Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 465.0825


465.0825 Limitation for Issuing Determination—Bankruptcy. A taxpayer filed Chapter 11 bankruptcy on January 31, 1992. The Board initiated an audit which resulted in a Notice of Determination issued to the taxpayer on April 30, 1992, for pre-petition periods. With each of the tax returns filed by the taxpayer for the first quarter of 1992 through the third quarter 1993, the taxpayer attached a letter requesting that, "pursuant to section 505(b) of the Bankruptcy Code, a determination as to any unpaid liability that the estate may have pertaining to this return be made as soon as possible."

Although section 505(b) states that a "request" is to be made by a "trustee," In re Goldblatt (1989) Bankruptcy Reporter 522, has held that either the debtor-in-possession or the trustee may invoke the section 505(b) procedure. Therefore, the time limitations specified in the code section are applicable for the Board's "notification" to the taxpayer of any additional tax due for those periods for which the taxpayer submitted its "request" pursuant to section 505(b), unless such return is fraudulent or contains a material misrepresentation (e.g., if the Board, within 60 days, notifies the estate that an audit is pending, it has 180 days to complete the examination or such additional time as the court may allow).

The general time limitation stated in section 505(b) has passed. While the Board may audit the taxpayer for those periods, it may issue a determination only if the Board finds that a return is fraudulent, or contains a material misrepresentation. 7/31/95.