TiNY Report for November 19, 2020 (reporting on DTA cases issued October 29, November 5, and November 12)

We’re taking a new writer for a test-drive this issue. Constant readers, meet Joe Tantillo. Being new here, he heard: “Would you like to write a tiny report this week?”, when I actually asked “Would you like to write the TiNY Report this week?” Anyway, after he said “yes,” he really couldn’t back out when he realized the (thankless? non-billable? mostly-ignored?) wonderful opportunity he was being given. Even better: Joe said he told his family members that he was writing for a blog, and two of them said they were actually going to read it. So that should increase our readership by, like, 15%!  At this pace, we may have twenty or so readers by 2025.

That was a couple of weeks ago. Since then the DTA has published another round or two of cases, so you get some of Joe and some of (very) Senior Editor Chris Doyle this week. Enjoy!

TRIBUNAL DECISIONS

Matter of ERW Enterprises; Division’s Rep.: Brian Evans; Petitioner’s Reps.: Paul Cambria, Jeffrey Reina, and Patrick Mackey; Application for Costs under Tax Law § 3030 (by Chris Doyle)

This is the appeal of the ALJ’s denial of Petitioner’s request for costs that we reported on here. The Tribunal affirmed the ALJ Order denying costs, finding that the Division was substantially justified in issuing a Notice of Determination to ERW on the basis that it was “in control” of certain unstamped cigarettes that were found in a truck that was registered to Petitioner, had Petitioner’s name and DOT number on it, and was driven by someone who may have been employed by Petitioner. In the interest of providing a complete record, the Tribunal also found that: (1) Petitioner did not prove that it had a net worth of less than the $7 million limit, and (2) Petitioner did not show that an hourly rate in excess of $75 per hour was warranted.

In addition to the comments we made on the ALJ determination, I offer the following: $75 per hour is a ridiculously low rate. I know of no attorney with successful experience at the DTA who would charge such a low rate. But…whatever.

Matter of Zimmermann; Division’s Rep.: Michelle Helm; Petitioner’s Rep.: pro se; Article 22 (by Chris Doyle)

The Tribunal affirmed the ALJ’s determination that Petitioner’s BCMS request was not filed within 90 days of the issuance of the Notice of Determination. The Division proved its standard mailing practice and that it was followed when it mailed, on November 30, 2017, the Notice of Deficiency to Petitioner’s last known address. Petitioner’s BCMS request filed on July 11, 2018 was therefore a few months too late. A different Mr. Zimmerman once wrote “The Times They Are A-Changing” –  but the 90-day time limit is not.

ALJ ORDER

Matter of Grainger; Judge Maloney; Division’s Rep.: Maria Matos; Petitioner’s Rep.: pro se; Article 22 (by Joe Tantillo)

The Judge granted the Division’s motion for dismissal/summary determination in part and denied it in part. The Division proved its standard mailing procedures and that they were followed when it mailed Notices to Petitioner’s last known address on July 2, 2019, and July 3, 2019. Therefore, Petitioners’ BCMS request, filed on October 22, 2019, was late, with respect to these two Notices.

However, Judge Maloney found the Division did not prove that the Notice for the 2018 tax year was properly mailed on July 16, 2019. Inadequacy in the evidence of the mailing could have been overcome by evidence of actual delivery of the Notice to the taxpayer. Here, the Division lacked sufficient evidence of delivery because the confirmation of receipt of certified mail bore an illegible signature of the recipient and the address of the recipient failed to include a floor or apartment number. Therefore, a question of fact remained as to whether the Notice was received by Petitioner. So the 90-day period for filing a BCMS request was tolled, and a hearing on the Notice will be scheduled in due course.

ALJ DETERMINATIONS

Matter of Pardey; Judge Maloney; Division’s Rep.: Maria Matos; Petitioner’s Rep.: Kevin Tung; Article 22 (by Joe Tantillo)

Judge Maloney granted the Division’s motion for summary determination. The Division proved both its standard mailing procedures and that they were followed when it mailed, on July 2, 2019, the Notice to Petitioner’s last known address. Petitioner’s BCMS request, filed on October 19, 2019, was therefore late.

Matter of Kim; Judge Gardiner; Division’s Rep.: Christopher O’Brien; Petitioner’s Rep.: pro se; Article 22 (by Joe Tantillo)

The Division proved that Petitioner failed to file New York income tax returns in 2012 and 2013. Judge Gardiner found that the Division properly issued a Notice to Petitioner, but Petitioner failed to supply any documentation addressing her failure to file. Thus, the Division was authorized to estimate Petitioner’s personal income tax liability based on the information reported on her federal income tax returns for 2012 and 2013. Petitioner’s challenge to the Notice of Deficiency failed because she neither introduced any documentation in the proceedings for review, nor did she submit any briefs. In sum, Petitioner presented zero evidence that the issued Notices were erroneous. If Petitioner had provided any documentation, maybe the Division’s motion would have been defeated.

Matter of Ahmed; Judge Gardiner; Division’s Rep.: Brian Evans; Petitioner’s Rep.: Lance Lazzaro; Article 20 (by Chris Doyle)

Petitioner was driving a silver Camry that didn’t belong to him. The Department’s Criminal Investigation Division (“CID”) received a tip from “a reliable source” that a silver Camry was being used to transport unstamped cigarettes. A joint strike force including CID investigators and Suffolk County detectives pulled the car over and found two cardboard boxes in the trunk. “One box appear[ed] to contain cartons of Newport cigarettes.” But the strike force didn’t open the boxes to determine if they, in fact, contained cigarettes that were unstamped. Furthermore, Petitioner credibly testified that he merely borrowed the car from a friend, and there was no evidence from the Division linking the (alleged) unstamped cigarettes to Petitioner other than the fact that they were in a car driven by Petitioner. Accordingly, Judge Gardiner determined that the imposition of a penalty against Petitioner for the possession of unstamped cigarettes was improper.

Matter of North Country Property Management, LLC; Judge Gardiner; Division’s Rep.: Michael Hall; Petitioner’s Rep.: Karla Williams Buettner; Articles 28 and 29 (by Chris Doyle)

Judge Gardiner determined that rock salt purchases by a company that provided snow-removal services was subject to sales tax. Tax Law § 1101(b)(4)(i) excludes from tax receipts from sales of tangible personal property (“TPP”) to be used by the purchaser in performing taxable services if the TPP “so sold is later actually transferred to the purchaser of the service in conjunction with the performance of the service subject to tax.” Snow removal is a taxable service. Because Petitioner’s witness testified that “some of his service contracts include a cleanup of winter debris in order to remove any remaining rock salt at the end of a snow season,” the Judge found that Petitioner had not proved that the salt was transferred to Petitioner’s customers.

If Petitioner never was required to remove the rock salt, would it have been excluded from sales tax?

Interestingly, the Judge cites three rules of statutory interpretation. I repeat them below and ask, can the rules be reconciled, or is the “only reasonable construction” standard an outlier?

1. “It is well settled that ‘an agency’s interpretation of the statutes it administers must be upheld absent demonstrated irrationality or unreasonableness….’”
2. “In order to prevail, petitioner must demonstrate ‘that its interpretation of the statute is not only plausible, but also that it is the only reasonable construction….’”
3. “Where petitioner claims an exemption from tax, the statute must be construed strictly and narrowly against petitioner, although not so narrowly as to defeat the exemption’s purpose….”

The DTA’s adherence to the only reasonable construction standard continues to infuriate.

Matter of Ahkenazi; Judge Gardiner; Division’s Rep.: Anita Luckina; Petitioner’s Rep.: Isaac Sternheim; Articles 28 and 29 (by Chris Doyle)

The Judge granted the Division’s motion for summary determination. The Division proved both its standard mailing procedures and that they were followed when it mailed, on April 15, 2019, the Notice to Petitioner’s last known address. Petitioner’s mere denial of receipt was not sufficient to overcome the presumption of receipt that follows from proof of proper mailing. Petitioner’s BCMS request, filed on November 7, 2019, was therefore a few months too late.

Matter of Dubois; Judge Maloney; Division’s Rep.: Peter Ostwald; Petitioner’s Rep.: pro se; Article 22 (by Chris Doyle)

The Judge granted the Division’s motion for summary determination. The Division proved both its standard mailing procedures and that they were followed when it mailed, on May 17, 2018, the Notice to Petitioner’s last known address. Petitioner’s BCMS request, filed on August 5, 2019, was therefore a few months too late.

Matter of Elngaawy and Agamy; Supervising ALJ Friedman; Division’s Rep.: Mary Hurteau; Petitioner’s Rep.: pro se; Article 22 (by Chris Doyle)

The Supervising ALJ sustained the Notice of Intent to Dismiss. BCMS proved both its standard mailing procedures and that they were followed when it mailed, on April 12, 2019, the Order to Petitioners’ last known address. Petitioners’ Petition, filed on November 26, 2019, was therefore a few months too late.

Matter of Georgiades; Judge Russo; Division’s Rep.: Adam Roberts; Petitioner’s Reps.: Ariele Doolittle and Christopher Doyle; Articles 28 and 29 (by Chris Doyle)

One of ours/mine, so I’m “Joe Fridaying” it. The Judge granted the Division’s motion to dismiss. Judge Russo found that the Division proved both its standard mailing procedures and that they were followed when it mailed, on December 13, 2018, the Notice to Petitioner’s last known address. The Judge also determined that Petitioner’s mere denial of receipt was not sufficient to overcome the presumption of receipt that follows from proof of proper mailing. The Judge therefore concluded that Petitioner’s BCMS request, filed on April 5, 2019, was a few weeks too late.

With respect, we disagree.  Stay tuned!

Matter of Marozas; Judge Galliher; Division’s Rep.: Christopher O’Brien; Petitioner’s Rep.: pro se; Article 22 (by Chris Doyle)

In this “submitted” case, the Judge found that Petitioner was a resident of New York in 2012, but did not file a resident income tax return for that year. Based on information received from the IRS, i.e. that Petitioner reported federal AGI of $73,500 in 2012, the Division calculated New York tax due and issued a Notice of Deficiency to Petitioner. Petitioner provided evidence that her student loans were discharged in 2012 due to a disability. But there was no evidence tying that debt discharged to Petitioner’s reported federal AGI for 2012. Nor was the 2012 federal return placed into evidence. Based on the lack of evidence, the Judge concluded that Petitioner failed to overcome the presumption of correctness that attaches to a Notice of Deficiency.