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REPRESENTING CLIENTS

IN STATE AND LOCAL CRIMINAL TAX

INVESTIGATIONS: WHAT EVERY LAWYER NEEDS

TO KNOW Prepared in connection with a Continuing Legal Education course presented at New York County Lawyers’ Association, 14 Vesey Street, New York, NY

scheduled for February 12, 2015

Program Co-sponsor: NYCLA's Taxation Committee

Faculty: James Druker, Kase & Druker; Robert Eisman, NYS Dept. of Taxation and Finance; Maureen Kokeas, NYC Dept. of Finance; Gilda Mariani, NY County District

Attorney's Office

This course has been approved in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 3 Transitional and Non-Transitional credit hours: 1 Professional Practice/Law Practice Management; 1 Skills; 1 Ethics.

This program has been approved by the Board of Continuing Legal education of the Supreme Court of New Jersey for 3 hours of total CLE credits. Of these, 1 qualify as hours of credit for ethics/professionalism, and 0 qualify as hours of credit toward certification in civil trial law, criminal law, workers compensation law and/or matrimonial law.

ACCREDITED PROVIDER STATUS: NYCLA’s CLE Institute is currently certified as an Accredited Provider of continuing legal education in the States of New York and New Jersey.

Information Regarding CLE Credits and Certification Representing Clients in State and Local Criminal Tax Investigations: What Every Lawyer

Needs to Know Thursday, February 12, 2015; 6:00 PM to 9:00 PM

The New York State CLE Board Regulations require all accredited CLE providers to provide documentation that CLE course attendees are, in fact, present during the course. Please review the following NYCLA rules for MCLE credit allocation and certificate distribution.

i. You must sign-in and note the time of arrival to receive your

course materials and receive MCLE credit. The time will be verified by the Program Assistant.

ii. You will receive your MCLE certificate as you exit the room at

the end of the course. The certificates will bear your name and will be arranged in alphabetical order on the tables directly outside the auditorium.

iii. If you arrive after the course has begun, you must sign-in and note the time of your arrival. The time will be verified by the Program Assistant. If it has been determined that you will still receive educational value by attending a portion of the program, you will receive a pro-rated CLE certificate.

iv. Please note: We can only certify MCLE credit for the actual time

you are in attendance. If you leave before the end of the course, you must sign-out and enter the time you are leaving. The time will be verified by the Program Assistant. Again, if it has been determined that you received educational value from attending a portion of the program, your CLE credits will be pro-rated and the certificate will be mailed to you within one week.

v. If you leave early and do not sign out, we will assume that you left at the midpoint of the course. If it has been determined that you received educational value from the portion of the program you attended, we will pro-rate the credits accordingly, unless you can provide verification of course completion. Your certificate will be mailed to you within one week.

Thank you for choosing NYCLA as your CLE provider!

New York County Lawyers’ Association

Continuing Legal Education Institute 14 Vesey Street, New York, N.Y. 10007 • (212) 267-6646

Representing Clients in State and Local Criminal Tax Investigations: What Every Attorney Needs To Know

February 12, 2015 6 p.m. to 9 p.m.

Agenda

6:00 - 6:05 p.m. Introduction

6:05 - 6:20 p.m. Overview of New York State Department of Taxation and Finance • how investigations are initiated • relationship with other agencies • process for referring criminal cases Robert Eisman

6:20 - 6:35 p.m. Overview of New York City

Department of Finance • how investigations are initiated • relationship with other agencies • process for referring criminal cases Maureen Kokeas

6:35 - 6:50 p.m. Overview of Applicable Tax Law

Offenses • elements of tax-related crimes • state procedures • how New York tax-related crimes

compare with federal tax-related crimes

Jill Mariani 6:50 - 7:05 p.m. Overview of Defense Strategy

• the opportunities for review with NYSDTF and NYCDF prior to

criminal referral and comparison with the federal system

• differences in plea negotiations and prosecutions among state and local prosecutorial offices

James Druker 7:05 - 7:30 p.m. Simulated Conference (based on

hypothetical) • plea bargaining and petite policy • sentence recommendations • collateral consequences to conviction • global settlements • ethical issues Panel

7:30 - 7:40 p.m. Break

7:40 - 8:00 p.m. Follow-up to Simulated Conference

• mens rea and defenses • dual prosecutions and double

jeopardy • method of computing taxes • civil proceedings including False

Claim Act • ethical issues Panel

8:00 - 8:20 p.m. Voluntary Disclosure

• NYCDF program • NYSDTF program • defense strategy • ethical issues James Druker, Robert Eisman and Maureen Kokeas

8:20 - 8:30 p.m. Cigarette Task Force

• description of joint investigations through the Cigarette Task Force

• types of cigarette tax fraud prosecutions

Robert Eisman and Maureen Kokeas

(cont’d)

8:30 - 8:50 p.m. NYSDTF and NYCDF Initiatives • current civil and criminal focus • data checking programs Robert Eisman and Maureen Kokeas

8:50 - 9:00 p.m. Question & Answer Sessions

Panel

Hypothetical

Martha owns a small restaurant in Soho in New York County. Because of a few good reviews in the press, the foodies have been coming into her restaurant in droves and business has been very good. About 25% of Martha’s customer’s pay their bills in cash. Most nights, especially on busy nights, Martha closes out the cash register at the restaurant and prepares the deposit slip for the cash to be deposited into the restaurant’s bank account. The cash never makes its way to the bank account. Martha uses it to give some of the wait staff a bonus, and some of the wait staff is paid entirely in cash. Martha also uses some the cash to pay small expenses and some vendors of beer and liquor. Martha also uses some of the cash to pay personal expenses. In addition, some of Martha’s regular clients pay their tab with a personal check. Although Martha does not generally accept checks, she makes an exception for these clients and deposits the checks into her personal account, not the business’s account. There are also checks from web-based services such as GrubHub and Seamless. Some of these checks are not deposited into the business bank account but are endorsed over to liquor or beer vendors. Martha handles most of the business aspects of the restaurant with some help from the employees. Martha is the responsible party and she signs the sales tax returns and other related business tax returns. Martha hired an accountant to prepare her sales tax reports and her income tax returns. The accountant simply used the monthly bank account statement. Martha did not tell the accountant about the cash, the customer checks, or the GrubHub and Seamless checks endorsed over to a third-party. Pursuant to the execution of a search warrant at the restaurant, the Point of Sale (PoS) system was seized and various financial and business documents. At the same time a subpoena duces tecum was served for corporate records relating to an unrelated restaurant business also owned by Martha. The defense counsel (DC) has requested a meeting with the assistant district attorney (ADA) in charge of the investigation.

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New York StateCriminal Tax InvestigationsRobert B. Eisman, Esq.Criminal Investigations DivisionNew York State Department of Taxation and Finance

Overview of D.T.F.

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Mission Statement

Our Mission

To efficiently collect tax revenues in support of State services and programs while acting with integrity and fairness in the administration of the tax laws of New York State.

Overview

A key Department focus is the balance of efforts to promote voluntary compliance -the cornerstone of the State's system of taxation - with the duty to enforce New York's tax laws. More than 96 percent of the taxes collected are remitted voluntarily by taxpayers. The remaining 4 percent is a result of the Department's enforcement programs - audit, collections, and criminal investigations.

The Department administers more than 40 state and local taxes and fees, including more than $14 billion in local sales tax and $8 billion in local income tax. In regard to real property taxes, the Department oversees the administration of more than $50 billion annually and works directly with nearly 1,000 local governments.

Key D.T.F. Divisions & Executives

Commissioner Kenneth Adams

Executive Deputy Commissioner (“D/C”) Nonie Manion

D/C & Counsel Amanda Hiller

Director Joseph Carzo, Audit Division

D/C Barry Ginsberg, Office of Risk Management & C.I.D.

D/C Argi O’Leary, Civil Enforcement Division

D/C Richard Ernst, Office of Professional Responsibility

Taxpayer Advocate Margaret Neri

Director Camille Siano Enders, B.C.M.S.

D/C Geoffrey Gloak, Office of Communications & Public Affairs

F.O.I.L Officer Frank Nuara

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Personnel Snapshot

4,355 employees 2,898 in Albany 1,457 in district offices

Audit (1614)

Tax Processing (984)

Enforcement (1008)

Tax Administration (217)

Agency Administration (368)

Property Tax Services (164)

37%

23%

23%

8% 4%

5%

Returns Snapshot

23.8 million returns processed in 2014

Income

Withholding

Sales

MCTMT

Corp

Other

46%37%

8%

4% 4%1%

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Collections Snapshot

Other Local Taxes

NYC Income Tax

Local Sales and Use

Other State Taxes

Corporation and Business

Sales, Excise and User

Personal Income $43B

$14.2B

$7.4B

$2.3B

$14.8B

$9.9B

$3.6B

Taxes Collected by DTF in the 2013-14 Fiscal year ($95.2B Total)

State taxescollected

$66.9 Billion

Local taxescollected

$28.3 Billion

All figures represent net collections for period; excludes Stock Transfer Tax (fully eligible for rebate)

Serving Taxpayers - Mediation

Bureau of Conciliation and Mediation Services

Handles approximately 4,400 cases annually

Agreements reached in 75% of cases

73% of cases are scheduled for conference within 90 days

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Age of Open Cases (3/31/12) Number of Open Cases Percent Open

within 6 months 1115 71.7%

6 months - 1 year 259 16.7%

1 year - 1 ½ years 84* 5.4%

1 ½ years - 2 years 41* 2.6%

over 2 years 56* 2.6%

TOTAL 1555 100.0%

* Includes 106 cases over 1 year old on hold pending other litigation0

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Involuntary Compliance(as a percentage of total collections)

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2.9% 2.5%1.4% 1.0%

3.9%

BusinessTaxes

Sales and UseTax

PIT PropertyTransfer Tax

Excise andOther

Total All Taxes

15.4%

Voluntary Disclosure Program

The Voluntary Disclosure Program enables taxpayers to avoid penalties and criminal prosecution by disclosing their tax liabilities and agreeing to pay their debts. Applications are made online.

To be eligible, an applicant must meet all of the following criteria:• They must not currently be under audit by the Tax Department for

the tax type and tax year(s) that they are disclosing. • They must not have received a bill for the past due taxes that they

are disclosing. • They must not be under criminal investigation by a New York State

agency or political subdivision of the state. • They must not be seeking to disclose participation in a tax

avoidance transaction (commonly known as a tax shelter) that is a federal or New York State reportable or listed transaction.

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Overview of C.I.D.

Mission Statement

The Criminal Investigations Division (C.I.D.) is the investigative and law enforcement arm of the Tax Department. Its primary mission is to detect and investigate evasion of New York State taxes. This is accomplished by a regulatory and investigative approach aimed at increasing voluntary compliance and confidence in the tax system.

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The Criminal Investigations Division

C.I.D. is an independent law enforcement agency.

C.I.D. is made up of teams of investigators, forensic auditors, and attorneys with prosecutorial and investigative experience in 8 District Offices throughout the State.

C.I.D. investigates and audits all tax types.

C.I.D. uses all necessary law enforcement tools to do its work, i.e., subpoenas, search warrants, undercover operations, wiretaps, surveillances, interviews, etc.

Investigators are peace officers who have arrest powers and carry firearms.

C.I.D. works closely with Federal and State prosecutors and other law enforcement agencies.

C.I.D. works closely with the Audit Division and C.E.D. to coordinate our activities.

The Cigarette Task Force is a separate unit within C.I.D.

How C.I.D. Generates Cases

C.I.D. generates its cases like any other White Collar criminal law enforcement agency, including:• Complaints received from members of the public• Referrals from:

− other D.T.F. Divisions

− other law enforcement agencies

− ADA’s, called “Prosecutor’s Requests”

• Computer research, such as data mining of tax records• Traditional law enforcement activities, such as

surveillances and undercover operations

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Particular Crimes of Concern

Although C.I.D. is generally concerned with the enforcement of the Tax Law, there are particular tax crimes that C.I.D. regards as a high priority, such as:• Smuggling of cigarettes and alcohol to evade NYS tax

• Tax Return Preparer fraud and identity theft

• Misappropriation of trust taxes– Sales Tax & Withholding Tax

• Personal Income Tax cheaters, including non-filers

Investigative Discretion

As an independent law enforcement agency, C.I.D. has discretion to determine if and when to conduct a criminal investigation, or to handle a matter with a civil disposition, or to take no action at all.

C.I.D. uses many factors in deciding whether to conduct a criminal investigation or to handle a matter civilly, including, but not limited to: the interests of justice; the best interests of the State; the alleged harm to the public; and; various mitigating factors in favor of the subject.

C.I.D. has the freedom to choose which prosecutorial agency to work with on a particular case, depending on which prosecutor would be the best partner. A Manhattan restaurant owner who misappropriated Sales Tax could be referred to either: the New York County District Attorney’s Office; the U.S. Attorney’s Office, S.D.N.Y.; the N.Y.S. Attorney General’s Office; the Albany County District Attorney’s Office, or; the U.S. Attorney’s Office, N.D.N.Y.

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C.I.D. and Cooperating Witnesses

C.I.D. is a police agency, and not a prosecutor, and therefore, C.I.D. does not have the ability to offer a witness prosecutorial immunity or a “Queen for a Day” agreement in exchange for a witness’s cooperation.

However, C.I.D. can exercise its investigative discretion and agree not to refer a subject to a D.A. for prosecution.

C.I.D. also has the authority to settle tax debts, and has the ability to negotiate the amount of taxes and penalties due, but never the amount of interest due. ADA’s do not have the authority to settle tax liabilities, although C.I.D. may authorize an ADA to negotiate a settlement on its behalf, which C.I.D. must ultimately approve.

Vetting of Cases Before Referral

The decision to refer a case for prosecution is scrutinized by multiple C.I.D. supervisors before a final decision is made.

A typical criminal audit report is reviewed by two audit supervisors, a staff attorney, and a supervising attorney, before it is presented to the Deputy Commissioner, also an attorney, for a final decision.

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C.I.D. vs. Audit: A Difference in Focus

The Audit Division audits the tax; C.I.D. investigates the taxpayer. This is the most important difference between these two divisions.

For example, the Audit Division will conduct a Sales Tax audit of a restaurant focusing on a discrete number of taxable quarters.

If C.I.D. conducts an investigation of the same restaurant, it will expand the focus to include all tax types, such as the Corporate Franchise Tax, Withholding Tax, and the Personal Income Tax issues of the owners and employees; and in addition, C.I.D. will expand the investigation further to include all of the restaurants and other related entities that are owned and/or operated by the same taxpayer and his/or her partners.

If the restaurant is a delinquent Sales Tax vendor, C.I.D. may also work with C.E.D. to revoke the restaurant’s certificate of authority to prevent further loss of Sales Tax revenue to the State.

The Role of the Attorney in C.I.D.

Unlike the Audit Division and the Civil Enforcement Divisions, attorneys are embedded in every case in C.I.D.

Attorneys perform a wide spectrum of duties in C.I.D. cases, ranging from reviewing the results of an investigation; analyzing financial records; drafting subpoenas, search warrant applications, complaints, and referral letters; planning undercover operations; conducting interviews and depositions; supervising investigations; assisting ADA’s in reviewing evidence; and occasionally being cross-designated as ADA’s to prosecute cases.

C.I.D. attorneys also perform a myriad of administrative duties, including conducting training for investigators, auditors, and prosecutors.

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Taxpayers’ Bill of Rights

The Taxpayers’ Bill of Rights does not apply to C.I.D. investigations Tax Law § 3006(c). Therefore, under this law:• C.I.D. does not have to give taxpayers advance notice about

recording them in interviews.• Taxpayers may not make their own recordings.• Taxpayers may not obtain copies of the recordings or transcripts

made of the interviews.• C.I.D. does not have to explain the audit or collection process.• Generally, although not required to do so under the Tax Law,

C.I.D. will advise taxpayers that they may have an attorney or an accountant assist them during interviews.

Internal Referrals Between Divisions

Occasionally, the Audit and Civil Enforcement Divisions will refer pending audit or collection matters to C.I.D. for criminal investigation.

Generally, in these cases, C.I.D. will notify the taxpayer by letter that the civil matter is now being handled as a criminal investigation, with the following exceptions:• Any such notification will interfere with a pending criminal

law enforcement action or covert activity.• The case has been referred to a prosecutor, and the

A.D.A. requests that no such notification be made.

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C.I.D.’s Partners

Many N.Y. State D.A.’s receive grants from the Crimes Against Revenue Program (C.A.R.P.) to fund A.D.A.’s to work on tax crimes cases.

Cases are sent to the N.Y. State D.A.’s and the Attorney General’s Office via referral letters.

We work with Federal U.S. Attorney’s Offices via Hampers Orders

C.I.D. also works with the IRS C.I.D., the Dept. of Labor, the FBI, the El Dorado Task Force, and other agencies.

The Audit Division Fights Fraud, Too

C.I.D. works very closely with the Audit Division in fighting fraud.

C.I.S.S. (Case Identification Selection System) uses analytics to stop approximately $450 million in fraudulent refund requests each year.

The F.A.S.T. Team (Fraud Analysis Selection Team) uses data mining to identify preparer misconduct and identity theft.

District Offices may assess the fraud penalty in routine audit cases.

The Office of Professional Responsibility regulates the tax return preparers.

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What is C.A.R.P.?

The Crimes Against Revenue Program (“C.A.R.P.”) is a competitive grant program administered by the N.Y.S. Division of Criminal Justice Services to combat financial crimes that wrongfully deprive the State of taxes and other forms of revenue.

Grants are awarded on an annual basis to District Attorney’s Offices, and $14.3 million in grants will be awarded in Fiscal Year 2014 – 2015.

C.A.R.P. eligible cases include: Tax Fraud; Welfare Fraud; Medicaid Fraud; Unemployment Insurance Fraud; Prevailing Wage Fraud, and; Workers’ Compensation Fraud.

C.A.R.P. Counties

The following 26 District Attorney’s Offices received C.A.R.P. grants in 2014:

Albany, Bronx, Broome, Cayuga, Clinton, Erie, Kings, Madison, Monroe, Montgomery, Nassau, New York, Niagara, Oneida, Onondaga, Orange, Queens, Richmond, Rockland, Schenectady, St. Lawrence, Steuben, Suffolk, Ulster, Warren, & Westchester

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C.A.R.P./Purpose of Tax Prosecutions

The first clause of the M.O.U. that C.A.R.P. grantees execute with DTF is a concise description of the purpose of tax prosecutions.

“WHEREAS, the State of New York (‘State’) and DTF share with the District Attorney’s Office a strong interest in robust enforcement of the tax laws, effective deterrence so as to increase voluntary compliance with those laws, and the recovery of revenues properly due the State and other units of government.”

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C.A.R.P. Revenue 2011 - 2013

$43,860,600 in C.A.R.P. grants issued to 23 District Attorney’s Offices.• $27,838,200 in grants to the 5 NYC D.A’s Offices.

$52,186,851 in revenue returned to the State.• $36,436,003 in revenue by the 5 NYC D.A’s Offices.

119% return on investment for all grantees.• 131% return on investment for the 5 NYC DA’s

Offices.

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C.I.D. April 2011 – March 2014

2,599 cases opened. • 44% Excise Tax.

• 29% Personal Income Tax.

• 19% Sales Tax.

1,085 cases referred for prosecution. • 42% of all cases opened.

829 convictions. • 76% of all referred cases.

Cigarette Strike Force

The Cigarette Strike Force is a statewide investigative task force that combats the smuggling of cigarettes and tobacco products.

C.I.D. leads the Strike Force, and its partners include the N.Y.C. Department of Finance, and the District Attorney’s Offices of New York, Suffolk, Erie, Niagara, and Cattaraugus Counties. The Strike Force also works cooperatively with Homeland Security and A.T.F.

In 2014, the Strike Force’s investigations resulted in 67 arrests and the seizure of:• 21,018 cartons of untaxed cigarettes • 69,229 counterfeit cigarette tax stamps• 2,061 loose pounds of cigarettes• 261,198 untaxed cigars• $448,673 in funds.

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Tax Secrecy

It is a misdemeanor for Tax Department employees to disclose tax information.

The Tax Department can only provide information to three types of law enforcement agencies on its own initiative: (a) New York State District Attorney’s Offices and the Attorney General’s Office; (b) the Internal Revenue Service, Criminal Investigations Division, and; (c) the New York City Department of Finance.

The Tax Department shares information with the Attorney General and the District Attorney’s Offices through referrals of cases.

We cannot share information with any other law enforcement or prosecutorial agency.

Tax Secrecy is usually waived in Closing Agreements that arise from criminal prosecutions.

How We Work With Federal Agencies

The Tax Department refers information to the IRS through its disclosure office. In addition, we have a memorandum of understanding with the IRS in which we can exchange information orally under certain emergency circumstances in criminal cases.

We will comply with court-ordered grand jury subpoenas served on us by U.S. Attorney’s Offices, and we usually assist A.U.S.A.’s in drafting these Hampers orders. Through referrals to the IRS and these Hampers orders, we are able to work, indirectly, with the F.B.I., the U.S. Postal Inspections Service, and other Federal law enforcement agencies.

We have an MOU that allows us to share information with A.T.F.

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Tax Department Subpoenas

Criminal Investigation Division subpoenas are issued pursuant to Tax Law §§ 171 and 174, and they concern any matter that falls within the subject matter jurisdiction of the Tax Department.

In addition, pursuant to Tax Law §§ 171 (Ninth), all New York State government agencies must cooperate with the Tax Department, making it possible to get government records without a subpoena.

It is a misdemeanor to fail to comply with a Tax Department subpoena. The penalty includes incarceration for up to a year, and a maximum $10,000 fine for individuals and a $20,000 fine for corporations. Tax Law § 1831.

Regulation of Tax Return Preparers

The Tax Return Preparer Requirements enacted in 2013, 20 N.Y.C.R.R. Part 2600, creates a regulatory scheme for tax return preparers.

The Office of Professional Responsibility works with the Audit Division and C.I.D. to regulate and educate the tax return preparer industry.

Tax return preparers must register with DTF, and the failure to do so is a misdemeanor. Tax Law §1833.

Grounds for Denial of Registration, 20 NYCRR § 2600-2.1, includes dishonest or fraudulent behavior or a criminal conviction for preparer fraud.

Sanctionable Conduct, 20 NYCRR § 2600-5, includes giving false information to DTF; assisting a client in tax evasion; aiding someone to violate the Tax Law, and; a criminal conviction for preparer fraud.

Forms of Discipline, 20 NYCRR § 2600-3.3, includes suspending or canceling a tax preparer’s registration; denying the preparer the right to prepare or file returns or other limitations or conditions (be creative).

Discipline can be meted out in addition to a preparer penalty and a criminal prosecution.

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Tax Law Penalties for Preparers

Failing to register as a preparer, Tax Law § 32(g)(1): $250.

Failing to pay registration fee, Tax Law § 32(g)(2): $50 per return, up to $5,000.

Failure to furnish taxpayers with copies of return, failure to maintain copies of returns, Tax Law § 685(u)(3)-(4): $50 per violation up to $25,000.

Understatement of liability (Reasonableness Standard), Tax Law §685(aa)(1)(C): $1,000 per return

Understatement of liability (Recklessness Standard), Tax Law §685(aa)(2)(B): $5,000 per return

Aiding or assisting in the giving of a fraudulent return, Tax Law § 685(r): $5,000 per return.

Tax Crimes

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Tax Fraud – N.Y. Tax Law, Art. 37

The crime of Tax Fraud is found in Article 37 of the New York State Tax Law.

Tax Law § 1801 indentifies numerous Tax Fraud Acts which describe the various activities that constitute a tax crime.

The level of the crime depends on the amount of the tax effect.

There are separate crimes for failing to file tax returns; smuggling motor fuel, alcohol, and cigarettes; violating tax secrecy; and failure to comply with a subpoena.

The Tax Law and the Penal Law Work Together Some criminal acts violate both the Tax Law and the

Penal Law. For example, if you file a false Personal Income Tax return and you defraud DTF of a $3,500 tax refund, you may be guilty of:

1. Criminal Tax Fraud in the Fourth Degree, Tax Law §1803, a class E felony;

2. Offering a False Instrument for Filing in the First Degree, Penal Law § 175.35 a class E felony, and;

3. Grand Larceny in the Third Degree, Penal Law §155.35, a class D felony.

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Tax Fraud Act Levels

Tax Fraud Act in the 5th Degree, Tax Law § 1802, a misdemeanor. Commits a tax fraud act.

Tax Fraud Act in the 4th Degree, Tax Law § 1803, a class E felony. More than $3,000 tax effect.

Tax Fraud Act in the 3rd Degree, Tax Law § 1804, a class D felony. More than $10,000 tax effect.

Tax Fraud Act in the 2nd Degree, Tax Law § 1805, a class C felony. More than $50,000 tax effect.

Tax Fraud Act in the 1st Degree, Tax Law § 1806, a class B felony. More than $1,000,000 tax effect.

Aggregation, Tax Law § 1807

tax return preparer failure to sign a tax return or a register, Tax Law § 1833, a misdemeanor.

Compare to Larceny, Penal Law Art. 155

The Larceny is the amount of the tax refund stolen.

Petit Larceny, Penal Law § 155.25, A misdemeanor, $.01 - $1,000

Grand Larceny 4th, Penal Law § 155.30, E felony, $1,000.01 -$3,000

Grand Larceny 3rd, Penal Law § 155.35, D felony, $3,000.01 -$50,000

Grand Larceny 2nd, Penal Law § 155.40, C felony, $50,000.01 -$1,000,000

Grand Larceny 1st, Penal Law § 155.35, B felony, $1,000,000.01 –No Limit

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Statute of Limitations

N.Y. Penal Law misdemeanor – 2 years

Civil Tax Audit – 3 years

Tax Law Misdemeanor – 3 years

N.Y. Penal Law/Tax Law Felony – 5 years

Non-violent offense under U.S. Code – 5 years

Civil Fraud under the C.P.L.R. – 6 years

Civil Tax Fraud – No Statute of Limitations

Collections

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Tax Department Collections

Generally, the Tax Department uses three methods to collect money in civil matters :

(a) the taxpayer voluntarily pays taxes

(b) the Tax Department conducts an audit and the taxpayer signs a Consent to Field Audit adjustment

(c) the Tax Department conducts an audit, issues a tax assessment, and the taxpayer either does not protest it, or the assessment is sustained by the Tax Department’s administrative appeals procedures and State court i.e., B.C.M.S., Tax Appeals, and Article 78 Proceedings

Under (b) and (c), the Tax Department gets a Tax Warrant, which is subsequently filed in State court, and then becomes enforceable like any other State court judgment. These judgments are enforceable in any other State that gives them “full faith and credit.”

Collection Methods

The Tax Department enforces its own judgments in New York State, and does not need to retain a civil enforcement officer to levy on property, such as a sheriff, a marshal, a constable, or a bailiff.

The Civil Enforcement Division is the unit that enforces these judgments, and it works closely with C.I.D.

C.E.D. Collection Agents use the same enforcement methods as marshals and sheriffs, i.e., property executions and income executions (wage garnishments).

The maximum amount of wages that can be garnished is 10% of the tax debtor’s pay checks.

Tangible property is seized pursuant to the service of property executions, and if the taxpayer does not enter into a payment arrangement, the property may be sold at public auction.

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Offers in Compromise Program

The Offer in Compromise program allows qualifying, financially distressed taxpayers the opportunity to put overwhelming tax liabilities behind them by paying a reasonable portion of their tax debt. We can consider offers in compromise from:

individuals and businesses that are insolvent or discharged in bankruptcy

individuals who are not insolvent or bankrupt when payment in full would create undue economic hardship. (Only individuals may apply for relief based on undue economic hardship. This may include relief from business debts for which an individual is personally responsible.)

We analyze each application to ensure that every taxpayer seeking relief receives full consideration. However, only applicants meeting the qualifying criteria will receive hardship relief, and we will use our discretion to deny any application that isn't in the best interests of other taxpayers or the State. This may, for example, require the applicant to fully pay any trust taxes owed (excluding penalty and interest) in order to reach a compromise.

Global Settlements

A defendant may continue to have financial obligations upon payment of restitution, because C.I.D. still must collect penalties and interest, both of which are not included in restitution orders.

Pursuing penalties and interest can often be like a separate investigation.

If a defendant has more than $10,000 in tax liabilities and no payment arrangement with DTF, pursuant to Tax Law § 171-v, D.T.F. may notify the DMV about this matter, and DMV may suspend the defendant’s Driver’s License.

It is within the best interests of the defendant and C.I.D. to resolve these issues during plea negotiations as part of a Global Settlement.

Global Settlements can be memorialized in Closing Agreements.

46

2/4/2015

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Closing Agreements vs. Consents

There are two basic D.T.F. documents that can give a taxpayer finality concerning a tax liability in a criminal case: • A Consent to Field Audit Adjustment – This is a pro forma

document in which the parties merely agree to the amount of taxes, penalties, and interest due. This is the appropriate tool where the liability is being remitted in a lump sum, or has already been paid, or the parties agree to delegate the negotiation of the payment arrangement to the Civil Enforcement Division.

• A Closing Agreement – This is a contract between the taxpayer and D.T.F. that is intended to resolve all of the taxpayer’s issues, including not only the amount of the liability, but the payment arrangement, the disposition of Driver’s Licenses and Certificates of Authority issues, and the payment of future taxes.

Closing Agreements

A Closing Agreement is like a Stipulation of Settlement in a civil case, in that the parties settle on the amount of taxes, penalties, and interest due, and the manner in which the debt will be satisfied.

C.I.D. also uses Closing Agreements to change the behavior of the taxpayer in the future, such as by requiring the taxpayer to pay his taxes on time, and make his records available to C.I.D. for inspection. Some Closing Agreements have included provisions geared to preventing the misconduct that resulted in the prosecution, such as:

(a) requiring a business to deposit Sales Tax into a segregated bank account that the Tax Department can sweep on a monthly basis;

(b) appointing an independent monitor to oversee a business, and;

(c) requiring a tax return preparer to cease preparing tax returns.

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Administrative Matters

Power of Attorney Forms

As soon as you make an appearance before a D.A.’s Office, file a D.T.F. Power of Attorney form with C.I.D. Make sure that it is properly completed and that the original is filed. In Box 3, entitled, “Tax Matters,” write, “All Tax Periods and All Tax Types.” Also, for joint-P.I.T. returns, a P.O.A. is needed for both filers, and it is a good practice to file a P.O.A. on behalf of all of your client’s business entities. These best practices will enable C.I.D. to communicate with you about any tax matter concerning your client.

2/4/2015

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Secure Communication Accounts

During the course of an investigation, C.I.D. may wish to e-mail sensitive documents to you, such as your client’s tax returns. To do so, C.I.D. must provide you with a Secure Communication Account, also called a “SCOM” Account. This is a secure e-mail address that will facilitate your ability to communicate with not only C.I.D., but any other D.T.F. division, including Audit, Collections, and Counsel’s Office. If you regularly appear before D.T.F., you should make arrangements to have a SCOM Account created for you. Your SCOM Account will remain active for as long as you appear before D.T.F.

Financial Statements

In negotiating payment arrangements, C.I.D. and Collections may require your client to complete a financial statement, also called a “DTF-5.” These financial statements will be reviewed very carefully, so please make sure that they are complete and accurate, and that you include any necessary supporting documents, such as bank statements and other financial records.

2/4/2015

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Contact Information/DTF

www.tax.ny.gov

Fraud Hotline (518) 457-0578

Taxpayer Rights Advocate (518) 530-4357

Tax Practitioner Hotline (518) 457-5451

Online Services Center (518) 457-6387

Offer in Compromise Office (518) 457-9086

Voluntary Disclosure Program (518) 457-4448

Civil Enforcement Division (518) 457-5434

Child Support Enforcement (518) 485-6820

53

CID Key Contacts/Downstate Region

Acting Deputy Commissioner: Barry Ginsberg, Esq. ([email protected])

Director of Investigations: Michael Szrama ([email protected])

Deputy Director of Investigations: Michael Spinosa ([email protected])

Director of the Cigarette Strike Force: Robert Michaelis ([email protected])

Director of Operations: Steven Krantz, Esq. ([email protected])

Director of Administration: Bruce Kato, Esq. ([email protected])

Manhattan & The Bronx: Robert B. Eisman, Esq. (347) 390-7485

Brooklyn & Staten Island: Michelle Demeri, Esq. (347) 390-7222

Queens & Nassau: Francesann DiPietro, Esq. (718) 459-5387

Nassau & Suffolk: David Paldy, Esq. (631) 595-4057

Westchester & Mid-Hudson Valley: Arielle Singer, Esq. (914) 215-6236

54

ADC - New York City Administrative Code(NEW) Chapter 40 - CRIMES AND OTHER OFFENSES: SEIZURES AND FORFEITURES 11-4001 - Definitions. 11-4002 - Tax fraud acts. 11-4003 - City criminal tax fraud in the fifth degree. 11-4004 - City criminal tax fraud in the fourth degree. 11-4005 - City criminal tax fraud in the third degree. 11-4006 - City criminal tax fraud in the second degree. 11-4007 - City criminal tax fraud in the first degree. 11-4008 - Aggregation. 11-4009 - Non-preemption; penal law anticipatory offenses and accessorial liability apply. 11-4010 - Failure to obey subpoenas; false testimony. 11-4011 - Failure to file bond. 11-4012 - Cigarette tax. 11-4014 - Tax on commercial motor vehicles and motor vehicles for transportation of passengers. 11-4015 - Tax on owners of motor vehicles. 11-4016 - Hotel room occupancy tax. 11-4017 - Violation of secrecy provisions. 11-4018 - Other offenses. 11-4019 - Jurisdiction. 11-4020 - Disposition of fines. 11-4021 - Seizure and forfeiture of cigarettes. 11-4022 - Filing of documents. 11-4023 - Authority to seal premises. 11-4024 - Seizure and forfeiture of taxed and lawfully stamped cigarettes sold or possessed by unlicensed retail or wholesale dealers and flavored tobacco products.

DTF-5 (12/08)New York State Department of Taxation and Finance

Statement of Financial Condition and Other InformationPlease furnish the information requested on this form at the time you submit your offer in compromise, request for payment plan, or other proposal if the offer is based in whole or in part on inability to pay the liability. It is important that you answer all questions. If a question does not apply, please enter N/A. This will speed up consideration of your proposal.

Note: When making an offer in compromise you must file in duplicate. Also file Form DTF‑4, Offer in Compromise For Liabilities Not Fixed and Final and Subject to Administrative Review, or Form DTF‑4.1, Offer in Compromise For Fixed and Final Liability.

I. A. Name of taxpayer(s) and/or trade or business names B. Date of birth C. Social security number(s)

D. Business ID number (EIN)

F. Home telephone number

H. Business telephone number

E. Home address

G. Business address

II. Name of representative, if any Telephone number

Address:

III. Names of Banks and Other Financial Institutes You Have Done Business with at Any Time During the Past Three Years

Name and Address Name and Address

A. B.

C. D.

E. Do you rent a safe deposit box in your name or in any other name? Yes No If Yes, give name and address of bank

IV. Proposal Filed by IndividualA. Name of spouse B. Spouse’s age C. Spouse’s social security number

D. Names of dependent children or relatives E. Relationship F. Social security number G. Age

1.

2.

3.

4.

5.

6.

7.

V. Life Insurance Policies Now in Force

A. Number of Policy B. Name and Address of CompanyC. Amount

ofPolicy

D. PresentCash Surrender

Value PlusAccumulated

Dividends

E. PolicyLoan

F. DateMade

G. Automatic PremiumPayments

H. DateMade

1.

2.

3.

4.

5.

DTF-5 (12/08)

Please furnish your most recent financial information. In the columns below, show the cost and fair market value of each asset you own directly or indirectly. Also show all your interests in estates, trusts and other property rights, including contingent interests and remainders.

VI. Statement of Assets and Liabilities as of (date)

Cost Fair Market Value Appraisal Value A. Assets

1. Cash

2. Cash surrender value of insurance (see item V, page 1)

3. Accounts receivable (see item VIIIA, page 3)

4. Notes receivable (see item VIIIB, page 3)

5. Merchandise inventory

6. * Real estate (see item IX, page 3) * submit appraisal by qualified Real Estate Appraiser Broker

7. Furniture and fixtures (see item X, page 4)

8. Machinery and equipment (see item X, page 4)

9. Trucks and delivery equipment (see item XI, page 4)

10. Automobiles (see item XI, page 4)

11. Securities (see item XII, page 4)

12. Jewelry

13. Contingent claims or actions (lawsuits or insurance claims)

14. Other assets (list below)

15,

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

Total assets

Total liabilities

Amount B. Liabilities

1. Accounts payable

2. Notes payable (attach note agreement)

3. Mortgages (see item IX, page 3)

4. Accrued real estate taxes (see item IX, page 3)

5. Judgments (see item XIII, page 4)

6. Federal income tax payable

7. Loans payable to relatives (attach loan agreement)

8. Loans payable to others (attach loan agreement)

9. Notes payable to relatives (attach copy of note)

10. Other liabilities (list below)

11.

12.

13.

14.

15,

16.

17.

18.

19.

20.

21.

DTF-5 (12/08) Page 3

VII. Life Insurance Policies Assigned or Pledged on Indebtedness

If any of the policies listed in item V are assigned or pledged on indebtedness, except with insurance companies, give the following information about each policy:

A. Number of PolicyAssigned or Pledged

B. Name and address of Pledgee or Assignee C. Balance Dueon Loan

D. Date Pledgedor Assigned

1.

2.

3.

4.

5.

6.

7.

VIII. Accounts and notes receivable

Name and Address Book Value Liquidation Value Balance Due onLoan, if Pledged

DatePledged

A. Accounts receivable

1.

2.

3.

4.

5.

6

Total

B. Notes receivable

1.

2.

3.

4.

5.

Total

IX. Real estate*

A. Description B. Cost C. Fair MarketValue

D. Balance Dueon Mortgage

E. Date MortgageRecorded

F. Unpaid Interestand Taxes

1.

2.

3.

4.

5.

6.

7.

Total

*Attach copy of indenture, mortgage, and deed for each.

DTF-5 (12/08)

X. Furniture and Fixtures, Machinery and Equipment

A. Description B. CostC. Fair Market

ValueD. Balance Due onLoan, if Pledged

E. DatePledged

1. Furniture and fixtures (business)

2. Furniture (household-residence)

3. Machinery (specify kind)

4.

5.

6.

7. Equipment (except trucks and automobiles; specify)

8.

9.

10.

Total

XI. Trucks and Automobiles (personal or used in business)

XII. Securities (Bonds, Stocks, etc.)

A. Trucks Registration Number Cost

Fair MarketValue

Balance Due onLoan, if Pledged

DatePledgedMake, Plate Number Model Year

B. Automobiles

Make, Plate Number Model Year

1.

2.

3.

4.

5.

6.

1.

2.

3.

4.

5.

Total

B. Number of Units C. Cost D. Fair MarketValue

E. Balance Due onLoan, if Pledged

F. DatePledgedA. Name of Company

1.

2.

3.

4.

5.

6.

7.

8.

Total

B. Amountof Judgment

C. Balance Dueon Judgment D. Date Recorded E. Where RecordedA. Name of Creditor

1.

2.

3.

4.

Total

Attach supplemental sheets if necessary

XIII. Judgments

DTF-5 (12/08) Page 5

XIV. Statement of Income - Individual

Important: Please furnish information requested below for the last 12 months. Attach the last three years’ federal returns with all schedules.

A. Gross receipts or income

1. Salaries, wages, commissions

2. Dividends

3. Interest

4. Income from business or profession

5. Partnership income

6. Gains or losses (from Form 1040, Schedule D)

7. Annuities and pensions

8. Rents and royalties

9. Income for estates and trusts

10. Other income (include accounts receivable from spouse, relatives, social security, unemployment, welfare, etc.)

11. Gifts

12.

13.

Total

B. Disbursements

1. Interest (use space below if necessary)

2. Taxes paid

3. Loans paid

4. Insurance premiums

5. Medical expenses

6. Automobile expenses

7. Servant’s wages

8. Gifts

9. Living expenses (itemize below)

Rent

Notes paid

Debt reduction (give details below)

Other disbursements (give details below)

To whom paid and relationship, if any Amount

Total disbursements

Source Amount

DTF-5 (12/08)

A. Gross income

1. Gross sales or receipts (subtract returns and allowances)

2. Cost of goods sold

3. Gross profit — trading or manufacturing

4. Gross profit — from other sources

5. Interest income

6. Rents and royalties

7. Gains and losses (from Schedule D)

8. Dividends

9. Other (specify)

XV. Statement of Income - Corporation

Important: If the proposal is from a corporation, please furnish the information requested below (from income tax returns, as adjusted, for past two years and from records for current year from January 1 to date).

Type of corporation: business not‑for‑profit P.C.

Attach a detailed statement of carry over/carry back loss intentions. If you do not intend to use this offset, attach a full explanation.

Total income

B. Deductions

1. Compensation of officers

2. Salaries and wages (not deducted elsewhere)

3. Rents

4. Repairs

5. Bad debts

6. Interest

7. Taxes

8. Losses

9. Dividends

10. Depreciation and depletion

11. Contributions

12. Advertising

13. Other (specify)

14.Total deductions

C. Net income

D. Nontaxable income

E. Unallowable deductions

XVI. Salaries Paid to Principal Officers and Dividends Distributed - Corporation

Important: If the proposal is from a corporation, please show salaries paid to principal officers for past three years and amounts distributed in dividends, if any, during and since the taxable years covered by this offer.

A. Salaries paid to (name and title)

1. , President

2. , Vice President

3. , Treasurer

4. , Secretary

5.

6.

Total

20 20 Jan. 1 to 20

20 20 20

DTF-5 (12/08) Page 7

XVI. (continued from page 6) Dividends Distributed - Corporation

B. Year Dividends paid Year Dividends paid Year Dividends paid

1. 8. 15.

2. 9. 16.

3. 10. 17.

4. 11. 18.

5. 12. 19.

6. 13. Total

7. 14. (add lines 1 through 19)

XVII. Disposal of assets — From the beginning of the taxable period of your liability(ies) to the present date, have you disposed of any assets or other property with a cost or fair market value of more than $500, except for full value at the time of sale, transfer, exchange, gift or other disposition?

Yes No If Yes, please furnish the following information and attach a copy of transfer document or bill of sale.

1.

2.

3.

4.

5.

A. Description of AssetB. Date ofTransfer

C. Fair Market ValueWhen Transferred

D. ConsiderationReceived

E. Relationship of Transfereeto Taxpayer

XVIII. Interest In or Beneficiary of Estate or Trust — Are you the grantor or donor of any trust, or the trustee for any trust?

Yes No If Yes, please furnish a copy of the instrument creating the trust or estate. Also give the following information.

1.

2.

3.

4.

5.

A. Name of Trust or Estate B. Present Valueof Assets

C. Value of YourInterest

D. Annual Income ReceivedFrom This Source

XIX. Grantor, Donor, Trustee or Fiduciary — Have you any life interest or remainder interest, either vested or contingent in any trust of estate, or are you a beneficiary of any trust?

Yes No If Yes, please furnish a copy of the instrument creating the trust. Also give present value of corpus of trust, and any

other pertinent information.

XX. Any Other Assets or Interests in Assets — Have you any other assets or an interest in assets either actual or contingent, other than those listed here (i.e., profit-sharing plan or pension plan)?

Yes No If Yes, please describe the assets.

XXI. A. Are foreclosure proceedings pending on any real estate which you own or have an interest in? Yes No

B. If Yes, please give location of real estate: C. Was the Tax Department made a party to the suit?

Yes No

XXII. A. Are bankruptcy or receivership proceedings pending?

Yes No

B. If a corporation, is it in process of liquidation?

Yes No

XXIII. Is the sum offered in compromise or submitted as a partial payment borrowed money? Yes No If Yes, please give name and address of lender and list collateral, if any, pledged to secure the loan.

XXIV. A. Have you (or any one of you) been convicted of any crime involving unlawful possession or acquisition of property or income obtained by fraud, theft or other illegal means within the last five years?

Yes No If Yes, provide details.

B. Are you the subject of, or defendant in, any pending criminal or grand jury action or proceeding which may involve or affect in any way, your right, title or interest to any real or personal property whether or not listed herein?

Yes No If Yes, provide details.

DTF-5 (12/08)

XXV. What is the prospect of an increase in value of assets or present income? Please give a general statement.

XXVI. Items A, B and C must be attached; items D through L, if applicable, must be attached. Failure to provide these returns, statements and documents will cause immediate rejection of your compromise request, request for payment plan or other proposal.

A. Federal returns ‑ preceding three years, all schedules attached.

B. All bank statements (including checking accounts) for the preceding year.

C. Recent credit report from local bureau within last 30 days.

D. Real estate appraisal.

E. Chapter 7 discharge papers.

F. All mortgage indentures and conveyances, as grantor or grantee ‑ preceding 10 years.

G. Legal instruments related to pending claims (insurance or otherwise), rights to sue, subrogations, assignments and other assets.

H. Contracts of sale of any sizable assets, either pending or within last 5 years.

I. Federal Application to Compromise, with results.

J. Leases, both as landlord and as tenant.

K. Audited profit and loss statement (corporation only).

L. Loan agreements and instruments in evidence of assets pledged as collateral for any undertaking.

Statement

I declare that I have examined the information given in this statement and, to the best of my knowledge and belief, it is true, correct, and complete, and I further declare that I have no assets, owned either directly or indirectly, or income of any nature other than as shown in this statement. This statement is made with the knowledge that a willfully false representation is a misdemeanor punishable under section 210.45 of the Penal Law of New York State.

Signature of taxpayer Date of the statement




0291100094

Taxpayer’s name Taxpayer’s identification number (see instructions)

Spouse’s name (if joint tax return) Spouse’s SSN (if applicable)

Mailing address City State ZIP code

Spouse’s mailing address (if different from above) City State ZIP code

1. Taxpayer information (Taxpayer(s) must sign and date this form - please print or type.)

New York State Department of Taxation and Finance New York City Department of Finance

Power of Attorney

Type(s) of tax(es) Tax year(s), period(s), or transaction(s) Notice/assessment/Audit ID number(s) (may enter more than one)

3. Tax matter(s) — For estate tax matters, use Form ET-14, Estate Tax Power of Attorney, instead of this form.

The taxpayer(s) named above appoints the individual(s) named below as the taxpayer’s or taxpayers’ attorney(s)-in-fact:

to represent the taxpayer(s) in connection with the following tax matter(s):

POA-1 (9/10) Page 1 of 4

Read Form POA-1-I, Instructions for Form POA-1, before completing. These instructions explain how the information entered on this power of attorney (POA) will be interpreted and the extent of the powers granted.

Representative’s name Telephone number Fax number

( ) ( ) Mailing address (include firm name, if any) Representative’s NYTPRIN ( if applicable)

City State ZIP code E-mail address







2. Representative information (Representative(s) must complete section 8 on page 4 of this form.)

with full power to receive confidential information and to perform any and all acts that the taxpayer(s) can perform with respect to the above specified tax matter(s), except for signing tax returns or delegating his/her/their authority (unless specifically authorized; see page 2). If you do not want any of the above representative(s) to have full power as described above, attach a signed and dated explanation and mark an X in this box ..................

0292100094

Taxpayer’s identification numberPage 2 of 4 POA-1 (9/10)

Affix corporate seal here, if applicable

Signature Taxpayer’s telephone number Taxpayer’s fax number Date

( ) ( ) Name of person signing this form (type or print) Title, if applicable

Spouse’s signature Spouse’s telephone number Spouse’s fax number Date

( ) ( )

4. Retention/revocation of prior power(s) of attorneyThis power of attorney (POA) only applies to tax matters administered by the New York State Tax Department, the New York City Department of Finance, or both. Executing and filing this POA revokes all powers of attorney previously executed and filed with an agency for the same tax matter(s) and year(s), period(s) or transaction(s) covered by this document. If there is an existing POA that you do not want revoked, attach a signed and dated copy of each POA you want to remain in effect and mark an X in this box. .........

5. Notices and certain other communicationsIn those instances where statutory notices and certain other communications involving the tax matter(s) listed on page 1 are sent to a representative, these documents will be sent to the first representative named in section 2. If you do not want notices and certain other communications sent to the first representative, enter the name of the representative designated on page 1 (or on the attached power of attorney previously filed and remaining in effect) that you want to receive notices, etc.

Representative’s name: _________________________________________________________________

If you do not want notices and certain other communications to go to any representative, enter None on the line above.

6. Taxpayer signatureIf a joint tax return was filed for New York State, New York City, or both, and both spouses request the same representative(s), both spouses must sign below.

If the taxpayer named in section 1 is other than an individual: I certify that I am acting in the capacity of a corporate officer, partner (except a limited partner), member or manager of a limited liability company, or fiduciary on behalf of the taxpayer, and that I have the authority to execute this power of attorney on behalf of the taxpayer.

7. Acknowledgment or witnessing the power of attorneyThis power of attorney must be acknowledged by the taxpayer(s) before a notary public (see next page for acknowledgment formats) or witnessed by two disinterested individuals, unless the appointed representative(s) is licensed to practice in New York State as an attorney-at-law, certified public accountant, public accountant, or is a New York State resident enrolled as an agent to practice before the Internal Revenue Service.

The person(s) signing as the above taxpayer(s) appeared before us and executed this power of attorney.

IF NOT SIGNED AND DATED, THIS POWER OF ATTORNEY WILL BE RETURNED.

Signature of witness Signature of witness

Name of witness (type or print) Date Name of witness (type or print) Date

Mailing address of witness (type or print) Mailing address of witness (type or print)

City State ZIP code City State ZIP code

I / We authorize the above representative(s) to sign tax returns for the tax matter(s) indicated above. (If joint return, both taxpayers must sign.)

I / We authorize the above representative(s) to delegate his/her/their authority to another. (If joint return, both taxpayers must sign.)

Your signature Date Spouse’s signature Date

Your signature Date Spouse’s signature Date

0293100094

Taxpayer’s identification number POA-1 (9/10) Page 3 of 4

Acknowledgment — limited liability company (LLC)

State of ss:County of On this day of , , before me personallycame, to me known, who, being by me duly sworn, did say that he/she isa member or manager of the limited liability company described in the foregoing power of attorney; and that he/she is empowered to and did execute the same.

Acknowledgment — corporate

State of ss:County of On this day of , , before me personallycame, to me known, who, being by me duly sworn, did say that he/she isthe of , the corporation described in the foregoing power of attorney; and that he/she signed his/her name thereto by authority of the board of directors of said corporation.

Signature of notary public Date


Notary public: affix stamp (or other indication of your notary authority)


Acknowledgment — partnership/limited liability partnership (LLP)

State of ss:County of On this day of , , before me personallycame, to me known, who, being by me duly sworn, did say that he/she is a partner of the partnership described in the foregoing power of attorney; and that he/she is empowered to and did execute the same.



Acknowledgment — individual

State of ss:County of On this day of , , before me personallycame, to me known to be the person(s) described in the foregoing power of attorney; and he/she/they acknowledged that he/she/they executed the same.



0294100094

Taxpayer’s identification numberPage 4 of 4 POA-1 (9/10)

1 an attorney-at-law licensed to practice in New York State 2 a certified public accountant duly qualified to practice in

New York State 3 a public accountant enrolled with the New York State

Education Department

4 a New York State resident enrolled as an agent to practice before the Internal Revenue Service

5 an employee not a corporate officer (if the taxpayer is a corporation)

6 other:

Designation(s)(use number(s)from above list)

Representative’sPTIN, SSN, or EIN

Signature Date

8. Declaration of representative(s) (to be completed by each representative)

I agree to represent the above named taxpayer(s) in accordance with this power of attorney. I affirm that my representation will not violate the provisions of the Ethics in Government Act or section 2604(d) of Chapter 68 of the New York City Charter restricting appearances by a former government employee before his or her former agency. I have read a summary of these restrictions reproduced in the instructions to this form.

I am (indicate all that apply):

IF THIS DECLARATION OF REPRESENTATIVE IS NOT COMPLETED IN ITS ENTIRETY, THE POWER OF ATTORNEY WILL BE RETURNED.

Type(s) of tax(es) Tax year(s), period(s), Notice/ (may enter more than one) or transaction(s) assessment/Audit ID number(s)

1 Personal income tax 2006, 2007 99999999999

2 2000, 2001, 2002 3 NYC real property transfer tax July 10, 2008 NYS real estate transfer tax

New York State Department of Taxation and FinanceNew York City Department of Finance

Instructions for Form POA-1Power of Attorney

General informationUse Form POA-1, Power of Attorney, as evidence that the individual(s) named as representative(s) has the authority to obligate, bind, or appear on your behalf with respect to the tax matters listed in section 3, Tax matter(s). This form is used for all New York State and New York City taxes except estate tax (see Estates below).

The individual(s) named as representative(s) may receive confidential information concerning your taxes. Unless you indicate otherwise, he/she/they may also perform any and all acts you can perform, including consenting to extend the time to assess tax, or executing consents that agree to a tax adjustment. Representatives may sign returns or delegate authority only if specifically authorized on the power of attorney (POA). See section 3, Tax matter(s), Limitations. Note: Authorizing someone to represent you by a POA does not relieve you of your tax obligations.

Form POA-1 will not be required when an individual appears with the taxpayer(s) or with an individual who is authorized to act on behalf of the taxpayer(s). For example, Form POA-1 would not be required for an individual who appears on behalf of a corporate taxpayer with an authorized corporate officer. In addition, Form POA-1 is not required when an individual merely furnishes information, or prepares a report or return for the taxpayer(s).

Fiduciaries — A fiduciary (trustee, receiver, or guardian) stands in the position of a taxpayer and acts as the taxpayer. Therefore, a fiduciary does not act as a representative and should not file a POA. (However, a fiduciary may be asked to submit proof of the fiduciary’s authority.) If a fiduciary wants to authorize another individual to represent or act on behalf of the taxpayer, a POA must be filed and signed by the fiduciary acting in the position of the taxpayer.

Filing Form POA-1 — File the original Form POA-1 with the office of the agency in which a matter is pending. If this POA covers tax matters administered by both the NYS Tax Department and the NYC Department of Finance, a copy of Form POA-1 must be filed with each agency. A photocopy or facsimile transmission (fax) is also acceptable. Form POA-1 should be filed in a conspicuous manner. It should not be attached to or incorporated in any return, report, or other document that is routinely filed unless the return, report, or other document specifically provides for such attachment or incorporation. Sign and date all copies of documents attached to Form POA-1.

Specific instructions1. Taxpayer informationEnter your taxpayer identification number, as explained below, on all pages.

Individuals — Print or type your name, social security number (SSN), and mailing address in the spaces provided. If a joint NYS tax return is involved, and you and your spouse are designating the same representative(s), also enter your spouse’s name and SSN (and your spouse’s address if different than yours) on page 1. If a joint NYS tax return is involved, and you and your spouse are not designating the same representative(s), each spouse must file a separate Form POA-1.

Sole proprietorships — If you run a business as a sole proprietorship, print or type your name, including a dba (doing business as) name if applicable, and mailing address in the spaces provided. Enter your taxpayer identification (ID) number. For NYS tax matters, your taxpayer ID number is your employer identification number (EIN), SSN, or the taxpayer ID number issued by the NYS Tax Department for this business. For NYC tax matters, your taxpayer ID number is your SSN or EIN.

Corporations, partnerships, limited liability companies (LLC), or associations — Enter the legal name, EIN, and business address.

Trusts — Enter the name and EIN of the trust, and the name, title, and address of the trustee.

Estates — Use Form ET-14, Estate Tax Power of Attorney, for all estate tax matters.

POA-1-I (9/10)

2. Representative informationEnter each representative’s name, mailing address (including firm name, if any), telephone number, fax number, New York tax preparer registration identification number (NYTPRIN) if applicable, and e-mail address. Only individuals may be named as representatives. You may appoint more than one individual to represent you. You may not appoint a firm to represent you.

All representatives appointed will be deemed to be acting severally, unless Form POA-1 clearly indicates that all representatives are required to act jointly.

Attach additional sheets if necessary.

3. Tax matter(s)Enter the tax type (personal income, corporation, sales, etc.). Do not use this form for tax matters involving estate tax (see Estates). You may enter more than one tax type. Also enter the tax year(s) or tax period(s), or transaction(s) covered by this POA. If applicable, enter the notice, assessment, or Audit ID number(s) in the last column.

If you designate only a specific tax and no tax year or period, the POA will apply to all tax years and periods. If you designate only a specific tax year or period and not a specific tax type, the POA will apply to all tax types for the designated tax year or period. If you do not designate either a tax type or a tax period the POA will apply to all taxes and all periods.

Certain taxes, like the real estate transfer tax, do not have a tax period or year, but are based on a specific transaction. In that situation, enter the date of conveyance in the Tax year(s), period(s), or transaction(s) column.

Examples:

1. You receive an assessment for unpaid personal income taxes for tax year 2007. Your records indicate that it is due to an uncredited overpayment from your 2006 taxes. You are designating POA to the representative for a specific tax type, tax years and assessment.

2. You want your representative to handle all tax matters for the years you had an S corporation in New York.

3. You want your representative to handle the transfer of real estate in New York City which occurred on July 10, 2008.

Limitations — This POA authorizes the representative(s) you appointed to act for you for the tax matter(s) indicated with the exception of signing returns or delegating authority. You must sign the specific authorization line if you want your representative(s) to sign tax returns for you or if you want your representative(s) to have the authority to delegate his/her/their authority to someone else. If you intend to limit the authority in any other way, mark an X in the box and attach a complete explanation (signed and dated), stating the specific restrictions. A representative named in Form POA-1 may delegate the powers given to him/her only if the taxpayer(s) specifically authorizes delegation by signing on the line indicated in section 3. A representative does not need the consent of any other representative to make a delegation, unless the taxpayer(s) has specified otherwise.

4. Retention/revocation of prior power(s) of attorneyThis POA only applies to tax matters administered by the NYS Tax Department, the NYC Department of Finance, or both. Executing and filing this POA with an agency revokes all POAs previously executed and filed with that agency for the same tax matter(s) and year(s), period(s) or transaction(s) covered by this document. Executing and filing this POA does not revoke any other POA, including a POA executed under the General Obligations Law, for matters not listed on this POA. If there is an

existing POA filed with an agency that you do not want revoked, attach a signed and dated copy of each POA you want to remain in effect and mark an X in the box on this POA form.

You may not partially revoke a previously filed POA that applies to tax matters administered by the NYS Tax Department, the NYC Department of Finance, or both. If a previously filed POA appoints more than one representative and you do not want to retain all the representatives on that previously filed POA, you must indicate on the new POA the representative(s) you want to retain.

If you want to revoke an existing POA filed with an agency and do not want to name a new representative, send a copy of the previously executed POA to the office in which a matter is pending. Write Revoked across the copy of the POA, and sign and date the form. If you do not have a copy of the POA you want to revoke, send a statement to the office where you filed the POA. The statement of revocation must indicate that the authority of the POA is revoked, and must be signed and dated by the taxpayer(s). Also, the name and address of each recognized representative whose authority is revoked must be listed.

A representative can withdraw from representing you by filing a statement with the office where the POA was filed. The statement must be signed and dated by the representative and must identify the name and address of the taxpayer(s) and tax matter(s) from which the representative is withdrawing.

Any change to a POA filed with one agency does not change the POA filed with another agency. If a POA covers one or more tax matters administered by the NYS Tax Department and one or more tax matters administered by the NYC Department of Finance, you must notify each agency separately in writing of any and all changes to a POA.

5. Notices and certain other communicationsStatutory notices and certain other communications involving tax matters will be sent to only one representative, the first representative listed, unless you indicate a different representative on the form. If you do not want notices and certain other communications to go to any of your representatives, write None.

6. Taxpayer signatureForm POA-1 must be signed by the taxpayer(s) or by an individual who is authorized to execute the POA on behalf of the taxpayer(s). The taxpayer(s) or the taxpayer’s representative may be required to provide identification and evidence of authority to sign this POA. If not signed and dated, this POA will be returned.

Individuals — If a joint tax return has been filed and both spouses will berepresented by the same individual(s), both must sign Form POA-1unless one spouse authorizes the other, in writing, to sign for both.In that case, attach a copy of the authorization. If, however, a jointtax return has been filed and both spouses will be representedby different individuals, each taxpayer must execute his or her ownPOA on a separate Form POA-1.

Corporations — The president, vice-president, treasurer, assistant treasurer, or any other officer of the corporation having authority to bind the corporation must sign Form POA-1.

Partnerships — If the POA is executed on behalf of the partnership only, it must be signed by a partner authorized to act for the partnership. A partner is authorized to act in the name of the partnership if, under state law, the partner has authority to bind the partnership.

Limited liability companies (LLCs)— If the POA is executed on behalf of the LLC only, it must be signed by any member or manager duly authorized to act for the LLC, who must certify that he or she has such authority.

Fiduciaries — In matters involving fiduciaries under agreements, declarations, or appointments, Form POA-1 must be signed by all of the fiduciaries unless it can be established that fewer than all fiduciaries have the authority to act in the matter under consideration. Include evidence of the authority of the fiduciaries to act when filing Form POA-1.

Others — Form POA-1 must be signed by the taxpayer(s) or by an individual having the authority to act in the interest of the taxpayer(s).

7. Acknowledgment or witnessing the power of attorney Form POA-1 must be acknowledged by the taxpayer(s) before a notary public or witnessed by two disinterested individuals who must also sign and date this form. Notary public: affix stamp (or other indication of your notary authority).

Exception: Acknowledgment or witnessing will not be required if the appointed representative is licensed to practice in NYS as an attorney-at-law, certified public accountant, public accountant, or is a NYS resident enrolled as an agent to practice before the Internal Revenue Service (IRS).

8. Declaration of representative(s) (to be completed by each representative)

In the Designation(s) column, each representative must enter the number(s) describing his/her profession or capacity to represent the taxpayer(s) listed on page 1 of Form POA-1. If the representative enters 6 for other, that representative must indicate in the space provided at number 6 his/her relationship or capacity to represent the taxpayer(s). If the representative is a professional but not licensed to practice in NYS, indicate in the space provided at number 6 the representative’s professional designation and the state in which he/she is licensed, such as Florida attorney. If more than one representative is listed as other, indicate the relationship or capacity for each representative by name. Each representative must sign and date the declaration and include his/her federal preparer tax identification number (PTIN), SSN, or EIN. If this declaration is not completed in its entirety by each representative, the POA will be returned. Attach additional sheets, if necessary.

For additional information, see the regulations relating to representation before:

• theDivision of Taxation, see Title 20 of the Codes, Rules and Regulations of the State of New York, section 2390.1;

• theBureau of Conciliation and Mediation Services of the Division of Taxation, see Title 20 of the Codes, Rules and Regulations of the State of New York, section 4000.2;

• theNew York State Tax Appeals Tribunal, see Title 20 of the Codes, Rules and Regulations of the State of New York, section 3000.2;

• theNew York City Department of Finance, see Title 19 of the Rules of the City of New York, Chapter 27;

• theNew York City Department of Finance Conciliation Bureau, see Title 19 of the Rules of the City of New York, Chapter 38; or

• theNew York City Tax Appeals Tribunal, see Title 20 of the Rules of the City of New York.

Representation by former government employeesThe New York State Ethics in Government Act and section 2604(d) of Chapter 68 of the New York City Charter bar a government employee from appearing or practicing before his/her former agency for two years if a state agency, or one year if a city agency, after leaving public service, and prohibit for life his/her participation in any matter that he/she was directly and personally involved with while a government employee.

Privacy notification — The right of the Commissioner of Taxation and Finance and the Department of Taxation and Finance to collect and maintain personal information, including mandatory disclosure of social security numbers in the manner required by tax regulations, instructions, and forms, is found in Articles 9, 9-A, 11, 12-A, 13-A, 18, 20, 20-A, 21, 21-A, 22, 26, 26-A, 26-B, 28, 29, 30, 30-A, 30-B, 31, and 31-B of the Tax Law; Article 2-E of the General City Law; and 42 USC 405(c)(2)(C)(i).

The Tax Department uses this information primarily to determine and administer tax liabilities due the state and city of New York and the city of Yonkers. We also use this information for certain tax offset and exchange of tax information programs authorized by law, and for any other purpose authorized by law.

Information concerning quarterly wages paid to employees (and identified by unique random identifying code numbers to preserve the privacy of the employees’ names and social security numbers) is provided to certain state agencies for research purposes, to evaluate the effectiveness of certain employment and training programs.

Failure to provide the required information may subject you to civil or criminal penalties, or both, under the Tax Law.

This information is maintained by the Manager of Document Management, NYS Tax Department, WA Harriman Campus, Albany NY 12227; telephone (518) 457-5181.

The right of the Commissioner of the New York City Department of Finance to require disclosure of identifying numbers is contained in section 11-102.1 of the Administrative Code of the City of New York.

Page 2 of 2 POA-1-I (9/10)

SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF

EPARTMENT OF FINANCE OF THE CITY OFYORK,

CREDITORAGAINST.

DEBTOR

AF'F'IDAVIT FORJUDGMENT BYCONFESSION

STATE OF NEW YORKSS

COUNTY OF

, being duly sworn, deposes and says:

l. I reside at in the county of

I am a debtor in the above entitled action and hereby confess judgment in favor of the creditor, theDepartment of Finance of the City of New York (hereafter "Department of Finance"), for the sumof ( ) as provided for in the separately executed Consent and Waiver form ofENTITY NAME , dated plus any accrued interest through the date of payment (seeattached).

I hereby authorize the Department of Finance to finally and irrevocably fìx and assess and enter ajudgment for the sum of against me in County for money due.

4. This confession ofjudgment is for a debt justly due to the creditor in the above entitled action andarose as a result of the following facts:

a. I am an officer of ENTITY NAME, , dt , and in the ordinary course of businessincured an additional New York City Real Property Transfer Tax liability for the tax periods NA- NA pursuant to audit number

b, As a result I do owe to the Department of Finance the sum ofdue to the Department of Finance,

and that this debt is justly

)))

)

J

;

I This Confessíon of Judgment is not for the purpose of securing the creditor against a contingent liability.

By:Signature Title Date

Name

Acknowledgement of Taxpa]rer's Sienature

On this dayto me known, who swore

of before me camethat (s)he is the person described in the above instrument as the taxpayer, and

acknowledged that (s)he executed the above instrument.

Notary Public

lAffix seall

Finance

DEPARTMENT OF FINANCE

AUDIT DIVISION

PP-2009-1rev.5/24/t2

STATEMENT OF AUDIT PROCEDURE

VOLUNTARY DISGLOSURE AND COMPLIANCE PROGRAM

I. BACKGROUND

The New York City Department of Finance ("Finance") encourages all taxpayers to file City taxreturns and to pay taxes owed on time. Pursuant to administrative code section 11-131, Financenow allows taxpayers who are delinquent to come fonruard voluntarily to comply with New York Citytax laws. For City taxes administered by New York State (NYS), taxpayers must contact the NYSDepartment of Taxation & Finance (at www.tax.nv.qov) to participate in the Voluntary Disclosureprogram. Finance believes that encouraging delinquent taxpayers to come fonruard will increasetax compliance.

We have established general procedures for auditors to follow to help taxpayers comply. Sometaxpayers may qualify for a limited look-back period of six years (for trust fund taxes or intentionaltax evasion) or three years (for most other circumstances). Some othenruise eligible taxpayers maynot be offered a voluntary disclosure agreement when doing so will impede rather than further thegoal of overall compliance. For example, a taxpayer that is late with the filing of a single returnmay not utilize the program to avoid the imposition of a single late filing penalty.

il. scoPE

This Statement of Audit procedure ("SAP') provides general guidance to Finance staff on how tohandle requests to participate in the Voluntary Disclosure and Compliance Program (VDCP) sothat all requests are given consistent treatment. Specifically, the SAP:

. describes a voluntary disclosure;

. explains who is eligible to make a voluntary disclosure;

. explains how the initial contact is usually made; and

. provides the steps necessary for the voluntary disclosure process;

A taxpayer that merely wishes to file returns for all delinquent years and fully pay any resultingliability may do so at any time. These voluntary filings of delinquent returns are not covered in thisSAP.

, Voluntary Disclosure PP-2009-'lrev

III. PROCEDURE

A. What is Voluntary Disclosure?

Typically, a voluntary disclosure is made when a taxpayer has not filed one or more taxes and nowwants to comply. The taxpayer may also seek abatement of penalties and/or a limit on the numberof years it must file. The taxpayer or its representative may make the first contact with Finance.Also, the taxpayer may choose to remain anonymous until a written agreement is complete. Thewritten agreement specifies the steps and payments necessary to satisfy any existing delinquentliability, No refund shall be granted or tax credit allowed, including applicable interest, for amountspaid under this program.

B. Eligibility

A taxpayer may make a voluntary disclosure for one or more tax periods and/or tax types provided

. the taxpayer is not currently under audit by Finance. the taxpayer was not previously contacted by Finance regarding the liability. the taxpayer is not a party to any criminal investigation being conducted by NYS or anypolitical subdivision of NYS. the liability is not related to a tax avoidance transaction that is a Federal or NYS reportabletransaction

A taxpayer is eligible even if the reason for the delinquency is intentional disregard of the taxobligation or fraud.

Even though the taxpayer may want a limit on the number of years to file, the entire delinquentliability must be disclosed. This disclosure protects the taxpayer from audit and assessment forearlier years, lf the delinquency is the result of mistake, confusion, ignorance of the law, inability tocomply, or a similar reason, applicants may qualify for a three-year "look-back". lf the tax involvedis a trust fund tax, the taxpayer may qualify for a six-year "look-back".

The taxpayer must also document the reason for not filing. That reason is subject to review as partof the audit process. Any voluntary disclosure and compliance agreement made between Financeand a taxpayer will become null and void if a taxpayer makes misrepresentations or omits facts inthe voluntary disclosure request.

C. lnitial Contact

A taxpayer may come fonruard directly or anonymously through a representative. The initialcontact, whether by phone or in writing, should be made to the Voluntary Disclosure Coordinator

D. Voluntary Disclosure Process - From Request through Conclusion

Taxpayers participating in the voluntary disclosure and compliance program generally want anadvance written commitment from Finance to waive penalties and/or limit the number of years theymust comply. We require the taxpayer to make the request for a voluntary disclosure andcompliance agreement in writing and provide certain supporting information,

, Voluntary Disclosure PP-2009-lrev

Finance will ask the taxpayer or the taxpayer's representative to include the following in the writtenrequest:

1) A statement of facts, anonymously if necessary, describing the taxpayer's activities in New YorkCity and New York State, when these activities started, the number of employees, and their titles,involved in the activities. The statement should indicate the tax year they believe their taxobligation first began. (Note: There is no limit in the law as to how many past years Finance mayexamine for a non-filing entity under the voluntary disclosure and compliance program. The periodis determined by the facts and circumstances. However, some taxpayers may qualify for a limited"look-back" period.)

2) A statement explaining why the taxpayer has failed to file tax returns and pay taxes in the past.

3) A computation of the taxpayer's approximate tax liability on a year-by-year basis for all thedelinquent years.

4) An affirmation, prepared by either the taxpayer or its representative, that the taxpayer has notbeen previously contacted by Finance concerning any potential tax liability for the tax now beingdisclosed. The taxpayer must not be currently under audit for any City tax and the taxpayerunderstands that all disclosed facts are subject to audit. lf it is determined a material fact has beenomitted or misrepresented, the agreement becomes null and void.

5) For taxpayers requesting a limited "look-back" period, a statement that explains why the limited"look-back" is appropriate. Generally, a taxpayer will qualify for the three-year "look-back" ifdelinquency was caused by mistake, confusion, ignorance of the law, or some inability to comply.Most other taxpayers may qualify for a six-year "look-back". Taxpayers will not qualify for thelimited "look-back" if any of the following apply:

a) the taxpayer was a NYC filer in the past and had stopped filing NYC returns;

b) the taxpayer has no current obligation to file NYC tax returns; or

c) the delinquent obligation occurred as a result of changes made by the lnternal RevenueService or by New York State.

Taxpayers that do not qualify for the limited "look-back" period may still receive an agreementcovering a longer period.

6) Other information or data deemed appropriate

Once the process is complete and Finance determines conditions for a voluntary disclosure andcompliance agreement are satisfied, our representative and the taxpayer can discuss terms for awritten voluntary disclosure and compliance agreement. The agreement must include the followingelements or terms:

, Voluntary Disclosure PP-2009-1rev

a) A summary of the facts and representations

b) Disposition of penalties.

c) The period or periods for which returns must be filed and the period or periods thatFinance will not audit the taxpayer or assess amounts due.

d) A statement that all returns and representations are subject to audit. Any materialomission or misrepresentation may result in rescinding the agreement.

e) The agreed delinquent taxes must be paid within a specified time period.

f) A commitment to file all tax returns and make estimated payments due, after the date ofthe agreement, on a timely basis.

All voluntary disclosure and compliance agreements must be reviewed and approved by theCoordinator. An authorized employee must sign the agreement for Finance.

IV. UNIFIED PROGRAM

Taxpayers that are delinquent for both NYS and NYC taxes may participate in the UnifiedProgram, This program allows a taxpayer to make one request to participate in both the NYS andNYC VDCPs without making separate requests to each jurisdiction. As part of this program, NYCwill conform to NYS procedures, including those requiring taxpayers to identify themselves on theirapplication. The taxpayer receives one agreement detailing the terms of both jurisdictions. Anauthorized employee from each jurisdiction will sign the agreement.

All requests to participate in the Unified Program must be made with NYS.

RPIE-201 3 coNFTDENTAL

REAL PROPERTY INCOME AND EXPENSE WORKSHEETThe following form is NOT to be submitted. You must file all RPIE forms electronically.

Address of Property:

Borough Block: Lot

PART l: OWNER AND PROPERTY INFORMATION PLEASE READ THE RPIE f NSTRUCTIONSCAREFULLY BEFORE COMPLETING THIS FORM

SECTION A- OWNER/FI LER I ON

SECTION B - CONTACT INFORMATION

d. Entity's Relationslrip to the Property: fJ Owner U Lessee U Owner Representative U Lessee Representative

OR

OR

OR

t T

I

1a. Owner's Narne

d. Additional Owner's Name:

c. Owner's Social Security Number

f. Additional Owner's Social Security Number:

b. Owner's Employer ldentification Number:

e. Additional Owner's Employer ldentification Number:

c. Filer's Social Security Number:2a. Name of Entity Filing (if different from the owner)

b. Filer's Employer ldentification Number:

3. Address:-NIIMBER AND STFÉÉT

Zip Code

4. Telephone #:

cty

2. Firm

State

1. Contact Name:

5. E-mail Address

CONSOLIDATED LOTS.l . please indicate all contiguous properties thal have the same owner, ere operated as one economic unit and are in the same borough

2. Please select apportionment method: D Percentage E euitOing square feel D # of units

Block: Lot: Block: Lot:

3. Q Check here if this property is a hotel.

4. Condominiums filing for multiple lots, please indicate if this filing covers:

Block: Lot:

to lol

to lot

to lot

frorn lot

from lot

from lot

a. U Ent¡re Condominium from lot

b. fl All lots within a range from lot

frorn lot

frorn lot

to lot

to lot

to lot

to lot

Block: Lot: Lot: Block; Lot:

RPIE-2013 - Real Property lncome & Expense Worksheet Page 2

lJ Please check this box if you claimed an exclusion above and want lo file an RPIE-B form to provide Finance with the most cur-

rent information about your property.

a.Ob. flc.Ed,tre.Df.D9.tr

I am not requlred to flle a RPIE for thls yêar because my property:

h.tri.B¡.Dk.D

has an actual assessed value of $40,000 or ¡ess.

is excluslvely residential with 10 or fewer apartments,

is prlmarlly resldential with 6 or fewer apaftments, no more than one commercial unit, and is in tax Class 1 or Tax Class 2.

is a residentlal cooperatlve apartment building with less than 2,500 square feet of commercial space (not including garage space).

is an indlvidual residential condomlnium unlt that is not part of a group of rental units that makes up the majority of the development.

is rented exclusively to a related person or ent¡ty.

is occupied exclusively by the owner but is not a; department store with 10,000 or more gross square feet; hotel or motel;

parking garage or lot; power plant; or theater.

is owned and used exclusively by a fully exempt not-for-profit organization or government entity and generates no rental income.

is vacant or unlnhabltable and non-income-producing.

is vacanl, non-lncome-produclng land.

The owner has not operated the property and is without knowledge of the income and expenses for the entire calendar or fiscalyear of the reporting period

lF YOU CLAIMED AN EXCLUSION ABOVE, YOU MAY SKIP TO PART lVr RPIE CERTIFICATION

USIIAS

$'olÌKsIlliH'lONTY!

IìIOT

IrotÌsuBilrssr0N[

RPIE-2013 - Real Property lncome & Expense Worksheet Page 3

For each use type, indicate the percentage of total square feet that was vacant (unoccupied, unleased or generating no in-come) as of January 5, 2014. Square feet occupied for any portion as of January 5, 2014 may not be included.

1. Description

a, Total # of Units b. # of Residential Units: c, # of Commercial Units

d, # of Buildings: e. # of Floors f. Year of Purchase:

lndicate lhe percentage of lhe space in the building that was vacant (unoccupied or unleased, generaling no income) as of January 5, 2014.

2. Resldentlal:

Otflce:

4. Retall Tenants:

5. Lott:

6. Factory; ¿ ,¿

7. Il/arehouse:

8. Storago

L caragdParklng:

10. Other:

'11. Other:

12. Other:

13. Other:

U Despite our due diligence in seeking rent roll information for sponsor-owned units, we have been unable to obtain such information

from the sponsor,

A. # of Units B. Annual lncome ($)

1. Unsold Occupied Units;

a. BegulatedApartments

b, Unregulated Apartments

2. Commercial Units that are Leased

3. Commercial Units Owned and Occupied

by the Cooperative/Condominium Owner:

RPIE-2013 - Real Property lncome & Expense Worksheet Paqe 4

1, #ofTheater Seats:

1 a. Does the tenant pay ALL the operating expenses, including the Real Estate Tax (Triple Net Lease)? E yeS tr NO

b. lf the answer is 'YES", and the filer is the tenant (see Part l, Question 2d), indicate the total annual rent paid to the owner $

2 a. Owner Occupancy: ls any part of this property owner-occupied or owner-related?............................. D yeS D ruO

I "i-i

i.il::i"T":i ;.:ï::ff ; ii:,flJffiTT'"'

lÏ:i:"''"' -: /tsU Retail %

-îITORKÍ|I|liliTONIY!N0'r'

superintendent: units.

D tott

E Factory

ü Warehouse

ll Storage

D Garages/Parking

ü other

END OF RPIE.2Ol3 PART I: ROPERTY INFORMATION

,,ñU,$UI-SffilUrPART ll: INCOME AND EXPENSE STATEMENT (FOR ALL PROPERTIES EXCEPT HOTELS)

OR

PART lll: INCOME AND EXPENSE STATEMENT FOR HOTELS ONLY

The new submission deadline for all RP|E-filings is June 2,2014.

RPIE-2013 - Real Property lrrcome & Expense Worksheet Page 5

PART ll: I NCOME AND EXPENSE STATEMENT (FOR ALL PROPERTIES EXCEPT HOTELS)SECTION I. REPORTING PERIOD1. The income and expense statement is for a:

2. Please indicate the period covered in this statement:

a. D Calendar Year b. U Fiscal Year c. ü partial year

FromMONTH YEAR

; ot Un¡t¡ Income ($ per year)

YEAFTo

MONIH

SECTION J . INCOME FROM REAL ESTATE. Do not |¡st1 ' a. Residential Regulated (lf an anìount is entered as lnconre you nrust also enter the I of units).,..

b. Residential Unregulated (rf an amount is errtereci as rncome, you musr also enter the # of L¡nits)c. Total Residelrtial lncolne - see instructions

2.J.

4.Ã

6.7.o

9.

OfficeRetail Tenants

Garages/ParkingOwner-Occupied or Owner-Related Space..,.,..,,..,....,

10. Ancillary lncome (not inclucled in Regulaled or Unregulated irrcome listeci above)a. Operating Escalationb. Real Estate Tax Escalaiionc. Sale of Utility Servicesd. Sale of Other Servicese. Government Rent Subsiciiesf . Signage/Billboardg, Cell Towers

1'1 . Other (detail other uses below)a.b.

Factory ,..,....,....

WarehouseStorage

c

Light and Power....

Loft

Cleaning ContractsWages and PayrollRepairs and Maintetrance . ... ., .

Management and Administrationlnsurance (annual)

1

J

45ba

12. Total lncome f rom Real Estate

SECTION K - INCOME FROM BUS¡NESS. Do not list a ve f¡ ures.MerchandiseFood and BeverageParkingAutomotive FuelAdmissionsOther Sales..Departrîent Store Salesa. Gross DepaflrnentStore Sa|es,...,.......,,..,.

b. Returns and Refurrds (Deduct frorn Gross Departrnent Store Sales)c. Leased Depadmentsd. Net Department Store Sales

B. Total lncome from Business. .... ...

SECTION - PROPERW OPERAilNG EXPENSES. Do not llst any

Fuel

lncome ($ per year)

Expenses ($ per year)

1

¿

J

45

6

Bo

Waler & SewerAdvertising

.10. lnterior Painting and DecoratingI1. Arnortized Leasing Costs (annualized, pro-rated cost)12. Amortized Tenant lmprovement Costs (annualized, pro-rated cost)13. Miscellaneous Expenses: (notall cleductecl byËinancecluringvaluation)....................

14. Total Expenses.l 5. Real Estate Taxes, Bad Debt, Depreciation and Mortgage lnterest

(Optional - These expenses are not included when tallying Total Expenses) ..,......

a.b.c.d.

RPIE-20'1 3 - Real Property lncome & Expense Worksheet Page 6

Total Reserve at Start Total Reserve at Endof Reporting Period ($) of Reporting Period

fnstructions: To be completed only if there is an annual monetary reserve for replacement. See lnstructions page 14tor alist of eligible reserve items. Fill in the item number if listed. For items not listed describe the item in this section.

ItemDescription

ReportingPeriod Expenses ($)

RecoveryPeriod (Years)

Other ltems

RPIE-2013 - Real lncome & Worksheet Page 7

PART lll: INCOME & EXPENSE STATEMENT FOR HOTELS ONLYSECTION M. REPO PERIOD1. The incotne and expense statement is for a: a. Q cdendar Year b. Ll Fiscal Year c. .J Part¡al Year

2. Please indicate the period covered in this statement: From - To¡/ONTH YFAR MONNH YEAR

3. Name of the Hotel or Motel: 4. Total # of Rooms:

4a. # of Transient Flooms: 4b. # of Permanent Rooms:___ 4c. # of Keys

4d. Rate for 2013: 4e. RevPAR for 2013 4f. Ave Rate for 2013

SECTION N - INCOME. Do not t¡st n year)1. Departmental

a. Roomsb, Food and Beverage

2, Total Departmenlal Income3. Rental Tenants

a.

b,

c.

cl,

e.

Stores

Olhers4. Total Rental Tenants

7. Other (describe): a) b) c)

Expenses ($ per year)SECTION O - EXPENSES. Do not l¡st any negative figures.

3. Undistributed Operating

45

6

7

c)b)

Total Expenses

d. Other Departments (describe):

Financial and Other (describe)

d. Franchise Fee

h. Other Operating (descrlbe): a)

Recapitulation. .. ... ...

a. Net Departmental lncome... ... .

b. Net Operating lncotne...c. Net lncome

2. Furniture, Fixtures and Equipment (FF & E) Used in Hotel Operations ....

a. ls there a reserve for FF & E ? C Yes E ruo

b. Contribution to reserve in reportirrg year.,...... .. . .. .. .... ... .. . ..$

d. Book cost of all FF & E at year end .... . .............$

e. Depreciation of FF & E for reporting year .. .. . ..............$

f. Book cost less accumulated depreciation.. . ... .........$

res.Amount

SECTION P - RECAPITULATION, FURNITURE, FIXTURES

Finance

In The Matter Of:

Taxpayer NameAddressAddress

RE: STIPULATION OF SETTLEMENTEIN/SSN: XX-XXXXXXXCASE ID: N/A

DATE: lll/2015

The New York City Department of Finance hereby enters into this agreement with the Taxpayer, acorporation organized under the laws of the State of New York.

WHEREAS, the Department of Finance ("Department") has been reviewing the Taxpayer's (TAX TYPE)returns filed pursuant to Chapter (CHAPTER HERE) of Title (TITLE HERE) of the New York City AdministrativeCode for tax years (INSERT AUDITED PERIOD HERE), and

WHEREAS, the parties to this agreement wish to resolve all issues that have developed in the course ofthat review and to settle with finality any liability of the Taxpayer for the (TAX TYPE) for all years (INSERTAUDITED PERIOD HERE), except in respect to Federal and State changes previously assessed or that may besubsequently assessed in the future.

NOV/, THEREFORE,IT IS MUTUALLY AGREED THAT

1 The Taxpayer will pay to the Department an amount of (INSERT TAX AMOUNT HERE)("Settlement") in complete satisfaction of its liability for the years (INSERT AUDITED PERIOD),inclusive of any amount due, interest and/or penalties.

The Settlement will be calculated as follows

The Taxpayer agrees to pay the settlement as shown in paragraph I to the Department. If payment isnot received by the Department as stated above on or before (TAX PAYMENT DUE DATE),additional interest (compounded) will accrue from when the payment was originally due. TheTaxpayer hereby waives any and all rights to protest the settlement or claim a refund of all or any

2

ENF STIP

TAX PERIOD(S) PRINCIPAL INTEREST PENALTY TOTAL2009 $ $ $ $2010 $ $ $ $2011 $ $ $ $2012 $ $ $ $2013 $ $ $ $

Total Assessment /(Total Refund) $ $ $ $

Interest Calculatedto: 4/1512015 Refunds and pøyments on account $

Balance: $

JACQUES NHA, Ph DCOMMISSIONERDEPARTMENT OF FÌNANCE

JOSEPH ¡uclloSHERIFFSHERIFF'S OFFICE - TAX ENFORCEMENT DIVIS]ON

3O-IO STARR AVENUELONGISLANDCITY. IIIOI http ://nyc, gov/fi nance

Finance

ENF STIP

5

6

J

4.

7

8

part of any payment of any of the settlement for the tax periods (INSERT TAX PERIOD HERE)stated in Paragraph 1.

Should the Taxpayer not comply with the stated conditions, the Commissioner of Finance mayinstitute those collection proceedings set forth in the Administrative Code of the City of New Yorkand other relevant statutes.

This agreement sets forth the entire understanding among the Departrnent and the Taxpayer withrespect to the subject matter hereofand supersedes any prior negotiations, agreements, understandingor arrangements among them with respect to the subject matter hereof. This agreement is final,conclusive and irrevocable and no modification to this agreement or to the calculation ordetermination of tax, interest and penalties shall be made on âccount of a mathematical or othercomputational error.

This agreement shall be binding upon and inure to the benefit of the Department and the Taxpayerand their respective successors and assignees.

This agreement and its term and any information obtained by the Department during or derived fromthe review of the Taxpayer with respect to the (INSERT TAX PERIODS HERE) tax years are to betreated by the Department as shictly confidential and not for disclosure, publication or release unlesssuch disclosure, publication or release is required by operation of law. The Department representsthat the Director of Enforcement is authorized to sign this agreement on behalf of the Department andto bind the Department and its Commissioner of Finance in accordance with its terms.

This agreement sets forth the entire understanding among the Department and the Taxpayer withrespect to the subject matter hereofand supersedes any prior negotiations, agreements, understandingor arrangements among them with respect to the subject matter hereof. This agreement is final,conclusive and irrevocable.

The Department and the Taxpayer hereby certif, that they have read this agreement and accept itsterms. This agreement shall be interpreted in accordance with the law of the State of New York. TheStipulation of Settlement shall not be binding until the Stipulation is signed by both parties.

By: By:

Date

Title of Officer

Date

Maureen KokeasDirectorSheriffs Office -Tax Enforcement DivisionCity of New York

JACQUES JIHA, Ph DCOMMISSIONERDEPARTMENT OF FINANCE

JOSEPH FUCITOSHERIFFSTIERIFF'S OFFICE - TAX ENFORCEMENT DÌVISION

30-IO STARR AVENUELONGISLANDCITY, lIIOI http://nyc gov/finance

O U T L I N E O F S T A T E A N D L O C A L T A X - R E L A T E D C R I M E S

by A.D.A. Jill Mariani, New York County District Attorney Office

1. Criminal Tax Fraud

On April 7, 2009 the Legislature created the new offense of Criminal

Tax Fraud. The crime has five degrees ranging from fifth-degree (a class A

misdemeanor) through first-degree (a class B felony). Tax Law §§1802 through

1806.

There are three elements of the felony offenses that the People must

prove beyond a reasonable doubt. The elements are:

1. the commission of a “tax fraud act,”

2. the requisite mens rea, and

3. a monetary threshold.

The misdemeanor level requires the first two elements, but has does not

require a monetary threshold.

A. Tax Fraud Act

The eight tax fraud acts, listed in Tax Law §1801(a), states that a person

engages in a tax fraud act when he or she, as a principal or an agent, willfully:

1. fails to make, render, sign, certify or file any return or report required under [the Tax Law] or any regulation promulgated under [the Tax Law] within the time required by or under the provisions of [the Tax Law] or such regulation;

2. knowing that a return, report, statement or other document under [the Tax Law] contains any materially false or fraudulent information, or omits any material information, files or submits that return, report, statement or document with the state or any political subdivision of the state, or with any public office or public officer of the state or any political subdivision of the state;

3. knowingly supplies or submits materially false or fraudulent information

in connection with any return, audit, investigation, or proceeding or fails to supply information within the time required by or under the provisions of [the Tax Law] or any regulation promulgated under [the Tax Law];

4. engages in any scheme to defraud the state or a political subdivision of

the state or a government instrumentality within the state by false or fraudulent pretenses, representations or promises as to any material matter, in connection with any tax imposed under [the Tax Law] or any matter under [the Tax Law];

5. fails to remit any tax collected in the name of the state or on behalf of

the state or any political subdivision of the state when such collections is required under [the Tax Law];

6. fails to collect any tax required to be collected under articles twelve-A,

eighteen, twenty, twenty-two or twenty-eight of this chapter1, or pursuant to the authority of article twenty-nine of [the Tax Law];2

7. with intent to evade any tax fails to pay that tax; and

8. issues an exemption certificate, interdistributor sales certificate, resale

certificate, or any other document capable of evidencing a claim that taxes do not apply to a transaction, which he or she does not believe to be true and correct as to any material matter, which omits any material information, or which is false, fraudulent, or counterfeit.

Criminal Tax Fraud provides for various felony level prosecutions in

situations in which sales tax is not collected from customers or taxes are not

1 These articles relate to gasoline and motor fuel, alcoholic beverages, cigarettes, and tobacco products, personal income tax (including withholding), and sales and compensating use taxes.

2 This article authorized taxes for cities, counties, and school districts.

2

withheld from the salaries of the employees. Under the previous statutory

framework, the failure to withhold tax from employee wages was a

misdemeanor no matter how large the dollar amount. Now, since a year’s

worth of unpaid wages can be aggregated, failure to withhold tax can easily

meet a felony threshold. Similarly, the failure to collect sales tax can lead to

several class E or D felonies, for which consecutive sentences can be imposed.

B. Mens Rea

The second element is the mens rea. The Tax Law has gathered all the

“intents” formerly scattered throughout Article 37 of the Tax Law into a new

umbrella term of willfully. Tax Law §1801(c) defines “willfully” to include (1)

“intent to defraud,” or (2) “intent to evade the payment of taxes,” or (3) “intent

to avoid a requirement [of the Tax Law] or a lawful requirement of the

commissioner, or a known legal duty.” .

While proof of any one of these “intents” will establish willfulness, proof

of a particular type of willfulness may be required for certain tax fraud acts. For

instance, the tax fraud act of “failure-to-pay” set forth in subsection 7 of

§1801(a) specifies an “intent to evade” the payment of tax.

C. Monetary Thresholds

The third element of the felony offenses is a threshold dollar amount.

The statute specifies that the defendant commits a tax fraud act with the

requisite mens rea and “pays the state and/or a political subdivision of the state

3

(whether by underpayment or receipt of refund or both), in a period of not

more than one year, in excess of a [dollar amount] less than the tax liability that

is due.” The threshold amount determines the degree of the felony. More

specifically, an amount in excess of:

• $3,000 is required for a class E felony;

• $10,000 is required for a class D felony;

• $50,000 is required for a class C felony; and

• $1 million is required for a class B felony.

Tax Law §1807 expressly permits an aggregation of the “payments due

and not paid” in certain instances. Specifically, “payments” may be charged in

a single count if the payments were due and not paid “pursuant to a common

scheme or plan” and were due and not paid “within one year.”

The statute does not define the term “year,” so it is reasonable to assume

that it can mean either a calendar year (permitting aggregation of unpaid payroll

tax due within four quarters of a calendar year), or a tax year (permitting

aggregation of unpaid sales tax due with four quarters of the sales tax year of

March 1 of one year through February 28 of the following year).

2. Repeated Failure to File State Returns

The felony crimes of repeated failure to file personal income tax returns

and repeated failure to file corporate tax returns, which had been repealed in

4

2009, were re-instated in the following year. Tax Law §1808 and §1809. There

are four elements that the People must establish for such offenses:

1. failure to timely file a return or report,

2. for three consecutive years,

3. with an intent to evade tax, and

4. an unpaid tax liability in each of the three consecutive taxable years.

With respect to personal income tax liability, any amount of unpaid tax

liability is sufficient. With respect to corporate tax liability, the amount of the

unpaid liability must exceed the threshold amount of $250 in each year.

3. City Criminal Tax Fraud

On July 9, 2009, the Legislature created the new offense of City

Criminal Tax Fraud. This crime has five degrees, ranging from fifth-degree

(a class A misdemeanor) through first-degree (a class B felony). New York City

Administrative Code §§11-4003 through 11-4007.

There are three elements of the felony offenses that the People must

prove beyond a reasonable doubt. These elements are:

1. the commission of a “tax fraud act,”

2. with the requisite mens rea, and

3. a monetary threshold.

The misdemeanor level requires the first two elements, but does not

require a monetary threshold.

5

A. Tax Fraud Acts

There are eight tax fraud acts, parallel to the Tax Law. New York City

Administrative Code §11-4002(a). A person engages in a tax fraud act when he

or she, as a principal or an agent, willfully:

1. fails to make, render, sign, certify or file any return or report required under the provisions of any designated chapter of [title 11] or any rule or regulation promulgated thereunder within the time required by or under the provisions of any designated chapter of [title 11] or such rule or regulation;

2. knowing that a return, report, statement or other document under any

designated chapter of [title 11] contains any materially false or fraudulent information, or omits any material information, files or submits that return, report, statement or document with the city or the state or with any public office or public officer of the city or state;

3. knowingly supplies or submits materially false or fraudulent information in connection with any return, audit, investigation, or proceeding or fails to supply information within the time required by or under the provisions of any designated chapter of [title 11] or any rule or regulation promulgated under any designated chapter of [title 11];

4. engages in any scheme to defraud the city or of the state or a government instrumentality of the city or of the state by false or fraudulent pretenses, representations or promises as to any material matter, in connection with any tax imposed under any designated chapter of [title 11] or any matter under any designated chapter of [title11];

5. fails to remit any tax collected in the name of the city or the state or on behalf of the city or the state when such collection is required under any designated chapter of [title 11];

6. fails to collect any tax required to be collected under chapter twelve, thirteen, twenty-three-A, twenty-three-B or twenty-five of [title 11];

6

7. with intent to evade any tax imposed under any designated chapter of [title 11], fails to pay that tax; and

8. issues an exemption certificate, interdistributor sales certificate, resale

certificate, or any other document capable of evidencing a claim that taxes imposed under a designated chapter or [title 11] do not apply to a transaction, which he or she does not believe to be true and correct as to any material matter, which omits any material information, or which is false, fraudulent, or counterfeit.

B. Mens Rea

Similar to the Tax Law offenses, mens rea is termed as willfully and is

defined as either (1) “intent to defraud,” or (2) “intent to evade the payment of

taxes,” or (3) “intent to avoid a requirement [of Title 11] or a lawful

requirement of the commissioner, or a known legal duty.” New York City

Administrative Code §11-4002(c).

C. Monetary Thresholds

Each of the felony provisions includes a threshold dollar amount, which

are parallel to the threshold amounts of Criminal Tax Fraud. See pages 3-4

supra. It also has an analogous aggregation provision. New York City

Administrative Code §11-4008.

7

Repealed Repeated Failure to File City Returns

The crime of repeated failure to file New York City general corporation

tax returns or New York City unincorporated business tax returns was repealed

by the 2009 legislation. It has not yet been re-instated.

4. Other Applicable Criminal Offenses

There are several Penal Law offenses that are applicable to prosecute tax

fraud. The following is a list of most often charged offenses:

• Offering a False Instrument for Filing in the First Degree, Penal Law §175.35;

• Falsifying Business Records in the First Degree, Penal Law §175.10;

• Scheme to Defraud in the First degree, Penal Law §190.65;

• Grand Larceny in the Fourth through Grand Larceny in the First

Degree, Penal Law §155.30 through §155.42(1);

• Criminal Possession of a Forged Instrument in the First Degree, Penal Law §170.30;

• Criminal Possession of a Forgery Device, Penal Law §170.40; and

• Identity Theft in the Second and First Degrees, Penal Law

§190.79 and §190.80.

5. Criminal Fines

Both the Tax Law and the New York City Administrative Law permit

the sentencing court to impose a criminal fine for a felony offense that is the

greater of double the amount of the underpaid tax liability resulting from the

8

commission of the crime, or $50,000 in the case of an individual, or the

$250,000 in the case of a corporation. Tax Law §1800(c)(1) and New York City

Administrative Code §11-4000(c )(1).

The measure of the sanction is the amount of the tax that the defendant

cheated the State or the City at the time of the commission of the crime, not

how much he or she has left to pay at the time of sentencing. In other words,

even if the defendant has paid the entire outstanding tax owed before sentence,

the sentencing judge can use the original amount of “underpaid” tax as a basis

for computing the amount of the criminal fine. For example, a defendant

charged with evading $30,000 of personal income tax can be fined up to twice

that amount, even if he or she has all already been repaid the entire amount.

For misdemeanor offenses the applicable criminal fine for each count is

$10,000 in the case of an individual, or $20,000 in the case of a corporation.

Under Penal Law §80.00(c), the maximum fine for each felony count for

an individual is $5,000 and for a corporation is $10,000. There is a provision

for the sentencing court to impose a double-the-gain fine. However, in

contrast to the Tax Law and the New York City Administrative Law, the

statute provides that the calculation must deduct any amount the defendant has

repaid prior to sentence.

9

Miscellaneous Statutes

A. Money Laundering Statute

The legislature amended article 470.00 of the Penal Law containing the

money laundering offenses to designate the felony levels of criminal tax fraud

in its specific intent provisions. Penal Law §470.05(1)(a)(i)(B);

§470.10(1)(a)(i)(B) & (b)(i)(B); §470.15(1)(a)(i)(B) & (b)(i)(B), and

§470.20(1)(a)(i)(B) & (b)(i)(B).

B. Paid Tax Preparers

Tax Law §1833 creates a misdemeanor offense , covering commercial tax

return preparers who, willfully and with intent to evade, fail to sign a tax return

that requires a signature or fails to register as required.

C. Special Designation

County Law §702(7) permits a District Attorney to appoint an attorney

from the New York State Department of Taxation and Finance as a special

Assistant District Attorney.

10

DISTRICT ATTORNEY – NEW YORK COUNTY

FOR IMMEDIATE RELEASE CONTACT: Joan Vollero (DA’s Office) August 1, 2012 212-335-9400

Owen Stone (Finance) 212-669-2566

Glenn Newman (NYC Tax) 212-669-4401

MANHATTAN GRAND JURY RECOMMENDS SWEEPING REFORMS TO

NYC PROPERTY TAX SYSTEM

Grand Jury Empanelled At the Request of Manhattan DA’s Office Finds Systemic Problems With Real Property Tax Filings

Manhattan District Attorney Cyrus R. Vance, Jr., announced that a Grand Jury in New York State Supreme Court has issued a report examining the filing of false documents and information with New York City in connection with the computation of real property tax liability, and calling for legislative, executive, and administrative reforms to protect the integrity of the tax system and maximize tax receipts lawfully due to the City. Real Property taxes are levied each year on more than one million properties citywide. As part of the assessment process, Real Property Income and Expense (RPIE) Statements are required for properties that have assessed values greater than $40,000. Entities that are required to file RPIE forms with the NYC Department of Finance generally include rental properties, cooperatives, condominiums, hotels, motels, parking garages and lots, department stores, power plants, and theaters. This year, the deadline for property owners to file RPIE forms with the Department of Finance is September 4, 2012. Protests to the assessed valuations can be filed the following March with the NYC Tax Commission, after tentative assessments are issued in January, which may either reconfirm the original assessment or offer to lower it based on its findings. The Grand Jury found that current laws, regulations, and systems are not adequate to prevent and deter costly false filings, which occur with unacceptable frequency. For example, in one study examined by the Grand Jury, 60 percent of property owners surveyed who derived income from signs posted on their property failed to report that income to the Tax Commission when they sought to reduce their taxes.

CYRUS R. VANCE, JR. DISTRICT ATTORNEY

The Grand Jury’s report stemmed from investigations by the District Attorney’s Office’s Money Laundering and Tax Crimes Unit into false filings submitted to the NYC Department of Finance in connection with assessing the value of real property, as well as to the NYC Tax Commission in connection with taxpayers seeking a reduction of that assessment. “As the City’s single largest revenue source, the importance of real property tax to the financial well-being of New York cannot be overstated,” said District Attorney Vance. “However, some unscrupulous individuals and entities routinely try to cheat the City out of this valuable revenue stream by filing false information with City agencies. We have to do better if we want to deter these abuses. If adopted, the reforms proposed by this Grand Jury will protect the integrity of the City’s tax system and ensure that each taxpayer pays his or her fair share of the tax burden.” NYC Department of Finance Commissioner David M. Frankel said: “The Grand Jury’s findings are consistent with the reforms Finance has been working towards, including a bill that was recently introduced at the City Council to move the RPIE filing deadline to June. We will work with the State and City legislatures to ensure appropriate reforms are enacted and that property owners face real penalties for filing fraudulent documents with the City. The vast majority of New Yorkers do the right thing, but the fraudulent conduct cited in the Grand Jury report results in higher taxes and less services for the rest of us. This is not acceptable. We are tremendously appreciative of the work of District Attorney Vance and his staff, as well as the Grand Jury members and the Tax Commission for focusing on this issue, which is vital to the interests of all New Yorkers.” NYC Tax Commission President Glenn Newman said: “I want to thank District Attorney Vance for his office’s diligent efforts on this matter. Every taxpayer in the City of New York has an interest in making sure that property tax filings are accurate and complete so that fair assessments can be made. Everyone is hurt when false filings lead to inaccurate assessments, and some property-owners don’t pay their fair share of the tax burden. We will continue to be vigilant and make every effort to ensure that false filings are uncovered. The Tax Commission has long suspected that the problem of property tax fraud was significant, and I’m gratified that the District Attorney’s work has borne this out, as well as laid the groundwork for reforms that will better protect the City, and honest property owners, including giving the Tax Commission the ability to impose civil financial penalties where false submissions have occurred.” As it currently stands, only minimal consequences flow to property owners who file false information pertaining to real property tax with the City, particularly as compared to the high cost and devotion of resources that these investigations can require of criminal authorities. The Grand Jury concluded that authorities currently lack the power to impose adequate sanctions – particularly, civil administrative sanctions – to deter these false filings. Among its recommendations, the Grand Jury called for a strengthening of prosecutorial tools used to address the criminal conduct of those who intentionally commit fraud in this area, the dedication of technological resources to detect fraud and false information, and empowering the Department of Finance and the Tax Commission to fine property owners who file false information.

The Grand Jury made the following seven recommendations:

1. Set an Earlier Deadline for Initial Tax-Related Filings The current deadline in September does not allow the Department of Finance adequate time to evaluate information in the filings, much less to detect fraud. The Grand Jury recommends requiring an earlier annual filing deadline no later than the first of June. The City Council recently introduced legislation, at the request of Mayor Bloomberg, that would implement this recommendation.

2. Require Notarized RPIE Filings

Property owners should be required to make a sworn statement about the validity of the representations made in RPIE filings, which would also serve to expose those who lie on the forms to prosecution for perjury, a felony offense. The City Council recently introduced legislation, at the request of Mayor Bloomberg, that would implement this recommendation.

3. Subject False RPIE Filers to Civil Administrative Sanctions While the Department of Finance can impose civil sanctions on owners who fail to file RPIEs, it does not have comparable authority to sanction those who file false RPIE’s unless it determines that the misrepresentations are so substantial that they render the RPIE tantamount to a non-filing. This is an anomaly, and fairness dictates that the filers of false information should be subject to the same sanctions as non-filers.

4. Subject False Tax Protest Filers to Civil Sanctions The Tax Commission is authorized to grant a large amount of tax relief to property owners based on its filings. But if those filings are intentionally inaccurate or false, the Commission currently has no power to sanction owners. The Grand Jury recommends authorizing the Tax Commission to raise an assessment value if it discovers that, as part of the protest process, the property was undervalued by the Department of Finance due to inaccurate or incomplete information, and to impose civil financial penalties.

5. Dedicate Technological Resources to Detect Property Tax Fraud Useful data for real property tax assessors already exists on a variety of City agency websites, such as those maintained by the NYC Department of Buildings, the Landmarks Preservation Commission, the NYC Department of Consumer Affairs, and the NYC Department of Housing Preservation and Development. Although this information is public, it is difficult to access and not easily searchable. A better system could make an enormous difference in the detection of false filings. The Grand Jury recommends having the Mayor’s Office of Policy and Strategic Planning devise a system for better sharing existing city records with the Department of Finance and Tax Commission.

6. Mandate Electronic Filings with the Tax Commission Submissions to the Tax Commission are still in paper form and must be digitized so that they can be better integrated with other City agencies and searched for investigative leads.

7. Amend the City Criminal Tax Fraud Statutes

Although certain crimes in the Administrative Code pertain to the evasion of taxes, no offenses apply to real property tax, due to an apparent legislative oversight. The Grand Jury recommends that the State Legislature create felony-level offenses in the Administrative Code to close this loophole.

District Attorney Vance thanked Assistant District Attorney Gilda Mariani, Chief of the Money Laundering and Tax Crimes Unit, for presenting the investigation to the Grand Jury, under the supervision of Executive Assistant District Attorney Adam S. Kaufmann, Chief of the Investigation Division, and Chief Assistant District Attorney Daniel R. Alonso. District Attorney Vance also thanked the NYC Department of Finance and its Commissioner, David M. Frankel; the NYC Tax Commission and President Glenn Newman, Special Counsel Leonard Picker, and Hearing Officer David Dunay; and the NYC Department of Investigation and its Commissioner, Rose Gill Hearn. District Attorney Vance also acknowledged the Mayor’s Office of Policy and Strategic Planning, the Mayor’s Financial Crimes Task Force, the NYC Department of Investigation, the NYC Landmarks Preservation Commission, and the NYS Department of Taxation and Finance for cooperating with the investigation.

###

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New York County District Attorney | [email protected] | 212-335-9400

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THE GRAND JURY OF THE SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

REPORT OF THE GRAND JURY OF THE SUPREME COURT

STATE OF NEW YORK FIRST JUDICIAL DISTRICT

ISSUED PURSUANT TO CRIMINAL PROCEDURE LAW

SECTION 190.85 SUBDIVISION (1)(c)

CYRUS R. VANCE, JR. DISTRICT ATTORNEY NEW YORK COUNTY

2

INTRODUCTION

One of the investigations conducted by this Grand Jury examined the

filing of false documents and information with governmental offices of the City

of New York in connection with the computation of real property tax liability.1

Although we heard evidence of a few specific actors filing such false informa-

tion, our investigation focused principally on systemic issues with the gathering

of information, the resources of the agencies charged with maintaining the in-

tegrity of the real property tax system, and the need for legislative, executive,

and administrative reform.

During the investigation, the Grand Jury took testimony from private

individuals and from governmental representatives from agencies such as the

New York City Department of Finance (the “Department of Finance”), the

New York City Tax Commission (the “Tax Commission”), the Mayor’s Finan-

cial Crimes Task Force, the Mayor’s Office of Policy and Strategic Planning,

the New York City Landmark Preservation Commission, the New York City

Department of Investigation, and the New York State Department of Taxation

and Finance. Some of these witnesses have substantial expertise in the field of

real property taxation and regulation. The Grand Jury also examined numerous

1 This Grand Jury was impaneled by the Honorable Marcy L. Kahn, upon application of New York County District Attorney Cyrus R. Vance, Jr., on March 28, 2012, and extended on April 16, 2012, to a term ending on November 19, 2012.

3

documents provided by financial institutions, private businesses, and govern-

ment agencies.

Our investigation has led us to conclude that legislative and administra-

tive reform is desperately needed to protect both the integrity of the system

that determines real property tax liability, and to maximize the tax receipts that

are currently lawfully due the City of New York but that it is not receiving be-

cause of false information being provided to city agencies. Because false filings

of this type threaten the integrity of the tax system and undermine the citize-

nry’s confidence in it, we believe that it is in the public interest to issue a report

with recommendations for legislative, executive, and administrative action.2 We

discuss the real property tax system, our investigation, and our seven proposed

reforms below.

BACKGROUND: REAL PROPERTY TAX

Real property tax is the City’s single largest revenue source. In 2011, real

property tax accounted for about $17 billion, or about 42% of the overall reve-

nue stream generated from taxpayers. Therefore, the reliability of the structure

for accounting for this particular tax is imperative to the fiscal soundness of the

City.

2 See Criminal Procedural Law Section 190.85(1)(c).

4

Real property assessments are performed annually by the Department

of Finance using complex statutorily mandated formulas that can involve in-

formation about the sale of comparable properties, the cost of improvements,

and the income generated by the property. Once this market value has been es-

tablished, the assessment ratio is applied by the Department of Finance. The

final component is the application of the tax rate adopted by the New York

City Council.

Current law provides that an owner of certain types of income-

producing property with an actual assessed value of more than $40,0003 is re-

quired to file a Real Property Income and Expense (“RPIE”) statement with

the Department of Finance each year on or before September 1st in the year

prior to the evaluation of the property. Thus, for the tax year 2012/2013,4 the

RPIE must be filed by September 1, 2011, reflecting the property’s 2010 finan-

cial information. The Department of Finance must then publish its tentative

assessment roll only 4½ half months later, on January 15, 2012.5

The next step in the process allows a property owner to seek a reduction

in the assessed value set by the Department of Finance by filing an application

with the Tax Commission – the City’s independent forum for administrative 3 Except where a statutory exemption applies. 4 The City’s fiscal years begins July 1 and ends June 30. 5 The City sets the final assessment on or about May 25.

5

review of the assessments set by the Department of Finance – by March (which

falls between the tentative roll and the final roll). The property-owner seeking a

reduction files a tax protest in the form of an Application for Correction of As-

sessed Value, which must be signed before a notary public. Owners of income-

producing properties with an assessed value of at least $1 million must addi-

tionally file a certification of audit provided by a certified public accountant,

along with a financial statement containing information comparable to that

provided on the RPIE filed earlier in the process with the Department of

Finance. Once the filings are received, the Tax Commission may either confirm

the original assessment or offer to lower the assessment for the current fiscal

year or the immediate prior year.

In the 2010/2011 fiscal year, the Tax Commission received more than

50,000 applications, covering 184,000 separately assessed tax lots. The Tax

Commission, a leanly-staffed,6 quasi-judicial body, conducted more than 25,000

substantive hearings in connection with these tax protests, with one hearing of-

ficer alone conducting almost 3,000 hearings. In 2011, the Tax Commission

granted over $6 billion in assessment reductions, totaling about one-half billion

dollars in tax relief to protesting taxpayers.

6 The Tax Commission consists of a President and six part-time commissioners. In addition, it employs about twelve full-time hearing officers.

6

INVESTIGATION

The Grand Jury was presented with evidence involving owners of three

separate Manhattan properties who filed false information in connection with

the income generated by their respective properties with the City of New York.

The Grand Jury found legally sufficient evidence to vote felony charges as to

the one property-owner, who was indicted. As to the other two property-

owners under investigation, charges were not ultimately submitted because

those individuals took responsibility for their improper conduct and entered

into negotiated dispositions.

Ordinarily, these resolutions would conclude our work. However, we

heard additional evidence that this misconduct is sufficiently widespread to

warrant additional testimony on the systemic nature of this issue. Among the

additional evidence were the results of certain studies presented to us by wit-

nesses.

One such study reviewed records concerning about 100 properties that

the New York City Department of Buildings had cited for posting signs on

their property without obtaining the proper permits to determine if any tax

protests had been filed with the Tax Commission that year. At least 60% of

those seeking to reduce their property tax failed to report to the Tax Commis-

sion as part of their tax protest the income they had received in connection

with their signs. Another study reviewed properties that had been reported to

7

the Tax Commission as either vacant or owner-occupied and discovered that

many were in fact retail concerns. Other studies have shown that operators of

unlicensed hotels have been filing applications to reduce their tax, without re-

porting all the income they receive from their properties to the Tax Commis-

sion.

In many cases, these inaccuracies may be a product of inattention or

carelessness, not subject to criminal sanction. But we believe that the lack of

availability of civil sanctions also fuels the unreliability of these reports. In other

instances, as we have seen, there is intentional misrepresentation warranting

criminal prosecution.

This misinformation not only decreases the amount of money available

to the City, but, just as importantly, affects the fairness of the system, forcing

some property-owners to pay more than their fair share, while others gain an

undeserved advantage by submitting false information. Compounding this situa-

tion, we found that there has been a shortage of resources available to detect

these false filings and a lack of adequate sanctions to deter such abuses.

We heard evidence that systematic changes could reveal a great many in-

stances of such transgressions, and we propose such changes below. Some of

these changes would require sworn filings with earlier deadlines by property-

owners to certain city agencies. Additionally, there is a need for other relevant

agencies to require mandatory electronic filings. There is also an urgent need to

8

allocate additional resources to the detection of real property tax fraud. Accor-

dingly, the Grand Jury makes recommendations to effectuate these changes.

We believe that there is little benefit to exposure of these misdeeds if the

consequences to property-owners who file false information are minimal, as is

the case today. To be sure, not every instance of false information in a filing

rises to the level of criminal conduct, and we begin with recommendations to

enhance certain civil sanctions already in effect and to enact new civil sanctions

to fill a void where sanctions are currently unavailable. But the Grand Jury be-

lieves that adequate criminal sanctions are a crucial tool in the governmental

arsenal used to protect the public fisc, and urges legislative, executive, and ad-

ministrative action in this regard.

When the evidence does support a finding of criminal behavior, charges

should be brought against the perpetrators. But based on the evidence before

us, it is clear that current criminal tax laws as contained in the New York City

Administrative Code do not apply to real property tax. In addition, applicable

offenses under the Penal Law such as offering false instrument for filing do not

provide different degrees of culpability to address the magnitude of the misin-

formation. Consequently, as described more fully below, we recommend revi-

sions to the New York City Administrative Code to bring such transgressions

within its ambit.

9

RECOMMENDATION ONE

Set An Earlier Deadline for Initial Tax-Related Filings

We heard evidence that the current filing deadline for an RPIE does not

allow the Department of Finance adequate time to evaluate all the necessary

information by the time its tentative assessment is due, much less to detect

fraud in the filings it receives in any systematic way.

We therefore recommend that the New York City Administrative Code

be amended to require an earlier filing deadline, one no later than the first of

June. The additional time would allow the Department of Finance to evaluate

the financial information it receives much more thoroughly. The change should

impose no hardship on property-owners because the required financial infor-

mation concerns the prior year, and should easily be available by June.

RECOMMENDATION TWO

Require Notarized RPIE Filings

Because the RPIE statement is so vital to the real property assessment

process, the Administrative Code should be amended to require property own-

ers to swear to the truth of the representations made in the document. In cer-

tain circumstances the RPIE should be accompanied with a form, developed by

the Commissioner of the Department of Finance that is signed by a certified

public accountant who has conducted an audit of the property-owner’s

10

records7 This requirement would underscore the need for accurate information

and accord the Department of Finance some level of assurance in the validity

of income and expense information. The requirement of a sworn statement

would have the additional effect of exposing those who lie on the forms to

prosecution for felony perjury.

RECOMMENDATION THREE

Subject False RPIE Filings to Civil Administrative Sanctions

Under current law, the Department of Finance, through its administra-

tive process, can impose civil sanctions on a property owner who fails to file

the required RPIE. However, there is no comparable authority to impose civil

sanctions on those who file RPIE statements containing false information. In-

stead, the Department of Finance can impose sanctions only if it determines

that the misrepresentations are so substantial that they render the RPIE tanta-

mount to a non-filing.

This situation is highly anomalous. Sanctions are necessary to deter this

abusive conduct. In addition, fairness dictates that filers of false information

should be subject to sanctions just as non-filers are, especially since false in-

formation will generally be the result of an intentional, affirmative act on the

7 The Tax Commission already requires notarized filings in all instances and certifications in certain instances.

11

part of the taxpayer. Therefore we recommend an amendment to the Adminis-

trative Code to correct this anomaly.

RECOMMENDATION FOUR

Subject False Tax Protest Filings to Civil Administrative Sanctions

Unfortunately, evidence presented to this Grand Jury reveals that fraud

in the initial tax filings submitted to the Department of Finance is sometimes

perpetuated in later filings during the protest process. For example, property

owners who have omitted ancillary income in the category of signage and bill-

board income on the RPIE, repeat their mendacity on the Tax Commission’s

Income and Expense filings. Others have denied that their property produced

any income at all, claiming that the property was “vacant land,” when in fact it

was not, once on the RPIE filings and then on the application for corrective

action.

These false filings with the Tax Commission are particularly pernicious

because the property owners are seeking affirmative relief from the City. Hav-

ing already misled the assessors in their initial calculation of a fair valuation of

the property, the property owner compounds the fraud to obtain an even more

favorable, and even more unfair, outcome.

In light of the volume of applications and the small staff available to re-

view them, it is clear that many false filings may go undetected. Indeed, random

samplings conducted by the Tax Commission over the years have revealed pat-

12

terns of fraud. Moreover, in light of the huge amount of tax relief being

granted, even a small percentage of false filings could result in a loss of revenue

in the tens of millions of dollars. This deficit must be shouldered by honest

taxpayers, either by the payment of increased real property taxes or by reduced

services.

The Grand Jury was surprised to learn that, if the Tax Commission dis-

covers that a protesting property owner has submitted false information, its

sole option with respect to the real property tax under current law is to confirm

the existing assessment.8 It is not empowered to correct the mistaken assess-

ment caused by the false information by increasing the assessment. It is not em-

powered to recoup any lost revenue. It is not empowered to impose sanctions

for filing false information in connection with the protest or the initial assess-

ment process. In short, it is powerless to effect justice. The current process, in

fact, creates a win-win situation for the tax cheat.

This Grand Jury feels strongly that assessments should be based on

truthful information and those who submit false documents with the Tax

Commission should be subject to sanctions, in order to maintain the integrity 8 As a theoretical matter, the Tax Commission could alert the Department of Finance to the false information it has uncovered. However, if the tax roll has been closed, which is often the case because of the timing involved in the protest process, the Department of Finance is powerless to raise the assessment retroactively. In cases that appear to involve intentional falsification, the Tax Commission can refer, and has on occasion referred, the matter for criminal investigation and prosecution to the New York City Department of Investigation or any of the five District Attorneys of New York City, as were the three property-owners in-vestigated by this Grand Jury. Our recommendations for changes in this area appear below.

13

of the property tax assessment rolls and the equitable allocation of the property

tax burden.

Therefore, the Tax Commission should be authorized to raise an as-

sessment value for the current year if it discovers, during the protest process,

that the property was undervalued by the Department of Finance due to inac-

curate or incomplete information provided by the taxpayer. In addition, the

Tax Commission should be equipped with an array of civil financial penalties to

impose on those whose filings contain such information. Such penalties may be

based on a percentage of reduced assessed value sought by the property owner

or on an amount equal to or double the amount of the under-assessment

created by the false submissions.

RECOMMENDATION FIVE

Dedicate Technological Resources to Detect Property Tax Fraud

The Tax Commission and the Department of Finance have minimal re-

sources to devote to the detection of real property tax fraud. Therefore, tech-

nology can and should be applied to use those resources more effectively.

The City already maintains a great deal of data that could be used in this

effort. The Department of Buildings and the Landmark Preservation Commis-

sion have data about permits for signs and billboards and cell towers and infor-

mation about structures that are being renovated and/or refurbished. The De-

14

partment of Consumer Affairs has data concerning licensed businesses, including

restaurants and parking lots. The Registrar maintains deeds reflecting the owner-

ship of real property. The Department of Housing Preservation and Develop-

ment is a repository of complaints from residents that could be evaluated against

a landlord’s claims for expense for repairs and maintenance. These are but a few

examples.

This information is public, but difficult to access. It is not easily searchable.

For example, the Department of Finance stores its data by a ten-digit number

representing borough, block and lot. The Fire Department, Police Department,

and emergency responders store data by longitude and latitude. The Depart-

ment of Consumer Affairs maintains its information by postal address. More

important, perhaps, this information is not available in real time to overworked

hearing officers and tax assessors, who are under pressure to render decisions by

the thousands and to make assessments on approximately a million tax lots, all in

a relatively brief period of time.

The City, fortunately, has experts in the Mayor’s Office of Policy and

Strategic Planning who can devise a system to deliver information from agency

records to the Department of Finance and the Tax Commission in a useful and

timely way by producing a “digital fingerprint” for tracking income generated

from real property. A system of this kind would create a Rosetta stone that

would allow tax assessors and hearing officers to read and interpret all the pub-

15

licly-held data about a parcel of real property.9 Moreover, any confidential or

proprietary information held in an agency can be protected with built-in fire-

walls. Therefore, we recommend the appropriate executive and administrative

action to accomplish this recommendation.

RECOMMENDATION SIX

Mandate Electronic Filings with the Tax Commission

Much of the relevant data needed to accomplish the previous

recommendation is not yet in electronic form. In particular, submissions to the

Tax Commission are still in paper form. Moreover, if information is to be

integrated with that of other agencies, it must be digitalized. Therefore, we

recommend administrative action that all filings made to the Tax Commission

and all determinations by hearing officers be made in electronic form.

RECOMMENDATION SEVEN

Amend the City Criminal Tax Fraud Statutes

The New York City Administrative Code contains the crimes that apply

to the evasion of New York City taxes. However, those offenses do not apply

9 This endeavor could also integrate data maintained by New York State agencies. For ex-ample, the Metropolitan Transit Authority has data about signage and billboard space that would be useful.

16

to real property tax. Section 11-4002 of the Administrative Code should be

amended to include real property tax.

The historical basis for excluding real property tax, as explained to us, no

longer applies. At one point, real property assessment was solely a governmen-

tal task. Assessors walked the district conducting a physical inspection to de-

termine the property’s use. However, as use of property became more sophisti-

cated, alternative methods of assessment were evolved, including use of the in-

come the property generates. Nevertheless, apparently due to an oversight,

when legislation was enacted to require RPIE filings by property owners, the

criminal provisions were not amended to embrace real property tax.

Therefore, we recommend to the State Legislature the creation of sepa-

rate offenses of a felony level to capture the misconduct under examination,

perhaps including a gradation based on the amount of the under-assessed val-

ue.

17

CONCLUSION

The Grand Jury’s recommendations are designed to protect the integrity of

the tax system and to ensure that each taxpayer bears his or her fair share of the

tax burden. Some recommendations assist property assessors in fulfilling their

obligations. Other recommendations call for dedicated technological resources

to detect fraud and false or inaccurate information. Still others empower the

Department of Finance and the Tax Commission by permitting pecuniary

sanctions to deter property owners, motivated by greed, from filing false

information. Our final recommendations will strengthen the tools prosecutors

can bring to bear against those who intentionally commit fraud in this arena. To

tax cheats, the message should be lie at your peril.

This report is respectfully submitted to the Honorable Marcy L. Kahn,

presiding judge of the Grand Jury, this 18th day of June 2012. We ask our legal

advisors to present our proposals the New York State Legislature, to the City

Council, and to all of the agencies involved in the process.

18

WE THE GRAND JURY OF THE SUPREME COURT, STATE OF

NEW YORK, FIRST JUDICIAL DISTRICT, PURSUANT TO THE

PROVISIONS OF CRIMINAL PROCEDURE LAW SECTION 190.85(1)(c)

BASED UPON OUR STATED FINDINGS SUBMIT THIS REPORT

RECOMMENDING LEGISLATIVE, EXECUTIVE, AND ADMINISTRA-

TIVE ACTION IN THE PUBLIC INTEREST.

Filed:

REPORT OF THE GRAND JURY OF THE SUPREME COURT

STATE OF NEW YORK FIRST JUDICIAL DISTRICT

ISSUED PURSUANT TO CRIMINAL PROCEDURE LAW

SECTION 190.85 SUBDIVISION (1)(c) CYRUS R. VANCE, JR. DISTRICT ATTORNEY NEW YORK COUNTY Foreman ADA Gilda I. Mariani Chief, Money Laundering and Tax Crimes Unit

No.

Faculty Biographies

Robert Bernard Eisman, Esq. New York State Department of Taxation and Finance

Criminal Investigations Division Robert Eisman is an Associate Attorney in the Brooklyn office of the Criminal Investigations Division of the New York State Department of Taxation and Finance. He previously served as the Attorney In Charge of the Manhattan Office of the Special Investigations Unit, the predecessor of the Criminal Investigations Division. As the Attorney In Charge of the Manhattan Special Investigations Unit, Mr. Eisman led a team of twenty-five investigators and auditors which worked closely with Federal and State prosecutors to convict numerous individuals and entities of tax fraud and raise millions of dollars in tax revenue. Mr. Eisman previously served as an Investigative Attorney for the New York City Department of Investigation, where he conducted investigations of corruption, conflicts of interest, and criminal misconduct in New York City government for sixteen years. Mr. Eisman also previously served as the Anti-Corruption Advisor to the Republic of Azerbaijan as a staff member of the American Bar Association, Central European and Eurasian Law Initiative. He has lectured on anti-corruption matters in Baku, Azerbaijan; Kiev, Ukraine; Yeravan, Armenia; and Tblisi, Georgia. Mr. Eisman has also lectured on investigative techniques and tax fraud at numerous Tax Department trainings and at the New York Prosecutors Training Institute. Contact Information Robert Bernard Eisman, Esq. Associate Attorney New York State Department of Taxation and Finance Criminal Investigations Division Metro NYC Regional Office 15 Metro Tech Center, 2nd Floor Brooklyn, N.Y. 11201 (347) 390-7485 [email protected]

Maureen Kokeas First Deputy Sheriff Office of the Sheriff New York City Department of Finance Maureen Kokeas began her career with the Department of Finance in 1987 as a Fraud Investigator and in 2003 became the Director of Tax Enforcement, a position she held until December 2014 when she was appointed First Deputy Sheriff. As the chief civil enforcement agency for the New York State Court System, the Office of the Sheriff enforces mandates, orders, warrants and decrees for the Courts and conducts criminal tax investigations related to tax evasion and related crimes. As Director of Tax Enforcement she supervised criminal tax investigations for New York City Department of Finance and the regulation and enforcement of N.Y.C. cigarette excise tax laws. Prior to joining the Department of Finance she worked in the Frauds Bureau of the Manhattan District Attorney's Office. Ms. Kokeas received her B.S in Criminal Justice from Marist College in Poughkeepsie, New York.

Gilda (Jill) Mariani is a litigation and trial attorney in white collar practice. She has experience in both private practice, as an associate with the firm of Obermaier, Morvillo & Abramowitz, P.C. (now Morvillo, Abramowitz, Grand, Iason, & Anello, P.C.) and in government, with the New York County District Attorney’s Office, where she held supervisory positions. These positions included Deputy Chief of its former Frauds Bureau and later, for over 20 years, Chief of its former Money Laundering and Tax Crimes Unit. Prior to that, she clerked as an appellate law assistant in New York State Supreme Court Appellate Division (Second Department). She is a graduate of St. John’s University School of Law (J.D. top five percent of her class and Law Review) and St. John’s University College of Liberal Arts (B.A. summa cum laude, Political Science).

She has conducted hundreds of investigations. Some investigations led to the issuance of Reports by the New York County Grand Jury, including a Grand Jury Report released in November, 2014 on MWBE reform, one in March, 2014 on workers’ compensation reform, and another in the summer of 2012 on real property tax reform.

She has had a significant role in drafting legislation, including the 2000 New York Money Laundering Statute and the misdemeanor crime of Providing a Juror with a Gratuity. She has written articles and spoken on legal issues internationally, nationally and locally relating to money laundering and tax fraud. In February 2014, she participated as a visiting professor in a course on Public Security presented at the Judges’ School in San Paolo, Brazil.

She has held leadership roles in national and local bar associations. She was the New York City Bar Association’s Chair of the Personal Income Taxation Committee (September 2009 through June 2012), former vice-chair of the Personal Income Taxation Committee (3 years), and former Chair of the Legal Issues Pertaining to Animals Committee (3 years). She has been active in the leadership of the American Bar Association (ABA) as a past Chair of the Animal Law Committee (one year), past Chair of the Government Law

2

Committee of the Tort Trial and Insurance Practice Section (TIPS) and a member of TIPS’ Task Force on Disaster Preparedness and Response (August 2011 to July 2012). She co-hosted TIPS’ internet radio podcast series “Legal TIPS;” including podcasts on disaster preparedness, and served as TIPS’ liaison to the ABA’s Coordinating Committee on Military Law and Justice. She organized multi-day seminars on “Access to Justice for Persons with Disabilities and the Elderly” at Stetson University and on “Bio-ethics and Animals” at Duke University.

She served for six years as a member of Council in the Government and Public Sector Lawyers Division (GPSLD) and a liaison from the International Law Section to GPSLD. She was a member of the Task Force on Treaties in U.S. Law formed by the ILS and the American Society of International Lawyers and had a three-year ABA presidential appointment to the Special Committee on Bioethics and the Law.

Currently, she is a vice-chair of the ILS International Criminal Law Committee and is in her second year of a ABA presidential appointment to the Committee on Disaster Response and Preparedness. She is a Fellow of the American Bar Foundation.

On January 27, 2012 she received the Robert M. Morgenthau Award from the District Attorneys Association of the State of New York. The award was established in 2009 to recognize an Assistant District Attorney whose professional accomplishments, honesty, integrity and commitment to justice exemplify Mr. Morgenthau’s high standards during his tenure as District Attorney.

TAXATION COMMITTEE > Officer Bio

Chair Allan R. Pearlman, Esq.

Office Address Law Office of Allan R. Pearlman 116 West 23rd St., S-500 New York, NY 10011

Phone: 646-827-4257 Email: [email protected]

Allan R. Pearlman

Allan R. Pearlman brings to bear 16 years of experience that spans working for both federal and state court judges and working in private practice litigating to protect and assert the rights people and businesses to now help taxpayers who have been targeted and are hunted by the IRS. He is a former staff attorney for the United States Court of Appeals for the Second Circuit and former Senior Court Attorney for the New York State Supreme Court. In addition to his tax practice, he writes and argues civil and criminal appeals and major motions at the trial level. He also handles more general trial-level civil litigation. His practice encompasses working as a “lawyer’s lawyer” on behalf of other attorneys and for the general public as well. He has successfully argued or briefed or both a number of cases which have resulted in published decisions, including: Wong v. Tang, 2 A.D.3d 840, 769 N.Y.S.2d 381 (2d Dept 2003); Aon Corporation Accidental Death and Dismemberment Plan v. Hohlweck, 223 F. Supp. 2d 510 (S.D.N.Y. 2002); Sadkin v. Raskin& Rappoport, P.C., 271 A.D.2d 272, 707 N.Y.S.2d 400 (1st Dept 2000) (for co-defendant McGrath). In addition, he litigated a First Amendment free speech and due process of law issue in a criminal case. He wrote the argument that succeeded in persuading a federal judge to strike down a special condition of probation as being an unconstitutional infringement of the First Amendment and a violation of due process of law. United States v. Sagginario, E.D.N.Y. 00 CR 806 [no published decision]. Read more about it in "Protecting our constitutional rights," at In the News page of this web site. Allan is a member of the Appellate Courts Committee and the Executive Committee of the Cyberspace Law Committee, both of the New York County Lawyers Association. He is also a member of the New York State Bar Association, the New York City Bar Association, and the American Bar Association. In 1996, the Criminal Justice Committee of the New York County Lawyers Association awarded him their Public Service Award for writing an essay on the criminal justice system. He has organized and moderated three panel discussions at the New York County Lawyers Association, the most recent of which was entitled: “Do the ‘Ayes’ have It?: Vote Counting Technology, Election Integrity and Democracy,” September, 2004, and a follow up panel entitled, “Do the Ayes Have It? II” in February, 2008. Prior panels were: “Intellectual Property: Rights and Competition in the Digital Age,” December, 2003; and

mailto:[email protected]

http://arpearlmanlaw.com/news.html

“ICANN: Domain Name Dispute Resolution Policies and Procedures,” March 2001. Allan attended the University of Michigan, Ann Arbor where he received a Bachelor of Arts in American Culture. While attending University of Michigan, he was awarded two Hopwood Writing Awards. He received his Juris Doctor from Rutgers Law School, where he was a staff member and then Lead Articles Editor of Rutgers Law Journal. While a law student he published two articles in Rutgers Law Journal. He also was awarded two American Jurisprudence Awards for excellence in Moot Court and in Jurisprudence. He is admitted to practice before the United States Supreme Court, the United States Court of Appeals for the Second Circuit, the United States District Courts for the Southern and Eastern Districts of New York, and the courts of the State of New York.

Allan R. Pearlman has received an AV Peer Review Rating from Martindale-Hubbell. The AV rating is the highest rating available by this peer review program for legal ability and ethical standards.

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