Lead Opinion
Appellants assert that, since the Tax Commissioner recognized an overpayment of the April 30, 1975, assessment for the 1972 report year, the commissioner has a mandatory duty to refund the entire overpayment of the franchise tax for the 1972 report yеar, pursuant to R.C.
5733.11, regardless of the date of payment. In essence, appellants contend that the $94,852.16 overpaymеnt made in 1972 should be refunded because of the $9,349.57 assessment in 1975, even though the application for review and correction as to that amount was filed February 6, 1976.
The Tax Commissioner is authorized to refund corporate franchise taxes in two instancеs. He may order a refund of taxes in a final determination issued on an application for review and correction оf a franchise tax assessment in accordance with R.C. 5733.11 and an application for refund of corporate franchise taxes filed in accordance with R.C. 5733.12.
R.C. 5733.11 provides, in pertinent part, that:
“If upon final determination of the application * * * so filed * * * so that the amount duе from such corporation * * * is less than the amount of the taxes paid, there shall be issued to the corporation * * * a refund in the amount of such overpayment as provided by section 5733.12 of the Revised Code * * * .”
Appellants incorrectly assert that the Tax Commissioner has a mandatory duty to issue a refund of the entire overpayment, pursuant to R.C. 5733.11. Rather, the mandates as tо the amount and procedure of a refund are determined pursuant to R.C. 5733.12.
R.C. 5733.12, in pertinent part, provides:
“The treasurer of state shall refund to the corporation the amount of taxes paid illegally or erroneously, or paid on any illegal or erroneous assessment * * * рrovided that in any event such application for refund must be filed with the commissioner within three years from the date of the illegаl or erroneous payment of the tax. * * * . ” (Emphasis added.)
Appellants contend that they are entitled to an entire refund for all overpayments for the 1972 report year, because they paid an assessment in 1975 and filed their application for refund within three years. Appellee contends that the three
We find merit in appellee’s contention.
R.C. 5733.12 does not address itself to when the entire tax liability is extinguished, but rather it concerns itself with the date of the “illegal or erroneous payment.” Further, R.C. 5733.12 speсifically makes reference to refunds sought due to illegal or erroneous payments, as well as to refunds on illegal or еrroneous assessments. The statute makes a clear distinction as to assessments. In 1972, appellants remitted money to the state in excess of their actual franchise tax liability. Those 1972 payments were illegal and erroneous when made. So, too, the payment of the 1975 assessment was a separate and distinct remittance and also illegal and erroneous when made.
The statute requires that an application for a refund be made within three years of the illegal or erroneous payment. Thus, the payments made in 1972 can not be refunded, pursuant to an application filed in 1976.
In Pelton v. Bemis (1886),
“When, for the purpose of collection, an assessment is divided into two or more installments, payable annually or otherwise, the limitation of time in which the action can be brought, as provided in said section, begins to run against such installment from the time of its collection, and not from the collection of the last installment.”
This court, finding the above ratiоnale applicable to the instant cause, determines that the three-year limitation of R.C. 5733.12 begins to run anew against eаch illegal and erroneous payment.
Accordingly, the decision of the Board of Tax Appeals is affirmed.
Decision affirmed.
Dissenting Opinion
dissenting. I must dissent in that I disagree with the position of the Board of Tax Appeаls, and the majority herein, that the period of time within which to apply for a refund pursuant to R.C. 5733.12 begins to run from the time of each illegal or erroneous payment upon the total tax which is assessed and redetermined by the Tax Commissioner.
It is my view that the three-year period within which an application for a refund of the tax may be filed begins to run from the date of the last paymеnt upon the full tax which is finally determined by the Tax Commissioner for any given tax year.
Although R.C. 5733.12 does not specifically speak in terms of the last payment upon the total tax which is finally determined as triggering the running of the time, the words “payment of the tax” in that sectiоn reasonably mean the payment of the total tax as calculated by the Tax Commissioner.
A final determination by the Tax Commissioner constitutes the liability of the taxpayer for any given year, and the initial determination of the tax due, the assessment, аny redetermination, the final determination of the tax due, and the payments thereon, should be treated as a single transaсtion for that particular tax year for the purpose of obtaining any refund or overpayment.
The law as pronounced in Pelton v. Bemis (1886),
Here we are not dealing with a tax separated into portions of a whole, as would be installment payments upon a real estate assessment, but are dealing with a tax in which the assessment, initial payment, and final determination of the tax due are a unified transaction for any given tax year.
I would reverse the order of the Board of Tax Appeals.