Atlas Van Lines, Inc. v. Tax Appeals Tribunal of State

• Decision Date: 23 October 2014
• Docket Number: 516631
• Citation: 2014 N.Y. Slip Op. 07219,123 A.D.3d 168,995 N.Y.S.2d 629
• Parties: In the Matter of ATLAS VAN LINES, INC., Petitioner, v. TAX APPEALS TRIBUNAL OF the STATE OF NEW YORK et al., Respondents.
• Court: New York Supreme Court — Appellate Division

123 A.D.3d 168

995 N.Y.S.2d 629

2014 N.Y. Slip Op. 07219

In the Matter of ATLAS VAN LINES, INC., Petitioner

v.TAX APPEALS TRIBUNAL OF the STATE OF NEW YORK et al., Respondents.

516631

Supreme Court, Appellate Division, Third Department, New York.

Oct. 23, 2014.

Bond, Schoeneck & King, PLLC, Albany (Arthur Siegel of counsel), for petitioner.

Eric T. Schneiderman, Attorney General, Albany (Robert M. Goldfarb of counsel), for respondents.

Before: STEIN, J.P., McCARTHY, EGAN JR., LYNCH and CLARK, JJ.

Opinion

EGAN JR., J.

Proceeding pursuant to CPLR article 78 (initiated in this Court pursuant to Tax Law § 2016 ) to review a determination of respondent Tax Appeals Tribunal which sustained a highway use tax assessment imposed under Tax Law article 21.

Petitioner is a motor carrier registered by the Federal Motor Carrier Safety Administration and, at all times relevant, was engaged in the interstate transportation of household goods and other property for a fee. To that end, petitioner's federal registration vested it with the authority to transport shipments of such goods either through New York, from points outside New York into the state or from New York to points outside the state (see 49 §§ U.S.C. 13501[1][A], [B]; 13901). This proceeding concerns the taxability of certain of petitioner's interstate shipments of household goods during the audit period at issue. Before addressing the particulars of this dispute, however, a review of the relevant state and federal provisions governing the definition of household goods and the taxability of such shipments is in order.

Insofar as is relevant here, Tax Law § 503(1) imposes “a highway use tax for the privilege of operating any vehicular unit upon the public highways of this state and for the purpose of recompensing the state for the public expenditures incurred by reason of the operations of such vehicular units on the public highways [there]of.” Tax Law § 504(5), however, exempts from such tax any vehicular unit “[u]sed exclusively in the transportation of household goods (as defined by the commissioner of transportation of this state or the interstate commerce commission) by a carrier under authority of the commissioner of transportation of this state or of the interstate commerce commission.”

Prior to January 1, 1996, for purposes of regulation by the now defunct Interstate Commerce Commission (hereinafter ICC), federal law defined “household goods” as including—subject to certain enumerated exceptions—three distinct categories: “personal effects and property used or to be used in a dwelling when a part of the equipment or supply of such dwelling,” “furniture, fixtures, equipment, and the property of stores, offices, museums, institutions, hospitals or other establishments when a part of the stock, equipment, or supply of such stores, offices, museums, institutions, hospitals, or other establishments” and “articles, including objects of art, displays, and exhibits, which because of their unusual nature or value require the specialized handling and equipment usually employed in moving household goods” (Household Goods Transportation Act of 1980, former 49 U.S.C. § 10102 [10][A], [B], [C], as added by Pub. L. 96–454, 94 U.S. Stat. 2011). In 1983, the Legislature adopted a definition of household goods that mirrored that previously promulgated by Congress (see Transportation Law § 2[15][a], [b], [c], as added by L. 1983, ch. 635, § 1)—an enactment designed to ensure compatibility with then-existing federal law (see Mem. of State Exec. Dept., 1983 McKinney's Session Laws of N.Y. at 2650). The state and federal definitions of household goods thereafter existed in harmony until Congress enacted the Interstate Commerce Commission Termination Act of 1995 (hereinafter ICCTA) (Pub. L. 104–88, 109 U.S. Stat. 803, eff. Jan. 1, 1996), abolishing the ICC and, insofar as is relevant here, eliminating two of the three categories of household goods. Going forward, the federal definition of household goods included only “personal effects and property used or to be used in a dwelling, when a part of the equipment or supply of such dwelling, and similar property if the transportation of such effects or property is ... arranged and paid for by the householder, including transportation of property from a factory or store when the property is purchased by the householder with the intent to use in his or her dwelling, or ... arranged and paid for by another party” (former 49 U.S.C. § 13102[10][A], [B] ),¹ thereby placing the federal definition of household goods at odds with that contained in Transportation Law § 2(15)(b) and (c).

Following the enactment of the ICCTA, the then Commissioner of Transportation notified state-regulated carriers that federal law now preempted the Department of Transportation (hereinafter DOT) from including in its definition of household goods the items described in Transportation Law § 2(15)(b) and (c) —commonly referred to as commercial shipments and shipments requiring the care and handling normally associated with the moving of household goods, respectively—and that, henceforth, the transportation of such goods would constitute the transportation of “property.” The Commissioner's notice was accompanied by an administrative order to that effect but, in the years that followed, no effort was made to expressly repeal or amend Transportation Law § 2(15)(b) or (c) to bring such provisions into accord with either federal law or the DOT's interpretation thereof.

In the context of the proceeding now before us, the Audit Division of the Department of Taxation and Finance audited petitioner's records for the period from August 1, 1998 to April 30, 2003 and, in the course thereof, consulted with DOT to ascertain the proper definition of household goods for purposes of the exemption set forth in Tax Law § 504(5). DOT, in turn, held to the position that the ICCTA preempted Transportation Law § 2(15)(b) and (c) and, therefore, only those items set forth in Transportation Law § 2(15)(a) qualified as household goods. Based upon DOT's analysis, the Division concluded that petitioner had claimed certain exemptions from the highway use tax to which it was not entitled and issued notices of determination.²

During the relevant time period, petitioner utilized five commodity code definitions to describe the items it transported and to determine the taxability thereof for purposes of the highway use tax imposed under Tax Law § 503(1). Ultimately, the Division and petitioner entered into a stipulation, wherein it was agreed that petitioner's commodity code 1 shipments qualified for the exemption set forth in Tax Law § 504(5), while those shipments classified under commodity codes 4 and 5 did not so qualify. Accordingly, the dispute distilled to whether petitioner's shipments of items described in commodity codes 2 and 3 qualified for the household goods exemption.³

Petitioner waived a hearing and agreed to have the dispute resolved upon documentary submissions. After an Administrative Law Judge upheld the notices of determination, petitioner filed exceptions—contending that it was entitled to the requested exemption. Respondent Tax Appeals Tribunal sustained the notices of determination, prompting petitioner to commence this proceeding pursuant to Tax Law § 2016 to challenge the Tribunal's determination.

“It is well settled that [s]tatutes creating tax exemptions must be construed against the taxpayer, and the taxpayer, in turn, bears the burden of establishing that the requested exemption applies. To that end, it is not sufficient for the taxpayer to establish that its construction of the underlying statute is plausible; rather, the taxpayer must demonstrate that its interpretation of the statute ... is the only reasonable construction” (Matter of 677 New Loudon Corp. v. State of N.Y. Tax Appeals Trib., 85 A.D.3d 1341, 1342 [2011], affd. 19 N.Y.3d 1058 [955 N.Y.S.2d 795, 979 N.E.2d 1121] [2012], cert. denied ––– U.S. ––––, 134 S.Ct. 422 [2013] [internal quotation marks and citations omitted]; see Matter of Piccolo v. New York State Tax Appeals Trib., 108 A.D.3d 107, 111–112 [2013] ; Matter of Stevenson v. New York State Tax Appeals Trib., 106 A.D.3d 1146, 1147 [2013] ).

Based upon our review of the record, we cannot say that petitioner discharged that burden here. Accordingly, the Tribunal's determination is confirmed.

Initially, we reject petitioner's contention that it is entitled to the exemption set forth in Tax Law § 504(5) so long as it is able to demonstrate that it transported household goods within the meaning of Transportation Law § 2(15) —regardless of the impact of the ICCTA and the subsequent change in the definition of household goods under federal law. As noted previously, Tax Law § 504(5) exempts from the highway use tax otherwise imposed any vehicular unit “[u]sed exclusively in the transportation of household goods (as defined by the commissioner of transportation of this state or the interstate commerce commission) by a carrier under authority of the commissioner of transportation of this state or of the interstate commerce commission.” Once the ICC was abolished in 1996, petitioner's argument continues, the term household goods was—according to the plain language of Tax Law § 504(5) —defined exclusively by reference to Transportation Law § 2(15) ; therefore, petitioner's shipments bearing commodity codes 2 and 3, which generally correspond with the definition of household goods set forth in Transportation Law § 2(15)(b) and (c), are entitled to the subject exemption.

The flaw in petitioner's argument on this point is twofold. First, petitioner overlooks the fact that, despite indeed being subject to certain DOT rules and regulations governing, among other things, safety issues (see 49 U.S.C. § 14501 [a][2]; [c][2][A] ), petitioner remains a federally registered interstate motor carrier and, with respect to the transportation of household goods, is subject to the...