347 Mass. 281 | Mass. | 1964
This is an appeal from the refusal of the State Tax Commission to abate a foreign corporation excise tax assessed under G. L. c. 63, § 39, as amended, for the calendar year 1955. The facts were agreed.
On December 31, 1958, acting under Gr. L. c. 63, § 44, as amended, the Commissioner assessed a tax of $56,225.56, of which $43,505.23 had been paid, leaving, with interest, a balance of $12,720.33. The Commissioner did not notify the appellant or its predecessor, prior to the assessment, of his intention to determine the income to be in excess of that shown by the return. The difference between the amount computed by the taxpayer and that computed by the Commissioner depended upon whether the amount of “gross receipts from all its business,” within the meaning of G-. L. c. 63, § 38, el. 2 (c), included sums from the sale or maturity of United States government securities and from the sale of real estate and equipment located outside the Commonwealth. These sums were not included by the Commissioner in the denominator of the allocating fraction.
1. The procedure for assessment of the tax by the Commissioner is set forth in Gr. L. e. 63, § 44, which, as amended through St. 1955, c. 549, § 1, and as in effect during the taxable year, contained the sentence: “He shall not determine the income of any such corporation, which has filed a return within the time prescribed by law, to be in excess of the income shown by such return, without notifying the corporation and giving it an opportunity to explain the apparent incorrectness of the return.”
The Appellate Tax Board in its opinion took the position that the failure to give the notice in no way injuriously af
The one case most nearly in point, Tyson v. Commissioner of Corps. & Taxn. 1 B. T. A. 482, 487, decided in 1932, is not cited in the opinion of the Appellate Tax Board nor in the tax commission’s brief. That case involved a tax under Gr. L. c. 62, but § 35 thereof contained a prohibition against the Commissioner making a determination that the income was in excess of that disclosed by the return without notifying the taxpayer and giving him an opportunity to explain the apparent incorrectness of his return. It was held that the provision was a condition precedent to the making of a valid assessment. Reliance was placed, and with sound reason we think, upon an opinion of the Attorney General given in 1922. 6 Op. Atty. Gen. p. 616.
The opinion below not only misconstrues the statute but errs in asserting that the taxpayer’s rights were not injuriously affected. The right to contest a tax before payment is an important one.
It may be noted that where the Legislature intended that the failure to receive the notice of a tax required by G. L. c. 63, § 48, as amended, should not affect the validity of the tax, there was an express provision to that effect.
2. The foregoing disposes of one of the two items composing the excise tax for 1955, namely the item based upon an amount equal to a percentage of its net income determined to be taxable under c. 63. But G. L. c. 63, § 39, then in effect (as amended through St. 1936, c. 362, § 6) also pro
3. The decision of the Appellate Tax Board is reversed. The abatement is to be granted with costs to the taxpayer.
So ordered.