Articles Posted in New York Court of Appeals

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The owner commenced tax certiorari proceedings against the City of Rye, challenging assessments for tax years 2002-2010. for Lot 9 and Lot 10. Lot 10 is within the Rye City School District. Lot 9, which the owner believed to be within that district, actually lies within Rye Neck Union School District. Under RPTL 708, within 10 days of service of the notice and petition on a municipality in a tax certiorari proceeding, a petitioner must mail a copy of those documents to the superintendent of schools of any district within which the assessed property is located. The owner did not comply with that requirements before reaching an agreement with the City. Before that tentative settlement was finalized, the owner recognized its error, notified the Rye District, mailed the petition and notice, and sought the Rye District's consent to settle. The District instead intervened. The court dismissed the petitions with prejudice for failure to comply with RPTL 708. The Appellate Division clarified that dismissal pertained to Lot 9, noting that the action may not be recommenced under CPLR 205(a). The Court of Appeals affirmed. A petitioner who ignores the RPTL 708 mailing requirements and denies a school district the opportunity to economically address a tax certiorari proceeding is not permitted to recommence a proceeding dismissed based upon such noncompliance; to do so would undermine the goals that prompted amendments to RPTL 708. View "Westchester Joint Water Works v Assessor of City of Rye" on Justia Law

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Petitioner applied for the partial ten-year exemption for certain improvements made to real property - known as the business investment exemption - in 2008. After the city assessor valued Petitioner’s property, Petitioner challenged the assessed value of the property and the amount of the exemption. Supreme Court granted summary judgment to Petitioner on the amount of the exemption and recalculated the exemption for years 2008 through 2014. Supreme Court ordered the Schenectady City School District to issue refunds of any excess taxes it collected during the 2009 through 2014 calendar years due to the prior incorrect calculation of Petitioner’s exemption. The Appellate Division modified by reversing the portion of the order directing the School District to issue refunds for the 2009 through 2011 assessment rolls, concluding that unless Petitioner filed annual challenges to the assessment while the initial 2008 petition was pending, Petitioner failed to preserve its challenge. The Court of Appeals reversed, holding that there is no requirement that a taxpayer who challenges the amount of the business investment exemption file annual petitions while the initial petition is pending in order to compel compliance with a resulting court order. View "Highbridge Broadway, LLC v. Assessor of the City of Schenectady" on Justia Law

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In 2012, the Attorney General (AG) filed a complaint resulting in a civil enforcement action by the AG, alleging that Sprint knowingly violated the New York Tax Law, engaged in fraudulent or illegal acts, and submitted false documents to the State pursuant to the New York False Claims Act (FCA). Sprint moved to dismiss the complaint for failure to state a cause of action. Supreme Court denied the motion, and the Appellate Division affirmed. The Court of Appeals affirmed, holding (1) the New York Tax Law imposes sales tax on interstate voice service sold by a mobile provider along with other services for a fixed monthly charge; (2) the statute is unambiguous; (3) the statute is not preempted by federal law; (4) the AG’s complaint sufficiently pleads a cause of action under the FCA; and (5) the damages recoverable under the FCA are not barred by the ex post facto clause of the United States Constitution. View "People v. Sprint Nextel Corp." on Justia Law

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Plaintiffs here were a group of travel companies that enable customers to make online travel arrangements, including hotel reservations. Plaintiffs brought a declaratory judgment action challenging the constitutionality of Local Law 43, a hotel room occupancy tax applicable to online travel companies. Alternatively, Plaintiffs contended that the law did not apply to them because their service fees were not "rent" within the meaning of the state enabling legislation. Supreme Court held (1) the law was constitutional, and (2) the plain language of the state statute authorized the City's tax. The Appellate Division reversed, holding (1) the enabling legislation did not provide the City with broad taxation powers to tax Plaintiffs' fees, and (2) the City's tax was unconstitutional. The Court of Appeals reversed, holding that the City had the authority to enact the tax and that the Appellate Division erred when it declared the tax unconstitutional. View "Expedia, Inc. v. City of New York Dep't of Fin." on Justia Law

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The Empire Zones Program Act offered state tax incentives designed to enhance business development in the state. In 2009, the program was amended to introduce two new criteria businesses must meet to retain their certificates for the program. Plaintiffs were five businesses which were certified under the program prior to 2008. In 2009, Plaintiffs were decertified from the program for failing to meet the new criteria. Supreme Court granted summary judgment for the James Square plaintiffs, concluding that the state defendants acted without legal authority when they applied the new criteria for the program retroactively. The legislature subsequently clarified its intention, stating that the 2009 amendments to the program were to be applied retroactively to January 1, 2008. Supreme Court adhered to its prior determination, declaring that the legislature's clarification as applied was unconstitutional. The Appellate Division affirmed. Regarding the additional plaintiffs, the Appellate Division modified Supreme Court's holding to the extent of granting Plaintiff's petitions seeking a declaration that the 2009 amendments could not be applied retroactively to January 1, 2008. The State appealed. The Court of Appeals affirmed the Appellate Division's determinations in all five cases that the 2009 amendments should not be applied retroactively. View "James Square Assocs. LP v. Mullen" on Justia Law

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The Commonwealth of the Northern Marina Islands obtained two tax judgments in the U.S. district court against the Millars for unpaid taxes. The Millards, who previously resided in the Commonwealth, relocated before the Commonwealth was able to obtain the judgments. The Commonwealth commenced proceedings as a judgment creditor asseking a turnover order against garnishees holding assets of the Millars. The Commonwealth named a Canadian bank (Bank) headquartered in Toronto, with a branch in New York, as a garnishee under the theory that the Millards maintained accounts in a foreign subsidiary of Bank. The district court denied the Commonwealth's motion for a turnover order against Bank. The Court of Appeals accepted certification to answer questions of law, holding (1) for a court to issue a post-judgment turnover order pursuant to N.Y. C.P.L.R. 5225(b) against a banking entity, the entity itself must have actual, not merely constructive, possession or custody of the assets sought; and (2) therefore, it is not enough that the banking entity's subsidiary might have possession or custody of a judgment debtor's assets. View "Commonwealth of N. Mariana Islands v. Canadian Imperial Bank of Commerce" on Justia Law

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Plaintiffs in this case were Amazon.com and Overstock.com. Both companies were formed in states other than New York, were located in states other than New York, and sold their merchandise solely through the Internet. At issue was N.Y. Tax Law 1101(b)(8)(vi) (the Internet tax), which was amended in 2008 to provide that vendors who paid New York residents to actively solicit business in the State would be required to pay New York taxes. Plaintiffs challenged the Internet tax, alleging that it was unconstitutional on its face as a violation the Commerce Clause and the Due Process Clause. Supreme Court dismissed the complaints for failure to state a cause of action. The Court of Appeals affirmed, holding (1) the Internet tax did not subject online retailers without a physical presence in the State to New York sales and compensating use taxes; and (2) the tax did not create an irrational, irrebuttable presumption of solicitation of business within the State. View "Overstock.com, Inc. v State Dep't of Taxation & Fin." on Justia Law

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Petitioner, a national satellite television provider, purchased equipment used to deliver programming to its customers. Between March 2000 an February 2004, Petitioner did not pay sales or use taxes on its equipment purchases from manufacturers, and instead, collected sales taxes from its customers at the time the equipment was leased to them. Following an audit in 2005, the Department of Taxation and Finance issued a notice of determination assessing Petitioner an additional $1.8 million in use taxes in use taxes for the same period on the basis that Petitioner owed taxes at the time it purchased the equipment from manufacturers. The Tax Appeals Tribunal upheld the notice of determination. The Appellate Division confirmed the Tribunal's determination. The Court of Appeals reversed, holding that Petitioner's purchases of equipment used to deliver programming to its customers were exempt from sales and use taxes under New York's Tax Law. View "EchoStar Satellite Corp. v. State Tax Appeals Tribunal" on Justia Law

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Plaintiffs were owners of real property in the Town of Chester (Town), New York. Plaintiffs then lived in New Jersey, and their address there appeared on the deed. Plaintiffs subsequently moved without informing the Town taxing authorities of their new address. After Plaintiffs failed to pay taxes on their New York property for three years, Plaintiffs defaulted in a foreclosure proceeding brought by the County on their New York property. The property was later sold. Plaintiffs subsequently sued the County, asserting that the attempts to give them notice of the foreclosure were constitutionally inadequate and seeking a declaration that they still owned the property. Supreme Court granted the County's motion for summary judgment, and the Appellate Division affirmed. The Court of Appeals affirmed, holding (1) when notice mail to Plaintiffs at their last known address proved undeliverable, the tax collector was not constitutionally required to find some means of making personal service on them, or to address a notice to "occupant" at the former address, or to search New Jersey public records for a new address; and (2) therefore, Plaintiffs were not deprived of their property without due process of law. View "Naughton v. Warren County" on Justia Law

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Plaintiff, a credit union, commenced this declaratory judgment action against Defendants, the state department of taxation and finance, its commissioner, and the state. The credit union asserted it was not required to pay the mortgage recording tax (MRT) on mortgage obligations issued to members because (1) the Federal Credit Union Act (FCUA) exempts federal credit unions and their property from state taxation, and (2) as instrumentalities of the United States, federal credit unions are immune from state taxation under the Supremacy Clause. Supreme court granted Defendants' motion to dismiss the complaint, and the appellate division affirmed. The Court of Appeals affirmed, holding that, based on principles of statutory interpretation and the legislative history of the FCUA, federal credit unions are not exempt from the state's MRT. View "Hudson Valley Fed. Credit Union v. Dep't of Taxation & Fin." on Justia Law