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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 11, 2020 (reporting on DTA cases issued June 3 and 4)

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Four determinations and three ALJ Orders this week. That’s a pretty big haul. But the cases were yawners from a substantive legal perspective. Timies galore!

DETERMINATIONS

Matter of Hidalgo; Judge: Connolly; Division’s Rep: Stephanie Lane; Taxpayer’s Rep: pro se; Article 22 (by Emma Savino).

This is an earned income credit (“EIC”)/empire state child credit (“ESCC”) case. Petitioner filed his 2015 return reporting business income and requested a refund as a result of an ESCC and NYS and NYC EICs. The business income was reported on a Schedule C and it included gross receipts of $12,200 and expenses of $1,573. During the audit, Petitioner provided sufficient substantiation for part of the ESCC, and the Division conceded in its brief that Petitioner had proved his entitlement to the full amount, so all that remained at issue was the EIC.

In order to be eligible for the EIC, Petitioner had to prove the amount of his earned income. At the hearing, Petitioner testified that he worked in grocery delivery, but his employer did not provide him with a 1099-MISC and fired Petitioner when he found out that Petitioner was reporting the income (ed. sounds like a guy he wouldn’t want to be working for if you ask me). Petitioner claimed that he earned roughly $300 a week in a cash, and that he had expenses for which he no longer had proof. The Judge took issue with the discrepancy between Petitioner’s testimony that he earned $300 a week ($15,600 in total) and the amount reported ($12,204). There were also discrepancies in the schedules that Petitioner prepared during the audit - one indicated that he earned roughly $12,000 in a year, and another that he earned that amount in 7 months. Due to the discrepancies and lack of documentation of business income and expenses, the Judge determined that Petitioner was not entitled to the EIC. So he denied the petition, but granted it with respect to the ESCC, which the Division had conceded.

Matter of Cazac; Judge: Law; Division’s Rep: Maria Matos; Taxpayer’s Rep: pro se; Article 22 (by Emma Savino).

Judge Law found that the Division proved both its standard mailing practices and that they were followed when it mailed the notice at issue to Petitioner’s last known address on March 26, 2018. Petitioner’s petition filed on April 19, 2019, was therefore late. Accordingly, the Judge granted the Division’s motion to dismiss the petition.

Matter of Bortnikova; Judge: Behuniak; Division’s Rep: Anita Luckina; Taxpayer’s Rep: Aleksei Koutin; Articles 28 and 29 (by Emma Savino).

The Division issued Petitioner four Notices of Determination dated May 15, 2018. Petitioner filed two requests for conciliation conference on August 14, 2019, each of which contested two of the Notices. BCMS issued an order dismissing the request as untimely. Petitioner then filed a timely petition. The Judge found that the Division proved both its standard procedures and that they were followed when it mailed the four Notices to Petitioner’s last known address on May 15, 2018. So, the Judge sustained the dismissal of Petitioner’s request for conciliation conference as untimely and granted the Division’s motion for summary determination.

Matter of Bresler; Judge Connolly, Division’s Rep.: Hannelore Smith; Petitioner’s Rep.: Isaac Sternheim; Proposed driver license suspension referral under Tax Law § 171-v (by Emma Savino).

The Divisions issued Petitioner a 60-day Notice of Proposed Driver License Suspension on May 1, 2019. Petitioner did not respond within the 60 days, and the DMV suspended his license on July 16, 2019. Petitioner filed a request for conciliation conference on July 22, 2019, which was dismissed as untimely on August 16, 2019. Petitioner then filed a timely petition to protest the dismissal.

The Division moved to dismiss the petition on lack of jurisdiction or for summary determination. In its answer, the Division asserted that Petitioner failed to timely protest the 60-day Notice, but did not provide proof of when the 60-day Notice was mailed. The Division also asserted that Petitioner failed to seek relief under any of the enumerated grounds. Since Petitioner did not respond to the Division’s motion, it was deemed that Petitioner conceded no question of fact existed.

The Judge determined that the DTA did have jurisdiction. Since the Division did not provide proof of mailing, the Judge found that the argument that Petitioner failed to timely file the request for conciliation conference failed. However, because Petitioner did not respond to the Division’s motion the Division’s facts were deemed admitted, including the fact that Petitioner did not allege any of the compulsory defenses to a driver’s license suspension. So, the Judge granted summary determination and sustained Petitioner’s driver’s license suspension.

ALJ ORDERS

Matter of Cassandro; Judge: Gardiner; Division’s Rep: Christopher O’Brien; Taxpayer’s Rep: Michael Norman; Article 22 (by Chris Doyle).

The Division issued Petitioner a Notice of Determination for 2007-2009 taxes. A copy of the Notice was not in the record. Petitioner filed a request for conciliation conference on October 19, 2018. The Conciliation Order sustaining the Notice was dated July 19, 2019. Petitioner filed a petition challenging the Order on August 28, 2019. The Supervising ALJ issued a Notice of Intent to Dismiss on the grounds that the petition was filed late. The Judge found that the Division proved both its standard procedures and that they were followed when it mailed the Order to Petitioner’s last known address on June 19, 2019, a mere 38 days before the petition was received by the Division of Tax Appeals. Since the Notice was not in the record, there was no way for Judge Gardiner to determine whether a 30-day time limit or a 90-day time limit applied to the petition challenging the Order. The 30-day time limit would apply only if there had been a fraud penalty asserted on the Notice, and without the Notice, there was no way for the Judge to determine whether one had been asserted. So, the Judge withdrew the Notice of Intent to Dismiss and ordered the Division to submit its answer.

Matter of Issa; Judge: DiFiore; Division’s Rep: Michael Trajbar; Taxpayer’s Rep: pro se; Article 22 (by Chris Doyle).

The Division issued Petitioner two Notices of Determination dated September 25, 2017 (for 2016) and November 20, 2018 (for 2015). Petitioner filed a request for conciliation conference challenging the 2015 Notice. BCMS sustained the 2015 Notice in an Order dated June 28, 2019. Petitioner also filed a request for conciliation conference challenging the 2016 Notice on August 5, 2019. BCMS issued an order dated August 23, 2019, dismissing the 2016 Request as untimely.

Petitioner then filed a timely petition appealing both Orders. And the Division moved to dismiss the petition or for summary determination.

The Judge found that the Division proved both its standard procedures and that they were followed when it mailed the 2016 Notice to Petitioner’s last known address on September 25, 2017. So, the Judge granted summary judgement to the Division and sustained the 2016 Notice. The Division did not submit evidence on the issuance of the 2015 Notice. Therefore, the parties will need to have a hearing to address the issues Petitioner raised with respect to the 2015 Notice.

Matter of Rossi; Judge: Maloney; Division’s Rep: Michele Milavec; Taxpayer’s Rep: pro se; Article 22 (by Chris Doyle).

Petitioner filed his 2013 personal income tax return on February 1, 2019 (just a liiiiiitle late). On it he reported tax due of $9,444 and prepayments of $10,448. The prepayments included $500 Petitioner paid with an “automatic extension to file” form he submitted back in April, 2014. On his 2013 tax return, Petitioner requested a repayment of his $1004 overpayment. The Division denied the refund claim since it was not filed within the later of three years from the time the return was supposed to have been filed or two years from the date the tax was paid. Petitioner filed a petition challenging the refund denial, and the Division made a motion for summary determination, to which the pro se Petitioner did not respond.

In support of its motion the Division submitted the affidavit of a Division employee who stated that Petitioner’s 2013 return was filed on January 28, 2019. This information was contradicted by the February 1, 2019, date handwritten on the return and the February 1, 2019, postmark. The Judge found: “The existence of the contradictory dates raises an issue of material fact and a matter of credibility, neither of which can be resolved on a motion for summary determination,” and denied the motion for summary judgement.

While I’m always happy to see a taxpayer victory, and I certainly expect the Division to dot all of its “i’s” and cross all of its “t’s,” this one left me scratching my head just a little. Regardless of the discrepancy in the affidavit, the Judge found as a fact that: “On February 1, 2019, petitioner filed a New York State resident income tax return (form IT-201) for the year 2013 with the Division of Taxation (Division).” And did it really matter if the return was filed an January 28, 2019 or February 1, 2019? The four-day difference doesn’t seem significant when the last date for the Petitioner to timely claim a refund for his 2013 tax payment probably fell on October 15, 2017 (i.e. three years after the return was due), a date that passed more than 15 months before the return claiming the refund was filed.

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