D.C. Proposes Law to permit Indefinite Suspension of Limitation Period for Assessment and Collection

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D.C. Proposes Law to permit Indefinite Suspension of Limitation Period for Assessment and Collection

[co-author: Eric Carstens]The Fiscal Year 2016 Budget Support Act of 2015 (BSA), created by the Washington, D.C. Council in the request of Mayor Muriel Bowser on April 2, 2015, includes a subtitle (see Title VII, Subtitle G, page 66-67) that will provide the Office and Tax and Revenue (OTR) complete discretion to indefinitely suspend the time of limitation on assessment and assortment of all D.C. taxes-apart from real estate taxes, that have another algorithm and operations. The modification towards the statute of limitation provision would eliminate a simple citizen protection that exists today in most states. Individuals concerned should achieve to people from the D.C. Council to discourage adoption of the subtitle from the BSA.

Current Law

Under current law, the quantity of tax enforced should be assessed (quite simply, your final assessment should be issued) within three (3) many years of the taxpayer’s return being filed. See D.C. Code § 47-4301(a). Practically speaking, this involves the mayor to issue a notice of suggested assessment no after two (2) many 11 several weeks following the return is filed-to permit the citizen the requisite thirty days to file for a protest using the Office of Administrative Proceedings (OAH). See D.C. Code § 47-4312(a). Because the law reads today, the important from the duration of limitation is suspended between your filing of the protest and also the issuance of the final order by OAH, along with an additional two months after that. See D.C. Code § 47-4303. The District has ten years following the final assessment to levy or start a court proceeding for collections. See D.C. Code § 47-4302(a).

Suggested Changes

The BSA would extend the limitation period for assessment and collection, the following:

  1. The BSA would add a new provision to statutorily require the chief financial officer (CFO, the executive branch official overseeing the OTR) to send a notice of proposed audit changes at least 30 days before the notice of proposed assessment is sent; and
  2. The BSA would toll the running of the statute of limitation on assessment and collection during the period after the CFO/OTR issues the aforementioned notice of proposed audit changes until the issuance of a final assessment or order by OAH.

The BSA doesn’t indicate an relevant date of these changes. Consequently, the supply likely could be relevant to the open tax period, effectively making the modification retroactive to returns already filed.


By altering what the law states to toll the statute of limitation for that period after OTR issues a notice of suggested audit changes, the BSA allows OTR to unilaterally control if the three-year statute of limitation is running. The present statute mandates that OTR issue its notice of suggested assessment prior to the expiration from the three-year statute-and provides taxpayers the opportunity to protest such notices prior to the OAH. By tolling the statute upon issuance of the notice of suggested audit changes, which isn’t susceptible to review by OAH, the BSA would strip taxpayers from the protection provided by a 3-year time limit closing the tax year. Rather, OTR could indefinitely toll the statute by issuing a notice of suggested audit changes-an undefined document without any current statutory basis, which isn’t susceptible to judicial review. The finish result for taxpayers is going to be indefinite audits along with a disruption from the timely and efficient closing of tax years. We observe that the approach can also be sporadic using the OTR’s own ‘Taxpayer Rights’ commitment of “prompt treatment.”


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