Sullivan v. Reilly

Plaintiff, the State of Rhode Island Tax Administrator, filed this collection action against Defendants William J. and Marielle Reilly, in pursuit of more than $1 million in assessed-but-unpaid personal income taxes. In their answer, Defendants denied that they owed any personal income taxes for the assessed years. Eventually Plaintiff filed a motion for summary judgment, which was granted by a justice of the Superior Court. Defendants timely appealed to the Supreme Court, arguing that the motion justice erred because: (1) they were nonresidents who were not subject to Rhode Island income tax; (2) that the period of limitation for filing a tax collection action had expired; and (3) that the equitable doctrine of laches should bar the tax administrator's suit under the circumstances of this case. Upon review, the Supreme Court affirmed; Defendants were not entitled to judicial review of the tax administrator's assessment of taxes for the contested tax years because they failed to exhaust their administrative remedies. The Court agreed with Plaintiff that "a taxpayer cannot 'simply wait to be sued for the income tax to then raise objection to the assessment or payment in [the] collection proceeding.'" View "Sullivan v. Reilly" on Justia Law