Will the Department issue an advisory opinion on a 'hypothetical' sales tax question when the same issue is already the subject of a pending Division of Tax Appeals proceeding involving the same representative and client?

Plain-English summary

This opinion is unusual for this series: it doesn't answer any question about what's taxable. Attorney Andrew B. Sabol submitted a petition asking the Department for an advisory opinion on what he described as a "hypothetical situation," checking a box on the petition form to represent that the question wasn't already the subject of a pending audit, refund claim, notice, declaratory ruling request, or any other matter before the Department or the Division of Tax Appeals.

The Department discovered that wasn't accurate. A few months earlier, the Division of Tax Appeals had received a petition -- naming Sabol and two colleagues from his law firm as representatives -- appealing a Bureau of Conciliation and Mediation Services conciliation order, and that Tax Appeals case raised "virtually identical" issues to the "hypothetical" advisory opinion request. Department regulations flatly prohibit issuing an advisory opinion on a question that's already pending in a Tax Appeals petition, a conciliation-conference request, a declaratory ruling request, or an opinion-of-counsel request. The Department held that this rule can't be sidestepped just by naming an attorney (rather than the actual taxpayer-client) as the advisory-opinion petitioner, when the same issue is genuinely already before Tax Appeals. Because the matter was, in substance, the same dispute, the Department refused to issue any opinion on the merits.

What this means for you

Tax attorneys and representatives considering an advisory opinion request

You can't use an advisory opinion petition -- even one framed as addressing a "hypothetical" or naming yourself rather than your client -- to get a second bite at an issue that's already pending in a Tax Appeals proceeding, a conciliation conference, a declaratory ruling request, or an opinion-of-counsel request. The Department will look past the framing to whether the substantive issue is the same, and will decline to rule if it is.

Taxpayers with a matter already in the conciliation or Tax Appeals process

If you want Department guidance on a live dispute, pursue it through the pending proceeding itself (conciliation, Tax Appeals litigation) rather than trying a parallel advisory-opinion request -- the two tracks are mutually exclusive under Department regulation.

Accountants and tax professionals

This opinion is useful less for any tax substance and more as a citable authority on 20 NYCRR § 2376.1(c)(1)'s scope: it confirms the "pending matter" bar applies based on the real identity of interest between the advisory-opinion petitioner and the Tax Appeals petitioner, not just formal party names, and that the Commissioner's general authority under Tax Law § 171(24) to issue opinions to non-taxpayer representatives doesn't override this specific bar.

Common questions

Q: Did the Department ever address the underlying sales tax question in this case?
A: No -- this opinion is entirely procedural. It explains why the Department refused to rule, without reaching whatever substantive sales tax issue the petition described.

Q: Can you get an advisory opinion by asking a "hypothetical" version of a question that's actually part of a live dispute?
A: No -- the Department looks at whether the issue is substantively the same as one already pending in Tax Appeals, a conciliation request, a declaratory ruling request, or an opinion-of-counsel request, regardless of how the advisory-opinion petition is framed.

Q: Does naming an attorney instead of the actual taxpayer as the petitioner get around the "pending matter" bar?
A: No -- the Department explicitly rejected that approach here, since the attorney was also representing the same client in the parallel Tax Appeals proceeding on the same issue.

Citations and references

Statutes and regulations:

• Tax Law § 171(24) (Commissioner's authority to issue advisory opinions)
• 20 NYCRR § 2376.1(c)(1) (advisory opinion not issued on a pending Tax Appeals matter)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1998.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a98_86s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(86)S
Sales Tax
December 23, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980512A

On May 12, 1998, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Andrew B. Sabol, Hodgson Russ Woods & Goodyear LLP, 1800 One M&T Plaza,
Buffalo, New York 14203.
By letter dated May 1, 1998, followed up by a completed petition form dated May 7, 1998,
Petitioner submitted this petition for advisory opinion. Petitioner stated that he sought advice
relating to a “hypothetical situation.” Petitioner checked the “None of the above” box on the
petition, thereby representing that the petition did not relate to:
A. A matter presently under audit;
B. A claim for credit or refund;
C. An issued statutory notice;
D. An Application for a Declaratory Ruling;
E. Any other matter or proceeding that is currently before the Department of Taxation and
Finance or the Division of Tax Appeals.
It appears, however, that, on July 31, 1998, the Division of Tax Appeals received a petition
naming Petitioner and two other attorneys in his law firm as representatives in a matter virtually
identical to that raised in the petition for advisory opinion. The Tax Appeals petition indicates that
it relates to a Bureau of Conciliation and Mediation Services Conciliation Order dated May 8, 1998
and is accompanied by a power of attorney dated April 5, 1998 appointing Petitioner and three others
(including the two other attorneys in the firm indicated on the Tax Appeals petition) as
representatives.
Section 171, subdivision twenty-fourth of the Tax Law authorizes the Commissioner, in his
discretion, to issue advisory opinions to other than a taxpayer and, in numerous instances, advisory
opinions have been issued to representatives on behalf of unnamed clients. Since an advisory
opinion is only binding on the Commissioner “with respect to the person to whom such opinion is
rendered,” it is not binding with respect to the unnamed client.
Section 2376.1(c)(1) of the Department’s Regulations provides that:

-2­
TSB-A-98(86)S
Sales Tax
December 23, 1998

An advisory opinion will not be issued where the petition for advisory
opinion relates to a pending question raised by the Petitioner in:
(i) a petition for a decision or determination by the Division of Tax Appeals
pursuant to Part 3000 of this Title, or any appeals therefrom;
(ii) a request for a conciliation conference and issuance of a conciliation order
by the Division of Taxation’s Bureau of Conciliation and Mediation Services
pursuant to Part 4000 of this Title;
(iii) a petition for a declaratory ruling by the commissioner pursuant to section
2375.3 of this Title; or
(iv) a request for an opinion of counsel pursuant to section 2375.4 of this
Title.
Although section 171, subdivision twenty-fourth of the Tax Law authorizes the
Commissioner, in his discretion, to issue an advisory opinion to other than the taxpayer, section
2376.1(c)(1) of the Department’s Regulations provides that an advisory opinion will not be issued
with respect to a pending question raised by the Petitioner in a Tax Appeals petition. This provision
may not be circumvented by merely naming the attorney as the Petitioner for the advisory opinion.
Since the matter raised in the petition for advisory opinion is the same as that raised in the Tax
Appeals petition, an advisory opinion addressing the issues raised by Petitioner will not be issued.

DATED: December 23, 1998

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.