Ouziel v. State

Decision Date23 October 1997
Docket NumberNo. M-55836,M-55836
Citation667 N.Y.S.2d 872,174 Misc.2d 900
Parties, 1997 N.Y. Slip Op. 97,657 Bernard OUZIEL, Movant, v. STATE of New York, Defendant. Motion
CourtNew York Court of Claims

Bernard Ouziel, Great Neck, movant pro se.

Dennis C. Vacco, Attorney General (Risa L. Viglucci, Albany, of counsel), for defendant.

FRANCIS T. COLLINS, Judge.

The application of movant for an order pursuant to subdivision 6 of section 10 of the Court of Claims Act permitting him to serve a late claim is denied.

The proposed claim 1 alleges that on October 17, 1996 the New York State Department of Taxation and Finance levied against movant's bank account and was paid therefrom the sum of $22,361.46. The levy was made pursuant to a determination by the Department that movant was a responsible person of 92-73 Queens Blvd. Car Wash, Inc., which corporation failed to timely pay sales taxes. Pursuant to an amnesty program the total sum claimed was later reduced to $19,967.72, plus interest. Movant alleges that he was not an officer or responsible person of the corporation.

The record before the Court discloses that notices of determination of taxes due were issued to movant on January 9, 1995. On May 3, 1995, movant wrote to the Tax Compliance Division stating that while he was a shareholder of the corporation, he was not an officer. Movant recited in the letter that the corporation had failed to file sales tax returns for two years. Movant requested that the demands against him be withdrawn since he was not a person responsible for the collection of sales taxes by the corporation. On October 7, 1995, movant wrote to the Department requesting that his letter be considered a notice of appeal. That request was repeated in a letter of December 15, 1995. On January 13, 1997, movant requested a conciliation conference. In an order issued on March 7, 1997, the Department denied the request for a conciliation conference in the following language:

The Tax Law requires that a request be filed within 90 days from the date of the statutory notice. Since the notices were issued on January 9, 1995, but the request was not received until January 16, 1997, or in excess of 90 days, the request is late filed.

The request filed for a Conciliation Conference is denied.

Movant asserts that during June of 1997 he was advised by someone from the Attorney General's office that his only recourse was to file a claim in this Court. This motion ensued.

The Attorney General opposes the application, contending that: movant has failed to offer any valid excuse for his delay in filing; movant has failed to exhaust his administrative remedies; movant's judicial remedy is an Article 78 proceeding before the Appellate Division of the Third Judicial Department; movant has failed to petition the Division of Tax Appeals for a review within 90 days of the March 7, 1997 denial of his request for a conciliation conference; this Court lacks subject matter jurisdiction as it has no authority to review administrative decisions; estoppel is not available against the State; and this claim is premature.

Section 1133 of the Tax Law provides that every person responsible for the collection of sales and use taxes imposed by Article 28 of the Tax Law is personally responsible for the payment of such taxes. Thus, a corporate officer or employee responsible for the collection of sales taxes on behalf of the corporation can be compelled personally to pay such taxes if the corporation fails to file tax returns (Massa v. New York Tax Com'n, 102 A.D.2d 968, 477 N.Y.S.2d 838). Pursuant to Tax Law § 1138(a)(3)(B) the Commissioner shall determine the amount of sales tax owed by a responsible person when the corporation has failed to file a return or pay its taxes. The Department issues a determination to the responsible individual, and the statute provides, "Such determination shall finally and irrevocably fix the tax and liability for the tax with respect to such person unless such person, within ninety days after the giving of notice of such determination, shall apply to the tax commission for a hearing". Here, Exhibit B of the proposed claim sets forth that the notices of determination that movant was responsible for the payment of the corporation's sales taxes were issued on January 9, 1995. The first request by movant for a hearing contained in this record is his letter of October 7, 1995, a date well past the 90-day time frame. Had movant timely pursued his administrative tax appeal he could have obtained review of any adverse determination by way of an Article 78 proceeding commenced in the Appellate Division of the Third Judicial Department within four months of being notified of the adverse determination (Tax Law § 2016; Matter of Waite v. Tax Appeals Tribunal of the State of New York, 225 A.D.2d 962, 639 N.Y.S.2d 584; Matter of Hopper v. Commissioner of Taxation and Finance, 224 A.D.2d 733, 637 N.Y.S.2d 494; Matter of Landau v. Tax Appeals Tribunal of the State of New York, 214 A.D.2d 857, 625 N.Y.S.2d 343). Movant did not timely pursue his administrative remedy and any Article 78 proceeding he now attempts to commence will be dismissed as time barred by the four-month statute of limitations (Matter of M. Parpis Food Distributors Inc. v. Wetzler, 202 A.D.2d 873, 609 N.Y.S.2d 444).

In addition to the previously discussed administrative and Article 78 remedies, movant had available to him another avenue of judicial review. Many taxpayers attempting to challenge an assessment are confronted with the requirement set forth in Tax Law § 1138(a)(4) that before judicial review can be instituted the amount of the tax sought to be reviewed, with penalties and interest, must first be deposited with the Commissioner of Taxation or an undertaking in an amount approved by a Supreme Court Justice be filed with the Commissioner of Taxation and Finance. Just such a circumstance confronted the plaintiff in the case of Horner v. State of New York, 125 Misc.2d 1, 478 N.Y.S.2d 467, affd. 107 A.D.2d 64, 485 N.Y.S.2d 595 (see also, Two Twenty East Limited Partnership v. New York State Dept. of Tax. and Fin., 185 A.D.2d 202, 586 N.Y.S.2d 596). Horner was a shareholder of PJG Gasoline, Inc., the operator of a gasoline service station. PJG failed to pay its sales tax for the period of June of 1978 through August of 1983. The Department of Taxation and Finance issued two assessment notices addressed to Horner demanding payment of $185,619.65. Plaintiff commenced a declaratory judgment action seeking a ruling that he was not a person responsible for the collection of sales taxes on behalf of the corporation. The defendant argued that the action had to be dismissed as Horner's only remedy was an Article 78 proceeding brought after paying the taxes assessed or the giving of an undertaking. Mr. Justice Hughes rejected that position, holding that Horner could pursue his declaratory judgment action without first paying the taxes or posting an undertaking. Movant could have pursued a similar remedy. However, his declaratory judgment action would have had to have been commenced within four months of April 10, 1995 in order to be timely, as he could have obtained relief by way of an Article 78 proceeding (Heron v. Div. of Tax. of Dept. of Tax. and Fin., 209 A.D.2d 989, 619 N.Y.S.2d 454; Matter of Morania Oil Tanker Corp. v. State Tax Comm., 1985 WL 193047, affd. 103 A.D.2d 965, 479 N.Y.S.2d 810).

The Court is confronted with a litigant who chose not to pursue the Article 78 remedy created by the Legislature or the declaratory judgment redress created by the courts and instead requests that this Court determine that it has the jurisdiction to annul the administrative determination of the Commissioner and award movant money damages. Complicating the equation is the fact that movant failed to timely pursue a claim and seeks relief under Court of Claims Act § 10(6).

Subdivision (6) of § 10 of the Court of Claims Act permits this Court, if the applicable statute of limitations set forth in Article 2 of the CPLR has not expired, to allow the filing of a late claim upon consideration of the following factors: "whether the delay in filing the claim was excusable; whether the state had notice of the essential facts constituting the claim; whether the state had an opportunity to investigate the circumstances underlying the claim; whether the claim appears to be meritorious; whether the failure to file or serve upon the attorney general a timely claim or to serve upon the attorney general a notice of intention resulted in substantial prejudice to the state; and whether the claimant has any other available remedy". This Court has broad discretion in deciding a motion to permit the late filing of a claim (Ledet v. State of New York, 207 A.D.2d 965, 616 N.Y.S.2d 831), and the statutory factors are not exhaustive or one factor...

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