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Court Rules No Supersedes Bond Required for Appeal

By Erica Horn

This case is an appeal by the taxpayer of an adverse ruling of the Kentucky Board of Tax Appeals (the “KBTA”) in a property tax case. Before briefing the merits of the case, however, the parties asked the Franklin Circuit Court to set the amount of a supersedeas bond or alternative security to stay the enforcement of the KBTA’s order. The Honorable Judge Thomas D. Wingate issued Order No. 14-CI-00170, declining to require a bond or alternative security on appeals from the KBTA to the Circuit Court.

The requirement for posting of a supersedeas bond is set forth in KRS § 131.370(2). In relevant part, KRS § 131.370 provides:

  1. Any party aggrieved by any final order of the Kentucky Board of Tax Appeals … may appeal to the Franklin Circuit Court ….

  2. If the appeal is from an order sustaining a tax assessment, collection of the tax may be stayed by filing of a supersedeas bond in the manner directed by the Rules of Civil Procedure ….

    The court held the statute only permitted a supersedeas bond for appeals taken to the Kentucky Court of Appeals, not administrative appeals taken to the Circuit Court. Therefore, given the case’s procedural posture, the Court determined it could not require a bond. The Court affirmed this holding following a motion to reconsider on May 9, 2014.

    In the Department of Revenue’s (the “DOR”) motion for reconsideration, the DOR asserted that CR 1(2) removes statutory appeals, such as this one, from governance under the civil rules because the rule states that statutory procedures “shall prevail” over the civil rules if the rules are inconsistent with the statute. The Court disagreed and held that because the civil rules govern bond posting and only permit bond posting to be required on appeals to the Kentucky Court of Appeals, requiring a bond was impermissible at this stage of the appeal.

    In support of its position, the DOR pointed to a number of decisions that implicitly recognized the circuit court’s authority to act under KRS § 131.370, and argued the Commonwealth’s “compelling interest and obligation in collecting tax dollars determined due and in ensuring that the KBTA’s judgment remains collectible.” Despite these arguments and others, the Court cites a lack of “persuasive new authority,” as a basis for affirming its original order.