Court Opinion

ID: 5833770
Source: CourtListenerOpinion
Date Created: 2022-01-12 22:32:27.281366+00
Date Added: 2024-06-11T08:43:32.085053
License: Public Domain

Judgment reversed, without costs, and petition dismissed, without prejudice to the institution of administrative proceedings in accordance with the following memorandum: In this CPLR article 78 proceeding, Special Term prohibited respondents-appellants from determining that petitioner-respondent Fairbank Farms, Inc., is subject to assessment of *1002sales tax arising from certain transactions for a specified period of time and from taking any departmental action in furtherance of their proposed determination that such sales tax is due. Petitioner-respondent Rhodes, accountant for Fairbank Farms, Inc., had inquired by letter to the Instructions and Interpretations Unit of the New York State Department of Taxation and Finance as to the taxability of a method of accounting proposed by Fairbank Farms, Inc, Upon the written reply from the Instructions and Interpretations Unit that the method would not result in additional sales tax liability, Fairbank Farms, Inc., implemented the method. Subsequently, respondents-appellants Mazurowski and Holynski, sales tax examiners, proposed to assess an additional sales tax on the transactions. Fairbank Farms applied for a preassessment hearing at which respondent-appellant Kasza, the hearing officer, upheld the proposed assessment. Before petitioners-respondents applied for a hearing pursuant to section 1138 of the Tax Law and, indeed, before a final determination had been made by the Tax Commission, petitioners-respondents commenced the instant CPLR article 78 proceeding. Respondents-appellants contend that petitioners-respondents failed to exhaust their administrative remedies as required by sections 1138 and 1140 of the Tax Law. We agree. Petitioners-respondents do not challenge the taxing authority’s jurisdiction on the ground that the statute is unconstitutional or inapplicable; therefore, they must comply with the method of review prescribed in the Tax Law (see Richfield Oil Corp. v City of Syracuse, 287 NY 234, 239; Matter of Hospital Tel Systems v New York State Tax Comm., 41 AD2d 576). Inasmuch as no final determination has been reached by the Tax Commission, the 90-day period in which petitioners-respondents may apply for a hearing (Tax Law, § 1138) has not begun to run. We do not reach the question of estoppel as against the State Tax Commission which is not a party hereto but which should be joined in any further proceedings. All concur, except Callahan, J., who dissents and votes to affirm the judgment in the following memorandum.