Vallee v. State

Vallee v. State  (94-575); 165 Vt 560; 678 A.2d 1255

[Opinion Filed 03-Apr-1996]

[Motion for Reargument Denied 29-Apr-1996]


                               ENTRY ORDER

                      SUPREME COURT DOCKET NO. 94-575

                             JANUARY TERM, 1996


Rodolphe J. Vallee, Elizabeth        }     APPEALED FROM:
W. Vallee, Rodolphe M. Vallee        }
and Timothy L. Vallee d/b/a/         }
Vallee Farms                         }     Property Valuation &
				     }     Review Division
     v.                              }
				     }     DOCKET NO. Franklin 1994-1
State of Vermont                     }


       In the above-entitled cause, the Clerk will enter:

       Owners of Vallee Farms (sellers) sold a farm enrolled in the Working
  Farm Tax Abatement Program (WFTAP).  They appeal from a decision of the
  State Board of Appraisers, which assessed the repayment of benefits in the
  amount of $6,657.60 against sellers because purchasers of the farm did not
  earn at least one-half of their gross income from farming.  We affirm.

       Sellers owned and operated a farm enrolled the WFTAP.  Under the
  program, their property taxes were reduced by $6,657.60 over two years.  On
  December 29, 1993, they sold the farm to Frederick Magdoff and Amy Demarest
  (purchasers), who recorded the deed January 7, 1994.  At the time of the
  conveyance, Mr. Magdoff was a member of the faculty at the University of
  Vermont and Ms. Demarest was a teacher in the Milton schools.  They
  continued to hold these positions after purchasing the farm.  The
  Department of Taxes Property Valuation and Review Division determined that
  the land had been sold to nonfarmers and ordered repayment of the benefits. 
  Sellers appealed to the State Board of Appraisers, which concluded that
  purchasers were nonfarmers and therefore required repayment.  Sellers
  appeal.

       The WFTAP provides a reduction in property taxes for properties
  enrolled in the program.  32 V.S.A. § 3765(a).  The state reimburses the
  municipality for these reductions. 32 V.S.A. § 3765(b).  If the property is
  converted to nonfarm use, however, the owner must repay benefits for the
  five most recent years.  32 V.S.A. § 3774(a).  At the time of the sale of
  the farm in this case, 32 V.S.A. § 3764(2)(B) provided that any conveyance
  by deed of property enrolled in the program constituted conversion to
  nonfarm use.  There is no dispute that sellers conveyed the property at
  issue.

       Section 3764(2), however, also provides three exceptions.  Sellers
  maintain that they fall under one of these exceptions, which states: "it
  shall not be considered a conversion to nonfarm

 

  use . . . to convey property enrolled in the program to a farmer who
  maintains the property's status as eligible property."  32 V.S.A. §
  3764(2).  The dispute in this case concerns whether purchasers are
  "farmers," qualifying sellers under this exception.  Section 3764(5) states
  that "farmer" shall have the same meaning as under § 3752, which states:
  "`Farmer' means a person who earns at least one-half of his annual gross
  income from the business of farming."  The State Board of Appraisers held
  that purchasers were not farmers at the time that they purchased the farm
  because they did not earn at least one-half of their 1993 gross income from
  farming. Sellers maintain that purchasers were farmers because they began
  earning at least one-half of their annual income from farming when they
  purchased the farm at the end of 1993.

       We do not decide the legal issue presented here -- when purchasers
  must earn one-half of their income from farming to qualify sellers under
  the tax repayment exception -- because, even under the test sellers urge us
  to adopt, they have failed to meet their burden.  Sellers are required to
  repay the WFTAP benefits upon conveyance of the property.  The department
  showed that sellers conveyed the property on December 29, 1993.  Sellers
  have the burden of establishing that an exception applies.  Cf. Wetherbee
  v. State, 132 Vt. 165, 168, 315 A.2d 251, 253 (1974) (burden on taxpayer to
  establish exemption from property transfer tax applies).  They failed to do
  so under either interpretation of the statute.

       Although sellers maintained that purchasers began receiving fifty
  percent of their income from farming when they received their first milk
  check, they presented no evidence to support this assertion.  Before the
  Board, they claimed that it was the State's burden to prove that purchasers
  were not farmers, that they had no access to purchasers' tax records or
  financial information, and that they had no evidence of purchasers' income
  from farming or otherwise. Indeed, purchasers urged the Board to require
  the department to wait for purchasers to file their 1994 tax returns to
  determine whether purchasers were farmers with respect to the farm
  conveyance.

       To counter sellers' unsupported assertion that purchasers were
  farmers, the department relied on purchasers' 1993 tax returns and a
  telephone call to purchasers to confirm that they did not earn at least
  one-half of their income from farming.  Because sellers presented no
  evidence, they failed to meet their burden of showing purchasers meet the §
  3752 definition of farmers.

       Next, sellers argue that a 1995 amendment to § 3764 should be applied
  retroactively because the amendment is remedial in nature.  In April 1995,
  the Legislature amended the exceptions to § 3764(2), which now provides
  that a conveyance to "an owner who maintains the property's status as
  enrolled property under any of the use value programs of this chapter"
  shall not be considered a conversion to nonfarm use.  1995, No. 20, § 1
  (emphasis added).  Under this amendment, purchasers of property enrolled in
  the WFTAP need not meet the previous income requirements to fall under the
  exception.  The amendment went into effect on July 1, 1995.  1 V.S.A. §
  212. Sellers maintain that the amendment cures a defect in the statute, is
  therefore remedial in nature, and should be applied retroactively.  We
  disagree.

       Ordinarily, tax exemptions are construed strictly against the
  taxpayer.  Chamberlain v.

 

  Vermont Dep't of Taxes, 160 Vt. 578, 580, 632 A.2d 1103, ____ (1993). 
  Sellers provide no support for their claim that the statutory amendment
  cures a defect, rather than changing the class of persons who benefit from
  the exemption, nor any support for retroactive application of a tax
  exemption.  Moreover, sellers failed to show that purchasers maintain the
  property under a covered use value program, and thus, failed to meet their
  burden even if the amendment applied.

       Affirmed.





     BY THE COURT:



     _______________________________________
     Frederic W. Allen, Chief Justice

     _______________________________________
     Ernest W. Gibson III, Associate Justice

     _______________________________________
     John A. Dooley, Associate Justice

     _______________________________________
     James L. Morse, Associate Justice

     _______________________________________
     Denise R. Johnson, Associate Justice