Opinion ID: 1911828
Heading Depth: 1
Heading Rank: 2

Heading: Were the deficiency assessments made within the time permitted by law?

Text: The statute provides that income tax returns shall be filed    on or before the thirtieth day of April in each year, for the preceding year. Amendatory Act of February 19, 1943, 44 Del.L. Ch. 5, 30 Del.C. § 1168. The statute further provides that the Tax Department may make deficiency assessments at any time within two years after the time when the return was due, or if not filed on the due date within two years from the date the return was filed. Amendatory Act of April 19, 1945, 45 Del. L.Ch. 10, 30 Del.C. § 1181. The returns here involved were for the year 1950 and were filed at times prior to April 29, 1951. The deficiency assessments were made April 29, 1953  more than two years after the returns were filed, but within two years after April 30, 1951. The taxpayers' argument is that the conditional clause beginning with the words or if not filed is to be construed as meaning that the actual date of filing the return is in all cases the date from which the two-year period begins to run. If this is so, then the preceding clause is without purpose or meaning, as the court below pointed out. If this had been the legislative intent, it would have been a simple matter to provide only that a deficiency assessment might be made within two years from the date of filing the return. But that was not done, and the language of the preceding clause must be given effect. Its plain meaning is that the due date  i. e., April 30  fixes the starting date of the two-year period for all returns filed in time, that is, on or before April 30. The language of the second clause  if not filed on the due date  refers to returns not filed in time, that is, after April 30. The preposition on here means by. If there were any doubt about the legislative intent, it would be resolved by the history of the present provision of the statute. Prior to 1945, the statute provided that the deficiency assessments might be made at any time within two years after the time when the return was due or filed. Revised Code of 1935, Ch. 6, § 125(b). This language was obviously ambiguous. In his annual report to the Governor for 1944 the Tax Commissioner recommended nine changes in the income tax laws. One of these was as follows: 7. To clarify Section 125(b) as to the two-year limitation on the making of assessments so that it will be clear that assessments may be made within two years after the due date for filing the return and, if filed after the due date, within two years after such return was filed. Report of Delaware State Tax Commissioner, 1944, Division 4. All of the recommended changes were enacted into law. See 45 Del.L.Ch. 10. We are justified in saying, therefore, that the legislature intended to enact, and did enact, a provision respecting the time for making deficiency assessments that conformed to the Tax Commissioner's recommendation. The taxpayers suggest that if the General Assembly had intended to make the due date  April 30  the starting point for the two-year period, it could and should have used language like that of the comparable federal act  that any return filed before the due date should be deemed to have been filed on the due date. No doubt this would have been one way of amending the law, but it was not the only way. Even if it would have been a preferable way, still the language of our law, especially in the light of the Commissioner's recommendation, is clear enough. We are in accord with the decision of the Tax Board and with the decision of the court below that the assessments were made within the prescribed time. It follows from the conclusions above set forth that the orders of the Superior Court of July 8, 1955, affirming the findings and decision of the State Tax Board must be affirmed in part and reversed in part. The cause is remanded to the Superior Court, with instructions to modify its orders of July 8, 1955 to conform with this opinion, and to remand the cases to the State Tax Board with instructions to affirm the rulings of the Tax Commissioner.