Mofo New York Tax Insights -- Volume 2, Issue 12

In This Issue:

New York Audit Software Subject to Freedom of Information Law Disclosure; Payments for Telephone Number “Porting” Services Not Subject to Sales Tax; Failure to Serve Notice on Representative Tolls Time to File Protest; New York Real Property Owned by a Partnership Not Includible in Decedent’s New York Estate; No Costs Allowed to Petitioner Who Challenged a Sales Tax Assessment; and Insights In Brief.

Excerpt from "New York Audit Software Subject to Freedom of Information Law Disclosure"

In Matter of TJS of N.Y., Inc. v. New York State Dept. of Taxation & Fin., Case No. 512259 (N.Y. App. Div. 3d Dep’t Nov. 3, 2011), the Appellate Division held that the Department of Taxation & Finance was required to turn over audit software in response to a Freedom of Information Law (“FOIL”) request from a taxpayer.

The taxpayer, TJS of New York, Inc. (“TJS”), appealed the Department’s denial of a FOIL request for records in connection with a sales tax audit performed by the Department. The lower court ordered the Department to provide TJS with copies of its records in an electronic format. Although the Department complied with this request, some of the provided data could not be viewed without a copy of the Department’s Audit Framework Extension software, which the Department refused to provide. TJS moved to compel production of the software so that it could view the Department’s electronic files, and the lower court denied TJS’ motion, concluding that the software was exempt from FOIL under Public Officers Law § 87(2)(i), which exempts material that, “if disclosed, would jeopardize the capacity of an agency… to guarantee the security of its information technology assets.”