Here are the sales tax cases from the TiNY Report for the week of August 13, 2024.
Decisions:
Matter of Safford Services Corp. (July 25, 2024); Div’s Rep. Kaitlyn Smith, Esq.; Pet’s Rep. pro se; Articles 28 and 29/Timy (Pete Calleri).
Petitioner was issued a notice of determination on July 1, 2022. Petitioner filed a petition protesting the notice on October 24, 2022. Because the petition was filed after the 90-day statutory limit, the DTA issued a notice of intent to dismiss the petition. The Division provided evidence that it had followed its standard mailing procedure. In response, Petitioner submitted a letter and other documentation and claimed that the notice of determination was not received or seen by him. At the ensuing hearing, the ALJ determined that the Division had met its burden of demonstrating its standard mailing procedure and that such procedure was followed. The ALJ also found that mere denial of receipt of notice by Petitioner, without more, is insufficient to overcome the presumption of receipt and dismissed the petition as untimely.
The Tribunal agreed with the ALJ. The Division demonstrated proper mailing of the notice and Petitioner had failed to rebut the presumption of receipt. It agreed that Petitioner’s testimony amounted to no more than mere denial of receipt, which was insufficient to rebut the presumption. When Petitioner argued that it did not receive the notice due to the failure of its administrative staff, the Tribunal responded that extenuating circumstances do not provide a basis to excuse the late filing of a petition. Accordingly, the Tribunal denied Petitioner’s exception, affirmed the ALJ’s determination, and dismissed Petitioner’s petition.
Determinations:
Matter of Connecticut Insulation Distributors Corp. (ALJ Baldwin, July 25,2024); Div’s Rep. Aliza Chase, Esq.; Pet’s Rep. pro se; Articles 28 and 29/Timy (Chris Doyle).
The Division mailed its Notice of Determination to Petitioner on May 1, 2015. Petitioner filed its Request for Conciliation Conference on September 21, 2015, which was denied as untimely in an order dated October 9, 2015. On January 4, 2016, Petitioner filed its Petition protesting the Order. Judge Maloney granted the Division’s Motion for Summary Determination finding that Petitioner’s Conciliation Conference Request was filed late.
Petitioner, mistakenly concluding that tax controversy is like shampoo, pursued a “suds, rinse, repeat” strategy by filing another Conciliation Conference Request on November 22, 2022. This second Request was also denied as being even more untimely than the first Request. Petitioner stuck to its strategy by filing another petition challenging the second Order. The Division moved for dismissal on the grounds that the case had already been the subject of DTA review. Judge Baldwin granted the motion and dismissed the petition. A frivolous petition penalty may have been appropriate here, although the Division didn’t ask for one.
Matter of Globalops Network Inc.; Matter of Globalops Network Inc. (Supervising ALJ Gardiner, July 11, 2024); Articles 28 and 29/Proposed Refusal to Issue a Certificate of Authority, jurisdiction of the DTA (Zoe Peppas).
Petitioner filed two petitions at DTA. Neither had a signature, and one didn’t include the Notice being challenged. These formal deficiencies were not cured following a DTA written request. The petitions were dismissed with prejudice.
Matter of Saslaw (ALJ Baldwin, July 11, 2024); Div’s Rep. Melanie Spaulding, Esq.; Pet’s Rep. pro se; Articles 28 and 29/Responsible officer (Chris Doyle).
This was a rare victory for a pro se taxpayer on a substantive legal issue. Petitioner worked at an ice cream shop that didn’t pay all the sales taxes shown on its returns. After the shop went out of business, the Division went after Petitioner alleging he was a responsible officer. The Division’s evidence: a NY partnership return listing Petitioner as “general partner;” A computer transcript indicating Petitioner opened the shop’s on-line services business account at the Department; a Form DTF-17 listing Petitioner as a responsible person, but also listing Petitioner’s ownership percentage as 0%; and a copy of a business tax account update form signed by Petitioner as the shop’s “former director of finance.” Petitioner challenged the resulting Notice with a Conciliation Conference Request, which was denied as late filed. Then Petitioner filed his petition challenging the BCMS Order and argued he a was not a responsible person. Interestingly, the Division didn’t challenge the timeliness of the BCMS request and instead argued the merits of the responsible person case.
Petitioner testified that Brian Smith was the member who managed the shop and directed if and when payments to creditors were made. Petitioner undertook ministerial actions like requesting the Certificate of Authority just to keep the process moving so the shop could open on time. Petitioner testified that he “signed many tax documents and tax returns and had check signing privileges at the time. At the time these taxes were due, none of that was true and none of that existed.” In essence, Petitioner testified that if he ever was a responsible person for the shop, that responsibility ended when the shop fell into distress and the owners, and in particular Mr. Smith, took control over if and when creditors were paid.
Petitioner’s testimony was corroborated by three witnesses who worked at the business and were aware of the situation.
Judge Baldwin found “[w]hether petitioner was a responsible person before the periods at issue is beyond this determination but, as the unrefuted and thus credible testimony establishes, during the periods at issue, petitioner did not have sufficient authority or control over its corporate affairs to assure that sales tax was remitted on behalf of [the shop].” In light of this finding, the Judge canceled the Notices issued to Petitioner.
