CHARLESTON – West Virginia can keep five and a half million dollars that it would have refunded to a business if the business had not fouled up its tax appeal, the Supreme Court of Appeals ruled June 13.

Four of five Justices agreed that Elk Run Coal Company was not entitled to a refund because it sent its tax appeal to the wrong office.

The majority reversed Kanawha County Circuit Judge Louis Bloom, who ordered a refund for Elk Run last July.

Elk Run in 2002 requested a refund of severance tax it paid in 1999. The tax applied to coal that Elk Run exported to other countries.

Elk Run claimed the tax violated the U. S. Constitution. It limits taxes on imports and exports and it directs the proceeds of such taxes to the national treasury.

The state tax commissioner denied the refund Jan. 8, 2003. The decision gave Elk Run 60 days to appeal.

Prior to 2003 taxpayers had appealed to the tax commissioner, who referred their cases to Office of Hearings and Appeals under the tax commissioner.

By an act of the Legislature an Office of Tax Appeals opened Jan. 1, 2003, independent of the tax commissioner.

Elk Run should have sent its refund petition to the Office of Tax Appeals, but on Jan. 24, 2003, it sent the petition to the tax commissioner.

The tax commissioner did not forward the petition to the Office of Tax Appeals.

Around that time other coal companies asked for severance tax refunds on constitutional grounds. They correctly sent petitions to the Office of Tax Appeals, which consolidated the petitions into a single case.

On Dec. 11, 2003, the Office of Tax Appeals declared the tax unconstitutional and ordered refunds of about $20 million to the coal companies.

The decision did not rule on Elk Run's petition or refer to it.

The tax commissioner appealed to Kanawha County circuit court.

In 2004 the court affirmed the decision of the Office of Tax Appeals, not on the constitutional question but on a point of procedure.

The tax commissioner had responded to the petitions ten days too late.

In February 2005 Elk Run asked the Office of Tax Appeals to deem its refund petition filed as of the date Elk Run sent it to the tax commissioner.

The Office of Tax Appeals so ruled. It included Elk Run's refund petition with the petitions of the other companies, qualifying Elk Run for a refund.

The tax commissioner challenged the decision in Kanawha County. Circuit Judge Louis Bloom signed an order upholding the Office of Tax Appeals.

The tax commissioner appealed to the Supreme Court of Appeals. Attorney General Darrell McGraw represented him.

Herschel Rose III and Steven Broadwater of Charleston represented Elk Run.

Justice Larry Srtarcher wrote in the majority opinion that under Bloom's order Elk Run would receive the same refunds that others received as a result of the tax commissioner's procedural default.

"Elk Run was required by law to file its appeal with the Office of Tax Appeals," Starcher wrote. "Elk Run did not do so."

He wrote, "Elk Run wants 'sauce for the goose' – the application of strict jurisdictional deadlines to the procedural error by the Commissioner, but not 'sauce for the gander' – the application of the same strict deadlines to a procedural error by Elk Run."

Justices Joseph Albright and Brent Benjamin concurred, with reservations. They reserved the right to file concurring opinions.

Justice Spike Maynard dissented and reserved the right to file a dissenting opinion.

Meanwhile, in a separate but similar group of cases, the Supreme Court of Appeals has declared the severance tax constitutional.

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