Matter of City of New York

190 N.E.2d 240, 12 N.Y.2d 1051, 239 N.Y.S.2d 880, 1963 N.Y. LEXIS 1323, 11 A.F.T.R.2d (RIA) 1445

• Court: New York Court of Appeals
• Decided: March 28, 1963
• Status: Published

Opinion

Order affirmed, with costs, upon the ground that the claim of the city to sales taxes and general business taxes was not a setoff at the crucial date for the reasons stated in the opinion at the Appellate Division. Question certified answered in the affirmative. No opinion.

Concur: Judges Dye, Van Voorhis, Burke and Foster. Chief Judge Desmond and Judges Fuld and Scileppi dissent in the following memorandum. By express provision of the New York City Sales Tax Law (Administrative Code of City of New York, § N41-6.0), all sales taxes for the period for which a return is required to be filed “ shall be due * * * and payable * * * on the date limited for the filing of the return for such period”. This being so, we believe that the sales taxes “ due and payable ” to the city prior to the time of the Federal tax assessments — as opposed to those which became due and payable after such time — may be set off against the condemnation award made by the city to its taxpayer, with the consequence that the amount of the condemnation award, to which the Federal tax liens could attach, is reduced by the amount of the taxes due the city. In other words, the Federal taxes may be paid out of so much of the award only as remains after payment of the “ due and payable ” city sales taxes. To deny this right of setoff to the city would result in the Federal tax lien attaching to a greater share of the condemnation award than the city’s taxpayer would have been entitled to recover from the city at the time the Federal lien arose. Accordingly, we would answer the certified question in the negative, modify the order appealed from and remand the matter to Special Term so that that court may give proper recognition to the city’s right of setoff.