Buffington v. Miss. State Tax Comm'n
| Docket Number: | 2009-CA-01658-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 09-09-2010 Opinion Author: Graves, P.J. Holding: Affirmed. |
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| Additional Case Information: |
Topic: Taxation - Filing amended income tax return - Statute of limitations - Section 27-7-49(1) & (3) Judge(s) Concurring: Waller, C.J., Carlson, P.J., Randolph, Chandler and Pierce, JJ. Dissenting Author : Dickinson, J., Dissents With Separate Written Opinion Dissent Joined By : Lamar and Kitchens, JJ. Procedural History: Bench Trial; Summary Judgment Nature of the Case: CIVIL - STATE BOARDS AND AGENCIES |
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| Trial Court: |
Date of Trial Judgment: 09-15-2009 Appealed from: Hinds County Chancery Court Judge: William H. Singletary Disposition: The chancery court affirmed the MSTC’s order affirming the assessment against the Buffingtons and granted the MSTC’s motion for summary judgment. A final judgment prepared in accordance with the order was filed on September 29, 2009. Case Number: G2008-1529 S/2 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | A. D. Buffington and Ruth Buffington |
ASHLEY WHITE PITTMAN, J. STEPHEN STUBBLEFIELD |
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| Appellee: | Mississippi State Tax Commission | STEPHANIE RUTLAND JONES, HEATHER STAMPER DEATON | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Taxation - Filing amended income tax return - Statute of limitations - Section 27-7-49(1) & (3) |
| Summary of the Facts: | In 2004, A.D. and Ruth Buffington reached a settlement with the IRS regarding additional tax liability assessed by the federal government based on previously unreported income in excess of $350,000 for tax year 2001. As evidence of that settlement, on March 23, 2004, A.D. Buffington and an IRS representative executed Form 4549, entitled Income Tax Examination Changes. On April 2, 2004, the Buffingtons submitted a check in the amount of $96,038.95 to the IRS for full payment of the agreed-upon liability. The check did not clear the bank that same day, and neither party knows when the check cleared. Although Form 4549 explained to the Buffingtons that they should file the appropriate state form if the change in their reported taxable income would affect the amount of state income tax they owed, the Buffingtons admit that they did not file an amended 2001 Mississippi income tax return. On June 24, 2004, the IRS mailed Form 3210 to the Mississippi State Tax Commission, advising the MSTC that the IRS had increased the Buffingtons’ income for tax year 2001. The MSTC signed for receipt of Form 3210 on July 7, 2004. On June 22, 2007, the MSTC issued a $37,999 assessment to the Buffingtons for the additional state income tax they owed for tax year 2001. Despite the Buffingtons’ argument to the MSTC that the MSTC’s assessment fell outside the three-year statute of limitations during which the MSTC is statutorily permitted to make assessments, the MSTC continued to send the Buffingtons notices of assessment. The Buffingtons therefore requested a hearing before the MSTC’s Review Board. The Review Board issued Order No. 8814, upholding and affirming the MSTC’s assessment of tax liability. The Buffingtons then appealed to the MSTC. The MSTC issued an order upholding the order of the Review Board and affirming the assessment of tax liability. The Buffingtons then filed their Petition for Appeal of Mississippi State Tax Commission Order in the chancery court. The MSTC filed a Motion for Summary Judgment, and the Buffingtons filed a Counter-Motion for Summary Judgment. The chancery court affirmed the MSTC’s order affirming the assessment against the Buffingtons and granted the MSTC’s motion for summary judgment. The Buffingtons appeal. |
| Summary of Opinion Analysis: | Section 27-7-49(1) provides that returns shall be examined by the commissioner or his duly authorized agents within three years from the due date or the date the return was filed, whichever is later, and no determination of a tax overpayment or deficiency shall be made by the Commissioner, and no suit shall be filed with respect to income within the period covered by such return, after the expiration of said three-year period, except as hereinafter provided. Section 27-7-49(3) provides that where the reported taxable income of a taxpayer has been increased or decreased by the Internal Revenue Service, the three-year examination period provided in subsection (1) shall not be applicable, insofar as the Mississippi income tax liability is affected by the specific changes made by said Internal Revenue Service. However, no additional assessment or no refund shall be made under the provisions of this article after three years from the date the Internal Revenue Service disposes of the tax liability in question. The Buffingtons argue that the IRS disposes of the federal tax liability on the date a written settlement between the IRS and the taxpayer is executed, which in this case occurred on March 23, 2004, through the execution of IRS Form 4549. The MSTC, on the other hand, argues that the IRS disposes of the tax liability on the date the MSTC receives IRS Form 3210, which is accompanied by information regarding changes in a taxpayer’s reported income for the applicable year. In this case, the MSTC received IRS Form 3210 on July 7, 2004. The MSTC mailed its initial letter of assessment to the Buffingtons on June 22, 2007. Thus, if the Buffingtons’ interpretation stands, the MSTC’s assessment was issued after the three-year statute of limitations imposed by section 27-7-49(3) had expired. But if the MSTC’s interpretation stands, the assessment was issued within the three-year statute of limitations. Statutory interpretation is appropriate if a statute is ambiguous or is silent on a specific issue. If a statute is ambiguous, it is the Court’s duty to carefully review statutory language and apply its most reasonable interpretation and meaning to the facts of a particular case. In this case, the statute is ambiguous. The MSTC’s interpretation of the disputed statutory language – “the date the Internal Revenue Service disposes of the tax liability in question” – is reasonable, because the MSTC is not informed of the date the IRS and the taxpayer executed the written settlement changing the taxpayer’s reported taxable income (Form 4549). The MSTC is not notified that there has been a change in the taxpayer’s reported taxable income until the MSTC receives Form 3210 from the IRS. And Form 3210 does not inform the MSTC of the date the written settlement was executed, nor of the date the liability ultimately was paid. Therefore, the interpretation of the statute proposed by the Buffingtons is unreasonable because, although the MSTC would not be informed of the alleged date of disposition, it would nevertheless have three years from that date to issue an assessment for tax liability. The MSTC’s interpretation of “disposed of” as the date the MSTC receives Form 3210 is consistent with these common and ordinary meanings of the phrase. The definitions of “dispose of” include “to finish with” and “to deal with conclusively,” which the IRS has not done until it has fulfilled its agreement with the MSTC, explained on Form 4549, to exchange information with the MSTC regarding federal tax increases or decreases. Additionally, the IRS could not have “disposed of” the tax liability before the Buffingtons had paid the IRS the agreed-upon amount, which the Buffingtons did not do until some time after the date they executed the written settlement agreement – i.e., which the Buffingtons did not do until after the date they contend the IRS “disposed of” the tax liability. The IRS did not dispose of the tax liability in question until July 7, 2004, when the MSTC received the pertinent information from the IRS on Form 3210. Thus, the MSTC’s June 22, 2007, assessment was issued within the three-year statute of limitations period set forth in section 27-7-49(3). |
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