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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 March 21, 2019 (covering DTA cases issued March 14)

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This week reinforces Doyle’s Second Corollary to Murphy’s Law*:  “There won’t be any timeliness cases the week you are on vacation, but there will be at least one the week you get back.”  We have two ALJ determinations to report on this week.  And, as you might have guessed, one determination considers the timeliness of a request for conciliation conference.

ALJ Determinations

Matter of Udayni; Judge: Connolly; Division’s Rep: Christopher O’Brien; Petitioners’ Rep: pro se; Article 22. 

Petitioners’ 2014 return claimed a tax refund of $1,490.  Taxpayers reported Schedule C  trade or business income of $20,544, and no wage income.  The tax on this income was $32.  The refund claimed was the result of four refundable credits:  an Empire State child credit in the amount of $330.00; a New York State earned income credit (NYS EIC) in the amount of $902.00; a New York City school tax credit in the amount of $125.00; and a New York City earned income credit (NYC EIC) in the amount of $165.00. 

On audit, the Division denied the child credit because of some minor discrepancy in the addresses used by Petitioners in 2014.  The Division also denied the NYS EIC and NYC EIC on the basis that Petitioners failed to prove that they actually earned income.  But the Division accepted the school tax credit, so the refund was reduced to $125 (ed.  Kudos to the Division for backing-out the $32 tax on the earned income the existence of which the Petitioners failed to prove on audit).

In his determination, the Judge found that the Division conceded—based on evidence produced at the hearing—Petitioners’ child was really their child.  So the child credit Petitioners claimed was determined to be valid.

But the Judge also found that Petitioners failed to prove, with clear and convincing evidence, that they earned the income that they said they earned.  Petitioners record-keeping was slipshod, and deposits into the bank account into which business receipts were supposedly deposited were far less than the income Petitioners stated on their return.  The Judge sustained the denial of the NYS EIC and NYC EIC, and we suppose Petitioners will now receive a refund of $455. 

Matter of Fearon; Judge: Maloney; Division’s Rep: Peter Ostwald; Petitioners’ Rep: pro se; Article 22. 

The Division proved its standard mailing practices, but did not prove that said practices were followed when it mailed a Notice of Deficiency to Petitioner at her last known address on March 22, 2017.  The Certified Mailing Record produced at hearing was incomplete and, therefore, did not provide adequate proof that the Notice was mailed on March 22.  HOWEVER, the Division adequately proved that the Notice was actually delivered to (and accepted by) Petitioner on March 28, 2017, thereby starting the 90-day period during which Petitioner was required to initiate any administrative challenge to the Notice.  The Request for Conciliation Conference filed by Petitioner on July 26, 2017 was therefore too late by almost one month.  After reminding Petitioner that she could always pay the tax and file a refund claim, the Judge sustained the Division’s motion for summary determination on timeliness grounds.

*Doyle’s First Corollary to Murphy’s Law is:  “Murphy was an optimist”.

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