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State and Local Tax Blog

About This Blog

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.  

TiNY Report for December 21, 2014 (covering DTA cases issued December 14)

By on

One ALJ Determination and nothing else this week.

The Determination

Matter of Castillo, Judge: Russo; Division’s Rep: Christopher O’Brien; Taxpayer’s Rep: pro se; Article 22.  It’s December 21.  Tomorrow begins the long Christmas weekend.  The full name of the case is In the Matter of Santa Costillo. Ho-ho…oh-boy.  I’m not sure I need to say more.  But I will.

Santa took a roundabout route to arrive at this determination—if they are still together, maybe Clarice should buy Rudolf a GPS.  The journey started on September 12, 2014, when the Division of Tax Appeals issued a Notice of Intent to Dismiss on timeliness grounds since it appeared that the petition had been filed more than 90 days after the BCMS Order.  On February 19, 2015, the DTA dismissed the petition.  On November 12, 2015, the Tribunal reversed and remanded since there was no “mail cover sheet” submitted to the DTA to prove that BCMS’s standard mailing practices had been followed.  Perhaps BCMS had used the cover sheet as scratch paper to rough out its naughty and nice lists.  But whatever the reason, the absence of the mail cover sheet was found by the Tribunal to create a question of fact as to whether the Order was actually mailed on the date claimed. 

Rather than litigate whether “c/o The North Pole” was Santa’s last known address, the Division conceded that the DTA had jurisdiction to hear Santa’s case.  On her 2007 return Santa had claimed two earned income credits, two child care credits and a STAR credit, all of which were denied on audit.  At the hearing, Santa could not prove the accuracy of the earnings she (yes, Virginia, it turns out Santa is a “she”) reported on her return, and was therefore denied a majority of the earned income credits she had claimed.  According to Santa’s testimony, in 2007 Santa was a restaurant worker for about four months, during which time she was paid $150 in cash per week and was never given a Form W-2 or a Form 1099.  The ALJ found that her income computed based on her testimony was far less than what she reported on her 2007 return. 

On the plus side, the Division stipulated that Santa had proved the number of her dependents during the year as well as her entitlement to a portion of the credits based on the amount of income her testimony supported.  So while she took something home, Santa still ended up with a pretty empty bag:  She’ll get $390 in child care and other credits, but about $1615 of other credits were denied.  

To all our readers (even those in the Department with whom we sometimes butt heads):  We sincerely hope this holiday season brings you an abundance of joy. 

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