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05/23/88 the Department of Revenue, v. Enrico Navarroli

May 23, 1988

THE DEPARTMENT OF REVENUE, PLAINTIFF-APPELLANT

v.

ENRICO NAVARROLI, AS RESPONSIBLE CORPORATE OFFICER OF NAVARROLI CONSTRUCTION COMPANY, DEFENDANT-APPELLEE

THE PERTINENT NOTICE REQUIREMENTS ARE SET FORTH IN SECTIONS 902(A) AND 905(J) OF THE ACT (ILL. RE

v.

STAT. 1983, CH. 120, PARS. 9-902(A), 9-905(J)). SECTION 902(A) PROVIDES:



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

524 N.E.2d 658, 170 Ill. App. 3d 355, 120 Ill. Dec. 628 1988.IL.808

Appeal from the Circuit Court of Du Page County; the Hon. Edwin L. Douglas, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE LINDBERG delivered the opinion of the court. NASH, J., concurs. JUSTICE INGLIS, Dissenting.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LINDBERG

On January 16, 1986, the Illinois Department of Revenue (Department) filed its complaint against Enrico (aka Enricco) Navarroli as responsible officer of Navarroli Construction Company (defendant) for $7,907.49 in unpaid tax, penalties and accrued interest. The trial court granted defendant's motion to dismiss for the Department's failure to give defendant proper notice and demand of tax liability pursuant to statute. The Department appeals. We reverse and remand.

During the tax years 1981 and 1982, defendant was an officer of the Navarroli Construction Company. The record is not consistent as to whether the company was a corporation. In its complaint, the Department alleges that the Navarroli Construction Company failed to collect and pay over to the Department income tax withheld from employee wages. The complaint further alleges that defendant violated section 1002(d) of the Illinois Income Tax Act (Act) (Ill. Rev. Stat. 1983, ch. 120, par. 10-1002(d)) by willfully failing to collect the tax and to truthfully account and pay over the tax to the Department. The Department assessed a penalty against defendant individually for the first through fourth quarters of 1981 and the second and third quarters of 1982. The penalty is equal to the total amount of the tax not paid by the corporation.

On December 18, 1984, the Department sent a notice and demand letter to "Enrico Navarrol [ sic ], Responsible Officer of Navarroli Construction Co., Inc., 33 Devonshire, Oak Brook, Illinois 60525." This address was the business address of Navarroli Construction Company when the returns in question were filed. However, in December 1984, it was neither the usual place of business of Enrico Navarroli nor his residence. Payment was not made within 10 days of the demand. Separate notice and demand was sent on April 11, 1985; however, that notice and demand was not pleaded in the Department's complaint.

On January 16, 1986, the Department filed its verified complaint. After four unsuccessful attempts at service at 405 Jamestown, Westmont, Illinois, defendant was finally served at 705 Oakwood Drive, Westmont, Illinois. On April 24, 1987, defendant filed a motion to dismiss the Department's complaint alleging that the Department failed to serve defendant with notice and demand pursuant to section 902(a) of the Act (Ill. Rev. Stat. 1983, ch. 120, par. 9-902(a)). Prior to the hearing on the motion, defendant's counsel sought to have the matter remanded to the Department for a hearing since defendant had never been given an opportunity to be heard on the merits of the charge. The Department declined, and the matter was set for hearing on defendant's motion. At that hearing, the Department agreed to rely only upon the December 18, 1984, notice and demand and not upon the second notice and demand mailed on April 11, 1985. The Department took this position despite defendant's representation that he had no objection to the Department pleading over if it wanted to allege the second notice. The court subsequently determined that the first notice was inadequate, and the Department declined the court's invitation allowing it to replead. After advising the Department that its order would be final, the trial court granted defendant's motion to dismiss. This appeal followed.

As a preliminary matter, we observe that the second notice and demand mailed on April 11, 1985, is not before this court for consideration. The Department elected to stand on the first notice at the hearing on the motion to dismiss. In addition, at the Conclusion of the hearing, the Department did not accept the opportunity offered by the court to replead to include the second notice. The Department should not be allowed to raise on appeal an issue clearly waived before the trial Judge, and any references to the second notice are not considered.

Thus, the sole issue before this court is whether the Department properly notified defendant of his tax liability on December 18, 1984, by sending notice and demand to defendant at his last known address. The Department argues that the notice and demand served on defendant at the address listed on the 1982 tax form filed by Navarroli Construction Company was sufficient. We agree.

"Except as provided in subsection (b) the Director shall, as soon as practicable after an amount payable under this Act is deemed assessed (as provided in Section 903), give notice to each person liable for any unpaid portion of such assessment, stating the amount unpaid and demanding payment thereof. Upon receipt of such notice there shall be paid at the place and time stated in such notice the amount stated in such notice. Such notice shall be left at the dwelling or usual place of business of such person or shall be sent by mail to the person's last known address." (Emphasis added.) (Ill. Rev. Stat. 1983, ch. 120, par. 9-902(a).)

Section 905(j) provides:

"In the case of returns required under Article 7 of this Act (with respect to any amounts withheld as tax or any amounts required to have been withheld as tax) a notice of deficiency shall be issued not later than 3 years after the 15th day of the 4th month following the close of the calendar year in which ...


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