Time Warner Cable Information Services (NY), a Charter affiliate, provided bundled VoIP services (local, long-distance, international) in New York from March 1, 2014, to February 28, 2017. As a telecom provider, they had to pay the Federal Universal Service Fund (FUSF)—a federal surcharge based on interstate (and international) revenue—though providers pass this cost to customers as a line item.
Here at Noonan’s Notes world headquarters, we don’t write about every case that comes out of the Division of Tax Appeals, but every once in a while, a case comes out that is notable in some way where we think it’s worth a discussion. Often, these are cases where we disagree with the judge’s reasoning, but over the last couple of weeks, we saw two taxpayer victories that we wanted to highlight because the facts of each of them were a bit unusual. In both Determinations, the tax forms filed with the Tax Department that listed the Petitioner’s names as responsible persons were determined to be insufficient to hold the Petitioners as responsible persons when considered with the other facts in each of the cases, which seems like reason enough to take a closer look at these two cases.
As our regular readers know, we’ve been following the Zelinsky “convenience-rule” case through New York’s Division of Tax Appeals over the past couple of years.
Earlier this month, House Republicans issued a broad package of tax proposals to be made part of the “Big Beautiful Tax Bill” that the Trump administration has promised to enact. For weeks if not months, there has been a lot of chatter about what will happen to the SALT deduction, as many House Republicans from blue states like New York and California have been insistent on reviving the deduction, or at the very least increasing the cap on the deduction (currently set at $10,000) to a much larger number.
One of the more obscure provisions in the New York residency law, known as the 548-Day Rule, allows a New York-domiciled taxpayer to be treated as a nonresident simply by spending lots of time out of the United States for an 18-month period.
One of the more common issues that comes up in audits of New Yorkers relates to how an audit adjustment impacts their home state tax liability. And due to its proximity to New York, this is a huge issue in Connecticut, as New York spends a lot of its time auditing Connecticut residents on all sorts of personal income tax issues.
There is a lot of residency guidance out there harping on the importance of taking various administrative steps to change your domicile, like changing your driver’s license, voter registration, vehicle registration, etc. And while those steps are certainly indicative of a move, they are typically less relevant to the final determination, and often can cause taxpayers to lose focus on what we think can be the most important factor in changing your domicile: where you spend your time. Indeed, a poor “time factor” can hamstring an otherwise legitimate change in domicile.
The Third Department of the New York Supreme Court, Appellate Division recently issued a somewhat surprising ruling that should expand taxpayers’ access to protest rights within the state’s Division of Tax Appeals (“DTA”).
In the case, Matter of Dumpling Cove, LLC, the Petitioner was audited and subsequently signed a Statement of Proposed Audit Change in January 2018, agreeing that it owed over $500,000 in sales tax, interest, and penalties. Shortly thereafter, the Petitioner made a partial $100,00 payment, and the Department responded with a letter confirming receipt of the $100,000 check and, importantly, referring Petitioner to the Department’s website “to view your balance due.”
In July, the Massachusetts Appellate Tax Board (ATB) issued a decision upholding the state’s 2020 emergency regulation that required nonresident employees who worked in Massachusetts prior to the pandemic, but worked remotely due to the pandemic, to continue to apportion their income to Massachusetts.
But just because we’re posting about it—don’t confuse the Massachusetts’ emergency regulation with New York’s convenience rule. There are several key differences.
Earlier this year we reported on a Massachusetts case where a court, (wrongly, we think), determined that a nonresident taxpayer could be taxed on the sale of stock in a business that he founded and ran in the state. Turns out this issue might be contagious……a few months ago, Ohio successfully made a similar argument. In a Final Determination issued on March 28, 2024, the Ohio Tax Commissioner denied Claimants Dr. Garry Rayant and Dr. Kathy Fields’s $719,492 refund application filed with their amended 2018 Ohio tax return. The Claimants sold 25% of their interest in Rodan & Fields, a skincare products company, and originally apportioned their resulting capital gain income to Ohio in calculating their Ohio nonresident credit. On their amended return, however, they allocated this capital gain income to California, increased their nonresident credit, and claimed a refund.