Mr. Pizza II, Inc. v. Comptroller of the Treasury

WILLIAM W. WENNER, Judge, Retired, specially assigned. The genesis of this appeal is a judgment entered by the Circuit Court for Anne Arundel County affirming a decision of the Maryland Tax Court. Appellant, Mr. Pizza II, Inc. (“Mr. Pizza”), contends that because appellee, the Comptroller of the Treasury (the Comptroller), did not mail a notice of assessment within six months after receiving notice of a bulk sales transfer, the six-month limitations, period set forth in § 6-111 of the Commercial Law Article bars the Comptroller from imposing personal liability on Mr. Pizza. The Comptroller contends that § 6-111 does not apply when it is seeking to recover sales and use tax solely under the provisions of the Tax General Article of the Maryland Code.

The matter proceeded in the circuit court on the following stipulation of facts: I. On January 20, 1997 Pardner’s, Inc. transferred all of its assets to Mr. Pizza II, Inc. as part of a “bulk transfer,” as defined in Md.Code Ann. Commercial Law Article § 6-102.

II

The bulk transfer of January 20, 1997 falls within the requirements of Md.Code Ann. Tax General Article § 11-505.

III

Neither Petitioner nor Pardner’s Inc. complied with the provisions of Md. Ann.Code Tax General Article § 11-505 and Md. Commercial Law Article §§ 6-107 and 6-108. No notice of the bulk transfer was ever sent to the Comptroller. .

IV

The transferor, Pardner’s Inc., of the January 20, 1997 bulk transfer owes sales and use tax to the Comptroller in the amount of $24,912.07 plus interest and penalty for the period April 1, 1992 thru January 31,1997. This obligation remains outstanding and interest continues to accrue. ²⁵⁵ V. The Comptroller received information from a third party source that a bulk transfer had occurred on or about April 17,1997.

VI

The Comptroller contacted the Petitioner’s accountant on May 23, 1997 and informed that office of the outstanding tax liability of the transferor and that Petitioner could be held liable as a successor for Pardner’s Inc.’s outstanding liability.

VII

On January 5, 1998, the Comptroller mailed to Petitioner, as successor to vendor, a Notice of Assessment for the outstanding sales and use tax liability, plus interest and penalty. VIII The assessment was affirmed, with interest, and the penalty was abated by a decision of the Comptroller’s Hearing Office on May 1, 1998. Subsequent to the decision by the Comptroller’s Hearing Office, Mr. Pizza noted an appeal to the Maryland Tax Court. The Tax Court, which is actually an administrative agency, affirmed the decision of the Comptroller’s Hearing Office, that the limitations period contained in § 6-111 of the Bulk Transfer Act (BTA) was not applicable because the Comptroller did not bring an action or levy under the Commercial Law Article, but rather an assessment pursuant to the provisions of § 13-802 of the Tax General Article (TGA).

Mr. Pizza then appealed to the Circuit Court for Anne Arundel County, which, by an order of 3 January 2000, affirmed the Tax Court’s decision. This appeal followed. The sole issue before us is whether the six-month statute of limitations contained in § 6-101 of the Commercial Law Article (CLA) bars the Comptroller from imposing personal liability on Mr. Pizza. For the reasons hereinafter set forth, we shall affirm the judgment of the circuit court.

Discussion Section 6-101 of the Commercial Law Article (hereinafter referred to as the Bulk Transfer Act) governs bulk transfers. In appellant’s view, as § 6-107 of the BTA designates the ²⁵⁶ Comptroller as a party to be notified of an impending Bulk Transfer, the Comptroller is subject to the six-month period of limitations set forth in § 6-111. We disagree. Since the Comptroller’s imposition of liability on Mr. Pizza was neither an action nor a levy, § 6-111 does not apply.

We shall explain. TGA § 13-802 provides, in relevant part: If the transferee ... in a bulk transfer fails to file the notice required in § 11-505 of this article or to retain consideration in an amount equal to the claim of the Comptroller for unpaid sales and use tax: * * * (2) the transferee ... is personally liable for the sales and use tax, interest and penalties that the transferor owes to the State. It is undisputed that neither of the transferors, Mr. Pizza and Pardner’s, Inc., complied with the requirements of TGA’s § 11-505, which provides, in relevant part: "(a) Notice to creditors. — A transferee or auctioneer in a bulk transfer, as defined in § 6-102 of the Commercial Law Article, shall mail to the Comptroller the notice to creditors, as required in §§ 6-107 and 6-108 of the Commercial Law Article, whether or not: (1) the transferor lists the Comptroller as a creditor; or (2) the transferee or auctioneer knows that the transferor owes any sales and use tax. TGA § 11-401 provides: “[a] vendor is a