Court Opinion

ID: 9792740
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:35:41.303405+00
Date Added: 2024-06-11T07:35:50.014417
License: Public Domain

SIMMS, Justice,
concurring in part, dissenting in part:
Two issues are before this Court. The first is whether the “proposed assessment” sent by the Oklahoma Tax Commission (OTC) to Griffin Television, Inc. and its subsidiaries (collectively “Griffin”), constituted an “assessment” under 68 O.S.1981, § 223 so as to meet the statute of limitations on tax assessments. Because I believe the “proposed assessment” does not constitute an “assessment” under § 223,1 must respectfully dissent to Part II of the majority opinion.
However, I believe the majority has correctly determined the second issue regarding *595the apportionment between Oklahoma and Arkansas of the gain that Griffin received on the sale of property in Arkansas. Consequently, I concur in Part III of the opinion and agree that the order imposing additional assessment should be reversed.
The relevant statute, 68 O.S.1981, § 223, provides, in pertinent part:
“(a) No assessment of any tax levied under the provisions of any state tax law except as provided in the following paragraphs of this Section, shall be made after the expiration of three (S) years from the date the return was required to be filed or the date the return ivas filed, whichever period expires the later, and no proceedings by tax warrant or in court without the previous assessment for the collection of such tax shall be begun after the expiration of such period.” (Emphasis added).
The statute clearly grants a three-year period within which an “assessment” must be made. Griffin received the proposed assessment two months before the statutory period ran, but an actual assessment of taxes did not occur until long after the period expired. The proposed assessment informs Griffin that a field audit of its 1985 and 1986 Corporation Income Tax Returns “discloses additional tax and interest due” in a stated amount. It concludes with the following paragraph:
“In the event you do not agree with this proposed assessment or adjustment, you may within thirty days file a verified protest with the Commission and, if requested therein, a hearing will be granted before the Commission. In the event you do not do so, this assessment or adjustment will become final, at the expiration of said thirty days and payment must be made at that time.” (Emphasis added).
By its very terms, the proposed assessment indicates that it is not a final assessment. Rather, it will become final upon the happening of a certain event, to wit, Griffin’s failure to protest. Because Griffin timely protested the proposed assessment and requested a hearing, the proposed assessment did not become final.
The majority ignores the § 223 requirement that all tax assessments be made within three years of the date that the return was required to be filed or was actually filed. Instead, the majority concludes that the mailing of a notice of proposed assessment tolls the statute of limitations. Such a conclusion contradicts both the unambiguous language and the legislative intent of § 223.
Section 223 was part of the Uniform Tax Procedure Act enacted by the Oklahoma Legislature in 1965. See 1965 Okla.Sess. Laws, ch. 414, § 2. Another part of that act is 68 O.S.1981, § 221 which authorizes OTC to send a letter proposing an additional assessment. Indeed, the language used by OTC in its proposed assessment sent to Griffin was clearly lifted from § 221.
Section 221(a) provides that where OTC determines from its investigation that additional taxes may be due, “it shall in writing propose the assessment of taxes or additional taxes, as the case may be, and shall mail a copy of the proposed assessment to the taxpayer at his last-known address.” The statute then grants the taxpayer the right to file a protest “[wjithin thirty (30) days after the mailing of the aforesaid proposed assessment.” 68 O.S. 1981, § 221(c). Subsection (d) permits the taxpayer to request an oral hearing on the protest. The statute then states that if the taxpayer fails to timely file a written protest, “then the proposed assessment, without further action of the Tax Commission, shall become final and absolute at the expiration of thirty (30) days from the date same is mailed to the taxpayer.” 68 O.S.1981, § 221(e).
Throughout the statute, the legislature uses the terns “proposed assessment” to describe an assessment that has not been finalized. The language indicates that when a taxpayer protests the proposed assessment and requests a hearing as Griffin did herein the assessment does not become final until resolution of the protest. See also 68 O.S. Supp.1989, § 226(b) which provides an alternative to protesting the § 221 proposed assessment. Under § 226, the taxpayer may pay the taxes and give notice that they will bring suit against OTC for the recovery of those taxes. However, § 226(b) provides for *596the assessment to become “final and absolute” if the taxpayer does not file the action within one year from the date of the mailing of the § 221 proposed assessment.
Moreover, if the taxpayer protests and a hearing is held, the assessment still does not become final unless the taxpayer fails to file an appeal of an adverse ruling within thirty days after a certified copy of the order is mailed to the taxpayer. 68 O.S.1981, § 221(g). It appears that the legislature intended to use the term “proposed” in § 221 for a specific reason and that a proposed assessment would not be final until certain events occur.
In § 223, however, the term “proposed” is never used. The statute unambiguously states that every assessment must be made within three years. Nowhere does it say that a “proposed assessment” may be made; nor do its terms allow for a “proposed assessment” to toll the statute of limitations. I am convinced that the legislature intended for the statute of limitations of § 223 to apply to all assessments and that there is no legislative intent that a proposed assessment would toll the statute. Otherwise, if the legislature intended for the term “assessment” used in § 223 to include “proposed assessment” then the legislature could, and should, have indicated such in the statute when it enacted the Uniform Tax Procedure Act in 1965. “[Statutes must be interpreted to render every word and sentence operative, rather than a manner which would render a specific statutory provision nugatory.” State ex rel. Thompson v. Ekberg, 613 P.2d 466 (Okla. 1980); TWA v. McKinley, 749 P.2d 108 (Okla.1988) (Emphasis added). To treat a “proposed assessment” as an “assessment” would be to ignore both the specific term “proposed” which the legislature intentionally drafted into § 221, and the absolute requirement in § 223 that “no assessment ... shall be made after the expiration of three (3) years” from the date of the return.
Rather than addressing the unambiguous use of the term “assessment” in § 223, the majority merely finds the statute of limitations is tolled by the § 221 proposed assessment, grounding its decision upon two cases. The first, Protest of Pentecost & Hodges, Inc., 186 Okla. 390, 98 P.2d 606 (1940), does not hold what the majority states as its holding. In Pentecost, the Oklahoma Tax Commission gave the taxpayer notice of a proposed additional assessment for income taxes. The notice was given within the then applicable two year statute of limitations. However, after the two year period expired, but within the time for taxpayer’s protest, the Commission notified the taxpayer that the earlier proposed assessment had been canceled and an increased assessment proposed. The taxpayer had not protested the earlier proposed assessment, but lodged a protest against the second proposed assessment based upon the argument that the Commission had abandoned its fiyst proposed additional assessment by adopting in its second proposal a wholly new plan or principle for determining the additional assessment. Taxpayer had not raised the defense of the statute of limitations in a timely fashion and the plea in bar had been disallowed at the close of the hearing. The Court found that even if the defense had been timely raised, it would not have availed the taxpayer, for even if the second proposal did present a plan or method unlike that in the first proposal, it would nonetheless be an amendment of the first notice. The Court stated:
“both proposals related to the same income, and the last thereof can be considered in no other manner than a mere amendment of the first. The mere change in the process or plan of calculation cannot give to the last proposal the character of a new proceeding.” 98 P.2d at 609.
Hence, Pentecost does not hold that a proposed assessment tolls the statute of limitations. It merely stands for the proposition that an amended proposed assessment lodged after the limitation period but before the time for protest had run stands in the place of an earlier proposed assessment made prior to the running of the statute. The Court did not address the issue of whether the original proposed assessment met the statute of limitations’ requirement of an assessment within two years because the taxpayer did not raise that issue. Thus, this majority’s reliance upon Pentecost is misplaced.
*597For the same reason, the majority’s reliance upon In re Woods Corp., 531 P.2d 1381 (Okla.1975) is likewise amiss. Woods concerned a protest to an additional assessment of use tax upon an airplane purchased by the corporation in 1969. Woods Corp. paid no sales tax or use tax for the airplane, and, well within the statutory time, the tax commission sent a proposed assessment pursuant to § 221 to Woods Corp. in May of 1970. Woods Corp. immediately protested the proposed assessment, also within the statutory period, but nothing more was done on the case until September of 1973, over three years later, when the tax commission notified Woods Corp. of a scheduled hearing on the protest. Arguing that the protest it filed was equivalent to a return required by law, Woods Corp. contended the assessment should be barred because no final assessment was made within three years of the filing of the “return’Vprotest. This Court rejected Woods Corp.’s argument, and citing Pentecost, supra in support, stated that the filing of the proposed assessment tolled the statute of limitations.
As noted above, the Court in Pentecost did not hold' that a proposed assessment tolled the statute of limitations, and this Court erred in Woods Corp. by stating that it did. The ease at bar provides this Court with the opportunity to correct that mistake and interpret §§ 221 and 223 according to the unambiguous legislative intent.
• The majority also indicates that by enacting the Oklahoma Tax Code including § 223 in 1965, “the Legislature chose to leave the rule announced in Pentecost intact.” However, Pentecost does not directly or impliedly hold that proposed assessments toll the statute of limitations. Pentecost did not even address the issue. Therefore, contrary to the insistence of the majority, the Legislature did not have “extant judicial construction” of the statutes upon which to base a decision as to the enactment or amendment of the statute of limitations on tax assessments.
The decision of the majority fails to recognize and follow the legislative intent of § 223 and permits OTC to assess additional taxes upon taxpayers long after the statutory time period for assessing such taxes has run. The decision places Oklahoma taxpayers in the position of not knowing with certainty what their tax liability is whereas taxpayers in other states know after a definite period that their tax liability has been determined. See Weyenberg Shoe Mfg. Co. v. Kelley, 210 Wis. 638, 246 N.W. 418 (1933) (holding that a proposed assessment is not a final assessment) and Wilmington Trust Co. v. State Tax Comm’r, 275 A.2d 568 (Del.1971) (holding that the statute of limitations for tax assessments is not met by a letter notifying the taxpayer of additional taxes but that actual assessment of those taxes must occur). I would hold that OTC’s proposed assessment did not constitute an assessment and does not toll the statute of limitations found in 68 O.S.1981, § 223.
I am authorized to state that Justice HAR-GRAVE joins me in the views expressed above.