Court Opinion

ID: 5896166
Source: CourtListenerOpinion
Date Created: 2022-01-13 03:05:27.122466+00
Date Added: 2024-06-11T08:45:30.566785
License: Public Domain

Kane, J. P., and Casey, J., dissent and vote to confirm in a memorandum by Kane, J. P. Kane, J. P. (dissenting).
We agree with the majority’s conclusions with respect to the substantive issues and in particular with its conclusion that substantial evidence supports respondents’ determination that petitioner’s accountant failed to cooperate and provide access to petitioner’s books and records. However, we disagree with that portion of the majority’s decision finding that respondents’ determination must be annulled since respondents did not use their subpoena power to obtain access to petitioner’s records.
Under the circumstances presented here, we are unable to conclude that respondents’ actions were arbitrary and capricious. The test period audit was conducted to determine whether a detailed audit was necessary and when petitioner’s accountant disagreed with the results of the test period audit, he denied the Audit Division further access to petitioner’s books and records. This court has previously determined that when the taxpayer’s records are "unavailable” or "not provided”, that: "it is [the State Tax Commission’s] duty to select a method reasonably calculated to reflect the taxes due * * *. The burden then rests upon the taxpayer to demonstrate by clear and convincing evidence that the method of audit or the amount of the tax assessed was erroneous” (Matter of Surface Line Operators Fraternal Org. v Tully, 85 AD2d 858, 859 [citations omitted]).
Here, petitioner may have had complete records; however, it refused the auditor access to these records in order to allow *932her to complete a detailed audit for the period in question (see, Tax Law § 1135 [d]). Accordingly, respondents properly relied on a test period audit (see, Matter of Surface Line Operators Fraternal Org. v Tully, supra). After the assessment was issued, petitioner had every opportunity to come forth with its detailed records to demonstrate that the amount of the tax assessed was erroneous (see, Tax Law § 1138). Petitioner, for some inexplicable reason, declined to avail itself of this opportunity at the administrative level. Since petitioner refused to allow the auditor access to its records even though given every opportunity to cooperate and/or to produce its records, we are unable to find that respondents acted arbitrarily by not taking on the added duty of attempting to subpoena petitioner’s records. Moreover, if petitioner had detailed records which refute the results obtained by the test period audit, it could have presented them upon administrative appeal. Having failed to do so, it can hardly be heard to complain that respondents arbitrarily relied on a test period audit. We would accordingly confirm the Tax Commission’s determination.