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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 February 7, 2019 (covering DTA cases issued January 31)

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Despite the cold weather last week, we had four ALJ Determinations and one ALJ Order to review this week. Four of the five are on dull-as-dishwater timeliness issues.  Which is why last Friday, in an effort to make it more fun to review/edit the summaries before posting them, TiNY’s senior editor created the “timeliness game” in which he did a shot of Jack Daniels every time any word with “timely” as its base (e.g. untimely, timeliness, timely) appeared in a summary.

And that is why this wasn’t posted until Monday.

DETERMINATION

Matter of Robo’s Pizza, Inc.; Judge: Law; Division’s Rep: Justine Clark Caplan; Petitioner’s Rep: pro se; Article 28 and 29

The Division proved it properly mailed the Conciliation Order to the Petitioner’s last known address on April 14, 2017. Petitioner did not file its petition until March 27, 2018, well beyond the 90-day deadline. The Judge dismissed Petitioner’s petition as untimely filed. 

Matter of Chimiak; Judge: Law; Division’s Rep: Justine Clark Caplan; Petitioner’s Rep pro se; Article 28 and 29

This is the responsible officer companion case to Matter of Robo’s Pizza.  In this case, BCMS demonstrated that it mailed the Conciliation Order to Petitioner at his last known address by certified mail on April 14, 2017.  But the Order was returned as unclaimed.  The Judge found that the Division established that the Conciliation Order was properly mailed on April 14, 2017, even though it was not received, as it was sent to the Petitioner’s last known address with sufficient postage. Since Petitioner did not file his petition until June 18, 2018, over a year after the Order was mailed, the Judge dismissed Petitioner’s petition as untimely.

In the Matter of Noble; Judge: Russo; Division’s Rep: Stephanie Scalzo; Petitioner’s Rep Edward Delli Paoli; Article 28 and 29

In this case, the Division proved that it properly mailed six out of the seven Notices of Determination to Petitioner’s last known address on September 17, 2001.  The Petitioner filed a petition on June 29, 2018, protesting the seven petitions, again well outside 90-day deadline. The Judge sustained the Notice of Intent to dismiss petition for the six Notices found to have been properly mailed. However, because the record lacked a properly completed CMR (i.e. certified mailing record) for the 7th Notice of Determination, and the Division provided no documentation of proper mailing, the Judge held that the Notice of Intent was rescinded and severed, and she assigned a separate case number for the seventh notice.  Given that the tax periods at issue are close to 20 years old, we wonder how Petitioner is going to be able to satisfy his burden of proving that the assessment is erroneous.  Then again, it may be equally difficult for the Division to prove it had a rational basis for issuing the Notice.

In the Matter of Bodor; Judge: Connolly; Division’s Rep: Christopher O’Brien; Petitioner’s Rep pro se; Article 22

The Division proved it properly mailed to Petitioner’s last known address a Notice of Deficiency on December 14, 2017 and a Notice of Demand for the same liability on March 30, 2018.  Petitioner filed a petition challenging both notices on May 17, 2018.  The Judge determined that the petition was untimely with respect to the Notice of Deficiency because the petition was filed after the expiration of the 90-day period.  And the Judge found that the Notice and Demand did not provide hearing rights. Thus, the Judge dismissed the Petitioner’s petition as untimely.

ALJ ORDERS

In the Matter of Robinson; Judge: Galliher; Division’s Rep: Stephanie Lane; Petitioner’s Rep: pro se; Article 22

Petitioner late-filed three resident income tax returns for the years 2014, 2015, and 2016 on April 29, 2017. The Division performed an audit of Petitioner's 2014 return and disallowed her claimed dependent exemption, Empire State Child credit, New York State earned income credit and reduced her claimed household credit. This reduced Petitioner's refund to $455.00, instead of the claimed $1,565.00.  The recalculated refund of $455 was applied by the Division as an offset against Petitioner's tax liability for 2010. As for the 2015 return, the Division made no changes to the return, but it withheld Petitioner’s refund of $208.00 again as an offset to her tax liability for 2010. Finally, for 2016, the Division issued Petitioner her entire refund of $715.00.

On May 23, 2017, Petitioner filed a Petition challenging the Division’s actions. The documents that Petitioner submitted in support of her petition were incomplete in that they did not have copies of the type of notice that would normally confer jurisdiction on the DTA.  The documents included with the petition included some account adjustment notices and documents regarding a dispute between Petitioner, her former employer, and the New York State Department of Labor regarding wage issues and unemployment insurance benefits. The employment dispute ultimately resulted in Petitioner's conviction of grand larceny in the third degree. 

The Division filed a motion to dismiss the petition on the basis that it did not include any statutory notices which provide a right to a DTA hearing. Specifically, the Division argued that the account adjustment notices provided to Petitioner regarding 2014 and 2015 are not statutory notices that provide hearing rights. The Division also sought summary determination on the grounds that there were no material issues of fact and that Petitioner did not state a cause of action upon which relief could be granted.

With regard to the 2014 return, the Judge did not agree with the Division’s position that an account adjustment did not confer jurisdiction on the DTA. Rather, the Judge found that the partial refund disallowance in Petitioner’s 2014 return is subject to challenge before the DTA. The Judge denied the Division’s motion for dismissal and summary judgment and allowed Petitioner’s protest with respect to the 2014 tax year to proceed.

As for the 2015 tax year, the Judge found that, since the entire refund Petitioner claimed on her return was granted, Petitioner’s protest to the application of her refund to an outstanding liability was a collection challenge that is not justiciable in the DTA and granted the Division’s motion for dismissal.

Finally, for the 2016 return, it was noted that the Division did not disallow any portion of the refund and it was paid to Petitioner, so the Judge found that there was no controversy to adjudicate.

AND IN OTHER NEWS

TiNY welcomes Emma Savino as its newest (blogger? author? editor?) drafteer (she is a draftee—no one in their right mind would volunteer for this gig—and a drafter; ergo “drafteer”).  We hope she embraces this opportunity to write on a serious and highly-technical area of the law while not taking it (or ourselves) too seriously.

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