47 S.E.2d 240 | N.C. | 1948
ERVIN, J., took no part in the consideration or decision of this case.
The plaintiff filed its State income tax return for the calendar year 1940 prior to 15 March, 1941, and paid the tax upon the net income manifested. In ascertaining the taxable net income the taxpayer took certain credit for depreciation of machinery for the tax year. On 20 October, 1944, notice was given the plaintiff by the Commissioner of Internal Revenue that its 1940 taxable net income as shown in the Federal return had been changed and corrected by disallowance of a portion of the deduction claimed for depreciation of machinery, and that an additional assessment was being made. The plaintiff made no report to the North Carolina Department of Revenue of this change and correction in its 1940 income and additional assessment thereupon. Upon advice from the Federal department that such change had been made, notice was given to the plaintiff by the defendant Commissioner that an assessment of additional State income tax for the year had been made because of disallowance of a portion of the deduction claimed by it for depreciation of machinery. The plaintiff, denying the authority of the Commissioner to make additional assessment after the expiration of three years from the filing of the original return (G.S.,
At the hearing before Gwyn, J., at September-October Term of Burke Superior Court, it appearing that the plaintiff's pleading sufficiently set forth the above facts, the defendant demurred and moved to dismiss the action. Judge Gwyn, being of the opinion that the power to make additional assessment was barred by the cited statute, overruled the demurrer and defendant appealed.
The only question raised on this appeal is whether, on the above stated facts, G.S.,
For a long period during which the General Assembly enacted its tax income laws biennially or at each regular session, and since the enactment of the permanent Revenue Act in 1939, it has been the policy of the State, as reflected in these statutes, to require the taxpayer to notify the Commissioner of Revenue and file an additional return under oath when any change or correction affecting the taxable net income has been made *766
by the Federal authority, and on such change authority is given the Commissioner to make additional assessments or refunds on "such evidence as may be brought to his attention" or he "shall otherwise acquire." G.S.,
It is well to observe here that the provision found in Section
The power to make additional assessments or make refunds, predicated on changes made in the taxpayer's liability to the Federal authority, is based on a distinctly new condition not contemplated in G.S.,
In recognizing and adopting, to this extent, Federal revision as an aid to local taxation the legislative body was in the field of remedial legislation, and is presumed to have had a knowledge of the new conditions upon which administrative action must depend. It is pointed out that the Legislature must have known that only a small proportion of the Federal corrections mentioned in the statute actually occur during the three-year period, and that under the construction contended for by the appellee the remedy provided would be inadequate. The Federal income tax law has a provision similar to ours limiting the authority of the taxing unit to deal with original returns and make corrections. However, in Federal practice, when the taxpayer, with his return, files a waiver of this limitation the authority of the department to make corrections is continued without limitation of time. Hence a large proportion of the corrections is made beyond the period limited by our statute in G.S.,
As we have pointed out, the requirement that a taxpayer within 30 days after receiving notice of the correction of the Federal taxing authority shall file with the State Commissioner of Revenue a return reflecting such change, under oath, is positive, mandatory, and separately implemented with heavy penalties for failure to do so, and makes no reference to the three-year statute of limitations provided in Section
It is pointed out by the appellant that the latter construction of the statute has been uniform for many years in administrative practice and acquiesced in by the General Assembly for a long period of time, and is entitled to the weight accorded administrative interpretation by the cited precedents; Cannon v. Maxwell,
Decision might well rest on these principles, but not necessarily so. The General Assembly of 1937 amended the pertinent sections of the *768
existing law, now G.S.,
In 1947 the Legislature amended Section
For the reasons stated, the judgment overruling the demurrer and declining the nonsuit must be reversed. It is so ordered.
Reversed.
ERVIN, J., took no part in the consideration or decision of this case.