Summary
In Ragland, the Arkansas Supreme Court stated that "[t]he primary rule in the construction of statutes is to ascertain and give effect to the intention of the legislature."
Summary of this case from McKee v. Federal Kemper Life Assur. Co.Opinion
No brief, for appellant.
No brief, for appellee.
[285 Ark. 188-A] HAYS, Justice.
In this supplemental opinion we address appellee's continued insistence that Ark.Stat.Ann. § 84-4715(a) imposes on the Commissioner of Revenue a duty to issue the final assessment within three years or lose the right to pursue further efforts to collect a deficiency in income tax, an issue which has given us considerable difficulty. Restated, the question is whether the legislature intended by § 84-4715(a) to allow three years in which the commissioner could commence a challenge to the sufficiency of an income tax return, or to allow three years in which the commissioner must complete the process of challenging a return, including any time necessary for administrative review. We held in our opinion on March 11, 1985, 686 S.W.2d 391 (Ark.), that the three year limit applies to the commencement of the process, interpreting the word "assessment," as used in § 84-4715(a), to refer to the proposed assessment. Of course, if the process must be completed in three years (unless extended by agreement between the commissioner and the taxpayer) then the word "assessment" refers to the final assessment.
We adhere to our original position for the reasons stated previously and because we believe the history of our income tax laws supports that conclusion. Our initial income tax legislation, the Income Tax Act of 1929 (Act 118) provided [285 Ark. 188-B] that if the commissioner determined that an income tax return was deficient he had two years within which to act by giving notice to the taxpayer, who then had thirty days in which to confer with the commissioner "as to the proposed assessment." (Our italics). See Section 26 of Act 118. No other administrative review was provided.
Ten years later Act 140 of 1939 was adopted amending Act 118. As with Act 118, no other administrative review was provided, except that the taxpayer was given thirty days in which to confer with the commissioner over "the proposed assessment." The 1939 act, however, did include a provision permitting the taxpayer and the commissioner to extend the time by written agreement. The amendments included a provision increasing the time allowed the commissioner to commence the process from two years to three years. This same limitation of time was included in the provisions of Act 401 of 1979, "The Arkansas Tax Procedure Act."
The 1939 amendment makes it entirely clear the assessment which must occur within the three years is not the final assessment, as appellee urges, but the proposed assessment, as the amendment uses the identical language used in Act 118, i.e. "The taxpayer against whom such assessment has been made shall have an opportunity within thirty days to confer with the commissioner as to the proposed assessment."
When the Tax Procedure Act of 1979 (Act 401) was adopted, this provision allowing three years appeared in restructured form (See § 15) and the rewording failed to make it clear that the assessment referred to is the proposed assessment and not the final assessment. However, nothing in Act 401 suggests there was any intent by the legislature to shorten the three year period which had prevailed over forty years in which the commissioner could commence his challenge to an income tax return by issuing the proposed assessment.
The petition for rehearing is denied.