Vermont Department of Taxes v. Montani et al.Annotate this Case
The Vermont Department of Taxes appeals from trial court orders in favor of defendants in consolidated tax-collection cases. Defendants Thomas Tatro, Kenneth Montani, and Tyre Duvernay failed to file personal income tax returns for various years and the Department sent a First Notice of Audit Assessment to each that provided the amount of taxes due along with interest and penalties. These notices were issued more than three years after the date that the tax returns should have been filed. Defendants did not appeal the assessments to the Commissioner pursuant to 32 V.S.A. 5883. The issue before the superior court in each case arose in the context of a collection action brought by the Department. Defendants did not appear or participate in the collection cases or in these appeals. The Department moved for default judgment. The superior court sua sponte raised a statute-of-limitations challenge to the underlying tax assessments. The court concluded that the underlying tax debts were invalid because the Department issued its notices of deficiencies or assessments of penalty or interest to defendants more than three years after defendants’ tax returns were originally due. The Department argued on appeal to the Vermont Supreme Court that the trial court lacked subject matter jurisdiction to consider the validity of the underlying debts in these collection actions, and that, in any event, it erred in concluding that a three-year limitation period applied. The Supreme Court agreed with the Department on both points. The Court therefore reversed and remanded for entry of judgment in the Department’s favor for the years covered in these cases.