Court Opinion

ID: 5783018
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:53:51.591691+00
Date Added: 2024-06-11T08:42:01.792335
License: Public Domain

Herlihy, P. J. (dissenting).
It appears that in considering
an individual’s status as an unincorporated business for purposes of article 23 of the Tax Law, the courts have consistently refused to intervene as to the imposition of a tax by the respondents in the absence of a record which clearly established that as a matter of law the taxpayer was solely an employee as opposed to any aspect of entrepreneur in the earning of his livelihood. (See People ex rel. Wittich v. Browne, 270 App. Div. 774-778, affd. 296 N. Y. 720; Matter of Sundberg v. Bragalini, 7 A D 2d 15, mot. for lv. to app. den. 6 N Y 2d 705; Matter of Britton v. State Tax Comm., 22 A D 2d 987, affd. 19 N Y 2d 613; Matter of Hardy v. Murphy, 29 A D 2d 1038; Matter of Frishman v. New York State Tax Comm., 33 A D 2d 1071, mot. for lv. to app. den. 27 N Y 2d 483.) In order to reverse the present determination it must be found that the determination of the respondents was “ clearly erroneous as a matter of law”. (Matter of Britton v. State Tax Comm., supra, p. 988.)
In many of the foregoing cited cases the record contained extremely strong evidence of direction and control by the alleged employer, but, nevertheless, the court was constrained to uphold the determination of the respondents in imposing the tax. (Cf. Matter of Hardy v. Murphy, supra.) In the present case the record establishes that the taxpayer did for a small portion of the tax year maintain his own office and for that time personally employed a secretary. The contract witnessing the relationship of the taxpayer to his alleged employer is entirely consistent with a relationship between an entrepreneur and his principal or client. It states: ‘ ‘ Nothing contained in this Contract shall be construed to create *274the relationship of employer and employee The record establishes that the office space and secretarial services either directly supplied for the taxpayer or indirectly supplied by reimbursement were totally dependent upon the quantity of sales generated by him. It is not disputed that he was in fact an entrepreneur or unincorporated business as to a portion of the income received by him through his insurance sales activity which constituted the conduct of an unincorporated business within the meaning of the Tax Law; and it is to be noted that such sales would be slightly less than 20% of his total income for the tax year in question. (See Matter of Hardy v. Murphy, supra.) In addition to the indicia of a self-employed entrepreneur noted by the majority as found by the respondents, he also obtained legal advice in regard to the appropriate counseling which he should give certain prospects and paid for such advice himself.
Upon the present record it does not appear that the taxpayer has established that his relationship with the New England Mutual Life Insurance Company or its general agent, the A. W. Schmidt Agency, was solely that of an employee as a matter of law within the meaning and intendment of section 703 of article 23 of the Tax Law. Upon the present record it appears that there was ample evidence available to the respondents to support the determination other than the fact that as to a certain amount of his commissions he was selling insurance either for himself or for enterprises other than the alleged employer. (Of. Tax Law, § 703, subd. [f]; Matter of Frishman v. New York State Tax Comm., supra, p. 1072.)
The contention of the petitioner that the respondents are bound by the ruling or example set forth at 20 NYCKR 281.3 is without any merit as such, ruling was quite obviously based only on a particular set of facts. As noted by the majority, the facts in this record do substantially conform with that example or ruling, but the ruling is phrased in general terms and is clearly not an explicit predetermination that upon the facts presented in this record the petitioner would not be considered an unincorporated business. The last paragraph of the ruling states: “In every case all the relevant facts and circumstances will be considered before a decision is made whether or not the agent is subject to the unincorporated business tax.”
Upon the present record it does not appear that the determination is clearly erroneous as a matter of law and, accordingly, the determination should be confirmed.
*275Kane and Reynolds, JJ., concur with Simons, J.; Heblihy, P. J., and G-beenblott, J., dissent and vote to confirm determination in an opinion by Heblihy, P. J.
Determination annulled, with costs, and matter remitted for further proceedings not inconsistent herewith.