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State and Local Tax Blog

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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.  

TiNY Report for July 12, 2018 (covering DTA cases from July 5)

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A light load this week, which one might expect for the week after the Fourth of July holiday.  Since we have only one ALJ Determination to summarize, I am also going to offer some views on the DTA’s recently-released 2017-18 annual report as filler.

ALJ DETERMINATION

Matter of Salahuddin; Judge: Maloney; Division’s Rep: Charles Fishbaum; Taxpayer’s Rep: pro se; Article 22.  Petitioner claimed to have not received any notification of an assessment against her.  A Notice and Demand and a Tax Warrant were issued, and Petitioner challenged them.  The arguments included substantive points—Petitioner’s income for the year at issue was distorted by the inclusion in income of a lump sum reflecting prior-year loans from her pension plan, and equitable points—Petitioner’s financial status is below the poverty limit.  Petitioner’s arguments notwithstanding, Judge Maloney dismissed the petition, finding that the DTA does not have jurisdiction to adjudicate the bona fides of either Notices and Demands or Tax Warrants.   The amount at issue?  $993.93.

AND IN OTHER NEWS…

On June 27, 2018, the New York State Division of Tax Appeals and the Tax Appeals Tribunal (collectively the “DTA”) sent its Annual Report for the Fiscal Year 2017--2018 (the “Report”) to the Governor and the heads of the Senate and Assembly. Addressed below are some noteworthy observations and conclusions one might draw from the statistics in the Annual Report.

First, even though the number of ALJ Determinations had been rising significantly in prior years, the Report notes a 29% drop in the number of ALJ Determinations issued in the 2017—18 fiscal year. In fact, from FY 2014-15 through FY 2016-17, the number of ALJ determinations had increased nearly three-fold. So why this current drop after such a strong growth spurt? There are several possible reasons for this. There were far fewer petitions filed last year as compared to any of the four preceding years. Fewer petitions mean that there are fewer cases to be heard. We understand that there were also less ALJs for much of the year. Additionally, 43% of the cases in which hearing notices were issued were settled. Ironically, the one thing that did increase this past fiscal year was the Tax Department’s rate of “wins,” even if only by 3%. 
 

Administrative Law Judge Determinations

 

Fiscal 2017-18

Fiscal 2016-17

Fiscal 2015-16

Fiscal 2014-15

 
 

#

%

#

%

#

%

#

%

 

Sustained

90

88%

122

85%

106

81%

93   

85%

 

Canceled

6

6%

7

5%

15  

11%

8   

7.5%

 

Modified

6

6%

15

1 0%

10  

8%

8  

7.5%

 

Total

102

100%

144

100%

131

100%

109  

100%

 


The Tax Appeals Tribunal issued one less decision compared to the prior year.  The number of Exceptions filed was also fairly flat at 53, as is the Tribunal’s ending inventory which decreased by just one case to 79.

Tribunal Decisions

 

Fiscal 2017-18

Fiscal 2016-17

Fiscal 2015-16

Fiscal 2014--15

 
 

#

%

#

%

#

%

#

%

 

Sustained

35

70%

37

72%

40 

63%

19  

70%

 

Canceled

4

8%

1

2%

2

3%

7%

 

Modified

8

16%

6

12%

14

22%

5   

19%

 

Remanded

3

6%

7

14%

8

12%

1

4%

 

Total

50

100%

51

100%

64

100%

24

100%

 


Drilling down, the Tribunal denied the Exceptions in most cases last year; it denied 76% of Petitioner exceptions and 100% (!) of the Department’s three exceptions. 

As in prior years, Sales Tax and Personal Income Tax once again made up the bulk (about 85%) of the cases.

One area of concern raised by the Annual Report is the vacancy, since August 2016, in the position of the Small Claims Presiding Officer.  As one might think, that has resulted in a pretty significant jump (from 67 to 95) in the inventory of Small Claims cases.

The Report also contains general information concerning the NYS Tax Appeals’ mission, functions, and operations, together with the statutorily required statistics regarding cases handled and adjudicated. If you’d like to review some of these other issues in detail, the 2017-2018 New York State Tax Appeals Annual Report can be found here.

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