Docstoc

STATE OF NEW YORK DIVISION OF

Document Sample
STATE OF NEW YORK DIVISION OF Powered By Docstoc
					STATE OF NEW YORK

DIVISION OF TAX APPEALS
________________________________________________

             In the Matter of the Petition                 :

                          of                               :

              LOIS P. GROSVENOR                            :              SMALL CLAIMS
                                                                          DETERMINATION
for Redetermination of a Deficiency or for Refund of :                    DTA NO. 820752
New York State and New York City Personal Income
Taxes under Article 22 of the Tax Law and the New    :
York City Administrative Code for the Years 1988
and 1989.                                            :
________________________________________________

      Petitioner, Lois P. Grosvenor, 142 Wilcox Court, Matawan, New Jersey 07747, filed a

petition for redetermination of a deficiency or for refund of New York State and New York City

personal income taxes under Article 22 of the Tax Law and the New York City Administrative

Code for the years 1988 and 1999.

      A small claims hearing was held before Frank W. Barrie, Presiding Officer, at the offices

of the Division of Tax Appeals, 641 Lexington Avenue, New York, New York, on November 29,

2006 at 1:15 P.M., which date began the three-month period for the issuance of this

determination. Petitioner appeared pro se. The Division of Taxation appeared by Mark F. Volk,

Esq. (Susan Parker).

                                             ISSUE

      Whether the Division of Taxation may be compelled to accept petitioner’s offer in

compromise of two assessments.
                                                      -2­


                                         FINDINGS OF FACT

          1. The Division of Taxation (“Division”) issued a Notice of Additional Tax Due dated

    August 2, 1999 to petitioner, asserting a balance due totaling $33,038.76 for 1988 consisting of

    the following:

                          Tax due        Interest due        Penalty due   Payments/    Balance Due
                                                                            Credits
1988 NY State          $ 7,822.45       $ 9,525.71          $ 6,232.76     $0.00        $23,580.92
personal income tax
1988 NY City             3,137.30          3,820.42          2,500.12       0.00          9,457.84
personal income tax
Totals                 $10,959.75       $13,346.13          $8,732.88       0.00        $33,038.76

    The notice provided the following explanation:

           This deficiency is based on your failure to report Federal audit changes to New
           York State. We have been notified of these changes by the Internal Revenue
           Service under authorization of the Internal Revenue Code.

    The Internal Revenue Service (“IRS”) had increased petitioner’s reported Federal adjusted gross

    income of $20,863.00 for 1988 by $94,015.00, resulting in a corrected amount for Federal

    adjusted gross income of $114,878.00. Consequently, the Division increased petitioner’s New

    York adjusted gross income for 1988 by a similar amount.

          2. The Division also issued a Notice of Additional Tax Due dated August 2, 1999 to

    petitioner, asserting a balance due totaling $28,429.89 for 1989 consisting of the following:

                           Tax due       Interest due        Penalty due   Payment/     Balance Due
                                                                            Credits
1989 NY State           $ 7,607.60      $ 7,828.70          $ 4,509.45     $0.00        $19,945.84
personal income tax
1989 NY City              3,235.97         3,329.98           1,918.10      0.00          8,484.05
personal income tax
Totals                  $10,843.66      $11,158.68          $ 6,427.55      0.00        $28,429.89
                                                    -3­


   This notice included the same explanation as provided in the notice for 1988 detailed in Finding

   of Fact “1”. The IRS had increased petitioner’s reported Federal adjusted gross income for 1989

   of $30,758.00 by $96,300.00, resulting in a corrected amount for Federal adjusted gross income

   of $127,058.00. Consequently, the Division increased petitioner’s New York adjusted gross

   income for 1989 by a similar amount.

         3. A Consolidated Statement of Tax Liabilities dated January 5, 2005 and issued to

   petitioner shows that interest and penalty has continued to accrue resulting in a current balance

   due greater than the amounts shown above, despite various payments made by petitioner on the

   assessment for 1988. This consolidated statement shows a total current balance due totaling

   $65,302.42 consisting of the following:

                             Tax due       Interest due   Penalty due      Payments/     Balance due
                                                                            Credits
1988 NY State and City     $10,959.75     $23,562.04      $10,194.68      $22,717.94     $21,998.53
personal income tax
1999 NY State and City      10,843.66      23,564.15         9,396.08         500.00      43,303.89
personal income tax
Total balance due                                                                        $65,302.42

         4. As part of the New York State 2002-2003 budget, a tax amnesty program was

   authorized (L 2002, ch 85, Pt. R). Under terms of this amnesty legislation, applicants accepted

   into the program were required to pay their outstanding tax liability, but penalties were waived,

   and the interest rate on the outstanding tax liability was calculated at a rate that was reduced two

   percentage points from the preamnesty level. This amnesty program applied to tax liabilities for

   taxable periods ending or transactions or uses occurring on or before December 31, 2000, which

   covered the years at issue here. The amnesty period began on November 18, 2002 and ended on

   January 31, 2003 with payment required by March 15, 2003. Petitioner, who was eligible for
                                                 -4­


amnesty, would have been able to satisfy the assessments at issue by a payment in the amount of

$35,539.99 representing a savings in penalty and interest of $31,051.07 as of December 12,

2002. Unfortunately, petitioner contends she did not have the financial resources at the time to

take advantage of the amnesty program.

       5. Subsequently, petitioner, who owns two pieces of real property (a two-family house in

Brooklyn at 819 East 36th Street as well as her current residence in Matawan, New Jersey), built

equity in her real estate as a result of the appreciation of real estate values in the New York City

metropolitan area in the past few years. Utilizing such appreciation, she has reached an

agreement with the IRS to satisfy her outstanding Federal personal income tax deficiency for the

two years at issue. The IRS has agreed to her offer in compromise in the amount of

$181,000.00. In contrast the Division has rejected petitioner’s offer in compromise in the

amount of $30,000.00. By a letter dated December 13, 2004, the special Offer in Compromise

unit within the Tax Compliance Division provided the following explanation, in relevant part,

for its rejection:

              Our Offer in Compromise (OIC) program is a way for financially distressed
        taxpayers to put overwhelming tax liabilities behind them by paying a reasonable
        amount in compromise. This is not to say every offer in compromise received by
        the Department will be accepted . . . . The Tax Law [§ 171(15)] requires that
        taxpayers fulfill two separate criteria:

              1. Taxpayers must be discharged from bankruptcy or shown by proof to be
        insolvent and

              2. The amount offered must exceed the amount which could be collected
        through legal proceedings.

               . . . I regret to inform you that we have determined we cannot approve your
        offer. The equity in your assets far exceeds the amount of your offer.
        Specifically, you have equity in your residence of approximately $176,246.00. In
        addition, real property located at 819 East 35th Street, Brooklyn, New York which
        you are in the process of transferring to your children for less than the fair market
        value has equity of approximately $190,516.00. Therefore, we feel that
                                                 -5­


       acceptance of your offer would not be in the best interest of the State of New
       York.

                                  CONCLUSIONS OF LAW

      A. The jurisdiction of the Division of Tax Appeals is limited by statute. Tax Law § 2008

provides, in relevant part, that a taxpayer may commence a proceeding in the Division of Tax

Appeals to protest a notice “which gives a person the right to a hearing in the division of tax

appeals under this chapter [Chapter 60 of the Consolidated Laws of New York] or other law.”

There is no statutory right to a hearing in the Division of Tax Appeals provided to a taxpayer

who seeks to challenge the rejection by the Division of Taxation, acting on behalf of the

Commissioner, of an offer in compromise (see, Matter of Williams, Tax Appeals Tribunal,

September 1, 1994 [wherein the Tribunal noted it “lacks statutory authority to accept or even

consider” an offer in compromise made by a taxpayer when he took an exception to an adverse

determination of an administrative law judge and requested that a Notice of Deficiency be set

aside by the Tribunal on its review]). In short, the Division of Tax Appeals simply lacks

authority to consider whether the Commissioner should have accepted petitioner’s offer in

compromise. As a result, the Division of Taxation’s letter dated December 13, 2004 rejecting

petitioner’s offer to compromise her tax liability for the years at issue, with a payment of

$30,000.00, may not be the subject of review in the Division of Tax Appeals.

      B. The petition of Lois P. Grosvenor dated October 2, 2005 is denied.

DATED:	 Troy, New York
        February 15, 2007


                                                  /s/ Frank W. Barrie
                                                  PRESIDING OFFICER

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:23
posted:8/12/2011
language:English
pages:5