Taxation – Notice – Date Of Assessment – Abatement

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Where (1) a corporation unsuccessfully sought a corporate excise tax abatement and (2) an appeal to the Appellate Tax Board was dismissed under G.L.c. 62C, Sect. 37 on the ground that the abatement request was filed more than two years after the date of assessment, we conclude that the Board committed error, as the abatement request was filed less than two years after the corporation received notice of the assessment.

Remanded.

Statutory Construction

“EMC Corporation (taxpayer) received a notice of assessment dated March 16, 1990, reflecting an assessment made on March 2, 1990, by the Commissioner of Revenue pursuant to G.L.c. 62C, Sect. 26(b), of additional corporate excise taxes for 1985. On March 5, 1992, the taxpayer filed an application for abatement with the commissioner. The commissioner failed to act on the application within the time provided under G.L.c. 58A, Sect. 6, and it was deemed denied. The taxpayer appealed to the Appellate Tax Board pursuant to G.L.c. 62C, Sect. 39. The board dismissed the taxpayer’s appeal on the ground that it lacked jurisdiction because the taxpayer had not filed its application for abatement within two years from the date the tax was assessed. See G.L.c. 62C, Sect. 37. The taxpayer appealed to the Appeals Court, and we transferred the appeal to this court on our own motion. We vacate the decision of the board, and remand for a hearing on the merits of the taxpayer’s administrative appeal. This case turns on the construction of that portion of G.L.c. 62C, Sect. 37, which states: ‘Any person aggrieved by the assessment of a tax … may apply in writing to the commissioner … for an abatement thereof at any time … within two years from the date the tax was assessed or deemed to be assessed. …’ The commissioner contends that the plain language of the statute dictates that the two-year period should begin to run on the date a tax is assessed under Sect. 26(b). The taxpayer argues that the two-year period should not begin to run until a notice of assessment is sent in conformity with G.L.c. 62C, Sects. 31 and 32, because that is when the tax obligation is established and a person becomes ‘aggrieved’ by the assessment.

“An assessment under Sect. 26(b) and the date it occurs are internal departmental matters that are not disclosed to the taxpayer until a notice of assessment is sent, which may, but need not, include the date of assessment. The parties have stipulated that prior to 1988 a notice of assessment did not contain the date of the Sect. 26(b) assessment, and the commissioner had no practice of notifying taxpayers of the Sect. 26(b) assessment date. The parties also have stipulated that, before 1988, delays of up to two or three weeks and sometimes longer occurred between the Sect. 26(b) assessment date and the issuance of a notice of assessment.

“It is not apparent from the language of Sect. 37 whether the Legislature intended that a taxpayer should have two years from the date of notice of assessment, or whether a taxpayer should have, after notice, only the balance of a two-year period that began on the date of the department’s internal setting of the assessment. The latter is particularly troubling because it could result in no time at all, as in the case of a notice sent two years or more after the assessment date, or one not sent at all. We conclude that the statute is ambiguous. …

“The use of the Sect. 26(b) assessment date to trigger the two-year period causes results that are contrary to the goal of uniform administration of State taxes underlying the 1976 legislation. Unlike the other triggering mechanisms described in Sect. 37, which are readily ascertainable by the taxpayer, the assessment date is purely internal to the department. The taxpayer does not learn that the two-year period is running, or has run (as may be the case), until the notice of assessment is received. Although the notice of assessment in this case contains the assessment date, there is no requirement that it do so. See 830 Code Mass. Regs. Sect. 62C.26.1(6)(h)(1)(b)(iv). Further, if the assessment date is provided in the notice or assessment, there is no assurance that it is accurate. … Use of the Sect. 26(b) assessment date also affords taxpayers less actual time than the statute expressly provides to file an application for an abatement, a feature that sets it apart from the other triggering mechanisms within Sect. 37.

“It is unlikely that the Legislature intended to abandon the date of notice of assessment as the trigger for the period within which to make application for abatement of a deficiency assessment. It is superior to the assessment date in all practical respects, and more consonant with the purposes of the 1976 legislation. ‘Recent decisions of this court have emphasized that statutes embodying procedural requirements should be construed, when possible, to further the statutory scheme intended by the Legislature without creating snares for the unwary.’ … Use of the date of the notice of assessment accomplishes this result, and it does so in a way that comports more with contemporary notions of openness in government and fundamental fairness. … The idea that a taxpayer’s procedural rights to challenge that assessment can be affected or determined by an internal government act, without notice, is anomalous, at best. One of the hallmarks of due process is notice. …

“Finally, the statute should be construed as ‘a consistent and harmonious whole, capable of producing a rational result consonant with common sense and sound judgment.’ … Treating the ‘date of assessment’ in Sect. 37 as the date of notice of assessment has this effect. A deficiency assessment does not become due until the notice of assessment is sent, pursuant to Sects. 31 and 32. The taxpayer is not ‘aggrieved’ within the meaning of Sect. 37 until that occurs. … This construction imposes no hardship on the department and it eliminates most problems attributable to the delay between the date of assessment and the date of the notice.

“The decision of the board is vacated and the matter is remanded to the board for a hearing on the merits of the taxpayer’s appeal.”

EMC Corp. v. Commissioner of Revenue (Lawyers Weekly No. 10-044-01) (10 pages) (Spina, J.) (SJC) Appealed from the Appellate Tax Board. John S. Brown for the taxpayer; Thomas J. Nicholas for the Commissioner (Docket No. SJC-08393).

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