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Raytheon Company v. Commissioner of Revenue

Appeals Court of Massachusetts, Suffolk

September 12, 2019

RAYTHEON COMPANY
v.
COMMISSIONER OF REVENUE.

         Argued June 3, 2019.

         Corrected October 4, 2019.

         [132 N.E.3d 1041] APPEALS from decisions of the Appellate Tax Board.

         Donald-Bruce Abrams (John S. Brown also present) Boston, for the taxpayer.

         Kirk G. Hanson, Assistant Attorney General, & Pierce O. Cray, Assistant Attorney General, for Commissioner of Revenue.

         Present: Green, C.J., Vuono, & Lemire, JJ.

         OPINION

         GREEN, C.J.

         [132 N.E.3d 1042] These two related appeals raise questions concerning the timeliness and scope of applications for abatement of excise taxes filed by the Raytheon Company for the years 2007 and 2012, respectively. In both cases, Raytheon timely filed its return, but thereafter received notice of a deficiency assessment

Page 73

from the Commissioner of Revenue (commissioner), and filed an application for abatement challenging the deficiency assessment. Raytheon timely appealed the commissioner’s denials of the abatement applications, and, while the appeals were pending before the Appellate Tax Board (board), subsequent events revealed in each instance that Raytheon had in fact overpaid the taxes owed when it filed its original returns. Although the commissioner abated the deficiency assessments in full while the appeals to the board were still pending, Raytheon argued that it was due further abatements on the theories that (a) it had overstated its income for 2007, and (b) it was entitled to recoup at once (in the form of a tax refund) certain investment tax credits, rather than carrying forward any credits remaining after the full abatement of the 2012 deficiency assessment. After abating the deficiency assessments, the commissioner moved to dismiss Raytheon’s appeals to the board, arguing that the appeals were untimely as to any matter other than the deficiency assessments. The board agreed and dismissed Raytheon’s appeals for want of jurisdiction over any amounts other than the deficiency assessments. On appeal to this court, Raytheon contends that the board’s dismissal was incorrect because the deficiency assessments necessarily encompassed not only the amounts stated in the notices of deficiency assessment but also the amounts by which Raytheon had overpaid its taxes in its original returns. In its appeal concerning its 2012 return, Raytheon makes an additional argument: that its application for abatement, which referenced only the deficiency assessment for that return, was sufficient to preserve its rights to claim an abatement of taxes reported in its filed return because the application for abatement was filed within three years after Raytheon had filed its return.[1] See G. L. c. 62C, � 37. We affirm the decisions of the board in both cases.

         1. Factual Background .

         a. 2007 return .

         Raytheon filed a corporate excise tax return for the 2007 tax year, reporting an excise tax liability of $7,333,762.[2] On November 15, 2011, following an

Page 74

audit, the [132 N.E.3d 1043] commissioner issued a notice of assessment, notifying Raytheon that he had assessed it an additional $650,752 of corporate excise tax, plus interest and penalties, for the 2007 tax year.[3]

          On January 12, 2012, Raytheon filed an application for abatement of the deficiency assessment. Raytheon did not, however, file any application for abatement directed to its original 2007 tax return. The commissioner denied Raytheon’s abatement application in full on July 31, 2013. On September 20, 2013, Raytheon filed with the board a timely appeal from the commissioner’s denial.

          In addition to challenging the nonincome measure of the excise upon which the $650,752 deficiency assessment for the 2007 tax year was based, Raytheon also raised for the first time in its appeal to the board a claim that it had overstated its sales factor in its original 2007 return, resulting in an overstatement of the income component of its corporate excise for that tax year on that return. As a result of the alleged sales factor overstatement in its 2007 tax return, Raytheon claimed it was entitled to an additional abatement of $5,746,575 for the 2007 tax year, to be refunded from the taxes paid when it originally filed its return.

          On December 14, 2015, the commissioner filed a partial motion to dismiss, moving to dismiss so much of Raytheon’s appeal to the board as sought an abatement of portions of the tax paid when it filed its 2007 return. The commissioner agreed that Raytheon could use the sales factor adjustment argument as a new legal theory to dispute the commissioner’s tangible property deficiency assessment of $650,752 for the 2007 tax year. However, he argued that, because Raytheon had never applied for an abatement of the tax originally reported on the 2007 return, any challenge to the original self-assessment for 2007 was time barred. After the board denied the commissioner’s motion, the commissioner abated the deficiency assessment in full, and filed a second motion to dismiss what remained of Raytheon’s appeal -- in other ...


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