Mancino v. Tracy - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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Mancino et al., Appellants, v. Tracy, Tax Commr., Appellee.
[Cite as Mancino v. Tracy (1997), _____ Ohio St.3d ________1997.)
Taxation -- IRS adjustment of taxpayer's 1986 and 1987 federal
adjusted gross income -- Amended Ohio returns reflecting
increase not filed -- R.C. 5747.13 barring Tax Commissioner
from collecting deficiency amounts more than four years after
taxpayer's filing of return not applicable, when.

(Nos. 96-2165 and 96-2176 -- Submitted April 22, 1997 -- Decided
June 25, 1997.)
Appeals from the Board of Tax Appeals, Nos. 95-A-890 and 95-A-
891.

Paul A. and Carole A. Mancino, appellants, timely filed their 1986
and 1987 Ohio income tax returns. The Internal Revenue Service ("IRS"),
however, audited the Mancinos' federal income tax returns for these years
and raised their federal adjusted gross income. The Mancinos did not file
amended Ohio returns reflecting these increases.

The IRS informed the Tax Commissioner, appellee, of the increases
in adjusted gross income. The commissioner sent billing notices to the
Mancinos proposing to increase their 1986 Ohio tax, including interest, to

$5,755.95 and their 1987 Ohio tax, including interest, to $4,794.38 to
account for these increases. After some correspondence, the Mancinos paid
these amounts and filed refund applications for each year. The
commissioner denied the claims, and the Board of Tax Appeals, on appeal,
affirmed the commissioner's orders.

The causes are now before this court upon appeals as of right.

Paul Mancino, Jr., for appellants.

Betty D. Montgomery, Attorney General, and Richard C. Farrin,
Assistant Attorney General, for appellee.

Per Curiam. The Mancinos argue that R.C. 5747.13 bars the
commissioner from collecting the deficiency amounts because he sought the
amounts more than four years after the Mancinos had timely filed their
returns. The commissioner replies that R.C. 5747.13 plays no role in these
cases because this statute bars assessments. He, instead, claims he did not
assess the Mancinos; he requested that they pay what would be due in
amended returns based on the federal adjustments to be filed under R.C.
5747.10. We agree with the commissioner and affirm the board's decisions.

Former R.C. 5747.10 stated:

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"If any of the facts, figures, computations, or attachments required in
a taxpayer's annual return to determine the tax charged by this chapter or
Chapter 5748. of the Revised Code must be altered as the result of an
adjustment to the taxpayer's federal income tax return, whether they are
initiated by the taxpayer or the Internal Revenue Service, and such alteration
affects the taxpayer's tax liability under this chapter or Chapter 5748. of the
Revised Code, the taxpayer shall file an amended return with the tax
commissioner in such form as the commissioner requires. The amended
return * * * shall be filed not later than sixty days after the adjustment has
been agreed to or finally determined for federal income tax purposes or any
federal income tax deficiency or refund, or the abatement or credit resulting
therefrom, has been assessed or paid, whichever occurs first * * *.

"The amended return shall be deemed a return subject to assessment
under section 5747.13 of the Revised Code for the purpose of assessing any
additional tax due under this section, together with any applicable penalty
and interest. ***" (139 Ohio Laws, Part I, 1465-1466.)

Thus, if the IRS adjusts a taxpayer's federal adjusted gross income,
and the adjustment affects the taxpayer's Ohio income tax liability, the

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taxpayer must file an amended return within sixty days of this
determination. The commissioner, moreover, may assess the amended
return. See Gibson v. Limbach (1991), 74 Ohio App. 3d 498, 501, 599
N.E.2d 715, 717.

Former R.C. 5747.13(C) (now, renumbered 5747.13[A]) does set
forth a statute of limitations barring the issuance of assessments:

"No assessment shall be made or issued against an employer or
taxpayer more than four years after the final date the return subject to
assessment was required to be filed or the date the return was filed,
whichever is later. ***" (142 Ohio Laws, Part II, 2933.)

However, the event to be barred by R.C. 5747.13(C), an assessment,
did not occur here. Under R.C. 5747.10, the commissioner could have
issued assessments against the Mancinos, and other provisions of R.C.
5747.13 set forth the procedure. Nevertheless, the commissioner notified
the Mancinos of the deficiencies and requested payment. The Mancinos
paid the amounts without the commissioner issuing assessments.
Consequently, the Mancinos cannot invoke this bar because the

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commissioner did not issue assessments. Gibson at 500-501, 599 N.E.2d at
717.

The Mancinos offer no other reason why the commissioner should
refund the payments. Accordingly, we affirm the board's decisions.

Decisions affirmed.

MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER, COOK
and LUNDBERG STRATTON, JJ., concur.

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