TiNY Report for May 18, 2017

Six ALJ determinations, but no orders. There were four Tribunal decisions posted. There is a little bit of something in each worthy of mention.

DETERMINATIONS

Matter of STJ Partners, LLC; Judge Friedman; Division’s Rep: Christopher O’Brien; Taxpayer’s Rep: Pro Se; Article 22. The taxpayer petitioned three Notice and Demands for Payment of Tax Due. Taxpayers can’t protest Notice and Demands so on the supervising ALJ’s own motion the taxpayer’s petition was dismissed.

Matter of Nena Advisors, LLC; Judge Friedman; Division’s Rep: Christopher O’Brien; Taxpayer’s Rep: Pro Se; Article 22. The taxpayer also petitioned three Notice and Demands for Payment of Tax Due, which was also dismissed on the supervising ALJ’s own motion because taxpayers can’t protest notice and demands.

Matter of A-Quick Bindery, LLC; Judge Friedman; Division’s Rep: Christopher O’Brien; Taxpayer’s Rep: Pro Se; Article 22. The taxpayer here petitioned a Notice and Demand for Payment of Tax Due. Again, taxpayers can’t protest Notice and Demands, so on the supervising ALJ’s own motion the taxpayer’s petition was dismissed.

Matter of Alsayedi; Judge Bennett; Division’s Rep: Michael Hall; Taxpayer’s Rep: Lance Lazzaro; Article 20. The taxpayer’s petition was dismissed on timeliness grounds. The Division adequately proved its standard mailing procedures, but did not prove it followed them. However, the Division provided other evidence sufficient to prove actual receipt of the notice of determination.

Matter of Cornerstone Kitchen Cabinets, Inc.: Judge Maloney; Division’s Rep: Christopher O’Brien; Taxpayer’s Rep: Scott Burgwin; Articles 28 & 29, 9-A, and 22. The taxpayer’s petition challenging multiple Notices was dismissed on timeliness grounds. For some of the Notices the Division adequately proved its standard mailing procedures and that it followed them. With respect to the Notices of Estimated Determination, the Division did not sufficiently prove it followed its mailing procedures, but provided other evidence to prove mailing.   The petition was dismissed as untimely filed.

Matter of Patel: Judge Bennett; Division’s Rep: Marvis Warren and Jennifer Hink-Brennan; Taxpayer’s Rep: Ramesh Sarva; Article 22. Judge Bennett sustained a Notice of Deficiency asserting personal income tax liability for the taxpayer who claimed he wasn’t a partner. The partnership sold business property, and the taxpayer received a check for $300K on which the name of the sold property was written. When the partnership filed its partnership tax return, it originally did not list all of the partners or report gain from the sale of the property. The partnership was audited, the return was then amended, and K-1’s were given to all of the partners including the taxpayer. While the taxpayer’s K-1 listed him as a partner with a 10% interest, the taxpayer insisted to the auditor that he owned a 5% interest.   Subsequently, with a different representative (the one who appeared at the hearing), the taxpayer claimed he had no interest in the partnership, the K-1 was fraudulent, and that the check for $300K was just payback for a loan. The Judge found it was never definitely established whether the taxpayer invested as a partner in the partnership, but that the evidence favored a finding the taxpayer was an investor. This may be because the taxpayer claimed he had a 5% interest in the partnership, or because the taxpayer represented himself as a partner to the IRS when he requested a copy of the original partnership return. Given all of the evidence suggesting the taxpayer was a partner, the Judge found the taxpayer was a partner and liable for the tax. The taxpayer also failed to establish reasonable cause to abate the penalties.   

DECISIONS

Matter of Kennedy Deli Restaurant Corp.; Division’s Rep: Frank Nuara; Taxpayer’s Rep: Mohd Abdalla; Articles 20, 28 & 29. These two decisions reflect a tortured procedural history. In April 2015, Taxpayer filed its petitions. They seemed late. In July 2015, the Supervising ALJ (SALJ) issued a Notice of intent to dismiss. In November 2015, the SALJ issued a determination dismissing the petition, but made no findings of fact or conclusions of law. The Taxpayer filed an exception. In June, 2016, the Tribunal sent the case back to the SALJ with instructions to give them something more to work with. In the supplemental determination, the SALJ reviewed Nagengast/Peltier affidavits that were produced by the Division to prove mailing procedures and that they were followed. The SALJ dotted his “i”s and crossed this “t”s. Ultimately, in September 2016, the SALJ determined (again) that the petitions were untimely. And in this Decision, the Tribunal agreed.

Matter of March; Division’s Rep: Charles Fishbaum; Taxpayer’s Rep: Roger Gromet; Article 22. Taxpayer involuntarily paid some penalties she did not think were owed. And she got some of them back. Here is the up-beat-ish summary to what is a tale a true woe. Taxpayer was a real estate professional. The evidence indicated her husband was a dominating and abusive functioning alcoholic. Taxpayer knew taxes were being filed late or not at all, but was unwilling to confront or escalate confrontations with her husband on the issue. Criminal tax fraud charges ensued. Ultimately both husband and wife pled to some lesser crime. There is some evidence that the criminal court judge intended that the fraud penalty should be paid by husband. But he died. When taxpayer sold her house, the Division claimed $15,000 or so of the proceeds to pay down what was left of the couple's penalties. Taxpayer filed a claim for a refund of the amounts applied to penalties. In partially reversing the ALJ’s determination sustaining the refund denial, the Tribunal found that the Division had not proven fraud, and that it alleged lesser penalties for certain years too late. But for the years lesser penalties had been timely asserted by the Division, petitioner owed them. So she’ll at least get some of her money back.

Matter of Li; Division’s Rep: Alejandro Taylor; Taxpayer’s Rep: Pro Se; Article 22. Ground source heat pumps are not “solar energy systems” for which a credit is available under Tax Law § 606(g-1). We've seen this issue before, and do not recall any taxpayer prevailing.

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