Periods of Limitation for Assessment of Taxes; Collection by Execution; Change or Correction of Net Income

  1. Law
  2. Georgia Code
  3. Revenue and Taxation
  4. Income Taxes
  5. Payment: Deficiencies, Assessment, and Collection
  6. Periods of Limitation for Assessment of Taxes; Collection by Execution; Change or Correction of Net Income

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  1. Except as otherwise provided in this Code section, the amount of income tax imposed by this chapter shall be assessed within the time periods specified in Code Section 48-2-49.
    1. In the case of income received during the lifetime of a decedent, by the estate of a decedent during the period of administration, or by a corporation, the tax shall be assessed within three years after the return is filed, and any proceeding in court without assessment for the collection of the tax shall begin within 18 months after written request for the commencement of the proceeding (filed after the return is made) by the personal representative or other fiduciary representing the estate of the decedent or by the corporation. No such proceeding shall begin after the expiration of three years from the date the return is filed. This paragraph shall not apply in the case of a corporation unless:
      1. The written request notifies the commissioner that the corporation contemplates dissolution at or before the expiration of the 18 month period;
      2. The dissolution is begun in good faith before the expiration of the 18 month period; and
      3. The dissolution is completed.
    2. If the taxpayer omits from gross income an amount properly includable in gross income which exceeds 25 percent of the amount of gross income less business expenses stated in the return, the tax may be assessed or a proceeding in court for the collection of the tax may begin without assessment at any time within six years after the return is filed.
    3. If the taxpayer omits from gross income an amount properly includable in gross income as an amount distributed in liquidation of a corporation, the tax may be assessed or a proceeding in court for the collection of the tax may begin without assessment at any time within five years after the return is filed.
  3. When the assessment of any income tax has been made within the period of limitation properly applicable to the assessment, the tax may be collected by execution, provided that the commissioner may transmit such execution electronically. The general provisions for tax executions as contained in Chapter 3 of this title shall apply to executions pursuant to this subsection.
  4. Reserved.
    1. Except as provided in Code Section 48-7-53, when a taxpayer's amount of net income for any year under this chapter as returned to the United States Department of the Treasury is changed or corrected by the commissioner of internal revenue or other officer of the United States of competent authority, the taxpayer, within 180 days after the final determination date of the changed or corrected net income, shall make a return to the commissioner of the changed or corrected income, and the commissioner shall make assessment or the taxpayer shall claim a refund based on the change or correction within one year from the date the return required by this paragraph is filed. If the taxpayer does not make the return reflecting the changed or corrected net income and the commissioner receives from the United States government or one of its agents a report reflecting the changed or corrected net income, the commissioner shall make assessment for taxes due based on the change or correction within five years from the date the report from the United States government or its agent is actually received. If he or she chooses, the commissioner shall have the authority to establish a de minimis amount upon which a taxpayer shall not be required to comply with this subsection. For purposes of this subsection the final determination date shall be determined as follows:
      1. Except as provided in subparagraph (B) of this paragraph, the final determination date is the first day on which no changes or corrections for a particular audit remain to be finally determined, whether by agreement, or, if appealed or contested, by a final decision with respect to which all rights of appeal have been waived or exhausted. For agreements required to be signed by the commissioner of internal revenue and the taxpayer, the final determination date is the date on which the last party signed the agreement; or
      2. If the taxpayer filed as a member of a combined or consolidated group, the final determination date is the first day on which no related changes or corrections for a particular audit remain to be finally determined for the entire group.
    2. In the event the taxpayer fails to notify the commissioner of the final determination of his or her United States income taxes, the commissioner shall proceed to determine, upon evidence that the commissioner has brought to his or her attention or that he or she otherwise acquires, the corrected income of the taxpayer for the fiscal or calendar year. If additional tax is determined to be due, the tax shall be assessed and collected. If it is determined that there has been an overpayment of tax for the year, the taxpayer, by his or her failure to notify the commissioner as required in paragraph (1) of this subsection, shall forfeit his or her right to any refund due by reason of the change or correction. A taxpayer who so fails to notify the commissioner, however, shall be entitled to equitable recoupment of 90 percent of any overpayment so determined against any additional tax liability so determined, the remaining 10 percent of the overpayment being totally forfeited as a penalty for failure to make a return as required by paragraph (1) of this subsection.

(Ga. L. 1931, Ex. Sess., p. 24, § 36; Code 1933, § 92-3303; Ga. L. 1937, p. 109, § 18; Ga. L. 1952, p. 405, § 5; Ga. L. 1953, Jan.-Feb. Sess., p. 279, § 6; Ga. L. 1965, p. 276, § 1; Ga. L. 1975, p. 862, § 1; Code 1933, § 91A-3802, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1985, p. 1350, § 2; Ga. L. 1986, p. 1480, § 2; Ga. L. 1997, p. 734, § 5; Ga. L. 2018, p. 319, § 4/HB 849.)

The 2018 amendment, effective May 3, 2018, in paragraph (e)(1), in the first sentence, substituted "Except as provided in Code Section 48-7-53, when" for "When" at the beginning, inserted "the" following "180 days after", inserted "date" in the middle, and added the third and fourth sentences; in paragraph (e)(2), inserted "or her" throughout, and inserted "or she" in the middle of the first sentence.

Editor's notes.

- Ga. L. 1986, p. 1480, § 3, not codified by the General Assembly, provided effective dates for §§ 1 and 2 of that Act and provided that § 2 of that Act, which amended this Code section, would apply to taxable years beginning on or after January 1, 1987.

Law reviews.

- For annual survey of state and local taxation, see 38 Mercer L. Rev. 337 (1986).

JUDICIAL DECISIONS

Section comports with equal protection requirements.

- There is a rational basis for providing different statutes of limitations based on the different situations provided for in former Code 1933, § 92-3303(a) and (f). Therefore, former subsection (f) did not deny equal protection under the state and federal Constitutions. Blackmon v. Monroe, 233 Ga. 656, 212 S.E.2d 827 (1975).

Period of limitations applies only to returns containing all required information.

- Information may be applied improperly in calculating tax liability, but after three years, if all required information is included in the return, the commissioner is barred from maintaining an action against the taxpayer. However, when the return does not give full information which is required, the statute will not run. Redwine v. Arvaniti, 83 Ga. App. 203, 63 S.E.2d 222 (1951).

Period of limitation inapplicable to examination of records.

- Provision that deficiency assessment must be made within three years from the date of filing an income tax return is only applicable to the assessment and collection of taxes and not to the right of examination of records. Redwine v. Arvaniti, 83 Ga. App. 203, 63 S.E.2d 222 (1951).

Taxpayer who missed three-year limitation period.

- O.C.G.A. § 48-7-82(e) did not give a taxpayer who missed the three-year limitation period for filing amended state returns a second opportunity to file an amendment; the taxpayer was not authorized by subsection (e) to submit an amended state tax return, and the taxpayer's untimely request for a refund was properly denied. Graham v. McKesson Info. Solutions, LLC, 279 Ga. App. 364, 631 S.E.2d 424 (2006).

Section does not bar the commissioner from collecting the amount admitted to be due when the return is filed, if that amount has not been paid. State v. Fuller, 90 Ga. App. 349, 83 S.E.2d 69 (1954).

Administrative interpretation of waivers by former commissioner will not estop present commissioner from relying on waivers, which toll the statute of limitation for 30 days beyond a time fixed by an unambiguous statute. Hawes v. Nashville, Chattanooga & St. Louis Ry., 223 Ga. 527, 156 S.E.2d 455 (1967).

No assessment proceeding is required when the return is accepted by the commissioner as correct.

- Tax is due and payable as a personal debt without an assessment. An assessment is an action taken only with regard to the collection of an amount of tax exceeding that returned by the taxpayer. State v. Fuller, 90 Ga. App. 349, 83 S.E.2d 69 (1954).

What constitutes a "report reflecting the changed or corrected net income."

- Conference report showing an increase in the taxpayer's tax liability, but which is not a final determination of the changed or corrected net income, is a "report reflecting the changed or corrected net income" for purposes of the statute of limitations. Chilivis v. Levy, 240 Ga. 792, 242 S.E.2d 594 (1978).

Conference report showing an increase in the taxpayer's tax is a report reflecting changed or corrected net income, notwithstanding the fact that the report does not show the changed or corrected net income itself. Chilivis v. Levy, 240 Ga. 792, 242 S.E.2d 594 (1978).

Failure to amend after increase of income by IRS.

- O.C.G.A. § 48-7-82(e)(1) required the debtor to provide an amended tax return because the IRS had reassessed the debtor's income upwards for the relevant tax years; because the debtor never filed an amended return for those years, the taxes were deemed nondischargeable pursuant to 11 U.S.C. § 523(a)(1)(B)(i). Loc Ngoc Pham v. Ga. Dep't of Revenue (In re Loc Ngoc Pham), Bankr. (Bankr. N.D. Ga. Mar. 1, 2005).

Non-dischargeability in bankruptcy.

- Georgia Department of Revenue was not entitled to summary judgment on the department's nondischargeability claim under 11 U.S.C. § 523(a)(1)(B)(i) based on the debtor's alleged failure to file an amended return as required by O.C.G.A. § 48-7-82(e)(1) because the department failed to establish that an amended return was actually due; the debtor's tax liability could have been adjusted by the IRS without an adjustment to the net income (for example, the debtor could have made a mistake in computing the tax based on net income that did not change), thus failing to trigger the filing requirement of paragraph (e)(1). Patterson v. Ga. Dep't. of Revenue (In re Patterson), Bankr. (Bankr. N.D. Ga. Dec. 12, 2006).

When the debtors failed to file an amended state income tax return after the debtors' federal income tax was revised upward by the IRS as required by O.C.G.A. § 48-7-82(e)(1), the debtors' state income tax based on the upward revision was excepted from discharge under 11 U.S.C. § 523(a)(1)(B)(i). Thovongsa v. Ga. Dep't of Revenue (In re Thavongsa), Bankr. (Bankr. N.D. Ga. Feb. 7, 2012).

Cited in Jones v. Georgia Dep't of Revenue, 158 Bankr. 535 (Bankr. N.D. Ga. 1993).

OPINIONS OF THE ATTORNEY GENERAL

Commissioner has three years to make assessment after return is filed.

- This section is a safeguard which gives the state an additional year in which to make the state's original audit and assessment. The General Assembly no doubt reasoned that if time permitted the commissioner to examine the return and make a proper assessment thereon within the two-year period, the commissioner should not be given additional time to reopen the assessment and correct the commissioner's own errors. If, however, the large volume of returns filed prevents the commissioner from completing work within the two-year period, the commissioner is granted an additional year in which to perform the duty. 1945-47 Op. Att'y Gen. p. 569.

When taxpayer makes full disclosure in an income tax return but the tax is erroneously computed, the period of limitation is three years. 1952-53 Op. Att'y Gen. p. 214.

Only material amendments to return change period of limitations.

- Obvious legislative intent of this section is to give the department sufficient time to review returns of taxpayers, and when a deficiency is discovered, time to make an assessment. A reasonable interpretation of this section would be that when the taxpayer files an amended return which makes no material change, but makes changes of a minor nature, that the period of limitations should commence on the date of the original return. On the other hand, when the taxpayer files an amended return which makes a material change, a logical and reasonable interpretation would have the period of limitations commence as to the material change only at the time of the filing of the amended return. 1948-49 Op. Att'y Gen. p. 677.

RESEARCH REFERENCES

C.J.S.

- 85 C.J.S., Taxation, §§ 2003, 2042 et seq., 2075 et seq.

ALR.

- Duress in obtaining waiver from taxpayer extending time for assessment of income tax, 78 A.L.R. 631.

Liability on bond given as condition of extension of time for payment of income tax, 117 A.L.R. 452.

When statute of limitation commences to run against action to recover tax, 131 A.L.R. 822.

Settlement negotiations as estopping reliance on statute of limitations, 39 A.L.R.3d 127.

Suspension of running of period of limitation, under 26 U.S.C.A. § 6503, for federal tax assessment or collection, 160 A.L.R. Fed. 1


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