TiNY Report for April 26, 2018 (covering DTA cases from April 19)

Only 3 ALJ Determinations this week, and substantive legal issues were in short supply.  Nothing from the Tribunal.

ALJ DETERMINATIONS

Matter of Mr. Septic, LLC; Judge: Galliher; Division’s Rep: David Gannon; Taxpayer’s Rep: Jack Geisenheimer; Articles 28 and 29.  Once again the case name suggested we could have some fun.  But instead we got the usual boring timeliness case.  Why couldn’t this have been a timely-filed innocent spouse case?  Wouldn’t you have loved to have read our clever descriptions of how the  Septics’ decaying marriage was headed down the drain and eventually tanked?  But instead we can only drone on about how the Division proved it mailed the Notice of Determination to Petitioner’s last known address, Petitioner didn’t file its BCMS request until after the 90-day limitations period expired, and blabbity blah-blah blah.  The Judge found the BCMS request was untimely filed and granted the Division’s motion for summary determination.

Matter of Bitton; Judge: Maloney; Division’s Rep: Linda Farrington; Taxpayer’s Rep: pro se; Articles 28 and 29.  Petitioner was a 50% member of Le Cave, LLC (the operating entity of a restaurant) during the audit period.  The restaurant started struggling to pay its bills.  After that, a bunch of transactions ensued, ownership interests changed hands, and eventually trouble arose between Petitioner and his partners.  Someone didn’t pay someone.  Debts went unpaid.  The restaurant got audited.  A liability was asserted against both the restaurant and petitioner.  Petitioner did not dispute that the restaurant owed sales and use taxes for the audit period.  Predictably, the Judge determined that because Petitioner was a member of the limited liability company, Petitioner had per se personal liability for the LLC’s sales and use taxes due. 

Matter of Reuben; Judge: Maloney; Division’s Rep: Jessica DiFiore; Taxpayer’s Rep: Norman Berkowitz; Articles 28 and 29.  The Division proved its standard mailing procedures and that they were followed to mail the first Notice of Determination to Petitioner’s last known address.  Petitioner did not file his BCMS request protesting the first Notice until after the 90-day limitations period ended, so the Judge determined it was untimely filed.  With respect to the other three Notices of Determination, the Division could not prove it properly mailed the Notices to Petitioner.  Petitioner denied receiving the Notices, but filed a BCMS request protesting those Notices.  Because Petitioner received notice of the tax liability, but the exact date of mailing couldn’t be established, Petitioner was entitled to a hearing to challenge the tax assessment. 

Then the Judge turned to the issue of whether Petitioner was properly determined to be a person required to collect and remit sales taxes on behalf of an LLC (“LLC2”) that owed sales tax.  Petitioner was a 99% member of an LLC (“LLC1”), and owned the remaining 1% of LLC1 through a wholly-owned S corporation. And LLC 1 was the sole member of LLC2.  Because Petitioner was a member of LLC1, which was the sole member of LLC2, the Judge determined Petitioner was properly subject to assessment and per se personally liable for the sales tax due.  The Judge also sustained penalties. 

Comment