Since the New York State Division of Taxation (“Division”) issued the wrong notice to an admittedly “responsible person,” an Administrative Law Judge (“ALJ”) held that no liability could be imposed on her for the sales taxes owed by the company. Matter of Calvano, DTA No. 851521 (Sept. 3, 2026). This case confirms that when the Tax Law requires certain procedures be followed, the Division cannot ignore those requirements.   

The Law: Before the Division can issue a Notice and Demand for payment, there must be an assessment of the tax. If the Division audits a person and determines that additional sales taxes are due, it is required to issue a Notice of Determination. A person has protest rights upon receipt of a Notice of Determination to challenge the Division’s assertion of additional tax being due. If no protest is filed or if one is filed but ultimately results in the conclusion that tax is due, then the asserted liability becomes an assessment.

The Facts: Lynn Calvano was an officer of Landmark Unlimited Inc. (“Landmark”). The Division audited Landmark and determined additional sales tax to be due. It then issued a Notice of Determination to Landmark asserting the additional tax. A couple of months later, the Division issued a Notice and Demand to Calvano on the basis that she was a responsible person of Landmark.

Calvano filed a Petition with the Division of Tax Appeals challenging the Notice and Demand. She did not, however, challenge her status as a responsible person for Landmark.

Calvano then filed a motion for summary determination seeking cancellation of the Notice and Demand on the basis that she had never received a Notice of Determination. In response, the Division asserted that the motion should be denied and the Petition dismissed because the Division of Tax Appeals lacked subject matter jurisdiction as a Notice and Demand is not a statutory notice under the Tax Law that can be protested. In the alternative, the Division asserted that Calvano had not been prejudiced because she was exercising her protest rights and no harm had occurred. 

The Determination: After reviewing the rules for when a Notice of Determination is required to be issued and when it becomes an assessment, the ALJ discussed when a Notice and Demand can be issued. Here, since there was never an assessment of tax for Calvano, the issuance of a Notice and Demand was not authorized and, therefore, “must be cancelled.”

The ALJ then rejected the Division’s assertion that Calvano was not prejudiced because she did exercise her protest rights. The ALJ first stated that the requirement that a Notice of Determination be issued in the first instance is not optional. The ALJ then noted: “If the Division’s procedural failures were countenanced, such practice could effectively deny other taxpayers, who did not have experienced tax professionals as representatives, their right to due process because they erroneously believed they had no formal prepayment protest rights.”

It is unfortunate that the Division attempted an end run around the Tax Law’s procedural requirements. This case is a reminder of the importance of having an independent, prepayment tax tribunal (such as the Division of Tax Appeals) that requires taxing agencies to follow the law, including its procedural requirements.

This update is one in a series of updates written for the October 2026 edition of The BR State + Local Tax Spotlight.

© 2026 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.