John J. & Carol A. Casey v. Commissioner of Revenue (December 7, 2010)

  COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD 


JOHN J. & CAROL A. CASEY    v. 	COMMISSIONER OF REVENUE


Docket No. C297610				Promulgated:
				    		December 7, 2010
This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39, from the refusal of the Commissioner of Revenue ("Commissioner" or "appellee") to abate personal income taxes, penalties, and interest assessed against John J. and Carol A. Casey ("appellants" or "Mr. and Mrs. Casey") for the tax years ending December 31, 2002 and December 31, 2003 ("tax years at issue"). 
Chairman Hammond heard the appellee's Motion to Dismiss for lack of jurisdiction.  He was joined in the decision for the appellee by Commissioners Scharaffa, Egan, Rose and Mulhern.  
	These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

William E. Halmkin, Esq. and Judith G. Edington, Esq. for the appellants.  

Diane M. McCarron, Esq. for the appellee.  

			 FINDINGS OF FACT AND REPORT
On the basis of the uncontroverted facts contained in the pleadings, motions, affidavits and other documents filed with the Appellate Tax Board ("Board") in this appeal, the Board made the following findings of fact.  The appellants filed Massachusetts non-resident income tax returns for both of the tax years at issue.  Following an audit of the appellants' tax returns, the Commissioner determined that the appellants were domiciled in Massachusetts during the tax years at issue, and therefore, all of their income was Massachusetts taxable income.  Accordingly, the Commissioner issued to the appellants a Notice of Intent to Assess ("NIA") dated April 12, 2006, expressing the Commissioner's intent to assess additional tax in the amount of $31,296 for tax year 2002, along with interest, and additional tax in the amount of $13,057 for tax year 2003, along with interest and penalties.  On May 31, 2006, the Commissioner issued a Notice of Assessment to the appellants, assessing the additional tax proposed on the NIA, along with penalties and interest, for the tax years at issue.  
On November 2, 2006, the appellants filed an Application for Abatement with the Commissioner, contesting the Commissioner's assessment ("Application for Abatement I").  A review of Application for Abatement I revealed that the following supporting documentation was appended to the application: the appellants' completed Domicile Questionnaire; a copy of Mr. Casey's Florida driver's license and Florida voter identification card; a letter dated March 4, 2002 from St. Edward Church in Palm Beach, Florida, which welcomed Mr. and Mrs. Casey to the parish; and a five-page spreadsheet, presumably detailing credit card expenditures made by Mr. Casey, organized by date, location, and amount of expenditure.  The spreadsheet covered the time period beginning January 8, 2002 and ending December 31, 2002.  
In Application for Abatement I, the appellants did not request a statutory hearing under G.L. c. 62C, § 37, but did request settlement consideration.  After several attempts to gather additional information from the appellants failed, the Department of Revenue's ("DOR") Office of Appeals issued a letter, dated October 24, 2007, informing the appellants that their request for settlement had been denied.  The letter stated that the request for settlement consideration had been denied because, among other reasons, the appellants "failed to provide the documentation requested by the Audit Division" and also because their Application for Abatement "contained no attachment explaining [their] position, nor did [it] present an offer for settlement consideration."  Further, the letter stated that the "Appeals Officer assigned to [the] case requested information from [appellants'] representative on two separate occasions; however, this information [was not] provided."  The letter also stated that the appellants' case was being "returned to the Customer Service Bureau for their determination on [appellants'] abatement request."  It further informed the appellants that "[t]his letter does not constitute a Notice of Denial; the Customer Service Bureau will issue such a Notice.  If you continue to disagree with the assessments, then you may file a petition with the Appellate Tax Board within 60 days of the date of such Notice of Denial."  
By Notice of Abatement Determination dated November 5, 2007 ("Notice I") the Commissioner denied Application for Abatement I.  Notice I stated "[a]fter careful review of the issues raised in your request for an abatement, [DOR] has determined that the tax in dispute has been properly assessed."  As indicated previously in the October 24, 2007 letter from the Office of Appeals, Notice I informed the appellants that they could appeal the abatement denial to the Board within sixty days of the date of Notice I.  
Notwithstanding the information provided in the October 24, 2007 letter and Notice I, the appellants did not file an appeal with the Board by January 4, 2008, the sixtieth day following the date of Notice I.  Instead, on or about March 31, 2008, the appellants filed a second Application for Abatement ("Application for Abatement II").  Application for Abatement II requested an abatement for the same tax years on the same grounds stated in Application for Abatement I, and included the same documentation that had been included in Application for Abatement I, along with a brief statement setting forth their argument as to why Florida had become their domicile.  
By letter dated May 1, 2008, the Commissioner informed the appellants that she had no authority to act on Application for Abatement II because it raised a claim for abatement on the same grounds raised in Application for Abatement I, which had been denied by Notice I.  By Notice of Abatement Determination dated May 7, 2008 ("Notice II"), the Commissioner informed the appellants that Application for Abatement II was denied.  Specifically, Notice II stated "[a]fter review of the issues raised in your request for an abatement, [DOR] has determined that these issues have already been considered in a prior claim[] and pursuant to Massachusetts General Laws Chapter 62C, Section 37, you may not challenge an item of tax that has already been challenged in a previous claim."  On Monday, July 7, 2008, the appellants filed a Petition Under Formal Procedure with the Board.
	Based on these subsidiary findings, the Board made the following, ultimate findings of fact.  The Board found that Notice I constituted a denial based on the merits of the claims raised in Application for Abatement I, rather than a denial based on lack of substantiation.  Pursuant to G.L. c. 62C, § 39, the appellants had sixty days following Notice I to file an appeal with the Board.  Notice I was dated November 5, 2007, and accordingly, the appellants had until January 4, 2008 to file their appeal.  The appellants did not file a petition with the Board until July 7, 2008.  The Board therefore found that the appellants' failure to timely file their appeal deprived the Board of jurisdiction over this appeal.  Accordingly, the Board allowed the Commissioner's Motion to Dismiss for lack of jurisdiction and entered a decision for the appellee in this appeal.  

				     OPINION
"Any person aggrieved by the refusal of the commissioner to abate or to refund any tax, in whole or in part . . . may appeal therefrom, within 60 days after the date of notice of the decision of the commissioner or within 6 months after the time when the application for abatement is deemed to be denied," by filing an appeal with the Board.  G.L. c. 62C, § 39.  "The Board has consistently held that it has no jurisdiction to consider an appeal filed later than prescribed by statute." Watjus Electric, Inc. v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1993-139, 142 (citing Perry v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1990-262, 263-64). Neither the courts nor the Board has the authority to create an exception to the time limit prescribed by G.L. c. 62C § 39. Sears Roebuck & Co. v. State Tax Commission, 370 Mass. 127, 130 (1976).  In the present appeal, it was undisputed that the Commissioner denied Application for Abatement I on November 5, 2007, which gave the appellants sixty days, or until January 4, 2008, to file their appeal with the Board.  The appellants did not file an appeal with the Board within that time period; their petition was filed with the Board on July 7, 2008.  "Since the remedy for abatement is created by statute, the Board . . . has no jurisdiction to entertain proceedings for relief by abatement begun at a later time or prosecuted in a different manner than is prescribed by the statute." Assessors of Boston v. Suffolk Law School, 295 Mass. 489, 492 (1936).  Because the appellants did not file their petition within the time period prescribed by G.L. c. 62C, § 39, the Board found and ruled that it had no jurisdiction to hear this appeal.
The appellants' arguments to the contrary were premised upon the language of G.L. c. 62C, § 37 ("§ 37"), and the circumstances surrounding the Commissioner's denial of Application for Abatement I.  Section 37 provides, in relevant part:
The applicant shall, at the time of filing its abatement application, include and attach to it all supporting information, documents, explanations, arguments and authorities that will reasonably enable the commissioner to determine whether the applicant is entitled to the abatement requested. The applicant shall not be considered to have submitted a completed written abatement application until the date on which all such information reasonably requested from the applicant and reasonably necessary for a decision has been furnished to the commissioner. If the commissioner has made a written request to the applicant for additional information, not then contained in the taxpayer's pending abatement application, and the applicant fails to provide such information within 30 days after such request, or within any extended period allowed by the commissioner, that application shall be considered incomplete and shall be denied without prejudice to its timely renewal. The commissioner shall give such applicant written notice that the denial is based upon the lack of sufficient information to grant the taxpayer's abatement application. (emphasis added).  
The appellants argued that, because Application for Abatement I was denied due to the appellants' failure to submit additional documentation supporting their claim for abatement, as requested by the Commissioner, the appropriate recourse was not to file an appeal with the Board, but to submit a new abatement application with documentation supporting their claim.  The Board disagreed.  
	The appellants' argument was incorrect as a matter of fact because Application for Abatement I was denied on the merits of the claim, not for lack of substantiation.  The language of § 37 expressly requires the Commissioner to give notice to the taxpayer that the abatement denial is based upon a lack of sufficient information.  Notice I contained no such statement.  Instead, Notice I plainly stated "[a]fter careful review of the issues raised in your request for an abatement, [DOR] has determined that the tax in dispute has been properly assessed."  Furthermore, nowhere in Notice I did the Commissioner request further information of the appellants or invite them to submit another Application for Abatement.  Instead, Notice I advised the appellants of their right to appeal to the Board.  
The issue raised by the appellants in Application for Abatement I involved their domicile.  A review of Application for Abatement I revealed that the following supporting documentation was appended to the application: the appellants' completed Domicile Questionnaire; a copy of Mr. Casey's Florida driver's license and Florida voter identification card; a letter dated March 4, 2002 from St. Edward Church in Palm Beach, Florida, which welcomed Mr. and Mrs. Casey to the parish; and a five-page spreadsheet, presumably detailing credit card expenditures made by Mr. Casey, organized by date, location, and amount of expenditure.  The spreadsheet covered the time period beginning January 8, 2002 and ending December 31, 2002.  Application for Abatement I was not devoid of any detail or substance upon which a determination on the merits could be based.  Rather, the Board found that it contained sufficient information upon which the Commissioner could make a determination on the merits.  Contrary to the appellants' claim that Application for Abatement I was denied due to lack of substantiation, the Board found and ruled that Notice I constituted a denial based on the merits of the claims raised by the appellants in Application for Abatement I.   Accordingly, the provisions of § 37 relating to "incomplete" applications for abatement were not applicable in the present appeal.  The Board notes that if the abatement application had been denied for lack of completeness, the appellants could have either filed an appeal with the Board within sixty days of the date of the notice of denial for a de novo review of their abatement claim or, alternatively, they could have renewed their abatement application with the Commissioner if the time period under § 37 for filing an abatement application had not yet expired.  
	Pursuant to G.L. c. 62C, § 39, following the Commissioner's denial of Application for Abatement I on November 5, 2007, the appellants had sixty days, or until January 4, 2008, to timely file an appeal with the Board.  The appellants did not file an appeal with the Board until July 7, 2008, and the Board found and ruled that they did not file their appeal within the time period required by G.L. c. 62C, § 39 and the Board therefore found and ruled that it had no jurisdiction to hear and decide this appeal.  Accordingly, the Board allowed the Commissioner's Motion to Dismiss for lack of jurisdiction and entered a decision for the appellee in this appeal.  

APPELLATE TAX BOARD


                   By: ___________________________________
                        Thomas W. Hammond, Jr., Chairman





A true copy,

Attest: ____________________________
           Clerk of the Board

 Counsel for the appellants filed an affidavit in connection with their opposition to the Commissioner's Motion to Dismiss.  The affidavit asserted, among other things, that a DOR employee informed the appellants that it was permissible to file a second abatement application in lieu of appealing to the Board.  Even if the employee made such a statement and the appellants relied on it, their reliance was misplaced.  "'[O]ne relies at his peril on representations by a government official concerning legal requirements . . . [p]articularly where misstatements about the effect of applicable rules and regulations relied upon are oral, reliance on them may not be regarded as reasonable.'" First National Bank of Boston v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1993-181, 228,  (quoting Harrington v. Fall River Housing Authority, 27 Mass. App. Ct. 301, 309-310 (1989)). See also Sidell v. Commissioner of Internal Revenue, 225 F.3d 103, 111 (1st Cir. 2000) ("The tax code is an intricate web and demands clear rules so that it may be administered with as little uncertainty as possible. To achieve this goal, the [government] must speak with a single voice, that is, through formal statements of policy such as regulations or revenue rulings. Accordingly, statements by individual [government] employees cannot bind the [government].")(citations omitted).  The Board therefore placed no weight on the statement attributed to the DOR employee, because it would have had no impact upon the Board's jurisdiction or its authority to grant an abatement in this appeal.  See Commissioner of Revenue v. Marr Scaffolding Co., Inc., 414 Mass. 489, 494-95 (1993).  

ATB 2010-1022