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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 May 30, 2019 (reporting on DTA cases published May 23)

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We weren’t on vacation last week. There was no TiNY Report because the DTA provided nothing on which we could report. Sometimes we write something quirky on those days when we have no cases, but last Thursday found both of the TiNY authors at Building 9 in Albany meeting with folks from the Tax Department on a case that could eventually become fodder for TiNY. And on Friday I found myself behind on my client work as a result of the Albany trip. So you got nothing, Spaulding, and you liked it!

Today there are two ALJ Determinations, both involve claims that the Division owed the Petitioners money. And there’s one Decision involving one of the Petitioners from those same Determinations.


Matter of SoulCycle. Inc.; Judge: Russo; Division’s Rep.:  M. Greg Jones; Petitioner’s Reps.: Kenneth Moore and Brian Linder;  Articles 28 and 29. 

If you were hoping for the sequel to Soul Plane, you really came to the wrong place. 

This case considers whether New York City’s special 4.5% sales tax on receipts of gyms and weight-loss salons applied to Petitioner’s instructor-led, indoor, stationary-cycling classes. Judge Russo, discounting Petitioner’s spin (see what I did there?), determined that the explicit language of NYC Admin. Code §§ 11-2001, 11-2002 includes fees for admissions to participatory sports activities within the universe of receipts subject to the special tax. Refund denied!

Matter of Mostovoi; Judge: Gardiner; Division’s Rep.:  David Gannon; Petitioner’s Rep.: pro se;  Award of Costs, Tax Law § 3030. 

Petitioner was not awarded the $315 of costs that he asserted he incurred in his case, notwithstanding the Division’s pre-hearing abandonment of the case. There were several reasons: 1. Timeliness—the first request for costs was premature and the second was too late. 2. Petitioner did not show that he had a net worth of less than $2 million at the time his petition was filed. 3. Petitioner represented himself pro se, and, therefore, he should not have incurred any legal fees. 4. Petitioners almost never have fees awarded to them.  


Matter of Mostovoi; Division’s Rep.: Michele Milavec; Petitioner’s Rep.: pro se; Article 22.

Yeah, of course it’s the same guy. How many Mostovois do you think are out there with DTA cases?

According to the Tribunal, on March 15, 2017, Petitioner filed a petition challenging the liabilities shown on a Consolidated Statement of Tax Liabilities dated February 27, 2018 (the “Statement”) (Ed.: Petitioner has lost all of his tax cases, but apparently has conquered time-travel) and the liability shown thereon for his 2011 tax year. Since the Statement is not a jurisdiction-granting statutory notice, the Supervising ALJ issued a Notice of Intent to Dismiss the petition (the “NID”). In support of the NID, the Division noted: 1. that the assessment number listed on the Statement for 2011 was previously protested by the filing of a prior petition, 2. that the prior petition was dismissed by the Division of Tax Appeals, and, 3. after an exception was filed, that such dismissal was upheld by the Tax Appeals Tribunal.  So the Division asserted that the 2011 assessment was previously adjudicated and sustained and that Petitioner was barred from relitigating the validity of the 2011 assessment. The ALJ accepted the Division’s reasoning, and Petitioner took this exception challenging the dismissal of his case.  

The Tribunal found that the dismissal of the petition was proper for two reasons. First, the Tribunal found that the second petition was not in a form conferring jurisdiction on the DTA inasmuch as there was no statutory notice attached to it (again, a Consolidated Statement of Tax Liabilities is not a statutory notice). Second, it was determined that the Statement for 2011 had previously been litigated and that Petitioner had exhausted his administrative remedies through the pursuit of that prior litigation.

This looks to me like the right result. However, I question the second basis listed by the Tribunal for dismissing the petition. Is a pre-hearing dismissal of a case the functional equivalent of “litigating”? This seems like a stretch to me. But since the petition should have been dismissed anyway, no harm, no foul.

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