TiNY Report for August 16, 2018 (covering DTA cases from August 9)

Four ALJ Determinations this week and nothing from the Tribunal.

ALJ Determinations

Matter of 165 Jamaica Realty, LLC; Judge: Galliher; Division’s Rep: Charles Fishbaum; Petitioner’s Rep: Isaac Sternheim; Article 22.  Following a BCMS order dismissing Petitioner’s request for a conciliation conference on timeliness grounds, Petitioner filed a petition challenging three Notices and Demand it received asserting penalties for failure to timely file complete NYS partnership returns for 2008, 2010, and 2011.  The Division brought a motion seeking to dismiss Petitioner’s petition or in the alternative, for summary determination, based on lack of jurisdiction.  The Judge granted the Division’s motion to dismiss, finding that the  DTA did not have jurisdiction over the matter because the Tax Law denies hearings to protest Notices and Demand.  Note to self: If this happens to one of our clients, do not pass DTA, do not collect $200 in fees, but do go directly to New York State supreme court because it looks like there is no administrative remedy to exhaust under these circumstances.

Matter of Leinwohl; Judge: Connolly; Division’s Rep: Stephanie Scalzo; Petitioner’s Rep: Christopher Whalen; Articles 28 and 29.   Petitioner filed a request for conciliation conference with BCMS on August 11, 2017, protesting two Notices of Determination issued December 7, 2016.  Um, let me guess.  This is a timeliness case.  On August 25, 2017, BCMS issued a conciliation order dismissing the request as untimely filed.  At the ALJ hearing the Division set forth in copious detail its mailing protocol and the statutory notice procedures it follows.   The Division also explained its document retention rules as applied to conciliation orders.  The Judge held because Petitioner did not respond to the Division’s motion, Petitioner was deemed to have conceded there was no question of fact requiring a hearing.  Petitioner did not offer proof to meet his burden to show his protest was timely filed.  Because the Division proved it sent the Notices to Petitioner’s last known address on August 11, 2017, and Petitioner filed his BCMS request after the 90-day limitations period expired, the Judge held the request was untimely and granted summary determination for the Division.

Matter of Pollack; Judge: Galliher: Division’s Rep: Adam Roberts; Petitioner’s Rep: pro se; Articles 28 and 29.  Petitioner leased a car from a New York dealership.  Petitioner, a resident of New York at the time he entered into the lease, paid the full amount of sales tax due on the lease when the first lease payment was due.  The next year, Petitioner relocated to Arizona.  Petitioner registered his car in Arizona and changed the plates.  A few months later, Petitioner filed a claim for refund of the sales tax paid (the amount presumably calculated on the remaining 21 months of the lease he had left).   The Division denied Petitioner’s refund claim.  In New York, the full amount of sales tax on the total amount of the lease payments is due at the inception of the lease.  Petitioner argued he should be allowed a partial refund of the sales tax based on his relocation to Arizona, removal of the vehicle from New York, and its subsequent registration in Arizona, all of which happened partway through the lease term.  The Judge disagreed, holding that the Tribunal has specifically rejected that argument previously.  As a result, the Judge sustained the Division’s denial of Petitioner’s refund claim. 

Chris Doyle has a true-life, first-person story about a vehicle lease and sales taxes. He’ll share it with you next week.  From Chris: “It demonstrates the Division’s duplicity on this issue.”

Matter of Rodriguez; Judge: Law; Division’s Rep: Charles Fishbaum; Petitioner’s Rep: pro se; Article 22.  Petitioner, a part-year resident during 2012, reported all of her New York income in both the federal and New York columns of her 2012 Form IT-203.  As it turns out, her federal income was quite a bit higher than her New York income, and had the federal income been reported correctly, petitioner would have been taxed at a higher bracket rate.  On audit, the Division discovered the error and properly computed the tax due at the correct bracket rate.  The Division issued a Notice of Deficiency the day before the three-year statute of limitations to assess tax expired.  Petitioner appeared to have conceded the Division’s calculation of tax due, but argued she should not be held liable for the additional tax and interest that had accrued during the three years from the date she filed her return until the Notice of Deficiency was issued.  The Judge found Petitioner’s argument was without merit.  The Division is allowed a three-year time period to assess tax and assert a deficiency.  Though the Notice was issued a few days before the statute expired, it was within the three-year limitations period, and the Judge held there was no mechanism to cancel the Notice.  With respect to the interest, the Judge noted that interest on an underpayment of tax is mandatory.  The Judge granted summary determination for the Division.

Comment