Nissan Motor Corp. in U.S.A. v. Commissioner of Revenue

• Decision Date: 04 April 1990
• Citation: 552 N.E.2d 84,407 Mass. 153
• Parties: NISSAN MOTOR CORPORATION IN U.S.A. v. COMMISSIONER OF REVENUE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 84

552 N.E.2d 84

407 Mass. 153

NISSAN MOTOR CORPORATION IN U.S.A. v. COMMISSIONER OF REVENUE.

Supreme Judicial Court of Massachusetts Suffolk.

Argued Feb. 7, 1990.

Decided April 4, 1990.

Paul F. Doyle, New York City (Sandra K. Rotter, New York City, with him) for taxpayer.

Countess C. Williams, Asst. Atty. Gen., for Com'r of Revenue.

Before LIACOS, C.J., and WILKINS, ABRAMS, NOLAN and LYNCH, JJ.

LYNCH, Justice.

In April, 1987, the plaintiff, Nissan Motor Corporation in U.S.A. (Nissan), filed applications for abatement of those portions of its 1979 through 1983 Massachusetts corporate excise taxes based on sales in the State of New York (New York). The applications were filed after the expiration of all the specific time limits for seeking abatements set out in G.L. c. 62C, § 37 (1988 ed.), and the Commissioner of Revenue (commissioner) so held. However, Nissan claimed that it was not until a 1986-1987 audit in New York that it learned it was liable to New York for taxes during the same years, on the very same sales income that formed part of the basis of the 1979-1983 excise taxes Nissan paid in Massachusetts, and thus discovered it might possess a claim for partial abatement of those taxes paid Massachusetts. The Appellate Tax Board (board) agreed with the commissioner and dismissed Nissan's appeals, stating that it had no jurisdiction of the matter. Nissan timely sought review in the Appeals Court, and we transferred the case here on our own motion. We affirm the decision of the board.

The facts in this case are not in dispute. Nissan, a California corporation, maintains regional offices in several States, including Massachusetts. The Mansfield office is responsible for handling the receipt and shipment of orders for Nissan vehicles and parts to be sold in a number of States in the Northeast.

Since 1974, Nissan has filed corporate excise tax returns in Massachusetts. After a 1982 audit of the company's 1979 and 1980 corporate excise tax returns, the commissioner decided that G.L. c. 63, § 38(f ) (1988 ed.), income attributable to regional, but out-of-State, Nissan sales that were not taxable in those States could be taxed as income earned in Massachusetts, since those transactions were coordinated through the Mansfield office. ¹ Under this ruling Nissan sales in New York, Connecticut, Maine, Vermont, and Pennsylvania became taxable in Massachusetts.

Nissan lodged an immediate "protest," which the commissioner denied. ² The company took no action to appeal from the adverse ruling. Rather, Nissan proceeded to pay the additional taxes assessed by the Commonwealth for 1979 and 1980. Thereafter, it filed returns and paid Massachusetts corporate excise taxes for tax years 1981 through 1983 based on a computation including the out-of-State sales, in accordance with the application of G.L. c. 63, § 38(f ), defined by the commissioner in the 1982 audit.

Nor did Nissan seek an abatement of the taxes within the time period provided by the statute. Under G.L. c. 62C, § 37, "[a]ny person aggrieved by the assessment of a tax ... may apply in writing to the commissioner ... for an abatement thereof at any time within three years from the last day for filing the return of such tax, determined without regard to any extension of time, within two years from the date the tax was assessed, or deemed to be assessed, or within one year from the date that the tax was paid, whichever is later " (emphasis added).

Nissan stopped factoring the New York sales into its computation of Massachusetts excise taxes beginning with the tax year ending September, 1984, the year for which it filed corporate tax returns in New York for the first time. Subsequently, New York began an audit of Nissan's records and concluded, in 1987, that the company had been delinquent since 1976, from which year on it should have been filing tax returns and paying franchise taxes reflecting income earned from its sales in New York. ³ On the heels of the New York audit, in March, 1987, the commissioner began an audit of Nissan for its 1983 Massachusetts excise tax.

On April 9, 1987, Nissan filed its applications for abatement of so much of the 1979-1983 corporate excise taxes that were based on New York sales, a total it claimed amounted to $527,549. ⁴ The commissioner denied the applications on December 11, 1987, citing Nissan's failure to file within the time limits of c. 62C, § 37. Nissan sought review by the board. On July 22, 1988, the board granted the commissioner's motions to dismiss for lack of jurisdiction, based on the applications' untimeliness.

In this appeal, Nissan challenges the board's decision on a number of grounds. First, it asserts that the time limitations for filing an abatement should have been measured from the date New York's audit informed Nissan it was liable in New York for taxes on its New York sales, because prior to that point it would have been "inherently unknowable" to Nissan that it had a claim for abatement of its 1979-1983 excise taxes in Massachusetts. Second, Nissan argues that, on the merits, the Commonwealth's application of G.L. c. 63, § 38(f ), to its New York sales at the time of the 1982 audit was erroneous. ⁵ Finally Nissan states that the Commonwealth's strict construction of the statutory abatement time limitations, unmodified by a "discovery rule," coupled with an erroneous use of c. 63, § 38(f ), amounted to a violation of the United States Constitution's commerce clause, and unconstitutional denial of Nissan's rights under the due process clause.

1. The time limits on filing for tax abatements. It has long been the law of this Commonwealth that, when a remedy is created by statute, and the time within which it may be availed of is one of the prescribed conditions for relief, failure to meet that time limit deprives a judicial body, court, or administrative appeals board of jurisdiction to hear the case. Greeley v. Zoning Bd. of Appeals of Framingham, 350 Mass. 549, 552, 215 N.E.2d 791 (1966). The remedy thus becomes unavailable after the statutory deadline. Sullivan v. Jordan, 310 Mass. 12, 17, 36 N.E.2d 387 (1941).

That rule applies to filing for abatements of taxes alleged to have been incorrectly assessed. The board lacks subject matter jurisdiction over abatement proceedings where the process was commenced at a later time or prosecuted in any manner different from that dictated by statute. Shea v. Commissioner of Revenue, 390 Mass. 1001, 455 N.E.2d 1199 (1983) (improper service of petition for abatement). Children's Hosp. Medical Center v. Assessors of Boston, 388 Mass. 832, 838, 448 N.E.2d 748 (1983) (failure to file required documents for consideration for exemption). Nature Church v. Assessors of Belchertown, 384 Mass. 811, 812, 429 N.E.2d 329 (1981) (appeal filed two days after statutory time limits). Aetna Life Ins. Co. v. Commissioner of Corps. & Taxation, 323 Mass. 657, 660, 84 N.E.2d 1 (1949) (failure to use approved form for application for abatement).

Nissan, having clearly filed its abatement applications after the deadlines established by c. 62C, § 37, seeks to avoid the application of this principle of law, by asking this court, (a) to engraft a "discovery rule" onto the time limitation statute for seeking an abatement, and (b) to decide that the circumstances of Nissan's case merit application of it. We decline to do either.

Under the "discovery rule," which applies in certain tort actions, a particular cause of action "accrues" only when the plaintiff learns, or with the exercise of reasonable diligence, should have learned, that he or she has been harmed by the defendant's conduct. Flynn v. Associated Press, 401 Mass. 776, 780, 519 N.E.2d 1304 (1988). Dinsky v. Framingham, 386 Mass. 801, 803, 438 N.E.2d 51 (1982). Franklin v. Albert, 381 Mass. 611, 612, 411 N.E.2d 458 (1980).

The most fundamental of several flaws in Nissan's request is that the "discovery rule" "grew out of the need to determine when a cause of action 'accrued.' When the Legislature limits the time within which suit can commence from the date of accrual, it leaves to the court the determination of the precise meaning of the term accrued." Pobieglo v. Monsanto Co., 402 Mass. 112, 116, 521 N.E.2d 728 (1988). See Flynn v. Associated Press, supra (construing G.L. c. 260, § 4: "[a]ctions for ... libel ... shall be commenced only within three years next after the cause of action accrues"); Franklin v. Albert, supra (construing another portion of the same statute: "[a]ctions of contract or tort for malpractice ... against physicians ... shall be commenced only within three years next after the cause of action accrues"). It is quite clear that, when the statute on its face is specific as to the definitely established event that starts the ticking of the statute's time clock, there is no room for engaging in such judicial construction. Pobieglo v. Monsanto Co., supra. In Pobieglo, therefore, we held the "discovery rule" was inapplicable to wrongful death actions where G.L. c. 229, § 2, provided: "An action to recover damages ... shall be commenced within three years from the date of death...."

General Laws c. 62C, § 37, does not speak in terms of "accrual" of the remedy for a tax abatement. Rather, like the wrongful death statute, it is a statute of repose, limiting the time within which the action it creates may be brought, without any regard to the accrual of an action. Klein v. Catalano, 386 Mass. 701, 702, 437 N.E.2d 514 (1982). "It does not lie within our power to provide the excuse for those who fail to comply with" the dictates of a clear statute. William Rodman & Sons v. State Tax Comm'n, 364 Mass. 557, 560, 306 N.E.2d 820 (1974).

Furthermore, in this case, even Nissan's claim of inherent unknowability is dubious. Nissan asserts it filed a "protest" immediately after the commissioner's 1982 tax audit that made the company liable for Massachusetts excise taxes on New York sales for the...