John M. Cornish et al., Trustees of the South Street Nominee Trust v. Board of Assessors of the Town of Carlisle (May 12, 2008)

COMMONWEALTH OF MASSACHUSETTS
APPELLATE TAX BOARD

JOHN M. CORNISH et al.,       v.      BOARD OF ASSESSORS OF     
TRUSTEES OF THE SOUTH           	   THE TOWN OF CARLISLE
STREET NOMINEE TRUST

Docket No. F281320                    Promulgated:
							   May 12, 2008


This is an appeal filed under the formal procedure, pursuant to G.L. c. 58A, § 7 and G.L. c. 61, § 3, from the refusal of appellee to abate withdrawal penalty taxes assessed by the Town of Carlisle to appellant under G.L. c. 61, § 7.  
The parties agreed to forgo a hearing and submit this appeal on briefs pursuant to 831 CMR 1.31.  Chairman Hammond and Commissioners Scharaffa, Egan, Rose, and Mulhern joined in the decision for appellant.
These findings of fact and report are made pursuant to a request by appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.   

David J. Martel, Esq. and Rosemary Crowley, Esq., for appellant.
 
Paul R. DeRensis, Esq. and John R. Hucksam, Jr., Esq., for appellee. 




FINDINGS OF FACT AND REPORT

On the basis of uncontroverted facts contained in the submissions of the parties, the Appellate Tax Board ("Board") made the following findings of fact.
On April 1, 2005, the Trustees of the South Street Nominee Trust ("appellant" or "trustees") received a special warrant from the Board of Assessors of the Town of Carlisle ("appellee" or "assessors") assessing a withdrawal penalty tax on property identified as parcel 17-X, on Map 5 in the Town of Carlisle ("subject property"). The withdrawal penalty tax, in the amount of $83,603.40, was based on the difference between the tax paid under G.L. c. 61 and the tax that would have been paid under G.L. c. 59, for the fiscal years 1992 through 2000 ("withdrawal penalty period").  The withdrawal penalty taxes and interest assessed were as follows:

Fiscal Year		       Tax	
$ 7,533.63	
$ 8,232.94	
$ 9,165.60	
$ 8,465.56	
$ 8,963.85	
$10,193.67	
$11,544.98	
$12,469.57	
$ 7,033.60	
	
Total withdrawal         $83,603.40	
         penalty tax	
Dr. Albert E. Benfield, identified as the "indirect beneficiary" of the South Street Nominee Trust ("Trust"), owned the subject property during the withdrawal penalty period.  Appellant paid the withdrawal penalty tax in full on the date it was assessed, April 1, 2005.  Appellant then timely filed an abatement application with the assessors on April 28, 2005.  The assessors denied the application on July 6, 2005, and on July 13, 2005, appellant seasonably filed its Petition with the Board.  On the basis of these facts, the Board ruled that it had jurisdiction over the subject appeal.
The subject property consisted of a 55-acre parcel of forest land in the Town of Carlisle.  Dr. Benfield owned the subject property from August 1, 1960 until December 29, 2000, when he conveyed title to the Carlisle Conservation Foundation ("Foundation") as a gift, retaining a non-transferable life estate in the subject property.  From 1978 through 2002, the parcel was classified as forest land pursuant to G.L. c. 61, and had been certified as such by the State Forester in three consecutive forest management plans.  As a result, the land was taxed at the reduced rates provided by G.L. c. 61, § 3 during the withdrawal penalty period.  From 2002 through 2005, the subject property remained in a forested, undeveloped state, but had no forest management plan in place.  The assessors considered the Foundation to be a charitable organization and have thus treated the subject property as exempt from real estate tax under G.L. c. 59, § 5, Third.  The Foundation did not file with the assessors an updated forest management plan or an application to recertify the subject property; it had little reason to do so since the assessors treated the subject property as tax exempt.
Based on the evidence submitted, and as will be explained further in the Opinion which follows, the Board found that Dr. Benfield's transfer of the subject property to the Foundation in 2000 in no way eliminated the subject property's forest land classification; instead, the subject property lost its forestry classification on December 31, 2002, when its forest management plan expired and the Foundation did not file a new plan.  The Board thus found that the Foundation - not Dr. Benfield or the Trust - was the owner of the subject property at the time that the property no longer qualified as forest land and a withdrawal penalty tax could have been assessed under G.L. c. 61, § 7.  Therefore, the withdrawal penalty tax assessment against appellant was improper.  Accordingly, the Board issued a decision for appellant in this appeal.

OPINION
	"When the owner of classified land withdraws such land or any part thereof from classification, or upon a final determination that said land should be withdrawn from classification, he shall pay to the city or town a withdrawal penalty tax . . . ."  G.L. c. 61, § 7.  The Board's jurisdiction over withdrawal penalty tax appeals stems from G.L. c. 61, § 3, which provides that "[a]ny person aggrieved by the refusal of the assessors to so abate a tax in whole or in part or by their failure to act upon such application by appeal to the appellate tax board within thirty days after the date of notice of decision of the assessors or within three months of the date of the application for abatement, whichever is later."  See also ADDA Realty Trust v. Assessors of Berlin, Mass. ATB Findings of Fact and Reports 2000-621, 634.  
The fundamental issue raised by this appeal was whether Dr. Benfield owned the subject property for purposes of c. 61, § 7 at the time the land was withdrawn from classification.  To resolve this issue, the Board analyzed when the subject property was actually withdrawn from forestry classification, and who held title to the subject property at that time. 
The subject property did not lose its forestry classification until the last plan of forest management expired on December 31, 2002.

The assessors apparently determined that the subject property was removed from classification on the date that Dr. Benfield transferred it to the Foundation, December 29, 2000.  However, while G.L. c. 61, § 8 expressly provides that classified forest land "shall not be sold for, or converted to, residential, industrial or commercial use" the statute is silent as to conveyances that do not convert classified forest land to residential, industrial or commercial use.  There is nothing in the record to suggest that Dr. Benfield withdrew the subject property from G.L. c. 61 classification or sold the subject property for purposes prohibited by § 8.  
Further, neither the assessors nor the State Forester had initiated formal proceedings as required by G.L. c. 61, § 2 to remove the subject property from G.L. c. 61 classification before the expiration of the forest management plan.  G.L. c. 61, § 2.  See also Dandy Realty, LLC v. Board of Assessors of the Town of Cummington, Mass. ATB Findings of Fact and Report 2006-853, 863-64 (ruling that § 7 requires a voluntary removal from classification by the owner or the initiation of formal withdrawal proceedings under § 2 as alternative "conditions precedent" to the assessment of a withdrawal penalty tax).  Accordingly, the conveyance to the Foundation constituted neither a voluntary removal from classification nor the initiation of formal withdrawal proceedings under § 2.       
Moreover, the parcels remained in their undeveloped, forested state through April 1, 2005, the date of the assessment of the withdrawal penalty tax, more than four years after the conveyance to the Foundation.  There is no evidence in the record that the subject property was at any time used in a manner inconsistent with Chapter 61 forest land classification.  The Board thus found and ruled that Dr. Benfield's conveyance did not terminate the subject property's forestry classification.  In fact, the only circumstance on this record that could justify the assessors' removal of the subject property from forest land classification was the expiration of the forest management plan in 2002.  G.L. c. 61, § 2 ("Land shall be removed from classification by the assessor unless, at least every ten years, the owner files with said assessor a new certification by the state forester."). Neither Dr. Benfield nor the Trust owned the subject property when the forest management plan expired in 2002.   
Dr. Benfield, the life tenant at the time that the subject property lost its forestry classification, was not the "owner" of the property for purposes of G.L. c. 61, § 7.

Section Seven of Chapter 61 states that "[w]hen the owner of classified land withdraws such land or any part thereof from classification, or upon a final determination that said land should be withdrawn from classification, he shall pay to the city or town a withdrawal penalty tax . . . ." (emphasis added).  
Appellee contended that, because property taxes can be properly assessed to the holder of a life estate under G.L. c. 59, § 11, then a withdrawal penalty tax could also be assessed to a life tenant.  However, the assessors' reliance on the general provisions of G.L. c. 59 is misplaced, because the withdrawal penalty tax is assessed under the specific provision of G.L. c. 61, § 7.  See W.D. Cowls, Inc. v. Board of Assessors of Shutesbury, 34 Mass. App. Ct. 944, 946 (1993) (ruling that the filing deadlines in G.L. c. 61 supersede the general deadlines in G.L. c. 59 for purposes of the Board's jurisdiction over a forest land tax appeal).  The legislature made the "owner" solely responsible for withdrawal penalty taxes under G.L. c. 61, § 7, and explicitly defined the "owner" as the "person or persons holding title to a parcel of forest land."  G.L. c. 61, § 1.  See also 304 CMR 8.02 (defining "owner" as "the person or persons holding an undivided fee interest in the subject parcel under a duly recorded deed").  
On April 1, 2005, the date of the assessment of the withdrawal penalty tax, the Foundation was the "owner" of the subject property.  The Foundation, not Dr. Benfield, held legal title to the subject property.  See, e.g., Aronian v. Asadoorian et al., 315 Mass. 274, 275 (1943) (distinguishing between "legal title in fee" and "merely a life estate").  For the entire period that Dr. Benfield held title to the subject property, it was classified as forest land, with a forest management plan in place.  The last forest management plan did not expire until December 31, 2002, after Dr. Benfield's conveyance to the Foundation.  At that time, the Foundation was the rightful owner of the property, and thus it was the responsibility of the Foundation, not Dr. Benfield, to apply to recertify the subject property.  G.L. c. 61, § 2 ("Land shall be removed from classification by the assessor unless, at least every ten years, the owner files with said assessor a new certification by the state forester.") (emphasis added); 304 CMR 8.05(1)("An owner shall submit to the State Forester a complete application [to renew the forestry classification] . . .")(emphasis added).  Whether or not Dr. Benfield had exclusive possession of the subject property was irrelevant under the plain terms of § 2.  The Board thus found and ruled that Dr. Benfield could not be assessed the withdrawal penalty tax pursuant to § 7.  Accordingly, the Board ruled that the withdrawal penalty tax assessment at issue in this appeal was improper.
The Board notes that a separate ground, not available at the time it reached its decision for appellant in this appeal, supports its decision.  Subsequent to the Board's decision in the instant appeal, the Appeals Court decided South Street Nominee Trust v. Assessors of Carlisle, 70 Mass. App. Ct. 853 (2007), rev. denied, 450 Mass. 1109 (2008), which reversed the Board's ruling that a withdrawal penalty tax under G.L. c. 61, § 7 was due in the circumstances of that appeal.  The Appeals Court disagreed with the Board's interpretation of St. 1981, c. 768, § 2, which provided that the withdrawal penalty tax at issue in South Street and the present appeal: 
shall not apply to land classified prior to the effective date of this act until the expiration of the term of the forest management plan governing such land or until one year after the withdrawal of such land from classification, whichever period is longer.  Notwithstanding the provisions of any laws to the contrary, the owner of such land, prior to the end of said period, may elect to remove such land from classification without imposition of a withdrawal tax or may elect to apply for classification of such land under the provisions of section one . . . .

As in the present appeal, the property owner in South Street owned land that was classified as forest land under G.L. c. 61, when the 1981 amendment to G.L. c. 61 was enacted.  The Appeals Court ruled that Section 2 of the 1981 amendment exempted the property from the post-1981 provisions of G.L. c. 61, including the withdrawal penalty tax provisions, because "'until one year after withdrawal of such land from classification' creates a right to a tax-exempt withdrawal of pre-1982 classified forest land which does not expire until exercised."  South Street, 70 Mass. App. Ct at 857.  Accordingly, the Appeals Court ruled that Section 2 of the 1981 amendment exempted all property from the withdrawal penalty tax provisions if, like the property at issue in this appeal, it had been classified prior to the post-1981 version of G.L. c. 61 and continuously recertified by the State Forester until withdrawal of the property from classification.  Id. at 858-59.   
The subject property in the present appeal had been subject to a forest management plan continuously from 1978 through 2002.  Therefore, the Appeals Court's ruling in South Street is dispositive of this appeal.
Conclusion 
For all of the foregoing reasons, the assessment of the subject withdrawal penalty tax was improper.  Accordingly, the Board decided this appeal for appellant.  

			                APPELLATE TAX BOARD
					
                       By:_________________________________
					  Thomas W. Hammond, Jr., Chairman
					
A true copy,

Attest:_______________________________
              Clerk of the Board

   The Trust never held legal title to the subject property during the withdrawal penalty period.  However, for purposes of the instant appeal, the Trustees have assumed that appellees assessed the withdrawal penalty tax to the Trust as proxy for Dr. Benfield.
  The subject property was a single parcel throughout the withdrawal penalty period but was subsequently divided into five distinct lots.
  The first forest management plan ran from January 1, 1978 to December 31, 1982, the second from January 1, 1983 to December 31, 1992, and the third from January 1, 1993 to December 31, 2002.
  The statute requires the transferor to notify the city or town of the intent to transfer or convert the classified forest land for residential, industrial or commercial use, and give the town or city either a right of first refusal or an option to purchase the property.  G.L. c. 61, § 8.
 "When in judgment of the assessors, land which is classified as forest land or which is the subject of an application for such classification is not being managed under a program, or is being used for purposes incompatible with forest production, or does not otherwise qualify under this chapter, the assessors may, on or before December first in any year file an appeal in writing mailed by certified mail to the state forester requesting a denial of application or, in the case of classified land, requesting removal of the land from such classification. . . .  The state forester may initiate, on or before December first of any year, a proceeding to remove land from classification, sending notice of his action by certified mail to the assessors and the owner of such land." 
 Under G.L. c. 59, § 11, "whenever the commissioner deems it proper he may . . . authorize the assessment of taxes upon real estate to the person who is in possession . . . [the commissioner can also] authorize the assessment of taxes upon any present interest in real estate to the owner of such interest . . . ."  

566


ATB 2008-555