Do you or your business need to litigate a tax matter in court?

Sometimes it is not possible to settle a tax matter out of court. In many instances simply filing a petition to appeal an assessment can result in additional negotiations and settlement without ever stepping foot in court. If we need to go all the way, we have the experience to advocate on your behalf. In fact, we can advocate in many states on a "pro hac vice" basis.

What should you expect to happen during tax litigation? Most tax litigation in New York State commences with filing a petition with the New York State Division of Tax Appeals – the tax court. The petition must be submitted within 90 days of the date listed on the notice that the taxpayer received from the tax department informing the taxpayer of the amount of tax penalties and interest due. Failure to file the petition by the deadline will result in a forfeit of the taxpayer’s right to a prepayment appeal. The petition outlines the relevant laws including cases, statutes and regulations. The petition also outlines the facts of the case. Attorneys for the tax department will reply to the allegations contained in the petition.

After the tax department replies to the petition, the attorneys for the taxpayer (now called the “petitioner”) and attorneys for the tax department will typically discuss the case and evaluate the possibility of settling the case. Many cases are settled. It generally takes up to a year after the petition is filed for the case to be argued before a judge. There are no juries. The judge acts as both judge and jury. This means that the judge performs both the traditional role of a judge, which is to interpret the law, and the traditional role of the jury, which is to review the evidence presented during the hearing. The judge will also hold prehearing conferences with the petitioner and the tax department to discuss procedural issues and often to encourage settlement.

Evidence presented at hearing may include documents and testimony. The petitioner, auditors and anyone else with first hand knowledge concerning the relevant facts of the case may testify. Expert witnesses may also give testimony and submit expert reports. Expert witnesses are frequently accountants and economist. The selection of witnesses and evidence is made during the period between the time the petition is filed and up to 10 days before the trial. At least 10 days before the trial, both the tax department and the petitioner must file their list of evidence and witnesses.

During the trial, the witnesses are examined and cross-examined and evidence is officially submitted into the record. The proceedings are transcribed. At the conclusion of the trial, the judge will set a schedule for the petitioner and the tax department to submit post-hearing briefs. Petitioner and the tax department include their factual and legal arguments in the brief. The transcript of the hearing is used to cite testimony when preparing the briefs. For purposes of rendering the decision in the case, the judge only considers evidence and testimony submitted during the hearing. The judge will review the petitioner’s and the tax department’s briefs and decide the case. The petitioner and the tax department can appeal the judge’s decision. These appeals are heard by the Tax Appeals Tribunal. If the Tax Appeals Tribunal decides in favor of the petitioner the case is closed. If the Tax Appeals Tribunal decides in favor of the tax department, the petitioner may appeal further to the Appellate Division of the Supreme Court of the State of New York. It should be noted that the decision of all the courts referenced above are a matter of public record.

Call us today at 212-232-2410 or contact us online to discuss your options.

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