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State v. Medved

Supreme Court of Colorado, En Banc

January 14, 2019

State of Colorado, Colorado Department of Revenue and Executive Director of the Colorado Department of Revenue, Petitioners
v.
John Medved and Debra Medved. Respondents

          Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 15CA1514

          Attorneys for Petitioners: Philip J. Weiser, Attorney General Grant T. Sullivan, Assistant Solicitor General Noah C. Patterson, Senior Assistant Attorney General Denver, Colorado

          Attorneys for Respondents: Fox Rothschild LLP Christopher J. Dawes Christopher T. Groen Marsha M. Piccone Denver. Colorado

          JUSTICE BOATRIGHT does not participate.

          HOOD JUSTICE

          ¶1 Whites Corporation donated a conservation easement (CE) and transferred a portion of the resulting CE tax credit to John and Debra Medved. In 2006, the Medveds filed a return claiming the credit. In 2007, Whites Corporation did the same. In 2011, the Colorado Department of Revenue (the Department) disallowed the credit in its entirety. The Medveds claim that the Department acted too late because their 2006 filing triggered the four-year limitations period within which the Department may invalidate a CE tax credit. The Department disagrees, asserting that Whites Corporation's 2007 filing triggered the limitations period, and therefore the disallowance stands.

         ¶2 To resolve their dispute, we must interpret section 39-22-522(7)(i), C.R.S. (2005), which states in part that the CE donor shall "represent[] and bind[] the transferees with respect to . . . the statute of limitations." The Department issued a regulation interpreting the statute to mean that "[t]he statute of limitations of the transferor . . . will also apply to the transferees of the credit." Dep't of Revenue Reg. 201-2:39-22-522(3)(g)(viii), 1 Colo. Code Regs. 201-2 (2018). The Department, unsurprisingly, argues that this interpretation is correct and that its regulation is entitled to deference.

         ¶3 A division of the court of appeals disagreed. Medved v. State, 2016 COA 157M, ¶ 11, ___ P.3d ___. The division found the statute's language ambiguous, id. at ¶ 16, and concluded that the General Assembly intended for the first claim filed to trigger the limitations period, id. at ¶ 24. The division acknowledged that the Department's regulation was entitled to "due deference" but ultimately declined to follow it because it clashed with the statute's purpose and legislative history. Id. at ¶ 25. The Department appealed.

         ¶4 We hold that the statute of limitations period begins when the CE donor claims the CE tax credit. This accrual applies to and binds any transferees of the credit. So, the limitations period here began when Whites Corporation filed its tax return in 2007, and the Department's disallowance occurred before the period expired. We reach this conclusion based on the plain language of the statute. Because the Department's regulation comports with our plain language reading, we need not determine whether it is entitled to deference.

         ¶5 Accordingly, we reverse the judgment of the court of appeals and remand for further proceedings consistent with this opinion.

         I. Facts and Procedural History

         ¶6 In March 2006, the Medveds purchased a portion of the CE tax credit resulting from Whites Corporation's donation of a CE.[1] The Department later discovered that the CE tax credit was invalid and disallowed it in its entirety. Three dates are crucial to understanding this dispute:

• October 2006: The Medveds filed their 2005 state income tax return claiming the CE tax credit.
• October 2007: Whites Corporation filed its 2005 state income tax return claiming the CE tax credit and identifying ...

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