Opinion
TC 3324
August 4, 1993.
Income taxation — Time for appeal
1. Plaintiff's belief that an appeal by his brother and partner on the same issue would protect him does not excuse his failure to file a protective appeal before the appeal period expired.
Vernon L. Burda, Burda and Richards, Wilsonville, represented plaintiff.
Ted E. Barbera, Assistant Attorney General, Department of Justice, Salem, represented defendant.
Submitted on Motion for Summary Judgment.
Decision rendered for defendant August 4, 1993.
This matter is before the court on defendant's Motion for Summary Judgment. The parties have stipulated the facts and submitted the matter on written memoranda.
Plaintiff and his brother James, both nonresidents of Oregon, were partners in an Oregon partnership known as Butternut Creek Nursery. The partnership suffered net operating losses. When the brothers filed their 1988 Oregon individual income tax returns, each claimed a net operating loss deduction. Defendant disallowed the deduction. This action was based on OAR 150-316.014(4)(b), which read:
"A nonresident shall be allowed an Oregon NOL for any loss year in which the nonresident also has computed a federal NOL. The amount of the Oregon NOL shall not exceed the amount of the federal NOL."
1. On November 21, 1989, defendant sent a notice of deficiency to each brother. James challenged his notice but plaintiff did not. On January 19, 1990, defendant sent each brother a notice of assessment. James appealed from his notice; plaintiff did not. Plaintiff's appeal period expired on or about April 19, 1990.
For reasons that are not clear, plaintiff apparently believed his brother's appeal would protect him. On July 10, 1990, plaintiff paid defendant $6,720 "under protest," requesting the amount be held available for a later refund depending on "the outcome of appeals hearings." James' appeal to defendant was held in abeyance pending the outcome of Lufkin. v. Dept. of Rev., 11 OTR 410 (1990).
On September 27, 1990, this court issued its decision in Lufkin, holding defendant's rule OAR 150-316.014(4)(b) void. On January 25, 1991, defendant cancelled its assessment against James. Subsequently, on May 13, 1991, plaintiff filed a formal appeal with defendant, which defendant then denied.
Plaintiff does not explain why he did not file a protective appeal. Plaintiff's arguments in response to defendant's motion are general in nature. For example, plaintiff asserts that where there is a wrong, there must be a remedy. Plaintiff also cites U.S. Supreme Court cases dealing with procedural safeguards against the collection of unconstitutional taxes. These arguments, however, miss the mark. Plaintiff had a remedy but failed to exercise it. The regulation under which plaintiff was denied his net operating loss deduction was not declared unconstitutional. It was declared void because it conflicted with the statute (ORS 316.014(1)). Accordingly, none of plaintiff's arguments are responsive to defendant's assertion that plaintiff failed to appeal when he should have.
Based on the stipulated facts, the court finds defendant's Motion for Summary Judgment should be granted. Now therefore,
IT IS ORDERED that defendant's Motion for Summary Judgment is granted. Defendant to recover its costs.