Comptroller of Md. v. Myers
| Decision Date | 01 July 2021 |
| Docket Number | No. 0095,0095 |
| Parties | COMPTROLLER OF MARYLAND v. JAMES R. MYERS, ET AL. |
| Court | Court of Special Appeals of Maryland |
TAXATION - INCOME TAXES - PAYMENT - RECOVERY OF TAXES PAID - STATUTE OF LIMITATIONS - EVIDENCE OF TIMELY FILING
The limitations period in Md. Code Ann., Tax-General Article ("TG") § 13-1104(c)(1) is inextricably keyed to § 6511 of the Internal Revenue Code ("I.R.C."), and therefore, pursuant to TG § 10-107, the Comptroller and Tax Court must apply administrative and judicial interpretations of I.R.C. § 6511, including Treas. Reg. § 301.7502-1 and I.R.C. § 7502. Accordingly, in a situation where a taxpayer mails a claim for a refund, but the Comptroller does not receive the claim within the limitations period, the taxpayer can show timely filing only by a receipt of registered mail or other proof permitted pursuant to Treas. Reg. § 301.7502-1 and I.R.C. § 7502.
Circuit Court for Anne Arundel County
REPORTED
Opinion by Graeff, J.
*Ripken, Laura S., J., did not participate in the Court's decision to designate this opinion for publication pursuant to Md. Rule 8-605.1.
This appeal addresses what a taxpayer must show to prove that he or she "filed" a document with the Comptroller. James and Monica Myers, appellees, prepared amended tax returns seeking a refund for tax years 2007, 2008, 2009, 2010, 2011, 2012, and 2013. The Comptroller denied refunds for tax years 2008, 2009, and 2012, alleging that appellees had failed to file their amended returns for those years within the applicable limitations period. The Tax Court, based on the testimony of appellees that they timely mailed the amended returns, reversed the Comptroller's decision and ordered refunds for the 2008, 2009, and 2012 tax years. The Circuit Court for Anne Arundel County affirmed the decision of the Tax Court.
On appeal, the Comptroller presents the following questions for this Court's review, which we have rephrased, as follows:
For the reasons set forth below, we shall reverse the decision of the circuit court.
The evidence indicated that appellees routinely filed their federal and state tax returns in a timely fashion. Appellees filed their original 2008 income tax return onOctober 15, 2009, their 2009 income tax return on October 15, 2010, and their 2012 income tax return on October 15, 2013.1
During this time frame, an issue relating to Maryland's tax scheme was working its way through the courts. On May 18, 2015, the Supreme Court issued its opinion in Comptroller of the Treasury of Maryland v. Wynne, 575 U.S. 542 (2015). Wynne addressed a provision in Maryland's tax law that provided a credit to offset State taxes for income taxes paid to other states on income earned in other states, but did not issue a credit to offset county income taxes. Id. at 545-46. The Court held that this was unconstitutional because it taxed income earned interstate at a higher rate than income earned intrastate, and therefore, it discriminated against interstate commerce in violation of the dormant Commerce Clause. Id. at 547-48, 564-65. "As a result, Wynne and others similarly affected who paid county income taxes as well as taxes to other states for income earned therein became entitled to refunds of a portion of their Maryland 'piggy back' taxes." Holzheid v. Comptroller of the Treasury of Maryland, 240 Md. App. 371, 382 (2019), cert. denied sub nom., 469 Md. 655 (2020).
In 2011, prior to the Wynne decision, but while the case was working its way through the court system, appellees' accountant, Ms. Truly, informed them that, if they filed amended tax returns, there was a possibility that they could benefit from the outcome of the Wynne decision. Ms. Truly advised appellees that, given the three-year statute oflimitations for filing a refund on tax returns, appellees would need to file their amended returns prior to the outcome of the Wynne case.
Ms. Truly testified that, with appellees' agreement, she prepared amended tax returns for the 2007 through 2013 tax years.2 Mr. Myers testified that he mailed all the amended returns to the Comptroller, but he did not send them by certified mail, and therefore, he did not have a receipt showing they were mailed. After the Supreme Court's 2015 decision in Wynne, appellees advised Ms. Truly that they previously had mailed all of the amended returns that Ms. Truly had prepared, but they did not receive all of their refunds. They asked Ms. Truly to follow up with the Comptroller.
On November 16, 2016, Ms. Truly filed a Form 156, requesting appellees' tax records. The Comptroller did not respond to this request. Ms. Truly then called the Comptroller's office, which stated that it had not received Ms. Truly's Form 156. Ms. Truly sent the form a second time, but again, the Comptroller did not respond.
In 2017, Ms. Truly became aware that the Comptroller was not in possession of appellees' 2008, 2009, and 2012 amended returns. She testified that she followed the accepted procedure, i.e., to resubmit the amended returns for those years. Ms. Truly included a letter advising the Comptroller that the 2008, 2009, and 2012 amended returns had been timely filed, but they were missing in the Comptroller's office.3 Appellees thenmailed a second set of amended returns, as well as an original amended return for 2013, on August 11, 2017. The Comptroller received them on August 16, 2017.
The Comptroller denied appellees' refund requests for the 2008, 2009, and 2012 tax years. The Comptroller alleged that he had not received appellees' amended returns for these years until August 16, 2017, which placed the refund requests outside of the three-year limitations period.
On March 13, 2018, the Comptroller held an informal hearing. Andre Aviles, a member of the Revenue Administrative Division of the Comptroller's Office, testified that the Comptroller received appellees' 2008, 2009, and 2012 amended returns requesting refunds on August 16, 2017. Appellees alleged that they had timely filed their amended returns several years before, within the limitations period. On August 11, 2017, after their accountant was advised that the Comptroller could not locate their 2008, 2009, and 2012 amended returns, appellees refiled their amended returns for these years.
On May 9, 2018, the Hearing Officer issued appellees a Notice of Final Determination, affirming the denial of appellees' 2008, 2009, and 2012 refund requests. The Hearing Officer found that appellees' amended returns for these tax years were not filed until August 16, 2017, and therefore, the claims were untimely.
On June 11, 2018, appellees filed a Petition of Appeal to the Maryland Tax Court. They listed the amount in controversy as $58,419, which included: $18,314 for 2008; $21,845 for 2009; and $18,260 for 2012.
The Comptroller subsequently filed a motion for summary judgment, alleging that appellees failed to timely file amended returns for tax years 2008, 2009, and 2012. Heattached an affidavit of the custodian of records, Mr. Aviles, who stated that the Comptroller did not possess any filings from appellees for these tax years other than those that the Comptroller received on August 16, 2017.
Appellees filed an opposition to the Comptroller's motion for summary judgment. The opposition did not include an affidavit, but the pleading stated that, "upon reasonable belief and evidence to be provided," appellees' original claims for refunds were timely submitted, and "the Comptroller misplaced the timely filed original amended returns for the tax years in issue."
The Comptroller filed a reply to appellees' opposition. The Comptroller argued that appellees did not offer a compelling basis to deny summary judgment because they failed to attach an affidavit showing a dispute of a material fact, and the opposition assumed "an incorrect understanding of the mailbox rule."
In response, appellees filed a motion to supplement their opposition with affidavits. The affidavits signed by appellees stated that, based on personal knowledge, the facts contained in their opposition and their Petition of Appeal were "true to the best of [their] knowledge, information and belief."
The Comptroller subsequently filed a motion to strike the motion to supplement and appellees' affidavits. He argued, among other things, that the affidavits were defective because they did not contain specific facts, but instead, they generally referenced pleadings and then stated that the statements were true to the best of their knowledge, information, and belief.
On October 24, 2018, the Tax Court held a motions hearing. It denied the Comptroller's motion to strike, stating that, as an administrative agency, it had "great flexibility" with regard to the admission of evidence.
With respect to the motion for summary judgment, the Comptroller argued that he had established by affidavit that the amended returns were not timely filed. He argued that, pursuant to Md. Code Ann., Tax-General Article ("TG") § 13-1104, the amended returns needed to be filed within three years after the tax was paid, and the August 16, 2017 filings fell outside of that time period. The Comptroller argued that, if a taxpayer alleges that the Comptroller lost tax returns, pursuant to the Internal Revenue Code, 26 U.S.C. § 7502 ("I.R.C. § 7502"), they needed to show proof of mailing through a return receipt of certified mail.
Counsel for appellees argued that there were facts in dispute, and therefore, summary judgment was not appropriate. Counsel argued for the...
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