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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 24, 2019 (reporting on DTA cases issued October 10 and 17)

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Three determinations this week and one ALJ order from last week that wasn’t posted last week.  We wish we could say there was something special in any of the cases.  But really, there’s not.


Matter of Ahmed; Judge Gardiner; Division’s Rep.: Brian Evans; Petitioner’s Rep.: Lance Lazzaro; Article 20.

The Division proved its standard mailing procedures, but failed to prove that they were followed to mail a Notice of Determination to Petitioner at his last known address on March 16, 2017. The CMR was found to be contrary to the Department’s standards because there were two additional handwritten dates on it. And the additional dates were not addressed in the affidavits by the Division’s personnel, Ms. Picard and Mr. Ramundo. Because of these additional dates, the CMR was determined to have been altered in a way that was not within the standard mailing procedures. It also didn’t help that the dates were not in a Julian calendar format. Further, the affidavit of Mr. Ramundo said it relied on Ms. Picard’s affidavit. But the affidavit of Mr. Ramundo was found to have been created before the affidavit of Ms. Picard, and thus Mr. Ramundo could not have based his conclusions on the affidavit of Ms. Picard. Therefore, Petitioner’s request for conciliation conference dated July 17, 2017, was not shown to be late and the Judge will continue the hearing on the merits.


Matter of Good N Go Trucking, LLC; Judge Maloney; Division’s Rep.: Adam Roberts; Petitioner’s Rep.: pro se; Article 21.

The Division proved both its standard mailing procedures and that they were followed to mail a Notice of Determination to Petitioner at its last known address on August 28, 2018. Petitioner filed its petition on February 8, 2019. Thus, the Judge dismissed the petition as untimely.

Matter of Berrios; Judge Friedman; Division’s Rep.: Maria Matos; Petitioner’s Rep.: Alisa Mitchell (sort of); Article 22.

A petition was filed in the name of Petitioner by her certified public account (“CPA”). Petitioner did not sign the petition. Instead, it was signed by Petitioner’s CPA who was licensed to practice in Florida. The petition did not indicate that the CPA was also licensed to practice in New York or was otherwise allowed to represent Petitioner. The petition also did not include a power of attorney (“POA”) authorizing the CPA to represent Petitioner. A POA was provided after the filing of the petition, but it did not identify the CPA’s qualifications to represent Petitioner, and it was not notarized or witnessed. On March 1, 2019, the Division sent a letter to Petitioner advising her that the petition was deficient because the POA form was incorrect, special permission was required for representation by an out of state CPA, and her CPA couldn’t represent her under the current circumstances. The letter also instructed Petitioner that failure to correct these issues would result in a dismissal. A few months later, the Division sent another letter again informing Petitioner that her CPA would need special permission from the Secretary of the Tribunal to represent Petitioner. Petitioner did not cure any of the deficiencies or respond to the Judge’s notice of intent to dismiss, which was based on the fact that the petition was not in proper form. Because Petitioner (or her Florida CPA) failed to cure the petition’s inadequacies, the Judge dismissed it with prejudice.

Matter of Carl; Judge Galliher; Division’s Rep.: Justine Clarke Caplan; Petitioner’s Rep.: pro se; Article 28 and 29.

Petitioner had an in-ground pool installed (lucky him). He paid one company (“Material Company”) for a pool kit including most of the materials needed to construct the pool, and Material Company collected sales tax on that purchase. Material Company doesn’t install pools, and it said so in its contract with Petitioner. So Petitioner hired another company to install the pool (“Installer Company”) at the recommendation of Material Company. He paid Installer Company for the installation services, but did not pay them sales tax. Petitioner submitted an application for refund or credit for sales or use tax in the amount of $1,135. Petitioner mistakenly included the tax that Material Company included on the contract estimate for installation (why Material Company included an estimate of installation costs when it does not in fact install pools is beyond me). And at the hearing Petitioner clarified that he was only requesting the tax paid to Material Company, which was $759.60. The Division denied Petitioner’s refund claim in full because an installed above-ground pool is not a capital improvement (it was determined that the Division got the wrong information about the pool being above-ground).

Purchases of material that will be capital improvements when installed are taxable if they are not purchased with installation provided by the same vendor. When installation is not being provided by the vendor of the material, the material purchases are taxable, regardless of whether they are purchased by a contractor or a property owner. When a contractor purchases the items for a capital improvement, it pays sales tax and then usually incorporates the tax in the total amount the contractor charges the property owner. In such circumstances the contractor is considered the ultimate consumer, and thus, the taxpayer. Alternatively, when the property owner purchases the material for self-installation or installation by a third-party contractor, (s)he becomes the ultimate consumer, and thus is required to pay the tax.

Here, the Judge determined that, since Petitioner purchased the materials from Material Company, Petitioner was the ultimate purchaser and thus liable for the sales tax and that Material Company properly collected the tax from Petitioner. Petitioner attempted to argue that Installer Company was a subcontractor of Material Company, and thus Material Company was responsible for the sales tax when it purchased the pool kit. However, the Judge found that the contract between Material Company and Petitioner didn’t support his argument, nor did any other facts in the case. Instead, the Judge found that the Material Company’s recommendation of Installer Company and its arranging for Installer Company to provide installation service did not create a contractor/subcontractor relationship. So the Judge denied Petitioner’s refund claim.

But hey Petitioner has an in-ground pool now – and is only out roughly $750 in beer money.

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