By Zachary T. Atkins and Open Weaver Banks
In a closely followed case, a Florida district court of appeal held that a proposed assessment is not an assessment for statute of limitations purposes. The Florida Department of Revenue generally has three years to “determine and assess” any tax, penalty or interest due. The Department has long believed that issuing a notice of proposed assessment prior to the expiration of the three-year period satisfies the statute. After conducting a sales and use tax audit, the Department issued a notice of proposed assessment approximately two months before the expiration of the agreed-upon, extended statute of limitations period. The notice indicated that the proposed assessment would become a final assessment after 60 days unless the taxpayer submitted an informal protest. The taxpayer did not submit an informal protest but instead filed a complaint against the Department challenging the validity of the assessment on the grounds that it did not become final prior to the expiration of the statute of limitations. Although the statutory term “assess” was not defined in the general statute of limitations, the court looked to a separate provision in the tax statutes that tolls the “statute of limitations upon the issuance of final assessments” if the taxpayer follows certain informal conference procedures. In finding the Department failed to issue a timely assessment, the court concluded that the legislature could have used the broader term “assessments” if it believed that a proposed assessment was an assessment for statute of limitations purposes. Separately, the taxpayer and the Department had agreed to extend the statute of limitations period for the tax periods under audit to March 31, 2011. The district court of appeal rejected the trial court’s conclusion that the written agreement extended the statute of limitations period with respect to the first sales and use tax period to March 31, 2011, and the statute of limitations for each subsequent period by another month thereafter. Thus, the agreed-upon date applied to all of the tax periods under audit. Verizon Bus. Purchasing, LLC v. State of Fla., Dep’t of Revenue, No. 1D14-3213, 2015 WL 3622356 (Fla. 1st DCA June 11, 2015).