Hamm v. Harrigan
| Citation | 278 Ala. 372,178 So.2d 529 |
| Decision Date | 09 September 1965 |
| Docket Number | 3 Div. 100,Nos. 3,s. 3 |
| Parties | Phillip J. HAMM, Commissioner of Revenue v. W. D. HARRIGAN et al. Phillip J. HAMM, Commissioner of Revenue v. Virginia H. O'MELIA et al. Div. 100,-A. |
| Court | Supreme Court of Alabama |
Statutes referred to in the opinion are as follows:
§ 407. Assessment of income taxes.--The income tax provided for in this chapter shall be assessed and fixed as hereinafter provided by the department of revenue and upon blanks in the form to be prescribed by the department of revenue. Provided, the amount shown to be due by the taxpayer's return shall constitute and create a prima facie liability for such amount on which taxes shall be paid as herein provided. Provided, further, that 'assessment' or 'assessed' herein used shall refer to and mean the final determination of the amount found to be due by the department of revenue. Provided, further, that the mailing of the income tax blank to persons liable for the tax herein provided, shall be the only notice required to be given, except where the amount as finally fixed by the department of revenue shall be different from the amount shown to be due by the returns as made by the taxpayer. Provided, further, that the failure to receive such blank shall not relieve any person required to make a return, from making such return, or the penalties for failure to so do or liability for tax. Provided, further, that where the department of revenue determines that the amount due is different from that shown by the taxpayer's return, notice of such different amount shall be given to taxpayer by registered mail, return receipt requested, giving the taxpayer notice of the amount so fixed and the department of revenue shall fix a day, not less than fifteen days from date of such notice, for hearing any protest of taxpayer. The time and place of such hearing shall be designated in such notice. Upon hearing such protest or if the taxpayer fails to appear on the day set, the department of revenue shall finally fix, determine and assess the amount of tax due and notify the taxpayer thereof by registered mail. Within thirty days from the date of mailing the letter advising the taxpayer of such assessment the taxpayer may appeal from such assessments in the same manner as in cases of appeals from assessments made by the department of revenue as provided for in this title. (Ib.)
§ 414. Limitation upon suits and proceedings by the taxpaper.--No suit or proceeding shall be maintained in any court for the recovery of any tax collected under the authority of this chapter alleged to have been erroneously or illegally assessed or collected or of any penalty claimed to have been collected without authority or of any sum alleged to have been excessively or in any manner erroneously collected (except as is otherwise provided in section 407 of this title) until the claim for refund or credit has been duly filed with the department of revenue according to the provisions of law in that regard and regulations established in pursuance thereof but such suit or proceeding may be maintained whether or not such tax, penalty or sum has been paid under protest or duress. No such suit or proceeding shall be begun before the expiration of three months from the date of filing such claim unless the department of revenue renders a decision thereon within that time, nor after the expiration of five years from the date of payment of such tax, penalty or sum, in any event. Provided, however, that in the event the department of revenue disallows said claim, or any part thereof, and notifies the taxpayer of such disallowance by registered mail, then the taxpayer must within a period of two years from the date of such notification, commence his suit or proceeding. Provided, however, that this section shall not prejudice or impair the right of the taxpayer to a credit against taxes imposed by this chapter for the amount of any refund allowed in accordance with the provisions of section 410 of this title, nor for the amount of any judgment recovered in accordance with section 407 of this title, even though at the time such credit is claimed the right of any such taxpayer to file suit would be barred hereunder. (Ib.)
Section 410. Tax paid through mistake or error.--In case any taxpayer has through mistake or error paid an income tax which he is not legally due, or has paid an amount in excess of which he was in fact due, such taxpayer may make application on forms furnished therefor, to the department of revenue to have such amount erroneously paid refunded, and upon making satisfactory proof to the department of revenue that such error was made, the department of revenue shall certify to the comptroller the amount to be refunded by the state and warrant shall be drawn for such refund together with interest at the legal rate. Applications for refund shall be made within three years from date of payment. In the event the department of revenue fails or refuses to certify to the comptroller the amount of tax due to be refunded or if he certifies a lesser amount than the taxpayer deems he is entitled to have refunded, the taxpayer may institute a proceeding in the circuit court of Montgomery county in the nature of a mandamus proceeding to require the department of revenue to certify, to the comptroller, the amount due to be refunded to such taxpayer. The taxpayer shall have the right to institute and prosecute such proceedings in the nature of mandamus whether or not the tax shall have been paid under duress or protest and without regard to the fact that the department of revenue may be entitled to exercise in respect of the determination of the amount to be refunded some measure of discretion and the court shall be entitled to determine whether or not and to what extent any discretion committed to the department of revenue shall have been properly exercised.
Richmond M. Flowers, Atty. Gen., Willard W. Livingston and Chas. P. Miller, Asst. Attys. Gen., for appellant.
Chas. B. Arendall, Hand, Arendall, Bedsole, Greaves & Johnston, Mobile, M. R. Nachman, Jr., Steiner, Crum & Baker, Montgomery, for appellees.
The commissioner of revenue appeals from two judgments of the Circuit Court of Montgomery County which awarded peremptory writs of mandamus commanding the commissioner to certify to the comptroller that certain sums of money are due to be refunded to the taxpayers, who are the appellees, to the end that the State's warrants shall be drawn so as to make the specified refunds to the taxpayers.
Two cases were tried together and have been so argued on this appeal. The issues in both cases are the same. We shall refer to them as if there were only one case and to the appellees in the singular as if there were only one taxpayer.
The essential facts, as we understand them, are that the taxpayer paid to the State income tax for 1958; that the amount of the tax paid was based and computed on a sum which taxpayer received as a 'liquidating dividend' of an Alabama corporation; that the computation was made on the erroneous and illegal premise that taxpayer was required to treat as part of his taxable income an amount equal to the unrealized appreciation in value of certain timberlands which were distributed in kind to the stockholders as liquidating dividends; that the computation was based on the further erroneous premise that such appreciation in value was not exempt from income tax under § 388, Title 51, Code 1940, which exempts 'liquidating dividends paid from income of domestic corporations on which the corporation distributing such dividends has paid all income taxes due the state of Alabama in the current or prior tax years'; that the assets so distributed had been acquired from the original capital and the earnings of the corporation; and that the corporation had paid to the state all income taxes due to the state.
It further appears that taxpayer timely filed income tax return; that the department of revenue assessed a tax deficiency; that taxpayer waived notice and requested that the assessment be made final; and that the department did make the assessment final on December 30, 1959. The waiver and assessment in one case recite as follows:
Waiver.
'That taxpayers herein by requesting the assessment for income taxes against them be made final immediately, hereby reserve the right to appeal from said final assessment in the manner which the law permits them to do.'
Final Assessment.
'WHEREAS, on the 30th day of December, 1959, the State Department of Revenue made an assessment against W. D. and Dorine Harrigan (hereinafter called Taxpayer) for additional income tax due by said Taxpayer under the provisions of the Alabama Income Tax Act (Title 51, Sections 373, et seq., Code of Alabama 1940), for the calendar year of 1958 together with penalty and interest thereon, in the amount as follows:
'Additional income tax
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