NYC Corp amended refund denied with no explanation

Technical topics regarding tax preparation.
#1
Posts:
394
Joined:
13-Sep-2014 1:26pm
Location:
New York
Hi all,

Hope everyone is doing okay.

I filed over a year ago an amended NYC Corporate tax return for 2017 and 2018 for taxpayer who is a mortgage broker and does business as an S-Corp. For many years, taxpayer's prior accountant was incorrectly filing NYC Corporate tax returns and S-Corp was paying substantial NYC Corporate Taxes even though Corporation's physical office location was and always has been located outside of NYC (Long Island) and was and always has done all business outside of NYC.

I sent in on taxpayer's behalf hundreds of closing statements from sales of homes in Long Island to establish S-Corp did business in Long Island (outside of NYC). I also sent in a signed lease which indicates physical office location has always been located in Long Island (outside of NYC) along with an explanation stating that just from a logistics stand point it wouldn't even make sense for Corporation to do business or have an office in NYC if 100% of the home sales are in Long Island (outside of NYC).

In many of my phone calls with tax auditor this past year I also advised her that if she needed any additional documentation to prove Corporation did not do business in NYC to let me know and we could provide additional info if necessary.

One problem with prior returns was that the 100% owner of S-Corp does personally live in NYC and the prior accountant listed that address on his S-Corp Tax returns and simply assumed Corporation does business in NYC as well when that has never been the case.

After waiting patiently for 7 months I received a Consent to Audit Adjustments that simply stated "the claims for refund filed have been denied".

There is not one explanation or reason indicated on the notice as to why the amended refund claims have been denied.

When I called auditor she reiterated what she has said in the past that the NYC tax returns have been filed this way for many years. My rebuttal was that just because a tax return has been filed incorrectly for many years does not make it correct. For example, if a taxpayer under reports their income for many years does that make those tax returns correct? Also, the fact these returns have been filed this way for so long just means that any years before the 3 year SOL NYC has collected Corporate tax that they should not have collected.

The auditor really did not have any patience with me and could not give me any reasonable explanation as to why the refund claims and/or documentation provided are not valid except to point out the returns have been filed this way many years and that a determination has been made. She did say she only saw a rental lease for one of the amended years and not the second amended year. When I said I would gladly provide her with another copy of the second year's rental lease I was told do not send in any further information a determination has been made.

Can anyone guide me as to their possible experience with NYC Corporate audits and their suggestion here? How can I/should I move forward? The Consent to Audit Adjustments does not state anywhere what actions to take if you disagree with the adjustments.

Update: Based on further reading it sounds like I need to disagree with the notice of proposed tax adjustments along with any additional information to substantiate taxpayer's position. At that point if NYC still does not allow claim for refunds then NYC will send a Notice of Determination. Then at this point there are 3 options 1.) Accept audit result 2.) File a request for a Conciliation Conference or 3.) Petition for a Tax Appeals Tribunal Hearing.

Any feedback from anyone would be greatly appreciated, as always.

Thank you very much.
 

#2
Posts:
314
Joined:
2-Jun-2014 11:11am
Location:
Long Island, NY
I have had good success a few times with NYC tax hearings.
 


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