TiNY Report for April 13, 2023

Sorry, loyal readers, but client work takes precedence, and I had a load these past few months. In addition, we have been hiring and training new colleagues here to be able to serve the rising tide of clientele seeking to move out of New York, or who are being audited merely because they had the temerity to move out of New York. And New Yorkers are not the only folks who feel disrespected by the internal tax laws of their states of residence; our residency client-base in states like California, Connecticut, Illinois, Massachusetts, and New Jersey has been growing too.

So, yeah, it’s busy times for us here at Hodgson Russ, but good times too. 

Unfortunately, the above priorities have meant I’ve needed to eschew my TiNY editing duties. And this has meant that I have missed commenting on a few worthy cases. I still read them all. The Tribunal’s decisions in Matter of Ciardullo and Matter of Global Foundries U.S. are recognized as works meriting TiNY critiques I was too busy to deliver. And the Administrative Law Judges, when temporarily released from the drudgery of drafting timy determinations, have been serving up some read-worthy material too. Judge DiFiore’s willingness to find that the Division had not satisfied its burden of proving fraud with clear and convincing evidence in Matters of Balakula and Pancharoen is an example of a determination that should be required reading; likewise Judge Law’s determination in Matter of Raytheon Company finding that Petitioner was not a qualified emerging technology company. But alas, the distraction of other work kept me from writing-up these cases.

Now I am back on the job. This morning when I performed my once-a-week journey to the DTA’s website, I was pleasantly-surprised to find seven (!) determinations posted. 

Then I read them.

And then I decided I needed to create another word (and not just because “timy” was getting lonely):

costy \’kȯs(t)-ē\ n. pl costies [US 2023] : 1.  A New York division of tax appeals determination or decision on a petition for costs under tax law Sec. 3030, normally brought by Dean Nasca CPA, and normally in which costs are denied.

DETERMINATIONS

Matter of Bentham, Judge Maloney, April 6, 2023; Div’s Rep. Stefan Armstrong, Esq.; Pets’ Rep. Dean Nasca, CPA.; Pet. for costs TL § 3030. A prototypical costy. Costs denied.

Matter of Krause, Judge Maloney, April 6, 2023; Div’s Rep. Stefan Armstrong, Esq.; Pets’ Rep. Dean Nasca, CPA.; Pet. for costs TL § 3030. A prototypical costy. Costs denied.

Matter of Lam, Judge Maloney, April 6, 2023; Div’s Rep. Stefan Armstrong, Esq.; Pets’ Rep. Dean Nasca, CPA.; Pet. for costs TL § 3030. Wait, there’s more than two of these costies? Costs denied.

Matter of Lucciola, Judge Maloney, April 6, 2023; Div’s Rep. Stefan Armstrong, Esq.; Pets’ Rep. Dean Nasca, CPA.; Pet. for costs TL § 3030. There can’t be a fifth, right? Costs denied.

Matter of Sawyer, Judge Maloney, April 6, 2023; Div’s Rep. Stefan Armstrong, Esq.; Pets’ Rep. Dean Nasca, CPA.; Pet. for costs TL § 3030. If TiNY’s editorial and style guidelines allowed profanity, I’d use it here, liberally. Costs denied.

Matter of Suneima, Judge Maloney, April 6, 2023; Div’s Rep. Stefan Armstrong, Esq.; Pets’ Rep. Dean Nasca, CPA.; Pet. for costs TL § 3030. PLEASE MAKE THE MADNESS STOP! April Fools’ Day was a week ago! Costs denied.

It turns out that if you want to get an award of costs, you need to respond to the Division’s pre-notice requests for records corroborating your income and deductions. Otherwise, the position reflected in the Notice will be found to be substantially justified. I would have liked to have seen what would have happened if one of the taxpayers alleged that they never received the Division’s request for documents since the Division bears the burden of proof on the issue of “substantial justification.”

Matter of Lal, Judge Behuniak, April 6, 2023: Div’s Rep. Brandon Batch, Esq.; Pet’s Rep. Jaikrishen Lal (Pet’s spouse); Articles 28 and 29. The determination is a study of an incorrect application of the trade-in allowance. In October 2015, Petitioner purchased Vehicle 1 for $36,590 and paid $3,155.89 in New York State and local sales tax.  In March 2019, Petitioner sold Vehicle 1 for $24,500. In April 2019 Petitioner purchased Vehicle 2 for $38,023.26 and paid $3,279.51 in New York State and local sales tax. A few days after the purchase of Vehicle 2, Petitioner filed a refund claim seeking repayment of $2,113.12 in sales tax paid, which was the sales tax attributable to the value of Vehicle 1 when she sold it. Petitioner’s argument: If Vehicle 1 had been traded-in to the dealership upon the purchase of Vehicle 2, Petitioner would have paid $2,113.12 less in sales tax on the purchase of Vehicle 2. Even though Petitioner sold Vehicle 1 to one party and purchased Vehicle 2 from another party, the sales tax consequences to Petitioner should be the same.

Judge Behuniak narrowly (and properly) interpreted the Tax Law § 1101(b)(3) exclusion from “consideration” as including only the value of tangible personal property tendered to the vendor as consideration for the transaction. The Judge ultimately held that because Vehicle 1 was not traded-in to the dealer that sold Petitioner Vehicle 2, the exclusion did not apply.

ORDERS

There was also one order posted:

Matter of Bautista and Avelino, Judge Law, April 6, 2023: Div’s Rep. Peter Ostwald, Esq.; Pet’s Rep. pro se; Article 22. This is a rare taxpayer-favorable timy. Judge Law denied the Division’s motion for dismissal/summary determination. The Division had made the motion alleging that Petitioners failed to file their BCMS request within the required 90 days. Judge Law first found that the Division had, through affidavits, proven that the Notice was properly issued to Petitioners’ last known address on August 21, 2020. But then he found that the Division had not established that Petitioners had not filed their BCMS request within the required 90 days. The Judge found that the BCMS request was dated within the 90-day limit, and that there was a facsimile cover sheet submitted into evidence dated a day before the signature date on the request. While the Judge recognized that the request was stamped as “received” on January 26, 2021 (after the 90-day limit had expired), he noted that the Division did not submit any evidence other than the received stamp to show when the BCMS request had been received. In light of the lack of evidence (or perhaps in light of the conflicting evidence), Judge Law found that the date Petitioners filed the BCMS request was a disputed factual matter requiring a hearing. 

Comment