Revere v. Comm'r of Taxation and Finance
| Decision Date | 15 July 2010 |
| Parties | In the Matter of Terrence REVERE et al., Petitioners, v. COMMISSIONER OF TAXATION AND FINANCE et al., Respondents. |
| Court | New York Supreme Court — Appellate Division |
75 A.D.3d 860
In the Matter of Terrence REVERE et al., Petitioners,
v.
COMMISSIONER OF TAXATION AND FINANCE et al., Respondents.
Supreme Court, Appellate Division, Third Department, New York.
July 15, 2010.
Kestenbaum & Mark, Great Neck (Bernard S. Mark of counsel), for petitioners.
Andrew M. Cuomo, Attorney General, Albany (Julie S. Mereson of counsel), for Commissioner of Taxation and Finance, respondent.
Before: MERCURE, J.P., PETERS, SPAIN, MALONE JR. and KAVANAGH, JJ.
MALONE 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, among other things, sustained an assessment of personal income tax imposed under Tax Law article 22.
Petitioners, husband and wife, were employees of Revco Construction Corporation, which petitioner Candace Revere owned and petitioner Terrence Revere operated. As a result of an audit in 2003 of Revco's withholding tax returns, which revealed that Revco had made substantial payments to petitioners for which tax had not been withheld and which were not reported on Revco's W-2 forms or withholding tax returns, the Department of Taxation and Finance issued a withholding tax assessment to Revco and to the wife, as the responsible person for the company, and imposed penalties and interest. Revco agreed with the tax assessment and thereafter submitted, among other things, revised W-2 forms for the periods covered by the audit. After Revco issued the revised W-2 forms, petitioners filed amended joint income tax returns for the 1997 through 2001 tax years, adding the previously unreported income and claiming withholding credits based on the amended W-2 forms. The wife filed a separate amended income tax return for 2002 in which she also claimed the withholding tax credit. According to petitioners, the payments were not originally reported because the wife had diverted the money from Revco, allegedly without the husband's knowledge, in order to support her gambling addiction.
Following an audit of petitioners' personal tax returns, the Department disallowed the withholding tax credits and ultimately issued petitioners a notice of deficiency in the amount of
Petitioners thereafter sought a redetermination of the deficiency amounts in the Division of Taxation. After a hearing, the Administrative Law Judge (hereinafter ALJ) sustained the notice of deficiencies, concluding that petitioners had received payments from Revco for which no tax had been withheld, and denied the husband's claim for innocent spouse relief. The ALJ determined that petitioners were liable for the negligence penalty, as initially assessed, but not the fraud penalty, as was sought by the Division. After petitioners and the Division filed exceptions to the ALJ's determination, respondent Tax Appeals Tribunal sustained the ALJ's determinations with respect to the...
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