TiNY Report for November 9, 2017 (covering DTA cases issued November 2)

5 ALJ determinations this week.  Nothing from the Tribunal and no orders.  Three of the Determinations involve timeliness issues which the taxpayers lost.  So more than half the cases were both boring and depressing.  To brighten our prose, today we sample from a popular song from the 80s (“Once in a lifetime” by The Talking Heads) that investigates the hollowness of a life lived in accordance with social expectations.  We bet you feel more cheerful already!

ALJ DETERMINATIONS

Matter of Globe Wholesale Distributors, Inc., Judge: Gardiner; Division’s Rep: Brian Evans; Taxpayer’s Rep: Stephen Solomon and Kenneth Moore; Article 20.  Petitioner was partially granted the refunds it claimed.  The Petitioner protested a Notice of Determination assessing additional tax the Petitioner paid for periods in the 2011 and 2012 tax years.  In December 2013, the Department issued a TSB-M providing a more taxpayer-friendly computation approach, and as a result the Petitioner filed a protective refund claim letter shortly after.  The Judge noted the letter only claimed a refund but did not provide documentation or a theory on which it based its claim, however, the Judge partially allowed the Petitioner’s refunds.   The Petitioner had to have filed the refund claim within two years from the date it paid the tax, so it was entitled only to refunds for the audit periods starting November 2011 (two years from December 2013).  The Petitioner also argued it was entitled to relief under the Taxpayer Bill of Rights section 3004-a.  Tax Law section 3004-a provides the Department must disclose overpayment discoveries made during the audit.  However, the Judge determined that the TSB-M facilitating the refunds was issued after the audit and was, by its terms, to have only prospective effect.  And you may ask yourself:  “Well, how did I get here?”

Matter of Les; Judge: Russo; Division’s Rep: Tobias Lake; Taxpayer’s Rep: Jerry Merola; Article 22.  Petitioners claimed business expense deductions for real estate activities.  The main legal issue in this case was whether Petitioner-wife was a real estate professional for whom passive loss limitations would not apply.  The main factual issue involved various inconsistencies and discrepancies with Petitioners’ evidence and testimony.  During the audit the Petitioners argued that Petitioner-husband was the real estate professional.  At the hearing, Petitioners did a 180 and argued that it was Petitioner-wife who was the real estate professional.  But Petitioners could not prove the number of hours Petitioner-wife worked in her occupation outside of the real estate activities (real estate professional need to spend more than half of their work time on real estate matters).  And there were several discrepancies with the evidence – e.g., Petitioner-wife claimed to be an employee, but instead Petitioner-husband got a W-2 from the employer.  The documents seemed a little sketchy and the Judge determined the Petitioners were not credible witnesses.  So, the Judge determined the Petitioners had not met their burden to show more than half of the personal services Mrs. Les performed during the year in question were in the real property business, and thus she was not a real estate professional.   In addition, the Judge determined Petitioners failed to substantiate their claimed expenses.  And you may tell yourself: “This is not my beautiful wife!” 

Matter of Dhan Guru Ji Corporation; Judge: Gardiner; Division’s Rep: Adam Roberts; Taxpayer’s Rep: Parvinder Kaur; Articles 28 & 29.  The Division adequately proved its standard mailing procedures and that they were followed to mail the conciliation order to Petitioner.  Petitioner filed its petition after the 90-day period of limitations expired, so the petition was deemed to have been untimely filed and was dismissed.  Same as it ever was… .

Matter of Mutai; Judge: Gardiner; Division’s Rep: Christopher O’Brien; Taxpayer’s Rep: pro se; Article 22.  The Division met its burden to prove timely and adequate mailing and Petitioner did not timely file his petition.  Petitioner argued he never received written notice of the conciliation order, however, once the Division proves proper mailing, it gets the benefit of presumed receipt by the taxpayer, and Petitioner did not produce evidence to rebut that presumption.  The Judge dismissed the petition.  Same as it ever was… .

Matter of Kaur; Judge: Gardiner; Division’s Rep: Adam Roberts; Taxpayer’s Rep: unknown; Articles 28 & 29.  Again, the Division met its burden to show it correctly mailed the Notice of Determination to Petitioner, and Petitioner filed its petition after the 90-day limitations period expired.  The petition was deemed to have been untimely filed and was dismissed.   Same.  As.  It.  Ever.  Was.

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