TiNY Report for February 15, 2018 (covering DTA cases issued February 8)

This week we had 5 ALJ Determinations and 2 Tribunal Decisions. No orders.

ALJ DETERMINATIONS

Matter of Bitton; Judge: Maloney; Division’s Rep: Linda Farrington; Taxpayer’s Rep: pro se; Articles 28 & 29.  The issue in this case was whether Petitioner had enough authority and control over the sales tax vendor in question to be considered a responsible person jointly liable for the vendor’s unpaid sales tax.  The Judge determined Petitioner did not meet his burden to prove that he either lacked the necessary authority, or was prevented by others in carrying out his responsibilities.  Petitioner argued he did not have authority over the company between March 1, 2002 through May 31, 2002 because Petitioner sold his interest in the company to someone else on December 10, 2002.  Though Petitioner submitted the signed sales agreement, the Judge determined that the record showed the sale of Petitioner’s interest was never finalized.  From the evidence, the Judge determined it was clear Petitioner remained a 50% owner of the company during the period in question, was a corporate officer, and one of two shareholders in the corporation.  From the facts found it appears that Petitioner handed off management of the company to the almost-buyer, often checking in with the buyer and frequently confirming whether various payments were being made.  Ultimately, Petitioner took back the operation of the business when it didn’t seem to be working out with the almost-buyer.  The Judge determined that the delegation of responsibility for the management of the company’s financial matters did not excuse Petitioner from his responsibilities.  Thus, Petitioner was deemed a responsible person liable for the sales tax due on behalf of the company.  The Notice of Determination and penalties were sustained.

Matter of Leidel; Judge: Connolly; Division’s Rep: Michele Helm; Taxpayer’s Rep: James Kaplan; Article 22.  The Division failed to establish its standard mailing procedures.  First, the Division failed to show how the employee, whose affidavit explained much of the mailing procedures, had personal knowledge of the procedures (how the employee knew what those procedures were).  Second, there were inconsistencies in the affidavits offered by the Division that explain the mailing procedures.  So, the 90-day period to file a petition or BCMS request began when Petitioner actually received the Notices of Deficiency.  However, Petitioner’s BCMS request was nonetheless deemed untimely filed because Petitioner did not mail the BCMS request until well beyond 90 days after its actual receipt.

Matter of Kasem; Judge: Maloney; Division’s Rep: Christopher O’Brien; Taxpayer’s Rep: pro se; Article 22.  Case dismissed on timeliness grounds.  The Division established its standard mailing procedures and that they were followed to mail the conciliation order to Petitioner’s last known address.  Petitioner mailed his DTA petition 16 days after the 90-day limitations period closed, so the Judge deemed the DTA petition untimely filed.

Matter of Rodriguez; Judge: Galliher; Division’s Rep: Ellen Roach; Taxpayer’s Rep: pro se; Article 22.  Case dismissed on timeliness grounds.  The Division established its standard mailing procedures and that they were followed to properly mail the conciliation order to Petitioner’s last known address.  Petitioner mailed his DTA petition after the 90-day limitations period expired, so the Judge deemed the DTA petition untimely filed. 

Matter of Zubaidi; Judge: Gardiner; Division’s Rep: Christopher O’Brien; Taxpayer’s Rep: pro se; Article 22.  Case dismissed on timeliness grounds.  You get the picture. . .

TRIBUNAL DECISIONS

Matter of RJB Slick’s, Inc.; Division’s Rep: Robert Maslyn; Taxpayer’s Rep: Steven Cohen and Amanda Wyzykiewicz (on brief), and Rudolph Bersani (oral argument); Articles 28 & 29.  This case brought me back to my college days.  Slick Willie’s was a local bar popular with the University at Buffalo students, mostly because of its Thursday “Ladies’ Night.”  At least that’s what I heard.  I, of course, would never have attended such a thing.  (One of our 15 or so regular TiNY readers is my mom, so . . .). 

Petitioner operated a sports bar (Slick Willie’s).  Mr. Bersani was president of the company. Petitioner was audited for sales tax, and ultimately the parties agreed to close the audit and Petitioner agreed to pay the assessment as long as penalties were abated.  Petitioner paid the tax and interest due.  Two years later, Petitioner applied for a refund of sales tax on the basis that the audit method was unreasonable.  The Division denied the refund claim.  Petitioner argued in its DTA petition that the Statement of Proposed Audit Change was signed by Mr. Bersani under duress and Petitioner was misled by the Division’s auditors. 

The Tribunal determined that Mr. Bersani was not under any duress when he signed the consent to proposed audit change.  The correspondence between Petitioner’s representatives and the Division showed Petitioner understood and agreed to the terms of the settlement.  The Tribunal agreed with the ALJ’s determination that the record established Petitioner’s representatives and the Division resolved the audit through a negotiated settlement, which was properly reflected in the Consent.  The Tribunal emphasized that Petitioner was contesting a refund claim denial under Tax Law §1139(b) subsequent to consenting to assessment under Tax Law §1138(c), instead of §1138(a).  The Tribunal determined this meant the rational basis of the assessment had been established and that Petitioner effectively conceded the reasonableness of the audit method and audit computations when the Consent was signed.  Moreover, the Tribunal found Petitioner failed to meet its burden to show its actual sales tax liability was less than the amount it consented to, and so Petitioner wasn’t entitled to a refund.  Petitioner did not offer any computation of the taxable sales it asserted were the correct amount.  Ultimately, the Tribunal determined that even if Petitioner had not effectively conceded the reasonableness of the audit methodology, Petitioner’s claim of errors were unfounded.  The Tribunal sustained the ALJ’s determination denying Petitioner’s refund claim. 

Matter of Reuben; Division’s Rep: Linda Farrington; Taxpayer’s Rep: Norman Berkowitz; Article 22.  The Division established it properly mailed the Notices of Deficiency to Petitioner’s last known address.  Petitioner mailed his BCMS request several months after the 90-day limitations period expired, so the Tribunal affirmed the ALJ’s determination deeming the BCMS request untimely filed. Where have we heard this before?   

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