Opinion ID: 2519779
Heading Depth: 2
Heading Rank: 2

Heading: effect of statute of limitations on 1995 claims

Text: ¶ 34 On November 26, 1996, Matrix sent a letter to the Commission referencing prior refund claims for October 1991 through December 1994. The letter also states, [W]e will be filing additional claims for periods after 1994. Matrix contends that this letter alerted the Commission to a forthcoming claim for 1995 and should therefore toll the statute of limitations. Determining the meaning of the word claim under section 59-12-110(2)(b) is a question of law for which this court grants the Commission no deference, applying a correction of error standard. Utah Code Ann. § 59-1-610(1)(b) (2000). The relevant statute provides: Except as provided in Subsection (2)(c) or Section 19-2-124, a taxpayer shall file a claim with the commission to obtain a refund or credit under this Subsection (2) within three years from the day on which the taxpayer overpaid the tax, penalty, or interest. § 59-12-110(2)(b) (2000). Under this section, a refund may be obtained from the Commission if a claim is filed within three years from the date of payment. The Commission asserts that the language in the November 26, 1996, letter clearly and unambiguously signals Matrix's intention of filing subsequent claims for periods after 1994 but that the letter itself does not purport to constitute a claim for 1995. ¶ 35 We have not heretofore addressed what constitutes a claim for refund under the Sales and Use Tax Act. In support of its argument that its letter was sufficient to meet the demands of the statute of limitations in section 59-12-110(2)(b), Matrix refers to an informal claims doctrine as used in United States v. Kales, 314 U.S. 186, 62 S.Ct. 214, 86 L.Ed. 132 (1941). In Kales, a taxpayer sent a letter to the IRS challenging a stock revaluation. In the letter, the taxpayer stated that `if for any reason a revaluation shall be had' she ... `will claim the right to a refund of the excess tax collected.' Id. at 190, 62 S.Ct. 214. A revaluation subsequently occurred and the taxpayer filed a formal claim after the statute of limitations had run. The Supreme Court noted, This Court . . . has often held that a notice fairly advising the Commissioner of the nature of the taxpayer's claim, will be treated as a claim, where formal defects and lack of specificity have been remedied by amendment filed after the lapse of the statutory period. Id. at 194, 62 S.Ct. 214. The court noted that the facts of the situation were well known to the IRS and that the claim gave the IRS notice that the taxpayer was setting forth her right to a refund. Id. The court also stated that the use of the future tense in stating a claim may, with due regard to the circumstances of making it, rightly be taken as an assertion of a present right. Id. at 195, 62 S.Ct. 214. ¶ 36 The Kales line of reasoning has been followed in subsequent federal cases. [11] Although Matrix has outlined the Kales line of cases in its brief, it has not addressed the effect of subsequent IRS regulations and cases interpreting the regulations that weaken the holding in Kales. [12] Matrix's claim that only notice of a potential future claim is necessary under federal law is therefore not wholly accurate. [13] ¶ 37 Section 59-12-110(2)(b) requires that the taxpayer file a claim for a refund. In absence of Commission rules or legislation to the contrary, we hold that Matrix's interpretation of the informal notice accepted in Kales is insufficient to be deemed a claim for purposes of section 59-12-110(2)(b). Matrix's letter to the Commission stated that we will be filing additional claims for periods after 1994. This letter does not indicate to the Commission presently asserted grounds for refund, nor does it advise the Commission of the specific nature of Matrix's claim. Indeed, the purported informal claim refers only to the year for which it will be filing for a refund at some future point. We hold that the language in this letter does not contain sufficient grounds upon which a refund can be claimed and the facts presented in the letter did not apprise the Commission of the basis of the refund claim. Because the November 1996 letter did not constitute a sufficient claim, it did not toll the statute of limitations which ran in 1999, and plaintiffs' 1995 claims are therefore barred.