State, Dept. of Revenue v. Lindsey

• Decision Date: 09 March 1977
• Parties: STATE of Alabama, DEPARTMENT OF REVENUE v. Aubrey J. LINDSEY, d/b/a A. J. Lindsey Wholesale Produce Company. Civ. 1015.
• Court: Alabama Court of Civil Appeals

Page 535

343 So.2d 535

STATE of Alabama, DEPARTMENT OF REVENUE v. Aubrey J. LINDSEY, d/b/a A. J. Lindsey Wholesale Produce Company.

Civ. 1015.

Court of Civil Appeals of Alabama.

March 9, 1977.

William J. Baxley, Atty. Gen. of Ala., Willard W. Livingston and Philip C. Davis, Asst. Counsels, Dept. of Revenue, and Asst. Atty. Gen. of Ala., for appellants.

W. M. Beck of Beck & Beck, Fort Payne, for appellee.

HOLMES, Judge.

From a decree of the Circuit Court of DeKalb County finding that the State Department of Revenue's assessment of taxes upon Aubrey J. Lindsey, d/b/a A. J. Lindsey Wholesale Produce Company, was barred by the statute of limitations, the State appeals.

The sole issue before this court is whether Tit. 51, § 786(17)(b), Code of Alabama (1973 Cum.Supp.), which became effective October 1, 1965, allows assessment by the State on December 10, 1968, of a sales tax on sales made by the taxpayer from January 1, 1963, through August 31, 1965. We hold that it does and reverse and remand.

The record discloses the following:

Taxpayer operates a wholesale produce business and sells produce and other food items to stores, restaurants, schools, individuals, and other entities. These sales were sales for consumption and as such were subject to the Alabama sales tax. Tit. 51, § 786(2) et seq., Code of Alabama (1973 Cum.Supp.). Taxpayer failed to collect the sales tax upon these sales and did not file returns with the State Department of Revenue as required by the Code.

From January 1, 1963, until October 1, 1965, the law provided:

'(b) No assessment shall be made by the department of revenue against any person, firm or corporation for any tax which became due from such person, firm, or corporation under the provisions of this Act more Than three years prior to the date the department commenced an audit of the books or records of such person, firm, or corporation to ascertain the amount due, or, if no audit is made, prior to the date the department mailed written demand for the amount claimed to be due from such person, firm or corporation.' (Emphasis supplied.) (Act No 100, § 16(b), 1 Acts of Alabama 307 (1959)).

Effective October 1, 1965, the preceding provision was amended to read as follows:

'Any notice, . . . of an amount due under this article shall be given or any action in court for the collection of such amount shall be begun within three years of the due date of such amount. Provided, however, In the case of . . . a failure to file a return, the tax may be assessed or a proceeding in court for the collection of such tax may be begun At any time. . . .' (Emphasis supplied.) (Tit. 51, § 786(17), Code of Alabama (1973 Cum.Supp.)).

Although not disclosed by the record, apparently the State Department of Revenue commenced its audit of taxpayer on Spetember 1, 1968.

On December 10, 1968, the department entered a sales tax assessment against taxpayer for $1,821.62 plus $308.37 interest, for a total assessment of $2,129.89. The taxes assessed were for a period extending from January 1, 1963, through June 30, 1968.

The taxpayer appealed within the time provided by law, and on September 24, 1976, the learned trial judge rendered a final judgment wherein it held the taxpayer liable to the State for taxes and interest thereon for taxes accruing from September 1, 1965, through June 30, 1968, a sum of $1,753.10.

The court specifically found that the taxes sought to be recovered for the period from January 1, 1963, to September 1, 1965, were barred by the statute of limitations, I.e., Act 100 as set forth, Supra. It is from this ruling that the State prosecutes this appeal.

I

The pertinent portion of the Code, as set forth Supra, discloses that had Act 100 been in effect on September 1, 1968, when the State commenced its audit of taxpayer's records, the State would have been allowed to assess taxes accruing only from September 1, 1965, three years prior to the time it commenced its audit. However, Act 100 was not in effect on September 1, 1968. Rather, Tit. 51, § 786(17), Code of Alabama (1973 Cum.Supp.), which became effective October 1, 1965, was the applicable statutory provision. It provided that in cases where, as here, the taxpayer failed to file a return, the State could assess a tax at any time.

The State contends that the 1965 amendment (Tit. 51, § 786(17)) authorizes it to make assessments at any time for taxes accruing three years prior to the effective date of the amendment in those instances where the taxpayer has failed to file a return. Put another way, the State contends that since the taxes attempted to be assessed in this instance (from January 1, 1963, through August 30, 1965) were not barred by Act 100, § 16(b), when the 1965 amendment which extended the period for assessment became effective, they are governed by § 786(17)'s provisions and are properly levied. The State is correct in its contention.

Statutes of limitation are of two types. In one, the limitation is so inextricably bound up in the statute creating the right that it is deemed a portion of the substantive right itself. In the other, the limitation is deemed to affect only the remedy and does not constitute part of the substantive right. By affecting the remedy, it is meant that the statute establishes the time...