5 FSM Intrm. 407 (App. 1992)

FEDERATED STATES OF MICRONESIA
SUPREME COURT APPELLATE DIVISION

FSM APPEAL No. P3‑1992
(from Civil Action No. 1991‑038)

RAYMOND SETIK
Appellant

V

FEDERATED STATES OF MICRONESIA
Appellee

OPINION: Argued:  October 15, 1992 - Decided : December 9, 1992

BEFORE: Honorable Richard H. Benson, Associate Justice, FSM Supreme Court
Honorable Martin Yinug, Associate Justice, FSM Supreme Court
Honorable Harry H. Skilling, Temporary Justice, FSM Supreme Court*
*Associate Justice, Kosrae State Court, on this Court by designation for this case.

APPEARANCES: For the Appellant: R. Barrie Michelsen, Esq.; For the Appellee: Douglas Juergens, Esq., Chief of Litigation, Office of the FSM Attorney General

HEADNOTES

Taxation
Under 54 F.S.M.C. 902, a monthly penalty is imposed on delinquent payment of any tax specified in Title 54, including gross revenue tax.  Setik v. FSM, 5 FSM Intrm. 407, 409 (App. 1992).

Statutes ‑ Construction
The plain meaning of a statutory provision must be given effect whenever possible.  Setik v. FSM, 5 FSM Intrm. 407, 410 (App. 1992).

Statutes ‑ Construction
Where a statute of general application conflicts with a statute of more particular application concerning the same subject matter, the more particularized provision prevails.  However, remedial provisions that are merely cumulative and not duplicative apply equally.  Setik v. FSM, 5 FSM Intrm. 407, 410 (App. 1992).

Statutes ‑ Construction
That certain provisions of a general statute are overridden by a more specific statute does not imply that the general statute in its entirety is superseded.  Setik v. FSM, 5 FSM Intrm. 407, 411 (App. 1992).

COURT'S OPINION

MARTIN YINUG, Associate Justice:

INTRODUCTION

This is an appeal from summary judgment against a taxpayer concerning the amount of penalties and interest to be assessed for late payment of taxes.  In the appeal briefs and at oral argument counsel for both sides in the dispute put forth several well‑reasoned arguments for their respective interpretations of applicable law.  Weighing all arguments carefully, we find the government's interpretation of the tax law at issue more persuasive.  Therefore, we affirm the summary judgment ruling.

I.  FACTUAL BACKGROUND

Appellant Raymond Setik made computational errors in tax years 1987, 1988 and 1989 resulting in an underpayment of gross revenue taxes in the amount of $2,189.03.  Mr. Setik has not disputed that he owes the government this deficiency, and has in fact already paid it.  In addition, the government assessed interest on the deficiency pursuant to 54 F.S.M.C. 155(5) in the amount of $196.19, and a penalty pursuant to 54 F.S.M.C. 902 in the sum of $1,955.13.

Mr. Setik refused to pay the interest and penalty on the delinquent taxes, contending that the government was not entitled to both additional charges.  He filed a complaint and a motion for summary judgment seeking declaratory judgment that the civil penalty provisions of 54 F.S.M.C. 902 were superseded by 54 F.S.M.C. 144(2) and 155(5), and therefore inapplicable to gross revenue tax deficiencies.  The trial court denied the plaintiff's motion for summary judgment and granted the government's cross‑motion for summary judgment on April 23, 1992.

II.  LEGAL ANALYSIS

Appellant does not contest that he owes the interest on the tax deficiency as established under 54 F.S.M.C. 155(5).  The issue appellant raises is whether the penalty provision of 54 F.S.M.C. 902 applies in addition to the interest provision of 54 F.S.M.C. 155(5) for late payment of gross revenue taxes.  Implicit in this question is whether the Congress intended to impose cumulative penalty and interest assessments by virtue of successive enactments of tax laws.  Our analysis will be guided by basic norms of statutory interpretation.

A.  Scope of § 902

The Congress of Micronesia in 1967 enacted what is currently codified as 54 F.S.M.C. 902, "Monthly penalty upon unpaid taxes and fees."  This provision imposes a 10 percent per month penalty, up to a maximum of 100 percent total penalty, for "failure to pay any tax, fee, or charge levied or imposed under this title . . . ."

Four years later in 1971 the Congress enacted what is now codified as 54 F.S.M.C. 155(5), imposing an interest assessment of 6 percent per year on the unpaid balance of any overdue gross income tax or penalty.  There is no cross‑reference to § 902 in § 155 or any of the other provisions of Chapter 1 of Title 54 of the Code.

Despite the failure to refer to § 902 in other parts of Chapter 1 of Title 54, it is clear that § 902 applies to the title as a whole and any tax levied thereunder.  This is apparent as a matter of plain statutory construction and also legislative history, which neither party disputes.1  Appellant admitted at oral argument that § 902 was intended to be prospective at the time of enactment even though gross revenue taxes did not then exist.  However, appellant argues that the subsequent enactment of a more detailed enforcement scheme for collection of gross revenue taxes in what is now Chapter 1 of Title 54 displaced § 902 as the controlling provision for civil penalties.  We turn to this discussion in the next section.

B.  Statutory Interpretation

Our analysis of the provisions of Title 54 in question focuses on the three main statutory arguments propounded by the appellant.  These are that the use of the word "chapter" in §§ 144 and 155 directs that only those penalties found in Chapter 1 apply to gross revenue tax; that the Court should apply the doctrine that the more specific statutory provision governs over the more general; and that by analogy, since the criminal penalties imposed under § 154 and § 901 are conflicting and only one, § 154, can currently apply, so too must § 155 and § 902 be seen to be in conflict such that Congress meant for only § 155 to apply.  These points will be discussed in turn.

Appellant points to the fact that since the civil penalty provisions of Chapter 1 do not refer to any other penalty provisions of Title 54, Congress must have intended only those of Chapter 1 to apply to gross revenue taxes.  We do not find this omission to be determinative.  As we said in part A above, § 902 by its terms includes the gross revenue tax provisions of Chapter 1 of Title 54.  That § 902 remains in effect is not disputed; it has not been repealed by Congress.  The plain meaning of statutory language must be given effect whenever possible.  FSM v. George, 2 FSM Intrm. 88, 94 (Kos. 1985) (citing Tammow v. FSM, 2 FSM Intrm. 53, 57 (App. 1985)).  Thus we do not find merit in the appellant's contention that the word "chapter" in §§ 144 and 155 must lead to an exclusion of the § 902 penalty on gross revenue tax delinquencies.

Appellant directs us to the well‑established doctrine of statutory interpretation which maintains that between two competing or conflicting statutory provisions concerning the same issue, the more specific provision governs over the more general.  According to appellant, the penalty scheme established under Chapter 1 of Title 54 is thus controlling in lieu of the more general § 902.  This would be correct if the civil penalty provisions in Chapter 1 and § 902 were in fact contradictory.

This Court had occasion to apply the above identified doctrine in Olter v. National Election Commissioner, 3 FSM Intrm. 123 (App. 1987), where we held that if there is an irreconcilable "conflict between a statute of general application to numerous agencies or situations . . . and a statute specially aimed at a particular agency or procedure . . . the more particularized provision will prevail."  Id. at 129.  We find, however, no such conflict between § 155(2) and § 902 merely because they each impose a charge on delinquent taxpayers.

Section 155(5) is an interest assessment of 6 percent per annum on the outstanding tax balance; § 902 imposes an overall penalty of 10 percent for each month that the delinquent tax is not paid, up to a maximum of 100  percent.  Therefore, § 902 is not duplicative of anything in Chapter 1.  That the two provisions are cumulative certainly increases the burden on the delinquent taxpayer; however, it is entirely within the authority of the Congress to set penalties it deems appropriate and unless there is a constitutional violation the Court will not second‑guess legislative judgment.2

We note that our determination regarding applicability of §902 takes into account and agrees with appellant's point concerning criminal penalties found under § 154 and § 901.  The original provision, § 901, imposes a penalty of up to one year's imprisonment or a fine of not more than $500 for a conviction of willful violation of revenue laws.  The subsequent counterpart in Chapter 1, § 154, states that a conviction for violation of provisions of the chapter are punishable by not more than one year's imprisonment or a fine of $1,000.

Clearly since the nature of these two provisions, § 154 and § 901 are the same, if a taxpayer is found guilty of criminal violation of the gross revenue tax laws, the penalty provision of § 154 would apply and not that of § 901.  This would be analogous to the situation presented in Olter, supra, and the more specific provision would govern.  As the Court noted in Olter, the fact that some provisions of the general statute are overridden by a more specific statute does not mean that all of the provisions of the general statute are superseded.  Olter, 3 FSM Intrm. at 130 (although the time provisions of the National Election Code prevail over the more general analogous provisions of the APA, the judicial review provisions of the APA still apply).  Thus our findings above regarding § 155(5) and § 902 are consistent with the Olter decision.

III.  CONCLUSION

A taxpayer who fails to pay on time total gross revenue tax due is subject to an interest assessment under 54 F.S.M.C. 155(5) and a monthly late penalty under 54 F.S.M.C. 902.  The joint application of these provisions is neither contradictory nor illogical given the legislative goal of improving enforcement of tax laws and collection of gross revenue taxes in particular.  For the reasons discussed herein, we uphold the trial court's summary judgment decision and the appellant, Raymond Setik, is therefore ordered to pay the government the sums of $196.19 in interest per § 155(5) and $1,955.13 per § 902.  In reaching this decision, we do not take a view as to the reasonableness of the government's tax penalty scheme and would urge Mr. Setik and other taxpayers who consider the burdens imposed under Title 54 too severe to present their concerns to the Congress.

The judgment of the trial court is affirmed.

ENDNOTES:

1For a thorough account of the substance and import of the legislative history of this provision, see FSM v. George, 2 FSM Intrm. 88, 91‑94 (Kos. 1985).
2Indeed the case which appellant cites in favor of the proposition that tax laws be strictly construed in favor of the taxpayer, In re Island Hardware, Inc., 3 FSM Intrm. 428 (Pon. 1988), assumed without question that both § 902 and § 155 applied to delinquent gross revenue taxes.