Subsequently, the Department
conducted a corporate income tax audit for the 2004, 2005, 2006, and 2007 tax
years. For the 2004 tax year, the audit resulted in the partial refund of the
tax requested. For the 2005, 2006, and 2007 tax years, the audit resulted in
the assessment of additional adjusted gross income tax.
…
Taxpayer claims that the proposed
assessments issued for the 2005 and 2006 are barred by the statute of
limitations. Taxpayer relies on IC § 6-8.1-5-2(g) which states: If any part of a listed tax has been
erroneously refunded by the department, the erroneous refund may be recovered
through the assessment procedures established in this chapter. An assessment
issued for an erroneous refund must be issued:
(1) within two (2) years after making the refund; or
(2) within five (5) years after
making the refund if the refund was induced by fraud or misrepresentation.…
The Department is unable to agree
that the 2005 and 2006 assessment is barred by IC § 6-8.1-5-2(g) because there
is no indication that the 2005 and 2006 refunds were "erroneous."
There is no indication that Taxpayer filed false returns leading to the 2005 or
the 2006 refunds; there is no indication that the 2005 or 2006 refunds were
generated due to faulty or incorrect information contained in Taxpayer's
returns; there is no indication that the 2005 and 2006 refunds were
attributable to a calculation error on the part of the Department; there is no
indication that the refunds were attributable to an error contained in the
Department's records or its computer system. The refunds issued on April 1,
2011, were applied for and issued in the ordinary course of the Taxpayer's
business and the ordinary course of the Department's business. At the time the
refunds were issued, there was nothing "erroneous" about the refunds
because both Taxpayer and the Department believed that the refunds were based
upon a correct application of the facts and the law.
…
Taxpayer claims that the
Department's partial denial of its refund is barred by the statute of
limitations. Taxpayer states:
The Department did not review the
2004 amended return until the audit began in April 2009. At the completion of
the audit at the time the assessments were issued for the 2005, 2006, and 2007
tax years, i.e., [August, 23, 2011] the auditor denied the refund claim for
2004. This denial was outside the statute of limitations, and thus, the
Department has no choice but to issue the refund claim for the 2004 year since
a waiver to extend the 2004 statute was not executed by the Taxpayer.
It appears that Taxpayer argues that
the Department is required to issue a refund within the three year statute of
limitations for issuing assessments provided in IC § 6-8.1-5-1 and the three
year time period a taxpayer has to file its refund claim.
…
Accordingly, the statute is silent
on how long the Department has to issue a refund, but does provide a three-year
limit for a taxpayer to claim its refund within three years of the later of the
date of the tax payment or the due date of the tax return. The statute contains
a second limitation that a taxpayer must appeal to Tax Court within three years
of requesting its refund claim. The statute gives a taxpayer the right to
appeal to Tax Court if the Department has not made a decision on the refund
claim within one hundred and eight days of receiving the claim. Thus, when the
Department has not responded after one hundred and eighty days, but before
three years have expired, a taxpayer can consider its refund claim "deemed
denied" and appeal to Tax Court. This is the remedy that the statute
provides. The statute does not automatically deem a refund granted. In fact,
under Taxpayer's logic, all a taxpayer would have to do is file its refund
request on the last date it is allowed, the Department would not be able to
investigate the claim, and the Department would be required to issue the
refund. The Department does not agree with Taxpayer's logic and acted
appropriately issuing the partial denial of Taxpayer's refund in its audit report
dated July 22, 2011.
…