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In re Jacobi

Supreme Court of New York, Third Department

December 21, 2017

In the Matter of MARY E. JACOBI, Petitioner,
v.
TAX APPEALS TRIBUNAL OF THE STATE OF NEW YORK et al., Respondents.

          Calendar Date: November 20, 2017

          Andreozzi Bluestein LLP, Clarence (Randall P. Andreozzi of counsel), for petitioner.

          Eric T. Schneiderman, Attorney General, Albany (Robert M. Goldfarb of counsel), for Commissioner of Taxation and Finance, respondent.

          Before: McCarthy, J.P., Rose, Devine, Mulvey and Rumsey, JJ.

          MEMORANDUM AND JUDGMENT

          McCarthy, J.P.

         Proceeding pursuant to CPLR article 78 (initiated in this Court pursuant to Tax Law § 2016) to review a determination of respondent Tax Appeals Tribunal sustaining the notice of proposed driver's license suspension referral imposed under Tax Law article 8.

         The Division of Taxation issued petitioner a notice of proposed driver's license suspension referral, indicating that her license would be suspended by the Department of Motor Vehicles (hereinafter DMV) in 60 days unless she resolved her outstanding tax liabilities (see Tax Law § 171-v). Her income tax liabilities were well in excess of the $10, 000 statutory requirement for license suspension (see Tax Law § 171-v [1]). Petitioner requested and received a conference before the Bureau of Conciliation and Mediation Services (hereinafter BCMS) of the Department of Taxation and Finance (hereinafter DTF), but the suspension notice was sustained.

         Petitioner submitted an offer in compromise to make 48 monthly payments of $750, for a total of $36, 000, to settle her outstanding tax liability, which had grown at that point to more than $430, 000. According to the required financial information form, petitioner's liabilities (including $3.1 million in federal tax liability) far exceeded her assets. Petitioner began making the $750 monthly payments while her offer in compromise was pending.

         The next month, petitioner filed an administrative challenge to the suspension notice. The Division moved for a summary determination, asserting that petitioner relied on the provision preventing suspension when a person has made satisfactory payment arrangements with respondent Commissioner of Taxation and Finance, but her offer in compromise had not yet been accepted. An Administrative Law Judge (hereinafter ALJ) granted the Division's motion, finding that petitioner did not establish any statutory ground for challenging the suspension (see Tax Law § 171-v [5]). Respondent Tax Appeals Tribunal affirmed the ALJ's determination. Petitioner commenced this CPLR article 78 proceeding seeking to annul the Tribunal's determination (see Tax Law § 2016).

         Initially, to the extent that petitioner seeks to have this Court decide whether the Commissioner erred in rejecting her offer in compromise, that issue is not before the Court. The letter containing that denial was not in front of the ALJ, and the Tribunal appropriately held that it could not consider documents outside the record. Likewise, we will not consider documents - or determinations contained therein - that were not part of the administrative record or considered by the agency (see Matter of Lippman v Public Empl. Relations Bd., 296 A.D.2d 199, 203 [2002], lv denied 99 N.Y.2d 503 [2002]). This proceeding challenging the Tribunal's ruling on a license suspension notice is not the proper vehicle for petitioner to challenge the denial of her offer in compromise.

         The issue before us is the determination sustaining the notice to suspend petitioner's license. Tax Law § 171-v was enacted to require DTF and DMV to "cooperate in a program to improve tax collection through the suspension of drivers' licenses of taxpayers with past-due tax liabilities equal to or in excess of [$10, 000]" (Tax Law § 171-v [1]). The statute requires notice to the taxpayer at least 60 days prior to inclusion in the suspension program, with the notice containing clear statements of the past-due tax liabilities, that the taxpayer may avoid suspension "by fully satisfying the past-due tax liabilities or by making payment arrangements satisfactory to the [C]ommissioner" and how that can be accomplished, and that the right to protest the suspension notice is limited to certain issues (Tax Law § 171-v [3]). Pursuant to the statute, a taxpayer has no right to commence a proceeding or any other legal recourse against DTF or DMV regarding a suspension notice except on the grounds that (i) the notice was issued to the wrong person, (ii) the past-due liabilities have been satisfied, (iii) and (iv) the taxpayer's wages are being garnished by DTF or through an income execution to satisfy either the liabilities at issue or arrears in child or spousal support, (v) the taxpayer's license is a commercial driver's license, or (vi) DTF incorrectly found that the taxpayer failed twice within the previous 12 months to comply with a payment arrangement with the Commissioner (see Tax Law § 171-v [5]).

         The Division issued a timely suspension notice, and petitioner did not assert that its contents failed to comply with the statute. Nor did petitioner raise any of the enumerated grounds set forth in Tax Law § 171-v (5), despite that subdivision plainly stating that those are the only grounds upon which a suspension or referral may be challenged. Thus, according to the plain language of the statute, the Tribunal was required to uphold the suspension notice.

         Petitioner contends that the statute and the Division's implementation of it deprived her of due process because there was no consideration of her financial ability to make any arranged payments. Once a driver's license is issued, the holder has obtained a property interest therein that the state may not take away without providing procedural due process (see Dixon v Love, 431 U.S. 105, 112 [1977]; Bell v Burson, 402 U.S. 535, 539 [1971]; Pringle v Wolfe, 88 N.Y.2d 426, 431 [1996]; see also Matter of Daxor Corp. v State of N.Y. Dept. of Health, 90 N.Y.2d 89, 98 [1997]). As a legislative enactment, Tax Law § 171-v enjoys a presumption of constitutionality, which petitioner had to rebut by demonstrating that the statute is invalid beyond a reasonable doubt (see LaValle v Hayden, 98 N.Y.2d 155, 161 [2002]; Pringle v Wolfe, 88 N.Y.2d at 431). To the extent that petitioner is making a facial challenge to Tax Law § 171-v, she has failed to establish that no set of circumstances exist under which the law would be valid (see Matter of Moran Towing Corp. v Urbach, 99 N.Y.2d 443, 448 [2003]; Berry v New York State Dept. of Taxation & Fin., 2017 NY Slip Op 31345[U], *4 [Sup Ct, NY County 2017]).

         Petitioner contends that DTF's application of the statute in this matter deprived her of due process. Specifically, she argues that the statute, as implemented, fails to take into account a taxpayer's inability to pay, and due process is violated when a person is deprived of a right based on financial circumstances. Her argument is too broad. Petitioner relies on Bearden v Georgia (461 U.S. 660');">461 U.S. 660 [1983]), where, in a different context, the Supreme Court of the United States concluded that a state may revoke probation for failure to pay a fine if "the probationer willfully refused to pay or failed to make sufficient bona fide efforts legally to acquire the resources to pay" (id. at 672). However, "[o]nly if alternate measures are not adequate to meet the [s]tate's interests in punishment and deterrence may the court imprison a probationer who has made sufficient bona fide efforts to pay. To do otherwise would deprive the probationer of his [or her] conditional freedom simply because, through no fault of his [or her] own, he [or she] cannot pay the fine, " which "would be contrary to the ...


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