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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Northwest Medical Imaging, Inc. v. State, Dept. of Revenue (12/29/2006) sp-6087

Northwest Medical Imaging, Inc. v. State, Dept. of Revenue (12/29/2006) sp-6087, 151 P3d 434

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


) Supreme Court No. S- 11984
Appellant, )
) Superior Court No.
v. ) 1JU-04-307 CI
Appellee. ) No. 6087 - December 29, 2006
          Appeal  from the Superior Court of the  State
          of  Alaska, First Judicial District,  Juneau,
          Patricia A. Collins, Judge.

          Appearances:  Robert K. Reges, Jr.,  Reges  &
          Boone,  LLC, Douglas, for Appellant.  Michael
          A.  Barnhill, Assistant Attorney General, and
          David  W. M rquez, Attorney General,  Juneau,
          for Appellee.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          CARPENETI, Justice.

          I.   May Alaska tax a corporation that was administratively
dissolved by its state of domicile but that continued to  conduct
business  in Alaska?  The corporation says no. First, it  asserts
that  no  court  has  subject  matter jurisdiction  to  determine
whether  taxes  may  be  assessed  on  a  dissolved  corporation.
Because  Alaska  courts  have  subject  matter  jurisdiction   to
determine  the taxability of corporate entities, we  reject  this
jurisdictional challenge.
          Second, the corporation argues that the State of Alaska
may   not  tax  a  corporation  that  has  been  administratively
dissolved  by  another state.  The Office of Tax Appeals  agreed,
concluding  that, because the corporation had been  dissolved  in
Washington,  it  no  longer existed for tax purposes  in  Alaska.
Because  Alaska  courts  have  subject  matter  jurisdiction   to
determine taxability of corporations operating in this state, and
because  the  corporation  did not  cease  to  exist  for  Alaska
corporate  income  tax purposes, we affirm  the  superior  courts
decision to reverse the Office of Tax Appeals.
     A.   Factual History
          Northwest Medical Imaging, Inc. (Northwest Medical) was
incorporated under the laws of the State of Washington  in  1988.
Dr.  James  Pister was the sole director and shareholder  of  the
corporation.   Effective February 21, 1990, the corporation   was
administratively dissolved by the State of Washington for failure
to  file  its  initial  list of officers and  directors  and  for
failure to pay the annual license fee required by the state.  The
parties  have stipulated that Dr. Pister did not become aware  of
this dissolution until December 1998.
          Despite   its   administrative  dissolution   Northwest
Medical continued to act as a corporation between 1990 and  1998.
Corporate actions included entering written contracts in the name
of  the corporation to provide radiology services to health  care
organizations  and hospitals; contracting with service  providers
such   as   accountants,  financial  consultants,  and   lawyers;
contracting with medical organizations;  maintaining a  corporate
checking  account in Alaska; filing Alaska and federal  corporate
income tax returns; leasing a vehicle in the corporate name;  and
filing  the  underlying appeal of the tax deficiency assessed  by
Alaska  for  corporate income taxes.  Dr. Pister admitted  during
argument   before  the  Office  of  Tax  Appeals  that   business
transactions  were  conducted under the  name  Northwest  Medical
Imaging, Inc. for the period 1990 through 1998.
          In  1999 Northwest Medicals accountants learned of  the
corporations  administrative dissolution.  Upon learning  of  the
dissolution, Dr. Pister instructed the accountants to wind up the
corporate   accounts  and  tax  filings  as   existing  contracts
expired.   By  2000  all of the corporate contracts  had  expired
except  one.   Dr.  Pister sold that contract and  stopped  doing
business under the name Northwest Medical Imaging, Inc.
          The  Alaska Department of Revenue now seeks to  collect
state  corporate income taxes for business conducted  by  between
1991  and  1995.  The department claims the corporation owes  the
state  $88,665  in taxes, plus interest and penalties.  Northwest
Medical argues that it was not subject to Alaska corporate  taxes
for the years following its dissolution.
     B.   Procedural History
          The Office of Tax Appeals (the Office of Tax Appeals or
OTA) concluded as a matter of law that once Northwest Medical was
dissolved,  it  could no longer be considered a  corporation  for
purposes  of  assessing corporate income taxes.   OTA  determined
that,    post-dissolution,   Northwest   Medical    lacked    the
characteristics necessary for classification as a corporation for
income  tax purposes.  Accordingly, OTA abated the tax assessment
against the corporation.
          Upon   the  departments  appeal,  the  superior   court
reversed  and remanded.  The superior court first noted that  the
purported  dissolution  was supported by  fairly  weak  evidence,
including  an  undated document from the Washington Secretary  of
States  office,  representations of counsel that the  corporation
was  dissolved, references to the State of Washingtons web  page,
and  a  computer print-out, apparently from that web  page.   The
court held that the finding of administrative dissolution on  the
basis  of this evidence was premature.  The court also determined
that,   even  if  the  dissolution  was  effective,  OTAs   legal
conclusions were flawed.  In contrast to OTA, the superior  court
concluded that a dissolved corporation may continue to exist as a
corporation,  depending on the factual situation presented.   The
superior  court  remanded for OTA to consider  whether  Northwest
Medical could be subject to taxation despite its dissolution.
          On remand, OTA again concluded that the corporation did
not   exist  for  tax  purposes  from  1991  to  1995.   Applying
Washington  law,  it determined that Northwest Medical  had  been
effectively dissolved on February 21, 1990  the date on which the
certificate  of  administrative dissolution was issued.  It  then
concluded  that,  under Washington law, the  corporation  legally
ceased  to  exist  as of the date of administrative  dissolution.
It  further stated that under federal law, the corporation ceased
to  exist when it was administratively dissolved under Washington
law.   According to OTA, because the corporation ceased to  exist
immediately  upon dissolution, it did not exist for tax  purposes
after  1990.  Thus,  OTA abated the taxes and penalties  assessed
against Northwest Medical for tax years 1991 through 1995.
          The  Department  of Revenue again appealed.   Northwest
Medical filed a motion to dismiss the departments appeal  on  the
ground that it was untimely. The superior court denied the motion
to  dismiss,  holding that although the state  failed  to  appeal
within  thirty  days of service of OTAs decision,  a  conflicting
statute justified relaxation of the thirty-day limit of Appellate
Rule  602.  Alaska Statute 43.05.480(a) provides that appeals  of
tax agency decisions must be filed within thirty days of the date
the  decision becomes final, and AS 43.05.465(f) states that such
decisions  do  not become final until sixty days  after  service,
allowing a total of ninety days to appeal.
          On  the merits, the superior court again reversed  OTA,
          A  business  that  holds itself  out  to  the
          Alaskan public as a corporation, files Alaska
          and federal taxes as a corporation, takes  no
          steps  to amend federal corporate tax returns
          at  the same time it is claiming not to be  a
          corporation   for   Alaska   corporate    tax
          purposes, and initiates a tax protest in  the
          corporate  name in Alaska may not effectively
          use  its  non-payment of corporate  taxes  in
          Washington  (which at least  in  part  caused
          dissolution)  to  avoid  corporate  taxes  in
The    court   explained   that,   despite   Northwest   Medicals
administrative dissolution, it actively operated as  a  de  facto
corporation  for  many  years after the  effective  date  of  its
dissolution.    The  court  held  that,  despite   administrative
dissolution by a foreign state, Northwest Medical remained liable
for  Alaska  corporate  income taxes.  The superior  court  again
questioned the validity of the dissolution, but did not make  any
specific  findings in that regard.  It also disagreed  with  OTAs
conclusion  that  Washington corporations  immediately  cease  to
exist  after dissolution.  Finally, the superior court  concluded
that,   even  if  Northwest  Medical  had  been  administratively
dissolved  and  ceased to exist under Washington  law,  it  still
acted  as  a business entity in Alaska, subjecting it  to  Alaska
corporate taxes.
          Northwest  Medical  appeals.  Its  principal  point  on
appeal  is  that  the courts of this state do  not  have  subject
matter  jurisdiction to consider claims brought against a defunct
corporation.  We conclude that the courts of Alaska have  subject
matter  jurisdiction to consider the taxability  of  corporations
operating  in  this state.  We hold that OTA erred in  concluding
that Northwest Medical ceased to exist as a corporate entity  for
Alaska corporate income tax purposes.  Finally, we conclude  that
the  superior court did not abuse its discretion in  hearing  the
case  over  the  corporations  objection  that  the  appeal   was
          When  the superior court acts as an intermediate  court
of  appeal  in an administrative matter, we independently  review
and  directly  scrutinize the merits of the [agency]s  decision.1
In  reviewing the Office of Tax Appealss decision, we  apply  the
substantial  evidence  test  for  questions  of  fact   and   the
substitution of judgment test for questions of law.2
          Whether an agency acting in a judicial capacity or  the
superior  court has subject matter jurisdiction is a question  of
law, subject to de novo review by this court.3
          We  review for abuse of discretion the superior  courts
decision  to waive procedural rules and accept a partys  untimely
          We  begin our analysis by examining the subject  matter
jurisdiction  of  the Office of Tax Appeals, the superior  court,
and   the  Department  of  Revenue.   We  next  consider  whether
Northwest  Medical  is liable for corporate  income  taxes  under
Alaska  law.   Finally,  we discuss whether  the  superior  court
abused its discretion in entertaining the second appeal.
     A.   Subject  Matter Jurisdiction Was Appropriately Asserted
          in this Case.
           1.  The  Office of Tax Appeals and the superior  court
               have subject matter jurisdiction.
          Northwest  Medicals  primary  stated  purpose  in  this
appeal  is to challenge the subject matter jurisdiction of  state
adjudicatory  bodies over a defunct corporation.  This  challenge
          is based on its claim that subject matter jurisdiction is absent
because the corporation did not exist for the time period  during
which the department seeks to tax it.5
          Subject matter jurisdiction is the legal authority of a
court  to  hear  and  decide a particular  type  of  case.6   The
doctrine  of subject matter jurisdiction applies to judicial  and
quasi-judicial bodies to ensure that they do not overreach  their
adjudicative   powers.7    Subject  matter  jurisdiction   is   a
prerequisite  to  a courts ability to decide a  case:  [A]  court
which  does not have subject matter jurisdiction is without power
to  decide  a case.8  Under article IV, section 1, of the  Alaska
Constitution,  The jurisdiction of courts shall be prescribed  by
law.  Thus, where the legislature has authorized a court to enter
judgment  in a particular class of cases, the court properly  has
subject matter jurisdiction.9

          The  jurisdiction of the Office of Tax Appeals to  hear
tax  disputes has been clearly and explicitly prescribed  by  the
legislature.    Before   OTAs  creation,  controversies   between
taxpayers   and  the  Department  of  Revenue  were   adjudicated
administratively within the department.10  In 1996 the legislature
created  OTA,   removing the adjudicative role from elsewhere  in
the department and giving this new quasi-judicial agency the duty
of  resolving  tax  disputes.11 Because the issue  of  whether  a
corporation  exists for tax purposes is just such a tax  dispute,
OTA  has subject matter jurisdiction over the question raised  in
this case.
          The  superior  court acts as an intermediate  court  of
appeal  in  administrative matters.  Alaska Statute  22.10.020(d)
declares that the superior court has jurisdiction in all  matters
appealed to it from . . . [an] administrative agency when  appeal
is  provided  by  law.   Alaska Statute  43.05.480  provides  for
judicial  review of final administrative decisions made  by  OTA.
This  statute confers subject matter jurisdiction on the superior
court under the present circumstances.
          Because OTA and the superior court have subject  matter
jurisdiction  under  the  relevant statutes,  we  deny  Northwest
Medicals jurisdictional challenge.
          2.   The  Department  of  Revenue has  jurisdiction  to
               adjudicate tax assessments.
          Although Northwest Medical describes its jurisdictional
challenge as against OTA and the superior court, it also  directs
its  protest against the Department of Revenues ability to assess
and   enforce  taxes.   Northwest  Medical  contends   that   the
department  lacks  judicial authority to  levy  and  enforce  tax
assessments and penalties.
          Alaska  Statute 43.05.010(7) specifically confers  upon
the  Department  of  Revenue the authority to hold  hearings  and
investigations necessary for the administration of state tax  and
revenue  laws.   Alaska Statute 43.05.010(8) further  grants  the
department the responsibility to hear and determine appeals of  a
matter  within the jurisdiction of the Department of Revenue  and
enter  orders  on the appeals that are final unless  reversed  or
modified by the courts.12  The department is also required by  AS
          43.05.010(14) to issue warrants for the collection of unpaid tax
penalties and interest and take all steps necessary and proper to
enforce  full  and  complete compliance with  the  tax,  license,
excise, and other revenue laws of the state.
          Because  the  legislature has conferred assessment  and
adjudicatory  duties  upon the Department of  Revenue,  Northwest
Medicals  jurisdictional challenge against  the  department  must
     B.   Northwest  Medical Did Not Cease To Exist as a  Taxable
          Corporate Entity.
          Although   our   decision  regarding   subject   matter
jurisdiction  resolves the only substantive issue that  Northwest
Medical  directly appealed, we may consider issues not  preserved
for  appeal if the issues were raised and briefed below.13   Both
parties have briefed the underlying question in this case,  which
is  whether  the  state  can  tax a  dissolved  corporation  that
continues  to act as a business.  The Office of Tax  Appeals  and
the  superior court have both provided careful opinions, but they
reach  opposite results.  In order to resolve this  conflict,  we
address the question whether Northwest Medical ceased to exist as
a  corporate  entity for purposes of taxation  by  the  State  of
          1.   OTA  erred  in  applying Washington state  law  to
               determine that Northwest Medical did not exist for
               taxation purposes.
          OTA asserted that federal courts consider the statutory
and common law of the corporate domicile in determining whether a
corporate taxpayer has dissolved and still holds valuable assets.
Because  Northwest  Medical  was  domiciled  in  Washington,  OTA
applied Washington law and concluded that, under that states law,
once the corporation was administratively dissolved it ceased  to
exist for taxation purposes.
          However,  OTA mistakenly assessed the extent  to  which
federal  courts  defer  to  the law  of  the  domiciliary  state.
Indeed,  the  case upon which OTA relied for its  assertion  that
Washington  law controlled, United States v. McDonald  &  Eide,14
actually makes clear that state law is not determinative:

          [B]ecause there is no body of federal  common
          law on corporations, analysis of state law is
          sometimes   necessary   to   fill   in    the
          interstices.  Nevertheless, state law is  not
          controlling.  Reference to the statutory  and
          common  law of the corporate domicile may  be
          useful  in  determining whether  a  corporate
          taxpayer has dissolved or still holds assets.
          The  extent of its utility depends,  however,
          on  its consistency with the purposes of  the
          federal tax law.[15]
          Is  the  decision of OTA consisten[t] with the purposes
of  federal  tax law?  Federal Treasury Regulation 1.6012-2(a)(2)
(as amended in 2006) governs the cessation of corporate existence
for federal tax purposes.  The regulation states in part:
          A  corporation is not in existence  after  it
          ceases  business and dissolves, retaining  no
          assets, whether or not under State law it may
          thereafter  be  treated as  continuing  as  a
          corporation  for  certain  limited   purposes
          connected  with winding up its affairs,  such
          as for the purpose of suing and being sued.
In  other  words,  dissolution alone is not  enough  to  cause  a
corporation to cease to exist for tax purposes   the cessation of
business  and  a lack of assets are also required.  Because  this
federal  regulation provides clear guidance for  determining  the
existence  of dissolved corporations, and hence their taxability,
there  are no interstices that need be filled by state  law.   We
therefore conclude that OTA erred in relying on Washington law to
determine  whether  Northwest Medical existed  for  federal,  and
derivatively Alaska, taxation purposes.
          2.   Because  Alaska law adopts federal  law  regarding
               corporate taxation, and because under federal  law
               Northwest  Medical remained a corporation  despite
               its dissolution, Northwest Medical  is subject  to
               Alaska corporate taxes.
          Alaska  law  generally  incorporates  federal  tax  law
regarding  corporations.16  Accordingly, we must rely on  federal
law to determine whether Northwest Medical continued to exist for
tax  purposes after it was administratively dissolved.  As  noted
above, death of a corporation for federal, and hence Alaska,  tax
purposes requires (1) cessation of business; (2) dissolution; and
(3)  lack  of any retained assets.17  The Department  of  Revenue
concedes that Northwest Medical was administratively dissolved in
1990.   Thus,  to  decide  whether  the  corporation  remained  a
corporate  entity for tax purposes, we must determine whether  it
ceased doing business and what assets, if any, it retained.
          OTA  relied  on  Washington state law to conclude  that
Northwest  Medical  had ceased doing business because,  once  the
corporation was dissolved, it could not enter into any  contracts
unrelated to winding up and dissolution.  Consequently,  any  new
contracts  or leases entered into under the corporate  name  were
rendered  Dr. Pisters personal responsibility regardless  of  the
fact  that  he  purported  to act for  the  corporation  when  he
executed them.
          OTA  also  found that Northwest Medical  retained  only
the  most minimal of assets after dissolution.  According to that
office, at the time of dissolution Northwest Medical had no long-
term   contracts  (because  Dr.  Pister  was  providing   medical
radiology  services on a per-job basis) and owned only one  Xerox
copier, one computer, two or three hand-held tape recorders,  and
a few medical books, with a total value of $3,600.
          OTA  looked to United States v. McDonald & Eide,18 Cold
Metal  Process Co. v. Commissioner,19 and Commissioner  v.  Henry
Hess  Co.20  in concluding that, like the corporations  in  those
cases,  Northwest Medical had neither sufficient assets  nor  the
ability to conduct business to be liable for federal taxes.  Yet,
as  the  superior  court noted, each of those decisions  involved
corporations  that  had already been fully liquidated,  with  all
debts  and  assets distributed to the shareholders  at  the  time
          taxes were assessed.21  The corporations had ceased all activities
in  the corporate name by the time tax liability became an issue.
In contrast, the present case addresses the situation in which  a
corporation  continues in every respect to act as  it  previously
acted, despite its dissolved status.
          Unlike  the  corporations in McDonald, Cold Metal,  and
Henry  Hess,  Northwest Medical continued to earn income  and  to
make  contracts  after it was dissolved.  The parties  stipulated
that   business  transactions  were  conducted  under  the   name
Northwest  Medical Imaging, Inc., including the  maintenance  and
use  of  bank  accounts; contracting with physicians; contracting
with service providers such as accountants, financial consultants
and  lawyers; contracting with medical organizations; and leasing
vehicles.  These  actions indicate that the corporation  did  not
cease  its business operations.  Under federal law, a corporation
does  not  cease to exist just because it has been dissolved;  it
must  also cease all business activity and divest itself  of  all
assets.   Northwest  Medical, although  dissolved,  continued  to
contract and provide services under its corporate name.
          Moreover,  contrary to OTAs conclusion,  several  cases
suggest   that   corporate  dissolution  does  not  automatically
insulate a corporation from corporate tax liability.  OTA  failed
to  address  these cases, which were highlighted by the  superior
court.  For example, in Hill v. Commissioner,22 the United States
Tax Court stated:
          For   federal   income  tax   purposes,   the
          annulment of a corporations charter does  not
          necessarily  have the effect of discontinuing
          the   corporate  entity.   If  a  corporation
          retains  assets, even though under State  law
          its  legal existence has been terminated  and
          the   corporation  is  in  the   process   of
          liquidation,   it  will  be  treated   as   a
          continuing taxable entity.[23]
Similarly,  in Hersloff v. United States,24 the Court  of  Claims
explained  that  after dissolution the corporation-in-liquidation
continues for federal income tax purposes as a taxable entity  in
those instances in which its affairs are substantially unsettled,
it  possesses,  sells or seeks assets, or its liquidating  agents
carry on any substantial activities on its behalf.25  These cases
are  more  factually relevant than those relied upon by OTA,  and
they lead to a very different conclusion.
          By  maintaining active bank accounts; contracting  with
physicians,  service  providers, and medical  organizations;  and
leasing   vehicles,  Northwest  Medical  continued   to   conduct
business.  The  outstanding contracts  and  the  leased  vehicles
constitute  significant business assets.  Consequently,  we  hold
that,  although the corporation  was administratively  dissolved,
it  continued  to exist for purposes of taxation.  OTA  erred  in
holding  that under federal and Alaska law Northwest Medical  was
not taxable post-dissolution.
          3.   OTAs decision would lead to inequitable results.
          OTA  acknowledged in its first opinion that the  result
          of its decision was undesirable.  It stated, Concluding that NWMI
is  not  liable  for  Alaska corporate income taxes  under  these
circumstances is troubling because it seems to reward Dr.  Pister
for conduct that, at best, was negligent with respect to business
and  tax  matters.  Nonetheless, OTA held firm to its conclusion,
apparently relying in part on the notion that Dr. Pister could be
held   personally  liable  for  the  actions  of  the   dissolved
corporation.  Citing White v. Dvorak,26 OTA stated that those new
post-dissolution contracts and leases were rendered  Dr.  Pisters
personal  responsibility regardless of the fact that he purported
to act for the corporation when he executed them.
          It  is  true  that the court in Dvorak  held  that  the
shareholder  of  an administratively dissolved corporation  could
sue   personally  and  individually  to  enforce  a   contract.27
However, the court emphasized the fact that the shareholder acted
on  behalf  of  the corporation while knowing that  it  had  been
dissolved.28  Quoting the relevant statute, it stated, All persons
purporting to act as or on behalf of a corporation, knowing there
was  no incorporation under this title, are jointly and severally
liable  for liabilities created while so acting . . .  .29    The
court thus implied that an individual must act knowingly in order
to  be individually liable.  It did not analyze the result if the
party was unaware of the corporations dissolved status.
          The Washington Supreme Court addressed that question in
Equipto Division Aurora Equipment Co. v. Yarmouth,30 holding that
the  imposition  of personal liability requires actual  knowledge
that  there  was  no  incorporation.31  In that  case  the  court
reversed  judgments finding an individual personally  liable  for
debts  incurred  in  the  name of a  corporation  that  had  been
dissolved at the time the contracts were made.32  In the  present
case,  as in Equipto, the sole shareholder, director, and officer
of  the  corporation alleged that he acted in a good faith belief
that  the corporation was intact.33  Under the Equipto framework,
Dr.  Pister  would  not be personally liable  for  the  debts  of
Northwest  Medical because he did not know that  the  corporation
had been dissolved.  Consequently, OTAs decision to alleviate the
tax  burden  of  the  corporation would  mean  that  neither  the
corporation nor Dr. Pister individually could be held liable  for
any  taxes,  despite the fact that the corporation  continued  to
operate and earn income.
          We   addressed  the  inequity  of  such  a  result   in
University of Alaska v. Thomas Architectural Products, Inc.34  In
that  case,  Thomas, a subcontractor whose corporation  had  been
administratively  dissolved,  was sued  for  providing  defective
materials.35    Thomas argued that, because the  corporation  had
been  dissolved,  it  could no longer be sued.36   We  held  that
Thomass  failure  to  comply with statutory wind-up  requirements
made  it  susceptible  to suit by known  creditors  who  did  not
receive  notice of dissolution.37  As we explained, it  would  be
absurd  to conclude that after being dissolved for nonpayment  of
fees,  a  corporation would be rewarded.38  Allowing a  corporate
board   to   walk   away   from  an  administratively   dissolved
corporation, we further stated, would deliver all of the benefits
of  the  dissolution statute to a corporation without any of  the
          protections which the statute provides to creditors.39  A system
that  allowed  a  dissolved corporation  to  escape  its  wind-up
obligations would create an incentive for corporations  to  avoid
the  orderly  procedures set forth in the  voluntary  dissolution
provisions   in   favor  of  a  quick  exit   by   administrative
          OTAs  decision in the present case would have just such
an  inequitable  result and would create precisely  the  perverse
incentives we sought to avoid in Thomas.  Northwest Medical would
be  rewarded for failing to comply with its corporate obligations
and  responsibilities, including paying the appropriate licensing
fees,  as  well  as  taxes on income it earned  in  Alaska  while
operating under the corporate name.
          OTA distinguishes Thomas by arguing that the Department
of  Revenue was not a creditor at the time Northwest Medical  was
dissolved.   OTA  focuses on the fact that no  tax  claims  arose
before  the  certificate  of dissolution  was  issued.   However,
Northwest  Medical continued to operate as a business entity  for
several  years after the certificate of dissolution  was  issued.
All  businesses operating in Alaska are responsible  for  knowing
and   complying  with  corporate  income  tax  laws.   Thus,  the
Department of Revenue was a known creditor at the time  Northwest
Medical conducted business in the state.
     C.   The  Superior  Court Did Not Abuse  Its  Discretion  in
          Entertaining the Second Appeal.
          OTA  distributed its final decision on August 6,  2003.
The  state appealed the decision to the superior court on October
31,  2003,  eighty-six  days later.    Northwest  Medical  argued
before the superior court that the states appeal was untimely and
should be dismissed.  The superior court concluded that, although
the  state  failed to appeal within thirty days of  the  date  of
service  of  OTAs final decision, Appellate Rule 521 allowed  the
superior court to relax the filing deadline.
          Under  the  statutory provisions governing revenue  and
taxation,  an appeal must be filed within thirty days  after  the
decision becomes final.41  While most  administrative decisions by
OTA  become  final  sixty days after they are  served,42  an  OTA
decision  upon reconsideration becomes final at the  time  it  is
served.43   In its opinion in this case, OTA advised the  parties
that  the decision was a final administrative decision under  the
statutory  provision  that authorizes  OTA  to  issue  orders  on
reconsideration44  thus avoiding the sixty-day delay  before  the
order  would become final  but it did not explain why it believed
that  provision  to  be  applicable.  It may  have  reached  that
conclusion because the case was on remand from the superior court
and  the  remand  order required OTA to reconsider  part  of  its
earlier decision.  But it is debatable whether reconsideration in
this context encompasses a remand from the superior court to  the
          The  state argues that OTAs decision was not  an  order
upon reconsideration because
          [n]o party requested reconsideration under AS
          43.05.465(b).  Thus, the OTA did not have the
          opportunity to order reconsideration under AS
          43.05.465(c).  Accordingly, the OTA  decision
          became  final  under  AS 43.05.465(f)(1),  60
          days  after the date the decision was served.
          That  meant the OTA decision became final  on
          October  5, 2003.  Under AS 43.05.480(a)  the
          appeal  deadline  was therefore  November  4,
          2003.   The  Department filed its  appeal  on
          October 31, 2003.
Thus,   the   states  contention  is  that  OTA  erred   in   its
characterization of its own decision and that the decision  would
not  become final until sixty days after the date it was  served.
Under the states view, its appeal was timely.
          We  need  not  resolve  whether  OTAs  decision  was  a
decision  upon reconsideration under subsection .065(e)   because
Appellate Rule 521 authorizes a court to relax the rules where  a
strict adherence to them will work surprise or injustice.45  Here,
the  fact  that  OTA  viewed  its  decision  as  a  decision   on
reconsideration  which would properly be governed by the  thirty-
day  filing  requirement  was understandably lost on  the  state.
The decision merely asserted the point with no analysis as to how
it  actually  qualified as a decision on reconsideration.   Since
this  issue is genuinely debatable, it is hardly surprising  that
the  state failed to recognize OTAs view that this was a decision
on  reconsideration.  But even if the decision was a decision  on
reconsideration and the shorter time period applied, the superior
court found that Northwest Medical had not sufficiently supported
its  allegation  that it would be prejudiced if the  appeal  were
accepted.   Further, the state demonstrated that it would  suffer
prejudice if the appeal were dismissed because it would be denied
the    substantive   opportunity   for   review.    Under   these
circumstances, it was not an abuse of discretion for the superior
court to entertain the appeal.46
          Because  the  Office of Tax Appeals and  Alaska  courts
have  subject matter jurisdiction to determine whether an  active
but  dissolved  corporation  may be taxed,  we  reject  Northwest
Medicals  jurisdictional challenge.  Because the  superior  court
did  not abuse its discretion in accepting the departments appeal
and  because the corporation, although administratively dissolved
by the State of Washington, did not cease to exist as a corporate
entity for purposes of taxation by Alaska, we AFFIRM the superior
courts  decision requiring Northwest Medical to pay the  assessed
taxes plus interest and penalties.
     1     Alyeska  Pipeline Serv. Co. v. DeShong, 77 P.3d  1227,
1231 (Alaska 2003).

     2     State,  Dept of Revenue v. DynCorp, 14 P.3d  981,  985
(Alaska 2000).

     3     Hydaburg  Coop. Assn v. Hydaburg Fisheries,  925  P.2d
246, 248 (Alaska 1996).

     4     Commercial Fisheries Entry Commn v. Apokedak, 606 P.2d
1255, 1258 (Alaska 1980).

     5      Although   Northwest  Medical   did   not   raise   a
jurisdictional challenge until its second appeal to the  superior
court,  subject matter jurisdiction may be raised as an issue  at
any  point during the proceedings.  Hydaburg Coop., 925  P.2d  at

     6     Erwin  Chemerinsky, Federal Jurisdiction 257  (3d  ed.

     7      See,  e.g.,   Marley  v.  State,  Dept  of  Labor   &
Industries,  886  P.2d 189, 192 (Wash. 1994)  (A  tribunal  lacks
subject matter jurisdiction when it attempts to decide a type  of
controversy  over  which  it  has no authority  to  adjudicate.);
Gilbert  v. Gladden, 432 A.2d 1351, 1353-54 (N.J. 1981)  (subject
matter  jurisdiction  involves a threshold  determination  as  to
whether  the  court is legally authorized to decide the  question

     8     Wanamaker  v.  Scott, 788 P.2d 712,  714  n.2  (Alaska

     9     Rodriguez  v. Rodriguez, 908 P.2d 1007,  1011  (Alaska

     10     State, Dept of Revenue v. DynCorp, 14 P.3d  981,  984
(Alaska 2000).  See former AS 43.05.240.

     11     DynCorp, 14 P.3d at 984.  See ch. 108, preamble,  SLA
1996;  AS  43.05.405, AS 43.05.435.  AS 43.05.405  provides  that
[t]he  office  of tax appeals has original jurisdiction  to  hear
formal   appeals  from  informal  conference  decisions  of   the
Department of Revenue under AS 43.05.240.

     12     AS  43.05.010(8)  is limited to  informal  conference
decisions  of  the  Department of Revenue  made  pursuant  to  AS
43.05.240  (delineating  the  procedure  by  which  an  aggrieved
taxpayer  provides  the  department  notice  of  its  grievance).
Formal  appeals  are  heard  by the Office  of  Tax  Appeals  (AS
43.05.405-.499)  or  the  Office of Administrative  Hearings  (AS
44.64.030).   See  ch.  163,   62,  97,  SLA  2004,  amending  AS
43.05.010(8) effective July 1, 2005.

     13    See, e.g., Alderman v. Iditarod Props., Inc., 104 P.3d
136,  141 n.17 (Alaska 2004) (explaining that failure to  include
issue in statement of points on appeal does not bar consideration
of  issue  when it has been raised before trial court  and  fully
briefed  to  this  court); Native Village of Eklutna  v.  Bd.  of
Adjustment,  995  P.2d  641, 646 (Alaska  2000)  ([T]he  relevant
question  is  not  whether  an issue  is  stated  verbatim  in  a
statement  of points on appeal, but rather whether the court  and
the  opposing  party  are fully informed  as  to  the  matter  at
issue.).  See also Alaska R. App. P. 204(e): The appellate  court
will  consider only points included in the statement [of points],
and  points  that  the  court  can  address  effectively  without
reviewing untranscribed portions of the electronic record.

     14    865 F.2d 73 (3d Cir. 1989).

     15    Id. at 76.

     16    AS 43.20.210(a); AS 43.20.160(c); AS 43.20.300(b).

     17    Treas. Reg.  1.6012-2(a)(2) (as amended in 2006).

     18    865 F.2d 73 (3d Cir. 1989).

     19    247 F.2d 864 (6th Cir. 1957).

     20    210 F.2d 553 (9th Cir. 1954).

     21     McDonald, 865 F.2d at 74, 76; Cold Metal, 247 F.2d at
868; Henry Hess, 210 F.2d at 557.

     22    66 T.C. 701 (1976).

     23    Id. at 705.

     24    310 F.2d 947 (Ct. Cl. 1962).

     25    Id. at 950.

     26    896 P.2d 85 (Wash. App. 1995).

     27    Id. at 87.

     28    Id. at 89.

     29    Id. (quoting Wash. Rev. Code  23B.02.040).

     30    950 P.2d 451 (Wash. 1998).

     31    Id. at 456.

     32    Id. at 452.

     33    Id.

     34    907 P.2d 448 (Alaska 1995).

     35    Id. at 449.

     36    Id.

     37    Id. at 450.

     38     Id. at 452 (quoting Inducon Corp. v. Crowley Maritime
Corp., 771 P.2d 356, 358 (Wash. App. 1989)).

     39    Id. at 452.

     40    Id.

     41    AS 43.05.480(a).

     42    AS 43.05.465(f)(1).

     43    AS 43.05.465(f)(2).

     44     See AS 43.05.465(e).

     45     See Owsichek v. State, Guide Licensing & Control Bd.,
627 P.2d 616, 621 (Alaska 1981).

     46     See, e.g., Worthy v. State, 999 P.2d 771, 777 (Alaska
2000); Mackie v. Chizmar, 965 P.2d 1202, 1207 n.4 (Alaska1998).

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