After three years from the filing of a complete and timely return of income, the question of the correct amount of income tax due to the State is closed by the provisions of Code 92-303, unless administrative proceedings for assessment of an amount greater than that returned are instituted within the three-year period. This Code section does not operate to bar the present proceeding by execution for the collection of the amount of income tax returned by the taxpayer and alleged to be unpaid.
The State Department of Revenue issued an execution on May 1, 1953, against A. L. Fuller, Jr., to collect a tax of $800.67 on his 1947 income, and interest on the tax. The execution was levied on Fuller's property, and he filed a bond and an affidavit of illegality in which he alleged, first, that he had duly filed a return in 1948, showing his income for 1947, but that the tax had not been assessed against him within the time prescribed by law. He alleged in a second paragraph that he had paid the tax when he filed his return.
The State demurred to the first paragraph of the affidavit as setting out no defense; the court overruled the demurrer, and the State excepted pendente lite.
The case was submitted to the court on the following stipulated facts: On May 12, 1948, Fuller filed a Georgia income tax return for the year 1947, and the return showed $800.67 as the tax due. March 15, 1948, was the last date for filing returns on 1947 income, but the State Revenue Department granted Fuller an extension of 60 days. The Department of Revenue has made no assessment against Fuller for tax due on his 1947 income. The Department notified Fuller on May 12, 1953, by registered letter, that an execution had been issued in the amount of $1,219.63 for his 1947 income tax and interest to date, and that, if payment of this tax was not made within 15 days, legal action would be taken as provided by law for the collection of the tax.
The first ground of Fuller's affidavit of illegality is based on Code 92-3303 (a): "Except as provided in subsection (b) of this section, the amount of income taxes imposed by this law shall be assessed within three years after the return was filed, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period." It is provided in 92-3303 (c) that, "When the assessment of any income tax has been made within the period of limitation properly applicable thereto, such tax may be collected by execution."
In support of the superior court's ruling, Fuller contends that, regardless of what an assessment may be, no timely assessment was made in the present case, and therefore the State is barred from proceeding to collect the tax. The State's contention is that "assessment" as used in the income-tax law means the assessment of a deficiency, as dealt with in Code 92-3302, and that the limitation of three years is applicable only to an assessment of a deficiency.
Ordinarily, there are two distinct issues between the State and one who is liable for the payment of income tax: first, what amount of tax is to be paid; and, second, whether the tax has been paid. Concerning payment, the Code provides that "The total amount of tax imposed" shall be paid on or before March 15 following the close of a calendar year, unless an election is made to pay the tax in instalments. 92-3301. An execution may be issued by the Revenue Commissioner if any tax imposed by law is not paid within 10 days after notice and demand. 92-3306. From the time it is due and payable, income tax shall become a personal debt of the taxpayer to the State. 92-3311. It is apparent that payment of the tax imposed is not conditioned upon assessment by the Revenue Commissioner.
The Code does not define an assessment, but Code 92-3302 at least shows that an assessment is an administrative act relating to the issue of the correct determination of the tax to be paid. The Revenue Commissioner is required to examine a return after it has been filed and to determine the correct amount of tax. If he determines that there is a "deficiency"--i.e., either an excess of the tax imposed by law over the amount returned, or the Commissioner's determination of the tax where no return is filed or where the taxpayer has not shown his tax on his return ( 92-3302(f))--then he must notify the taxpayer of his determination. The deficiency may not be assessed nor proceedings for its collection begun until 30 days after the date of the notice, unless the taxpayer has petitioned for a redetermination of the deficiency; in such case, the assessment of the deficiency may be made and its collection begun only after notifying the taxpayer of the commissioner's decision on the redetermination of the deficiency. Code 92-3302 (a, b, c).
These considerations lead to the conclusion that a collection proceeding as referred to in Code 92-3303 is one involving an issue as to the determination of the tax due. The effect of this section is to state that the question of the correctness of a return is closed three years after it has been filed, unless the administrative procedures for an assessment have been commenced within that time. The exceptions stated in subsection (b) of 92-3303 are where no return is filed or where the return filed is incomplete or fails to show the taxpayer's total income from all sources; assessment may be made at any time in such cases, and, if no return is filed, a proceeding for collection may be begun without assessment.
In the present case, Fuller's return showed a tax of $800.67 as due on his 1947 income. The execution was issued some five years later to collect the same amount, with interest. The question raised by the execution was whether the tax had been paid, and not whether it had been correctly determined. The Revenue Commissioner is not seeking to question Fuller's return; indeed, if the return is complete, he is precluded from doing so. But the statute does not bar the Revenue Commissioner from collecting the tax in the amount admitted to be due when the return was filed, if that amount has not been paid.
The court erred in quashing the execution and in overruling the demurrer to the first paragraph of the affidavit of illegality.
Judgment reversed. Felton, C. J., and Quillian, J., concur.