Kansas Automated Food, Inc
Kansas Retailers' Sales Tax
Statute of Limitations
BEFORE THE BOARD OF TAX APPEALS OF THE STATE OF KANSAS
IN THE MATTER OF THE APPEAL
OF KANSAS CITY AUTOMATED FOOD SERVICE, INC.
FROM AN ORDER OF THE DIRECTOR OF
TAXATION ON ASSESSMENT OF
Docket No. 88-3573-DT
ORDER ON REHEARING
Now, on this 29th day of April, 1991, the above captioned matter comes on for consideration and decision by the Board of Tax Appeal of the State of Kansas.
This Board conducted a hearing in this matter on April 5, 1991. At issue on the rehearing was the Motion to Dismiss filed on behalf of the Department of Revenue, which the Board denied and remanded to the Department of Revenue for determination of assessment, in the Order dated November 19th, 1990. After considering all of the evidence, the arguments and being full advised in the premises, the Board finds and concludes as follows:
FINDINGS OF FACT
1. The facts in this case are not in dispute, and the parties agree that the Department had been attempting to conduct an audit of Kansas City Automated Food Service (Automated), for several months. Automated's President met with the Department's auditor on one occasion but failed to produce the records. Following this meeting, the Department sent waivers for extending the statute of limitation on assessment, which were never returned by Automated. The Department also made several telephone calls which were never returned. See Statements 1 and 2, Departments' Motion.
2. The Department believed that the taxpayer's reluctance in scheduling the audit would prejudice the Department's efforts to audit the taxpayer. Therefore the Department's efforts to audit the taxpayer. Therefore the Department prepared a Notice of Assessment. See Statement 3, Department's Motion. The Notice of Assessment dated April 15, 1988, was signed by Alan Corey, Audit Manager, and mailed by certified mail on April 18, 1988. See Exhibits F, G, H and I, Department's Motion.
3. Notices of delivery were made to Automated on April 19 and May 10, 1988. The mailing was returned to the Department on May 15, 1988, unclaimed. See Exhibit I, Department's Motion.
4. Upon return of the certified mail, Alan Corey redeposit the Notice of Assessment in the mail, first class postage paid, addressed to Automated at the same address. See Department's Motion, Exhibit F.
5. On June 10, the Department of Revenue filed a tax warrant with the Clerk of the District Court in Wyandotte County. See Notice of Appeal, Exhibit D. The tax warrant was not filed pursuant to a jeopardy assessment. See Exhibits P and Q of Department's Motion for examples of a jeopardy assessment order and resulting tax warrant.
6. Automated sent a registered letter tot he Department dated May 27, 1988, indicating their disagreement with the notice of Assessment and requesting a hearing. See Automated's Notice of Appeal, Exhibit C.
7. The letter was mailed on June 15 and received by the Department on June 17, 1988. See Department's Motion, Exhibit K.
8. On June 27, 1988, the Director of Taxation authored a letter to Automated denying their request for a hearing as untimely filed. See Notice of Appeal, Exhibit F.
9. Automated's Notice of Appeal to this Board was filed on July 18, 1988. The hearing was continued on two occasions at the request of the parties. The Motion to Dismiss was filed on August 22, 1990 and the final Reply was filed on October 23, 990. The original Order was issued by this Board was dated November 19, 1990.
CONCLUSIONS OF LAW
10. At the rehearing, the arguments propounded by the parties were similar to the arguments presented to the Board before the original Order was issued in this case. The Department reiterated their stance that the Notice of Assessment was mailed on April 18, 1988, and the first correspondence received form Automated was dated May 27, 1988, but not mailed until June 15, 1988. Further, the Department stated that K.S.A. 79-3610 references K.S.A. 79-3226 with respect to the time allowed for requesting a hearing, and the time allowed under the statute is 30 days. Therefore, since the letter was not received within 30 days of the mailing of the Assessment, the Department argues that the request is untimely and should be dismissed as a matter of law.
11. In the original Order, the Board found that K.S.A. 79-3610 provides an alternative means of requesting consideration from the Director of Taxation, and that the second paragraph of the statute allows a taxpayer to request a hearing within 15 days of the filing of the tax warrant. However, after reconsideration, the Board has concluded that statutory reference to an alternative method of requesting a hearing from the Director of Taxation is premised on a jeopardy assessment being filed. Here, the assessment filed by the Department on June 10, 1990 was not a jeopardy assessment and was not filed pursuant to a jeopardy assessment order. Therefore Automated did not have 15 days after that filing to request a hearing with the Director of Taxation. Instead, Automated should have requested a hearing within 30 days of the mailing of the Notice of Assessment.
12. At the rehearing, Automated conceded that the tax warrant was no labeled as a jeopardy assessment. However, they maintained that the warrant was in fact issued pursuant to a jeopardy assessment since the Department stated in their own Motion that they were afraid that the Department would be prejudiced if they did not file the Notice of Assessment.
13. The word "prejudice", is one of the terms used in K.S.A. 79-3610, to justify the issuance of a jeopardy assessment. However, the mere use of this word in the Department's Motion to Dismiss, with no other supporting facts, does not persuade the Board that a jeopardy assessment was filed. To the contrary, after an examination of the facts as a whole surrounding the issuance of the Notice of Assessment on April 15, 1988 and the tax warrant on June 10, 1988, the Board concludes that the Department did not file a document that constituted a jeopardy warrant on its face nor in substance.
14. Automated also argued that under K.S.A. 79-3610, there is no 30 day time limit to which to request a hearing. This argument is based upon Automated's contention that K.S.A. 79-3226 is referenced only for the Assessment function contained in K.S.A. 79-3610.
15. As in the original Order, the Board considers this argument to be without merit. The reference to K.S.A. 79-3226 refers to the entire statute generally. Further, without reference to the assessment and hearing procedure contained in K.S.A. 79-3226, there is not time prescribed for filing the request. Statutes should be construed with the intent and purpose of the legislature in mind.
Farmers Co-op v. Kansas Bd. Of Tax Appeals
, 236 Kan. 632, 694 P. 2d 462 (1985). The Board concludes that the legislature did not intend to leave such questions open without informing a taxpayer of the procedure for contesting assessments. Statutes should be considered as a whole and not by only isolated portions of their language.
Matter of Midland Industries, Inc.
, 237 Kan. 867, 703 P.2d 840 (1985). Statutes should not be construed to create voids in the legislative scheme where none exist under a different interpretation. We conclude that the legislature intended to reference the entire statute and that the hearing procedure set forth is included in that reference.
16. Since Under K.S.A. 79-3610, Automated had 30 days from the mailing of the Notice of Assessment, April 18, 1988, in which to request a hearing; and the Department did not receive the request for hearing until June 17, 1988; Automated's request was untimely. As a result, Automated did not exhaust their administrative remedy. Therefore, this Board does not have jurisdiction over the case, and the case must be dismissed as a matter of law.
IT IS, THEREFORE, BY THE BOARD OF TAX APPEALS OF THE STATE OF KANSAS, CONSIDERED AND ORDERED that the decision in the original Order is reversed, and the Motion to Dismiss filed by the Department of Revenue is Granted.
IT IS SO ORDERED
VICTOR ELLIOTT, CHAIRMAN
CONRAD MILLER, JR., MEMBER
JAMES P. DAVIDSON, CHARLES F. LAIRD, MEMBER
JUDITH A. MESSENGER, ATTORNEY MAYBELLE HERTZ, MEMBER
JAYNE ANNE AYLWARD, MEMBER
I., James P. Davidson, Secretary of the Board of Tax Appeals of the State of Kansas, do hereby certify that a true and correct copy of the order in Docket No. 88-3573-DT was placed in the United States Mail, on this date. IN TESTIMONY WHEREOF, I have hereunto subscribed my name at Topeka, Kansas, this 30rd day of April, 1991.
James P. Davidson, Secretary
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