Maragh: Assessment Notices Needed Review Before the Remaining Refund Deductions

The validity of the assessments had to be addressed before the remaining refund deductions. In Matter of Maragh, DTA No. 830290 (N.Y. Tax Appeals Trib. Jan. 22, 2026), the Tribunal upheld the conclusion that a 2009 assessment was too late and returned the 2007, 2008 and 2011 disputes for findings about the notices used to assess and collect the tax.

The taxpayers paid disputed liabilities after collection

Raymond and Hortense Maragh filed late returns claiming substantial gambling losses through New York subtraction adjustments and itemized deductions. The Division adjusted the returns and issued documents identified as notices and demands for payment. The disputed liabilities were paid in 2018 after collection activity.

The taxpayers then sought refunds. An administrative law judge found the 2009 assessment untimely but rejected the other years’ refund claims on substantiation grounds. The taxpayers filed an exception with the Tribunal. The record included casino loss statements, but also a threshold question about whether the Division used the assessment procedure required by law. Maragh, decision, PDF pages 2–8.

The 2009 assessment fell outside the ordinary period

The 2009 return was filed on December 4, 2012. Under the three-year assessment rule applied, the period ended December 4, 2015. The Division issued the relevant notice on January 15, 2016. The Tribunal upheld invalidation of that assessment as late. Maragh at 8.

The timing analysis used the actual late-filed return and notice dates. The tax year alone would not establish when that statutory period began or expired.

The remaining years required findings about statutory notice

Tax Law section 681 ordinarily provides a deficiency-notice procedure with an opportunity for review before assessment and collection. The Tribunal examined whether the Division had a valid basis for using notices and demands instead. The record did not establish the mathematical-error or federal-change circumstances that could justify a different route. The Division’s asserted reliance on late-filed returns also lacked supporting evidence for the procedure used.

The Division had not presented an auditor or other persuasive evidence explaining how the adjustments were made. For 2011, the record referenced a notice of deficiency, but the Tribunal found it unclear what type of notice had actually issued. The record confirmed notices and demands for 2007 and 2008. The Tribunal required clarification of what had issued and whether the assessment procedure was proper. Those gaps mattered because the notices’ legal basis affected whether the underlying assessments and collection were authorized. The Tribunal directed that this question be decided before reaching the remaining deduction disputes. Maragh at 10–12.

The refund proceeding supplied the review posture

The Tribunal distinguished direct review of a notice and demand from review after a timely refund denial. A statutory limit on appealing the former did not eliminate the refund proceeding’s jurisdiction to examine the paid assessment’s validity.

This distinction explains why the payment and refund history belongs beside the notices. It also prevents a taxpayer from treating the decision as permission to ignore a current collection notice or substitute one procedure for another.

The Tribunal retained jurisdiction on remand

The remaining years went back for a supplemental determination on notice validity. The Tribunal retained jurisdiction and provided a supplemental-exception procedure following that determination, including 30 days to supplement the taxpayers’ exception and briefs or an extension requested within that period and approved. The Division could respond and would need a timely exception to challenge the supplemental determination. The disposition preserved the unresolved deductions for the proper sequence of further decision; it did not calculate a final refund for those years. Maragh at 12.

Our practical guide explains reconstructing the assessment notices after New York tax has been collected. These are New York procedures, distinct from California FTB protests and federal Tax Court petitions.