Court Opinion

ID: 9540284
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:14:20.4304+00
Date Added: 2024-06-11T14:59:49.842284
License: Public Domain

MR. CHIEF JUSTICE WARD, dissenting: I fear some will consider the majority’s holding places the Department in a faintly ridiculous light. The Department properly and vigorously complains of the contemptuous refusal of the taxpayer to produce its books and records for the Department’s examination to determine whether the tax returns were accurate or deliberately falsified or simply erroneous. The majority ignores this unexplained and what appears to be significant failure of the taxpayer and criticizes the Department for what the majority says was a faulty method of advising the taxpayer of what tax it should have paid. The books and records in the taxpayer’s possession are obviously the best source of this information to determine the tax due, and this was pointed out by the hearing officer. I would hold that the taxpayer under the circumstances should not be heard to make the complaint the majority sustains. The recalcitrance of the taxpayer is shown clearly by the record. At the hearing on May 9, 1972, Mr. Blum, the Department’s auditor who had reviewed Grand Liquor’s returns, testified that on September 7, 1971, he first communicated with Michael DeCarlo, the president of Grand Liquor, concerning the audit and that DeCarlo told him he would make the company’s books and records available for examination. On September 14 DeCarlo’s accountant called Blum and informed him he had not been able to obtain the records. On September 28 the accountant again called Blum and informed him that DeCarlo had not brought in the books and records. After several unsuccessful attempts Blum communicated with DeCarlo in the first week of November 1971. DeCarlo stated he had been ill and would produce the records. Two weeks later, when the records had not been given to the Department, Blum made the estimated assessment. At the first hearing, on May 9, 1972, the taxpayer’s attorney stated he would do everything he could to make the books and records available to the Department and a continuance was granted to June 8, 1972, on this representation. (This was after Blum had testified that DeCarlo had assured him months before that the books and records would be made available.) The hearing was again continued on June 8, 1972, when the books were not produced. The taxpayer’s attorney again stated that arrangements would be made to produce them for the Department and, on this representation, the file was referred by the referee to the Department’s audit section. On February 8, 1973, another hearing was held at which no one appeared in behalf of the taxpayer. Blum testified he had spoken again with DeCarlo in early September of 1972. DeCarlo stated that he had been out of the country and that he would make the books and records available by the end of the month, i.e., September 1972- The records were never produced and another estimated assessment was made. At the conclusion of this hearing, at which no one appeared for the taxpayer, the assessment was made final by reason of default. However, the Department consented by stipulation that there would be another hearing, and on February 20, 1973, another hearing was held. The taxpayer’s attorney then charged that the tax, by reason of its various classifications, was unconstitutional. This argument was overruled by the hearing referee. The allegation of unconstitutionality was thereafter abandoned. The holding today will encourage the belief that the Department’s requests for the production of books and records may be ignored with impunity and may severely handicap its collection process.