., 364 Mass. 335, 338
(1973). Our review of the board's decision is therefore limited
to pure questions of law that were not otherwise waived. See
Supermarkets Gen. Corp. v. Commissioner of Revenue, 402 Mass.
679, 681-682 (1988). Thus, we can only rule in Dedham Health's
favor if the board erred as a matter of law. See id. We review
the board's conclusions of law de novo. Regency Transp., Inc.
v. Commissioner of Revenue, 473 Mass. 459, 464 (2016).
"However, because the board is an agency charged with
administering the tax law and has 'expertise in tax matters,' .
. . we give weight to its interpretation of tax statutes, and 12
will affirm . . . if [the board's] interpretation is reasonable"
(citations omitted). AA Transp. Co. v. Commissioner of Revenue,
454 Mass. 114, 119 (2009).
a. Withdrawal. Dedham Health contends that the board
erred in allowing the sellers to withdraw their petitions for
abatement. Dedham Health interprets the board's final order as
being predicated on the board's assumption that it was required
as a matter of law to accept the sellers' withdrawals and thus
had no discretion to strike them. On the basis of this
assumption, Dedham Health asserts that the board did have
discretion to strike the withdrawals, and that the board's
failure to recognize its own discretion constituted an error of
law.
As discussed, the board's final order did not include an
explanation for its ruling. Because Dedham Health chose not to
request findings of fact and a report, we do not know the basis
for the board's decision. The board may have either (1) decided
it had discretion to accept or reject the withdrawals, and
chosen in the exercise of that discretion to accept the
withdrawals; or (2) decided it had to accept the withdrawals as
it lacked discretion to reject them as a matter of law. We
cannot assume, in the absence of such findings and report, that
the board's decision was made on the latter basis, rather than
the former, as Dedham Health contends. Having failed to request 13
findings and a report, Dedham Health is left only with the
argument that the board's decision to accept the withdrawals was
improper as a matter of law in these circumstances. See
Supermarkets Gen. Corp., 402 Mass. at 681-682.
The board's rules expressly provide for withdrawals in
certain circumstances:
"When notice of the settlement of a pending appeal is received by the clerk from either party, unless a withdrawal of the petition or agreement for decision is filed forthwith, the clerk shall inform both parties or their attorneys by mail that the appeal should be disposed of by filing a withdrawal of the petition or agreement for decision according to the terms of the settlement" (emphasis added).
831 Code Mass. Regs. § 1.21 (2007) (rule 1.21). Thus, at least
where formal settlements are reached, the board expects that
withdrawals be filed to formally dispose of the petition. While
no such formal settlement has been reached and the withdrawals
here were not filed pursuant to rule 1.21, the sellers
effectively accepted the tax liability in its entirety, and
thereby withdrew their petitions for abatement. Rule 1.21 thus
provides support for the allowance and the board's acceptance of
the withdrawals in the instant matter.
Prior decisions by this court have also recognized
taxpayers' ability to withdraw and the board's ability to accept
such withdrawals at various stages of administrative tax
proceedings. See D'Errico v. Assessors of Woburn, 384 Mass. 14
301, 309 (1981) ("plaintiff's remedy was to pursue his appeal
from the decision of the [board], but he withdrew that appeal.
This withdrawal . . . was perhaps an unfortunate tactical
decision but not one which this court can undo"); O'Brien v.
State Tax Comm'n, 339 Mass. 56, 61 (1959) ("Two of these [buses]
were garaged in Massachusetts but these are not here involved
for the applications for abatement of the excises with respect
to them have been withdrawn"). See also AA Transp. Co., 454
Mass. at 117 n.5. Nor does Dedham Health argue otherwise; it
contends only that the board had the discretion to strike the
withdrawals, and did not recognize that it had such discretion.
As explained above, Dedham Health waived that argument by not
requesting findings and a report.
Without such findings and a report, we cannot conclude as a
matter of law that the board abused its discretion in allowing
the sellers' withdrawals in these circumstances. See O'Connor
v. Director of the Div. of Employment Sec., 384 Mass. 798, 799
(1981) ("In the absence of either such a request or an
indication from the District Court judge that he felt
constrained to dismiss the notice of appeal because he thought
such action to be mandatory, we conclude that the judge
considered the dismissal to be a matter of discretion and
further conclude that, if such dismissals are indeed
discretionary, the challenged dismissal would not have amounted 15
to an abuse of discretion"). The proceedings had already gone
on for thirteen years at that point; the putative class action
lawsuit had ended in the sellers' favor; there were limited
amounts of money at stake for individual purchasers; and only
two plaintiffs had been identified in the class action, one of
whom had died in the interim.11
Finally, the board's prior decision allowing Dedham Health
to intervene on its own behalf lends further support to the
board's discretion to accept the sellers' withdrawals. As an
intervener, Dedham Health had rights separate from the sellers'
rights. Thus, the sellers' withdrawal, by itself, did not leave
Dedham Health without a right or remedy. We address those
rights below.
b. Independent right to abatement. Dedham Health asserts
that, as an intervening party, it had an independent right to
continue to litigate the abatement proceedings even after the
sellers' withdrawal. To determine Dedham Health's rights before
the board, we look both to the statutory scheme of the tax in
question and the rights the board provided Dedham Health as an
intervener. Commissioner of Revenue v. A.W. Chesterton Co., 406
11 We also conclude that it would have been within the board's discretion to deny the withdrawals, given the sellers' over-all responsibility for collecting and abating the tax, which, according to one filing by the commissioner, involved as much as $50 million and as many as 7 million to 10 million purchasers. 16
Mass. 466, 467-468 (1990) (abatement is created by statute, so
board only has jurisdiction to extent prescribed by governing
statute). This task is made somewhat more complicated by the
fact that the board never made an explicit finding as to whether
the taxes at issue were sales taxes, under the purview of G. L.
c. 64H, or use taxes, under the purview of G. L. c. 64I.12 We
conclude that in these circumstances both statutory schemes
place the legal responsibility for collecting and paying the
taxes and seeking abatement on the sellers, leaving only limited
rights to Dedham Health as an intervener.
i. Statutory rights. In Massachusetts, sales and use
taxes are designed as "complementary components of a unitary
taxing program created to reach all transactions . . . in which
tangible personal property is sold inside or outside the
Commonwealth for storage, use, or other consumption within the
Commonwealth." Boston Tow Boat Co. v. State Tax Comm'n, 366
Mass. 474, 476-477 (1974). The sales tax is imposed on retail
purchases made inside the Commonwealth. See G. L. c. 64H, § 2.
The use tax, "designed to prevent loss of sales tax revenue from
. . . out-of-State retail purchases," is imposed on retail
purchases made outside the Commonwealth that are stored, used,
or otherwise consumed in Massachusetts. D & H Distrib. Co. v.
12 The interlocutory order of the board concluding that the taxes were unlawful refers to the taxes collectively as "sales and use taxes." 17
Commissioner of Revenue, 477 Mass. 538, 540 (2017). See G. L.
c. 64I, § 3. The sales tax and the use tax are mutually
exclusive, and the tax rate is identical. Regency Transp.,
Inc., 473 Mass. at 462.
Vendors are responsible for collecting and remitting the
sales tax and therefore are the party entitled to seek
abatement. See G. L. c. 64H, § 3; First Agricultural Nat'l Bank
of Berkshire County v. State Tax Comm'n, 353 Mass. 172, 179
(1967), rev'd on other grounds, 392 U.S. 339 (1968). By
contrast, purchasers are generally responsible for payment of
the use tax. See G. L. c. 64I, § 3. However, in practice
purchasers "seldom remit use tax of their own volition, and are
not likely even to be aware of the requirement." D & H Distrib.
Co., 477 Mass. at 540. Rather, for applicable purchases outside
Massachusetts from a vendor who conducts business in
Massachusetts, the vendor is required to collect and remit the
use tax, as it would a sales tax. See G. L. c. 64I, § 4.13 See
also G. L. c. 64H, § 3. More specifically:
13 General Laws c. 64I, § 4, provides, in relevant part:
"Every vendor engaged in business in the commonwealth and making sales of tangible personal property or services for storage, use or other consumption in the commonwealth not exempted under this chapter, shall at the time of making the sales, or, if the storage, use or other consumption of the tangible personal property or services is not then taxable hereunder, at the time the storage, use or other consumption becomes taxable, collect the tax from 18
"Vendors 'engaged in business in the commonwealth' who sell tangible personal property or services 'for storage, use or other consumption in the commonwealth' are required to collect the tax from the purchaser and give the purchaser a receipt, unless the 'storage, use, or other consumption' is not 'taxable' at the time of sale, in which case vendors are required to collect the tax when storage, use, or other consumption 'becomes taxable.'"
Town Fair Tire Ctrs., Inc. v. Commissioner of Revenue, 454 Mass.
601, 606 (2009), quoting G. L. c. 64I, § 4. In such instances
where the vendor is required to collect the use tax, if the
vendor fails to do so, the tax is "owed by the vendor to the
commonwealth." G. L. c. 64I, § 4. See Town Fair Tire Ctrs.,
Inc., supra.14
the purchaser and give the purchaser a receipt therefor in the manner and form prescribed by the commissioner. The tax required to be collected by the vendor shall constitute a debt owed by the vendor to the commonwealth. Such vendor shall collect from the purchaser the full amount of the tax imposed by this chapter, or an amount equal as nearly as possible or practicable to the average equivalent thereof; and such tax shall be a debt from the purchaser to the vendor, when so added to the sales price, and shall be recoverable at law in the same manner as other debts." 14 Under both tax schemes, when added to the sales price, the amount taxed becomes a "debt from the purchaser to the vendor." See G. L. c. 64H, § 3; G. L. c. 64I, § 4. Both schemes include a "bad debt" provision, wherein "any vendor who has paid to the commissioner a tax for a sale on credit is 'entitled' to reimbursement if the account 'is later determined to be worthless.'" Household Retail Servs., Inc. v. Commissioner of Revenue, 448 Mass. 226, 229 (2007). However, this provision is a mere "statutory courtesy," as the vendor is still legally responsible for paying the tax. Id. at 230. See Continental-Hyannis Furniture Co. v. State Tax Comm'n, 366 Mass. 308, 309 (1974) (prior to enactment of bad debt provision, vendor remained liable for sales tax even in instances where purchaser did not tender payment for tax). 19
Thus, where the vendor has collected and remitted the use
tax, such that it mirrors the implementation of the sales tax,
the vendor is legally responsible for the tax and becomes the
party entitled to seek abatement.15
Here, the taxes at issue were collected and remitted by the
sellers, not Dedham Health. Therefore, regardless of whether
the taxes at issue were sales taxes or use taxes, the sellers
were the party statutorily responsible for the payment of the
tax and statutorily entitled to seek abatement, not Dedham
Health. This is true even though the economic burden of the
taxes at issue were passed along to Dedham Health. See First
Agricultural Nat'l Bank of Berkshire County, 353 Mass. at 180
("There is no necessary inconsistency between imposing the legal
incidence of a tax upon the vendor, yet recognizing a statutory
right in the vendor to shift the tax to the purchaser").
Placing the legal responsibility for the tax on vendors is also
in accord with the purpose of the tax scheme. By making the
vendors responsible, the Legislature adopted "what it believed
to be the most efficacious method of ensuring the payment" of
the tax. Baker Transport, Inc. v. State Tax Comm'n, 371 Mass.
15 When abatement is sought for either tax, the vendor who collected the tax cannot, however, receive a refund until he or she demonstrates that "he [or she] has repaid to the purchaser the amount for which the application for refund is made." G. L. c. 62C, § 37. 20
872, 875-876 (1977) (Legislature's decision to require tax
payment prior to issuance or transfer of vehicle registration
was intended to ensure taxes paid on all taxable sales of motor
vehicles). See First Agricultural Nat'l Bank of Berkshire
County, supra at 178 ("practical considerations necessitate its
collection and remission to the State by the vendor"). Because
the vendor is already collecting the tax from the purchasers,
placing the legal responsibility for collecting, paying, and
abating the tax on the vendor is a logical way of administering
the tax burden, such that the State does not have to pursue
individual purchasers for payment.
ii. Intervener rights. Although Dedham Health was not
statutorily entitled to seek abatement here, the board allowed
Dedham Health to intervene in the proceedings before the board.
The sellers argue that such intervention violated the statutory
scheme. See A.W. Chesterton Co., 406 Mass. at 467-468, quoting
Assessors of Boston v. Suffolk Law Sch., 295 Mass. 489, 492
(1936) ("Since the remedy by abatement is created by statute
[the board] has no jurisdiction to entertain proceedings for
relief by abatement begun at a later time or prosecuted in a
different manner than is prescribed by the statute"). We
disagree.
The board properly allowed the intervention in accordance
with its own procedures. Under 831 Code Mass. Regs. § 1.37 21
(2007), the "practice and procedure before the [b]oard shall
conform to that heretofore prevailing in equity causes . . .
prior to the adoption of the Massachusetts Rules of Civil
Procedure."16 Prior to the adoption of the Massachusetts Rules
of Civil Procedure in 1973, an intervener needed a "substantial
interest in the subject matter of the original litigation" to
intervene in an equity claim. See D.J. Doyle & Co. v. Darden,
328 Mass. 288, 290 (1952); Check v. Kaplan, 280 Mass. 170, 178
(1932). Here, the board determined that "Dedham Health has
alleged sufficient facts relating to the subject matter of these
appeals to support its claims that the parties may not be
adequately representing [Dedham Health's] interests and
therefore [Dedham Health has] a substantial interest in the
subject matter of this litigation." The board also correctly
cited controlling authority in its order allowing Dedham Health
to intervene. See Check, supra.
In these circumstances, where the board ordered an
abatement, but where the sellers indicated they would withdraw
from the abatement proceedings if the putative class action were
dismissed, allowing Dedham Health to intervene was appropriate.
The board correctly recognized that Dedham Health, as the
purchaser whose money was used to pay the tax, had a substantial
16 This provision of the Code of Massachusetts Regulations also states that "substance and not form shall govern" in these proceedings. 831 Code Mass. Regs. § 1.37 (2007). 22
interest in the abatement and that the sellers had no intention
or incentive to protect that interest. Intervention was an
appropriate means of protecting Dedham Health's substantial
interest, while also respecting the statutory structure and the
expertise of the board. See Raytheon Co. v. Commissioner of
Revenue, 455 Mass. 334, 337 (2009); French v. Assessors of
Boston, 383 Mass. 481, 482 (1981) ("We have long recognized the
board's expertise in tax matters").
As an intervener, Dedham Health became a party to the
abatement proceedings entitled to protect its interest in the
abatement. See Spence v. Boston Edison Co., 390 Mass. 604, 611
(1983); American Hoechest Corp. v. Department of Pub. Utils.,
379 Mass. 408, 410 (1980); Check, 280 Mass. at 178. Cf. Mass.
R. Civ. P. 24, 365 Mass. 769 (1974); Massachusetts Fed'n of
Teachers, AFT, AFL-CIO v. School Comm. of Chelsea, 409 Mass.
203, 205 (1991) (specifying conditions under which party has
right to intervention); May v. Commissioner of Internal Revenue,
553 F.2d 1207, 1208 (9th Cir. 1977) (per curiam) ("Intervention
in a proceeding before [the Tax Court] has been held to be
within the sound discretion of the Tax Court"). Indeed, the
board expressly rejected attempts to limit Dedham Health's role
to that of an amicus allowed only to brief and argue before the
board. 23
Both the sellers and the commissioner contend that Dedham
Health has no right to recover the taxes it paid, as an
intervener or otherwise, because Dedham Health did not file a
request for abatement on its own. They make this argument
despite recognizing that such a request would have been denied
and was thus futile. See Sullivan v. Brookline, 435 Mass. 353,
355 n.1 (200l) (where no administrative remedy exists, plaintiff
is "not subject to any exhaustion requirement"); Massachusetts
Bay Transp. Auth. v. Labor Relations Comm'n, 425 Mass. 253, 258
(1997) (exhaustion not required where it would be futile).
Indeed, the commissioner concedes that he would deny any such
application, as would the board, because neither the
commissioner nor the board recognizes a purchaser's right to
seek abatement independently. In other words, Dedham Health's
other avenue of relief was to chase a separate ostensible
"remedy" that would be denied as soon as it was pursued. We do
not find this argument compelling.
The commissioner also suggests that Dedham Health could
instead sue the sellers, relying on G. L. c. 64H, § 3 (a). The
commissioner's interpretation of G. L. c. 64H, § 3 (a), however,
runs contrary to the plain meaning of this provision. General
Laws c. 64H, § 3 (a), requires the purchaser to reimburse the
vendor for the sales tax that the vendor is statutorily required
to remit to the Commonwealth. It is designed to protect the 24
vendor by imposing a reimbursement requirement on the purchaser.
As explained by the amicus: "Nowhere does G. L. c. 64H, § [3
(a),] mention or even suggest any right of action by the
purchaser against the vendor."
We recognize that Dedham Health's rights as an intervener
were limited. It did not have the same statutory powers and
responsibilities as the sellers, and thus could not seek to
displace the sellers or play an equivalent role in the abatement
process. The intervention order itself expressly stated that it
"in no way extends or expands the limitations contained in G. L.
c. 62C, § 37." Dedham Health's rights were appropriately
limited to defending its own interest in the abatement that
applied to its own transactions. It was not allowed or entitled
to step into the sellers' shoes or to intervene, as Dedham
Health suggests, as to the entirety of the sellers' tax
abatement claims.
Although these rights were limited, we conclude that their
existence could not be entirely contingent on the sellers'
decision whether to continue the abatement process, once it had
begun. In the instant cases, the board made this exact legal
error. It decided Dedham Health had a substantial interest in
the abatement and a limited right to intervene to defend that
interest, but as soon as the sellers filed their withdrawals,
the board terminated the proceedings, eliminating both the 25
interest and the right. In these circumstances, where the board
had already found that the taxes were improperly imposed, it
could not simply terminate the proceedings and leave Dedham
Health without a remedy. See Spence, 390 Mass. at 611; American
Hoechest Corp., 379 Mass. at 410; Check, 280 Mass. at 178. Cf.
Mass. R. Civ. P. 24. Dedham Health should have been permitted
to proceed after the sellers' withdrawal to recoup the tax
payment the board found had been unlawfully imposed on Dedham
Health. We therefore conclude that the board erred as a matter
of law by instead choosing to terminate the proceedings after
the sellers' unilateral withdrawal.
c. Due process. Dedham Health also contends that
terminating the abatement proceedings over its objection
violates its constitutional right not to be deprived of property
without due process of law. Because we conclude that the board
erred as a matter of law where it allowed Dedham Health to
intervene and then took away that right and remedy when the
sellers filed their withdrawals, we need not address this
argument. Cf. Commonwealth v. Disler, 451 Mass. 216, 228 (2008)
("It is, of course, our duty to construe statutes so as to avoid
such constitutional difficulties, if reasonable principles of
interpretation permit it [citation and quotations omitted]);
Textron Inc. v. Commissioner of Revenue, 435 Mass. 297, 307
(2001), cert. denied, 535 U.S. 986 (2002) ("As head of the 26
agency charged with administering the corporate excise tax
statutes, the commissioner has lawful discretion . . . to
interpret a statute in a manner that avoids potential
constitutional issues").
3. Conclusion. For the reasons discussed above, we
reverse the final order of the board and remand for further
proceedings consistent with this opinion.
So ordered.