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SALT TALK:  Refund Claims – Don’t Make a Leap of Faith on What Difference a Day Makes

Wayne Berkowitz CPA, J.D., LL.M. 03.12.2018 | SALT TALK

Buzzing through the tax dailies every morning, one can’t help but notice the sad but frequently repeated stories of taxpayers being denied refund claims because of late filed returns. Usually I skip over them. Who wants to read about clerks testifying about mailing procedures, postmarks, blurred envelopes, and the like. As if Civil Procedure weren’t tedious enough, Tax Procedure adds an additional layer of monotony to the mix. I can’t get the image out of my head of a room full of tax attorneys and accountants counting days on their fingers and toes to make sure a refund claim is timely.

Something however made me stop and look at a recent New York City Tax Appeals Tribunal Opinion[1] addressing the timeliness of a Real Property Transfer Tax refund request. First, this is one of the most onerous taxes around, second, we deal with it frequently at Berdon, third it’s a Tax Appeals Tribunal decision (citable as precedent) and fourth, the statute of limitations to request a refund is only one year, while virtually every other tax provides a three year time frame.

The substantive issue in the refund claim (which never was addressed) involved the “partial mere change in form” exemption.  One of the grantors of the property owned approximately a 10% interest before the transfer and actually owned over 20% after. Accordingly, the preexisting 10% ownership may have been exempt from tax.  While this may not seem like a substantial amount, in this case the refund claim was in excess of $2 million.

So while I’ve already presented a myriad of reasons as to why this case got my attention, I still haven’t told you the real reason.  The case actually discusses the definition of “one year.”[2]  I always assumed I knew what this meant, but apparently when it comes to leap years, it may in fact mean something else.  While arguably not relevant to the Decision (what us legal types call dicta) since there were so many other reasons the claim could be viewed as late, the General Construction Law is cited to for the proposition that

“[t]he term year in a statute . . . means three hundred and sixty-five days, but the added day of a leap year and the day immediately preceding shall for the purpose of such computation be counted as one day.”

What this means is February 28th and February 29th are only one day. At least in New York City. I wouldn’t make this leap of faith when filing a refund claim. And while time travel may be scientifically impossible, you now know that there are people in government with the power to make a whole day disappear.

Contact me at or your Berdon advisor.

Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, New York Accountants, advises on the unique requirements of governments and municipalities across the nation.

[1] In the Matter of Jamestown, L.P., as successor to Jamestown Chelsea Market, L.P., TAT (E) 14-8(RP) January 31, 2018.

[2] Administrative Code Section 11-2108 provides in relevant part: “[The] commissioner of finance shall refund . . . any tax . . . erroneously . . .paid if application to the commissioner of finance for such refund shall be made within one year from the payment thereof.” (Emphasis added.)

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