State v. Pettaway

• Decision Date: 09 March 2001
• Citation: 794 So.2d 1153
• Parties: STATE v. Collins PETTAWAY, Jr., and Synethia E. Pettaway.
• Court: Alabama Court of Civil Appeals

794 So.2d 1153

STATE v. Collins PETTAWAY, Jr., and Synethia E. Pettaway.

2000030.

Court of Civil Appeals of Alabama.

March 9, 2001.

Bill Pryor, atty. gen.; Susan Kennedy, chief counsel, Department of Revenue, and deputy atty. gen.; and David E. Avery III, asst. counsel, Department of Revenue, and asst. atty. gen., for appellant.

J.L. Chestnut, Jr., of Chestnut, Sanders, Sanders, Pettaway, Campbell & Albright, P.C., Selma, for appellees.

THOMPSON, Judge.

The State of Alabama, through its Department of Revenue (the "Department"), appeals from a summary judgment entered in favor of taxpayers Collins Pettaway, Jr., and Synethia E. Pettaway ("Pettaways"). This appeal involves the interpretation of § 40-2A-7(c)(2)a., Ala. Code 1975. We reverse and remand.

The Department denied the Pettaways' petition for a refund of income taxes paid through employee withholding for the tax years 1995 and 1996. The Pettaways appealed that denial, on March 24, 2000, to the Circuit Court of Dallas County, pursuant to § 40-2A-7(c)(5)b., Ala.Code 1975. The Department answered and filed a motion for summary judgment, with supporting documentation. The Pettaways filed an opposition to the Department's summary-judgment motion; the court treated that opposition as a cross-motion for summary judgment. After conducting a hearing, the trial court entered a judgment for the Pettaways, on September 6, 2000.

The Pettaways jointly filed their Alabama income-tax return for the 1995 tax year on October 8, 1998. The original due date for that return was April 15, 1996. Along with their return, the Pettaways petitioned for a refund. The Department mailed the Pettaways a letter on November 25, 1998, explaining that the refund was being denied, pursuant to § 40-2A-7(c)(2)a.

On August 16, 1999, the Pettaways jointly filed their Alabama income tax return for 1996; again, they petitioned for a refund. The 1996 tax return was originally due on April 15, 1997. The Department also denied this refund request, pursuant to § 40-2A-7(c)(2)a., and it mailed the Pettaways a letter explaining the denial on October 1, 1999.

The trial court conducted a hearing on July 18, 2000. It held on September 6, 2000, that the Pettaways were entitled to "$2,010.00 for the 1995 tax year and $6,100.00 for the 1996 tax year, plus all applicable interest due from the time of filing." The Department appealed.

The Department argues that the trial court erred in its application of § 40-2A-7(c)(2)a., Ala.Code 1975. The Department contends that the Pettaways were not entitled to a refund for either tax year, 1995 or 1996, because, it argues, § 40-27(c)(2)a., bars an income-tax refund request when the original income-tax return is filed more than two years after the original due date, if the tax has been paid through income withholding. We agree.

The construction of a statute is a legal question, and we review the trial court's interpretation of a statute with no presumption of correctness. Ex parte Sonat, Inc., 752 So.2d 1211, 1216 (Ala.1999) (citing Sizemore v. Franco Distrib. Co., 594 So.2d 143, 147 (Ala.Civ.App.1991)(rejecting a presumption of correctness in tax-refund action brought as original proceeding in circuit court)). The cardinal rule in statutory construction is to determine and give effect to the intent of the legislature as manifested in the language of the statute. State v. Amerada Hess Corp., 788 So.2d 179 (Ala.Civ.App.2000) (citing McClain v. Birmingham Coca-Cola Bottling Co., 578 So.2d 1299 (Ala. 1991)). "Absent a clearly expressed legislative intent to the contrary, the language of the statute is conclusive. Words must be given their natural, ordinary, commonly understood meaning, and where plain language is used, the court is bound to interpret the language to mean exactly what it says." Ex parte State Dep't of Revenue, 683 So.2d 980, 983 (Ala.1996) (citing IMED Corp. v. Systems Eng'g Assocs. Corp., 602 So.2d 344 (Ala.1992)). "If the language of the statute is unambiguous, then there is no room for judicial construction and the clearly expressed intent of the legislature must be given effect." IMED Corp. at 346; see also Johnson v. Price, 743 So.2d 436 (Ala.1999)

. In addition, the United States Supreme Court has held that a statute of limitations in the federal tax law must be strictly construed in favor of the Government. Badaracco v. Commissioner, 464 U.S. 386, 398, 104 S.Ct. 756, 78 L.Ed.2d 549 (1984).

We have found no Alabama cases interpreting § 40-2A-7(c)(2)a., which was amended in 1995. That provision reads:

"a. Generally.—A petition for refund shall be filed with the department or an automatic refund issued pursuant to Section 40-29-71, or a credit allowed, within (i) three years from the date that the return was filed, or (ii) two years from the date of payment of the tax, whichever is later, or, if no return was timely filed, two years from the date of payment of the tax. For purposes of this paragraph, taxes paid through withholding or by estimated payment shall be deemed paid on the original due date of the return."¹

When the Legislature amended the statute in 1995, it employed language similar to that used in a similar federal statute, 26 U.S.C. § 6511(a), but clarified the language relating to the question of whether the original return was timely filed. Before the 1995 amendment, § 40-27(c)(2)a. had provided: "A petition for refund must be filed with the department or an automatic refund pursuant to Section 40-29-71, or credit allowed within (i) three years from the date the return was filed, or (ii) two years from the date of payment of the tax, whichever is later."

Under that earlier version of the statute, if the petition for refund was made in conjunction with, or on the same documents as, the original return, then no limitations period applied. As drafted, the former statute allowed the delinquent filer the same benefit as the timely filer, with regard to a tax refund. We conclude that the amended statute, that was in effect when the Pettaways filed their 1995 and 1996 tax returns, clarified the three-year limitations period. The amended statute permitted the three-year-limitations period to run from the date of the filed return only in a case in which the original return was timely filed. Because the Pettaways requested a refund of taxes that had been paid entirely through withholding, they had two years from the date the taxes were "deemed paid" in which to request a refund. Under the present statute, the tax is "deemed paid on the original due date of the return." The petitions for refunds were not timely filed in regard to either tax year, 1995 or 1996. The periods allowed by the statute of limitations for the two refund petitions would have run on April 15, 1998, and April 15, 1999, respectively. Therefore, the refunds the Pettaways requested were properly denied by the Department; the trial court erred in entering a judgment for the Pettaways.

In addition, we note that 26 U.S.C. § 6511(a) reads as follows:

"Period of limitation on filing claim.— Claim for credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid."

Under the federal provisions, §§ 6513(b)(1) and (2) specify when the return is deemed to be filed and when the taxes are paid. Under those provisions, the Internal Revenue Code prohibits a refund if the original return is not filed within two years of the original due date of the return, when the money to be refunded was paid either by employee withholding or by estimated payments. See Dantzler v. United States Internal Revenue Serv., 183 F.3d 1247 (11th Cir.1999)

and Commissioner v. Lundy, 516 U.S. 235, 116 S.Ct. 647, 133 L.Ed.2d 611 (1996).

Furthermore, a split of authority exists among the circuits on the interpretation of § 6511(a) when the taxpayer petitions for a refund on a delinquent return. Some courts interpret the statute strictly against the Government, by holding that a refund claim based on a delinquent return is timely because...