Case Title: Gibson v. Levin

Citation: 2008-Ohio-4828

Docket Number: 

State: ohio

Court: Ohio Supreme Court

Date: 2008-09-30T00:00:00Z

Document:
[Cite as Gibson v. Levin, 119 Ohio St.3d 517, 2008-Ohio-4828.] 
 
 
 
GIBSON ET AL., APPELLANTS, v. LEVIN, TAX COMMR., APPELLEE. 
[Cite as Gibson v. Levin, 119 Ohio St.3d 517, 2008-Ohio-4828.] 
R.C. 5747.13 — Four-year statute of limitation for issuing an assessment does not 
commence if a taxpayer fails to file a required return. 
(No. 2008-0129—Submitted September 17, 2008—Decided September 30, 2008.) 
APPEAL from the Board of Tax Appeals, No. 2007-T-176. 
__________________ 
 
Per Curiam. 
{¶ 1} Appellants, James E. Gibson and Verna K. Gibson, contest an 
assessment of unpaid personal income tax issued against them on February 3, 
2006.  They initiated the present proceedings by filing a petition for reassessment 
on April 3, 2006. 
{¶ 2} Under certain circumstances, income tax payers who file a petition 
for reassessment must pay the assessment, including interest, to have their petition 
heard.  One such circumstance is when the taxpayers have not filed the required 
returns before the assessment is issued, R.C. 5747.13(E)(2), which is what the 
Tax Commissioner contends happened here—the Gibsons did not file an amended 
return as required by statute.  Because the Gibsons did not file an amended return, 
the commissioner determined that they had to pay the assessment before their 
petition could be considered.  Noting that the Gibsons had not paid, the 
commissioner dismissed the petition.  The Gibsons then appealed the dismissal to 
the Board of Tax Appeals (“BTA”). 
{¶ 3} Before the commissioner, the BTA, and now this court, the 
Gibsons have argued that the assessment was barred by the four-year statute of 
limitation set forth in the fourth paragraph of R.C. 5747.13(A).  The BTA rejected 
this argument based on its finding that “the statute does not bar an assessment 
SUPREME COURT OF OHIO 
2 
against a taxpayer who fails to file an amended return pursuant to R.C. 5747.10.”  
Accordingly, the BTA affirmed the dismissal of the petition.  We agree with the 
BTA’s decision, and we therefore affirm. 
I 
{¶ 4} The assessment at issue emanates from an audit conducted by the 
Ohio Department of Taxation that was performed when the Department of 
Taxation learned from the Internal Revenue Service that the taxpayers’ federal tax 
income had been adjusted.  Because Ohio ties its personal-income tax to the 
amount reported as “adjusted gross income” (“AGI”) on the taxpayer’s federal 
return, an increase in AGI at the federal level typically leads to an increase in AGI 
at the state level.  See Knust v. Wilkins, 111 Ohio St.3d 331, 2006-Ohio-5791, 856 
N.E.2d 243, ¶ 14. 
{¶ 5} R.C. 5747.10 expressly requires an Ohio income tax payer to file 
an amended return when an adjustment is made at the federal level, and the statute 
mandates that taxpayers accomplish the filing no later than 60 days after the 
adjustment has been agreed to or the final determination at the federal level.1  The 
Gibsons do not contend that they filed an amended return; indeed, they admit they 
did not do so.  Nor do they dispute that the assessment at issue pertains to the 
amount that should have been reflected on the amended return based upon the 
increase of AGI at the federal level. 
                                                 
1. R.C. 5747.08 imposes the general requirement that specified persons file an Ohio income tax 
return.  R.C. 5747.10 then requires the filing of an amended return if the “facts, figures, 
computations, or attachments” have to be “altered as the result of an adjustment to the taxpayer’s 
federal income tax return.”  If the federal adjustment means that Ohio tax was underpaid, the 
statute requires that payment be made with the filing of the return.  R.C. 5747.10(A).  If the 
federal adjustment means that Ohio tax was overpaid, the timely filing of the return entitles the 
filer to a refund of the overpayment.  R.C. 5747.10(B).  That is true even if the usual four-year 
statute of limitation has otherwise expired with respect to the filing of a refund claim.  Id.; R.C. 
5747.11(B). 
 
January Term, 2008 
3 
{¶ 6} R.C. 5747.13(A) authorizes the Tax Commissioner to “make an 
assessment against any person liable for any deficiency for the period for which 
the return is or taxes are due” when returns are not filed or are inaccurate.  The 
fourth paragraph of division (A) bars the making or issuance of an assessment 
“more than four years after the final date the return subject to assessment was 
required to be filed or the date the return was filed, whichever is later.”  The last 
sentence of the same paragraph states that “[t]here shall be no bar or limit to an 
assessment against * * * [a] taxpayer * * * that fails to file a return subject to 
assessment as required by this chapter * * *.” 
{¶ 7} The import of these provisions is threefold.  First, deficiency 
assessments of Ohio personal-income tax are subject to a four-year statute of 
limitation.  Second, the limitation period begins to run on the due date for the 
return or the actual filing of the return, whichever is later.  And third, the 
limitation period never commences to run if a required return has not been filed. 
{¶ 8} On appeal to this court, the Gibsons renew their contention that the 
statute of limitation expired and that the commissioner was thereby barred from 
issuing the assessment.  The Gibsons assert in their reply brief that they “timely 
filed their 1995 tax return and the four-year statute of limitations expired in 
2000.”  But the Gibsons are relying on the wrong filing.  The commissioner 
contends, and we agree, that the statute of limitation never began to run, because 
the Gibsons failed to file an amended return after the federal government 
increased their AGI. 
{¶ 9} We conclude that no further analysis under the statute is necessary.  
Because the Gibsons did not file an amended return before the Tax Commissioner 
issued the assessment, and because the assessment relates to the liability that an 
amended return would have disclosed, the statute required the Gibsons to pay the 
tax and the interest assessed in order to maintain their petition for reassessment. 
SUPREME COURT OF OHIO 
4 
{¶ 10} The statute of limitation has no relevance here, because in order to 
activate the statute, the Gibsons would not only have had to file an amended 
return (which they did not do), but they also would have been required to show 
that the four-year limitation period had lapsed between the actual filing of the 
amended return (or the due date, if later) and the issuance of the assessment.  
Absent the filing of the amended return, the statute of limitation never 
commenced to run.  R.C. 5747.13(A).  Because the Gibsons did not file the 
amended return at all, the time element is moot.  Therefore, the statute of 
limitation imposed no bar to the assessment. 
II 
{¶ 11} The Gibsons offer three ancillary arguments to bolster their 
position.  None of these arguments has merit. 
{¶ 12} First, the Gibsons contend that our decision in Mancino v. Tracy 
(1997), 79 Ohio St.3d 151, 679 N.E.2d 1125, establishes that the four-year statute 
of limitation bars the assessment in the present case.  They are mistaken.  In 
Mancino, the commissioner mailed a request to the taxpayers asking that they pay 
amounts that would be due under amended returns.  The taxpayers paid and then 
sought refunds on the ground that the four-year statute barred the request for 
payment.  We held that R.C. 5747.13’s statute of limitation did not apply, because 
the Mancinos had not paid pursuant to an assessment; the commissioner had 
issued a request, not an assessment, and the Mancinos offered no substantive 
ground that would have justified the refund. 
{¶ 13} Mancino does not address the statute-of-limitation issue, because 
the statute of limitation did not apply.  The payment in Mancino was not tendered 
in satisfaction of an assessment, and the taxpayer advanced no substantive reason 
that would have justified a refund.  Accordingly, the refund was properly denied.  
Because no assessment was issued in Mancino, the question whether the statute of 
January Term, 2008 
5 
limitation would have barred an assessment never arose.  Thus, Mancino does not 
support the proposition that the Gibsons advance in this case. 
{¶ 14} Second, the Gibsons argue that the Tax Commissioner knew he 
was time-barred from issuing an assessment, so he first issued a letter dated 
January 24, 2005, informing them of the audit, identifying the amount owed, and 
requesting information if they disagreed with the commissioner’s determination 
of a deficiency.  The Gibsons characterize the 2005 letter as a “strategy” designed 
to “circumvent the four-year time bar” by “bait[ing]” the Gibsons into making a 
payment.  As already discussed, we held in Mancino that a claim for refund of a 
payment that was not tendered to satisfy an actual assessment may not be 
predicated on the statute of limitation for issuing assessments.  But nothing in our 
decision in Mancino makes it improper for the commissioner to send an initial 
letter requesting payment or clarification.  Indeed, sending such a letter can 
benefit taxpayers as well as the state by facilitating communication with the 
Department of Taxation before a formal assessment is issued. 
{¶ 15} Moreover, even if the Tax Commissioner did believe that he was 
time-barred from issuing an assessment and sent the correspondence solely as part 
of a strategy, to bait the Gibsons into paying, his mistaken belief would not alter 
our decision.  The statute is clear—the limitation period does not begin to run 
until the date the amended tax return is due or the date the amended tax return is 
filed, whichever is later.  We conclude that the Tax Commissioner does not act 
unreasonably or unlawfully by sending such a letter.  Sending it had no legal 
effect on the Gibson’s obligation to tender payment in order to pursue their 
petition for reassessment. 
{¶ 16} Third, the Gibsons warn that acceptance of the commissioner’s 
position will give taxpayers a right to claim refunds without regard to the statute 
of limitation.  However, as discussed in footnote 1, this contention has no merit.  
The General Assembly passed a separate refund provision that requires refund 
SUPREME COURT OF OHIO 
6 
claims to be filed, as a general rule, within four years from the date of the 
erroneous overpayment.  R.C. 5747.11(B).  But the legislature expressly provided 
that the requirement that an amended return be filed opens a 60-day window for 
applying for a refund when the amended return reflects an adjustment to the 
federal tax return.  R.C. 5747.10(B).  As a result, there is no parade of horribles; 
the statute imposes a limitation by tying the refund of an overpayment to the 
timely filing of an amended return. 
III 
{¶ 17} For all the foregoing reasons, we hold that the plain language of 
the statutes required dismissal of the Gibsons’ petition for reassessment, because 
the Gibsons had not made payment as required by R.C. 5747.13(E)(2).  We 
therefore affirm. 
Decision affirmed. 
 
MOYER, C.J., and LUNDBERG STRATTON, O’CONNOR, O’DONNELL, 
LANZINGER, and CUPP, JJ., concur. 
 
PFEIFER, J., dissents. 
__________________ 
 
Roetzel & Andress, L.P.A., Edward C. Hertenstein, and Scot C. Crow, for 
appellants. 
 
Nancy Hardin Rogers, Attorney General, and Alan P. Schwepe, Assistant 
Attorney General, for appellee. 
______________________