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A taxpayer could not be required to pay penalties associated with a failure to correctly file its New York state corporate income tax return because the taxpayer and the New York Division of Tax Appeals (Division) entered into a voluntary disclosure agreement under which the Division agreed to waive penalties. It was determined that the Division was bound by the terms of the agreement even though there was an audit that resulted in additional tax being owed. Furthermore, the taxpayer acted in good faith and was not practicing deception in this case. It was found to have merely filed its returns to the best of its ability despite little guidance provided by the New York Tax Law, regulations and the instructions on the returns.
Delta Financial Corp., New York Division of Tax Appeals, Administrative Law Judge Unit, DTA No. 820677, March 29, 2007
