Opinion ID: 1189763
Heading Depth: 1
Heading Rank: 2

Heading: In a tax collection context, an assessment marks the beginning of an administrative proceeding.

Text: An assessment issued by DOR to a taxpayer under AS 43.05.270 satisfies all of the essential elements of an administrative proceeding. First, at the time that the State issues an assessment, a dispute does exist. As noted above, a dispute may be defined as a conflict or controversy; a conflict of claims or rights; an assertion of a right, claim, or demand on one side, met by contrary claims or allegations on the other. Black's Law Dictionary, at 472. Prior to the time that an assessment is issued, the taxpayer has either filed or failed to file a return. If the taxpayer has filed a return, this may be considered an assertion by the taxpayer that the amount stated, and only the amount stated, is due. Similarly, if a taxpayer fails to file a return, this may be taken as an implied assertion that no taxes are due. [24] If DOR then issues an assessment to the taxpayer, demanding additional tax payments (with interest and penalties), then there has been an assertion of a right, claim or demand on one side, met by contrary claims or allegations on the other and a dispute exists. [25] Second, the assessment reflects the fact of the dispute, serves a function similar to a civil complaint or an accusation or statement of issues under the APA, and is served on the taxpayer. The assessment's reflection of the fact of the dispute is self-evident. An assessment is also served on the taxpayer. See AS 43.05.245 (The notice and demand for payment is issued when the notice and demand is delivered to the taxpayer in person or placed in the United States mail, addressed to the last known address of the taxpayer.). The only significant question with respect to this attribute is whether an assessment serves a function similar to a civil complaint or an accusation or statement of issues. As discussed above, the primary function of each of these documents is to provide written notice to the other party that a matter is being contested and that particular relief is sought. Examination of the assessment notices provided by the State reveal that assessments also serve this function. The assessment letter itself lists a total amount due and demands payment. This constitutes a claim for relief. In addition, computations explaining the amount due are enclosed with the assessment. These constitute specific notice of the matter being contested and the basis for relief. Therefore, the second attribute of an administrative proceeding is present in a notice of assessment. Third, the notice of an assessment sets in motion mechanisms prescribed by statute or regulation under which the dispute will ultimately be resolved. Contrary to the State's arguments, this element does not require that a hearing be convened by the document, so long as the law provides that the document will lead toward a resolution of the dispute regardless of the opposing party's response. It is the legal authority to bind the opposing party, and not the exact means by which that authority is exercised, that is essential. Therefore, an administrative proceeding can begin before any hearing is initiated, if the law constrains the options of the opposing party on receipt of notice of the proceeding and provides mechanisms for resolving the dispute irrespective of the opposing party's response. An assessment has this effect. On receipt of an assessment, the taxpayer may 1) pay the assessment; 2) appeal the assessment; or 3) do nothing. If the taxpayer pays, the dispute is resolved. This is similar to a defendant admitting liability in a civil suit. If the taxpayer appeals, the mechanisms provided for by AS 43.05.240 are set in motion to attempt to resolve the dispute. Finally, if the taxpayer does nothing, AS 43.05.270 provides that the State may levy against the taxpayer. Once the sixty-day period for appealing the assessment has expired, however, the taxpayer may no longer challenge the substantive basis of the assessment. [26] The statutory scheme by which an assessment is converted into a debt to the State if no appeal is filed is itself a mechanism for resolving the dispute. As an assessment possesses each of the essential attributes which we have identified, it marks the beginning of an administrative proceeding in the tax collection process for purposes of Article IX, section 17 of the Alaska Constitution. [27]