A Grain of SALT: March State Focus – New York

On January 19, a New York qui tam complaint was unsealed. This was unremarkable in and of itself, as there are many qui tam complaints progressing through the courts. However, what was remarkable was the nature of the suit. The suit, State of New York ex. rel. Doreen Light v. Myron Melamed, et al., involves a relator alleging that a decedent and his family structured the decedent’s estate to avoid New York personal income and estate taxes. This is apparently the first estate tax qui tam suit that has been unsealed. The attorney general declined to intervene in the case. As per usual, the attorney general declined to comment as to why it did not intervene.

Although an unsealed case where the attorney general declined to intervene is not otherwise remarkable, the case is notable. It shows that potential relators and their attorneys are looking to expand the tax provisions of the False Claims Act as much as they can. Even though this case will likely not have an impact on corporate taxpayers, those taxpayers should know that relator’s attorneys are actively looking for cases to bring, and are being creative. There are no signs, either in the governor’s current proposed budget or otherwise, that the delegation of tax enforcement authority to private citizens is being reconsidered or even restrained. Taxpayers should be wary.