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District of Columbia v. Willard Associates

March 20, 1995

DISTRICT OF COLUMBIA, APPELLANT,
v.
WILLARD ASSOCIATES, APPELLEE.



Appeal from the Superior Court of the District of Columbia. (Hon. Eugene N. Hamilton, Trial Judge).

Before Farrell and King, Associate Judges, and Kern, Senior Judge.

The opinion of the court was delivered by: Farrell

FARRELL, Associate Judge: For the tax year 1990, appellee Willard Associates ("Willard") failed to submit in timely fashion information required annually by the Mayor of the District of Columbia to assist in the apportionment of "mixed use" property for purposes of real property taxation. A regulation adopted by the Mayor through the Department of Finance and Revenue (the "Department") provided that in the event this information was not submitted in time, "the Director [of the Department] shall classify the affected taxpayer's real property as Class Four Property for the next taxable year." 9 DCMR § 327.4 (1994). The Director invoked this regulation and reclassified Willard's property from its previous mixed use status (Class Three and Four) to Class Four for the tax year 1990. Willard experienced a significant tax increase for that year as a result. The question before us is whether this regulation exceeds the authority delegated to the Mayor by the governing statute. We hold that, at least as applied to the property in question here, it does not, and we reverse a contrary determination by the trial court.

I.

The District of Columbia's real property tax law requires annual assessments of all real property in the District. D.C. Code § 47-801 et seq. (1990 & Supp. 1994). The assessed value of the property is its estimated market value as of January 1 of the year preceding the tax year. Id. § 47-820 (a). After allowing a period for taxpayers to challenge the assessments, the Mayor issues a final assessment roll by June 30. Id. § 47-825 (g).

Once property is assessed, it is assigned one of five classifications *fn1 according to use in order to permit application of the proper tax rate to the assessed value. The rates increase in ascending order by class. Of concern here, improved commercial property regularly used to furnish lodging to transients, such as hotels and motels, is designated Class Three property, while all other improved and occupied commercial property is designated Class Four property. Id. § 47-813 (c-1)(3)-(4). *fn2 The statute also provides for classification of "mixed use" property: "when the uses of real property fall within more than 1 of the classes enumerated . . ., the total assessed value of the property shall be apportioned into the appropriate classes of real property . . ., and each of the areas resulting from the apportionment shall be taxed at the appropriate real property tax rate." Id. § 47-813 (f)(1). The statute further provides that "the Mayor shall devise a method for apportioning, by class, real property whose uses fall within more than 1 class." Id. § 47-813 (f)(2). As part of this process, "the Mayor may require an owner of real property to submit, at a time and in a form prescribed, such information relating to the uses of property as in the Mayor's judgment will assist in the apportionment of property by class for real property classification purposes . . . ." Id. Finally, the statute authorizes the Mayor "to promulgate such rules and regulations as may be necessary to carry out the provisions of this act." Id. § 47-814.

Purporting to act under this authority, the Mayor in 1980 promulgated regulations governing the apportionment of mixed use property, the primary feature of which is a requirement that "affected taxpayers" file annually a "mixed use form." 9 DCMR § 327.1. *fn3 Although "the Director shall make every effort to afford affected taxpayers the opportunity to apply and qualify for mixed use status," the regulation declares that "it shall be the affected taxpayer's responsibility to inform the Director of the existence of a mixed use property by properly completing and timely filing the mixed use form." Id. The form, as pertinent to this case,

shall contain a request for the following general information with respect to the mixed use property for the reporting period in question:

(b) The square foot area of . . . improved real property defined as Class Three Property, if any, and the square foot area of improved real property defined as Class Four Property, if any . . . .

(d) The total building area (square foot area) of . . . Class Three Property, if any, and Class Four Property, if any . . . .

9 DCMR § 328.3. *fn4 The completed form must be filed annually by June 1 "of the year in which the forms are mailed to affected taxpayers," id. §§ 329.1, 329.10, although a timely filed request for extension of time may be granted by the Director. Id. §§ 329.7, 329.8. Of key importance here, § 327.4 declares:

If any mixed use form is not submitted (postmarked) to the Department on or before June 1st of the year in which such forms are mailed to affected taxpayers, or within the time extended by the Director, or any mixed use form is timely submitted (postmarked) on or before June 1st, but is either inaccurate or incomplete and, after written notice from the Director and, in the opinion of the Director, remains inaccurate or incomplete, the Director shall classify the affected taxpayer's real property as Class Four Property for the next taxable year (July 1st - June 30st ). [Emphasis added.]

In limited circumstances, however, the Director may grant relief from an untimely filing:

Whenever the mixed use form or information sought under the form, or records or documents sought to completely and accurately inform the Director as to the mixed use of the property are not submitted in the time provided for by this chapter, and it is shown to the Director's satisfaction that the failure to provide the form, information, record, or document was due to reasonable cause and was not due to simple ...


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