A state tax appeals judge has ruled that a minority partner in a Greenburgh auto dealership is personally responsible for $173,318 in sales taxes and penalties incurred nine years ago.
Veniamin Nilva had argued that as a 22% member of White Plains Auto Company LLC he should not be held responsible for the entire sales taxes from December 2016 through November 2017.
But Administrative Law Judge Barbara J. Russo notes in a June 11 decision that under a state tax law “every person required to collect any tax … shall be personally liable for the tax.”
White Plains Auto Company was formed in 2014 by Gary Flom, and operated as White Plains Nissan, at 500 Tarrytown Road, Greenburgh.
Alexander Boyko held 56% interest in the company, and Flom and Nilva each held 22%. Though a minority partner, Nilva was designated as the secretary and treasurer, was authorized to sign checks for the business, and he was listed on tax forms as the “tax matters partner.”
In 2018, the state assessed $173,318 for unpaid taxes, interest and penalties. Nilva did not dispute the assessment, according to Russo, but argued that he should be held liable for only 22% of the taxes.
In 2018, the state tax law was amended to allow for assessments based on a member’s percentage interest in a company. Last year, the amendment was repealed. In this case, Russo noted, the taxes at issue were assessed for the period before the amendment was enacted and the amendment cannot be applied retroactively.
Nilva also argued that the penalties should be abated due to a medical condition that left him unable to discharge his responsibilities. He submitted a letter from a doctor attesting to two major surgeries resulting in complications, and a letter from another doctor stating that he has been unable to work since 2016.
Russo found that the letters did not list the dates of the medical procedures or cite specific limitations during the tax period at issue; there is no evidence that he withdrew as the tax matters member or was replaced for being unable to carry out his duties; and there is no evidence that he met the definition of disability under the company’s operating agreement.
Nilva “merely disregarded his duties,” Russo ruled, “and, thus, has failed to establish reasonable cause and the lack of willful neglect.”
