Blodnick v. New York State Tax Com'n
| Citation | 507 N.Y.S.2d 536,124 A.D.2d 437 |
| Parties | In the Matter of Janice BLODNICK et al., Petitioners, v. NEW YORK STATE TAX COMMISSION, Respondent. |
| Decision Date | 30 October 1986 |
| Court | New York Supreme Court — Appellate Division |
Tobin & Dempf (John W. Clark, of counsel), Albany, for petitioners.
Robert Abrams, Atty. Gen. (Wayne L. Benjamin, of counsel), Albany, for respondent.
Before MAIN, J.P., and CASEY, WEISS, LEVINE and HARVEY, JJ.
MAIN, Justice Presiding.
Proceeding pursuant to CPLR article 78 () to review a determination of respondent which sustained a sales and use tax assessment imposed under Tax Law articles 28 and 29.
In this CPLR article 78 proceeding, petitioners, the sole officers and shareholders of Precision Maintenance Corporation, contend that they were improperly assessed sales and use taxes because (1) they were not persons required to collect such taxes, (2) the basis for the field audit conducted by the Audit Division of the Department of Taxation and Finance was never established, and (3) respondent engaged in inordinate administrative delay in reviewing the assessment. With regard to the first point, it is petitioners' contention that they are but "nominal" officers of the corporation, having no responsibility for its day-to-day operation or its financial affairs. While we agree that "the holding of corporate office does not, per se, impose [tax] liability upon the officeholder" (Chevlowe v. Koerner, 95 Misc.2d 388, 392, 407 N.Y.S.2d 427; accord, Vogel v. New York State Dept. of Taxation & Fin., 98 Misc.2d 222, 224, 413 N.Y.S.2d 862), we do not agree that respondent improperly assessed petitioners.
The Tax Law imposes personal liability for taxes required to be collected under Tax Law article 28 upon a person required to collect such tax (Tax Law § 1133[a] ). A person required to collect such tax is defined as "any officer, director or employee of a corporation * * * who as such officer, director or employee is under a duty to act for such corporation * * * in complying with any requirement of [article 28]" (Tax Law § 1131[1] ). Pertinent inquiries in determining whether a person has such a duty to act for the corporation include, inter alia, authorization to sign the corporate tax return, responsibility for management or maintenance of the corporate books, authorization to hire or fire employees, derivation of substantial income from the corporation or stock ownership (see, 20 NYCRR 526.11[b][2]; Matter of Rosenblatt v. New York State Tax Commn., 114 A.D.2d 127, 131, 498 N.Y.S.2d 529, revd. in part on dissenting opn. below, 68 N.Y.2d 775, 506 N.Y.S.2d 675, 498 N.E.2d 148; Matter of Capoccia v. New York State Tax Commn., 105 A.D.2d 528, 529, 481 N.Y.S.2d 476). Here, the only officers and shareholders of the corporation, otherwise unemployed outside their homes, completely ignored their corporation, demonstrating a complete dereliction of their duties. Indeed, it appears that petitioners were even unaware of the location of their corporate offices. This court has noted that "corporate officials responsible as fiduciaries for tax revenues cannot absolve themselves merely by disregarding their duty and leaving it to someone else to discharge" (Matter of Ragonesi v. New York State Tax Commn., 88 A.D.2d 707, 708, 451 N.Y.S.2d 301; accord, Matter of Capoccia v. New York State Tax Commn., supra ). Given petitioners' positions as the sole officers and shareholders of the corporation, together with the fact that they were unable to relate who, if not they, was responsible for collection of taxes, respondent's finding that petitioners were the correct parties for assessment of taxes was neither arbitrary nor capricious. The fact that petitioners did not in fact exercise their responsibilities is irrelevant.
We next note that, contrary to petitioners' assertions, the Audit Division is not responsible for demonstrating the...
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