| Whitmer v New York State Dept. of Taxation &Fin. |
| 2014 NY Slip Op 06446 [120 AD3d 1590] |
| September 26, 2014 |
| Appellate Division, Fourth Department |
[*1]
| Judith R. Whitmer, Appellant, v New York StateDepartment of Taxation and Finance, Respondent. |
Law Office of Ralph C. Lorigo, West Seneca (Ralph C. Lorigo of counsel), forplaintiff-appellant.
Eric T. Schneiderman, Attorney General, Albany (Kathleen M. Arnold of counsel),for defendant-respondent.
Appeal from an order of the Supreme Court, Erie County (Frederick J. Marshall, J.),entered May 10, 2013. The order, among other things, granted defendant's motion forsummary judgment dismissing the complaint.
It is hereby ordered that the order so appealed from is unanimously affirmed withoutcosts.
Memorandum: In November 2007, defendant sent plaintiff a notice and demand forpayment of sales taxes under jeopardy assessment (jeopardy assessment) pursuant to TaxLaw § 1138 (b), and a notice of determination for sales taxes due pursuantto Tax Law § 1138 (a) (1) and (3) (B). The jeopardy assessment and noticeof determination advised plaintiff that defendant determined that she was liable as anofficer or a responsible person of the named corporation for payment of the sales taxes.The jeopardy assessment indicated that a jeopardy assessment was required inasmuch asplaintiff appeared to be preparing to transfer property or to leave the state. Defendantfiled tax warrants and liens against plaintiff.
On July 2, 2008, plaintiff commenced this declaratory judgment action alleging thatshe was not an officer, director, employee, shareholder, or responsible person of thenamed corporation and was not liable for the assessment. Plaintiff sought a judgmentdeclaring that Tax Law § 1138 was not applicable to her, that theassessment issued by defendant was null and void, and that the liens were null and voidbecause she was not a person responsible for the sales taxes. Plaintiff also sought a returnof money seized by defendant from the sale of property she owned.
Supreme Court properly granted defendant's motion for summary judgmentdismissing the complaint as time-barred. It is well settled that a court must examine thesubstance of a declaratory judgment action to determine if the issues could be resolved inanother proceeding for which a specific limitation period is provided by law (seeSolnick v Whalen, 49 NY2d 224, 229-230 [1980]). "Of course, when the claim isone against a governmental body or officer, the form of action that immediately springsto mind is a proceeding brought under CPLR article 78, a traditional, and surely the mostcommon, vehicle for challenging a governmental decision or action" (New York CityHealth & Hosps. Corp. v McBarnette, 84 NY2d 194, 201 [1994], reargdenied 84 NY2d 865 [1994]).
As the court properly determined, the gravamen of plaintiff's complaint is that she isnot responsible for the corporation's sales tax payments because she was not an officer,director, employee, shareholder, or responsible person of the corporation. Thiscontroversy could have been resolved in a CPLR article 78 proceeding to challenge theNovember 5, 2007 jeopardy assessment and notice of determination and, under thefour-month statute of limitations, plaintiff's complaint is time-barred (see Heron vDivision of Taxation of Dept. of Taxation & [*2]Fin. of State of N.Y., 209 AD2d 989, 990 [1994],lv denied 85 NY2d 809 [1995]; Davidoff v State Tax Commn. of State ofN.Y., 208 AD2d 1095, 1096 [1994]; Inserillo v State Tax Commn., 159AD2d 488, 489 [1990], appeal dismissed 76 NY2d 772 [1990], lv denied76 NY2d 709 [1990]).
Plaintiff contends that the catch-all six-year statute of limitations applies because thenature of the action is a return of money paid under protest to defendant, which is a causeof action for monies had and received. She contends that such a cause of action isappropriate where the allegations are that defendant was without jurisdiction to collectthe money, and the court has already ruled that the jeopardy assessment was untimely asa matter of law and thus defendant was without authority, or jurisdiction, to issue thejeopardy assessment (Whitmer vNew York State Dept. of Taxation & Fin., 24 Misc 3d 1017, 1021-1022[2009]). We reject those contentions. Although plaintiff's fourth cause of action sought arefund of approximately $73,000 for the money seized by defendant pursuant to theassessment and levies, that claim for monetary relief was incidental to the primary reliefsought, i.e., a declaration that plaintiff was not a responsible person for the taxes soughtunder Tax Law § 1138 (see CPLR 7806; Matter of Gross vPerales, 72 NY2d 231, 236 [1988], rearg denied 72 NY2d 1042 [1988]).When a tax statute is alleged to be unconstitutional, or attacked as wholly inapplicable,"the invalidity or total inapplicability affects the entire statute, including the limitationsand restrictions on the remedy provided in it" (Matter of First Natl. City Bank v Cityof N.Y. Fin. Admin., 36 NY2d 87, 92-93 [1975]; see City of Rochester vChiarella, 98 AD2d 8, 12 [1983], affd 63 NY2d 857 [1984]). "To challenge astatute as wholly inapplicable, the taxpayer must allege that the agency had nojurisdiction over it or the matter that was taxed" (Bankers Trust Corp. v New York City Dept. of Fin., 1 NY3d315, 322 [2003]). Even assuming, arguendo, that the jeopardy assessment wasuntimely, we disagree with plaintiff that Tax Law § 1138 is thereforewholly inapplicable and unconstitutionally applied to her. As explained above, defendantalso issued a notice of determination pursuant to Tax Law § 1138 (a)seeking the unpaid sales taxes, which is not dependent upon the jeopardy assessment.Present—Scudder, P.J., Centra, Carni, Lindley and Whalen, JJ.