Monday, March 19, 2012

You May Be Right, But Statutes of Limitation Will Drive You Crazy

Tennessee's unauthorized substance tax (aka the "Crack Tax") has received a lot of publicity over the last few years as it was being challenged by numerous "taxpayers" on constitutional grounds. In the end, the Tennessee Supreme Court ruled that the tax was unconstitutional, meaning that all those lawsuits that were pending were lined up for refunds or abatements of the pending assessments.

Not so fast...

Along comes Swafford v. Commissioner of Revenue, a recent Tennessee Court of Appeals decision that has held that despite the Crack Tax being unconsitutional, one plaintiff is not entitled to get his money back because his claim was filed beyond the applicable statute of limitations period. Mr. Swafford paid the tax back in 2005 and did not get around to filing a claim for refund until after the 2009 decision in Waters v. Farr, 291 S.W.3d 873 (Tenn. 2009) was decided. His claim was beyond the three-year statute of limitation, which had expired in December of 2008.

Mr. Swafford's loss is a reminder for taxpayers of all kinds in Tennessee. That is ... the deadlines that you cannot miss are the deadlines to file a refund or to file a lawsuit challenging the denial of a claim for refund. If you do that ... you may be right, but the statute of limitations will drive you crazy.


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