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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Lousiana Pacific Corp v State Dept of Revenue (05/04/2001) sp-5404

Lousiana Pacific Corp v State Dept of Revenue (05/04/2001) sp-5404

     Notice:  This opinion is subject to correction before publication in
the Pacific Reporter.  Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.



             THE SUPREME COURT OF THE STATE OF ALASKA
                                 

LOUISIANA-PACIFIC             )
CORPORATION,                  )    Supreme Court No. S-9198
                              )
             Appellant,       )    Superior Court No.
                              )    1JU-98-501 CI
     v.                       )
                              )    O P I N I O N
STATE OF ALASKA, DEPARTMENT   )
OF REVENUE, WILSON CONDON,    )    [No. 5404 - May 4, 2001]
Commissioner,                 )
                              )
             Appellee.        )
______________________________)




          Appeal from the Superior Court of the State of
Alaska, First Judicial District, Juneau,
                      Larry R. Weeks, Judge.


          Appearances:  Donna C. Willard, Law Offices of
Donna C. Willard, Anchorage, and Jeffrey M. Vesely and Richard E.
Nielsen, Pillsbury, Madison & Sutro, San Francisco, California, for
Appellant.  Stephen C. Slotnick, Assistant Attorney General, and
Bruce M. Botelho, Attorney General, Juneau, for Appellee.


          Before:  Matthews Chief Justice, Eastaugh,
          Fabe, Bryner, and Carpeneti, Justices.  


          FABE, Justice.


I.   INTRODUCTION
          Louisiana-Pacific Corporation sought and received a
refund of income taxes paid to the State for the years 1988 to
1991.  After a subsequent audit, the State Department of Revenue
demanded repayment of the refunded taxes on the ground that
Louisiana-Pacific did not request the refund within the period
permitted by the statute of limitations.  Maintaining that the
statute of limitations was stayed by waiver agreements that it had
reached with the Internal Revenue Service, Louisiana-Pacific
refused to repay the refund.  The State sued and filed for summary
judgment, which the superior court granted.  Louisiana-Pacific
appeals.     
II.  FACTS AND PROCEEDINGS
          Between 1988 and 1992, Louisiana-Pacific Corporation
operated the Ketchikan pulp mill through its subsidiary, the
Ketchikan Pulp Company.  These operations generated taxable income
in Alaska.  Accordingly, Louisiana-Pacific filed state income tax
returns in the years 1988-91 and paid taxes in the following
amounts:
     Tax Year            Filing Date         Amount of Tax

     1988                August 18, 1989     $3,904,820.20
     1989                August 22, 1990     $2,040,208.24
     1990                August 9, 1991      $  648,435.59
     1991                September 9, 1992   $  133,398.14

On June 26, 1996, more than three years after filing the last
return, Louisiana-Pacific filed amended state corporate net income
tax returns for the years 1988-91, claiming a refund totaling
$470,837.95.
          Louisiana-Pacific claimed the refund because it believed
that it had used the incorrect apportionment fraction in
calculating its Alaska taxes.  An apportionment fraction is the
portion of a corporation's income earned in a particular state.
[Fn. 1]  The portion of Louisiana-Pacific's income earned in Alaska
is then taxable in Alaska.  Louisiana-Pacific argued that it had
not included the receipts from the sales of short-term securities
in the sales factor [Fn. 2] in the denominator of its apportionment
fraction.  Including these receipts in the denominator would reduce
the size of Louisiana-Pacific's apportionment fraction for its
Alaska operations and hence the amount of income taxable by the
State of Alaska. [Fn. 3]  Although the issue on appeal is whether
Louisiana-Pacific's refund claim was filed within the time allowed
by the Alaska Net Income Tax Act's (ANITA's) statute of
limitations, the State disagrees with the theory asserted by
Louisiana-Pacific in its amended returns.
          In accordance with Department of Revenue policy, the
Department paid the refund promptly before evaluating the merits of
Louisiana-Pacific's claim.  The Department issued a refund of
$470,947.95, the amount Louisiana-Pacific had claimed in addition
to a $110 overpayment noted in its records.
          Tax Year            Amount of Refund
          1988                $226,852.64
          1989                $182,501.66    
          1990                $ 54,137.01
          1991                $  7,346.64
          Overpayment         $    110.00
          Total               $470,947.95

After a subsequent audit, the Department determined that Louisiana-
Pacific had filed its refund claims after the state statute of
limitations had run.  Accordingly, the Department sent Louisiana-
Pacific an assessment and demand for repayment on November 12, 1996
and a second demand on January 31, 1997.  Louisiana-Pacific refused
to return the refund, relying on its agreements with the federal
government to extend the statute of limitations for the
determination of its federal taxes in 1988-91.
          The State sued Louisiana-Pacific in March 1998, claiming
that erroneous refunds are a debt to the State under AS
43.10.032(a)(3).  The State filed a motion for summary judgment in
January 1999, and Louisiana-Pacific opposed it, filing a cross-
motion for summary judgment in February.  The superior court agreed
with the State, and entered judgment in its favor in June 1999. 
Louisiana-Pacific appeals, arguing that its waiver agreements with
the IRS extend the state statute of limitations for Alaska taxes.
III. STANDARD OF REVIEW
          We will affirm a grant of summary judgment if the record
presents no genuine issues of material fact and the moving party is
entitled to judgment as a matter of law. [Fn. 4]  When determining
whether the case presents genuine issues of fact, we draw all
reasonable inferences in favor of the non-moving party. [Fn. 5]
          In this case, portions of Alaska's income tax scheme
modify or create an exception from Alaska's incorporation of
particular federal Internal Revenue Code (IRC) provisions.  "This
is a matter of pure statutory construction which is not within the
particular expertise of the agency and which requires us to
exercise our independent judgment."[Fn. 6]   
IV.  DISCUSSION
          In this case we must interpret the Alaska statutes that
define the limitations period for filing an income tax refund.  The
State argues that Alaska's tax statutes clearly prescribe the time
for filing an income tax refund.  The parties agree that Louisiana-
Pacific exceeded the three-year statute of limitations described by
AS 43.05.275. [Fn. 7]  Louisiana-Pacific filed for a refund on June
26, 1996, almost four years after it filed its return for tax year
1991.  For all the other disputed tax years, the time elapsed
between the original filing date and the claim for a refund
exceeded four years.  Louisiana-Pacific also concedes that it never
entered into an agreement with the State to extend the statute of
limitations.
          Although Louisiana-Pacific admits that it exceeded the
time to file for a refund and that it did not agree with the State
to waive the statute of limitations, Louisiana-Pacific turns the
court's attention to the exception in AS 43.05.275(a).  That
exception refers to AS 43.20.021, the portion of ANITA that
incorporates the federal Internal Revenue Code: [Fn. 8]
          Internal Revenue Code adopted by reference.       
(a) Sections 26 U.S.C. 1-1399, and 6001-7872
(Internal Revenue Code), as amended, are adopted by reference as a
part of this chapter.  These portions of the Internal Revenue Code
have full force and effect under this chapter unless excepted to or
modified by other provisions of this chapter.

Louisiana-Pacific maintains that the incorporation of the IRC
includes the portion of the Code dealing with the statute of
limitations for claiming refunds, 26 U.S.C. sec. 6511(c).
          When a taxpayer and the IRS agree to waive the statute of
limitations for federal taxes, [Fn. 9] 26 U.S.C. sec. 6511(c)
extends
the statute of limitations for refunds as well. [Fn. 10]  A
taxpayer waives the statute of limitations by executing a Form 872,
which Louisiana-Pacific did on January 25, 1995 for tax years 1988,
1989, and 1990 and on December 13, 1995 for 1991.  Louisiana-
Pacific argues that because the state tax scheme incorporates this
portion of the IRC, its agreements with the IRS -- waiving the
federal statute of limitations for federal taxes -- effect a waiver
of the state statute of limitations for state taxes.  Louisiana-
Pacific maintains, therefore, that its claim for a refund of Alaska
state income tax was timely.  Thus, the issue before us is whether
agreements between the IRS and the taxpayer waive the state statute
of limitations for state income taxes.  
     A.   Applicability of Federal Waiver Agreements to State
Income Taxes

          In Hickel v. Stevenson, we addressed the issue of whether
a waiver agreement between the IRS and a taxpayer tolls the statute
of limitations for state taxes. [Fn. 11]  We concluded that waiver
agreements between the taxpayer and the IRS did stay the statute of
limitations for Alaska state taxes:
          [The exception in 26 U.S.C. sec. 6501(c)(4)]
          was
applicable as to [the taxpayers'] federal income tax liability
because of the waivers that the federal government secured from
[the taxpayers] which permitted the United States to assess
additional taxes after the three-year period of limitation had
expired.  Such exception was also applicable as to [the taxpayers']
Alaska income tax liability because of the incorporation by
reference in the Alaska law of the provisions of the Internal
Revenue Code.  By reason of the express adoption of the provisions
of the Internal Revenue Code relating to an exception to the
three-year period of limitation, the effect of [the taxpayers']
waiver of the federal period of limitation for assessment and
collection of taxes was to effect a like waiver of such period as
to the assessment and collection of the additional Alaska tax.[[Fn. 12]]
 
          The State presents two arguments asserting that our
decision in Hickel is not controlling in this case.  First, the
State argues that at the time of our decision in Hickel, Alaska's
income tax was dependent on federal tax, and it "simply ma[de]
sense to allow the State to assess additional tax due as a result
of the federal audit." The State contends that statutory revisions
have abrogated our holding in Hickel.  Second, the State argues
that the adoption of state waiver provisions in AS 43.05.275 and AS
43.05.260, enacted after the Hickel decision, require an agreement
with the State to stay the statute of limitations.
          In its first argument, the State contends that because
our decision in Hickel relied upon the former AS 43.20.200(b), [Fn.
13] the 1975 amendments to that statute abrogate our holding in
that case. [Fn. 14]  When we decided Hickel, AS 43.20.200(b) read:
"The same period of limitation upon the assessment and collection
of taxes imposed under this chapter and the same exceptions to it
shall apply as provided under section 6501, section 6502(a), and
section 6503(a) of the Internal Revenue Code of 1954."[Fn. 15] 
The legislature subsequently amended the statute.  One alteration
removed the subsections from the referenced IRC provisions, [Fn.
16] and a second added an additional sentence. [Fn. 17]  Now, AS
43.20.200(b) states:
          The same period of limitation upon the
assessment and collection of taxes imposed under this chapter and
the same exceptions to it shall apply as provided in 26 U.S.C. 6501
- 6503 (Internal Revenue Code).  In the case of additional tax due
by reason of a modification, recomputation, or determination of
deficiency in a taxpayer's federal income tax return, the period of
limitation on assessment commences from the date that the notice
required in AS 43.20.030(d) is filed, and if no notice is filed the
tax may be assessed at any time.

          The State argues that by including the second sentence
and the "by reason of"language in the 1975 amendment, the
legislature intended to limit additional state assessments to
situations in which additional tax is due "by reason of"a federal
audit.  Although the second sentence does address situations where
modification of tax liability occurs after a federal audit, [Fn.
18] the provision is a supplement to the specifically incorporated
IRC provisions rather than a replacement for them.  The first
sentence of AS 43.20.200(b) still allows the State to assess tax
during the time prescribed by the federal waiver; there has been no
material change since the Hickel decision. [Fn. 19]  The second
sentence simply requires taxpayers who have their federal liability
modified to notify the department or be subject to a subsequent
assessment of state taxes at any time.  It does not otherwise
invalidate the effectiveness of federal waivers for state law
purposes. [Fn. 20]  We conclude that the modifications to AS
43.20.200(b) do not prohibit the State from assessing additional
tax, or a taxpayer from claiming a refund, while a federal waiver
of the statute of limitations remains effective.
          The State's second argument is that the state statutory
provisions allowing for the extension of the state statute of
limitations by agreement create an exception to Alaska's
incorporation of the IRC.  Alaska's statutes allow waiver
agreements entered into between the State and taxpayers to extend
the state statute of limitations.  Alaska Statutes 43.05.275(b) and
43.05.260 require both the taxpayer and the Department to consent
to an extension.  Alaska Statute 43.05.260(a) provides:
          Except as provided in (c) of this section and
AS 43.20.200(b), the amount of a tax imposed by this title must be
assessed within three years after the return was filed, whether or
not a return was filed on or after the date prescribed by law.  If
the tax is not assessed before the expiration of the three-year
period, proceedings may not be instituted in court for the
collection of the tax.

Alaska Statute 43.05.260(c)(3) provides:

          [I]f, before the expiration of the time
prescribed in this section for the assessment of [income tax], both
the department and the taxpayer have consented in writing to the
assessment after the expiration of the time, the tax may be
assessed at any time before the expiration of the period agreed
upon.

And AS 43.05.275 provides:
               (a)  Except as provided in AS 43.20.021,
a claim for credit or refund of a tax under this title for which a
taxpayer is required to file a return or pay a tax may be filed by
the taxpayer

               (1)  before the later of

               (A)  three years from the time the return
was filed; or

               (B)  two years from the time the tax was
paid; or

               (2)  within two years from the time the
tax was paid, if no return was filed.

               (b)  If the department and the taxpayer
have consented to extend the period for assessment of tax as
provided in AS 43.05.260(c)(3), a tax refund claim may be filed at
any time before the expiration of the period agreed upon.
          Although the state waiver provisions require an agreement
between the taxpayer and the Department, both contain exceptions
that refer to the incorporation of certain provisions of the IRC.
[Fn. 21]  In turn, as already discussed, the IRC includes
provisions for waiver of the federal statute of limitations.  The
State argues that the references to the IRC do not mean that
federal waivers suffice to extend the state statute of limitations.
          We disagree.  Significantly, the provisions of AS
43.05.260 and AS 43.05.275 regarding the statute of limitations and
written agreement to extend that statute do not eliminate the first
sentence of AS 43.20.200(b), which incorporates specific IRC
sections, those concerning extension of the limitations period for
assessment.  We interpret the references to the IRC contained in AS
43.20.200 and 43.20.021 as making waiver agreements between the IRS
and the taxpayer effective for the purpose of extending the state
statute of limitations.  The State has not explained convincingly
what the references to the IRC mean if they do not allow federal
waiver agreements to be effective for state tax purposes.  Citing
AS 43.20.021, the State argues that "[t]he statutory scheme
anticipates that some of the incorporated provisions of the IRC
will be superfluous if they are 'excepted to or modified by [other
provisions of this chapter].'" (Emphasis added.) However,  AS
43.05.260 and 43.05.275 appear in chapter 5 of Title 43, while AS
43.20.021 appears in chapter 20 of Title 43.  The modifications and
exceptions to which AS 43.20.021 refers therefore do not include AS
43.05.260 and 43.05.275.
          Moreover, when we engage in statutory construction, we
must, whenever possible, interpret each part or section of a
statute with every other part or section, so as to create a
harmonious whole.  We must also presume that the legislature
intended every word, sentence, or provision of a statute to have
some purpose, force, and effect, and that no words or provisions
are superfluous. [Fn. 22]  We therefore decline the State's
invitation to interpret the references to the IRC in 43.20.200 and
43.20.021 in a way that would make them superfluous.  We conclude
that the incorporation of certain provisions of the IRC into Alaska
law makes federal waivers effective for Alaska state taxes.  
     B.   References to the "Secretary"or the "Service"in the
Incorporated IRC Cannot Uniformly be Read as Referring to the State
Department of Revenue or to the State Revenue Commissioner.

          In asserting that Alaska requires a taxpayer to agree
with the Department to waive the state statute of limitations, the
State argues that the incorporated IRC should be read to require an
express agreement between the taxpayer and the State.  To reach
this result, the State argues that both AS 43.05.275(b) and the
incorporated IRC provisions 26 U.S.C. sec. 6501(c)(4) and 26 U.S.C.
sec.
6511 require an agreement with the Department to waive the statute
of limitations.  The State contends that where the IRC refers to
the "Secretary of the Treasury"this court should interpret that to
refer to "the Commissioner of the Alaska Department of Revenue."
Although the State's substitution argument finds some support in a
footnote in Wien Air Alaska, Inc. v. Department of Revenue, [Fn.
23] we reject the State's position.
          Wien does not require us to interpret references in the
incorporated IRC to federal officials to mean state officials.  In
Wien, we addressed the issue of whether a letter from the
Department containing a favorable ruling could be altered
retroactively. [Fn. 24]  We interpreted the incorporated IRC as
allowing the Department to correct mistakes in the application of
the tax law and to do so retroactively. [Fn. 25]  We looked at the
context of incorporated IRC sec. 7805(b) and decided that the
reference to the U.S. Secretary of the Treasury's power to decide
which rulings and regulations had retroactive effect granted the
State Department of Revenue that power. [Fn. 26]  We held that, in
the particular circumstances of Wien, the reference in 26 U.S.C.
sec.
7805(b) to the "Secretary"may be used to refer to the Commissioner
of the Alaska Department of Revenue under AS 43.20.021(a). [Fn. 27]
          We decline the State's invitation to extend that holding
to require that in every place in which the "Secretary"appears in
the incorporated IRC, the "Commissioner"must be substituted. 
Instead, we confine our statement in Wien to the peculiar
circumstances of that case.  As Louisiana-Pacific points out, a
rule that calls for blanket substitution would lead to untenable
results and a major revision of Alaska's tax policies.  Louisiana-
Pacific cites 26 U.S.C. sec. 1362 as an example.  This provision
allows a corporation to elect status as an "S corporation"and
grants the Secretary the power to "determine[] that there was
reasonable cause for [a] failure to make [a] timely election."[Fn.
28]  If a blanket substitution rule were in place, then a separate
determination would need to be made by the State Department of
Revenue.  This reading would greatly complicate tax collection
procedures in Alaska.  Any time the IRC called for a determination
by the Secretary, Alaska taxpayers could be required to seek a
ruling from the Department as well, greatly increasing the burden
on the Department and taxpayer.  We conclude that such a
complicated tax system is contrary to the intent of the
legislature. [Fn. 29]
     C.   If Louisiana-Pacific Executed Federal Waivers Restricted
to Issues Unrelated to the Calculation of its Alaska Tax, then the
Federal Waivers Should Not Effect a Waiver of the State Statute of
Limitations.

          The waiver agreement between the IRS and Louisiana-
Pacific covering tax years 1988-90 was restricted to a specific
issue, [Fn. 30] which Louisiana-Pacific concedes is unrelated to
the theory under which Louisiana-Pacific claims its refund. 
Although the superior court did not reach the question whether the
restricted waiver could toll the statute of limitations for wholly
unrelated issues, we believe that it is necessary to reach that
question in light of our conclusion that general federal waivers
are effective for state tax purposes. 
          Congress has recognized the use of restricted waivers,
having called for the IRS to notify taxpayers that the limited
waiver is an available option:
          Notice to taxpayer of right to refuse or limit
extension. -- The Secretary shall notify the taxpayer of the
taxpayer's right to refuse to extend the period of limitations, or
to limit such extension to particular issues or to a particular
period of time, on each occasion when the taxpayer is requested to
provide such consent.[ [Fn. 31]]

In addition, the restricted waiver is recognized in the Internal
Revenue Manual [Fn. 32] and in several judicial decisions. [Fn. 33] 
And Louisiana-Pacific agrees that a restricted federal waiver
prevents the IRS from assessing additional tax for reasons
unrelated to those in the waiver.  Louisiana-Pacific instead
encourages this court to focus on the question of whether or not
"the very existence of a federal waiver, not any limitations
thereon which might be involved, holds open the Alaska statute of
limitations for refunds or assessments relating to purely state
issues."
          The State argues that the restriction in the federal
waiver should be given effect in determining the due date of the
state refund application.  The State reasons that when Louisiana-
Pacific signed the restricted waiver it agreed that "the amount of
any deficiency or overassessment is to be limited to that resulting
from any items affected by continuing tax effects caused by
adjustments to any prior tax return of Santa Fe Industries, Inc."
Because federal courts use contract principles to determine the
scope of a federal waiver, [Fn. 34] the State argues that it would
be inconsistent with Louisiana-Pacific's federal waiver agreement
to allow a state refund on unrelated issues.  We agree.  Alaska's
statutes require that "[t]he department shall apply as far as
practicable the administrative and judicial interpretations of the
federal income tax law."[Fn. 35]  Thus, we conclude that the
restricted federal waivers limit the scope of what may be claimed
as a refund of state tax or what the State may assess. [Fn. 36]  A
restricted waiver is only effective for state adjustments that are
reasonably related to the issues covered by the restricted federal
waiver.  Sound policy favors a tax system where a limited federal
waiver does not expose a taxpayer to unforeseen state tax
liability.  The same analysis applies to refunds.  We therefore
conclude that a restricted federal waiver extends the state statute
of limitations only so far as the issues covered in the restricted
waiver would affect state tax liability.
V.   CONCLUSION
          Because Alaska's tax statutes incorporate the IRC
provisions which call for the waiver of the statute of limitations
by agreement with the IRS, such waivers are effective for state tax
purposes.  But a restricted federal waiver can only extend the
state statute of limitations for assessment or refund to the issues
covered in the restricted waiver.  Thus, while the statute of
limitations for claiming state refunds was extended based on the
federal waivers for those years in which the waiver agreements were
entered, Louisiana-Pacific is precluded from claiming refunds on
any issues other than those specified in the restricted federal
waivers.  We therefore REMAND for further proceedings in light of
our opinion.


                            FOOTNOTES


Footnote 1:

     See Multistate Tax Compact, Article IV.9, AS 43.19.010; see
also State, Dep't of Revenue v. OSG Bulk Ships, Inc., 961 P.2d 399,
403-04 (Alaska 1998).


Footnote 2:

     The sales factor constitutes one of the three factors which
make up the apportionment fraction.  See Multistate Tax Compact,
Article IV.9 & 15, AS 43.19.010; OSG Bulk Ships, 961 P.2d at 403-
04.


Footnote 3:

     The numerator of the apportionment fraction is the amount of
income earned in Alaska.  The denominator represents the company's
total income.  The higher the denominator, the lower the Alaska tax
burden, provided that Alaska income remains the same.  See
Multistate Tax Compact, Article IV.9, AS 43.19.010.


Footnote 4:

          See In re Estate of Evans, 901 P.2d 1138, 1140 (Alaska
1995).


Footnote 5:

     See Bishop v. Municipality of Anchorage, 899 P.2d 149, 153
(Alaska 1995).


Footnote 6:

     OSG Bulk Ships, 961 P.2d at 403 n.6.


Footnote 7:

     AS 43.05.275 provides:

          Credit and refund claims.  (a) Except as
provided in AS 43.20.021, a claim for credit or refund of a tax
under this title for which a taxpayer is required to file a return
or pay a tax may be filed by the taxpayer

               (1)  before the later of

               (A)  three years from the time the return
was filed; or

               (B)  two years from the time the tax was
paid; or

               (2)  within two years from the time the
tax was paid, if no return was filed.
          
               (b)  If the department and the taxpayer
have consented to extend the period for assessment of tax as
provided in AS 43.05.260(c)(3), a tax refund claim may be filed at
any time before the expiration of the period agreed upon.

AS 43.05.260(c)(3) provides:

          [I]f, before the expiration of the time
prescribed in this section for the assessment of a tax imposed by
this title, both the department and the taxpayer have consented in
writing to the assessment after the expiration of the time, the tax
may be assessed at any time before the expiration of the period
agreed upon;  however, the period agreed upon may be extended by a
subsequent agreement in writing made before the expiration of the
period previously agreed upon.


Footnote 8:

     26 U.S.C. sec.sec. 1-9833 (1998).


Footnote 9:

     See 26 U.S.C. sec. 6501(c)(4).


Footnote 10:

     26 U.S.C. sec. 6511(c) provides:

          If an agreement under the provisions of
section 6501(c)(4) extending the period for assessment of a tax
imposed by this title is made within the period prescribed in
subsection (a) for the filing of a claim for credit or refund--

          (1)  Time for filing claim. -- The period for
filing claim for credit or refund or for making credit or refund if
no claim is filed, provided in subsections (a) and (b)(1), shall
not expire prior to 6 months after the expiration of the period
within which an assessment may be made pursuant to the agreement or
any extension thereof under section 6501(c)(4).


Footnote 11:

          416 P.2d 236, 238 (Alaska 1966).


Footnote 12:

     Id.


Footnote 13:

     See id.


Footnote 14:

     See Ch. 70, sec. 10 SLA 1975.


Footnote 15:

     Hickel, 416 P.2d at 238.


Footnote 16:

     See Ch. 68, sec. 4 SLA 1987.


Footnote 17:

     See Ch. 70, sec. 10 SLA 1975.


Footnote 18:

     We addressed such a situation before the legislature  modified
AS 43.20.200(b) in Stevenson v. Burgess, 570 P.2d 728, 730 (Alaska
1977).  In Burgess, the federal government assessed additional
liability for tax years 1965-66 in 1972.  But the State did not
receive notice of the additional liability until after the federal
waivers had expired.  We held that the taxpayer was estopped from
asserting the statute of limitations because the taxpayer had
failed to notify the Department as required by statute.  See id. at
733.  The second sentence of AS 43.20.200(b) squarely addresses
that situation.


Footnote 19:

     416 P.2d at 238.


Footnote 20:

     In fact, since the 1975 amendment, the State Department of
Revenue has held the position that a federal waiver is valid for
state taxes.  See In re Amoco Prod. Co., Department of Revenue
Decision 89-066, at 3 (Oct. 19, 1989).


Footnote 21:

     See AS 43.05.260(a) ("Except as provided in . . . AS
43.20.200(b) . . . .); AS 43.05.275(a) ("Except as provided in AS
43.20.021 . . . .").  AS 43.20.200(b) and AS 43.20.021 both
incorporate by reference provisions of the IRC.


Footnote 22:

     See Kodiak Island Borough v. Exxon Corp., 991 P.2d 757, 761
(quoting Rydwell v. Anchorage Sch. Dist., 864 P.2d 526, 528, 530-31
(Alaska 1993)).


Footnote 23:

     647 P.2d 1087, 1093 n.5 (Alaska 1982).


Footnote 24:

     Id. at 1092.


Footnote 25:

     See id. at 1093-96.


Footnote 26:

     See id. at 1093 n.5.


Footnote 27:

     See id.


Footnote 28:

     26 U.S.C. sec. 1362(b)(5)(B) ("[T]he Secretary determines that
there was reasonable cause for the failure to make such timely
election, the Secretary may treat such election as timely made for
such taxable year. . . .").


Footnote 29:

     See AS 43.20.160(c) ("The department shall apply as far as
practicable the administrative and judicial interpretations of the
federal income tax law.").


Footnote 30:

     When it signed the waiver, Louisiana-Pacific agreed that the
amount of any deficiency or overassessment would be limited to that
caused by adjustments to prior tax returns of Santa Fe Industries,
Inc.


Footnote 31:

     26 U.S.C. sec. 6501(c)(4)(B).


Footnote 32:

     See 2 Internal Revenue Manual sec. 4541.71(1)-(6); sec.
4541.72.


Footnote 33:

     See Smith v. Commissioner, 925 F.2d 250, 253 (8th Cir. 1991);
Kinsey v. Commissioner, 859 F.2d 1361, 1362, 1364-65 (9th Cir.
1988); Grunwald v. Commissioner, 86 T.C. 85, 89 (1986); Piarulle v.
Commissioner, 80 T.C. 1035, 1042 (1983).


Footnote 34:

     See Piarulle, 80 T.C. at 1042 (citing Strange v. United
States, 282 U.S. 270 (1931)).


Footnote 35:

     AS 43.20.160(c).


Footnote 36:

     It should be noted that in a 1982 adjudication, the Department
of Revenue adopted the opposite rule, determining that federal
waivers also extend the statute of limitations for state
assessments, even on issues not involved in the federal waivers. 
See In re Acme Oil Co., Department of Revenue Decision 82-48, at
39-40 (Oct. 26, 1982) (holding that limited federal waivers "were
effective for all Alaska purposes").  In addition, the Audit
Division of the Department advanced this contradictory rule in the
In re Amoco proceeding, although the hearing officer ultimately
decided the issue on other grounds.  See In re Amoco Prod. Co.,
Department of Revenue Decision 89-066, at 3, 11-14 (Oct. 19, 1989). 
The Department is not, however, bound to follow its Acme rule here
because it has since disclaimed the policy of relying on federal
waivers for state taxation purposes.  For example, in its Oil & Gas
Company Audit Manual of March, 1994, the Department takes the
position that federal waivers "should not be relied upon for making
an assessment in cases where the Alaska statute has otherwise
expired unless there are compelling reasons for doing so." The
Department's Audit Manual also recognizes that restricted federal
waivers limit the scope of corresponding state waivers: "[a]n open
statute [of limitations] by reason of a federal waiver does not
limit the resulting Alaska statute [of limitations] except where
the federal waiver is restricted as to specific issues." (Emphasis
added.)