TAX LAW
Supreme Court of Alaska (2024)
Brendan Genaw
In City of Valdez v. Prince William Sound Oil Spill Response Corp., 548 P.3d 616 (Alaska 2024), the supreme court affirmed the lower court holding that Alaska’s three-year statute of limitations on tax assessments, AS 43.05.260, applied, and the Department of Revenue (“Revenue”) cannot retroactively assess the taxes at issue if it has been over three years since the taxes were filed. (Id. at 617–18). In 1997, the city of Valdez initially appealed Revenue’s determination that certain oil spill response vessels were not taxable under AS 43.56, and Valdez has continued to appeal every year since. (Id. at 620). Eventually, Revenue reversed and decided that these vessels were taxable; however, AS 43.05.260’s three-year statute of limitation bars Revenue from assessing taxes on oil and gas property if it has been over three years since the tax return was filed. (Id. at 625–26). Essentially, this limited taxation to the most recent years rather than every year since Valdez initially appealed in 1997. (Id.). Valdez subsequently appealed arguing the three-year statute of limitation didn’t apply here and that Revenue should retroactively assess taxes for the entire period in question. (Id.). Using legislative history and the plain text, the supreme court held that AS 43.05.260’s three-year limit for tax assessment included the oil and gas property taxes at issue under AS 43.56. (Id. at 626). Furthermore, the court rejected Valdez’s argument than an exemption should apply to municipalities in part because the statute’s apparent purpose is to minimize unforeseen tax liability by ensuring taxpayers do not face sudden, perpetual tax liability. (Id. at 628–29).
