Daily Archives: March 25, 2010

Declaratory Relief Against NYS Department of Taxation & Finance in State Supreme Court

Tax disputes involving New York State are normally adjudicated in the New York State administrative tax tribunals. A “conciliation conference,” presided over by a “conferree” who is actually an employee of the Department of Taxation, usually commences the pas de deux. From there, the taxpayer may seek a hearing before an administrative law judge in the Division of Tax Appeals. An exception to an adverse decision by the ALJ may be taken to the Tax Appeals Tribunal. If the taxpayer loses, he may roll the dice again and appeal to the Appellate Division, Third Department, in Albany via an Article 78 proceeding. Leave to appeal to the Court of Appeals, rarely granted, may be sought if the taxpayer in the Appellate Division. In recent years, the U.S. Supreme Court has granted certiorari to relatively few petitioners involving substantive state tax issues. Continue reading

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Asset Protection for Professionals

Asset protection is best implemented before a creditor — judgment or otherwise — appears, since a transfer made with the intent to hinder, delay or defraud a creditor may be deemed a “fraudulent conveyance” subject to rescission. Asset protection may consist of simply gifting or consuming the asset. Continue reading

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IRS Collections: Defensive Measures

A taxpayer facing IRS collection should initially determine whether the assessment was timely or whether the 10-year collection period will soon expire. Collections may not proceed if the statute of limitations on assessment was time-barred. Agreeing to extend the statute of limitations on assessment or collection, even if immediate assessment or enforcement action will otherwise is threatened, is not always advantageous. One reason is that interest well above the prime rate will continue to accrue. Continue reading

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Northern District Finds Successive Tax Penalties Imposed by NYS-AG and NYS-DTF to be Unconstitutional

Finding that Tax Law § 481(1)(b)(i) effectively operates as a criminal penalty, the Northern District  held that the assessment of a tax penalty by the Department of Taxation and Finance under § 481(1)(b)(i) following the taxpayer’s previous prosecution and conviction … Continue reading

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The Tax Appeals tribunal sits as the final administrative tax tribunal. A CPLR Article 78 proceeding is the “dotted line” in the flowchart that brings the tax dispute out of administrative tribunal system and into the New York judicial court system. From a tax petitioner’s standpoint, Article 78 is far from perfect: it possesses treacherous statutes of limitations, it is inherently capable of providing only narrowly circumscribed relief, and it imposes onerous bonding requirements. Still, like the Spirit of St. Louis, Article 78 will at least take the taxpayer into the courtroom of the Appellate Division, where counsel may be able to convince the Court of reversible error below.
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Defeating The Right of Election in EPTL § 5-1.1-A

Under Estates, Powers & Trusts Law (EPTL) § 5-1.1-A, a surviving spouse has a right to elect against the Will of a predeceasing spouse. The elective share is one-third of the net estate. The net estate consists of the net probate assets as well as testamentary substitutes. [EPTL § 4-1.1 provides that if the decedent dies intestate and is survived by a spouse and issue, the spouse takes $50,000 plus one-half of the residue; if there are no surviving issue, the spouse takes the entire estate.] Continue reading

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IRS Criminal Investigations

The IRS reserves the threat of incarceration for taxpayers it believes are guilty of tax evasion, failure to file, or making false statements. About 3,500 cases commenced by the Criminal Investigation Division (CID) each year result in prosecution. CID generally focuses on cases having a high deterrent value. Continue reading

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