Pioneer Savings Bank & Subsidiaries

99-18

Taxpayer filed a claim for refund by filing an income tax return showing a balance due to the taxpayer. The Department took no action on the Taxpayer’s refund claim.  More than a year later, the taxpayer inquired as to the status of its refund claim. The taxpayer was asked to send a letter setting out the details of its claim for refund. The taxpayer did so and also requested interest from the date of its original claim for refund. The Department ignored and did not respond to the taxpayer’s correspondence. Twenty one months after submitting its original claim for refund, the taxpayer resubmitted its claim for refund and asked for interest from the date of filing its original claim. The Department granted the refund in the amount of tax principal, but did not pay any interest on that refund. Six months later, in November, 1997, the taxpayer submitted a refund claim for the interest it was not refunded previously.  The Department took no action on that refund claim. When the taxpayer inquired as to the status of its November, 1997 refund claim it was informed that the Department had not received it. The taxpayer then wrote the Department, in March, 1998, enclosing a copy of the certified mail return receipt showing that the Department had received the claim for refund and it enclosed copies of everything it submitted with its claim for refund. The Department took no action with respect to either of the taxpayer’s submittals requesting a refund of interest on its original claim and the taxpayer protested the Department’s failure to grant a refund of interest.The Department first argued that there was no jurisdiction to hear the taxpayer’s protest because the time for protesting the Department’s failure to act upon its November, 1997 refund claim had expired. It was determined that although the time for protesting the Department’s inaction on its November, 1997 refund claim had expired, the taxpayer’s March, 1998 correspondence was a refiling of its claim for refund and the taxpayer timely protested the Department’s inaction on that claim.  The taxpayer’s protest of the Department’s failure to grant it a refund of interest on its original claim for refund was denied. Pursuant to Section 7-1-26, the taxpayer had 90 days to either file an administrative protest or a suit in district court to contest the Department’s failure to grant its original claim for refund after the Department failed to act upon it after 120 days of its filing. Having failed to take either action to contest the Department’s inaction on its original claim for refund, that claim was extinguished and any claim for interest which would be payable on that claim pursuant to Section 7-1-68 died with the claim for refund itself.