Estate of Joseph Owen Boote, Jr., Helen Boote Shivers and Linda Boote, Co-Executors v. Richard H. Roberts, Commissioner, Tennessee Department of Revenue

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
November 13, 2012 Session

ESTATE OF JOSEPH OWEN BOOTE, JR.,
HELEN BOOTE SHIVERS AND LINDA BOOTE, CO-EXECUTORS
v.
RICHARD H. ROBERTS, COMMISSIONER,
TENNESSEE DEPARTMENT OF REVENUE

An Appeal from the Chancery Court for Davidson County
No. 11-1037-IV Russell T. Perkins, Chancellor

No. M2012-00865-COA-R3-CV - Filed March 28, 2013

This appeal involves a claim for interest on inheritance and estate tax refunds. In 2002, the
decedent’s estate filed a Tennessee inheritance tax return and paid an estimated amount of
taxes due. Over the next several years, the estate was embroiled in litigation; the litigation
expenses diminished the size of the estate. Once the litigation concluded, the estate became
entitled to more deductions on its inheritance tax return. To obtain the benefit of the
deductions, the estate filed two amended Tennessee inheritance tax returns, one in 2009 and
one in 2010, claiming that it was entitled to substantial tax refunds based on its overpayment
of inheritance and estate taxes in 2002. The defendant Commissioner of the Tennessee
Department of Revenue paid the refunds claimed in the estate’s amended returns, plus a
pittance of interest on the refunds. The estate filed this lawsuit against the commissioner,
claiming that it was entitled to additional interest on the inheritance and estate tax refunds
under the applicable law. The parties filed cross-motions for summary judgment; each
agreed that the facts are undisputed and each claimed that it was entitled to judgment as a
matter of law. The trial court granted summary judgment in favor of the commissioner. The
estate now appeals. We affirm the decision of the trial court.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court is Affirmed

H OLLY M. K IRBY, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and D AVID R. F ARMER, J., joined.
Andree S. Blumstein and Linda R. Koon, Nashville, Tennessee, for the Plaintiff/Appellant
Estate of Joseph Owen Boote, Jr., Helen Boote Shivers and Linda Boote, Co-Executors

Robert E. Cooper, Jr., Attorney General & Reporter; William E. Young, Solicitor General;
and R. Mitchell Porcello, Assistant Attorney General, for the Defendant/Appellee Richard
H. Roberts, Commissioner, Tennessee Department of Revenue

OPINION

F ACTS AND P ROCEEDINGS B ELOW

Background

Joseph Owen Boote, Jr. (“Mr. Boote”), died testate on September 12, 2001, leaving a sizable
estate. He was survived by his wife, Mrs. Martha M. Boote (“Wife”), and two daughters
from a previous marriage, Helen Boote Shivers and Linda Boote. Mr. Boote’s Last Will and
Testament was duly probated in the Chancery Court for Marshall County, Tennessee, and his
daughters were appointed as the co-executors of his estate (“the Estate”).

This appeal involves a dispute over the amount of interest due to the Estate for overpaid
inheritance and estate taxes. The parties do not dispute the underlying facts involved in this
controversy. They submitted to the trial court a document entitled “Joint Stipulations of
Material Facts” with their respective motions for summary judgment. Those stipulated facts
are the basis for our analysis of the issues on appeal.

Tennessee Inheritance and Estate Taxes

A general overview of Tennessee’s inheritance and estate taxes, sometimes rather
unflatteringly termed “death taxes,” is helpful to an understanding of the issues on appeal.

Under the Tennessee Inheritance Tax Statute, an inheritance tax is imposed upon the
beneficiary of an estate for the privilege of acquiring an estate by succession. Woods v.
Paschall, 547 S.W.2d 575, 577 (Tenn. 1977); see Tenn. Code Ann. §§ 67-8-301 to 67-8-507
(2011 & Supp. 2012). Tennessee inheritance taxes are imposed on an estate if the value of
the net taxable estate exceeds the maximum single exemption allowed on the date of the
decedent’s death.1 See Tenn. Code Ann. § 67-8-314 (Supp. 2012) (tax rates). The value of
the net taxable estate may be reduced by certain deductions, such as administrative costs, the

1
In 2001, the year Mr. Boote died, the maximum single exemption was $675,000. Tenn. Code Ann. § 67-8-
316(b) (Supp. 2012). The net taxable estate of Mr. Boote exceeded this exemption.

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bequest to the surviving spouse (referred to as the “marital deduction”), and other things. As
the deductions reduce the monetary value of the estate, the amount of Tennessee inheritance
tax due is also reduced. See Tenn. Code Ann. § 67-8-315 (2011).

“The Tennessee Inheritance Tax Law is supplemented by the Tennessee Estate Tax Law.”
2 Jack W. Robinson, Sr., et al., Pritchard on Wills and Administration of Estates § 978 (5 th
ed. 1994); see Tenn. Code Ann. §§ 67-8-201 to 67-8-217 (2011). The Tennessee estate tax
is imposed “upon the transfer of the Tennessee estate of every decedent, the amount of which
Tennessee estate tax shall be equal to the extent, if any, of the excess of the credit over the
aggregate of state taxes . . . .” Tenn. Code Ann. § 67-8-204. In other words, the estate tax
is essentially a tax measured by the difference between the Tennessee inheritance tax due and
the maximum federal state death tax credit available on the federal tax forms. The Tennessee
Supreme Court has described the estate tax as a “pickup” tax, the purpose of which is “to
divert to state revenue funds which otherwise would have been payable to the United States
Government under the federal estate tax law and to assure that the state received the
maximum amount allowable as credit to a decedent’s estate under the federal statute.”
Woods v. Campbell, 584 S.W.2d 451, 453 (Tenn. 1979). Thus, in order to determine
Tennessee estate tax liability for a given estate, the estate’s Tennessee inheritance tax liability
and the federal state death tax credit must first be determined.

An estate is not required to file a separate estate tax return. Rather, the amount of estate tax
due is included as a line item in the Tennessee inheritance tax return.

Joint Stipulation of Material Facts

Original Inheritance Tax Return – Filed December 2002

The Boote Estate’s inheritance tax return was due to be filed on June 12, 2002.2 On June 10,
2002, the Estate filed for an extension to file its inheritance tax return. At the time it
requested the extension, the Estate paid Defendant/Appellee Richard H. Roberts,
Commissioner of the Tennessee Department of Revenue (“Commissioner”) $4,010,000 for
the estimated inheritance and estate taxes due.

On December 12, 2002, the Estate filed its original Tennessee inheritance tax return. On that
return, the Estate determined that it owed $2,698,342 in inheritance taxes and $1,400,295 in

2
An inheritance tax return must be filed nine months after the death of the decedent, but an extension of one
year may be granted if certain documents are filed with the request before the expiration of the nine-month
period. See Tenn. Code Ann. § 67-8-419 (2011). If an extension is granted, the estate must pay the resulting
tax liability plus interest on that amount from the date that the taxes were originally due.

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estate taxes, for a total tax liability of $4,098,637. Because the Estate had paid $4,010,000
in June 2002, it paid the difference of $88,638 to the Commissioner when it filed its return.
In calculating the taxes due on the original return, the Estate reduced the amount of the
taxable estate by estimated funeral expenses and administrative expenses of $1,618,977.
This amount included an estimated executor’s commission of $750,000; estimated attorney
fees of $759,000; estimated accountant fees of $30,000; estimated court costs of $3,981; and
an estimated cost of the executor’s bond of $58,650. Additionally, in its original return, the
Estate used an estimated marital deduction of $624,200.50, even though by that time the
amount of Wife’s share of the Estate had already become the subject of litigation.

Because the additional $88,638 inheritance tax payment had been actually due in June 2002,
interest was due on that additional payment in the amount of $3,885.87. On May 23, 2003,
the Commissioner billed the Estate for the $3,885.87 in a Notice of Assessment. On June
9, 2003, the Estate paid the Commissioner $3,885.87 in accordance with the notice.

Thus, in total, the Estate paid the Commissioner $4,102,523.87 in inheritance and estate taxes
plus interest in 2002 and 2003: $4,010,000 (June 2002 – advance taxes), $88,638 (December
2002 – additional taxes), and $3,885.87 (June 2003 – interest).

The First Amended Inheritance Tax Return — Filed January 2009

Almost from the moment of Mr. Boote’s death in 2001 until 2010, the Estate was ensnarled
in complex litigation. Perhaps not surprisingly, the litigation generated substantial
administrative expenses for the Estate. In turn, the Estate was entitled to a deduction on its
inheritance taxes for those sizeable administrative expenses. The litigation also resulted in
the Estate becoming entitled to a larger marital deduction. As noted above, both the
deductions for administrative expenses and Wife’s marital share had been estimated in the
Estate’s original tax return filed in December 2002. As the litigation progressed, however,
it became apparent to the Estate that the estimated deduction amounts used in its 2002 return
were insufficient. Although it was foreseeable in 2002 that the Estate would incur these
expenses, their final and exact amount could not have been determined in 2002. In 2002, the
Estate opted to pay the taxes owed using conservative estimates for those deductions, and
thereby overpaid its Tennessee inheritance and estate taxes.

In November 2008, the litigation over Wife’s marital share was finally settled. Once the
amounts related to this litigation became ascertainable, the Estate sought to take the
allowable deductions for those expenses. To that end, the Estate filed its first amended
Tennessee inheritance tax return (“First Amended Return”), mailed to the Commissioner on

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January 23, 2009.3 On that return, the Estate reported an increase in the marital deduction
of $3,000,000, an increase in the legal expenses of $1,776,394.70, and an increase in the
bond expense of $7,499. The previously claimed deductions from the original return were
also included in the return. Based on these deductions, the Estate requested a refund of
$746,158.51 in overpaid inheritance and estate taxes.

Included with the First Amended Return was a copy of an Agreed Order dated November 6,
2008. The Agreed Order related to a meditation agreement in the underlying litigation over
Wife’s share of the Estate. It stated in relevant part that any tax refund due to the Estate as
a result of an increased marital deduction was contingent upon the “receipt of written
confirmation from the Internal Revenue Service that a marital deduction will be allowed.”
The order included alternate distribution instructions “if a marital deduction is not allowed
for part or all of [the] distribution to [Wife].” Additionally, the Agreed Order noted that
payments for “an Executor’s fee” and “attorneys’ fees” were “reserved for further
proceedings.” Thus, the distribution of funds in the Estate was contingent upon the decision
by the Internal Revenue Service (“IRS”) on how the increased marital deduction would be
treated.

Upon the receipt of the Estate’s First Amended Return, the Commissioner contacted the IRS
to determine what deductions it had accepted and allowed for the Estate at the federal level.
On September 29, 2009, the Commissioner received the IRS response. The IRS allowed the
claimed marital deduction and some attorney fees, but it disallowed the executor’s
commission of $750,000. The IRS also disallowed the $759,000 in claimed attorney fees
“until the exact amounts are determined.”

The response the Commissioner received from the IRS indicated that it had tentatively
allowed deductions and expenses at the federal level, so the Commissioner processed and
issued a tentative refund for the Estate. On approximately November 25, 2009, the
Commissioner issued a refund to the Estate in the amount of $516,246. This was
considerably less than the amount claimed by the Estate. The refund the Commissioner
issued to the Estate was comprised of the following:

Inheritance tax refund: $346,805.63
Estate tax refund: 164,531.82
Interest refund: 3,885.87
Interest paid on refunds: 1,022.68
TOTAL: $516,246.00

3
The Stipulated Facts state that the First Amended Return was dated December 29, 2008, but was mailed to
the Commissioner on January 23, 2009.

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 The Second Amended Inheritance Tax Return — Filed December 2010

At the time the Estate filed its First Amended Return in early 2009, there was still ongoing
litigation related to a claim for fees by a former executor and attorney fees for counsel
retained by the executor. Almost two years later, in December 2010, the Estate filed a second
amended inheritance tax return (“Second Amended Return”), which took into account the
additional administrative expenses incurred by the Estate in that litigation. In the Second
Amended Return, the Estate sought a refund of $261,997.13 for overpaid inheritance and
estate taxes. This Second Amended Return was based on additional executor fees, legal
expenses, and fees of $1,637,486. The Commissioner received the Second Amended Return
on December 27, 2010.

On April 1, 2011, the Estate forwarded to the Commissioner the IRS Estate Tax Closing
Document for the Estate. This document showed the final amount of federal estate tax due
for the Estate. The Commissioner determined that this document was necessary to determine
the amount of the federal net estate tax and the state tax credit available and, therefore, the
final amount of Tennessee inheritance tax and estate tax due from the Estate. On May 23,
2011, the Commissioner issued a refund to the Estate based on the Second Amended Return.
The refund was in the total amount of $263,279, comprised of the following:

Inheritance tax refund: $155,540
Estate tax refund: 107,322
Interest paid on refunds: 417
TOTAL: $263,279

Commissioner’s Interest Calculations

As we have indicated, the Commissioner paid the Estate a total of about $1,440 in interest
on the $778,085 in inheritance and estate tax refunds under the First and Second Amended
returns. The Commissioner calculated this amount of interest on the inheritance refunds in
accordance with Tennessee Code Annotated § 67-1-801(b), which addresses how interest
should be calculated on “any tax collected or administered by the commissioner.” Tenn.
Code Ann. § 67-1-801(b) (2011). Section 67-1-801(b) states in relevant part:

(b)(1) When it is determined by administrative review that a person is entitled
to a refund or credit of any tax collected or administered by the commissioner,
. . . interest shall be added to the amount of refund or credit due, beginning
forty-five (45) days from the date the commissioner receives proper proof to
verify that the refund or credit is due and payable.

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Tenn. Code Ann. § 67-1-801(b)(1) (2011). Thus, under this statute, interest on a tax refund
begins to accrue 45 days after “proper proof” is received by the Commissioner. The rate of
interest is determined by the Commissioner according to the formula rate of interest last
published in the Tennessee Administrative Register. See Tenn. Code Ann. § 67-1-801(b)(3).

The Commissioner also applied this general interest statute, Section 67-1-801(b), to calculate
the interest on the Estate’s estate tax refunds. This was done pursuant to the directive of
Tennessee Code Annotated § 67-8-208(d), which specifically applies to the rate of interest
on a Tennessee estate tax refund. In its current version, it directs that an estate tax refund
must be paid “together with interest thereon as provided in Section 67-1-801(b),” the above-
quoted general interest provision. Therefore, the Commissioner calculated the interest on the
inheritance tax refund as well as the estate tax refund pursuant to Section 67-1-801(b), the
general interest statute.

In applying Section 67-1-801(b), the Commissioner determined that it had received “proper
proof” of the refund for the First Amended Return on September 29, 2009, the date of the
IRS’s response to the Commissioner’s inquiry about the federal tax treatment of the proposed
deductions. Based on that premise, interest on the first refund began to accrue 45 days after
September 29, 2009, i.e., on approximately November 13, 2009. Because the first refund
check was written on approximately November 25, 2009, and interest was paid at a rate of
7.25%, the Commissioner paid the Estate $1,022.68 in interest, broken down as follows:
$688.38 (interest on inheritance tax) plus $326.59 (interest on estate tax) plus $7.71 (interest
on 2003 interest payment).

For the Second Amended Return, the Commissioner concluded that a final determination of
the inheritance and estate taxes was made on April 1, 2011, when the Estate forwarded to the
Commissioner the IRS Estate Tax Closing Document for the Estate. Based on this, the
Commissioner determined that interest on the second refund began to accrue 45 days after
April 1, 2011, which was on May 15, 2011. Because the second refund check was written
on May 23, 2011, the Commissioner paid the Estate $417 in interest: $247 (interest on
inheritance tax) plus $170 (interest on estate tax).

Lawsuit

Unhappy with the Commissioner’s calculation of the amount of interest paid on the tax
refunds, on July 28, 2011, the Estate filed this lawsuit against the Commissioner. The Estate
sought additional interest on the inheritance and estate tax refunds, alleging that the
Commissioner misapplied the law in calculating the amounts of interest paid on both the First
and Second Amended Returns.

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As to the interest on the estate tax refunds, the Estate claimed that the Commissioner
erroneously calculated the amount of the interest due by retroactively applying the current
version of Section 67-8-208(d). The Estate asserted that the Commissioner should have
applied the version of subsection (d) of the statute that was in existence in 2002, when the
Estate made the estate tax overpayments. The version of Section 67-8-208 in effect at the
time the payments were made in 2002 provided:

(a) If the amount of federal estate tax is, upon the final determination of the
federal estate tax, increased or decreased as affecting an estate the transfer of
any part whereof is taxable hereunder subsequent to the payment of the
Tennessee estate tax, the Tennessee estate tax imposed shall be changed
accordingly. . . .

(b) In the event that there shall be a decrease in the federal estate tax, the
executor shall file with the commissioner of revenue an affidavit in such form
as is prescribed by the commissioner . . . .

...

(d) The commissioner shall thereupon cause to be paid to the executor from
the fund retained by the commissioner, as provided in § 67-8-210, the amount
of refund found to be due, together with interest thereon at the rate of six
percent (6%) from the date of payment of the Tennessee estate tax . . . .

Tenn. Code Ann. § 67-8-208 (2009). Thus, under this previous version of the statute, the
Estate would have been entitled to interest on its estate tax refunds based on an interest “rate
of six percent (6%) from the date of payment of the Tennessee estate tax.” Using this rate,
the Estate claimed, would have resulted in interest of $121,920 on the estate tax refunds.

The Estate conceded that the Commissioner was correct in calculating the amount of the
interest on the inheritance tax refunds in accordance with the method set out in the general
interest statute, Section 67-1-801(b). It argued, however, that the Commissioner improperly
calculated the interest by erroneously using the dates on which it received information about
the federal estate tax — September 29, 2009, and April 1, 2011, respectively — in
determining the accrual date for the interest payments. Instead, the Estate argued, interest
should have begun to accrue 45 days after the Commissioner received the First and Second
Amended Returns. It claimed that the First and Second Amended Returns, along with all of
the supporting documentation, constituted “proper proof” on which the Commissioner could
have verified and paid the tax refunds within the meaning of the statute. Therefore, the
interest on the two inheritance tax refunds should have begun accruing 45 days from the

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dates on which the Commissioner received the First and Second Amended Tax Returns; the
Estate claimed that this would have resulted in interest on the inheritance tax refunds in the
amount of $23,104. Thus, in total, the Estate sought compensatory damages of $145,024,
less the approximately $1,440 in interest already paid, plus attorney fees and costs.

On December 20, 2011, the Estate filed a motion for summary judgment, asserting that the
facts were undisputed and that it was entitled to a judgment as a matter of law. The Estate
attached to its summary judgment motion the affidavit of Helen Shivers, as well as numerous
exhibits that included all of the tax returns filed, correspondence between the Commissioner
and the Estate, and other relevant documentation.

On February 1, 2012, the Commissioner filed a cross-motion for summary judgment,
maintaining that the amount of interest paid on the estate and inheritance tax refunds was
correct. The Joint Stipulation of Material Facts to which we have referred was also filed on
that day. The Commissioner attached to his summary judgment motion the affidavits of Amy
Green, an employee with the Tennessee Department of Revenue, and Wendy McCormack,
an attorney in the Attorney General’s office, as well as relevant exhibits. The Commissioner
argued in his motion that the former version of Section 67-8-208(d), on which the Estate
relied, was inapplicable in this case. The Commissioner reasoned that, at the time he made
the first refund payment to the Estate, no “final determination of the federal estate tax” had
been made within the meaning of Section 67-8-208(a), which triggered the Estate’s
entitlement to a refund under the statute. By the time a “final determination” had been made
in 2011, the Commissioner argued, Section 67-8-208(d) had been amended to its current
form, and the 2011 version of the statute was properly applied. In the alternative, the
Commissioner argued that 1986 Pub. Acts Ch. 749, codified in Section 67-1-801(b) in 1986
and commonly known as the “Wilder Bill,” implicitly repealed and superseded any older,
conflicting interest provisions, including Section 67-8-208(d). Therefore, the Commissioner
argued, the general interest statute — Section 67-1-801(b) — controlled the interest paid
on both refunds in their entirety.

Regarding the accrual date for the calculation of interest under Section 67-1-801(b), the
Commissioner argued that it did not have proper proof to verify the amount of the refunds
until he received the information about the IRS conclusions regarding the federal estate tax.
Therefore, he claimed, because “proper proof” to verify the two refunds was received by the
Commissioner on September 29, 2009, and April 1, 2011, respectively, it was appropriate to
measure the interest on the Estate’s refunds from those dates.

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 Trial Court Decision

On February 24, 2012, the trial court conducted a hearing on the parties’ cross-motions for
summary judgment.4 On March 21, 2012, the trial court issued a memorandum and order
granting the Commissioner’s motion for summary judgment and denying the Estate’s motion.
At the outset, the trial court rejected the Commissioner’s argument that Section 67-8-208(d)
was either expressly or impliedly repealed by the enactment of the Wilder Bill in 1986,
because the statutes were not in conflict, and the legislature expressed no intention to repeal
the interest provision in Section 67-8-208(d) when it promulgated the general interest statute.
The trial court nevertheless concluded that the Commissioner had properly calculated the
interest on the Estate’s two estate tax refunds. It held that calculation of the interest under
the current version of Section 67-8-208(d), and thus pursuant to the general interest statute,
was correct because interest under Section 67-8-208(d) was triggered only “upon the final
determination of the federal estate tax.” The trial court held that the“final determination”
requirement in subsection (a) was a prerequisite to the interest calculations in subsection (d):
“[A] comprehensive review of the structure of the entire statute reveals that the subsection
(d) language addressing interest simply cannot be separated and applied to a refund claim
when none of the other earlier requirements of the statute have been met.” Because the
Estate’s federal estate tax liability was not finalized until 2011, the trial court held, the
version of the statute in effect at that time governed the calculation of interest on the
Tennessee estate tax refund. For this reason, the trial court found, the application of the
current version of Section 67-8-208(d) was proper, and it did not constitute retroactive
application as argued by the Estate.

The trial court also held that the Commissioner had properly calculated the interest owed to
the Estate on the inheritance tax refunds. It held: “The calculation of Tennessee’s
inheritance tax requires a determination of several federal estate tax deductions and
expenses.” The trial court found that the amended returns themselves did not provide the
Commissioner with the information necessary to “verify” and issue a refund, because the
refunds were reliant on information outside of the returns, and the amounts ultimately paid
were different from the amounts claimed by the Estate. Thus, the trial court held, the
Commissioner correctly determined that proper proof to verify the Estate’s entitlement to
refunds, as well as the amount of the refunds, was received on September 29, 2009, and April
1, 2011, when the Commissioner received documentation on the IRS’s federal estate tax
decisions. Therefore, it concluded, the Commissioner properly calculated the interest on the
inheritance tax refunds beginning 45 days after it received that federal documentation. The
trial court commented that it was concerned “with the equities associated with the State being
allowed to have the use of the taxpayer’s funds for so long without incurring a corresponding

4
A transcript of that hearing was not included in the appellate record.

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interest obligation,” but ultimately determined that its decision was compelled by the statutes
that were in effect.

In addition, the trial court held that the Commissioner, as the prevailing party, was entitled
to reasonable attorney fees and expenses pursuant to Section 67-1-1803(d), but it reserved
that issue “until all appeals are concluded.” The trial court certified the March 21, 2012
order as final and appealable pursuant to Rule 54.02 of the Tennessee Rules of Civil
Procedure. From this order, the Estate now appeals.

ISSUES ON A PPEAL AND S TANDARD OF R EVIEW

On appeal, the Estate challenges the trial court’s grant of summary judgment in favor of the
Commissioner, making the same legal arguments it made to the trial court. On appeal, the
Estate raises two specific issues:

1. Whether the 2011 version of Section 67-8-208(d) may be applied
retroactively to interest on refunds of estate taxes that were paid in 2002?

2. Whether the receipt by the Commissioner of the First and Second Amended
Returns constituted “proper proof” within the meaning of Section 67-1-801(b)
to verify that the refund of inheritance tax was due and payable, thereby
triggering the date on which interest began to accrue on that refund?

The Commissioner raises an additional issue in his appellate brief, namely, whether the trial
court erred in holding that Section 67-8-208(d) was not repealed by the Wilder Bill, either
expressly or by implication. Arguing in the alternative, the Commissioner asserts that this
is an additional reason supporting the trial court’s grant of summary judgment on the estate
tax issue.

The trial court’s resolution of a motion for summary judgment is a conclusion of law, which
we review de novo on appeal, according no deference to the trial court’s decision. Martin
v. Norfolk S. Ry. Co., 271 S.W.3d 76, 84 (Tenn. 2008). Summary judgment is appropriate
only when the moving party can demonstrate that there is no genuine issue of material fact,
and that it is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04; see Hannan v.
Alltel Publ’g Co., 270 S.W.3d 1, 5 (Tenn. 2008); Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn.
1993).

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This action was filed on July 28, 2011. Therefore, the trial court was required to apply the
summary-judgment standard set forth in Tennessee Code Annotated § 20-16-101.5 That
statute provides:

In motions for summary judgment in any civil action in Tennessee, the moving
party who does not bear the burden of proof at trial shall prevail on its motion
for summary judgment if it:

(1) Submits affirmative evidence that negates an essential
element of the nonmoving party’s claim; or

(2) Demonstrates to the court that the nonmoving party’s
evidence is insufficient to establish an essential element of the
nonmoving party’s claim.

Tenn. Code Ann. § 20-16-101 (Supp. 2012).6

In this case, the parties stipulated to the pertinent facts, and the only issues presented are
questions of law. “Summary judgments are appropriate in virtually any civil case that can
be resolved on the basis of legal issues alone.” CAO Holdings, Inc. v. Trost, 333 S.W.3d
73, 81 (Tenn. 2010). As the trial court recognized, “[b]ecause legal disputes involving the
payment of taxes are frequently based on stipulated facts, they generally lend themselves to
disposition by summary judgment as issues of law.” Id. Nevertheless, “the well-understood
principles generally governing the review of summary judgments are equally applicable to
summary judgments in proceedings involving tax disputes.” Id. at 81-82. Furthermore,
when both parties move for summary judgment on undisputed facts, such cross-motions “are
no more than claims by each side that it alone is entitled to a summary judgment. The court
must rule on each party’s motion on an individual and separate basis.” Id. at 83 (citation
omitted).

5
Section 20-16-101 is applicable to all cases filed on or after July 1, 2011.
6
Section 20-16-101 was enacted to abrogate the summary-judgment standard set forth in Hannan, which
permitted a trial court to grant summary judgment only if the moving party could either (1) affirmatively
negate an essential element of the nonmoving party’s claim or (2) show that the nonmoving party cannot
prove an essential element of the claim at trial. Hannan, 270 S.W.3d at 5. The statute is intended “to return
the summary judgment burden-shifting analytical framework to that which existed prior to Hannan,
reinstating the ‘put up or shut up’ standard.” Coleman v. S. Tenn. Oil Inc., No. M2011-01329-COA-R3-CV,
2012 WL 2628617, at *5 n.3 (Tenn. Ct. App. July 5, 2012).

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The issues presented in this appeal involve statutory construction, which are questions of law
to be reviewed de novo. U.S. Bank, N.A. v. Tenn. Farmers Mut. Ins. Co., 277 S.W.3d 381,
386 (Tenn. 2009). In construing a statute, our duty “is to ascertain and give effect to the
intention and purpose of the legislature.” Jordan v. Knox County, 213 S.W.3d 751, 763
(Tenn. 2007). Whenever possible, this intent is gleaned from the plain and ordinary meaning
of the statutory language. Id. A statute should be read naturally and reasonably, presuming
that the legislature says what it means and means what it says. See In re Samaria S., 347
S.W.3d 188, 203 (Tenn. Ct. App. 2011). If the language of a statute is clear, we apply the
plain meaning of the statute without complicating the task and without giving it “a forced
interpretation that would limit or expand the statute’s application.” Eastman Chem. Co. v.
Johnson, 151 S.W.3d 503, 507 (Tenn. 2004).

A NALYSIS

Retroactive Application of Tennessee Code Annotated § 67-8-208(d)

The Estate first argues that the trial court erred in applying the 2011 version of Section 67-8-
208(d) retroactively in determining the interest due on its estate tax refunds. It points out that
the former version of the statute, allowing for 6% interest “from the date of payment of the
Tennessee estate tax,” was in effect in 2001 when Mr. Boote died, in 2002 when the estate
taxes were paid, and in 2009 when the first estate tax refund was paid. The amendment to
the special provision did not become effective until July 1, 2010, after the Estate’s right to
a refund had already vested. For this reason, the Estate argues, the Commissioner improperly
applied the amended version of Section 67-8-208(d) retroactively to its estate tax refund.

In response, the Commissioner argues that the trial court correctly applied the version of
Section 67-8-208(d) in effect in 2011, because “the Estate failed to meet the requirements
to trigger an interest payment under the old version of Tenn. Code Ann. § 67-8-208(d).” In
accord with the trial court’s decision, the Commissioner claims that Section 67-8-208
addresses an adjustment of the Tennessee estate tax “upon change in federal tax payment,”
and only after “the final determination of the federal estate tax” has been made. Because “the
final determination of the federal estate tax” was made in 2011, the Commissioner argues,
2011 was the year in which the Estate became entitled to a refund under the statute; there was
nothing to trigger the statute prior to that time. Therefore, the former version of the statute
never became applicable to the Estate, and the trial court’s application of the 2011 version
of the statute did not constitute a “retroactive application” of the statute.

“In Tennessee, amendments to tax statutes are presumed to be prospective in application
unless an intention to the contrary is clearly expressed.” Northwest Airlines, Inc. v.
Tennessee State Bd. of Equalization, 969 S.W.2d 911, 913 (Tenn. 1998). This presumption

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arises in part from an age-old rule of law: “The repeal of a statute does not affect any right
which accrued, any duty imposed, any penalty incurred, nor any proceeding commenced,
under or by virtue of the statute repealed.” Id. (quoting Nashville Ry. & Light Co. v.
Norvell, 124 S.W. 613, 614 (Tenn. 1910) (quoting statute now codified at T.C.A. § 1-3-
101)).

The Court in Northwest Airlines recognized this principle. In that case, the petitioner airline
and railroad businesses sued the Tennessee State Board of Equalization in federal district
court, challenging the board’s assessment of certain property taxes for the years 1990 through
1995. The parties reached a settlement as to most of the issues; pursuant to the settlement
agreement, the petitioners owed taxes to some counties and municipalities and were due
refunds from others. The only issue in Northwest Airlines that remained unresolved was the
appropriate interest rate to be applied to the refunds and additional payments due pursuant
to Section 67-5-1512(b)(2). Id. at 912. For the tax years in question, the relevant statute
provided that the rate of interest was the composite prime rate. On April 22, 1996, however,
the statute was amended to lower the interest rate to the composite prime rate minus two
points. The issue then became whether the interest on any of the refunds or additional
payments for the tax years 1990 through 1995 — all of which were made after April 22, 1996
— should have been calculated under the former version of the statute or the newer version.
The federal district court certified the question to the Tennessee Supreme Court, which
accepted certification. Id. at 911.

The taxpayers in Northwest Airlines argued that the lower, post-amendment rate should
apply, even to interest that accrued prior to the effective date of the amendment. They
asserted that, because the certification of a final assessment by the state board of equalization
for each taxable year would not occur until after April 22, 1996, application of the 1996
amendment would not be a retroactive application. In the alternative, the taxpayers argued
that the post-amendment rate should be applied retroactively. Id. at 913. Addressing the
certified question, the Tennessee Supreme Court held that retroactive application of tax
statutes is impermissible unless the statute includes express language providing for its
retroactive application. Because the statute contained no express language providing for its
retroactive application, the Supreme Court held that “[t]he answer to the certified question
is that only the interest on payments or refunds of property taxes accruing after April 22,
1996 are to be calculated” under the post-amendment version of the statute. Id. at 914.

In the instant case, the Estate argues that Northwest Airlines supports its position that the
trial court is not permitted to apply the 2011 version of Section 67-8-208(d) retroactively.
The Estate claims that its entitlement to the interest on the refund vested when it made the
tax overpayment in 2002, and that application of the 2011 version of the statute violated the
rule against retroactive application of a tax statute absent any statutory language indicating

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that it is to be applied retroactively. The Estate argues: “The duties and rights that existed
in 2002 are the duties and rights that the Boote Estate retains, even after the law was
amended.” It further asserts that when it paid the estate taxes in 2002, “it did so in reliance
on the fact that any overpayment would be refunded with interest at a rate of 6% from the
payment date” under Section 67-8-208(d) as it then existed. For these reasons, the Estate
argues, the 2002 version of the statute is applicable, and the Commissioner should have paid
interest on the estate tax refund pursuant to that version of the statute.

The Commissioner has pointed to no language in the July 2010 amendment to Section 67-8-
208(d) indicating that the amendment was intended to be retroactive in nature, so the Estate
rightly maintains that we are to presume that the amended statute must be applied
prospectively. The Commissioner, however, does not argue that the statute should be
retroactively applied. Rather, he claims that the trial court’s application of the current
version of the statute does not constitute retroactive application of the statute at all. The
Commissioner asserts that the Estate’s right to a refund of any estate tax paid is triggered
under the statute only by “the final determination of the federal estate tax” indicating that the
Tennessee estate tax would be reduced thereby. In other words, the Estate’s right to a refund
did not vest until after this final determination of federal estate tax was made. We agree.

As this Court has noted: “There is no common-law or equitable cause of action to recover
taxes voluntarily paid in error.” SunTrust Bank, Nashville v. Johnson, 46 S.W.3d 216, 223
(Tenn. Ct. App. 2000). Instead, the recovery of such a voluntary overpayment is “a matter
of legislative grace.” Id. Thus, because an action to recover a tax refund, along with the
interest on the refund, is based entirely on statute, the statutes entitling a taxpayer to a refund
must be strictly followed. Id.

The Estate cites no authority to support its contention that its right to a refund vests when the
tax overpayment is made, and we have found none.7 In our view, the plain language of
Section 67-8-208(a) clearly directs that the taxpayer is entitled to an estate tax refund only
where “the amount of federal estate tax is, upon the final determination of the federal estate
tax, increased or decreased . . . .” This language indicates that the Estate’s right to a refund
accrues when the amount of federal estate tax has changed upon “final determination.”

In this case, the final determination of the federal estate tax was made and conveyed to the
Commissioner in 2011; this in turn resulted in a decrease in the Estate’s Tennessee estate tax

7
The Estate claims that the Commissioner’s reliance on the “final determination” language in subsection (a)
is misplaced because “[t]here is nothing in subsection (a) that deals with interest or with accrual dates for
interest.” We respectfully disagree that subsection (a) and subsection (d) are unrelated. To the contrary,
subsection (a) provides the conditions under which all of the other subsections become effective.

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liability. At this point in time, the Estate became entitled to a refund of its overpaid estate
taxes. Thus, based on the plain language in Section 67-8-208(a), the Estate’s right to a
refund did not accrue when the overpayment was made in 2002, but rather in 2011 when a
final determination of the federal estate tax was made. For this reason, we agree with the
trial court’s reasoning, that its application of the 2011 version of the statute was not in fact
a retroactive application of the statute. Rather, it was simply an application of the statute in
effect when the Estate’s right to the refund vested.

The Estate insists that the Commissioner should be obligated to pay interest from the time
that the tax payments were made in 2002 because “the State has had the use of the funds
since 2002.” This is a valid point, noted by the trial court when it expressed concern about
the length of time the State has had the use of the taxpayer’s funds. However, it amounts to
a policy argument in a case in which the rights of the Estate are entirely circumscribed by
statute. We agree with the trial court that, regardless of where the equities lie, we are bound
by the plain language in Section 67-8-208(d), indicating that the right to interest on a
Tennessee estate tax refund under that statute does not vest until a final determination of the
federal estate tax obligation shows that such a refund is due. Therefore, because the Estate’s
entitlement to a refund of its estate taxes vested in 2011, the 2011 version of the statute was
applicable, and the trial court’s application of it in this case did not constitute a retroactive
application of the statute. See State v. McDougal, 648 S.W.2d 254, 257 (Tenn. Ct. App.
1983) (holding that the right to increased interest began to accrue on the effective date of the
amended interest statute, so the application of the amended interest statute did not constitute
a retroactive application).

As a further alternative argument, the Estate contends that, even if the Commissioner’s
position is otherwise accepted, the 2009 version of Section 67-8-208(d) should apply to the
refund of the estate taxes that were paid pursuant to the First Amended Return in November
2009, when the statute still provided for 6% interest from the date the estate taxes were paid.
In making this argument, the Estate claims that, at that point, the IRS had provided for a
tentative estate tax refund. It argues that there can be more than one “final determination”
regarding different aspects of the federal estate tax under subsection (a), as evidenced by the
fact that the Commissioner issued two estate tax refunds in this case. We respectfully
disagree. It is undisputed that the refund paid to the Estate by the Commissioner in
November 2009 was tentative, based on the information available at the time. In addition,
the IRS had not at that time made a final determination of the Estate’s federal estate tax
obligation; it was clear that a final determination would be forthcoming. Thus, in November
2009, the IRS had not made a “final determination of the federal estate tax” under subsection
(a) so as to implicate the interest provision in subsection (d). Therefore, although the
Commissioner chose to pay a partial refund to the Estate in 2009, at that time there had been
no final determination of the federal estate tax within the meaning of Section 67-8-208(a),

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and the Estate’s right to interest on the refund of estate taxes in Section 67-8-208(d) had not
yet been triggered.8

“Proper Proof” for Verification of Refund

The Estate concedes that the interest on the Estate’s inheritance tax refunds should have been
calculated under the method set out in Section 67-1-801(b). It argues, however, the First and
Second Amended Returns and the attached documentation filed in January 2009 and
December 2010, respectively, constituted the “proper proof” necessary for the Commissioner
“to verify that the refund or credit [was] due and payable.” Tenn. Code Ann. § 67-1-801(b).
Therefore, the Estate argues, the interest on its inheritance tax refunds should have begun to
accrue 45 days after the two amended returns were filed. This calculation would have
resulted in a few more months of interest to the Estate on its inheritance tax refunds. The
Estate notes that “proof” is defined as an “attested document that constitutes legal evidence,”
and that “proper” is defined as “adapted or appropriate to the purpose or circumstances,
suitable.” Because the First and Second Amended Returns were attested documents, sworn
under penalty of perjury, and because they included all of the information necessary to verify
that a refund was due and the amount of the refund, so the argument goes, the returns
themselves must be considered to be “proper proof” under Section 67-1-801(b). The Estate
points out that, where there is doubt about the interpretation of a tax statute, the statute must
be construed strictly against the government and liberally in favor of the taxpayer. See Home
Builders Ass’n of Middle Tenn. v. Williamson County, 304 S.W.3d 812, 817 (Tenn. 2010).

In response, the Commissioner acknowledges that the Estate’s amended inheritance tax
returns were attested documents and provided some information regarding the refunds. He
argues, however, that they did not constitute “proper proof” from which the entitlement to
and amount of refunds could be verified. Thus, the Commissioner asserts, the amended
returns in and of themselves do not constitute “proper proof” to verify the refunds. The
Commissioner notes that the amount of the refund actually paid to the Estate for the First
Amended Return was significantly less than the refund amount claimed by the Estate, and
the amount of the refund for the Second Amended Return was slightly more than the amount
claimed. In addition, the Estate’s entitlement to the refund claimed in the First Amended
Return was specifically made contingent upon the IRS’s treatment of the claimed deductions;
thus, the federal tax treatment of the information in the Estate’s amended returns was critical
to a determination of the amount of any state inheritance tax refund due. The fact that the
IRS disallowed some of the claimed deductions and notified the Commissioner of this fact

8
To the extent that the Estate asserts a due process violation as a result of the retroactive application of
Section 67-8-208, we decline to address this argument because the Estate has not shown that it was raised
in the trial court proceedings below. See Barnhill v. Barnhill, 826 S.W.2d 443, 448 (Tenn. Ct. App. 1991).

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on September 29, 2009, demonstrates that the returns are not “proper proof” in and of
themselves to verify the amount of the refund due. The Commissioner maintains: “This case
presents a textbook example of why the Commissioner of Revenue requires verification from
the IRS to substantiate a taxpayer’s claims of federal deductions and expenses.”

We have found no authority describing what constitutes “proper proof” to verify an
inheritance tax refund. In this case, we agree with the Commissioner that the First and
Second Amended Returns, without more, did not constitute the “proof” necessary to verify
the entitlement to and amount of inheritance and estate tax refunds due to the Estate. As the
Commissioner pointed out, the filing of the First Amended Return included the order from
the underlying legal dispute over the amount of Wife’s marital share. The order stated
specifically that the Wife’s share (and, consequently, the amount of the Estate’s inheritance
tax refund) was contingent upon the federal tax treatment of the additional claimed
deductions. Without any documentation regarding the IRS treatment of the additional
deductions claimed by the Estate, it would have been impossible to determine the amount of
inheritance tax refund to which the Estate was entitled. Although the Estate argues that the
inheritance tax refund is unrelated to the federal estate tax determination,9 the order included
with the First Amended Return linked the federal government’s treatment of the claimed
deductions to the inheritance tax refund due in this case. Therefore, the IRS response to the
Commissioner’s inquiry was necessary for a determination of the refund from the First
Amended Return.

Moreover, the refund from the Second Amended Return was dependent on the “final
determination” from the IRS. The Commissioner requested the IRS Estate Closing
Document to assist it in verifying the information included with the Second Amended Return
to determine or test the accuracy of the Estate’s claim. The Estate indicated that the estate
tax refund was requested as a part of the amended inheritance tax return. Even though the
inheritance tax refund may not have been affected by the IRS determination of the federal
estate tax (the Commissioner does not concede this), the estate tax refund could not be
determined until the IRS issued a “final determination of the federal estate tax.” This final
determination was not provided to the Commissioner on April 1, 2011. Therefore, proper
proof to verify the entire refund on the Second Amended Return was not provided to the
Commissioner until that date.

9
In its reply brief, the Estate cites an Attorney General Opinion, No. 84-114, 1984 WL 186176 (Tenn. AG
Apr. 4, 1984), for the proposition that the “calculation of the Tennessee inheritance tax is made pursuant to
Tennessee law and is independent of the calculation of federal death taxes . . . .” That opinion, however,
involves issues not related to those presented here, and we decline to adopt that reasoning on this issue.

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In sum, we find that, although the documentation included in the First and Second Amended
Returns provided the Commissioner with much of the information necessary to calculate the
amount of refunds due, these returns were insufficient to verify the entitlement to and amount
of the refunds due to the Estate. Under these circumstances, the Commissioner acted
properly in measuring the amount of interest due from the date that it received the response
from the IRS on September 29, 2009, and the date that the Estate forwarded to the
Commissioner the federal Estate Tax Closing Document.

Our conclusion herein pretermits all other issues raised in this appeal.

C ONCLUSION

For the foregoing reasons, we hold that the Commissioner properly calculated the interest due
on the Estate’s inheritance and estate tax refunds. Accordingly, we affirm the trial court’s
grant of summary judgment in favor of the Commissioner and also the denial of the Estate’s
motion for summary judgment. The cause is remanded to the trial court for further
proceedings consistent with this opinion.

The decision of the trial court is affirmed and the cause is remanded for further proceedings.
Costs on appeal are to be taxed to Appellant Estate of Joseph Owen Boote, Jr. (Helen Boote
Shivers and Linda Boote, Co-Executors), and its surety, for which execution may issue, if
necessary.

_________________________________
HOLLY M. KIRBY, JUDGE

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