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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 June 1, 2017

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No Tribunal decisions or orders this week.  As for ALJ determinations, things are a little weird: Consistent with DTA SOP, three determinations from last week were posted yesterday (i.e. Thursday, June 1).  Then the weirdness began.  After a few hours, another four determinations dated June 1 were posted.  Normally those would have been posted next Thursday.  And today, the four June 1 determinations were removed from the website. 

We surmise that the Division of Tax Appeals did not intend to post the June 1 determinations. We think it proper that the taxpayers (and their representatives) and the Division (and its representatives) receive the determinations and decisions before we publish our comments on them.   So we have pocketed our summaries of the June 1 determinations and will publish them next week per our standard practice.   Spoiler alert:  June 1 was not a great day for New York taxpayers.

ALJ DETERMINATIONS FROM MAY 25

Matter of Javino; Judge Maloney; Division’s Rep: Linda Jordan; Taxpayer’s Rep: Pro Se; Article 8.  A notice of proposed driver’s license suspension was sustained.  The Division established the taxpayer received the notices of deficiency for the tax owed, and the taxpayer never protested them, so the liabilities were fixed and final, and by definition “past due”.   Since the taxpayer had past-due liabilities, did not provide proof of payment and did not allege any of the other statutory defenses, the Judge summarily sustained the notice of proposed driver’s license suspension. 

Matter of Clinton Delicatessen, Inc.; Judge Galliher; Division’s Rep: Robert Maslyn; Taxpayer’s Rep: Jack Stuart Beige; Articles 28 & 29.  A revocation of certificate of authority to collect sales tax was summarily sustained.  At the audit level, the Division found the taxpayer willfully underreported and underpaid sales tax due, and it also properly issued a Notice of Determination for that tax (with fraud penalties), which the taxpayer didn’t challenge.  Because the tax liabilities became a final and fixed assessment, the Judge determined the revocation was proper, i.e. the Judge found the record showed there were no issues of fact.  There was no dispute that the Commissioner properly notified the taxpayer of the proposed revocation, and the taxpayer didn’t raise any proper defenses.  With due respect, we’re not certain the Judge got it right here.  The determination quotes Tax Law §1134(a)(4)(A) as providing the grounds for revocation, and each of the quoted grounds requires “willful” action.  We think whether this taxpayer acted willfully is a question of fact that may not yet be determined and that a hearing is required.  Because the taxpayer did not challenge the original notice which contained a fraud penalty, it could be argued that the taxpayer conceded that it acted willfully.  But absent an actual hearing on the issue of willfulness (and being mindful that the Division bears the burden of proof on fraud issues) we wonder whether this fact remains unresolved.

Matter of Supermedia LLC; Judge Gardiner; Division’s Rep: Robert Maslyn; Taxpayer’s Rep: Craig Fields and Nicole Johnson; Articles 28 & 29.  The taxpayer’s deliveries of its telephone directories were determined to not have been delivered by common carriers or “like delivery service[s].”   Therefore, the telephone directories were taxable promotional materials. The Judge noted that the Tax Law doesn’t define “common carrier” or “contract carrier” and instead looked to the Transportation Law’s definition defining “common carrier of property by motor vehicle” as “any person that transports property by motor vehicle for compensation for the general public.”  The taxpayer entered into contracts with two delivery companies.  The Judge found that the companies the taxpayer used for delivery specialized in delivering promotional and advertising materials, so the companies were providing a service for a specific type of customer instead of the general public.  The companies also used independent contractors who used their own vehicles for delivery.  The Judge held the companies were acting as contract carriers, and the Judge also held that contract carriers used by the taxpayer were not “like” common carriers “like delivery service” doesn’t include contract carriers such as the companies here.  Though, apparently, in Matter of Verizon Yellow Pages Co., an ALJ determined that the same two companies at issue here were common carriers.  Judge Gardiner noted that case couldn’t cited as precedent, and in any event should be viewed as being superseded by Matter of Yellow Book of New York

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