In Matter of Leslie Thompson, DTA No. 824908 (N.Y.S. Div. of Tax App., Nov. 8, 2012), a New York State Administrative Law Judge held that a request for a conciliation conference was untimely, because it had not been filed within 30 days of the issuance of a Notice of Deficiency alleging fraud.

The Department claimed that it had issued a Notice of Deficiency on November 10, 2011, seeking additional personal income tax for 2004 through 2009 of nearly $150,000, plus interest and a penalty for alleged fraud, bringing the total amount sought to more than $330,000. Ms. Thompson claimed that she had not received the Notice, nor had her representative, who had been retained in April 2011 and who had discussed the case with the Department’s employees, corresponded with them and met with the Department on her behalf. On November 23, the representative requested a copy of the Notice of Deficiency. Although it is not clear from the determination whether such a copy was provided, Ms. Thomson’s representative provided a power of attorney on December 20, 2011, and on January 4, 2012, a copy of a Notice and Demand for Payment of Tax Due was mailed to the representative.

The ALJ reviewed the mailing records provided by the Department and found that the Department established that the Notice of Deficeincy was indeed mailed to Ms. Thompson on November 10, 2011. Although there is generally a 90-day period from the date of mailing of a Notice of Deficiency to file a request for a conciliation conference or petition for a hearing, a 2010 amendment to the Tax Law provides that, whenever a notice imposes a fraud penalty, the request for review must be filed within 30 days of the mailing of the notice. Tax Law § 170[3-a][b], [h]. Because the request for a conciliation conference was not filed until January 17, 2012, more than 60 days after the mailing date, it was untimely.

The ALJ also held that Ms. Thompson’s representative did not have to be served with a copy of the Notice, despite the usual rule that, once an attorney has appeared, the time period for filing does not begin to run until counsel has been served. Here, the ALJ stated that, while there may have been discussions, correspondence, and a meeting, “those events do not constitute an appearance that would toll the period for filing a petition or require the service of a notice.” Because no power of attorney had been filed at the time the Notice was mailed, the representative had not formally appeared on behalf of the petitioner and was not required to be served.

Additional Insights. This case illustrates the importance of paying careful attention to the exact rules that govern different proceedings before the Bureau of Conciliation Services and the Division of Tax Appeals. Whenever a notice includes a fraud penalty, a response must be filed within the very short 30-day period, and that rule is clearly set forth in the statute.

However, the situation involving the representative seems a little murkier. The representative requested a copy of the Notice on November 23, when the 30-day period would still have been open, and it is not clear what response, if any, was received. It also appears that, prior to the issuance of the Notice, the representative had a series of telephone calls and correspondence with the Department, as well as a personal meeting, which the determination acknowledges. No explanation is provided as to why the Department was willing to correspond and meet with the representative without a power of attorney, which seems inconsistent with the Department’s strict adherence to the rules of confidentiality prohibiting the sharing of taxpayer information with anyone who has not filed a valid power of attorney.