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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.  

TiNY Report for October 19, 2017 (covering DTA cases issued October 12)

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One ALJ Order and two Tribunal Decisions this week.

THE ALJ ORDER

Matter of Marrereo; Judge Russo; Division’s Rep: Ellen Roach; Taxpayer’s Rep: Ariele Doolittle; Article 22.  Judge Russo withdrew the DTA’s Notice of Intent to Dismiss when she found that the Nagengast and Koslow Affidavits (that the Division offered to prove its standard mailing practices and that they had been followed in this instance) had certain inconsistencies.  According to the Judge, the affidavits sufficiently demonstrated the Division’s standard mailing practices.  But the aforementioned inconsistencies brought into question whether those practices were followed in this case.  In particular, one affidavit said the notice was sent on August 22, and the other affidavit said the notice was sent on October 20.  From the Judge: “The contradiction of dates as stated in the Division’s affidavits creates a question of fact and, as such, the Division’s proof ‘fails to meet the exacting standard demanded of proponents of an accelerated determination’” (citation omitted).  The Division was ordered to file its Answer.  

DECISIONS

Matter of Johnson; Division’s Rep: Adam Roberts; Taxpayer’s Rep: pro se; Articles 28 and 29.  After losing his responsible person ALJ hearing, the Petitioner filed an exception, but did not file a brief or request oral argument.  Thus, it was no surprise that the Tribunal affirmed the ALJ’s determination.  At the hearing the Petitioner testified that he was hired to run, and did run, the day-to-day operations of the underlying security guard business.  The Petitioner said he was not an owner of the business but confirmed that he registered the business in his name.  Given the totality of the circumstances and the Petitioner’s weak defense, the Tribunal easily found he was a responsible person liable for the business’ sales tax.  As to the amount of tax owed, it was self-assessed by the business, and the Petitioner did not offer any evidence to disprove the accuracy of the self-assessment.  Finally, late filing penalties were sustained.  

Matter of Gilani; Division’s Rep: Frank Nuara; Taxpayer’s Rep: pro se; Articles 28 and 29.  This is another taxpayer loss in a responsible officer case.  This loss was, however, on timeliness grounds.  A few interesting facts here:  The Petitioner was automatically included at the BCMS conference when the underlying business (a restaurant) filed its timely BCMS request.  Petitioner never filed his own BCMS request and did not appear at the conference.  The BCMS issued an Order to Petitioner, and the Petitioner filed an ALJ Petition challenging the Order about 100 days after the BCMS order had been issued (i.e. about ten days too late).  The ALJ rescinded the initial Notice of Intent to Dismiss which was based on the Petition being filed more than 90 days after the BCMS order.  It seems that the ALJ felt the Petition could be timely if it was filed within 90 days of either the initial Notice of Determination or the BCMS order and therefore the Division was required to prove the mailing of both.  The timeliness issue was revisited after the Division offered evidence of the mailing of the original Notice of Determination and a new Notice of Intent to Dismiss was issued.  The second time around the ALJ dismissed the case since the Petition had been filed more than 90 days after both the issuance of the BCMS Order and the issuance of the Notice of Determination.  In affirming the ALJ’s dismissal of the case, the Tribunal noted that the Division adequately proved the mailing of both the Notice and the BCMS Order by demonstrating its standard mailing practices and that they had been followed in both instances.  OK, but the situation raises a few questions:  (1) When a taxpayer is automatically included in the BCMS process as a responsible officer (RO) of a timely-filing underlying business, is the statute of limitations for the RO tolled?  I.e. Once an RO’s case gets to the ALJ level (if the RO files a petition within 90 days of the BCMS order), does the Division have a meritorious argument that DTA has no jurisdiction because the RO never filed a timely BCMS request?  (2)  In every case in which there is a timeliness issue with respect to an ALJ petition following a BCMS Order (assuming the Petitioner denies receipt of the original notice), is it now incumbent on the Division to prove the mailing of both the BCMS Order and the original Notice?  I expect that the latter circumstance won’t arise very frequently since a copy of the Notice is usually included with the BCMS request.  But what if the copy of the Notice attached to the BCMS request is from the Notice sent to the taxpayer’s representative?  Hmmm.

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