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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.  

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TiNY Report for July 6 (covering DTA Determinations/Decisions during the week of June 25)

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As mentioned last week, one of your authors made a rare appearance in NY State Supreme Court (which is New York’s trial court) for oral argument.  I have appeared for oral arguments in other venues (NYS Tax Appeals Tribunal; NYS Appellate Division, Third Department; NYS Court of Appeals; PA Board of Finance and Revenue), but this was my first time in Supreme Court.  It was a hoot.  The bench was “hot” in that it was clear the judge had read all of the materials provided previously by counsel.  And right out of the blocks the judge was peppering both sides with questions that indicated the judge understood the issues.  We went back and forth for an hour before the judge had us stop so he could do a conference on another case.  Most oral arguments are fifteen minutes of working off of a script and being asked one or two questions by the court.  My trip to the Supreme Court was a refreshing change of pace.

This week:  A Decision, a Determination and an Order from the Division of Tax Appeals

The Decision: 

Matter of Ahmed; Division’s Rep: Michael Hall; Taxpayer’s Rep: Jacqueline Kafedjian; Articles 28 & 29.  The Tribunal sustained the ALJ’s summary determination (on a motion to dismiss) that Petitioner filed his petition two-years too late, and therefore his petition was time-barred.  Nothing to see here folks; just go about your business.

The Determination:

Matter of Marthone; Judge Bennett; Division’s Rep: Charles Fishbaum; Taxpayer’s Rep: Pro Se; Article 22.  It’s like déjà vu all over again.  Just last week we had a railroad employee claim his wages were not “income.”  He lost his case.  This week we have a similar case (this time the Petitioner is an MTA employee), with the same result: petition denied summarily with a frivolous filing penalty thrown in.


The Order:

Matter of Strachan; Judge Gardiner; Division’s Rep: n/r; Taxpayer’s Rep: n/r; Article 22.  I don’t doubt that the Judge is correct on the law.  But sometimes the law can achieve inequitable results.  On April 5, 2016, the record closed on Petitioner’s ALJ hearing.  On February 9, 2017, the Judge issued her determination that the Petitioner was not a real estate professional (and therefore was, presumably, required to treat his losses from real estate rental activities as passive).  On March 21, 2017, Petitioner filed a motion to re-open the record to submit additional evidence, which was a copy of the stipulation reflecting the IRS’s concession at Tax Court (for the very same year) implying that Petitioner was a real estate professional.  The Judge denied the motion because: (1) Motions to reopen the record must be received within 30 days of the determination and this motion was received 38 days after the determination; (2) the Stipulation doesn’t clearly state that the Petitioner is a real estate professional; and (3) in any event the stipulation would not be “new evidence” because it did not exist at the time the record closed.  Under the rules applicable to such matters, “new evidence” permitting the re-opening of a case needs to be evidence in existence at the time the original case was heard but that could not be discovered by Petitioner or its counsel acting with due diligence.  Again, this seems like the right result under the law, but there ought to be a way to fix this if the Tax Court determined that the Petitioner was a real estate professional.  One would think a final Tax Court determination on the merits would be viewed as controlling by both the Division of Tax Appeals and the Department’s Division of Taxation if such decision had been presented in a timely fashion.

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