People v. Christie
| Decision Date | 18 June 1986 |
| Citation | 133 Misc.2d 468,505 N.Y.S.2d 310 |
| Parties | The PEOPLE of the State of New York v. Aliki CHRISTIE, Barbara Christie, Constantino Christie, Phillip Christie, Terry Christie and Christie Brothers, Inc., Defendants. |
| Court | New York Supreme Court |
Robert Abrams, Atty. Gen., Diane Peress, Asst. Atty. Gen., of counsel, for the people.
Shea & Gould, New York City, Caryn G. Carvo, of counsel, for defendants.
The defendant New York corporation is owned and run by the individual defendants for the retail sale of luxury furs from a location in the County of New York. The indictment charges the defendants with conspiracy (Penal Law § 105.05, subd. 1) to falsify business records of the corporation, and with falsification of such records (Penal Law § 175.10) in order to conceal the commission of the crime of offering false sales tax returns for filing (Penal Law § 175.35). This alleged scheme is based upon the false use of out-of-State addresses purported to be the shipping destination of furs actually sold and carried from the premises in order to avoid the sales tax that is imposed on local retail transactions.
The evidence before the grand jury viewed most favorably to the People (People v. Warner-Lambert Co., 51 N.Y.2d 295, 304, 434 N.Y.S.2d 159, 414 N.E.2d 660 [1980] ) established that in the course of their retail fur trade, the defendants would solicit out-of-State addresses from customers as a means of encouraging purchases by discounting the amount of sales tax that would ordinarily be owed on an intrastate transaction (Tax L. §§ 1131, subd. 4; 20 NYCRR § 527.1, subd. 6). The evidence further established that the defendants would solicit old cloth coats or other heavy items from customers to mail to out-of-State addresses in place of the furs that the customers would take with them from the premises. In order to disguise this practice in sales records, the defendants or others at their direction, would substitute on invoices as the true purchaser the name and address of the out-of-State recipient of the substituted item. Consequently, the invoice, bill or receipt would not reflect (as the law required) that the transaction was subject to sales tax in a specified amount (Tax L. § 1132[a]; Tax L. former § 1145[b], repealed L.1985 c. 65 § 33; Tax L. § 1817[g][2] [new] ). The fictitious purchaser, address and purported tax exemption would then be recorded on the books of the corporation subject to examination by tax auditors. The excluded sales would result in a knowing underreporting of the gross sales subject to taxation on the corporation's quarterly sales tax returns (Tax L. § 1136).
Consequently, the indictment charges, with respect to each of 164 sales that the defendants made in which the invoice was completed as described, that there was a false entry of the address of the purchaser (counts 1-164); an omission to enter the sales tax owed in violation of a duty imposed by law (counts 165-328); the omission of a true entry of the actual address of the purchaser (counts 329-492); and the
entry of false addresses and unwarranted sales tax exemptions on the corporate ledger subject to inspection by tax auditors (counts 493-656). These are the counts of falsifying business records (Penal Law § 175.05, subds. 1, 3, 4) raised to the first degree (Penal Law § 175.10) by the alleged intent to defraud the State of sales tax revenue by concealing commission of the crimes of willfully failing to collect sales tax (Tax L. former § 1145 [b] ) and of offering false sales tax returns for filing (Penal Law § 175.35) (Counts 657-671).
The court does not find the legislative distinction between taxpayers whose delinquencies came to light before the effective date of the amnesty statute (L.1985 ch. 66 § 1) and those whose delinquencies were revealed only in exchange for amnesty violative of equal protection of the law to those taxpayers who were excluded from the benefits of amnesty.
In April, 1985, the State legislature granted to the State tax commission authority to establish "a three month amnesty program to be effective during the fiscal year ending March thirty-first, nineteen hundred eighty-six," which would exempt "from civil, administrative or criminal action" taxpayers, (including corporations employing fewer than five hundred people in the United States), who had incurred tax liabilities for "transactions ... occurring prior to January first, nineteen hundred eighty-five". (L.1985 ch. 66 § 1[a], [b] ). Amnesty was made conditional upon the completion of a written application by the taxpayer designating the taxes and taxable period for which exemption was sought, and upon payment in full of all such taxes and interest accrued. The enactment excluded "any taxpayer who is a party to any criminal investigation being conducted by an agency of the state or any political subdivision thereof or to ... criminal litigation which is pending on the date of the taxpayer's application in any court ... for nonpayment, delinquency or fraud in relation to any of the designated taxes ..." (L.1985, ch. 66 § 1[c] ). The tax commission decided to implement the amnesty during the period November 1, 1985 until January 31, 1986. Taxpayers who filed for amnesty prior to November 1 were processed as if they had applied on the first day. In publications issued by the commission, in news releases, and on the amnesty application form itself, applicants were advised that "tax liabilities related to a criminal investigation in progress ..., to a pending criminal proceeding, or resulting in a criminal conviction" were not covered and that as to such liabilities taxpayers were ineligible.
Regulations adopted by the commission provided for compilation of a confidential list of taxpayers ineligible because they were under criminal investigation relating directly to any covered taxes, and for a mechanism by which potential applicants could learn whether they were under investigation and, hence, ineligible. (20 NYCRR § 2500.4 [b][1].) An applicant was required to certify eligibility for amnesty in accordance with these conditions. In the event an applicant was rejected as being subject to criminal investigation, the regulations provided that upon a subsequent finding of no criminal liability the applicant could resubmit the application for amnesty from civil penalties. (20 NYCRR § 2500.4 [b][4][iii].) A taxpayer against whom an indictment had been filed as of the date of the application was deemed ineligible for amnesty altogether, apparently regardless of the outcome of the criminal proceeding, and continues to be liable for civil penalties in spite of timely application and subsequent acquittal. (20 NYCRR § 2500.4 [c].)
There is no dispute that the defendants were under investigation for failure to collect or remit sales tax on the transactions at issue here, as of the date the amnesty statute was enacted. The grand jury began hearing evidence on these allegations in July, 1985 and the instant indictment was filed on August 5, 1985 or three months prior to the effective date of the amnesty program. Hence the defendants were specifically excluded by the statute The defendants now contend that the statutory exclusion of tax liabilities under criminal investigation, and the regulatory exclusion of taxpayers under indictment as to such liabilities prior to the effective date of the program, created a distinction based upon the assertedly fortuitous circumstance of when the taxpayer's delinquencies became known to the authorities. Before considering this argument, it is important to note that insofar as the criminal prosecution is the only proceeding before this court, there is no issue here regarding the distinction between taxpayers under investigation and those under indictment, as to continued eligibility for amnesty from civil penalties in the event of acquittal.
from the benefits of amnesty from criminal prosecution and, by regulation, from amnesty for civil penalties. In December 1985 the defendants nonetheless certified their eligibility for amnesty and paid almost $90,000 in sales tax and interest accrued from June 1980 through February 1984. In accordance with tax commission regulations, the payment was accepted "as if ... received apart from an amnesty application" (20 NYCRR § 2500.4 [c][3][ii] ).
The defendants contend that granting amnesty only to those taxpayers whose delinquencies were unknown until revealed in their applications bears no relation to the State's objective to raise revenue or, if it does bear some relation, it is the same with regard to taxpayers whose delinquencies are under investigation. Specifically, the defendants assert that if the objective is to induce payment by an exchange of amnesty from prosecution, then the inducement is equally compelling to anyone who has not been convicted, and that to distinguish those whose delinquencies came to light before the effective date of the program from those whose delinquencies were discovered subsequently, is arbitrary and a violation of the equal protection of law to those who are excluded. (U.S.Cons.Amdt. XIV; N.Y.Cons. Art. I Sec. 11). The argument, in short, is that the statutory classification of those eligible for amnesty is underinclusive. (See, e.g., LaFave & Scott, Criminal Law, 1972 ed., ch. 2 § 19 "Equal Protection" p. 132). The defendants seek to have the benefit of the amnesty program extended to all taxpayers who complied with the disclosure and payment conditions, regardless of their status as targets of an investigation or grand jury proceeding, or as defendants under a pending indictment for violating the tax laws. (Compare, People v. Liberta, 64 N.Y.2d 152, 170-171, 485 N.Y.S.2d 207, 474 N.E.2d 567 [1984] ).
The nature of the classification alone does not violate equal protection standards. The classification is neither based upon suspect criteria nor is there any...
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Latimer v. Lake Cnty. Treasurer (In re Latimer)
...Indiana's ‘Tax Amnesty’: What Every Indiana Taxpayer Should Know, 49–Aug. Res Gestae 9; See e.g., State of New York v. Christie, et al., 133 Misc.2d 468, 505 N.Y.S.2d 310, 314 (1986).11 U.S.C. § 108(b) is designed to apply when there is a time limit set for doing a certain act, such as fili......