This is an appeal from a judgment of the district court of Burleigh County holding void certain purported assessments of additional income tax made by the State Tax Commissioner. The facts, briefly stated, are as follows:
The plaintiff, a resident taxpayer of the State of North Dakota, filed his State income tax returns for the years 1946, 1947, 1948, and 1949. :On March 4, 1954, the Tax Commissioner notified the plaintiff that, under authority given to him by Section 57-3838 of the North Dakota Revised Code of 1943, as amended by Chapter 307 of the Session Laws of 1945, he had assessed additional income tax against the taxpayer for the above-mentioned years.
Thereafter, on March 26, 1954, the tax- • payer filed his written objections to such additional assessments and demanded a hearing thereon. The hearing was held on April 21, 1954, in the office of the Tax Commissioner in the State Capitol. At such hearing, thе plaintiff objected, in writing, to the authority of the Tax Commissioner to levy additional taxes on the returns in question, contending that any additional assessments had been barred by thе three-year statute of limitations. Evidence produced at such hearing was limited largely to the testimony of the taxpayer, who testified that, in the preparatiоn of the returns in question, he had fairly submitted all of the necessary information to an accountant who thereupon had prepared the returns which later were signеd and filed with the Tax Commissioner.
Nothing further was heard by the taxpayer from the Tax Commissioner until May 23, 1961, more than.seven years after the evidence had been taken at suсh hearing. On that date, the Commissioner made his decision assessing $13,764.63 as additional taxes for the years in question, .plus penalties and interest.
In making such assessment for additionаl taxes claimed to be due, the Tax Commissioner made no finding that the returns in question were based on false or fraudulent information given by the taxpayer. He merely statеd that such additional taxes were assessed on the “taxpayer’s failure to report his entire income as provided by law, for the years in question.”
The Tax Commissioner is an administrative agenсy, and an appeal from his decision was available to the taxpayer. Langer v. Gray,
The taxpayer, however, failed to avail himself of this right to appeal. Where a statutory remedy, by appeal, is available to the taxpayer,' the decision of the Commissioner becomes final upon failure of the taxpayer to take such appeal within the period provided therefor. Hoover Grain Co. v. Thoresen,
Since the decision of the Tax Commissioner, regardlеss of how defective or erroneous it may have been, became final on the failure of the taxpayer to appeal within the statutory period provided for taking appeal, the assessment of additional taxes and statutory interest cannot be attacked in this case.
In this proceeding, however, the taxрayer prays for judgment declaring his rights under the decision of the Tax Commissioner. Is he entitled to have his rights and obligations determined in this action, including liability for penalty and interest, or is the decision of the Tax Commissioner final because of taxpayer’s failure to appeal?
Section 32-23-01 of the North Dakota Century Code provides that courts of record shall have power to declare rights, status, and other legal relations. This court has held that declaratory-judgment actions are availаble to determine the validity and priority of mortgage and tax liens. State v. Divide County,
The New York Court of Appeals, in an action involving the.collection of gas taxеs, said that, where the interests of the public are involved,
“ * * * we consider that a declaratory judgment is the appropriate remedy to settle these controversies * Socony-Vacuum Oil Co. v. City of New York,247 App.Div. 163 ,287 N.Y.S. 288 , and affirmed without opinion in272 N.Y. 668 ,5 N.E.2d 385 .
Borchard on “Declaratory Judgments,’” second edition, at page 826 and following, points out that government officials, chаllenged by declaratory action to correct erroneous construction of a tax statute, frequently attempt to escape an adjudication by asserting the impropriety of judicial recourse by declaration, but that, even in States which decline to enjoin the collection of taxes, the courts neverthеless have granted declaratory remedies to correct errors. Again, at page 849, Borchard points out that problems of various kinds have arisen in connection with the collection and the enforcement of taxes, to the prompt solution of which the declaratory procedure has proved adaptable. He states:
“Thus, both government and taxpayer have had occasion to question the legality and regularity of the proceedings connected with the аssessment, collection and enforcement of taxes, * * ”
Thus this tax, as redetermined by the Tax Commissioner, became delinquent fifteen days after the giving of notice of the decision of May 23, 1961.
Section 57-38-43 of the North Dakota Century Code provides for interest on delinquent taxes. That section reads:
“Interest at the rate of one per cent a month shall be computed upon all delinquent income tax payments, with an additional penalty of five per cent at the time such tax becomes delinquent.”
Thus interest on such delinquent taxes did not or could not be assessed for thе more than seven years during which the Tax Commissioner failed to act in this case. Such interest commenced when such assessment for additional taxes became dеlinquent fifteen days after the giving of notice of the Tax Commissioner’s decision of May 23, 1961. The five per cent penalty also became due when such tax becamе delinquent.
For all of the reasons stated herein, the plaintiff is entitled to judgment declaring the tax liability of the taxpayer, for which lien has attached on assets held in Federal court, in the sum of $13,764.63, plus interest from fifteen days after the giving of notice of the decision of the Tax Commissioner of May 23, 1961, plus the penalty of five per cent provided in Section 57-38-43.
The case is hereby remanded to the district court for entry of judgment in accordance with this opinion. No costs shall be awarded to either party on appeal.