Opinion
38173.
DECIDED APRIL 20, 1960. REHEARING DENIED MAY 10, 1960.
Tax assessment. Bleckley Superior Court. Before Judge Whaley. November 30, 1959.
Eugene Cook, Attorney-General, Ben F. Johnson, Jr., L. F. McDonald, John E. Dean, Deputy Assistant Attorneys-General, for plaintiff in error.
Bloch, Hall, Groover Hawkins, Johnny Floyd, Denmark Groover, Jr., contra.
1. The trial court was authorized to find that the taxpayer did not participate in the filing of fraudulent sales tax returns though he illegally and mistakenly sought to settle with sales tax agents for less than the amount due.
2. The statute of limitations as to the collection of sales taxes the amount of which is that obtained from proper returns accepted by the Revenue Commissioner is seven years from the time a tax execution could first be issued.
DECIDED APRIL 20, 1960 — REHEARING DENIED MAY 10, 1960.
The State Revenue Commissioner made an assessment of sales taxes against Ben Jessup in the amount of $4,903.43 tax, $3,633.04 penalties, and $1,115.16 interest. The assessment in part was based on what the Commissioner deemed fraudulent returns. The taxpayer appealed from the final ruling of the Revenue Commissioner to the Superior Court of Bleckley County. The court tried the case without a jury on the stipulations between the parties and facts introduced in evidence relating to the taxpayer's participation or lack of participation in alleged fraudulent returns. The stipulations are as follows:
"1. During the calendar months of February 1, 1955, through December 31, 1956, inclusive, appellant was engaged in the business of selling tangible personal property under the trade name Ben Jessup Motors at his place of business on Cherry Street in Cochran, Georgia. 2. Throughout said period, except for the calendar month of December, 1956, appellant was registered as a retail dealer with the Sales and Use Tax Unit, Department of Revenue, State of Georgia, having been assigned account number 012-30-0031. 3. Within the time prescribed by law, appellant, for the calendar months of February, 1955, through October, 1955, inclusive, filed sales and use tax returns with appellee, showing thereon a sales and use tax liability to the State of Georgia for said months in the aggregate amount of $3,294.25, but did not make any remittance with any of said returns. 4. True and correct copies of said returns, marked Exhibits 1-9, inclusive, are attached hereto and made a part hereof. 5. Within the time prescribed by law, appellant filed a sales and use tax return and paid the amount of tax due thereon for the calendar month of November, 1955. A copy of which, marked Exhibit 10, is attached hereto and made a part hereof. 6. Thereafter, within the time prescribed by law, appellant filed sales and use tax returns for the calendar months of December, 1955, through March, 1956, inclusive, showing thereon a sales and use tax liability to this State for said months in the aggregate amount of $1,243.14, but did not make any remittance with any of said returns. 7. True and correct copies of said returns, marked Exhibits 11-14, inclusive, are attached hereto and made a part hereof. 8. Thereafter, within the time prescribed by law, appellant filed sales and use tax returns and paid the amount of tax shown to be due thereon for the calendar months of April, 1956, through November, 1956, inclusive. 9. True and correct copies of said returns, marked Exhibits 15-22, inclusive, are attached hereto and made a part hereof. 10. No sales and use tax return was filed nor was any such tax paid by appellant for the calendar month of December, 1956, although appellant continued to sell tangible personal property during said month at the aforesaid place of business. 11. Sometime during the latter part of December, 1956, or the early part of January, 1957, appellant paid $1,100 in cash to Woodrow W. Coleman, the nature of such payment being one of the issues in this case as hereinafter set forth. However, $139.65 of the aforesaid sum was, on January 10, 1957, credited to appellant's aforesaid sales and use tax account. 12. Subsequently, on February 25, 1959, an audit of appellant's aforesaid sales and use tax liability was made by appellee, a report of which, marked Exhibit 23, is attached hereto and made a part hereof. The facts set forth in said auditor's report are to be taken as true and correct for the purpose of this proceeding. 13. The sole issue of fact for the court's determination in this proceeding is whether or not appellant, as regards his sales and use tax liability for the calendar months of February, 1955, through October, 1955, inclusive, December, 1955, through March, 1956, inclusive, and December, 1956, conspired with Woodrow W. Coleman and Joseph W. Ray to defraud the State of Georgia of the sales and use tax due by appellant or any part thereof. 14. The only issues of law for the court's determination in this proceeding are: (a) Whether or not Code section 92-3426a bars appellee from collecting the sales and use taxes shown to be due on appellant's tax returns as prepared and filed by appellant for the calendar months February, 1955, through October, 1955, inclusive, and December, 1955, through January, 1956, inclusive. (b) If the aforesaid question of law is answered in the affirmative, is appellant entitled to have that portion of the $1,100 payment, $960.35, which has not been credited to the aforesaid sales and use tax account applied to appellant's liability for sales and use tax, penalty and interest accruing since March 3, 1956? 15. If the aforesaid issue of fact is determined adversely to appellant, then judgment shall be entered for appellee in the amount of $4,903.43 tax, $3,633.04 penalty, $1,189.79 interest, as shown by Exhibit 24, attached hereto and made a part hereof, together with court costs. 16. If the aforesaid issue of fact is determined favorably to appellant and the issue of law, as defined in paragraph 14(a), is determined adversely to appellant, then judgment shall be entered for appellee in the amount of $3,772.72 tax, $1,218.18 penalty, $1,000.56 interest, as shown by Exhibit 25, attached hereto and made a part hereof, together with court costs. 17. If the issue of fact and the issue of law, as defined in paragraph 14 (a), are determined favorably to appellant and the issue of law, as defined in paragraph 14 (b), is determined adversely to appellant, then judgment shall be entered for appellee in the amount of $771.16 tax, $192.79 penalty, $155.44 interest, as shown by Exhibit 26, attached hereto and made a part hereof, together with court costs. 18. If all issues, both of fact and law are determined favorably to appellant, then judgment shall be entered for appellant in the amount of $156.61, as shown by Exhibit 27, attached hereto and made a part hereof, together with court costs."
The evidence with reference to the returns insofar as it is necessary to consider it, is as follows: Mr. Ben Jessup gave the following testimony: "Q. Did you ever have any other conversation with Mr. Coleman? A. I had a conversation with Mr. Coleman and Mr. Ray together. Q. Where was that conversation? A. At the Henry Grady Hotel in Atlanta. Q. And why was that conversation at the Henry Grady Hotel? A. To try to work out something for me to settle my sales tax. Q. Why did you want to go to the Henry Grady Hotel to hold a conference? A. Well, it was at night. I left Macon late in the afternoon and I asked them to meet me over at the hotel. Q. At that time were you engaged in any kind of business in Macon? A. Yes sir. Q. What — ? A. I was running an automobile auction up there every Wednesday. This was on Wednesday. Q. What time would that auction get over with? A. Oh, about 4 or 5 o'clock in the afternoon. Q. And what time did the State office close? A. At 4:30 I think. Q. Had you made any arrangements on that day to talk to Mr. Coleman? A. I don't remember whether I talked to him that day or not. I may have. Q. Did you go to the Henry Grady Hotel then that night? A. Yes sir. Q. Did you talk to Mr. Ray and to Mr. Coleman? A. Yes sir. Q. What was the conversation that you had? A. They told me that if I would pay eleven hundred dollars they would settle my sales tax claim that they had against me. Q. Did they tell you that that eleven hundred dollars would go into their pockets? A. No sir. Q. Did they say anything that led you to believe that eleven hundred dollars was going into their pockets? A. No sir. Q. Did you pay them the eleven hundred dollars then? A. Not then I didn't. Q. Did you agree to pay them the eleven hundred dollars then? A. Yes — No, I told them I would see if I could get it up. I told them I would try to get it up. Q. You didn't reach any agreement at that time then? A. No sir. I told them that I would see if I could get it and that I thought that I could. Q. Did that end the conversation? A. That was about it. Q. At that time did they tell you that they were going to do anything about destroying any records? A. No sir. Q. Did they say anything that led you to believe that they were going to destroy any records? A. No sir. Q. Now, Mr. Jessup, when was the next conversation you had about that matter? A. It must have been about a month or three weeks later that Mr. Coleman came down here. He said that he had come to see if I had the eleven hundred dollars. Q. A month or three weeks after the Henry Grady conference? A. That is right. Q. What did you tell him? A. I told him I could get it. Q. Well, did you give him the eleven hundred dollars? A. Yes sir. Q. Was anything said about a receipt? A. He said — I asked him if he was going to give me a receipt and he said I would be mailed one from Atlanta. Q. Was anybody with him? A. Not then. Q. All right, where did you hand him that eleven hundred dollars? A. In my back office at the place. Q. Did you sign any —. After you had paid them that eleven hundred dollars did you ever sign any request for change in numbers or anything? A. Sir? Q. Did you ever file any additional papers in connection with it or anything? A. No sir. Q. Now, after he mailed — after you gave him the eleven hundred dollars did you ever get the receipt? A. No sir. Q. Did you ever ask him about the receipt? A. I didn't mention it any more. I figured it was closed. I was satisfied."
The court rendered the following judgment: "After consideration of the evidence and stipulations entered into and after argument of counsel I find: 1. That as regards the appellant's sales tax liability for the calendar months, February, 1955, through October 1955, inclusive, December 1955, through March 1956, inclusive, and December, 1956, appellant did not conspire with Woodrow W. Coleman and Joseph W. Ray to defraud the State of Georgia of the sales and use tax due by him or any part thereof. 2. As a matter of law Code Section 92-3447a bars appellee from collecting the sales and use tax shown to be due on appellant's tax returns as prepared and filed by appellant for the calendar months February 1955, through October 1955, inclusive, and December 1955, through January, 1956, inclusive. Whereupon, it is considered, ordered and adjudged that the appellee have and recover of the appellant the sum of $771.16 tax, $192.79 specific penalty, $155.44 interest to October 30, 1959, together with future interest at 7% per annum from date, together with all costs to be hereafter assessed by the clerk of this court."
The Revenue Commissioner excepts to the above judgment for the following reasons: (a) The uncontradicted evidence demanded, as a matter of law, a finding that appellant, as regards his sales and use tax liability for the calendar months of February, 1955, through October, 1955, inclusive, December 1955, through March, 1956, inclusive, and December 1956, did conspire with Woodrow W. Coleman and Joseph W. Ray to defraud the State of Georgia of the sales and use tax due by appellant or some part thereof. (b) To the extent that said order and judgment holds that Code § 92-3447a (Section 26, Georgia Retailers' and Consumers' Sales and Use Tax Act, as amended) bars appellee from collecting the sales and use taxes shown to be due on appellant's tax returns as prepared and filed by appellant for the calendar months February, 1955, through October, 1955, inclusive, and December, 1955, through January, 1956, inclusive, said order and judgment is contrary to law. (c) The court erred in not rendering judgment for appellee in the amount of $4,903.43 tax, $3.633.04 penalty, $1,189.79 interest, as shown by Exhibit "24" attached to and made a part of the stipulation filed November 30, 1959, together with court costs. (d) Even if the court did not err as alleged in subparagraphs (a) and (c) of this paragraph, it did err in not rendering judgment for appellee in the amount of $3,772.72 tax, $1,218.18 penalty, $1,000.56 interest, as shown by Exhibit "25" attached to and made a part of the stipulation filed November 30, 1959, together with court costs. The taxpayer did not except in any way to the order of the superior court judge.
1. The court was authorized to find that the taxpayer was not liable for penalties based on his participation in the filing of a false or fraudulent return. The finding was authorized that the taxpayer unlawfully but innocently and ignorantly sought to settle his tax debt with a representative of the State for less than the amount due; that the taxpayer did not contemplate or participate in the filing of false and fraudulent returns in his behalf by the State agents; that the taxpayer did not conspire with the State agents in a scheme whereby the agents were to rob the State of the amount he paid in an effort to settle his debt and that he honestly believed the State agents had authority to make the settlement and that the State would receive the amount paid in settlement. It is true that the State is not bound by any unauthorized settlement and that a taxpayer may be said to be a party to an unlawful conspiracy to settle under the facts of this case and remains liable for the full debt less the amount paid on good faith. Acts cited in Code (Ann.) § 92-3426a provide in part: "In the case of a false or fraudulent return where wilful intent exists to defraud the State of any tax due under this chapter, a specific penalty of 50 percent of the tax bill shall be assessed." The finding was authorized under the facts here that the taxpayer was not guilty of a wilful intent to defraud. If the evidence had demanded the finding that the taxpayer had known that the State's agents intended to steal the amount paid in settlement he would have been charged with knowledge of the false returns filed by the agents in his behalf, but not otherwise. The rules applying to civil conspiracy do not extend to the point of infusing the stigma of immorality into an act which is merely malum prohibitum. Ga. L. 1937-38, Ex Sess. pp. 77, 83, Ga. L. 1953, pp. 185, 186; Code (Ann.) §§ 92-8411, 92-8411.1. We conclude, as already stated, that the court was authorized to find that the taxpayer was not liable for penalties based on the filing of false and fraudulent returns.
2. Ga. L. 1951, pp. 360-387, Ga. L. 1953, p. 184, (Code, Ann., § 92-3447a) provide: " Time of assessment; limitation of actions. — The amount of taxes imposed by this law shall be assessed within three years after such taxes become due and payable and no proceeding of any kind for the collection of such taxes, interest or penalty shall be begun after the expiration of such period: Provided, however, in the case of a false or fraudulent return with intent to evade payment of taxes imposed by this Chapter or a failure to file a return, the tax may be assessed or proceeding in court for the collection of such tax may be begun without assessment at any time." Ga. L. 1951, pp. 360-382; Ga. L. 1952, pp. 334, 336 (Code, Ann., § 92-3434a) provide: " Delinquency procedure; execution; distraint, levy, and sale; claim of illegal assessment. — The tax imposed by this Chapter shall for each month become delinquent on the 20th day of each succeeding month. The State Revenue Commissioner is empowered and it shall be his duty when any tax becomes delinquent under this Chapter, to issue a fi. fa. for the collection of the tax, interest and penalty from each delinquent taxpayer. Said fi. fa. may be addressed and delivered to the sheriff wherein such delinquent taxpayer resides, or has his principal office or place of business, or to the sheriff of any county in which the Commissioner has reason to believe property of such delinquent taxpayer may be found. The sheriff into whose hands such fi. fa. may come, or his deputy, may execute same by the distraint and sale of personal property belonging to such taxpayer and the proceedings in respect thereto shall be the same as are provided by law for proceedings under an execution at law from a court of record; and the executing officer shall be entitled to the same fees, commissions, and necessary expense of removing and keeping property levied upon as in case of an execution from a court of record. If the officer cannot find any personal property to satisfy said fi. fa., he may levy same upon any real estate belonging to such delinquent taxpayer; and if levied on land, the same shall be sold under law applying to sheriff's sales in other cases. Upon any claim of illegal assessment and collection the taxpayer shall have his remedy under section 92-8445 et seq., and also shall be allowed to file claims for refund in the manner authorized by the general law." The notice of assessment in this case involves a two-fold purpose and the stipulations concede that this is true and there was no issue made as to the propriety of the action of the Commissioner. One purpose of the notice was to issue an assessment based on fraudulent returns, and the other to issue an assessment for the amounts admitted to be due by the taxpayer according to returns accepted by the Commissioner. The purpose of the double adjudication was designed to settle all issues in one proceeding and simplify the procedure and administration. Furthermore, the proceeding afforded the taxpayer the opportunity to assert the statute of limitations as to the amounts returned and accepted by the Commissioner. Under the two laws above quoted in this division the court erred in holding that the three-year limitation applied to the returns which were not required to be assessed by the Commissioner, but which were assessed on the basis of settling the issues in one proceeding. Amounts due on returns properly made and accepted by the Commissioner need not be assessed. The fact that they are assessed in such a case as this does not change the limitation of action as to them. It is the nature of the debt and the purpose of the law not to let contested issues become stale and difficult to prosecute or defend that matters. As to sums not required to be assessed, the statute of limitations is seven years from the time when a fi. fa. could first have been issued. State of Georgia v. Fuller, 90 Ga. App. 349 ( 83 S.E.2d 69); Suttles v. Dickey, 192 Ga. 382 ( 15 S.E.2d 445); Ga. R. Bkg. Co. v. Wright, 124 Ga. 596 ( 53 S.E.2d 251). We think Ga. L. cited by Code (Ann.) § 92-3447a are intended to serve the same function as to sales tax as acts cited in Code (Ann.) § 92-3303 are intended to serve as to the income tax.
Neither the amendment to Section 26 of the Georgia Retailers' and Consumers' Sales and Use Tax Act (Ga. L. 1960, p. 1007) nor the meaning of the section before the amendment, has any bearing on this case for the reason that that section has no application to the amounts due by a taxpayer ascertained by returns properly made and accepted by the Commissioner, whether the amounts so shown to be due are sought to be collected by assessment or execution.
The Commissioner was entitled to a judgment according to paragraph 16 of the stipulation and the court erred in not so deciding and adjudging.
Judgment reversed. Nichols and Bell, JJ., concur.