Case Title: King v. Comptroller

Citation: 

Docket Number: 32/11

State: maryland

Court: Maryland Supreme Court

Date: 2012-02-24T00:00:00Z

Document:
Wanda T. King v. Comptroller of the Treasury, No. 32, September Term 2011.
STATUTORY INTERPRETATION – SECTION 13-1104(c)(2)(i) OF THE TAX-
GENERAL ARTICLE – TIME FOR FILING A MARYLAND REFUND CLAIM
AFTER A FEDERAL ADJUSTMENT TO A PARTNERSHIP RETURN
The Court of Appeals held that the Maryland Tax Court correctly determined that the one
year statute of limitations applicable to a Maryland tax refund claim filed by the Petitioner,
Ms. Wanda King, provided in Section 13-1104(c)(2)(i) of the Tax-General Article of the
Maryland Code (1988, 2004 Repl. Vol.), began to run on the date the Internal Revenue
Service issued to her its final adjustment report.
IN THE COURT OF APPEALS OF
MARYLAND
No.  32
September Term, 2011
WANDA T. KING
v.
COMPTROLLER OF THE TREASURY
Bell, C.J.
Harrell
Battaglia
Greene
          Adkins
Barbera
Eldridge, John C.  (Retired,
Specially Assigned),
JJ.
Opinion by Battaglia, J.
Filed:   February 24, 2012
1
Section 13-1104(c) provides, in relevant part:
(c) Financial institution franchise tax and income tax. –  (1)
Except as provided in paragraph (2) of this subsection, a claim
for refund or credit of overpayment of financial institution
franchise tax or income tax may not be filed after the periods of
limitations for filing claims for refund or credit of overpayment
set forth in § 6511 of the Internal Revenue Code.
   
(2) 
A claim for refund or credit of overpayment may
not be filed later than 1 year from the date of:
      
(i) 
a final adjustment report of the Internal
Revenue Service; or
      
(ii) 
a final decision of the highest court of the
United States to which an appeal of a final
decision of the Internal Revenue Service is
taken.
Md. Code (1988, 2004 Repl. Vol.), § 13-1104(c) of the Tax-General Article.  Statutory
references to Sections of the Tax-General Article throughout this opinion are to Maryland
Code (1988, 2004 Repl. Vol.).
We are called upon to interpret Section 13-1104(c)(2)(i) of the Tax-General Article
of the Maryland Code,1 regarding the statute of limitations within which a taxpayer must file
a Maryland tax refund claim after a federal audit of a partnership of which she was a limited
partner.  The question presented by the Petitioner, Wanda T. King, is as follows:
Did the Maryland General Assembly, in enacting TG
13–1104(c)(2)(i), intend for the statute of limitations to begin to
run on Maryland refund claims on the date of a taxpayer’s
federal income tax liability is no longer subject to administrative
appeal rather than the date that the IRS issues a report proposing
adjustments to the taxpayer’s liability?
We shall hold that the statute of limitations in Section 13-1104(c)(2)(i) began to run on the
refund claim on the date that the Internal Revenue Service issued its report, in a Form 4549A,
2
All  references  throughout  to  the  Internal  Revenue  Code  are  to  Title 26 of the
United States Code (2006) (I.R.C.).
2
identifying adjustments to personal tax liability resulting from the partnership audit.
In 1982, Congress passed the Tax Equity and Fiscal Responsibility Act (Act), Pub.
L. No. 97-248, 96 Stat. 648, including an amendment to the Internal Revenue Code, currently
codified at Sections 6221 to 6234 of the Internal Revenue Code (2006),2 which was designed
to provide uniform treatment under federal tax law of partnership items with respect to the
partners.  The Act provided different procedures for auditing and examining the returns of
certain partnerships than those used for individuals, various partnerships not covered by the
Act, and corporations.  Under the Act, the process of auditing a partnership return is divided
into two steps, whereby the auditor first analyzes the partnership return, and the results of the
audit are either consented to or contested by a taxpayer-partner, and thereafter, the individual
partner’s return is adjusted to comport with the adjustments on the partnership returns.
The gravamen of a federal audit of a partnership return under the Act is whether the
line item under scrutiny should be classified as a partnership item, a non-partnership item,
or an affected item.  A partnership item is an item that “is more appropriately determined at
the partnership level than at the partner level.”  I.R.C. Section 6231(a)(3).  “[T]he hallmark
of a partnership item is that it affects the distributive shares reported to the other partners,”
according to the United States Tax Court.  Grigoraci v. Commissioner, 84 T.C.M. (CCH)
186, 189 (2002).  The factors to be considered when making a determination of partnership
items, according to the Code of Federal Regulations, are “the accounting practices and the
3
The Code of Federal Regulations defines partnership items as:
(a) 
In general. For purposes of subtitle F of the Internal
Revenue Code of 1954, the following items which are
required to be taken into account for the taxable year of
a partnership under subtitle A of the Code are more
appropriately determined at the partnership level than at
the partner level and, therefore, are partnership items:
(1)  
The partnership aggregate and each partner’s
share of each of the following:
(i) 
Items of income, gain loss, deduction, or
credit of the partnership;
 
(ii) 
Expenditures by the partnership not
deductible in computing its taxable income
(for example, charitable contributions);
 
(iii) 
Items of the partnership which may be tax
preference items under section 57(a) for
any partner;
 
(iv) 
Income of the partnership exempt from
tax;
 
(v) 
Partnership liabilities (including
determinations with respect to the amount
of the liabilities, whether the liabilities are
nonrecourse, and changes from the
preceding taxable year); and
 
(vi) 
Other amounts determinable at the
partnership level with respect to
partnership 
assets, 
investments,
transactions and operations necessary to
enable the partnership or the partners to
determine– 
 
(A)
The investment credit determined
under section 46(a);
(continued...)
3
legal and factual determinations that underlie the determination of the amount, timing, and
characterization of items of income, credit, gain, loss, deduction, etc.”  Treas. Reg. Section
301.6231(a)(3)-1(b) (1986).3  
3(...continued)
 
(B)
Recapture under section 47 of the
investment credit;
 
(C)
Amounts at risk in any activity to
which section 465 applies;
 
(D)
The depletion allowance under
section 613A with respect to oil
and gas wells; and
 
(E)
The application of section 751 (a)
and (b);
(2)
Guaranteed payments;
(3) 
Optional adjustments to the basis of partnership
property pursuant to an election under section 754
(including necessary preliminary determinations,
such as the determination of a transferee partner’s
basis in a partnership interest); and
(4) 
Items relating to the following transactions, to the
extent that a determination of such items can be
made from determinations that the partnership is
required to make with respect to an amount, the
character of an amount, or the percentage interest
of a partner in the partnership, for purposes of the
partnership books and records or for purposes of
furnishing information to a partner:
 
(i) 
Contributions to the partnership;
 
(ii) 
Distributions from the partnership; and
 
(iii) 
Transactions to which section 707(a)
applies (including the application of
section 707(b)).
Treas. Reg. § 301.6231(a)(3)-1(a) (1986).
4
An affected item, in contrast, is an item that is affected by an adjustment to a
partnership item.  “Affected items come in two varieties. The first are purely computational
adjustments which reflect changes in a taxpayer’s tax liability triggered by changes in
4
The term “affected item” is also defined in the Code of Federal Regulations, which
states in pertinent part:
(a) 
In general. The term affected item means any item to the
extent such item is affected by a partnership item. It
includes items unrelated to the items reflected on the
partnership return (for example, an item, such as the
threshold for the medical expense deduction under
section 213, that varies if there is a change in an
individual partner’s adjusted gross income).
(b) 
Basis in a partner’s partnership interest. The basis of a
partner’s partnership interest is an affected item to the
extent it is not a partnership item.
(c) 
At-risk limitation. The application of the at-risk
limitation under section 465 to a partner with respect to
a loss incurred by a partnership is an affected item to the
extent it is not a partnership item.
(d) 
Passive losses. The application of the passive loss rules
under section 469 to a partner with respect to a loss
incurred by a partnership is an affected item to the extent
it is not a partnership item.
Treas. Reg. § 301.6231(a)(5)-1.
5
partnership items.”  JT USA LP v. Commissioner, 131 T.C. 59, 66 n.11 (2008).4 A non-
partnership item, somewhat syllogistically, is “an item which is (or is treated as) not a
partnership item.”  I.R.C. Section 6231(a)(4). 
 The purpose of the Act was to “provide a method for adjusting ‘partnership items’
in a single unified proceeding, rather than in multiple separate actions against each partner.”
Grigoraci, 84 T.C.M. (CCH) at 189.  To achieve this purpose, the Act mandated that “the tax
treatment of any partnership item . . . shall be determined at the partnership level.”  I.R.C.
Section 6221.   Thus, when conducting an audit under the Act, such as the audit of the
6
Baltimore Orioles Limited Partnership in issue in this case, the Internal Revenue Service
(Service) will only identify adjustments to partnership items initially. 
Once the items have been classified, the Service will conduct a review of the
partnership items on the partnership returns to determine whether the returns were accurately
completed.  If the Service determines that an adjustment needs to be made to partnership
items on the partnership returns, it will inform the partners of the proposed adjustments in
a Form 870-PT, titled “Agreement for Partnership Items and Partnership Level
Determinations as to Penalties, Additions to Tax, and Additional Amounts,” which identifies
the partnership items to be adjusted and the dollar amounts of such adjustments, accompanied
by a Form 886-A, titled “Explanation of Items,” which details the bases for the adjustments;
the taxpayer-partner can consent to the adjustments by signing the Form 870-PT or can
petition the Tax Court, the appropriate federal district court, or the Court of Federal Claims
for review of the partnership adjustments only.  I.R.C. Section 6226(a)-(b); see also
Grigoraci v. Commissioner, 84 T.C.M. (CCH) at 189 (“[T]he Court’s jurisdiction extends
only to redetermining adjustments of partnership items.”).  
If a partner consents to the adjustments on the Form 870-PT, no other partner can
challenge the partnership level determinations pursuant to Section 6224 of the Internal
Revenue Code:
(c)
Settlement agreement.  
In the absence of a showing of fraud, malfeasance, or
misrepresentation of fact– 
7
   
(1) Binds all parties.  A settlement agreement between
the Secretary or the Attorney General (or his delegate)
and 1 or more partners in a partnership with respect to
the determination of partnership items for any
partnership taxable year shall (except as otherwise
provided in such agreement) be binding on all parties to
such agreement with respect to the determination of
partnership items for such partnership taxable year. An
indirect partner is bound by any such agreement entered
into by the pass-thru partner unless the indirect partner
has been identified as provided in section 6223(c)(3).
I.R.C. Section 6224(c)(1).
Once a taxpayer-partner consents, or a settlement agreement is reached by other
partners and the Service, each partner is notified that partnership return adjustments cannot
be reopened, “in the absence of fraud, malfeasance, or misrepresentation of fact.”  Form 870-
PT notifies the taxpayer-partner that:
If this part of this agreement form is signed for the
Commissioner, the treatment of partnership items and
partnership level determinations as to penalties, additions to tax
and additional amounts that relate to the adjustments to
partnership items under this agreement will not be reopened in
the absence of fraud, malfeasance, or misrepresentation of fact.
In addition, no claim for an adjustment of partnership items,
refund or credit based on any change in the treatment of
partnership items or partnership level determinations as to
penalties, additions to tax, and additional amounts may be filed
or prosecuted.
The partnership level determinations, thus, are concluded, and the focus of the audit then
shifts to any potential computational adjustments to each partner’s returns. When applying
the partnership level adjustments to an individual partner’s tax liability, the Service makes
5
The  Service’s  Internal  Revenue  Manual  defines  Form  4549  as  appropriate for
“agreed cases for individuals and corporations,” while 4549A is appropriate for “unagreed
and accepted agreed cases for individuals, corporations, taxable fiduciaries, and taxable small
business corporations.”  Internal Revenue Manual § 4.4.7.2.6(1) (Feb. 1, 2006), available at
http://www.irs.gov/irm/part4/irm_04-004-007.html#d0e28.
6
Subsection (b) of I.R.C. Section 6228, titled “Judicial review where administrative
adjustment is not allowed in full,” applies only to situations in which the taxpayer requested
the partnership adjustments.
7
I.R.C. Section 7422(h) states:
(continued...)
8
a “computational adjustment,” which, essentially, is an arithmetic operation to alter the
partner’s personal tax liability to conform with adjustments made to partnership items on the
partnership returns, and is defined in the Internal Revenue Code as 
the change in the tax liability of a partner which properly
reflects the treatment under this subchapter of a partnership
item. All adjustments required to apply the results of a
proceeding with respect to a partnership under this subchapter
to an indirect partner shall be treated as computational
adjustments.
I.R.C. Section 6231(a)(6).  
The Service sends notice of the computational adjustment to the taxpayer-partner in
a Form 4549 or Form 4549A, titled “Income Tax Examination Changes.”5  IRS Chief
Counsel Notice CC-2009-027 (Aug. 21, 2009).  If the taxpayer disputes the calculations
reported on Form 4549 or Form 4549A, the partner may file a claim, but only with respect
to the arithmetic computations, pursuant to two sections of the Internal Revenue Code:
Sections 6228(b)6 and 6230(c).  I.R.C. Section 7422(h).7  Section 6230(c) of the Internal
7(...continued)
(h) 
Special rule for actions with respect to partnership items.
No action may be brought for a refund attributable to
partnership items (as defined in section 6231(a)(3))
except as provided in section 6228(b) or section 6230(c).
I.R.C. § 7422(h).
9
Revenue Code makes clear that a taxpayer can only challenge computational errors made by
the Service, not the determinations upon which those computations were made:
(4)
No review of substantive issues.  
For purposes of any claim or suit under this subsection,
the treatment of partnership items on the partnership
return, under the settlement, under the final partnership
administrative adjustment, or under the decision of the
court (whichever is appropriate) shall be conclusive. In
addition, the determination under the final partnership
administrative adjustment or under the decision of the
court (whichever is appropriate) concerning the
applicability of any penalty, addition to tax, or additional
amount which relates to an adjustment to a partnership
item shall also be conclusive. Notwithstanding the
preceding sentence, the partner shall be allowed to assert
any partner level defenses that may apply or to challenge
the amount of the computational adjustment.
I.R.C. Section 6230(c)(4).  The taxpayer-partner has six months from the date that the
Service issues the Form 4549A to file a challenge to the computational adjustment, I.R.C.
Section 6230(c)(2), but if the taxpayer does not challenge the calculations reported on Form
4549A, the matter is concluded.
8
I.R.C. Section 6230(c) states:
(c)
Claims arising out of erroneous computations, etc.
(1)
In general  
A partner may file a claim for refund on the
grounds that–
   
(A)
the Secretary erroneously computed any
computational adjustment necessary–
        
(i)
to make the partnership items on
the partner’s return consistent with
the treatment of the partnership
items on the partnership return, or
(ii)
to apply to the partner a settlement,
a final partnership administrative
adjustment, or the decision of a
court in an action brought under
section 6226 or section 6228(a),
      
(B) 
the Secretary failed to allow a credit or to
make a refund to the partner in the amount
of the overpayment attributable to the
application to the partner of a settlement, a
final 
partnership 
administrative
adjustment, or the decision of a court in an
action brought under section 6226 or
section 6228(a), or
     
(C) 
the Secretary erroneously imposed any
penalty, addition to tax, or additional
amount which relates to an adjustment to
a partnership item.
   
(2) 
Time for filing claim.
      
(A) 
Under paragraph (1)(A) or (C) 
Any claim under subparagraph (A) or (C)
of paragraph (1) shall be filed within 6
months after the day on which the
Secretary 
mails 
the 
notice 
of
computational adjustment to the partner.
(continued...)
10
The Act also provided specific procedures for filing refund claims.8  A taxpayer-
8(...continued)
      
(B) 
Under paragraph (1)(B). 
Any claim under paragraph (1)(B) shall be
filed within 2 years after whichever of the
following days is appropriate:
         
(i) 
the day on which the settlement is
entered into,
         
(ii) 
the day on which the period during
which an action may be brought
under section 6226 with respect to
the final partnership administrative
adjustment expires, or
         
(iii) 
the day on which the decision of
the court becomes final.
I.R.C. § 6230(c).
11
partner who files a refund claim alleging erroneous computations must do so within six
months of the Service issuing the notice of computational adjustment, in this case Form
4549A.  I.R.C. Section 6230(c)(2)(A).  A taxpayer-partner who files a refund claim for
overpayment attributable to a settlement agreement (Form 870-PT) has two years from the
settlement date to file his or her refund claim.  I.R.C. Section 6230(c)(2)(B)(i).  A taxpayer-
partner who did not settle with the Service, receiving a final partnership administrative
adjustment following the audit rather than a settlement agreement (Form 870-PT), has two
years from either the expiration of the period during which he or she could have appealed the
final partnership administrative adjustment or the date the decision of the court becomes final
if an appeal was filed.  I.R.C. Section 6230(c)(2)(B)(ii)-(iii).
Turning to the case at hand, in 2005, the Service concluded its audit, pursuant to the
Tax Equity and Fiscal Responsibility Act of 1982, of the Baltimore Orioles Limited
9
The   adjustments  to  the  Baltimore  Orioles  Limited  Partnership  for  year  1999
included: Amortization for Intangibles, Bonus Expense for Amateurs, Amortization for
Amateur Bonuses, Amortization for Professional Bonuses, and Legal Expenses totaling
$2,803,938.  The year 2000 adjustments included: Amortization for Amateur Bonuses,
Amortization for Professional Bonuses, Amortization for Intangibles, Legal & Professional
Fees, and Professional & Consulting Fees totaling $2,992,627.  
12
Partnership’s tax returns for years 1993–1999 and adjusted various partnership items as a
result of its disallowance of certain claimed deductions on the partnership returns for 1999
and 2000.  Once the partnership audit was concluded, the Service sent Ms. King, one of the
limited partners, two Forms 870-PT, one for year 1999 and one for year 2000 that identified
the partnership items being adjusted and the amounts of the adjustments.9   Each was
accompanied by a Form 886-A that explained the results of the partnership audit.  The Form
886-A regarding the partnership return for 1999 stated:
The partnership agreement precludes BOLP [Baltimore
Orioles Limited Partnership] from allocating losses pursuant to
the General Sharing Percentages to the extent the losses would
cause a limited partner to have an “Adjusted Capital Account
Deficit” (defined as “the deficit balance. . . in such Partner’s
Capital Account. . .  after giving effect to certain adjustments”).
In determining whether a partner’s Adjusted Capital Account
has a deficit balance, the Capital Account balance is increased
to the extent that the partner is obligated (or deemed obligated)
to restore that Capital Account balance to zero.  Under the
partnership agreement, any loss that cannot be allocated
pursuant to the General Sharing Percentage is allocable to Mr.
Angelos.
On BOLP’s 1999 return, losses allocated to Tom Clancy
and Wanda King, as limited partners, were limited by the terms
of the partnership agreement.  As a result, a portion of the losses
that would have otherwise been allocated to Tom Clancy and
Wanda King were allocated to Peter Angelos.  But as a result of
the resolution of the IRS examination for years 1993 through
13
1999, a substantial amount of tax deductions on the originally
filed income tax returns for those years was disallowed.  As a
result of the disallowed deductions, Mr. Clancy’s and Ms.
King’s Capital Account balances were increased.  And as a
result of the increased Capital Account balances, BOLP is able
to allocate its 1999 loss pursuant to the General Sharing
Percentages. . . .
The Form 886-A accompanying the Form 870-PT regarding the year 2000 issued to Ms.
King contained nearly identical language.  Ms. King consented to the partnership item
adjustments when she signed both Forms 870-PT on April 7, 2005; the Service accepted the
1999 Form on June 23, 2005 and the 2000 Form on July 29, 2005, thereby closing the
partnership audit.  
On January 3, 2006, the Service sent Ms. King a letter indicating the
computational adjustments resulting from the partnership item adjustments for years 1999
and 2000.  Accompanying this letter were two Forms 4549A, one for each of the years 1999
and 2000; two unlabeled spreadsheets, one for each year, that explained the details of the
calculations on the Forms 4549A; and two Forms 886-A, titled “Explanation of Items,” one
for each year, that explained that the adjustments to Ms. King’s individual tax liability were
made pursuant to the Forms 870-PT she had signed.  Ms. King did not challenge the
computations reported on the Forms 4549A that she received.
The practical effect of the adjustments to the partnership items was that Ms. King’s
personal income tax liability was lessened, because partnership deductions were disallowed,
permitting a pass through of partnership losses to her individual return; as a result, she
became eligible for a Maryland tax refund totaling $173,364 for both years.  Ms. King filed
10
Section 13-904 provides, in relevant part:
(a) Investigation and hearing required. – The tax collector shall:
   (1) investigate each claim for refund; and
   (2) conduct a hearing at the request of the claimant prior 
        to a final determination on the claim.
§ 13-904 of the Tax-General Article.
14
a claim for refund on February 2, 2007, but the Comptroller of the Treasury denied it, stating
that the refund claim was not timely filed under Section 13-1104(c)(2)(i) of the Tax-General
Article, because the Service’s final report regarding adjustments to her personal tax liability
had been issued on January 3, 2006, more than a year before Ms. King filed for her refund
on February 2, 2007.  After the Comptroller denied her refund claim, Ms. King requested and
received from the Service a report indicating that the computational adjustments reported on
Forms 4549A were applied to her federal account on February 6, 2006.
Ms. King filed an informal appeal with the Hearings and Appeals Section of the
Comptroller’s Office, pursuant to Section 13-904(a)(2) of the Tax-General Article,10 arguing
that the one year statute of limitations for filing a refund claim in Maryland did not begin to
run until after the expiration of the appeal period regarding errors in the calculations reported
in Form 4549A, or, in the alternative, after the computational adjustment was applied to her
account on February 6, 2006.  The hearing officer affirmed the Comptroller’s denial of Ms.
King’s refund claims as untimely, reasoning that because the Forms 4549A that Ms. King
received were unquestionably reports and Ms. King did not challenge the calculations
11
The  designation  “CG”  after  the  report  number  refers  to  the  fact  that  it   was
computer generated.  See Internal Revenue Manual § 4.10.8.3.4(1) (Aug. 11, 2006), available
at http://www.irs.gov/irm/part4/irm_04-010-008.html#d0e575 (noting, in the context of a
different form, that the designation CG after a form number indicates that it was computer
generated).
12
Section 3-103 of the Tax-General Article outlines the jurisdiction of the Tax Court
and states:
(a) In general. – The Tax Court has jurisdiction to hear appeals
from the final decision, final determination, or final order of a
property tax assessment appeal board or any other unit of the
State government or of a political subdivision of the State that
is authorized to make the final decision or determination or issue
the final order about any tax issue, including:
   (1) the valuation, assessment, or classification of
property;
   (2) the imposition of a tax;
   (3) the determination of a claim for refund;
   (4) the application for an abatement, reduction, or
revision of any assessment or tax; or
(continued...)
15
reported on the Forms, “the adjustments detailed on Form 4549 A-CG constitute a final
adjustment report.”11  The hearing officer, thus, determined that Ms. King’s claims for refund
needed to have been submitted within one year of the date the Service issued Form 4549A.
The hearing officer concluded that “[t]he date the changes were implemented to the account
is not the date of a final adjustment report; the Form 4549 A-CG and enclosed
correspondence is the final adjustment report.” 
Ms. King then appealed to the Maryland Tax Court, which also ruled in favor of the
Comptroller.12  The Tax Court relied on the fact that no evidence was presented that there
12(...continued)
   
(5) the application for an exemption from any assessment
or tax.
(b) Effect of section. – This section does not affect any
requirement that a decision, determination, or order be appealed
to another unit of the State government or of a political
subdivision of the State before an appeal is taken to the Tax
Court.
§ 3-103 of the Tax-General Article.
13
Ms.  King  makes  much  of  the  Tax  Court’s  reliance  on the Comptroller’s long-
standing practice because, she asserts, the only instruction from the Comptroller relating to
a refund claim filed following a federal adjustment was:
If the claim for refund resulted from a federal adjustment or
final decision of a federal court which is more than three years
from the date of filing the return or more than two years from
the time the tax was paid, a claim for refund must be filed within
one year from the date of the adjustment or final decision.
The quoted language comes from the year 1999 Instruction manual for Maryland tax Forms
502, 503, and 123.  Ms. King asserts that because the Comptroller’s only published
instruction on the matter contradicts the longstanding policy, the Tax Court improperly gave
the Comptroller’s policy credence.  Because we conduct our own statutory interpretation
analysis, we need not address this concern.
16
would have been a report generated were Ms. King to have appealed the calculations on the
Forms 4549A.  The court also considered significant the longstanding practice of the
Comptroller’s Office regarding treatment of Form 4549A under Section 13-1104(c)(2)
noting, “[the Manager of the Amended Income Tax Return Unit] went on to testify that it had
been the consistent long-standing administrative procedure to treat the 4549A Forms as a
final adjustment report of the Internal Revenue Service.”13   The Tax Court determined that
the date the Forms 4549A were issued to Ms. King was the date upon which the one year
14
Section 13-532 states:
(a) In general. – (1) A final order of the Tax Court is subject
to judicial review as provided for contested cases in §§
10-222 and 10-223 of the State Government Article.
(2) Any party to the Tax Court proceeding, including a
governmental unit, may appeal a final order of the Tax
Court to the circuit court.
(b) Enforcement of orders. – When an order of the Tax Court
is subject to judicial review, that order is enforceable unless
the reviewing court grants a stay upon such condition,
security or bond as it deems proper.
§ 13-532 of the Tax-General Article.
17
statute of limitations began to run. 
Ms. King then filed a Petition for Judicial Review in the Circuit Court for Calvert
County, pursuant to Section 13-532 of the Tax-General Article of the Maryland Code.14  The
Circuit Court reversed the Tax Court determination and opined with respect to its
interpretation of Section 13-1104(c)(2)(i):
I’m persuaded in this case that the words of the statute mean the
final date is the date that the appeal period on the Federal Form
4549A expires, and when you read all of those words tegether
that that’s what the Legislature, the plain meaning, that’s what
the Legislature intended – that appeal period ending, making the
federal determination final.
The Comptroller appealed the Circuit Court’s decision to the Court of Special Appeals,
which, in an unreported opinion, reversed the Circuit Court, reasoning that the Circuit Court
judge’s determination would “run contrary to the statute’s plain meaning by using an entirely
18
different date – the date a claimant’s right to an administrative appeal expires” – than the date
emphasized in the statute: the date of the report.  The intermediate appellate court concluded
that Ms. King’s interpretation of the statute would insert “an unnecessary element of
uncertainty into the statutes of limitations” and, “[h]ad the legislature intended to allow for
varied limitations periods, it would have done so explicitly.”
The statutory section under which Ms. King’s claim for refund was denied, Section
13-1104(c) of the Tax-General Article, states: 
(c) Financial institution franchise tax and income tax.– (1)
Except as provided in paragraph (2) of this subsection, a
claim for refund or credit of overpayment of financial
institution franchise tax or income tax may not be filed
after the periods of limitations for filing claims for refund
or credit of overpayment set forth in § 6511 of the
Internal Revenue Code.  
(2) A claim for refund or credit of overpayment may not
be filed later than 1 year from the date of:
      
(i) 
a final adjustment report of the Internal
Revenue Service; or
      
(ii) 
a final decision of the highest court of the
United States to which an appeal of a final
decision of the Internal Revenue Service is
taken.
It is not contested that the Form 4549A Ms. King received represents an adjustment report
of the Internal Revenue Service.  The parties also agree that Ms. King did not receive any
further reports from the Service before she filed  her Maryland refund claim.  The point upon
which they differ is what represents a “final” adjustment report in subsection (2)(i).  
The Tax-General Article of the Maryland Code is silent on the definition of “final.”
19
Ms. King argues, however, that the Tax Court determination was erroneous, because, she
asserts, Form 4549A does not become final until six months from the date on which it was
issued as a result of the six-month period during which a taxpayer-partner could challenge
the computations reported on the Form referred to in subsection (2)(i);  she concludes that
her refund claim, therefore, was due no later than one year and six months from the date
Form 4549A was issued (January 3, 2006),  so the Tax Court improperly ruled in favor of
the Comptroller.
The Comptroller asserts that the Tax Court was correct in determining that Form
4549A is a “final” report and that the fact that a taxpayer could appeal the Service’s
calculations is not relevant.  He posits that the bifurcated statute of limitations in Section 13-
1104(c)(2) contemplates two scenarios: one in which the taxpayer does not appeal the
Service’s report, (2)(i), and one in which the taxpayer does appeal, (2)(ii).  In the first
scenario, the Comptroller argues, the one year limitation on filing a refund claim begins on
the date the Form 4549A is issued.  In the second, the one year limitation period would only
begin once the final decision of the court to which an appeal was taken was rendered.  
Ms. King’s proffered interpretation of the statute at issue – that the term final
adjustment report refers to the time at which an adjustment report can no longer be
challenged rather than the date it is issued – cannot stand when one looks at the entire
Section.  The Legislature constructed 13-1104(c)(2) with three distinct parts.  The first
clause, “[a] claim for refund or credit of overpayment may not be filed later than 1 year from
the date of,” provides the framework and duration on which the subsequent subsections rely.
15
As noted above, a taxpayer-partner has six months to file some federal challenges
but two years to file others.  Thus, every decision about whether a Maryland refund claim
was timely filed would require a factual inquiry into the types of challenges available in a
specific case, rendering the Tax Code both uncertain and non-uniform. 
20
Each subsection, then, provides the starting point to begin calculating the one year period.
The statute of limitations applicable to Ms. King, thus, reads “[a] claim for refund or credit
of overpayment may not be filed later than 1 year from the date of a final adjustment report
of the Internal Revenue Service.”  The natural, plain meaning of this sentence is that the date
of the report itself is the date of the event that begins the one year limitation period.  Ms.
King’s interpretation would require us to ignore the written language and instead read the
statute as though it said “a claim for refund or credit of overpayment may not be filed later
than 1 year from the date an adjustment report of the Internal Revenue Service becomes
final.”  Ms. King’s interpretation would require us to add language to the Section and would
introduce an element of uncertainty into the statute of limitations.15  The Section very clearly
links the terms “date” and “report,” and the date of issuance is the only date on Form 4549A.
Under the Maryland statute, therefore, a taxpayer-partner, such as Ms. King, who does not
challenge the Service’s calculations, is bound by the statute of limitations that begins to run
on the date the final adjustment report is issued, without regard to the unused appeals process
that was triggered.
The structure of Section13-1104(c)(2), when viewed in conjunction with its federal
analogue, also supports our interpretation.  Section 13-1104(c)(2) was promulgated in
response to the enactment of the Tax Equity and Fiscal Responsibility Act heretofore
21
discussed.  See Letter from Assistant Attorney General Gerald Langbaum to George M.
Spriggs, Jr., Director of the Income Tax Division of the Comptroller’s Office (Jan. 27, 1989).
Section 13-1104(c)(2) is in parallel to Section 6230 of the Internal Revenue Code, which was
enacted as part of the Act, involving the statutes of limitations for filing federal refund claims
following a partnership audit.  The statute of limitations applicable to a federal refund claim
filed by a taxpayer-partner such as Ms. King, who enters into a settlement with the Service
with respect to the treatment of partnership items, begins to run on the date the report, here
Form 4549A, is issued or the date the settlement was agreed upon, depending on the basis
for the claim.  I.R.C. Sections 6230(c)(2)(A)-(B)(i). The statutory appeal period is to be taken
into account only in identified circumstances when calculating the time frame for filing
claims, and a claim filed by a taxpayer-partner situated similarly to Ms. King would not
receive the benefit of the additional time during the appeal process provided by I.R.C.
Sections 6230(c)(2)(B)(ii)-(iii).
The Maryland statute is similarly constructed.  Section 13-1104(c)(2) is bifurcated,
such that the subsection that references court challenges applies to those taxpayer-partners
who file such challenges, while the other subsection applies to those taxpayer-partners, such
as Ms. King, who do not file challenges.  Subsection (ii) of (c)(2) of Section 13-1104 applies
to those taxpayers who challenge the Service’s determination of tax liability and states that
a taxpayer has one year from “a final decision of the highest court of the United States to
which an appeal of a final decision of the Internal Revenue Service is taken” to file a refund
claim.  Subsection (i) of (c)(2) applies to taxpayer-partners who do not challenge the
22
determinations made by the Service, and provides that the taxpayer has one year from the
date of “a final adjustment report of the Internal Revenue Service” to file a claim for a
refund.  Just as is the case under the federal statute, the applicable Maryland statute of
limitations deals only with the date of a report and, although there is a different statute of
limitations that does concern appeals, Ms. King does not benefit from it because she did not
challenge the information on Forms 4549A. 
Ms. King previously asserted, however, that a fiscal note found in the bill file for 1989
House Bill 225 indicates that the intent of the bill was to “require[] that refund claims
stemming from federal audit related adjustments be filed within one year of the settlement
date of the federal adjustment;” she argues that the proper point at which to begin the one
year statute of limitations period, then, is the settlement date.  If we were to find this
argument persuasive, the statute of limitations would have begun to run on July 29, 2005,
when the Form 870-PT was signed as a settlement agreement; Form 4549A is an “Income
Tax Examination Changes” form that does not require, or even provide for, a taxpayer’s
signature.
Ms. King’s underlying assumption that the term “settlement date” must refer to the
date on which the Service applied the computational adjustment to her federal account
(February 6, 2006) does not bear fruit.  Her understanding is not supported by the language
of the Section nor is there any mention of the date of such application in the legislative
history to which Ms. King directs this Court’s attention.  Moreover, as the Tax Court noted,
the Service does not customarily issue a report when a computational adjustment is applied
16
The Texas statute states in pertinent part:
(b) 
The taxable entity shall file the amended report under
Subsection (a)(1) not later than the 120th day after the
date the revenue agent’s report or other adjustment is
final. For purposes of this subsection, a revenue agent’s
report or other adjustment is final on the date on which
all administrative appeals with the Internal Revenue
Service or other competent authority have been
exhausted or waived.
Tex. Tax Code Ann. § 171.212(b) (West 2007).
23
to a taxpayer-partner’s account, and Ms. King did not receive such a report until she
requested it following the Comptroller’s denial of her claim.  Thus, the Comptroller was not
aware of the date the adjustment was applied to Ms. King’s federal account when he received
her refund claim, nor was Ms. King aware of the application date when she filed her refund
claim. 
Ms. King, finally, to bulwark her claim, refers us to statutes enacted in Texas and
Kentucky relating to the statutes of limitations for filing state refund claims.  The Texas
statute states, in pertinent part, “a revenue agent’s report or other adjustment is final on the
date on which all administrative appeals with the Internal Revenue Service or other
competent authority have been exhausted or waived.”  Tex. Tax Code Ann. Section
171.212(b) (West 2007).16  The Kentucky statute states, in pertinent part, “‘Final
determination of the federal audit’ means the revenue agent’s report or other documents
reflecting the final and unappealable adjustments made by the Internal Revenue Service.”
17
The Kentucky statute states in pertinent part:
(1) As used in this section and KRS 141.235, unless the context
requires otherwise:
(a) 
“Conclusion of the federal audit” means the date
that the adjustments made by the Internal
Revenue Service to net income as reported on the
taxpayer’s federal income tax return become final
and unappealable; and
(b) 
“Final determination of the federal audit” means
the revenue agent’s report or other documents
reflecting the final and unappealable adjustments
made by the Internal Revenue Service.
Ky. Rev. Stat. Ann. §§ 141.210(1)(a)-(b) (LexisNexis 2010).
24
Ky. Rev. Stat. Ann. Section 141.210(1)(b) (LexisNexis 2010).17  These statutes, however, are
explicit in their inclusion of appellate references, more in sync with Section 13-
1104(c)(2)(ii), which does not apply to Ms. King. 
As a result, we hold that the statute of limitations applicable to Ms. King’s refund
claim began to run when the Service issued to her Forms 4549A on January 3, 2006.
Accordingly, Ms. King’s refund claim had to have been filed within one year of that date,
so that her submission on February 2, 2007 was untimely. 
JUDGMENT OF THE COURT OF SPECIAL
APPEALS AFFIRMED.  COSTS IN THIS
COURT AND THE COURT OF SPECIAL
APPEALS TO BE PAID BY PETITIONER.