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Taxes in New York (TiNY) is a blog by the Hodgson Russ LLP State and Local Tax Practice Group. The weekly reports are intended to go out within 24 hours of the Division of Tax Appeals’ (DTA) publication of new ALJ Determinations and Tribunal Decisions. In addition to the weekly reports TiNY may provide analysis of and commentary on other developments in the world of New York tax law.  

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TiNY Report for August 6, 2020 (reporting on DTA cases issued July 30)

By on

The phrase “Dog Days” does not refer to those summer days when it is so hot that your dog just wants to lie around and pant all day. Instead, the dog days are those days in the year during which Sirius—aka: the “dog star”—rises before the sun in the morning. This year the dog days fall between July 22 and August 22, inclusive. Even without the knowledge of the origin of the phrase, I might have guessed we were in the dog days this week because the DTA served us up a determination and an ALJ order on cases that are real dogs, appearing to involve ill-prepared petitioners arguing mostly baseless factual issues.


Matter of Jackson; Judge Behuniak; Division’s Rep.: Charles Fishbaum; Taxpayer’s Rep.: Larry Johnson; Articles 22 and 30-A (by Chris Doyle)

Petitioner filed a return showing roughly $115,000 of compensation but $0 of taxable income. On her return, she claimed her income was offset by a $3,000 capital loss, a schedule C business loss from Royal Cleaning Agency of around $28,000, a schedule E real estate loss of $25,000, and employee business expenses of around $40,000.

Petitioner attended the hearing, but neither Petitioner nor any other witness testified on Petitioner’s behalf (this is never a good look for a petitioner). Lots of documents were introduced into evidence, although there was never a foundation laid for the documents submitted. Petitioner didn’t file an initial brief (also bad form), and then tried to submit evidence when she filed her reply brief (can anyone say “strike three”?).

The Judge found that: (1) Petitioner didn’t prove the Royal Cleaning Agency was a trade or business under the nine-factor test of Treas. Reg. § 1.183-2(b); (2) Petitioner couldn’t claim employee business expenses since she was entitled to reimbursement by her employer; (3) Petitioner failed to prove that the property claimed to be rental property was, in fact, rental property, or that she materially participated in the rental of the property (or was a real estate professional) so as to avoid the passive activity loss limitations; (4) Petitioner failed to substantiate the claimed rental real estate expenses; and (5) Petitioner had not proven that she was single, and thus not required to file a “married filing single” return.

But at least she was permitted to deduct her $3,000 capital loss . . . so there’s that.


Matter of Bey; Judge Law; Division’s Rep.: Adam Roberts; Taxpayer’s Rep.: pro se; Articles 28 and 29 (by Chris Doyle)

This might be a good time to remind you to read the TiNY Disclaimer, available here. And if you think you may be offended by sophomoric humor,  just stop after you read the Disclaimer, and we’ll see you next week.

Petitioner bought a truck and a trailer. The truck was purchased out of state. When Petitioner went to the DMV to register the truck, the DMV  asked for the sales (use) tax for the truck, which Petitioner refused to pay. When the trailer was purchased in Albany, Petitioner, once again, refused to pay the sales tax.

He refused to pay the tax on the truck and trailer on the basis that he was exempt from tax as a Moorish American. In case you were wondering, the Moorish Americans think they have sovereign immunity because they are part of an elite class with special rights and privileges that place them beyond state authority. No one in the tax universe agrees, and the results are predictable.

Anyway, BCMS sustained the Notices the Division issued asserting Petitioner owed tax on the truck and trailer. Petitioner filed his petition, the Division’s answered, and then, after the deadline for filing a demand for a bill of particulars had passed, Petitioner sent a letter to the DTA seeking the DTA’s rules and two other documents that appeared to me to have no relevance to the case. After being told by the DTA that it did not have the irrelevant documents, Petitioner sought the irrelevant documents from the Division. A few months later, Petitioner filed a motion for summary determination on the basis that he was a tax-exempt Moorish American. He also sought $5,000 in damages for the Division’s alleged violations of the Fair Debt Collections Practices Act.

Four days after making the summary determination motion, Petitioner filed a motion to compel the Division to respond to his prior demand for a bill of particulars. In that motion, Petitioner also demanded the Division produce nine additional and seemingly-irrelevant documents. The demand looked to have been cut-and-pasted from some income tax case involving original issue discount bonds. Petitioner rested for two weeks and then served another demand on the Division seeking more irrelevant documents. The Division ignored these demands. But here are five of the demands and (in italics) how I would have responded to them (with a nod to Abbott and Costello’s signature routine) had I been the Division’s counsel:

  1. The name of the damaged party.  What’s the damaged party.
  2. The name of the issuer.  I Don’t Know’s the issuer.
  3. Who is the real party in interest. No; Who’s on first base.
  4. Who is the holder of the account. Again, Who’s on first.
  5. Who signed the forms generating the bonds that is attorney in fact?  NO, FIRST BASE!

Unlike Yours Truly, Judge Law took the high road. He denied Petitioner’s motions to compel responses to the Demands for Bills of Particulars on the basis that: (1) the only remedy for a failure to comply with such a demand is a preclusion order, not an order to compel production; and (2) the documents and information sought in the Demands were evidentiary materials that did not relate to issues on which the Division bore the burden of proof.

The Judge also denied Petitioner’s motion for summary determination because: (1) the motion was in improper form since it was not accompanied by an affidavit; (2) there were no notices attached to the petition or the motion, so no basis for the notices had been established; (3) as a matter of law, Petitioner’s status as a Moorish American does not grant him an exemption from sales tax; and (4) the DTA does not have the institutional jurisdiction to entertain damages suits based on the Fair Debt Collections Practices Act.

The hearing will be scheduled in due course. Comedy Central is seeking broadcast rights.

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