STATE OF NEW YORK
TAX APPEALS TRIBUNAL
________________________________________________
In the Matter of the Petition
of
DOGAN AND MELIA IUSUF
DECISION
DTA NO. 822078
for Redetermination of a Deficiency or for Refund of New
York State and New York City Personal Income Taxes
under Article 22 of the Tax Law and the Administrative
Code for the City of New York for the Year 2005.
________________________________________________
Petitioners, Dogan and Melia Iusuf, filed an exception to the determination of the Administrative Law Judge issued on June 11, 2009. Petitioners appeared pro se. The Division of Taxation appeared by Daniel Smirlock, Esq. (Margaret T. Neri, Esq., of counsel).
Petitioners did not file a brief in support of their exception. The Division of Taxation filed a letter brief in opposition to the exception. Petitioners filed a letter brief in reply. Petitioners' request for oral argument was denied.
After reviewing the entire record in this matter, the Tax Appeals Tribunal renders the following decision.
ISSUES
I. Whether petitioners are entitled to federal adjustments to income consisting of a student loan interest deduction in the amount of $2,421.50 and a tuition and fees deduction in the amount of $4,000.00 for the year 2005.
II. Whether petitioners are entitled to a child and dependent care credit for the year 2005.
FINDINGS OF FACT
We find the facts as determined by the Administrative Law Judge. These facts are set forth below.
Petitioners, Dogan and Melia Iusuf, timely filed their joint New York State and City resident personal income tax return for the 2005 tax year. On this return, petitioners reported federal adjusted gross income in the amount of $64,948.00, which consisted of wages of $65,010.49, taxable interest income of $375.91 and a $438.00 adjustment to income for an "IRA Deduction." After claiming the standard deduction of $14,600.00 (married filing jointly) and a dependent exemption of $1,000.00, petitioners reported taxable income of $49,348.00, and calculated total New York State and City tax due for 2005 of $2,640.00, consisting of New York State tax due in the amount of $2,484.00 and New York City resident tax due in the amount of $156.00. Against tax computed due of $2,640.00, petitioners showed credits and payments totaling $4,829.00, consisting of a City of New York school tax credit of $125.00, New York State tax withheld of $2,955.00 and New York City resident tax withheld of $1,749.00, and claimed a refund of $2,189.00.
The Division of Taxation ("Division") processed petitioners' 2005 tax return and found that they incorrectly computed the New York State and New York City tax due on their reported taxable income of $49,348.00. Using the 2005 State and City tax tables, the Division determined total taxes to be due in the amount of $4,195.00, consisting of New York State tax of $2,585.00 and New York City resident tax of $1,610.00. The Division issued a Notice of Adjusted Refund, dated May 16, 2006, recalculating petitioners' return for the year 2005 using the amounts of tax due pursuant to the 2005 New York tax tables for State and City tax, and issued an adjusted refund in the amount of $634.26.
On June 19, 2006, petitioners filed a Claim for Credit or Refund of Personal Income Tax, Form IT-113-X, requesting a refund of $1,674.84. In their request, petitioners sought a refund of $1,554.84, the disallowed portion of the refund claimed on the original return because the taxes were miscalculated by the Division, and an additional refund of $120.00 for the New York child and dependent care credit. Supporting documents attached to petitioners' refund claim included a revised New York State and City resident income tax return for the year 2005 (revised 2005 tax return), a Form IT-216, Claim for Child and Dependent Care Credit, a Form IT-2, Summary of Federal Form W-2 Statements for the year 2005, a copy of the May 16, 2006 Notice of Adjusted Refund, and the Notice of Taxpayer Rights, Adjusted Refunds/Credits. On Form IT-216, Claim for Child and Dependent Care Credit, petitioners failed to report the name, address and identifying number of any persons or organizations who provided care, the amount paid to such care provider, and the amount of qualified care expenses paid in 2005 for their qualifying child, Sarah Iusuf, born in 2002. Petitioners did not provide any information to substantiate the claimed child and dependent care credit of $120.00.
By Notice of Disallowance dated April 27, 2007, the Division disallowed petitioners' claim for refund for the following reasons:
Based upon tax department records your IT-150 for the tax year 2005 was computed incorrectly. Your New York State and New York City tax was erroneously calculated.
Also your claim for the Child and Dependent Care Credit cannot be allowed because we cannot verify your child care provider or your qualified expenses.
Your return was recalculated and a check was issued to you in the amount of $634.26.
Since your return was recalculated and you have already been issued a refund, your request for refund per IT-113X has been denied.
Dogan Iusuf appeared at the Bureau of Conciliation and Mediation Services ("BCMS") conciliation conference held on October 17, 2007, and agreed to submit additional documentation in support of petitioners' position. Post-conference, petitioners submitted to the conciliation conferee, among other things, a second Claim for Credit or Refund of Personal Income Tax, dated October 27, 2007, requesting a net refund in the amount of $749.00 ($1,333.26 - $634.26 already refunded) for the year 2005 (second claim for refund), petitioners' second revised 2005 New York State and City resident personal income tax return (second revised 2005 tax return), and a Tuition Statement, Form 1098-T, for the year 2005 (2005 Tuition Statement) issued to Melia Iusuf by ASA Institute of Business and Computer Technology (ASA Institute) in Brooklyn, New York.
On the second revised 2005 tax return, petitioners reported federal adjusted gross income in the amount of $58,864.90, consisting of wages of $65,010.49, taxable interest income of $375.91 and $6,241.50 in federal adjustments to income, i.e., a student loan interest deduction of $2,421.50 and a tuition and fees deduction of $4,000.00. After claiming the standard deduction of $14,600.00 and a dependent exemption of $1,000.00, petitioners reported taxable income of $43,264.00, and calculated total New York State and City tax due for 2005 of $3,566.00, consisting of New York State tax due in the amount of $2,170.00 and New York City resident tax due in the amount of $1,396.00. Against tax computed due of $3,566.00, petitioners showed credits and payments totaling $4,929.26, consisting of a New York State child and dependent care credit of $120.00, a City of New York school tax credit of $125.00, New York State tax withheld of $2,955.00 and New York City resident tax withheld of $1,749.00, and claimed a refund of $1,383.26.
The Tuition Statement issued by ASA Institute shows the amounts billed in 2005 to Mrs. Iusuf for qualified tuition and related expenses in the amount of $2,340.00, and her receipt of scholarships or grants in the amount of $2,421.50 in the same year. Petitioners did not submit any documentation to show that they paid interest in 2005 on a qualified education loan.
After reviewing all documentation submitted, the conferee issued a Conciliation Order (CMS No. 219262), dated January 4, 2008, which denied petitioners' request and sustained the refund denial dated April 27, 2007.
A timely petition challenging the Division's disallowance of petitioners' claim for refund for the year 2005 was filed with the Division of Tax Appeals. In their petition, petitioners assert that they are entitled to federal adjustments to income totaling $6,421.50, consisting of a student loan interest deduction of $2,421.50 and a tuition and fees deduction of $4,000.00, and a child and dependent care credit of $120.00. They seek an additional refund of $749.00 for the year 2005.
Petitioners did not submit any documentation regarding interest that they allegedly paid on a qualified education loan for the year 2005.
Petitioners did not submit any documentation substantiating the payment of any child and dependent care expenses for the year 2005.
THE DETERMINATION OF THE ADMINISTRATIVE LAW JUDGE
The Administrative Law Judge observed that the Division reviewed petitioners' 2005 tax return for mathematical errors pursuant to Tax Law § 681(d) and the Administrative Code of New York City § 11-1781(d). The errors discovered by the Division resulted in the issuance of an adjusted refund in the amount of $634.26. The Administrative Law Judge found that the Division properly recalculated petitioners' New York State and City tax liabilities for the year 2005 (see, Tax Law § 601[a][2]; Administrative Code of New York City § 11-1701[g][1][A]).
Petitioners claimed that $2,421.50 in education loan interest should be deducted from their gross income in arriving at their federal adjusted gross income for the year 2005. However, petitioners failed to submit any documentation showing entitlement to this deduction. As such, the Administrative Law Judge sustained the disallowance of the claimed deduction.
Petitioners also claimed that $4,000.00 in tuition and fees should be deducted from their gross income in arriving at their federal adjusted gross income for the subject year. The Administrative Law Judge observed that for the tax year 2005, taxpayers filing a joint return, whose adjusted gross income did not exceed $130,000.00, could deduct up to $4,000.00 in qualified tuition and related expenses (tuition and fees) paid in the year for the enrollment or attendance of the taxpayer, the taxpayer's spouse or dependent at an eligible education institution (see, IRC § 222[a], [b]). However, the Administrative Law Judge noted that IRC § 222(d)(1) also required qualified tuition and related expenses to be reduced by, as relevant here, the amount of any scholarship, educational assistance allowance excluded from income for such year. In support of the claimed tuition and fees deduction, petitioners submitted a 2005 Tuition Statement issued by the ASA Institute to Melia Iusuf. This statement reflects that ASA billed Mrs. Iusuf for qualified tuition and related expenses in the amount of $2,340.00 for the year 2005, and that she received scholarships and grants of $2,421.50 for the same year. Since Mrs. Iusuf received scholarships or grants in excess of her qualified tuition and expenses, the Administrative Law Judge found that no monies were paid by petitioners for qualified tuition and fees for the year 2005, and accordingly, petitioners are not entitled to a deduction for qualified tuition and fees for the year 2005 (see, IRC § 222[d][1]).
Petitioners claimed a child care credit in the amount of $120.00, but did not supply the name, address and identifying number of any persons or organizations who provided care, the amount paid to such care provider, and the amount of qualified care expenses paid in 2005 for their qualifying child. Since petitioners failed to provide the required identifying documentation showing the child care provider and substantiate the amount of the child care expenses incurred in 2005, the Administrative Law Judge found that no child and dependent care credit could be allowed and denied the petition.
On exception, petitioners argue, as they did below, that they are entitled to the federal adjustments to income and the child and dependent care credit. As such, they seek an additional refund of $749.00.
The Division argues that petitioners have failed to prove that they are entitled to the claimed federal adjustments and the child and dependent care credit.
We affirm the determination of the Administrative Law Judge for the reasons stated therein. The Administrative Law Judge completely and properly addressed each of the issues raised, and we can find no basis to modify her determination in any respect.
ACCORDINGLY, it is ORDERED, ADJUDGED and DECREED that:
1. The exception of Dogan and Melia Iusuf is denied;
2. The determination of the Administrative Law Judge is affirmed;
3. The petition of Dogan and Melia Iusuf is denied; and
4. The Division's Notice of Disallowance dated April 27, 2007 is sustained.
DATED: Troy, New York
February 18, 2010
/s/ Carroll R. Jenkins
Carroll R. Jenkins
Commissioner