221 A.D. 471 | N.Y. App. Div. | 1927
A domestic corporation, the Claire Belle Dresses, Inc., was organized in November, 1917, to manufacture women’s dresses. It began and did business. Under date of July 1, 1919, while still doing business, it made its report for the franchise tax pursuant to article 9-A of the Tax Law (§ 211, added by Laws of 1917, chap. 726, as amd. by Laws of 1919, chap. 628; since amd.), showing that its net income for the year ending October 31, 1918, was $28,124.43. The tax for the year beginning November 1,1919, was thereupon assessed and payment in advance demanded. On December 31, 1919, the tax was paid under protest. In an affidavit filed with the Commission is set forth the resolution passed October 31, 1919, which authorized the distribution of the corporate assets and contained this: “ that said corporation cease to transact business from and after the 31st day of October, 1919, until the further order of the Board.” It asked “ for the refund of said tax upon the ground that the corporation, though not by statutory proceedings, had in effect dissolved and completely ceased business on October 31, 1919,” and stated “ that the charter has been abandoned and the corporation does not contemplate resuming operations under said charter; ” that the corporation had disposed of all its assets. After considerable correspondence, on March 16, 1920, the following letter was sent to the relator:
“ Gentlemen.— Based upon the affidavit of this company received February 28, 1920, the franchise tax assessed under Article 9-A of the Tax Law for the tax year beginning November 1, 1919, is hereby canceled. The State Comptroller upon application will refund the amount of franchise taxes overpaid.
“ Respectfully yours,
“ STATE TAX DEPARTMENT
“ By N. W. Canfield,
“ Deputy Commissioner.”
The amount paid under protest was then returned to relator. This for convenience we call the first determination.
A partnership had been organized about October 31, 1919, consisting of directors and stockholders of the corporation, together with Frank Wolff, who apparently had been chief salesman for the corporation. This firm took over all the assets and equipment of the corporation which had been distributed to the stockholders. It continued until 1924 the same business under the same business name, Claire Belle Dresses, Inc., which name it registered as its trade name. At all times the firm had the business, the personnel, the good will and the distinguishing name of the corporation. In 1924 one member of the firm withdrew and the remaining three,
It is our opinion that the relator has waived any and all rights under the first determination. The record shows that it intended, when it went before the Commission the second time, to have complete rehearing in respect to the legality of the tax. This so-called second proceeding must be looked upon as a part of the first proceeding — an opening of that proceeding and a further hearing by consent; otherwise the Commission had no authority to act, because a hearing under section 218 is only authorized when the application for revision is filed “ within one year from the time any such account shall have been audited and stated.” This period had expired. The relator itself invoked this action by the Commission. After having been further heard and the legality of the tax having been determined, rightly as we think, it should not now be allowed to successfully question the right of the Commission to act in the premises. The Commission had authority under this section 218 to revise and adjust the “ account ” in which is the disputed tax and must upon the evidence submitted determine whether or not (1) the tax was “ lawfully demanded; ” or (2) a payment thereof “has been illegally made or exacted.” Having determined these two issues it must settle the account “ according to law and the facts,” adjust the “ account ” accordingly and “ send notice of its determination thereon to the corporation forthwith.” This it has done in this case, acting at the request of the relator.
We do not find it necessary to discuss whether the changes above set forth were made for the purpose of avoiding taxes, nor the power of the Tax Commission to review its former decision.
The determination should be confirmed, with fifty dofiars costs and disbursements.
Cochrane, P. J., Hinman, McCann and Davis, JJ., concur.
Determination confirmed, with fifty dollars costs and disbursements.