N.Y. Tax Law § 998: Petition to the surrogate's court and appeal

§ 998. Petition to the surrogate's court and appeal. (a) General. A

taxpayer shall have the right to protest a notice of deficiency or a

notice of disallowance of a claim for refund issued by the commissioner

of taxation and finance with respect to tax under this article as

provided in this section. A proceeding under this section shall be a

special proceeding under article four of the civil practice law and

rules and shall be commenced by filing a notice of petition and verified

petition with the surrogate's court and service of such notice of

petition and verified petition on the commissioner of taxation and

finance or the commissioner's attorney. In any county which has

designated a transfer and estate clerk of the court, the filing of the

notice of petition and verified petition with the surrogate's court

shall be effected by filing such notice of petition and verified

petition with such clerk. The notice of petition, together with the

petition and any affidavits specified in the notice, shall be so filed

and served at least forty-five days before the time at which the

petition is noticed to be heard. An answer and supporting affidavits, if

any, shall be served at least ten days before such time. A reply,

together with supporting affidavits, if any, shall be served at least

five days before such time. No petition shall be denied without

opportunity for a hearing of any issues of fact raised therein.

(b) Conciliation conferences. The provisions of subdivision three-a of

section one hundred seventy of this chapter regarding conciliation

conferences in the bureau of conciliation and mediation services shall

be applicable with respect to a notice of deficiency or disallowance of

a refund of tax under this article provided, however, the references to

"the division of tax appeals" shall be deemed to be references to "the

surrogate's court" for purposes of the tax under this article and

references to filing a petition shall be deemed to be references to the

commencement of a special proceeding under this section.

(c) Jurisdiction and venue. The surrogate's court of every county

having jurisdiction of the estate of a decedent under the provisions of

sections two hundred five and two hundred six of the surrogate's court

procedure act shall have jurisdiction of proceedings under this section.

Venue of such proceedings shall be as provided in such sections.

(d) Petition for review of a deficiency. Within ninety days, or one

hundred fifty days if the notice is addressed to a person outside of the

United States, after the mailing of the notice of deficiency of estate

tax, the taxpayer may commence a special proceeding pursuant to this

section in the surrogate's court for review of the deficiency. Such

petition may also assert a claim for refund of tax under this article,

subject to the limitations of subsection (g) of section six hundred

eighty-seven of this chapter, as made applicable to the tax imposed

under this article by section nine hundred ninety.

(e) Petition for refund. (1) A taxpayer may commence a special

proceeding with the surrogate's court under this section for the amounts

asserted in a claim for refund if--

(A) the taxpayer has filed a timely claim for refund with the

commissioner of taxation and finance,

(B) the taxpayer has not previously commenced a special proceeding

under subsection (d) regarding the tax imposed by this article with

respect to the death of the same decedent unless the petition under this

subsection relates to a separate claim for refund properly filed under

subsection (f) of section six hundred eighty-seven, as made applicable

to the tax imposed by this article by section nine hundred ninety, and

(C) either (i) six months have expired since the claim was filed, or

(ii) the commissioner has mailed to the taxpayer, by registered or

certified mail, a notice of disallowance of such claim in whole or in

part.

(2) No special proceeding under this subsection shall be filed more

than two years after the date of mailing of a notice of disallowance,

unless prior to the expiration of such two year period it has been

extended by written agreement between the taxpayer and the commissioner

of taxation and finance. If a taxpayer files a written waiver of the

requirement that such taxpayer be mailed a notice of disallowance, the

two year period prescribed by this paragraph for filing a petition for

refund shall begin on the date such waiver is filed.

(f) Assertion of deficiency after filing petition.

(1) Petition for review of deficiency. If a taxpayer commences a

special proceeding for review of a deficiency, the commissioner may

assert and the surrogate's court shall have power to determine a greater

deficiency than asserted in the notice of deficiency and the

commissioner may assert and the surrogate's court shall have power to

determine any addition to tax or penalty.

(2) Petition for refund. If the taxpayer commences a special

proceeding for refund, the commissioner may assert and the surrogate's

court may determine:

(A) a deficiency as to any amount of deficiency asserted within the

period in which an assessment would be timely, or

(B) deny so much of the amount for which refund is sought in the

petition, as is offset by other issues pertaining to the taxpayer.

(3) Opportunity to respond. A taxpayer shall be given a reasonable

opportunity to respond to any matters asserted by the commissioner under

this subsection.

(4) Restriction on further notices of deficiency. If the taxpayer

commences a special proceeding under this section, no notice of

deficiency of estate tax may thereafter be issued to the taxpayer

regarding the tax imposed by this article with respect to the death of

the same decedent, except in case of fraud or with respect to a change

or correction required to be reported under section nine hundred

seventy-nine.

(g) Burden of proof. In any case before the surrogate's court under

this section, the burden of proof shall be upon the petitioner, except

for the following issues, as to which the burden of proof shall be upon

the commissioner:

(1) whether the petitioner has been guilty of fraud with intent to

evade tax;

(2) whether the petitioner is liable as the transferee of property of

a taxpayer, but not to show that the taxpayer was liable for the tax;

(3) whether the petitioner is liable for any increase in a deficiency

where such increase is asserted initially after a notice of deficiency

was mailed and a special proceeding commenced under this section, unless

such increase in deficiency is the result of a change or correction

required to be reported under section nine hundred seventy-nine, and of

which change or correction the commissioner of taxation and finance had

no notice at the time the commissioner mailed the notice of deficiency;

and

(4) whether any person is liable for a penalty under subsection (k) or

(r) of section six hundred eighty-five of this chapter, as made

applicable to the tax imposed by this article by section nine hundred

ninety.

(h) Review under this section exclusive. The review of a deficiency or

denial of a refund provided by this section shall be the exclusive

remedy available for the judicial review of the liability of the

taxpayer for the taxes imposed by this article.

(i) Appeal; assessment pending appeal; appeal bond. (1) The taxpayer

or the commissioner of taxation and finance may appeal from a decree

entered in a special proceeding pursuant to this section as provided in

section two thousand seven hundred one of the surrogate's court

procedure act.

(2) Irrespective of any restrictions on the assessment and collection

of deficiencies, the commissioner may assess a deficiency determined by

the surrogate's court after the expiration of the period during which a

notice of appeal may be filed, notwithstanding that a notice of appeal

has been filed by the taxpayer with respect to such deficiency, unless

the taxpayer, at or before the time his notice of appeal is filed, has

paid the deficiency, has deposited with the commissioner the amount of

the deficiency, or has filed with the commissioner a bond or other

security acceptable to the commissioner (which may be a jeopardy bond

under subsection (h) of section six hundred ninety-four, as made

applicable to the tax imposed by this article by section nine hundred

ninety) in the amount of the portion of the deficiency (including

interest and other amounts) in respect of which the appeal is made and

all costs and charges which may accrue against the taxpayer in the

prosecution of the proceeding, including costs of all appeals,

conditioned upon the payment of the deficiency (including interest and

other amounts) as finally determined and such costs and charges. If as a

result of a waiver of the restrictions on the assessment and collection

of a deficiency any part of the amount determined by the commissioner is

paid after the filing of the review bond or other security, such bond or

other security shall, at the request of the taxpayer, be proportionately

reduced.

(3) If the amount of a deficiency determined by the commissioner is

disallowed in whole or in part by the court, the amount so disallowed

shall be credited or refunded to the taxpayer, without the making of a

claim therefor, or, if payment has not been made, shall be abated.

(j) Date of finality of decree. A decree of the surrogate's court

shall become final upon the expiration of the time for filing a notice

of appeal if no such notice is filed within such time, or if a notice of

appeal has been duly filed, upon expiration of the time for all judicial

review, or upon the entry of a decree of the surrogate's court in

accordance with the mandate of the court on appeal.