Underhill Construction Corp. v. State Tax Commission, 48 N.Y.2d 843 (1979)
To qualify for a tax exemption under Tax Law § 1119(a), a taxpayer must provide sufficient evidence to demonstrate that they had “irrevocably entered into” a pre-existing construction contract before the statutory cutoff date.
Summary
Underhill Construction Corp. sought revision of a tax commission determination, claiming exemption from sales and use taxes under Tax Law § 1119(a) because they allegedly entered into a construction contract before April 1, 1969. The Court of Appeals affirmed the Appellate Division’s decision, holding that Underhill failed to provide sufficient evidence to prove they had “irrevocably entered into” the contract before the deadline. The court emphasized the lack of comprehensive contractual documentation and corroborating evidence, which undermined Underhill’s claim for tax exemption.
Facts
Underhill Construction Corp. claimed to have entered into a lump-sum construction contract before April 1, 1969. To support their claim for a tax exemption, Underhill presented only two pages of the purported contract: the first page, dated June 21, 1968, specifying a payment obligation of $2,451,000, and the last page, signed by both parties and dated August 19, 1969. The intervening pages were not provided. Underhill offered testimony about previous transactions and work done before April 1, 1969, but lacked comprehensive documentation of a binding agreement before the statutory deadline.
Procedural History
The State Tax Commission determined that Underhill Construction Corp. was liable for sales and use taxes. Underhill sought a revision of the commissioner’s determination. The Appellate Division affirmed the Tax Commission’s decision. The Court of Appeals affirmed the Appellate Division’s judgment, upholding the tax commission’s determination.
Issue(s)
Whether the taxpayer provided sufficient evidence to establish that they had “irrevocably entered into” a pre-existing lump sum or unit price construction contract prior to April 1, 1969, as required by Tax Law § 1119(a) for a tax exemption.
Holding
No, because the taxpayer’s proof was insufficient to establish that a construction contract of the substance required by the statute had been “irrevocably entered into” prior to the cutoff date.
Court’s Reasoning
The court found substantial evidence supported the Tax Commission’s determination that Underhill had not irrevocably entered into a pre-existing construction contract by April 1, 1969. The court emphasized the insufficiency of Underhill’s evidence, particularly the missing pages of the alleged contract and the lack of corroborating evidence like a performance bond. The court noted, “Taxpayer’s predicament stems from the insufficiency of the proof submitted in support of his application for revision of the commissioner’s determination of his liability for sales and use taxes.” While acknowledging that a written contract before the deadline wasn’t necessarily required, the court found the presented proof inadequate. The court highlighted the unexplained delay between the alleged agreement date (June 28, 1968) and the signing date (August 19, 1969). The court concluded that without more compelling evidence, the Tax Commission reasonably determined that Underhill failed to prove the existence of a binding agreement before the cutoff date.