UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

CORBIN DIVISION

IN RE:

ROGER G. POLLARD CASE NO. 92-60188

DEBTOR

MEMORANDUM OPINION

This matter is before the Court upon the debtor's Objection to Proof of Claim filed on April 1, 1992 to the Proof of Preferred Claim for Taxes Due the Commonwealth of Kentucky (the "Commonwealth") filed on April 7, 1992. (It is not germane that the Objection precedes the claim, one assumes that the attorney for the debtor is prescient.) The matter was heard at a hearing conducted in this Chapter 13 case on June 11, 1992. Briefs have been filed by both parties and the matter stands submitted for decision by the Court.

The matter in controversy stems from the purchase of a mobile home by the debtor pursuant to a Purchase Agreement between debtor and Grace Pollard and Storybrook Homes, Inc., a Clarksville, Indiana mobile home dealer. The parties have submitted a copy of the Purchase Agreement and a Financing Agreement between debtor, Gracie Pollard and First National Bank of Louisville. The Commonwealth has also submitted the affidavits of Willard E. Story, President of Storybrook Homes, Inc. and Larry O'Nan, Assistant Director, Division of Audit Review and Protest Resolution.

The claim of the Commonwealth is based upon the debtor's alleged failure to pay the use tax on the mobile home. The debtor contends that the tax was paid, or that the appropriate statute of limitations has expired and alleges that the Commonwealth's desperate financial straits have driven it to desperate measures in its attempts to generate tax revenues. Obviously, the Commonwealth has an obligation to its citizens to collect all taxes legally due and owing and the motivation of the Commonwealth and its alleged desperation for funds has no bearing on the matter.

Kentucky Revised Statutes ("KRS") 139.330 clearly places liability for the use tax on the purchaser of tangible personal property. This liability may be extinguished in several ways including a receipt from a retailer authorized by the Commonwealth to collect such taxes. It appears that Storybrook Homes, Inc. is not such a retailer and no such claim has been made herein. A review of the Purchase Agreement leads to the conclusion that the seller did not collect the tax and this is supported by the affidavit of Willard E. Story. The Court therefore finds that the use tax was not collected by the seller at the time of the sale.

It further appears that a separate tax return would have been required in 1981 for reporting this use tax. The debtor has no documentation that he paid the tax and the affidavit of Larry O'Nan indicates that no such return was filed. The Court concludes that the use taxes herein in issue were not paid and are due and owing unless barred by applicable statutes of limitations.

KRS 139.620 provides that any tax of this nature must be assessed within four years "...except that in the case of a failure to file a return ... the excess may be assessed at any time." The debtor argues that the default statute of limitations is applicable, KRS 413.160. The Court concludes that where, as here, the Legislature has specifically addressed the limitations period, that specifically stated statute of limitations is controlling. Therefore, since no return was filed by the debtor, the Commonwealth may assess the appropriate taxes at any time.

For the above reasons, it appears that the Objection of the debtor to the claim of the Commonwealth should be overruled and a separate Order will be entered.

Dated this ______ day of July, 1992.

BY THE COURT

_____________________________________

BANKRUPTCY JUDGE

COPIES TO:

Paul D. Deaton, Esq.

Barbara Curtin Kenney, Esq.

Sidney White, Esq.