SUSAN COYLE, EXECUTRIX (ESTATE OF VERMONT O. BLAKEMAN) v. COMMISSIONER OF REVENUE SERVICES, SC 19154

Judicial District of Ansonia-Milford

 

      Taxation; Administrative Appeals; Whether Appellate Court Properly Determined that Plaintiff’s Failure to Exhaust Administrative Remedies was not Excused by Futility Doctrine. On May 4, 2011, the legislature passed Public Acts 2011, No. 11-6 (act).  The act amended General Statutes § 12-391 (g) for the estates of decedents dying on or after January 1, 2011, by lowering the estate tax threshold from $3.5 million to $2 million, and taxing estates valued between $2 million and $3.6 million at 7.2 percent.  The act became effective upon passage.  The plaintiff’s decedent died in April, 2011, with a taxable estate in excess of $3.5 million.  The plaintiff brought this declaratory judgment action, claiming that the retroactive application of the changes in the estate tax amounted to an unconstitutional taking of property.  The trial court dismissed the action, concluding that the plaintiff failed to exhaust her administrative remedies and that the futility exception to the exhaustion of administrative remedies doctrine did not apply.  On appeal, the plaintiff contended that there were no administrative remedies to exhaust and, alternatively, that the futility exception applied because she had raised a constitutional challenge that the defendant was not authorized to address.  The Appellate Court (142 Conn. App. 198) rejected the plaintiff’s first claim, concluding that General Statutes § 12-395, which incorporates by reference the tax appeal procedures found in General Statutes §§ 12-553 and 12-554, applies to appeals of the estate tax in general.  As to the plaintiff’s futility claim, the court determined that she conceivably could have obtained the relief she sought, that is, an exemption of the payment of estate taxes on the decedent’s estate between $2 million and $3.5 million, without a resolution of the constitutional challenge.  The court reasoned that the plaintiff was required to pay or the defendant was required to assess an estate tax under the amended § 12-391 (g), but that, after payment of the tax or imposition of a deficiency assessment, the plaintiff could have sought, pursuant to § 12-553, a hearing to seek “a correction of the amount of the tax,” and that, if the hearing request was granted, the defendant, who is authorized under § 12-553 to “make such order . . . as appears to him just and lawful,” could have granted the plaintiff relief.  The court reasoned further that, if the plaintiff was not satisfied with the order, she could pursue an administrative appeal pursuant to § 12-554.  The Supreme Court will now decide whether the Appellate Court properly determined that the plaintiff’s failure to exhaust her administrative remedies was not excused by the futility doctrine.