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Tax Management
Weekly State
Tax Report™
NUMBER 31 JULY 31, 2015
HIGHLIGHTS
Texas Margin Tax Not ‘Income Tax,’ Appeals Court Says
Multistate businesses can’t choose whether to use the income apportionment formula under the Multistate Tax Com-
pact or the Texas margin tax, because the margin tax isn’t an income tax in the first place, a Texas appellate court
ruled in a win for the state. The Texas Court of Appeals for the Third Judicial District rejected arguments from
Graphic Packaging Corp., a Georgia-based packaging company, that because the margin tax isn’t a gross receipts tax
it must be an income tax.
Multistate Tax Commission Group OKs Nexus Model Statute
A committee of the Multistate Tax Commission (MTC) has approved a model statute attempting to define when out-
of-state sellers have an obligation to pay or collect sales and use taxes. The MTC Uniformity Committee voted 12-0
to forward the Model Sales and Use Tax Statute to the commission’s Executive Committee, which will convene dur-
ing the MTC’s 48th annual meeting in Spokane, Wash.
New Texas Enterprise Zone Rules Include Smaller Businesses
Effective Sept. 1, changes to the Texas Enterprise Zone Program will ultimately result in greater credit availability to
new and smaller companies looking to participate in the state’s tax incentives program designed to induce private
investment in severely distressed areas of the state, a Dallas tax attorney told Bloomberg BNA. Mike Goral, partner-
in-charge of state and local tax (SALT) services at Weaver’s Dallas office, said the ‘‘benefits’’ of the new amendments
would include ‘‘allowing new and smaller companies that begin business in Texas to participate in the Program, since
the focus now is on new permanent jobs as opposed to job retention which tended to benefit larger companies that
grabbed most of the available credit in the previous enterprise zone Program.’’
Illinois Towns Seek Class Certification in Hotel Tax Dispute
Illinois municipalities are taking another swipe at online travel companies, filing an amended motion for class certi-
fication in litigation that seeks unpaid hotel occupancy taxes and penalties from e-commerce defendants Expedia
Inc., Orbitz LLC, Priceline.com Inc. and Travelocity.com LP. The Village of Bedford Park, Ill., recently filed a second
motion for class certification in U.S. District Court for the Northern District of Illinois on behalf of 154 municipalities.
Perspective: Bloomberg BNA Q&A With Executive Director Of the Multistate Tax Commission, Joe Huddleston
Joe Huddleston has served as the executive director of the Multistate Tax Commission for the past decade. In this in-
depth interview with Bloomberg BNA, Huddleston discusses the biggest challenges facing the state and local tax
world today, new frontiers for the MTC and his decision to return to the private sector.
Perspective: Does N.Y. Overreach in Its Tax Enforcement? An In-Depth Look at the State’s Policies and Practices
New York is a leader in its tax enforcement and compliance efforts; however, many tax attorneys and certified pub-
lic accountants interviewed by Bloomberg BNA expressed concerns that the state may be overreaching in a number
of key areas. This article examines the states policies and practices in key areas such as sales tax audits, residency
and domicile issues and criminal enforcement in order to determine whether the state sometimes goes too far.
Copyright 姝 2015 TAX MANAGEMENT INC., a subsidiary of The Bureau of National Affairs, Inc. ISSN 1534-1550
2 (Vol. 2015, No. 31)
TM Weekly State Tax Report
CEO and PRESIDENT:
GREGORY C. MCCAFFERY
PRESIDENT, TAX & SPECIALTY
DARREN MCKEWEN
VICE PRESIDENT and GENERAL MANAGER,
TAX AND ACCOUNTING:
LISA FITZPATRICK
BUREAU CHIEF:
PAUL ALBERGO
NEWS DIRECTOR, TAX AND ACCOUNTING:
CHERYL SAENZ
EDITORIAL DIRECTOR:
GEORGE R. FARRAH
DEPUTY NEWS DIRECTORS,
TAX AND ACCOUNTING:
BRETT FERGUSON, RITA MCWILLIAMS
Contributing Editors, Molly Moses, S. Ali
Sartipzadeh, Derek Tong
Copy Editors, Jane Bowling, Megan
Finnerty, Dave Harrison, Kathy Carolin
Larsen, Steven Marcy, Vandana Mathur,
Ellen E. McCleskey, Gretchen Obert,
Isabella Perelman, Laura Tieger Salisbury,
Karen Saunders
Reporters/Legal Editors, Matthew
Beddingfield, Kevin A. Bell, Alison
Bennett, Laura Davidson, Diane Freda,
Dolores Gregory, Marc Heller, Aaron E.
Lorenzo, Erin McManus, Radha Mohan,
Priya Nair, Tiwa Nwogu, Alex M. Parker,
Anjana Solanki, Casey Wooten
Manager, Correspondents, Terence Hyland
Staff Correspondents: Albany, N.Y., Jerry
Silverman; Atlanta, Chris Marr; Austin,
Tex., Paul Stinson; Boston, Adrianne
Appel, Martha Kessler; Chicago, Michael
Bologna; Cincinnati, Bebe Raupe; Denver,
Tripp Baltz; Houston, Nushin Huq;
Lansing, Mich., Nora Macaluso; Los
Angeles, David McAfee, Carolyn Whetzel;
New York, John Herzfeld, Stephen Joyce;
Norwalk, Conn., Steve Burkholder, Denise
Lugo; Philadelphia, Leslie Pappas;
Phoenix, William H. Carlile; Raleigh, N.C.,
Andrew Ballard; Sacramento, Calif., Laura
Mahoney; San Francisco, Joyce E. Cutler;
Seattle, Paul Shukovsky; St. Louis,
Christopher Brown; St. Paul, Minn., Mark
Wolski; Washington, D.C., Jeff Day
Index Editors, Director, Chuck Knapp;
Manager, Russel Evans, Bonnie Taylor
Assignments Manager, Mack A. Paschal,
Gwen Holmes
Graphics Manager, Cordelia D. Gaffney,
Thomas M. Foley
Bloomberg BNA
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Fax: (703) 341-1625
Tax Management Weekly State Tax
Report: (ISSN 1534-1550) is
published weekly for $1,082 per year.
7-31-15 Copyright 姝 2015 TAX MANAGEMENT INC., a subsidiary of The Bureau of National Affairs, Inc. TM-WSTR ISSN 1534-1550(Vol. 2015, No. 31) 3
In This Issue
TAX BASE
TOPICAL INDEX
Legislators, governor butt heads over New
Hampshire budget ...............................................
ALLOCATION/APPORTIONMENT Online travel companies owe District of Columbia
Illinois issues proposed regulations for hedging sales tax ............................................................
transactions ........................................................
TAX POLICY
Texas margin tax not ‘income tax,’ appeals court Bloomberg BNA Q&A with executive director
says .................................................................. of the Multistate Tax Commission, Joe
Huddleston .........................................................
ASSESSMENT/COLLECTION
Does New York state overreach in its tax
Kansas, Indiana, Missouri to start amnesty enforcement? A comprehensive look at the
periods in fall ..................................................... state’s policies and practices .................................
CONSTITUTIONAL LIMITATIONS TAX RATES
Multistate Tax Commission group OKs nexus North Carolina lowers corporate income tax rate
model statute ...................................................... for 2016 .............................................................
UNCLAIMED PROPERTY
ENTERPRISE ZONE CREDITS
Delaware overhauls unclaimed property program .........
New Texas enterprise zone rules include smaller
businesses ..........................................................
INDEX OF DEVELOPMENTS BY STATE
EXCISE TAX
Oregon to tax recreational marijuana sales ..................
ALABAMA
Carcieri v. Salazar ..................................................
EXEMPTIONS
DTE partly exempt from tax, Mich. high court Poarch Band of Creek Indians v. Hildreth ...................
says ..................................................................
DELAWARE
Untethered hot-air balloons exempt from Missouri
S.B. 141 .................................................................
sales tax ............................................................
DISTRICT OF COLUMBIA
HOTEL TAX Expedia, Inc. v. D.C. ................................................
Illinois towns seek class certification in hotel tax
dispute .............................................................. GEORGIA
Douglasville Hospitality Inc. v. Riley ..........................
PROCEDURE
Alabama requires security code for tax website ............
ILLINOIS
Vill. of Bedford Park, et al. v. Expedia, Inc. .................
Assessment blocked, appeal filed in Alabama
tribal tax case ..................................................... MICHIGAN
Connecticut tax gap effort garners $85 million ............. Detroit Edison Co. v. Michigan Dep’t. of Treasury ........
Hotel buyer ruled liable for prior owner’s Georgia
MISSOURI
tax debt .............................................................
Letter LR 7067 ........................................................
Oregon expands tax haven list, with notable
omissions ........................................................... NEW HAMPSHIRE
Staff possibly blocking inquiry of N.M. Tax and H.B. 1 ....................................................................
Rev. secretary ..................................................... H.B. 2 ....................................................................
SPECIFIC INDUSTRY CREDITS OREGON
Oregon governor signs bill extending tax credits .......... H.B. 2041 ...............................................................
TAX MANAGEMENT WEEKLY STATE TAX REPORT ISSN 1534-1550 BNA TAX 7-31-154 (Vol. 2015, No. 31)
Excise Taxes Navigator, at Illinois 10.1
INDEX OF DEVELOPMENTS BY STATE
Vill. of Bedford Park, et al. v. Expedia, Inc. .................
Continued from previous page
Excise Taxes Navigator, at Oregon 2.4
H.B. 2171 ............................................................... H.B. 2041 ...............................................................
S.B. 61 ..................................................................
Sales and Use Tax Navigator, at D.C. 6.7
TEXAS Expedia, Inc. v. D.C. ................................................
Graphic Packaging Corp. v. Hegar .............................
Sales and Use Tax Navigator, at Georgia 10.5
Douglasville Hospitality Inc. v. Riley ..........................
INDEX BY PORTFOLIO/NAVIGATOR AFFECTED
Sales and Use Tax Navigator, at Michigan 8.3
1150-2nd T.M., Income Taxes: Principles of Formulary Detroit Edison Co. v. Michigan Dep’t. of Treasury ........
Apportionment
Graphic Packaging Corp. v. Hegar ............................. Sales and Use Tax Navigator, at Missouri 9.11
Letter LR 7067 ........................................................
1480-2nd T.M., Credits and Incentives: OR Through WY
H.B. 2171 ...............................................................
Corporate Income Tax Navigator, at Delaware 14 TABLE OF CASES
S.B. 141 .................................................................
Detroit Edison Co. v. Michigan Dep’t. of Treasury ..........
Corporate Income Tax Navigator, at New Hampshire 5.1
Douglasville Hospitality Inc. v. Riley ............................
H.B. 1 ....................................................................
Expedia, Inc. v. D.C. ..................................................
H.B. 2 ....................................................................
Graphic Packaging Corp. v. Hegar ...............................
Corporate Income Tax Navigator, at Texas 6.3 Poarch Band of Creek Indians v. Hildreth .....................
Graphic Packaging Corp. v. Hegar ............................. Vill. of Bedford Park, et al. v. Expedia, Inc. ...................
7-31-15 Copyright 姝 2015 TAX MANAGEMENT INC., a subsidiary of The Bureau of National Affairs, Inc. TM-WSTR ISSN 1534-1550(Vol. 2015, No. 31) 3
Perspective
Ta x P o l i c y
Joe Huddleston has served as the executive director of the Multistate Tax Commission for
the past decade. In this in-depth interview with Bloomberg BNA, Huddleston discusses the
biggest challenges facing the state and local tax world today, new frontiers for the MTC and
his decision to return to the private sector.
Bloomberg BNA Q&A With Executive Director
Of the Multistate Tax Commission, Joe Huddleston
BY RADHA MOHAN HUDDLESTON: It is a somewhat convoluted history. I
was practicing law in Tennessee and I had gotten in-
BLOOMBERG BNA: How did you start your career and volved in a political campaign. After my guy won, the
wind up in state taxation specifically? deputy to the governor asked if I might be interested in
a position in their administration. Looking at my back-
ground, he saw that I had spent some time working for
Joe Huddleston received the 11th annual the Internal Revenue Service before going back to law
award for Outstanding Achievement in State school, and asked if I would be interested in a position
and Local Taxation from New York University with the department of revenue. At the time, I knew
in 2012. Prior to joining the MTC, he was vice next to nothing about state tax, but was very interested
president of tax solutions for Liquid Engines in the position. So, I ended up in the commissioner’s of-
Inc., a tax software firm focused on advanced fice in the Tennessee Department of Revenue.
state income tax planning models and meth-
odologies for multi-state and multi-national BLOOMBERG BNA: You were working for the Internal
companies. Mr. Huddleston joined Liquid Revenue Service?
Engines from Grant Thornton LLP, then the HUDDLESTON: Yes, I was a revenue officer. A field col-
nation’s sixth largest accounting and manage- lection officer, actually. So, you can see I knew next to
ment consulting firm, where he was a part- nothing about tax!
ner and national director for state and local Working as a field collection officer involved the very
tax. Mr. Huddleston serves on numerous state end of a process that the revenue service goes through
tax related boards, including Bloomberg either to secure delinquent returns or delinquent taxes.
BNA’s State Tax Advisory Board.. The revenue department has a lengthy process before
the assignment gets made to the field. So, by the time
TAX MANAGEMENT WEEKLY STATE TAX REPORT ISSN 1534-1550 BNA TAX 7-31-154 (Vol. 2015, No. 31) PERSPECTIVE
an assignment gets to the field, it is usually the most dif- so contentious and problematic that the chance of get-
ficult situation left to deal with. ting it enacted into law was small. That is not the basis
on which the MTC has ever looked at its model statutes.
BLOOMBERG BNA: Did any interesting experiences The MTC does not have the same constraints as the
come out of that? ULC. We understand that many states look at these pro-
HUDDLESTON: Almost a life history. Every strange visions as being important to them at different times.
situation you can imagine, and many I hope you can’t, While one state may want to enact a provision this year,
are confronted by revenue officers every day. Of all the another state may not. It is our sense that providing
things I have done in my life, it was possibly the most these re-writes dealing with the world as we see it today
difficult and certainly the most unpleasant. is important. It is important to have these models avail-
BLOOMBERG BNA: How did you start working for the able to the states so that each individual state can refer-
Multistate Tax Commission (MTC) and what have the ence it when they see fit.
MTC’s biggest accomplishments been during your ten- So, we proceeded along the lines of rewriting the
ure? UDITPA provisions. While we met with some pushback
HUDDLESTON: I came to the MTC ten years ago. The and some criticism on it, it was not so great that we felt
executive committee that hired me was very concerned like we would be unable to fulfill our mission and write
that the MTC over the past decade had been building a updated provisions.
reputation that was not very positive in the business BLOOMBERG BNA: You mentioned that the UDITPA
community. This is certainly understandable when you project was in part spurred by a need to update provi-
have an agency that audits people. It can be very con- sions to reflect the current economic and technological
tentious. Plus, the MTC was and still is on the forefront model. What are some other ways in which state tax
of state tax policy issues and sometimes that can create codes need to change to be more closely aligned with
problems in the private sector as well. the current economy?
I would point to a number of things during my ten- HUDDLESTON: I think the biggest issue we have seen
ure that I am very proud of. On the top of that list is my over the past few years is the continuing move towards
original mandate to try to improve the view of the MTC. a market-based economy. As we see that, a number of
We have worked very hard with the private sector in states have moved in the direction of single-sales factor
terms of transparency and our willingness to sit down and if not single-sales factor, multiple weighting of the
and explain what we are doing and why. We have also sales factor.
continually invited the private sector to participate in Now, if you look at the history of the MTC, this is
any and all of our discussions. certainly not the direction we envisioned moving in.
I don’t think that the tension that is inevitable in an Early in our history, we were big believers in an equally
audit situation has gone away. I think that will always weighted three-factor apportionment program. In the
be there. But, I think our willingness to talk about the early 70’s we were even adamantly against moving
issues has developed some level of respect in the pri- away from anything other than an equally weighted
vate sector community. three-factor apportionment formula.
Another area where I am particularly proud of our At the heart of the MTC’s mission is uniformity. I
accomplishments is a number of model statutes that we would suggest that where we would see the states mov-
have been able to develop over the past ten years. I am ing is towards this goal of uniformity. Unfortunately for
particularly proud of our work on model financial insti- our founders, it is moving away from the vision that we
tutions. I also think our work with other areas, such as originally had. Nonetheless, it moves in the direction of
digital goods and mobile workforce, has been very much greater uniformity as states begin to change their
strong. statutes to adapt to a market-based economy. The MTC
I would be really remiss if I didn’t point to our re- has recognized that and has moved to build models and
write of UDITPA (Uniform Division for Income Tax uniform rules and regulations that relate to the
Purposes Act), particularly sections 17 and 18, which economy that we have in the 21st century.
were long overdue. While they were very contentious at
the time, I don’t think that there are any items that have BLOOMBERG BNA: Do you think that the movement
ended up being very contentious. I think we have done away from cost of performance-based sourcing and to-
an outstanding job dealing with tax structures that exist wards market-based sourcing will continue?
today, versus tax structures that existed ten years ago. HUDDLESTON: Yes, I absolutely do think that more
states will adopt market-based sourcing. I also think we
BLOOMBERG BNA: You mentioned that the UDITPA will not only continue to see these same kinds of discus-
re-write was somewhat contentious at the time. How sions at the state level, but also at the multinational
did you get the wheels set in motion for this project? level as well. I think what you find in government is that
HUDDLESTON: When we first started doing this, we very often there is a substantial lag behind the way gov-
went to the Uniform Law Commission (ULC), which ernments, whether it is national, state, or local govern-
was the father of UDITPA to begin with. We gave the ments, tax and regulate relative to the way actual busi-
ULC the opportunity to take the lead on this project. ness activity is carried on. Businesses tend to move rela-
The result was a very contentious period where the pri- tively quickly to adjust to changes in technology or in
vate sector pushed back a lot. their market. Governments, on the other hand, tend to
The ULC commissioners ultimately decided that they be really slow in making those adjustments.
would not go forward with this. Part of this was based So, I think that how businesses carry on business has
on the concept that the ULC wants to convince them- changed really dramatically in the past twenty years,
selves upfront that any provision that they go forward but the way states tax and regulate has not changed
with has a really strong chance of becoming law in that much. But, it is changing all the time to try and
many states. There was a sense that these issues were catch up with industry. Unfortunately, for all of us in
7-31-15 Copyright 姝 2015 TAX MANAGEMENT INC., a subsidiary of The Bureau of National Affairs, Inc. TM-WSTR ISSN 1534-1550PERSPECTIVE (Vol. 2015, No. 31) 5
business and government, the two are never quite on without benefits, but still receive their retirement pay.
the same page. This has been very attractive in some states.
This program has met with some success in the edu-
BLOOMBERG BNA: You mentioned that discussions on cational area, where a lot of states implemented a pro-
formulary apportionment will continue on the multina- gram that allowed teachers to retire and start receiving
tional level. Do you see the international community retirement benefits, but come back to work. This is
adopting formulary apportionment in the next few known as a DROP (Deferred Retirement Option Plan)
years? program in many states.
HUDDLESTON: No, I don’t see the international com- You may continue to see some of that as states try to
munity doing this in the near future. But, I think this is protect themselves from a loss of institutional knowl-
a discussion they will have to come to grips with. As I edge. But, I will tell you it is a very difficult problem to
said, regulatory bodies are about a decade behind time; deal with because from a budget cycle perspective, it is
it will probably be about close to that period of time be- very difficult to hire new employees while retaining old
fore most of the international community is able to employees at the same time.
come to grips with the fact that the taxation methods of
the 1950s don’t work very well in the 21st century. BLOOMBERG BNA: You just talked to me about the
biggest obstacles for state agencies. What about the
A lot of that will be driven by the fact that the third
MTC? Do the same problems apply to the MTC? What
world is becoming a much greater influence in the area
are the MTC’s biggest challenges going forward?
of market for multinational businesses. These develop-
ing countries will be looking more at a tax base that is
HUDDLESTON: Well, the MTC has been very fortunate
in that over the last few years we have been able to add
driven by the market they provide. So, a lot of the issues
states to our audit program, which is a very beneficial
that have come up in the state arena as it has moved to-
program for most states. At the same time, we are very
wards market-based sourcing will come up on the inter-
conscious of the fact that individual issues in individual
national side in the next decade.
states often have an overriding effect on whether states
BLOOMBERG BNA: I imagine as companies like Netflix join or continue to participate in third-party audit pro-
continue their expansion into highly populated Asian grams like the MTC’s.
markets, their governments will want to derive a benefit So, these issues are largely out of our control, really
from the market they provide. almost without consideration to what the return to the
HUDDLESTON: I think that is clearly true. I think you states might be from these programs. We are always
see from the reaction of China and India and those conscious of our relationship with our program states.
types of countries where there is a huge market, that It is a never-ending problem to monitor that and pro-
their reaction to the OECD (Organization for Economic vide an adequate budget to staff our programs.
Co-operation and Development) proposals has not been BLOOMBERG BNA: Another major initiative started by
very positive. the MTC is the ALAS (Arm’s-Length Adjustment Ser-
BLOOMBERG BNA: The gap between current law and vice) program. What is the future of this program? Will
the changing economic and technological model is one the program generate enough interest to continue in its
of the biggest challenges in the state and local tax full form, or will the MTC have to scale back the pro-
world. What are some other major challenges that the gram?
state and local tax world will face in the next five or ten HUDDLESTON: It is conceivable that they will have to
years? scale back, but I think it is important to remember that
HUDDLESTON: I certainly think that one is at the top when you begin an ambitious program like the Arm’s-
of the list! But, I also think you are going to see a much Length Adjustment Service, it certainly takes a lot of
more mundane challenge. That is, state tax agencies are time to build the basis of it.
facing ever-increasing problems in terms of being able We have had a number of states respond very
to staff their programs. Some of it comes out of the fact strongly to the program and we have many more states
that a number of years ago, in 2008, we had a substan- that have responded in a very positive fashion, but have
tial economic downturn. We had a lot of people at that not yet committed to financially support the program.
time that were looking at moving towards retirement. But we are close.
Many state agencies were very worried that they were I believe that within the next several months and cer-
going to lose a substantial amount of their institutional tainly in the next year, we will have more than an ad-
knowledge because of people retiring. equate number of states to get the program off the
ground in its current form.
That didn’t happen because the economic downturn
was so dramatic that a lot of people postponed their re- If that doesn’t happen, I suspect that the MTC will
tirements. Now, I think you are seeing that curve come want to look at whether or not there is some structure
back the other way. that can demonstrate its value at less than the full pro-
gram parameters. But, at this point, I am very optimis-
I think in the next couple of years, you are going to tic that there will ultimately be more than enough states
see some pretty dramatic losses in terms of institutional that sign on to the program to get it up and running in
knowledge at the state level as people begin to recover the next year. I think the potential there is just tremen-
from the economic downturn and start to retire. dous for the states.
BLOOMBERG BNA: What steps can states take to pre- BLOOMBERG BNA: Of course, it would provide states
serve that institutional knowledge? with additional resources to address income shifting
HUDDLESTON: It is extremely difficult. The states have from the use of transfer pricing on corporate income
been able to achieve that through some programs that tax returns. Some states already use third-party con-
allow employees to retire and then come back to work tractors to help with these cases. Can you tell me a bit
TAX MANAGEMENT WEEKLY STATE TAX REPORT ISSN 1534-1550 BNA TAX 7-31-156 (Vol. 2015, No. 31) PERSPECTIVE
more about the role of third-party auditors in the MTC’s ally think it is unlikely that many of these big issues will
ALAS program? move forward, certainly not in the next year or two.
HUDDLESTON: Sure. We would not be involved in Now, I think this is very unfortunate. I think that
dealing with their third-party auditors. We would hire many of the issues that have faced state tax administra-
auditors in-house. But where we would look to third tions have been around for a long time. It is well past
parties initially is in the econometrics area with econo- the time for Congress to act, especially in the area of In-
mists who deal in transfer pricing-type activities. ternet retailers. I would hope that Congress will act in
Economists with this type of expertise can be very such a fashion as to open the door for states to make
expensive and it is hard for the states to hire them on their own laws and rules.
any basis. We will be trying to build that capability over In the other areas, the more restricted areas that
time. Initially, we would have to hire third-party econo- Congress continues to consider, I am not sure that I see
mists to be able to help us with that program, but the Congress acting on those either.
auditing process would be MTC auditors exclusively.
BLOOMBERG BNA: So, essentially they will continue to
BLOOMBERG BNA: The Graphic Packaging case just maintain the status quo?
came out in Texas. Will this case have an impact on Gil- HUDDLESTON: Yes, I think that’s the shortest way to
lette in California? What are your thoughts on the hold- say it.
ing?
HUDDLESTON: I doubt it will have much impact on the BLOOMBERG BNA: In the absence of congressional ac-
tion on some of these issues, going back to Justice Ken-
California case. Certainly not as much impact as Kim-
nedy’s concurrence in Direct Marketing Association
berly Clark in Minnesota or IBM in Michigan. But, it
earlier this year, do you think that there is a chance of
will be helpful because the Graphic Packaging court fo-
a Quill II going before the U.S. Supreme Court any time
cused primarily on the income tax issue and found that
soon?
fact to be largely dispositive of the case.
HUDDLESTON: I certainly think that there is a chance
BLOOMBERG BNA: What is the next frontier for the and there is certainly a lot of discussion about this. If
MTC to address? states can find a vehicle that would allow them to do
HUDDLESTON: I think there are two big areas that the this, I think they would move forward.
MTC has increasing opportunities in. First, is unifor- I think it is important to keep in mind that these
mity. things don’t just spring up—they tend to develop over
In the uniformity area, the MTC has tremendous op- time. They also tend to develop in many states at once.
portunities to look more closely at rules and regula- When the Quill case came out a number of years ago,
tions, as opposed to broader-based model statutes. I there were several states that were pursuing similar
would hope that they will continue along the lines that types of activities and Quill just happened to be the case
they have started to go down to look more closely at that made it to the U.S. Supreme Court. I suspect that
rules and regulations that address the impact of the new this is the sort of thing we will see this time around too.
UDITPA models. BLOOMBERG BNA: What advice do you have for state
I think there are a lot of other areas, such as unifor- tax practitioners who are just starting out?
mity for Federal RARs (Revenue Agent Reports), that HUDDLESTON: I would say the most significant thing
the MTC should continue to pursue.
you can do is to find a face. That is what I like to tell
The other area where I think there are a lot of oppor- people who say ‘‘what is the most important thing you
tunities for the MTC is the area of legal support. can do?’’ By that I mean, in every revenue department
One thing that we have seen over the years is that across the country, taxpayers should find somebody
most states are very narrowly focused on their own le- who they actually know. The ability to facilitate discus-
gal issues. Sometimes, they will miss broader issues sion is very important. Problems are just routine com-
that ultimately impact them, but immediately impact a pliance issues, but your ability to find a solution is en-
lot of other states. hanced when you can find someone in the department
Being able to utilize the legal resources of the MTC to call.
can be a tremendous asset to states as they deal with Even if they can’t solve your problem for you, gener-
both legislation and litigation. I would like to see a con- ally they will be happy to find the right person for you
tinued expansion of the MTC’s legal support capabili- to talk to. Those types of contacts are just invaluable.
ties. Also, not just on the level of someone you can corre-
BLOOMBERG BNA: What role do you see the interna- spond with or call on the telephone, but someone if you
pass them on the street you would know who they are,
tional community playing in resolving some of the state
and they would know who you are.
tax controversies that have been brewing over the past
few decades (remote vendor sales tax collection, mobile BLOOMBERG BNA: What is the next step for you in
workforce, etc.) Also, do you think there is a chance your career?
that any of the state tax bills (Marketplace Fairness Act, HUDDLESTON: Well, I will be joining Ernst and
Remote Transactions Parity Act, etc.) currently before Young’s indirect tax practice in the Washington, D.C.
Congress will be enacted? national tax office as of August 3.
HUDDLESTON: No, I think it is unlikely that we are go-
ing to see legislation on most of these issues enacted in BLOOMBERG BNA: So, you will be moving back to the
the near term or in the near future. I think there are so private sector?
many issues that Congress is focused on. So, I person- HUDDLESTON: Yes, one more time.
7-31-15 Copyright 姝 2015 TAX MANAGEMENT INC., a subsidiary of The Bureau of National Affairs, Inc. TM-WSTR ISSN 1534-1550PERSPECTIVE (Vol. 2015, No. 31) 7
Ta x P o l i c y
New York is a leader in its tax enforcement and compliance efforts; however, many tax
attorneys and certified public accountants interviewed by Bloomberg BNA expressed con-
cerns that the state may be overreaching in a number of key areas. This article examines
the states policies and practices in key areas such as sales tax audits, residency and domi-
cile issues and criminal enforcement in order to determine whether the state sometimes
goes too far.
Does New York State Overreach in Its Tax Enforcement?
A Comprehensive Look at the State’s Policies and Practices
BY GERALD B. SILVERMAN emphasizes voluntary compliance over audits, collec-
tions, litigation and criminal enforcement.
An estimated 96 percent of the tax revenue collected
Introduction by the department—$96 billion—is reported and sub-
mitted voluntarily by taxpayers, according to Nonie
ew York, considered by some to be a leader in its
N tax enforcement and compliance efforts, may be
overreaching in a number of key areas, according
to tax attorneys and certified public accountants inter-
Manion, executive deputy commissioner of the depart-
ment.
‘‘We want to leave the compliant taxpayers alone,’’
Manion said. ‘‘We assign our resources based on where
viewed by Bloomberg BNA.
The tax practitioners acknowledged the importance we think there are compliance issues.’’
of compliance and the need for enforcement, but said
state policies and practices in areas such as sales tax
audits, residency and domicile issues and criminal en- Residency, Domicile Issues
forcement go too far.
The area that seems to cause the most concern
Practitioners are divided on the question of whether
among practitioners is the nonresident income tax and
New York is more aggressive than other states and the
the state’s interpretation of what constitutes residency
Internal Revenue Service, but many said New York and
and domicile.
California are the most aggressive states. They also
cited the vast resources available to the state, including Under state tax law, a resident is generally defined as
data analytics. one domiciled in the state or one who isn’t domiciled in
State tax officials said the Department of Taxation the state but who maintains a permanent place of abode
and Finance (DTF) has a compliance continuum that in the state and spends more than 183 days of the year
in New York.
The state devotes a large amount of its audit re-
Gerald B. Silverman is a correspondent for sources to this area and collects about $200 million a
Bloomberg BNA. year from residency audits, according to Manion. She
said the state receives 800,000 nonresident personal in-
TAX MANAGEMENT WEEKLY STATE TAX REPORT ISSN 1534-1550 BNA TAX 7-31-158 (Vol. 2015, No. 31) PERSPECTIVE
come tax returns per year and audits 2,800 of those. Of
the 2,800, 49 percent result in change to the taxes due.
Practitioners’ View
‘‘We do these residency audits because there are a Tax practitioners have a different view of the resi-
lot of people that do have homes in New York,’’ Manion dency and domicile issues.
said. ‘‘The nature of New York lends itself there.’’ David S. Untracht, senior principal at the accounting
Manion said many of the taxpayers who are audited firm Untracht Early LLC, said his general experience
have multiple homes, and the challenge for the state is has been that auditors take ‘‘seemingly extreme posi-
to determine where they are ‘‘landing’’ and if that is tions’’ like refusing to recognize the change in domicile
their domicile. Manion said the issue becomes some- of a former New York resident who moved to a foreign
what contentious with taxpayers because the state is country and remained there for several years with no
asking for personal information such as travel and intention to return to New York.
credit card records. ‘‘It’s an area the state devotes a lot of audit resources
to because there is a lot of abuse,’’ Untracht told
She implored taxpayers to keep good records, as Bloomberg BNA.
well as a diary of receipts. Barry H. Horowitz, a partner in the accounting firm
WithumSmith & Brown PC, said the area is particularly
challenging because ‘‘you have to prove a negative.’’ He
Examination Areas cited an example of overreach in a residency audit in
which the state asked one of his clients for ‘‘millions of
Three areas are examined during a residency audit, dollars,’’ but eventually settled for only 25 percent of
according to June 2014 nonresident audit guidelines the original amount because it knew it was incorrect.
from the DTF: domicile, statutory residency and income John R. Lieberman, managing director at the ac-
allocation. The state tax law doesn’t define ‘‘domicile,’’ counting firm Perelson Weiner LLP, cited a residency
according to the guidelines. Instead, the definition is set case in which his client’s position was backed up by
in regulation and has been the subject of numerous court precedent and a statute clarifying the issue. The
court cases and decisions by the state Tax Appeals Tri- client, a company executive, ended up with almost
bunal. $100,000 in legal and accounting fees and decided to
The tax guidelines cite 62 cases before state courts or settle instead of pressing on.
the tribunal that have addressed the issues of domicile ‘‘You’re either pregnant or you’re not pregnant,’’
and residency. Lieberman said. ‘‘A clear cut case.’’
‘‘The nonresident audit could place a heavy burden
on the taxpayer due to the subjective nature of the ar-
eas reviewed,’’ according to the guidelines, which are
Most Audits
128 pages long. ‘‘Throughout these guidelines, the De- New York conducts more residency audits and non-
partment recognizes and has attempted to reduce this resident income allocation audits than any other state,
burden.’’ according to the law firm Hodgson Russ LLP, which has
‘‘The auditor, team leader and section head should represented clients in many of these cases, including
attempt to streamline the audit where possible, identi- one of the first to reach the state’s highest court.
fying the scope of the audit in the early stages and pin- The New York Court of Appeals in 2014 ruled in
pointing the specific records needed to accomplish the Matter of John Gaied v. N.Y., State Tax Appeals Tribu-
task,’’ it said. nal that individuals can’t be taxed as statutory residents
of the state for personal income tax purposes without
evidence that their dwellings were actually utilized as
Unique Situation residences
The court said a New Jersey resident who owned a
Verenda Smith, deputy director at the Federation of business and a multifamily apartment building in
Tax Administrators, said New York is unique because Staten Island, N.Y., wasn’t a statutory resident within
of its size, tax base, geographic location and the inclu- the meaning of the tax law because there was no basis
sion of New York City. to conclude that he used the apartment as his residence.
‘‘Other large states do not have to deal with six ‘‘New York auditors are notorious for taking the po-
border-state neighbors that contain disparate cultures sition that ‘once a resident of the Big Apple, always a
and tax types, with many of them clustered just outside resident,’ ’’ Richard D. Pomp, a law professor at the
New York City,’’ Smith said in an e-mail. ‘‘These lead to University of Connecticut School of Law and a leading
constant fussing over sales and income taxation that authority on state and local taxation, said in an e-mail.
crosses the New York border. Connecticut-New Jersey ‘‘They see lots of folks who change their drivers li-
commuters who work in New York City are an obvious censes, registration to vote, religious organizations and
example.’’ even their run-of-the-mill doctors,’’ he said. ‘‘But they
may return to N.Y. for more sophisticated medical care
‘‘You constantly read about New York’s challenging and to see the kids and grandchildren.’’
residents who take large capital gains just after saying ‘‘They may have ambiguous living arrangements
they have become domiciliaries of Florida,’’ she said. when they return,’’ Pomp said. ‘‘If things are gray, the
‘‘But do you know which state actually has the most ag- auditors will not err on the side of the taxpayer. The
gressive program, and has the biggest problem? It’s problem is particularly acute in New York where you
Iowa.’’ have lots of high net-worth individuals, who are well ad-
‘‘You just never hear about the flood of wealthy vised, and have the funds to spend time outside New
farmers cashing in on their lifetime’s accumulation of York in a tax haven like Florida, and time inside the
farmland and moving to Florida,’’ she said. state, thus complicating the issue of residency. Things
7-31-15 Copyright 姝 2015 TAX MANAGEMENT INC., a subsidiary of The Bureau of National Affairs, Inc. TM-WSTR ISSN 1534-1550PERSPECTIVE (Vol. 2015, No. 31) 9
can get very murky if the move to a tax haven takes Manion said sales tax audits are particularly chal-
place shortly before the realization of a large gain.’’ lenging in cases where a vendor doesn’t keep good re-
cords or books and the state is forced to use indirect
methods of estimating taxes due.
Criminal Enforcement ‘‘It’s never clean,’’ she said. ‘‘It does come down to:
This is our best estimate.’’
Another area where practitioners said New York has The state uses data analytics to target its audits to
gone too far is in criminal enforcement. ‘‘outliers’’ whose sales aren’t consistent with similarly
William J. Comiskey, a partner with Hodgson Russ situated industries. In addition, it gets third-party infor-
LLP who helped usher in that area when he was the mation from beer, wine and liquor distributors, credit
DTF’s deputy commissioner for enforcement, says the cards and franchisors to cross-check sales by bars, res-
state has sometimes gone too far. taurants and others, she said.
Comiskey represented a Glens Falls, N.Y., business- The use of third-party information has been success-
man who was indicted in 2011 on tax fraud and false fil- ful in increasing voluntary sales tax compliance be-
ing charges. But in 2012, a Warren County court dis- cause taxpayers know that the DTF has the informa-
missed the case after the district attorney’s office con- tion, Manion said.
cluded that the DTF’s position was incorrect, Comiskey Comiskey, who created the third-party program
said. while at the department, said ‘‘some tools are designed
The evidence showed that the alleged unreported in- to just be out there to create the impetus to have more
come cited by the state was proceeds from the sale of a compliance.’’
personal residence, transfers from one bank account to The department, in another effort to increase volun-
another and other nontaxable sources of income. tary compliance, began a pilot program in 2014 called
‘‘The department jumped the gun without conduct- the ‘‘sales tax vendor relationship model,’’ Manion said.
ing any sort of real investigation,’’ Comiskey said. It Under the program, the DTF sends collection staff to
turned into ‘‘a nightmare’’ for the defendant and his certain new vendors to prospectively inform them about
business. their tax filing requirements or it sends the information
Alan J. Straus, a former chairman of the New York in the mail.
State Society of Certified Public Accountants, said there The department has found improved compliance
is ‘‘a scary difference’’ between civil and criminal en- when an agent visits and meets with a new vendor, but
forcement. less success when information is simply left with the
‘‘They’re taking the approach that instead of civilly vendor without a personal visit, according to Manion.
misstating your liability, you’ve criminally stolen our She said the department is getting into ‘‘behavioral sci-
money,’’ said Straus, an attorney and CPA. ‘‘That’s a ence’’ to find the best method to communicate with and
scary difference.’’ educate taxpayers.
Manion said the state’s electronic filing of sales tax
returns has been a success by making filing much
Guidelines easier. About 90 percent of sales tax vendors are
e-filing, she said.
The DTF’s Criminal Investigations Division guide-
lines, which were issued in 2013, set forth the factors
that must be considered before the state pursues crimi- Sales Tax Concerns
nal sanctions. The state should consider the nature and
seriousness of the misconduct, the putative defendant’s Leah Robinson, a partner at Sutherland, Asbill &
history and whether other noncriminal sanctions would Brennan LLP, cited examples of her concerns about the
be sufficient, according to the guidelines. DTF’s sales tax enforcement. In one case involving a
In addition, CID staff are supposed to consider the Fortune 500 company, the auditors asked for a ‘‘respon-
deterrent impact of a criminal case, ‘‘building respect sible person assessment’’ from high-level management
for the law and creating a fair and equitable tax sys- that would have made senior management personally li-
tem.’’ able.
‘‘While ultimate authority for pursuing prosecutions ‘‘It makes sense when you are worried about the
rests with prosecutors—itself an important safeguard ability of a company to pay,’’ Robinson said, pointing
against improvident use of the criminal law—the refer- out that this particular company was financially solid.
ral of a case for prosecutorial consideration or, even ‘‘It seemed to us to be a strategic way to force the com-
more clearly, pursuit by the Department on its own ini- pany to start talking settlement.’’
tiative of an arrest or search warrant, is itself a signifi- Another example was a case before an administra-
cant step with likely adverse consequences to the sub- tive law judge involving whether or not charges for film
ject of the action,’’ according to the guidelines. rent was subject to sales tax if it was delivered on a tan-
gible media. In the middle of the case, the DTF issued
‘‘Given the gravity of the decision to pursue criminal
an advisory opinion to another taxpayer that said the
sanctions, this memorandum sets out the factors that
charges were taxable. Although Robinson won the case,
CID personnel must consider when opening a CID mat-
the department kept the guidance up on its website.
ter and, even more importantly, when determining to
seek criminal sanctions.’’ ‘‘That was a questionable move in the middle of liti-
gation,’’ she said, and ‘‘an example of less-than-
forthcoming guidance.’’
Sales Tax Audits Robinson said the imposition of sales tax on remote
software or online services is ‘‘a constant audit issue,’’
Sales tax audits are also a concern for many practi- with the state taking ‘‘a very aggressive reading of the
tioners. statute.’’
TAX MANAGEMENT WEEKLY STATE TAX REPORT ISSN 1534-1550 BNA TAX 7-31-1510 (Vol. 2015, No. 31) PERSPECTIVE
Auditors ‘Arbitrary and Capricious’
Many of the issues cited by tax practitioners involve Horowitz said auditors sometimes take ‘‘arbitrary
the practices of state auditors, who they said can put and capricious’’ positions that can then end up being
undue pressure on taxpayers to obtain payments. Prac- settled at higher levels of the department.
titioners who asked to remain anonymous used the ‘‘There are some really good agents out there,’’ but
words ‘‘shake-down’’ and ‘‘extortion’’ to describe the some think ‘‘every taxpayer’s a crook,’’ said Horowitz,
most extreme cases. On the other hand, most practitio- a member of the NYSSCPA’s New York, Multistate &
ners acknowledged that auditors have a tough job and Local Taxation Committee.
many qualified their criticism by saying that there are Karen J. Tenenbaum of Tenenbaum Law P.C. said
good auditors and bad auditors. she had a case of a New York City restaurant that was
Untracht, whose practice is largely focused on New padlocked by the department, which had asked for a
York, New Jersey and Connecticut, said that ‘‘New large amount of money to settle the case. She brought
York is much more active.’’ the case to the tax commissioner at a ‘‘resolution room’’
‘‘They’re certainly the most active in audit at a tax conference and it was subsequently settled for
activity—by a lot,’’ said Untracht, a member of the a much lower amount.
NYSSCPA Financial Instruments and Transactions The restaurant is open and making its payments, ac-
Committee. cording to Tenenbaum. ‘‘If you’re balanced, everyone
Pomp said there are ‘‘conflicting expectations’’ for wins,’’ she said.
tax auditors. ‘‘They are the guardians of the fisc. In that Robinson said that in her experience representing
position, they should be cautious, skeptical, cynical, large companies, she doesn’t frequently run into audi-
and suspicious. Any auditor who has been around the tors going too far—perhaps because higher-level staff in
block has been lied to, deceived, and snookered.’’ Albany are paying closer attention. ‘‘The audit supervi-
‘‘On the other hand,’’ he said, ‘‘we want the auditors sor seems to be checking with the technical division,’’
to be flexible, reasonable, exercise good judgment, and she said.
view our clients as legitimate taxpayers, not tax dodg- Manion said ‘‘we work with our auditors to make
ers.’’ sure they are not overly aggressive’’ through training
Pomp said auditors ‘‘can be excused for being con- and supervisory oversight. She said the department has
servative and ruling for the government’’ in cases that a three-to-one auditor-to-supervisor ratio.
aren’t black and white, but supervisors need to play a The department also issues ‘‘an escalation letter’’ at
different role. the start of every audit, informing taxpayers of the au-
‘‘They should not automatically circle the wagons ditor, the supervisor, the section head and the program
and support the auditors no matter what,’’ Pomp said. manager. Manion said the DTF will sometimes rear-
‘‘They should have the backbone to intervene and see range the audit teams.
the issues more dispassionately and unbiased. There ‘‘The tenor of the audit can be set by the practitioner
should not be a disconnect between these higher level or the taxpayer themselves,’’ she said. ‘‘We have a large
officials and the auditors.’’ audit workforce. We spend a lot of time on training
them.’’
In a recent interview with Bloomberg BNA, the
Disconnect state’s new tax commissioner, Jerry Boone, said the
It is exactly that disconnect that is frequently cited by ‘‘use of advanced business analytics and predictive
practitioners as a concern. modeling techniques enables us to target our audits so
that we’re not bothering the taxpayers that are comply-
‘‘I don’t think the audit staff are bad people,’’ said Ar-
ing, but we’re significantly more likely to find non-
thur R. Rosen, a partner at McDermott Will & Emery
compliance and focus our efforts on those non-
LLP. ‘‘They just don’t have the same approach to the
compliers.’’
importance of the law.’’
‘‘Audit staff looks to get something out of every cor-
poration,’’ said Rosen, former deputy counsel at the Suggested Improvements
DTF and former chairman of the American Bar Associa-
tion Section of Taxation’s State and Local Tax Commit- Tax practitioners have a number of suggestions for
tee. ‘‘The higher-level people understand that the law is making the state’s tax enforcement fairer and more bal-
supposed to control.’’ anced for taxpayers, including the creation of an inde-
Rosen cited a case in which his client’s position was pendent Office of Taxpayer Advocate.
correct but he didn’t have 100 percent proof. The audi- While the state created the Office of the New York
tor threatened to request scads of documents and the State Taxpayer Rights Advocate in 2009, the office is
client ‘‘called the bluff’’ and agreed to the request. The housed within the Department of Taxation and Finance.
state then asked for more documentation and asked for Legislation to make the office completely independent
a certain amount of money. The client ultimately paid, has been introduced for some 15 years, but the bills
realizing that the legal fees would have exceeded the have either been vetoed or failed to pass both houses.
amount requested by the state. ‘‘That would be one way to provide a mechanism to
Rosen also cited a combined reporting case in which temper some of the enthusiastic enforcement that
a client provided extensive proof of instant unity, but people encounter,’’ Comiskey said.
the state disagreed. The client settled because it would Another suggestion is for the state to establish better
have cost more to litigate, but ‘‘there was absolutely no standards for offers in compromise, much like those
basis in law or facts,’’ he said. used by the IRS.
‘‘That happens on a regular basis,’’ Rosen said. Straus said that until one recent case, New York had
‘‘They’re coercing taxpayers into paying something.’’ never accepted an offer in compromise from one of his
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clients in 38 years of practice. ‘‘The standards are so ri- s an average of 88 percent of written inquiries re-
diculously high that you can’t meet them,’’ he said. garding PIT returns were resolved within 90 days, down
Similarly, the state could ease up on some of its from 92.7 percent in the second quarter of 2014; and
harsh collection terms, practitioners said. s 87.6 percent of written inquiries regarding busi-
Comiskey said collections ‘‘are really very aggres- ness taxes were resolved within 90 days, down from
sive’’ in some cases, with some taxpayers unable to af- 92.7 percent in the second quarter of 2014.
ford the onerous terms for repayment. He said he has a
better appreciation since leaving the department of the
pressure some businesses experience just to keep their Accessibility Issues
businesses afloat.
‘‘There’s a humanity to it that sometimes I think Some practitioners who represent individual taxpay-
folks on the enforcement side lose perspective of,’’ ers and small businesses suggested that the department
Comiskey said. improve its communications with taxpayers, while
practitioners who represent large companies said they
usually have access to supervisory staff when needed.
Payment Plans Lieberman said he can usually get through to a man-
ager at the IRS, if necessary, but ‘‘it’s very difficult to
Fred Slater, a partner in the accounting firm MS get through’’ in New York.
1040 LLC, said New York is frequently unwilling to ne-
gotiate reasonable payment plans. The state could get Slater said that ‘‘there’s nowhere to call, everything
more people into the system with reasonable plans, but is automated. Try and get a person, it’s almost impos-
is instead pushing people ‘‘underground,’’ he said. sible.’’
‘‘If you ask any accountant, do you pay the IRS first On the other hand, Robinson, who represents large
or pay New York state, they’ll all tell you to pay New companies, said mid-level and senior audit staff are ‘‘in-
York state,’’ said Slater, a former chairman of the credibly accessible.’’ In some states, Robinson said she
NYSSCPA’s Relations with the Internal Revenue Ser- has had to file a formal protest to get access to senior
vice Committee. ‘‘They don’t care if you don’t eat.’’ audit management.
Slater, an outspoken critic of the department, offered ‘‘I’ve never had senior audit management decline a
an example of overreach and delays in collections. A meeting,’’ she said. ‘‘To a large extent, that balances
client who omitted some Forms 1099 filed an amended some of the aggressiveness.’’
return with the IRS and the state for his 2011 personal
income tax returns. The IRS case was resolved quickly,
but the state case was only resolved in July 2015. Tax Guidance
The state sent the client a notice and amended the re-
Robinson also had high praise for the amount of
turn by deleting the credit for long-term care insurance,
guidance offered by the DTF. She said the state is some-
saying the amendment was ‘‘based on information re-
times seen as aggressive because it is so forthcoming in
ceived,’’ Slater said. ‘‘In all senses, this is an audit
guidance, whereas other states may be just as aggres-
change and the taxpayer should be given a right to re-
sive, but cases don’t become public until they are liti-
spond with New York state stating exactly why they are
gated.
changing the return,’’ Slater said in an e-mail.
The taxpayer sent two responses with proof of the ‘‘New York, more than any other state I work in
long-term care and asked for an explanation, but never regularly, constantly issues guidance,’’ she said. ‘‘It’s
received one. Instead, the state sent a notice of demand such a huge benefit for taxpayers.’’
for payment and, six months after it amended the re- Improving communications is a priority of the state’s
turn, filed a lien against the taxpayer, according to new tax commissioner. ‘‘We are targeting our commu-
Slater. nications to the specific needs and characteristics of the
‘‘So essentially letters written to New York state are taxpayer so we can contact taxpayers directly, before
not assigned for months and the law that requires New there’s an issue, to remind them to file by a particular
York state to stop collection pending a resolution was date or to confirm for the taxpayer that we received the
totally ignored,’’ Slater said. ‘‘No one was following the right documents on time,’’ Boone said. ‘‘This proactive
rules about logging in a letter and stopping the collec- communication fosters the relationship and continues
tion in a timely manner.’’ to build voluntary compliance.’’
Boone said the department is also getting ‘‘in front of
businesses early’’ to help them understand the tax laws.
Performance Metrics ‘‘It’s an opportunity for us to receive feedback on what
is needed, or clarification, or respond to questions and
The DTF, in an effort to improve accountability, just make sure we are all on the right path to success,’’
posts its performance against four metrics on a quar- he said.
terly basis: response to telephone inquiries, issuing tax
forms on time, resolving personal income tax (PIT)
written inquiries and resolving business written inqui-
ries.
Awards
For the quarter ending June 30: One of the department’s greatest successes is its
s 61.8 percent of telephone inquiries were answered e-file education program, which won the Federation of
within five minutes, a decline from 74.7 percent in the Tax Administrator’s 2015 Taxpayer Service and Educa-
second quarter of 2014; tion Award. The program included targeted mailings to
s 100 percent of 107 tax forms and instructions taxpayers and tax preparers who had previously filed
were issued timely and accurately, as in the second paper returns, video and radio public service announce-
quarter of 2014; ments, Web promotion and community outreach.
TAX MANAGEMENT WEEKLY STATE TAX REPORT ISSN 1534-1550 BNA TAX 7-31-15You can also read
