NO. 90-393
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
NORFOLK HOLDINGS, INC .,
Petitioner and Appellant
v.
J U N 1 3 199%
THE MONTANA DEPARTMENT OF REVENUE, C Smitlr
d
CLERK OF SUPREME COURT
STATE OF MONTANA
Respondent and Respondent.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Dorothy McCarter, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James P. Sites argued, Louis R. Moore, Crowley,
Haughey, Hanson, Toole & Dietrich, Billings, Montana
For Respondent:
Geralyn ~riscollargued, Department of Revenue,
Helena, Montana
submitted: May 7, 1991
Decided: June 13, 1991
Filed:
Justice ~illiam Hunt, Sr., delivered the opinion of the Court.
E.
Norfolk Holdings, Inc. , (Taxpayer) appeals from an order of
the First Judicial District Court, Lewis and Clark County, holding
that Taxpayer's claim for a refund was barred by the statute of
limitations. We affirm.
The sole issue raised on appeal is whether an automatic
extension of time for filing corporate license tax returns may be
included in computing the five-year limitations period in
5 15-31-509(2), MCA.
Taxpayer reported its 1982 corporate license tax on a calendar
year basis. On May 13, 1983, it filed a tentative 1982 tax return
form and paid $241,012 in estimated tax. At the same time,
Taxpayer applied for an automatic extension of time until
October 15, 1983, to file its return.
On May 14, 1984, Taxpayer filed its finalized return for 1982,
which showed a tax liability of $197,267. Thereafter, the State
of Montana, Department of Revenue (Department), refunded
$43,745--the difference between the estimated tax payment and the
finalized amount due.
On June 20, 1988, the Department received from Taxpayer
amended returns and claims for refunds for tax years 1982 through
1986. The Department issued refunds for all years except 1982.
It refused the refund claimed for 1982, contending that the statute
of limitations for a refund of that year's taxes had expired.
Taxpayer appealed to the State Tax Appeal Board. With the
Department's consent, the case was moved to District Court for
interlocutory adjudication, where the matter was submitted on
agreed facts. The District Court ruled in favor of the Department,
concluding that the five-year period of limitations in
5 15-31-509(2), MCA, does not include consideration of any
extensions of time for filing returns. Taxpayer appeals.
Section 15-31-101(3), MCA, mandates that corporate license
taxes are Itdue and payable on the 15th day of the 5th month
following the close of the taxable year of the corporation .... 11
Section 15-31-111(2), MCA, establishes the due date for filing
corporate license tax returns. The statute reads in its entirety:
If the corporation is reportins on a calendar year basis,
the return shall be filed with the department on or
before May 15 followins the close of the calendar year,
and if reporting on a fiscal year basis, the return shall
be filed with the department on or before the 15th day
of the 5th month following the close of its fiscal year.
Upon application, a corporation shall be allowed an
automatic extension of time for filins its return of 1
to 6 months followins the date prescribed for filins of
its tax return. The application is to be made on such
forms as the department shall prescribe. (Emphasis
added. )
Section 15-31-111(2), MCA.
Thus, tax returns of corporations filing on a calendar year
basis are due on May 15 of the following year. However, a
corporate taxpayer may apply for an automatic extension of up to
six months for filing the return. Section 15-31-111(2), MCA. If
the Department deems that good cause exists for granting more time
for filing, it may grant an extension above and beyond that
received with the automatic extension. Section 15-31-111(3), MCA.
A taxpayer has five years in which to claim a refund of
corporate license taxes. Section 15-31-509(2), MCA. The statute
of limitations provides:
No refund or credit shall be allowed or paid with respect
to the year for which a return is filed after 5 years
from the last day prescribed for filins the return or
after 1 year from the date of the overpayment, whichever
period expires the later, unless before the expiration
of such period the taxpayer files a claim therefor or the
department of revenue has determined the existence of the
overpayment and has approved the refund or credit
thereof. If the taxpayer has agreed in writing under the
provisions of subsection (1) of this section to extend
the time within which the department may propose an
additional assessment, the period within which a claim
for refund or credit may be filed or a credit or refund
allowed in the event no claim is filed shall
automatically be so extended. (Emphasis added.)
Section 15-31-509 (2), MCA.
Taxpayer argues that the "last day prescribed for filing the
returnw in this statute includes the automatic extension of time
provided for in § 15-31-111(2), MCA. The Department, on the other
hand, argues that "the last day prescribed for filing the returnvv
does not include any extensions of time received by the taxpayer.
The Department maintains that, for a corporation filing on a
calendar year basis, the Ivlastday prescribed for filingvt May 15
is
following the close of the calendar year. We agree with the
Department.
A statute must be construed according to the plain meaning of
the language therein. State ex rel. Woodahl v. District Court, 162
Mont. 283, 292, 511 P.2d 318, 323 (1973). In this case, the
operative word to be construed is "prescribed.I1 Black's Law
Dictionary 1345 (6th ed. 1990) defines "prescriben as follows:
To lay down authoritatively as a guide, direction, or
rule; to impose as a peremptory order; to dictate; to
point, to direct; to give as a guide, direction, or rule
of action; to give law.
Following this definition, the plain meaning of I1prescriben
is to l1lay down authoritatively.'I In 3 15-31-111 (2), MCA, the
legislature statutorily established a due date for filing a
corporate license tax return, i.e., May 15 following the close of
the taxable year for corporations filing on a calendar year basis.
This statutorily established day for filing the return is the day
the legislature "laid down authoritatively1' or "prescribed1' for
filing the return.
Although 3 15-31-111(2), MCA, allows the taxpayer to
automatically extend the period of time for filing for up to six
months, the extension applied for by the taxpayer is not included
in determining when the limitations period begins to run. If the
statute did not begin to run until the exhaustion of the automatic
extension, the day prescribed for filing would be a day established
by the taxpayer, not the legislature. The day would no longer be
"laid down authoritatively1'but would depend upon the whim of the
taxpayer. tlPrescribew
would be stripped of all meaning. The
automatic extension simply gives the taxpayer additional time to
prepare the return. It does not change the day prescribed by the
legislature for filing the return.
In 1972, the Department promulgated 5 42.23.601, ARM, which
interprets the limitations period for claims for refunds of
corporate license taxes. The regulation provides as follows:
No refund or credit may be allowed or paid with respect
to the year for which a return is filed, unless, within
5 years from the last day prescribed for filing the
return or after 1 year from the date of the overpayment
(whichever period expires later) the taxpayer files a
claim for refund thereof or the department has determined
the existence of the overpayment and has approved
refunding or crediting thereof. The 5-year period is
determined without resard to any extension which may have
been sranted. (Emphasis added.)
Section 42.23.601, ARM.
The regulation reflects the Department's conviction that any
extensions of time received for filing the return are excluded from
the computation of the running of the statute of limitations. The
adoption of the regulation, which is not in conflict with the
statute and is reasonably necessary to effectuate the purpose of
the statute, is a valid exercise of the Department's rule making
authority. Section 2-4-305(6), MCA. This Court shows great
deference to an interpretation given a statute by the agency
charged with its administration. DtEwart v. Neibauer, 228 Mont.
335, 340, 742 P.2d 1015, 1018 (1987) (quoting Department of Revenue
v. Puget Sound Power & Light Co., 179 Mont. 255, 262, 587 P.2d
In conclusion, the statute of limitations for claiming refunds
of corporate license taxes begins to run on the date statutorily
established by the legislature. This date does not include any
automatic extension of time applied for and received by the
taxpayer under 5 15-31-111(2), MCA.
Taxpayer in this case filed on a calendar year basis.
Therefore, the limitations period for its 1982 taxes began to run
on May 15, 1983, and expired five years later on May 15, 1988.
Because Taxpayer did not file for a refund until June 20, 1988, its
claim was time barred.
Affirmed.
/'
Justice
We Concur: ./
Justice Terry N. ~rieweilerdissenting.
I respectfully dissent from the opinion of the majority.
Although the majority opinion discussed traditional rules of
statutory construction, I believe it overlooks the most important
rule of construction which is applicable in this case. That rule
is as follows:
In interpreting tax statutes it should always be kept in
mind that they are to be strictly construed against the
taxing authorities, and in favor of the taxpayer.
Butte Country Club v. Dept. of Revenue, 186 Mont. 424, 430, 608
P.2d 111, 115 (1980).
In this case, the taxpayer's entitlement to recover a refund
hinges on our interpretation of the phrase "the last day
prescribed,I1 as used in 5 15-31-509(2), MCA. As the majority has
correctly stated, no refund can be paid unless a claim for that
refund has been filed within five years from the last day
prescribed for filing the return.
The last day prescribed for filing the return is set forth in
5 15-31-111(2), MCA, which provides that the return is due on
May 15 of the next calendar year unless an application for an
automatic extension is filed. In that event, the tax return is due
on the date to which the extension is granted.
"Time prescribed for filing" is nowhere defined in the Title
on taxation. However, I believe it is reasonable to interpret the
time prescribed by § 15-31-111(2), MCA, to be May 15, plus any
additional period granted pursuant to the taxpayer's application
8
for an automatic extension. This conclusion would be consistent
with the decision of the Maryland Court of Appeals in Compt. of
Treas., Inc. Tax Div. v. Diebold, Inc., 369 A.2d 77 (Md. 1977) .
Although the language being interpreted in that case was not
identical to the language in question here, the facts are similar
and it provides the only precedent cited by either party which
appears to be on point on the issue we have been asked to decide.
In the Diebold decision, the Maryland taxpayer's income tax returns
for 1966 and 1967 were due on March 15 following each taxable year.
However, for each tax return that taxpayer was granted an extension
to July 15. He claimed a right to a refund for the 1966 taxable
year on July 14, 1970, and for the 1967 return on May 7, 1971. The
Maryland Comptroller found that the refunds claimed for the years
1966 and 1967 were barred by a statute of limitations which
required that refund claims be filed within three years from the
date the refund was "due to be filed.I' The Maryland Tax Court
concluded, as this Court has, that the statute of limitations ran
from the date when the returns were originally due and not from the
date to which extensions were granted. However, the Maryland Court
of Appeals disagreed and stated as follows:
Diebold contends, and we think correctly, that the Tax
Court erred when it concluded that Code Art. 81, 8 310 (b)
mandated that the three-year period of limitations ran
from the date when the 1966 and 1967 returns were
originally due to be filed (15 March 1967 and 15 March
1968) and not from the date to which extensions were
granted under Art. 81, 8 8 305 and 306.
As we construe the language of 9 310 (b):
"Any claim for a refund made under and pursuant
hereto ... shall be filed within three years from
the date the return was due to be filed .
. ..11
we think that it is clearly contemplated that limitations
will run from the date of any extension. Obviously, that
part of 5 310(c) which requires the State to pay interest
on any refunds ll. .. accounting from the date the return
. .. was due to be filed ..
.I1 would not be interpreted
as requiring the payment of interest from the original
due date, rather than from the date to which an extension
has been granted.
Diebold, 369 A.2d at 81.
In this case, there are two plausible explanations for what
the legislature meant by "last day prescribed for filing."
However, since the legislature did not bother to explain what was
meant, I believe, based upon the authority previously cited, that
explanation which is most favorable to the taxpayer should be
adopted.
For these reasons, I dissent from the majority opinion and
would reverse the judgment of the District Court.