Court Opinion

ID: 5865951
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:33:03.500281+00
Date Added: 2024-06-11T08:44:34.727659
License: Public Domain

Casey, J. (dissenting).
In my view, there is substantial evidence in the record to support the Tax Commission’s finding that petitioner was not entitled to the exclusion provided by section 1105 (subd [c], par [5]) of the Tax Law and, therefore, its determination should be confirmed. The individual partners of petitioner elected to conduct their business in the form of two separate entities, petitioner and Stassett Corporation, with a single maintenance and cleaning staff carried on Stassett’s payroll. Petitioner paid Stassett a percentage of the expense of the staff based upon the portion of the building utilized by petitioner. Significantly, Stassett reported the funds received from petitioner as income on its State and Federal tax returns, and availed itself of the appropriate deductions. Having elected to conduct their businesses under this format, and having reaped the benefits thereof, the individual petitioners now seek to avoid any disadvantage arising out of the selected *34format. There is nothing irrational about the Tax Commission’s determination which has the effect of binding the taxpayers to the form of business chosen by them (see, e.g., Matter of Ormsby Haulers v Tully, 72 AD2d 845). The mere fact that petitioner Robert Zuggar is both the president of Stassett and the managing partner of petitioner, with the authority to hire, fire and supervise for both entities, does not compel the conclusion that Stassett’s employees are also petitioner’s employees.
Next, the Tax Commission could rationally conclude on this record that the services rendered by the staff were not those covered by the exclusion. Following this court’s decision in Direen Operating Corp. v State Tax Comm. (46 AD2d 191), the Tax Commission adopted a policy of distinguishing between repair services of a limited and simple nature and those of a more substantial nature for the purposes of the exclusion (see 20 NYCRR 527.7 [c] [3] [iv]), which the courts have recognized as a rational distinction (Matter of National Elevator Ind. v New York State Tax Comm., 49 NY2d 538, 550). Consistent with this policy, the Tax Commission found that the services herein, which involved carpentry, painting, plumbing and electrical work, were more substantial in nature than ordinary janitorial services or such elementary repair tasks as replacing a faucet washer. There is nothing irrational about the determination.
Mahoney, P. J., Weiss and Levine, JJ., concur with Main, J.; Casey, J., dissents and votes to confirm in a separate opinion.
Determination annulled, with costs, and matter remitted to the State Tax Commission for further proceedings not inconsistent herewith.