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New York Tax Crimes: Is the Failure to Pay Taxes in New York Always a Grand Larceny Offense

New York City prosecutors and District Attorneys are eager to find financial frauds. Not only does it give law enforcement credibility in their equal pursuit of all criminal activity from the “streets to the suites,” but they also receive a portion of the restitution that they may recover.

While it is in no way fair to assert a restitution motive is the driving force behind the prosecution of these New York Grand Larceny and New York Tax crimes, it certainly gives prosecutors an added incentive to ferret out offenders whether their theft crimes occur in Manhattan, Brooklyn, Queens or even Westchester County. Whatever the reasoning may be, it is critical to understand that an allegation, arrest or indictment in New York for Grand Larceny, Criminal Possession of Stolen Property or Tax crime is in no way proof that you are in fact guilty. While your immediate future will undoubtedly by frightening, your criminal lawyer may be able to establish that prosecutors are just off the mark.

In a relatively recent decision (in terms of the centuries old New York Penal Law and criminal code), New York’s highest court addressed whether a defendant’s failure to pay taxes constituted Grand Larceny from the State on the theory that New York was the owner of those unpaid taxes. In People v. Nappo, 94 N.Y.2d 564 (2000), the defendant was indicted for many crimes including (as pertinent here) Grand Larceny in the First Degree pursuant to New York Penal Law 155.42 (theft over $1 million dollars) and Tax Law 1812. It was alleged that in a scheme involving the importation of motor oil from New Jersey to New York, the defendants intentionally avoided paying taxes.

Although the Appellate Division (the second highest court in New York) stated that New York was the rightful owner of the tax monies withheld by the defendant, the Court of Appeals reversed this decision. Specifically, the Court found that “taxes due were not the property of the State prior to their remittance. Accordingly, defendants did not steal money that belonged to New York State, but rather failed to make payments of taxes which were their personal obligations under the Tax Law.”

A reading of this case should recognize the scope of the decision. For example, sales taxes, monies that are collected by vendors to be later remitted to the State of New York, are different than taxes that are due upon importation or distribution of a particular product or item. While Tax Law 1817(k) establishes that a failure to remit sales taxes collected and held in trust for the State is a crime, the circumstances in this case are vastly different. That is, the tax dollars were not payable until importation and distribution. Those dollars were not held in trust for the State like sales taxes.

Keep in mind that the value of this case is potentially significant depending on your arrest or indictment, but it is also insignificant for the same reasons. Further, while one particular crime may not have been committed, prosecutors may be able to establish other equal or serious offenses. Your New York Tax crime lawyer or criminal defense attorney should evaluate the evidence and allegations in your particular case.

To further educate yourself about Grand Larceny, Criminal Possession of Stolen Property or New York Tax crimes, follow the links found in this blog entry. Not only will you be directed back to NewYorkTheftAndLarcenyLawyers.Com, but further reading is available below in the White Collar section of CrottySaland.Com and the NewYorkCriminalLawyerBlog.Com.

Established by two former Manhattan Assistant District Attorneys who prosecuted and investigated large-scale financial frauds and White Collar crimes, the criminal defense attorneys at Crotty Saland PC represents clients throughout the New York City region.