97-007

Response January 27, 1997

Note: This letter is in response to a telephone conversation between NAME and Chairman Oveson.

January 27, 1997

Advisory Opinion - Prepayment Requirements for Corporate Filers

Dear NAME,

You asked us to review our interpretation of the corporate tax prepayment requirements. After reviewing the corporate tax provisions, we conclude that the corporation must make a prepayment of the tax due in order to secure an extension of the time to file.

Under section 59-7-505 (2) of the Tax Code, returns must be filed on or before the 15th day of the fourth month following the close of the tax year. A filing extension of up to six months may be allowed if the prepayment required by 59-7-507 is made on or before the due date. §59-7-505 (3).

Under section 59-7-505, if a filing extension is necessary, payment must be made by the original due date of the return in an amount equal to 90% of the tax due or 100% of the previous year’s tax. If the payment falls short of the amount required, a penalty of 2% per month is assessed until the payment is made during the extension period.

We do not agree that the statute allows for an automatic extension without payment. In fact, the statutory language of section 59-7-505 (3) explicitly requires a prepayment in order to obtain an extension. To read section 59-7-507 as you suggest renders section 59-7-505 (3) meaningless. Such a reading is improper under the rules of statutory construction, and strains our mandate to apply the plain language of the statutes.

We understand that you may bring this issue to the attention of the legislature. We take no position either for or against your position. However, if you pursue a statutory amendment, we will be happy to work with you on the language of your bill. Working together, we can draft clear language to accomplish the legislature’s intent.

For the Commission,

Joe B. Pacheco,

Commissioner