TiNY Report for February 1, 2018 (covering DTA cases issued January 25)

One Tribunal Decision and three ALJ Orders this week.

TRIBUNAL DECISION

Matter of Townley; Division’s Rep: Linda Jordan; Taxpayer’s Rep: pro se; Article 22.  The Tribunal affirmed the ALJ’s determination that the Division established its standard mailing procedures and that they were followed to properly mail the Notices of Deficiency to Petitioner’s last known address.  Petitioner mailed his BCMS request after the 90-day limitations period expired, so the Tribunal deemed it untimely filed.

ALJ ORDERS

Matter of Emerald International Holdings, Inc.; Judge: Friedman; Division’s Rep: Anita Luckina; Taxpayer’s Rep: Out Obot (taxpayer’s president); Articles 28 & 29.  A hearing was scheduled before Judge Law.  Petitioner failed to appear for such scheduled hearing and did not request an adjournment.  The Division submitted a motion for default.  Judge Law granted the motion for default.  A default determination was issued.  Petitioner requested the default determination be vacated.  Petitioner failed to establish an acceptable excuse for its failure to appear at the hearing or show that it had a meritorious case.  So, Judge Friedman denied Petitioner’s request to vacate the default determination.

Matter of Zaidan; Judge: Connolly; Division’s Rep: Linda Jordan; Taxpayer’s Rep: pro se; Article 22.  Petitioner claimed a federal earned income credit that the IRS disallowed after its audit of Petitioner’s federal tax return.  Because the earned income credit for NYS tax purposes is a percentage of the amount of federal earned income credit, the Division argued it was entitled to summary determination as a matter of law on the propriety of the earned income credit Petitioner claimed on his NYS return.  However, Judge Connolly determined that the Division is not bound by federal audit changes.  A taxpayer must report to NYS any federal disallowance of a claim for credit or refund of federal income tax, and the taxpayer must either concede that the change is correct or state that it is in error.  If the taxpayer claims the change is erroneous, the Division may issue a Notice of Deficiency, which the taxpayer has a right to protest.  Petitioner also claimed an Empire State child tax credit, which the Division denied under the same theory (that a state adjustment must follow the federal adjustment).  So, taxpayers are not precluded from challenging the validity of a New York credit denial  based on a federal change, and the Judge determined the Division was not entitled to summary determination here on the issue related to either credit claimed.  A hearing in this matter will be scheduled.

Matter of Woodner; Judge: Connolly; Division’s Rep: Charles Fishbaum; Taxpayer’s Rep: Beth Tractenberg; Article 22.  The Division issued a demand for a bill of particulars.  Judge Connolly noted that there is a murky line between a demand for a bill of particulars that identify the issues to be raised at a hearing (good), and one that only seeks to probe into the opposing party’s legal interpretations or to obtain disclosure of evidence (not ok).  Judge Connolly determined that the demand here fell more under the latter category, finding that the Division’s demand for a bill of particulars here was inappropriate because it went beyond clarifying the petition and sought evidentiary detail.  So, the Judge vacated the demand.  This is the second Bill of Particulars matter to be addressed by Judge Connolly in the last few months.

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