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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 October 26, 2017 (covering DTA cases issued October 19)

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Three ALJ determinations and one ALJ order.  Nothing from the Tribunal.


Matter of DiCamillo; Judge Maloney; Division’s Rep: Robert Maslyn; Taxpayer’s Rep: pro se; Articles 28 & 29.  This case involved the reasonableness of the Division’s sales tax audit methodology of a pizzeria.  The Judge determined that the record established the Division’s clear request for the restaurant’s books and records and that the Petitioner failed to provide those books and records during the audit.  After the Notice of Determination was issued, the Petitioner provided insufficient evidence (i.e. incomplete and inconsistent bank statements), so the Judge determined the Division could use an external index.  The index used was a  sales-to-total-assets ratio from the 2011-2012 Risk Management Association Annual Statement Studies to estimate the restaurant’s gross sales and sales tax liability.  The Division adequately identified the source of the external index it used.  The Judge found that the Petitioner failed to meet his burden to show by clear and convincing evidence that the audit method was unreasonable.  The Petitioner sold the business for $125K.  The Division used the sale price of the business as the value of the business assets.  The Judge determined this was not proven to be an inappropriate method to estimate sales.  The Judge also determined that the Petitioner provided no evidence to show the use of the external index was irrational, and didn’t provide evidence to contest the data in the study, show the ratio selected was dissimilar or inapplicable, or show the sales were overstated.  The Petitioner also argued the restaurant made exempt sales for which no credit was given, but because the Petitioner provided no books, records or exemption certificates, the Division concluded all of the sales were taxable.  Penalties were also sustained. 

Matter of Ji; Judge Russo; Division’s Rep: Melanie Spaulding; Taxpayer’s Rep: Chang Y. Han; Articles 28 & 29.  The case was dismissed on timeliness grounds.  The ALJ found that the Division sufficiently proved its standard mailing procedures and that they were followed when the Division mailed the Notice of Determination to the Petitioner’s last known address.  The Petitioner filed his BCMS request after the 90-day limitations period expired, so the request was determined to have been untimely filed.  The Judge granted the Division’s motion for summary determination and sustained the BCMS order dismissing the Petitioner’s BCMS request. 

Matter of Nigri; Judge Bennett; Division’s Rep: Charles Fishbaum; Taxpayer’s Rep: Issac Sternheim; Article 22.  This case was also dismissed on timeliness grounds for the same reasons as the previous case but with regard to a Notice of Deficiency.  Summary determination was granted and the petition denied.  However, the Judge noted that the Petitioners could pay the disputed tax and within two years file a refund claim.  If the refund claim is disallowed, the Petitioner may then request a conciliation conference or file a DTA petition.


Matter of Sheehan; Judge Law; Division’s Rep: Peter Ostwald; Taxpayer’s Rep: Timothy Noonan; NYC Admin Code.  The Division moved to have Petitioners’ subpoena withdrawn or modified.  First, the Division argued that statistics regarding requests made to the Division to exercise its special refund authority under Tax Law § 697(d) did not exist in a document the Division possessed.  The Judge determined those documents were not utterly irrelevant and that the Division submitted no evidence to establish it was under no obligation to create documents with the statistics.  The Judge held that the nonexistence of a document is not a basis for withdrawal of a subpoena.  Second, the Petitioners requested redacted copies of all granted requests or applications for § 697(d) relief.  The Judge disallowed that request because tax return information is statutorily protected from disclosure and the Petitioners’ request did not fall within any of the exceptions requiring the Division to produce tax returns or other items with tax return information.  The Judge explicitly found that redacted copies of returns did not fall within an exception; so that part of the subpoena was withdrawn.  Third, the Division argued producing copies of any and all memoranda, legal opinions, correspondence or other documents regarding the Division’s interpretation of Tax Law § 697(d) or the Commissioner’s scope of authority under Tax Law § 697(d) was excessive and unduly burdensome given the unlimited timeframe.  The Judge noted that it is the Division’s burden to prove the utter irrelevancy of a request, and that the Petitioners’ requests were entirely relevant.  However, the Judge determined the requests were excessive and unduly burdensome based on the unlimited timeframe; so the Judge limited the scope of that part of the subpoena to the last 10 years.  The Division did not sufficiently prove its argument that the opinions of counsel referring to or discussing Tax Law § 697(d) were protected by secrecy laws.  The Judge noted the Division also used boilerplate language to claim legal privilege, which wasn’t enough for withdrawal of that portion of the subpoena.  The subpoena requests were accordingly granted or modified and the Division was direct to furnish the requested documents consistent with the Order.  

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