| Matter of Michael A. Goldstein No. 1 Trust v Tax Appeals Trib. of theState of N.Y. |
| 2012 NY Slip Op 09109 [101 AD3d 1496] |
| December 27, 2012 |
| Appellate Division, Third Department |
| In the Matter of Michael A. Goldstein No. 1 Trust et al., Petitioners,v Tax Appeals Tribunal of the State of New York et al.,Respondents. |
—[*1] Eric T. Schneiderman, Attorney General, Albany (Paul Groenwegen of counsel), forCommissioner of Taxation and Finance, respondent.
Lahtinen, J. Proceeding pursuant to CPLR article 78 (initiated in this Court pursuant to TaxLaw § 2016) to review a determination of respondent Tax Appeals Tribunal which deniedpetitioners' requests for additional interest on certain refunds of personal income tax imposedunder Tax Law article 22.
An audit by the Internal Revenue Service resulted in petitioners, which are New York trusts,receiving in April 2006 a reduction of their taxable income from the years 1995, 1996 and1997.[FN*]In July 2006, petitioners timely filed amended returns with the Department of Taxation andFinance (see Tax Law § 659) and, in December 2006, petitioners received stateincome tax refunds for the years at issue. Interest was paid on the refunds for the period fromJuly 2006 (when the amended returns were filed) to December 2006 (when payments of therefunds were made). Petitioners, however, sought interest on the refunds from the dates of theoriginal return filings in 1995, 1996 and 1997.[*2]
The Department issued notices of disallowance regardingthe additional interest sought by petitioners. The Department determined that, pursuant to TaxLaw former § 688, interest on an amended return was allowed from the date of filing of theamended return and not the date the original return was filed. The Administrative Law Judge(hereinafter ALJ) noted that, under the statutory language now in effect, interest on an amendedreturn is permitted from the original filing date, but such statutory language did not becomeeffective until January 1, 1999. Since the years in question predated the pertinent change in thestatutory language, the ALJ sustained the disallowance. Thereafter, respondent Tax AppealsTribunal affirmed the ALJ. This proceeding ensued.
Petitioners contend that reading Tax Law § 688 (former [a] [3]) in conjunction withTax Law § 687 (c) establishes that they were entitled to interest from the date the originalreturns were filed. Initially, we note that interpreting these statutes does not implicate the specificapplication of a broad statutory term by the agency charged with administering the statute and,thus, deference need not be accorded the agency's statutory interpretation (see Kurcsics vMerchants Mut. Ins. Co., 49 NY2d 451, 459 [1980]; cf. Matter of Island Waste Servs., Ltd. v Tax Appeals Trib. of the State ofN.Y., 77 AD3d 1080, 1082 [2010], lv denied 16 NY3d 712 [2011]). Here, "[t]hequestion devolves to one of pure statutory interpretation and analysis, determinable only on [an]accurate apprehension of legislative expression and intent" (Matter of 1605 Book Ctr. v TaxAppeals Trib. of State of N.Y., 83 NY2d 240, 244 [1994], cert denied 513 US 811[1994]; see Kurcsics v Merchants Mut. Ins. Co., 49 NY2d at 459; Matter of MutualRedevelopment Houses v Roth, 307 AD2d 422, 424 [2003], lv denied 100 NY2d516 [2003]). Nonetheless, we agree with the agency's statutory interpretation.
Tax Law § 688 is entitled "[i]nterest on overpayment." Tax Law § 688 (a) (1)and (2) provide generally for interest to be paid from the date of overpayment. An exception tothe payment of interest that was in effect for the years at issue was set forth in Tax Law §688 (former [a] [3]) as follows: "Late and amended returns and claims for credit orrefund. Notwithstanding the provisions of paragraph one or two of this subsection, in the case ofan overpayment claimed on a return of tax which is filed after the last date prescribed for filingsuch return (determined with regard to extensions), or claimed on an amended return oftax or claimed on a claim for credit or refund, no interest shall be allowed or paid for anyday before the date on which such return or claim is filed" (L 1989, ch 61, § 151[emphasis added]). This language unambiguously provided that interest on a refund claimed inan amended return did not accrue until the amended return was filed. Further, the fact that suchwas the state of the law was clearly acknowledged by the Legislature when it amended Tax Law§ 688 (a) (3) and (c) to permit taxpayers filing amended returns for periods after January 1,1999 to receive interest from the date the original tax returns were filed (see L 1999, ch377, §§ 1-3). The need for the amendment was explained as follows: "Currently, thetax law provides that no interest shall be paid on any tax overpayment for any date before a lateor amended tax return is filed. An amended tax return is not the same as a [*3]tax return filed late and this difference should be realized in regardto the payment of interest on any tax overpayment . . . . This legislation. . . change[s] the current law by authorizing the payment of all interest accrued on atax overpayment from the date the original tax return was filed, and in so doing, give[s] taxpayersfiling an amended return the full benefit of all the interest earned on their tax overpayment"(Senate Mem in Support, 1999 McKinney's Session Laws of NY at 1799-1800).
Tax Law § 687 (c) does not, as urged by petitioners, authorize payment of interestfrom the original filing date where an amended return is filed following a change in taxableincome reported to the Internal Revenue Service. That statute generally addresses the limitationson credits or refunds, and Tax Law § 687 (c), in particular, addresses federal changes,stating: "A claim for credit or refund of any overpayment of tax attributable to a federal changeor correction required to be reported pursuant to [Tax Law § 659] shall be filed by thetaxpayer within two years from the time the notice of such change or correction or such amendedreturn was required to be filed with the [C]ommissioner of [T]axation and [F]inance. If the reportor amended return required by [Tax Law § 659] is not filed within the [90-]day periodtherein specified, no interest shall be payable on any claim for credit or refund of theoverpayment attributable to the federal change or correction." The language of this section servesto establish two limitation periods with regard to the filing of federal changes: first, a taxpayermust file a refund claim within two years from the time the taxpayer was required to notifyrespondent Commissioner of Taxation and Finance of the federal change and, second, a taxpayermust file the claim within 90 days after the change was finally determined in order to receiveinterest on the refund (see Tax Law § 687 [c]). Simply stated, failure to file thefederal change within 90 days results in no interest, whereas filing within 90 days permits interestin the manner provided by Tax Law § 688. And, as already discussed, during the years inissue, Tax Law former § 688 did not permit interest on an amended return from the date oforiginal filing.
Similarly unavailing is petitioners' argument premised upon Tax Law § 688 (former[c]). That paragraph of the statute provided that refunds of overpayments paid promptly (within45 days) did not receive interest. The paragraph was amended in the same 1999 legislation inwhich Tax Law § 688 (a) (3) was amended and now provides that, with regard to a refundin an amended return, no additional interest is paid from the date the amended claim is filed tothe refund date if the refund payment is made within 45 days. This is not inconsistent with theother pertinent statutory language regarding interest and furnishes no support to petitioners'current contentions regarding interest.
Petitioners' remaining arguments have been considered and are either unpreserved or withoutmerit.
Rose, J.P., Spain, Kavanagh and McCarthy, JJ., concur. Adjudged that the determination isconfirmed, without costs, and petition dismissed.
Footnote *: The taxable income of thebeneficiaries of the trusts was increased for the same time frame.