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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 September 5, 2019 (reporting on DTA cases issued August 29)

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Today we have four determinations and two orders, only one of which is a timy.  Not a bad way to ring in the new school year.


Matter of Bentham; Judge: DiFiore; Division’s Rep.: Linda Farrington; Petitioners’ Rep.: Dean Nasca; Application for costs under Tax Law § 3030.

If the facts of this case sound familiar, that’s because they are almost identical to the facts in a determination that we wrote about last week.  They are also almost identical to the below determination.

The Division sent a letter to Petitioners requesting substantiation for their itemized deductions. Sometime later, Petitioners responded that they were entitled to a field audit, and that they needed notice of place and time so that they could be present for the “audit process” or they were going to sue for the balance of the refund, damages for the violation of their due process rights, and costs.  The Division then issued a Notice of Disallowance which stated that Petitioners’ deductions would be denied unless they substantiated them.  Then, Petitioners filed a Request for Conciliation Conference. And, at the Conciliation Conference, Petitioners proved their entitlement to the deductions claimed on their original return for the first time.

Petitioners then petitioned for costs of $347.75, and the Petition included an unsworn statement that Petitioners’ net worth, at the time the action commenced, was less than the $2 million limit.

Judge DiFiore found that the Division’s assessment was substantially justified because Petitioners did not provide any substantiation for their deductions until the Conciliation Conference, a.k.a. after the assessment was issued.  The Judge also noted that, while not raised by the Division, an unsworn statement that Petitioners’ net worth did not exceed $2 million was insufficient -- a sworn statement of net worth is required to establish entitlement to fees. Thus, the Judge denied the Petition on two grounds.

Just my two cents, but I’m not sure this business model of having your clients demand an audit, waiting for an assessment, then providing information at BCMS of the bona fides of the claimed deductions and then filing a petition for fees is going to work out for Mr. Nasca.  Sure, his clients end up paying the right amount of tax, but the requests for costs in these cases seemed doomed from the get-go.  So the question from last week remains:  If Mr. Nasca is trying to make a point, what is it?

Matter of Langston; Judge: DiFiore; Division’s Rep.: Linda Farrington; Petitioners’ Rep.: Dean Nasca; Application for costs under Tax Law § 3030.

Suds.  Rinse.  Repeat.

This case is substantially similar to Matter of Bentham, above, Matter of Krause from last week, and the Tribunal’s Matter of Doyle back in May.

Matter of Nugent; Judge: DiFiore; Division’s Rep.: Melanie Spaulding; Petitioner’s Reps.: Christopher Smith and Karen Smith; Articles 28 and 29.  

The Division proved its standard procedures and that they were followed when it mailed five Notices of Determination to Petitioner’s last known address and to Petitioner’s representative on June 5, 2018.  Petitioner did not file his Request for Conciliation Conference until September 26, 2018, which was after the 90-day deadline.  Thus, the Judge found that the Request was properly dismissed as untimely and denied Petitioner’s petition.

And if you asked yourself like I did, “Is Petitioner the singer, Ted Nugent?”  It’s not.  But two of six of Ted Nugent’s acknowledged children also were named “Ted,” so maybe it is one of them.

Matter of Miller; Judge: Russo; Division’s Rep.: Karry Culihan; Petitioner’s Rep.: Michael Tedesco; Driver License Suspension, Tax Law Section 171-v.   

The Division issued a notice of proposed driver license referral (the “60-day notice”) to Petitioner dated December 7, 2016.  The 60-day notice included eight unpaid assessments and informed Petitioner how he could respond to the notice and upon which grounds relief may be permitted. Petitioner filed a timely Request for Conciliation Conference protesting the 60-day notice, but the conferee sustained the notice.

Petitioner then filed a timely petition dated November 21, 2017, which explained that Petitioner had entered into a voluntary wage garnishment with the Division, but that Division has ceased this garnishment because his wages were insufficient. Petitioner also explained that he was in the process of submitting an offer-in-compromise.  Unfortunately, Petitioner was broke, and did not have enough assets or income to support an offer in compromise or a voluntary garnishment.

The Judge explained that a taxpayer may challenge a 60-day notice only based on the six enumerated grounds, and Petitioner failed to do so.   Petitioner’s allegation that the Division discontinued his wage garnishment does not fall under any of the grounds permitting a challenge to the notice.  Thus, the Judge denied the petition and sustained the proposed driver license suspension.

I understand that the Judge must follow the letter of the law here, and agree that she did.  But, to allow wage garnishment by the Division as grounds to challenge a 60-day notice, while not permitting a challenge based on inability to pay just seems illogical.  Petitioner is making so little money that a wage garnishment can’t be permitted.  So, instead, his license is going to be suspended making it harder for him to get work.  This seems counterproductive.


Matter of McNichols; Judge: Connolly; Division’s Rep.: Christopher O’Brien; Petitioner’s Rep.: pro se; Article 22.

Petitioner filed a petition on August 7, 2018, and included (1) a notice of disallowance dated June 21, 2017 for the 2015 tax year; (2) a conciliation default order dated January 5, 2018 that referenced the refund denial dated June 21, 2017; and (3) a letter issued by the Division for the 2016 tax year dated March 13, 2017 stating that the Division needed additional information about Petitioner’s claimed child and dependent care credits.  The petition did not attach or reference any other statutory notices.  The Division of Tax Appeals sent Petitioner a letter informing her that her petition could not be considered unless she supplied the proper “notice/assessment/denial” in 15 days. Petitioner did not respond.  Supervising ALJ Friedman issued a notice of intent to dismiss because, with respect to the 2015 tax year the petition was filed more than 90 days after the Notice was issued, and with respect to the 2016 tax year, the petition did not include a statutory notice under protest.

The Judge found that with respect to the 2015 tax year, the Division failed to address the timeliness of the petition or produce any mailing records. So the Judge rescinded the notice of intent to dismiss with respect to the 2015 tax year.

As for the 2016 tax year, the Judge held that the petition should not be dismissed despite Petitioner’s failure to attach a statutory notice. Rather, the Judge determined that because the petition included a letter that requested more information about the claim for the child and dependent care credit, this was sufficient to show that Petitioner had filed a refund claim that was pending as of the date of the letter, March 13, 2017.  The Judge reasoned that, if the Division has issued a notice of disallowance after the letter, then the petition would have been filed within the 2 year time limit after the mailing of a notice of disallowance. And if the Division had not issued a notice of disallowance, the refund claim was deemed denied and the two year time limit would not have expired.  Thus, the petition was accepted and the notice of intent to dismiss was rescinded.

Matter of LaMarco; Judge: Maloney; Division’s Rep.: Karry Culihan; Petitioner’s Rep.: pro se; Driver’s License Suspension, Tax Law Section 171-v.  

The Division sent Petitioner a 60-day notice dated October 23, 2017 which included a consolidated statement of liabilities with four assessments for the 2013, 2015, and 2016 tax years and part of the 2017 tax year. The notice also informed Petitioner how he could respond to the notice and the bases upon which Petitioner could seek relief.  Petitioner filed a petition protesting the 60-day notice for the 2013, 2015 and 2016 tax years on November 16, 2017 (“the first petition”), and alleged that the tax deficiencies were erroneous. 

On the same day the petition was filed, Petitioner also filed a Request for Conciliation Conference. A Conciliation Order dated March 23, 2018 sustained the notice.

Petitioner thereafter filed a timely second petition challenging the Conciliation Order (“the second petition”), and stated that he did not know how the taxes for the 2016 tax year were determined but was willing to pay the tax when he could.

The Judge found that since Petitioner had filed a Request for Conciliation Conference before the first petition and had not waited until the order was issued, the portion of the petition challenging the 60-day notice was premature. Thus, the Division’s motion to dismiss with respect to this aspect of the first petition was granted.  However, this petition also challenged the substantive merits of the assessments and the Division didn’t offer any proof of mailing or any other evidence establishing proper issuance and timing, or exhaustion or prohibition of judicial or administrative review. Thus, the Judge denied the motion to dismiss with respect to the substantive merits of these assessments.

Finally, the Judge denied the Division’s motion to dismiss with respect to the second petition because the Division failed to prove that these liabilities were fixed and final, or even offer proof of proper issuance of the notices and/or prior exhaustion of judicial or administrative reviews.

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