Kentucky Court Report - SCOKY & COAKY

Business failed to timely file for refund of overpayment of occupation tax in Louisville: PARADISE TOMATO KITCHENS, INC. V. LOUISVILLE-JEFFERSON COUNTY METRO REVENUE COMMISSION (COA 5/9/2008)

PARADISE TOMATO KITCHENS, INC. V. LOUISVILLE-JEFFERSON COUNTY METRO REVENUE COMMISSION
REVENUE AND TAXATION:  Overpayment of occupational tax and time for filing for refund
2007-CA-000965
PUBLISHED: AFFIRMING
PANEL: KELLER PRESIDING; TAYLOR CONCURS; GRAVES CONCURS W/SEP. OP.
JEFFERSON COUNTY
DATE RENDERED: 5/22/2008

Paradise Tomato Kitchens, Inc. sought a refund of the occupational tax assessed by the Louisville/Metro Government (the Metro Government) that it had overpaid.  However, the Commission refunded only a portion of the overpayment. Therefore, Paradise filed suit seeking a refund of the remainder of the overpayment. The Jefferson Circuit Court entered an opinion and order granting the Appellees’ motion for summary judgment and it is from this order and opinion that Paradise appeals.

In its appeal, Paradise raises several constitutional, statutory, and common law issues which were rejected by the COA and the lower court decision affirmed.

From 1993 through 2001, Paradise’s accounting firm calculated the amount owed for the occupational tax based on 100% of Paradise’s net profits, not on
the portion of those profits attributable to activities within the City. Paradise filed tax returns based on these incorrect calculations.

In early 2003, the accounting firm discovered its mistake and Paradise filed an amended return for the 2001 calendar year, seeking a refund. The Commission
approved Paradise’s claim and issued a refund in the amount of $76,113. Paradise also filed amended returns for 1993 through 2000, seeking an additional refund of
$202,434. The Commission did not approve those claims by Paradise

Ordinance § 112.10 was amended during the time period in question; however, the versions state that the Commission cannot authorize any refund unless
application is made within either one year of the date payment was due or the date the return was filed. KRS 160.487 is part of a statutory plan to provide funding for school systems in counties with populations of 300,000 or more

Paradise argued that the taxes collected here violate the mandate of fair apportionment.  However, Paradise mischaracterizes what occurred since the revenue commission did not “collect” and did not fail to apportion what was appropriately due.

Paradise failed to apportion and “paid” more than was due. While this may appear to be a pedantic distinction, it is, nonetheless, significant.

In Gossum, the Supreme Court of Kentucky cited to the United States Supreme Court’s holding in McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990), that “the due process clause of the Fourteenth Amendment obligates the state to provide meaningful backward-looking relief to rectify any unconstitutional deprivation" and thus the Court held that a “two-year statute of limitations . . . is not violative of constitutional standards.”

COA then held that nothing in the application of Ordinance § 112.10 and KRS 160.487 is violative of the Commerce Clause.

The general rule is that a common law right to a tax refund exists: “(1) when the taxing statute or regulation is invalid and the tax payments were submitted involuntarily, [or] (2) when the taxing authority has engaged in misrepresentation.” Inland Container v. Mason County, 6 S.W.3d 374, 377 (Ky. 1999).  Since Paradise cannot establish that the Ordinance and Statute are wholly unauthorized or that it involuntarily paid the excess tax, it can have no common law right of action to recover that excess amount.

The general rule is that the knowledge of an agent is imputed to the principal. Paradise’s CPA’s were acting as Paradise’s agent so that knowledge of an agent is imputed to the principal.  There is no evidence that the CPA’s could not have known or should not have known how to correctly prepare Paradise’s tax returns.

Therefore, there is no reason why Paradise could not have known or should not have known how to correctly prepare the tax returns.

TAYLOR, JUDGE, CONCURS. GRAVES, SENIOR JUDGE, CONCURS AND FILES SEPARATE OPINION.
GRAVES, SENIOR JUDGE, CONCURRING: I concur, but I write separately to address the disparity in the respective positions of the parties. This case presents a basic inequity in the manner in which the government deals with its tax paying citizens. Were the roles of the parties herein reversed, that is, had the government mistakenly issued an excessive tax refund, the taxpayer would be prosecuted for failure to make required disposition of property if he refused to return the overpayment. The government should behave in the same manner it mandates its citizens behave. The government should not be rewarded for expropriating monies to which it is not entitled.

Digested by Michael Stevens

Trial court erred in reversing the Department of Revenues determination that the taxpayer was domiciled in Kentucky for tax purposes: FINANCE AND ADMINISTRATION CAB. V. SLAGEL (COA 4/25/2008)

FINANCE AND ADMINISTRATION CAB. V. SLAGEL
REVENUE & TAXATION: Board of Tax Appeals, standard of review
Commonwealth Of Kentucky - 497
PUBLISHED: AFFIRMING
PANEL: LAMBERT PRESIDING: MOORE, BUCKINGHAM CONCUR
JEFFERSON COUNTY
DATE RENDERED: 4/25/2008

The Court of Appeals found the trial court erred in reversing the Department of Revenues determination that the taxpayer was domiciled in Kentucky for tax purposes.

The Department of Revenue adjusted the individual income tax returns of Peter and Linda Slagel for the tax years 1996 through 2000 to include wages earned by Peter while working in Venezuela. The total amount of the resulting assessment of additional tax, including fees, penalties, and interest, is $72,731.50. The Slagels protested the assessment, but the Department issued a final ruling upholding the adjustment. The Slagels appealed to the Board, which affirmed the Department’s adjustment. The Slagels then appealed to the Franklin Circuit Court, which reversed the Board, finding that the Department failed to show with substantial evidence that Peter established domicile in Kentucky. This appeal followed.

In reviewing the trial court decision the issue is whether the trial court was correct in determining that the Department’s decision was not supported by substantial evidence. Whether a decision or action of the Department is unreasonable, arbitrary and capricious, because it is not based upon substantial evidence, is one of law, thus our review is de novo. 

Where an administrative agency's decision is to deny relief to the party with the burden of proof or persuasion, as was the case here, the issue on appeal is whether the evidence in that party's favor is so compelling that no reasonable person could have failed to be persuaded by it.

The COA held the evidence was not so compellingly in favor of the Slagels that no reasonable person could have failed to be persuaded by it.  First, Peter was registered to vote in Kentucky in 1992 and exercised his right to vote in 1999 and 2000. He additionally held driver’s licenses in both Kentucky and Venezuela. He owns property in Kentucky, maintains bank accounts in Kentucky, and has an incorporated business in Kentucky. His passport lists Kentucky as his “abode,” and his last will and testament and power of attorney assert that he is “of Fayette County Kentucky.” Finally, Linda and their children live in Lexington, Kentucky. In light of this fact alone, it seems likely that Peter has “the intention of returning” to but “no present intention of moving” from Lexington as required by Kentucky’s definition of domicile.

Accordingly, the trial court erred in substituting its judgment for the judgment of the Department on this factual determination. Therefore, COA reversed the order of the Franklin Circuit Court and remanded for proceedings consistent with this opinion.

Digest by Michael Stevens

Exemption to use tax applied to prosthetic devices etc. prescribed by licensed physician: KING DRUGS, INC. V. REVENUE CABINET

KING DRUGS, INC. V. REVENUE CABINET
REVENUE AND TAXATION:  Sales and use tax re: medical devices prescribed by licensed physician
2005-SC-000789-DG.pdf - NO. 82
PUBLISHED: REVERSING AND REMANDING
OPINION BY ABRAMSON; MINTON, SCHRODER NOT SITTING
FRANKLIN COUNTY
DATE RENDERED: 5/22/2008

The Revenue Cabinet sought judicial review of decision of Board of Tax Appeals that granted taxpayer's request for relief concerning assessment of sales tax regarding medical items.  A 1986 amendment to former KRS 139.472, a statute exempting “prosthetic devices and physical aids” from Kentucky sales and use tax, is the focal point of the case before this Court.

KRS 139.200 imposes a sales tax on gross receipts derived from “[r]etail sales, regardless of the method of delivery, made within this Commonwealth.” Pursuant to that statute, in early 2001, the Revenue Cabinet assessed sales taxes against King Drugs, Inc., and King Home Care, Inc., (collectively “King”) of $75,342.09 and $13,253.86, respectively, for sales between April 1997 and January 2001 of medical items such as C-Pap supplies, TENS units, heating pads, humidifiers, ventilators, catheters, and bandages.

Maintaining that these sales were exempt from sales tax under KRS 139.472, which at the time provided an exemption for “prosthetic devices and physical aids,” King sought review of the Cabinet's assessments before the Board of Tax Appeals. The Board agreed with King that the statute exempted the sales of all such items when prescribed by a physician, and, because it was undisputed that virtually all the sales at issue involved items that had been prescribed, the Board granted King's request for relief.

The Cabinet then sought judicial review, and both the Franklin Circuit Court and the Court of Appeals rejected the Board's reading of KRS 139.472. Those courts ruled instead that the statutory exemption applied only to sales of prosthetic devices and physical aids “prescribed ... solely for the use of a particular crippled person so as to become a brace, support, supplement, correction or substitute for the bodily structure including the extremities of the individual.” Because King's sales had not been limited to the identified items to be used by “crippled persons,” the court below held that King was not entitled to the exemption and so ordered that the Cabinet's sales-tax assessments be reinstated.

The Supreme Court granted King's petition for discretionary review and held that statute governing sales and use tax exemptions for certain medical items provided exemptions for all sales of artificial devices prescribed by licensed physician.


Digested by Michael Stevens

City's tax increase subject to 45 day rule unless adopt county's assessment: LIGHT V. CITY OF LOUISVILLE (SC 3/20/2008)

LIGHT V. CITY OF LOUISVILLE
REVENUE AND TAXATION:City's tax increase subject to 45 day rule unless adopt county's assessment
2005-SC-000759-DG.pdf
PUBLISHED: AFFIRMING
OPINION BY SPECIAL JUSTICE JAMES PARSONS
ABRAMSON, SCHRODER NOT SITTING
JEFFERSON COUNTY
DATE RENDERED: 3/20/2008

The Appellants "Lights" taxpayers brought a class action suit against the City of Louisville seeking a declaration or rights and refunds after the city had denied their action challenging the rate.  Taxpayers appealed an adverse decision of the Court of Appeals, which affirmed the judgment of the Jefferson Circuit Court, dismissing their claims that the City of Louisville, Kentucky set ad valorem tax rates for the years 1998 and 1999 in excess of the amount permitted by law.

The City had elected to use the Jefferson County property assessment for purposes of establishing the City's ad valorem tax rates pursuant to the provisions of KRS 132.285. In 1998 and 1999, the City established its ad valorem tax rates at the four percent (4%) Increase rate permitted by KRS 132.027, which rates were in excess of the compensating tax rates as defined by KRS 132.010(6). It is not disputed that the City published the public notices required by KRS 132.027 to establish the four percent  (4%) increase tax rate for each year in question. However, the ordinances adopting the tax rates for 1998 and 1999 were each adopted more than forty-five (45) days after the Kentucky Department of Revenue had certified the property tax rolls for Jefferson County, Kentucky, for those years.

The Supreme Court in an opinion written by Special Justice James E. Parsons held the property tax statute establishing 45-day deadline for setting a tax rate increasing revenues by more than four percent applied to  the city, but Louisville could could establish a rate increasing revenue by four percent, more than 45 days after certification of property tax rolls, under statute applicable to cities that adopted county's assessment. Since the city had adopted the county's assessment, the COA and trial court decisions upholding the tax increase were affirmed.

PSC order establishing economic development riders not authorized per statute: COM. V. THE PUBLIC SERVICE COMMISSION OF KY (COA 2/1/2008)

COM. V. THE PUBLIC SERVICE COMMISSION OF KY
ADMINISTRATIVE LAW:  Jurisdiction, utility regulation
2006-CA-001652
PUBLISHED: REVERSING AND REMANDING
PANEL: NICKELL, PJ;  COMBS, WINE CONCUR
COUNTY: FRANKLIN
DATE: 02/01/2008

This appeal started with the state filing an action to vacate or set aside orders by the Public Service Commission (PSC) that authorized establishment of economic development riders to electric utility's general tariff.  The Franklin Circuit Court affirmed. State appealed, and the COA reversed and remanded the circuit court holding the orders were unlawful under statute setting forth permissible considerations for free or reduced-rate services; and the state authorizing a public utility to employ suitable and reasonable customer classifications in the conduct of its business did not confer alternative basis of jurisdiction to issue orders in question.

Michael Stevens

FELA, causation, and instructions: COOKE V. CSX CORP. (COA 12/7/2007)

COOKE V. CSX CORP.
TORTS:  FELA CLAIM and substantial factor vs. substantial cause
2006-CA-001931
NOT PUBLISHED: AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
PANEL:  HOWARD PRESIDING; NICKELL, TAYLOR CONCUR
COUNTY: JEFFERSON
DATE RENDERED: 12/07/2007

Cooke appeals a jury verdict in favor of CSX on his FELA claim stemming from alleged injuries he sustained on two separate occasions while on the job with CSX. Specifically, Cooke alleged that CSX failed to provide adequate lighting in his work area (paint shop) and wrongfully assigned him to perform a job by himself that safely required two employees to complete. Cooke alleged three errors by the TC, each of which was addressed by the COA as follows:

1) Cooke claims error in the language contained in the TC's liability instruction that read, "Do you believe from the evidence that CSX failed to exercise that care required of it, and that failure, no matter how slight, was a substantial factor in causing injury to the Plaintiff? Cooke contends that the wording does not comport with the model instruction set forth by the Kentucky Supreme Court in Hamilton v. CSX Transportation, 208 S.W.3d 272 (Ky. 2006), which disapproved of the use of "substantial cause" because it placed a higher common law burden on the plaintiff instead of the lower "in whole or in part" FELA burden.

The COA agreed, finding error in the TC's use of "substantial factor" in light of Hamilton and its error in failing to include acceptable causation language such as "caused in whole or in part" or "played any part, even the slightest." The COA did point out that this trial occurred before the Hamilton decision was rendered. The COA then rejected CSX's argument that Cooke had failed to preserve this argument for appeal by the failure to object to the instruction when both attorneys were asked by the TC during trial. The COA analyzed CR 51(3) and felt that Cooke's tender of a jury instruction that avoided the above-cited error preserved the issue for appeal, and did not feel that later statements made by Cooke's attorney on the record qualified as a clear waiver. The COA therefore ordered reversal of the judgment entered against Cooke on this issue alone.

2) Cooke secondly assigns error to the TC's exclusion of testimony from a rebuttal witness, Hughes, who previously worked for CSX in the same paint shop where Cooke alleged he suffered injury but only after the date of injury. On avowal, Hughes proposed to offer testimony contradictory to testimony of a CSX witness that the lighting in the paint shop as shown in a video taken almost a year after the injury date fairly and accurately depicted the lighting conditions at the time of the earlier Cooke injury date. The TC had excluded the testimony since Hughes had no personal knowledge of the lighting in the shop at the time of injury before the date of his hire.

The COA noted that Hughes' avowal testimony stated his belief that the lighting was insufficient at the time of his hire, that he complained about it to CSX, and that CSX later installed additional lighting making the paint shop brighter before the video was taken. While the COA did not believe the TC's exclusion of his testimony was an abuse of discretion that alone would warrant a new trial, it nevertheless ruled that Hughes should be permitted to testify at the new trial as ordered above.

3) Cooke's final argument on appeal was that the TC erred in directing a verdict on his claim that CSX failed to provide adequate assistance for his job duties by requiring him to paint rail cars at the same pace as that previously performed by two employees together. TC felt that Cooke had failed to offer any evidence to warrant the claim going forward to the jury.

The COA agreed with the TC, noting that Cooke offered no expert testimony to support this theory and pointing out that his argument ignores the undisputed evidence that at the time of the alleged injuries, the number of cars painted per shift was only one-half the number painted when two persons previously performed the job duties.

Chad Kessinger
Schiller, Osbourn, Barnes & Maloney

Environmental cost recoupment by utility: COM. V. KENTUCKY PUBLIC SERVICE COMMISSION (COA 12/7/2007)

COM.  V. KENTUCKY PUBLIC SERVICE COMMISSION
GOVERNMENT:  Public utility regulation; Environmental cost recoupment
2006-CA-002349
PUBLISHED: AFFIRMING
PANEL: ROSENBLUM PRESIDING; DIXON, LAMBERT CONCUR
COUNTY: FRANKLIN
DATE RENDERED: 12/07/2007

At issue is the ability of Kentucky Power to recoup environmental surcharges it pays to two of its sister operating companies under the American Electric Power umbrella per an Interconnection Agreement in which it is required to make a capacity equalization payment which flows to two of these other power companies. Embedded within the capacity equalization payment are many generation related costs, one of which is the cost of environmental compliance equipment installed in the generating plants of those other two power companies.

KRS 278.183 provides a mechanism whereby electric utilities such as KP are entitled to immediately recover environmental compliance costs through a special environmental surcharge rather than having to wait until a general rate case to seek recoupment.  Although the Public Service Commission is granted sweeping authority to regulate public utilities pursuant to the provisions of KRS Chapter 278, it is nonetheless a creature of statute and only has such powers as granted by the General Assembly.  By any common understanding of that language, costs incurred by other utilities are not the costs of Kentucky Power.  Here a reasonable interpretation of the statute is that KP's costs include those costs embedded within its capacity equalization payment which relate to environmental compliance costs incurred by the out of state generating facilities.   Accordingly, such costs are “its costs" and the Public Service Commission has made a reasonable interpretation of KRS 278.183, and the COA will give deference to that interpretation under the Chevron doctrine.  Thus the COA found nothing in the statute which would limit its application to costs incurred at KP's in-state physical facilities and over which the Commission has direct jurisdiction.

Michael Stevens

Tax Shelter: COMMONWEALTH V. AUTOZONE DEVELOPMENT CORP. (COA 10/12/2007)

COMMONWEALTH V. AUTOZONE DEVELOPMENT CORP.
REVENUE AND TAXATION: INCOME SHELTER AND NEVADA REIT
2006-CA-002175
PUBLISHED: AFFIRMING
PANEL: TAYLOR PRESIDING; LAMBERT, WINE CONCUR
COUNTY: FRANKLIN
DATE RENDERED: 10/12/2007

COA affirmed Order of the Franklin Circuit Court which affirmed a decision of the Kentucky Board of Tax Appeals (KBTA) determining that AutoZone Development Corporation (AutoZone) was entitled to a tax deduction for dividends paid to shareholders which was appealed (and lost) by the Commonwealth.

AutoZone is a Nevada corporation that began doing business in Kentucky in 1995. AutoZone owns and leases land and buildings in Kentucky for the operation of its business. AutoZone is a federally qualified Real Estate Investment Trust (REIT) pursuant to 26 U.S.C. §§ 856-859 of the United States Internal Revenue Code. AutoZone timely filed its Kentucky corporate income tax returns for the years 1995-1997. On those returns, AutoZone claimed a deduction from gross income for dividends paid to its shareholders. This deduction resulted in ninety-five percent of AutoZone's income being sheltered from Kentucky's corporate income tax.

COA was presented with a pure question of law – whether KRS 141.010(13) permits a federally qualified REIT to claim a deduction from gross income for dividends paid shareholders for the purpose of calculating the REIT's net income on its state tax return.

In its October 10, 2005, order, KBTA concluded that 26 U.S.C. § 857(b)(2)(B)2 of the Internal Revenue Code permits a federally qualified REIT to claim a deduction for dividends paid to shareholders during the relevant taxable year.

KRS 141.010(13) clearly and unmistakably defines “net income” as gross income minus all deductions from gross income allowed by Chapter 1 of the Internal Revenue Code. Under Chapter 1 of the Internal Revenue Code, the dividends paid deduction is specifically codified in 26 U.S.C. § 857(b)(2)(B)

The issue of whether the dividends paid deduction, as codified in 26 U.S.C. § 857(b)(2)(B), is an allowable deduction under KRS 141.010(13) has never been addressed in this Commonwealth.  COA looked at Revenue Cabinet v. General Motors Corporation, 794 S.W.2d 178 (Ky.App. 1990) in which it was recognized that taxable income, as utilized in the Internal Revenue Code (26 U.S.C. § 63(a)), and net income, as used in KRS 141.010(13), are virtually “the same.” As the deduction for dividends paid is also utilized to arrive at and effectively reduce a REIT's taxable income for federal taxation purposes, we hold that the deduction for dividends paid, as codified in 26 U.S.C. § 857(b)(2)(B), is the functional equivalent of an allowable deduction from gross income under KRS 141.010(13).

Held the deduction for dividends paid, codified in 26 U.S.C. § 857(b)(2)(B), is an allowable deduction to gross income of a REIT under KRS 141.010(13).

Digested by Michael Stevens

Utility Tax: TREESH V. DIRECT TV, INC. (COA 9/7/2007)

TREESH V. DIRECT TV, INC.
REVENUE AND TAXATION:  Utility taxes
2006-CA-001983
PUBLISHED: REVERSING AND REMANDING
PANEL: WINE, PRESIDING; HENRY CONCURS; THOMPSON DISSENTS BY SEPARATE OPINION
COUNTY: FRANKLIN
DATE RENDERED: 09/07/2007

Held the tax authorized by the legislation here being attacked (KRS 160.614(3)) is for state purpose. Therefore, the provision of the Telecommunications Act which preserves the right of a state to tax the services of a DBS provider allows for the taxation scheme outlined in KRS 160.614(3).  Kentucky’s Courts have ruled consistently that the local district boards of education and the taxes they assessed were a state concern.  A board of education in Kentucky is performing a function of the state in operating the public schools as state institutions.” Commonwealth v. Louisville National Bank, 220 Ky. 89, 294 S.W. 815 (1927)(School taxes are classified as state and not local taxes).  However, any DBS or wireless cable service provider required to pay the utility tax may increase its rates up to 3% to cover the cost of the tax.

Revenue, Taxation, Relation Back Pleadings: REVENUE CABINET V. VERIZON SOUTH, INC. (SC 8/23/2007)

REVENUE CABINET V. VERIZON SOUTH, INC.
REVENUE AND TAXATION: Assessments and notice of excess tax
CIVIL PROCEDURE:  Amended pleadings and relation back
2004-SC-000519-DG.pdf
2005-SC-000223-DG.pdf
PUBLISHED: REVERSING
OPINION OF THE COURT BY LAMBERT (SCHRODER DISSENTS)
FROM: FRANKLIN
DATE RENDERED: 08/23/2007

Dept of Revenue appeals COA decision barring Dept from collecting unpaid sales taxes from Appellee due to inadequate notification of tax deficiency within the applicable 4-year statute of limitation. SC granted review to consider 2 main issues: 1) whether Dept's initial notice of tax deficiency was timely sent; and 2) whether notice was sufficient.

Relevant facts are that Dept determined that Appellee owed more than $370,000 in sales taxes for 2-year period ending in late 2003. Dept and Appellee both agreed that the notice of deficiency deadline under KRS 139.620(1) was October 20, 1997. Appellee argued that neither the assessment letter nor notice of tax due was mailed before this deadline. Dept had to agree with respect to the notice of tax due, but argued that the assessment letter was timely. KY Bd of Tax Appeals sided with Appellee on this issue (based solely on testimony of Appellee's auditor that the letter did not land in his hands until October 27th) while TC found a lack of substantial evidence to support this conclusion and reversed the Bd's decision, which was affirmed by the COA.

SC affirmed TC and COA, noting there was no question Appellee received the assessment letter dated October 16, 2007. SC ruled that the burden is then on Appellee to offer evidence indicating the letter was not postmarked until after the deadline. SC put great weight on the fact that Appellee had been able to produce the original postmarked envelope for the notice of tax due as well as the two notification letters sent by the Dept concerning additional back taxes for an earlier time period (that Dept was barred from collecting due to untimeliness of the notices), but somehow could not produce the original envelope for the assessment letter. SC offered the following rule of law: "Where correspondence bearing a date has been received, a party who disputes the timely mailing of the correspondence bears the burden of proof with respect to the issue."

Second issue was whether the assessment letter contained the required information as set forth in KRS 131.081(8), with Appellee making a strict construction argument that the tax deficiency notice must specifically contain all 5 items of information as referenced therein AND that the notice containing all this information must be given within the limitation period. It was undisputed that the only piece of information missing from the initial assessment letter was the Dept's notice of interest and penalties (which was provided shortly thereafter in the notice of tax due). The COA agreed with Appellee and barred the Dept from collecting any of the unpaid taxes for the subject period.

SC found that this result was not compelled by the relevant statutes, particularly KRS 139.620(1) containing the 4-year SOL that only requires the Dept to provide Appellee with the amount of excess tax being sought within the limitation period. SC notes that within the context of lawsuits while a party is entitled to formal notice of the claim within the limitations period, that party is not entitled to all of the theories or proof supporting that claim prior to the deadline. SC saw no reason the same logic should not compel a similar result where a taxpayer has been given timely notice that the Dept is making a claim for tax deficiencies. Thus, SC reversed the COA on this issue and ultimately held that the Dept was entitled to seek recovery for the $370,000+ in unpaid taxes.

By Chad Kessinger
Shiller, Osbourn, Barnes & Maloney