New York State
Ethics Commission


Advisory Opinion No. 91-13: Distinction between the Department of Taxation and Finance and the Division of Tax Appeals for purposes of Public Officers Law §73(8), former agency determination.

Introduction

The following advisory opinion was requested after issuance by the State Ethics Commission ("Commission") of an informal advisory opinion dated May 21, 1991, concerning application of the post-employment restrictions contained in Public Officers Law §73(8) to a former employee of the Department of Taxation and Finance ("Department") appearing before the New York State Division of Tax Appeals ("Division") prior to the expiration of the two-year bar. The requesting party has advised the State Ethics Commission that the former employee intends to become affiliated with a law firm in an "of counsel" position, where he will consult with the firm's attorneys and occasionally assist clients in tax planning and in matters pending before the Division.

Pursuant to the authority vested in it by Executive Law §94(15), the Commission hereby renders its opinion that the appearance or practice of a former Department employee before the Division, or receipt of compensation on a matter before the Division, does not violate the two-year bar on appearing, practicing, or receiving compensation on a matter before the Department.

Background

The Division was established on September 1, 1987, by Article 40 of the Tax Law as an independent division of the Department of Taxation and Finance. As provided in Tax Law §2002:
The powers, functions, duties and obligations of the division shall be separate from and independent of the authority of the commissioner of taxation and finance.

Located at offices in Troy, New York, apart from the Department's facilities at the State Campus in Albany, the Division is operated and administered by the Tax Appeals Tribunal. The Tribunal consists of three full-time commissioners, appointed by the Governor with the advice and consent of the Senate, who serve for terms of nine years.(1) The Division's budget is included as part of the budget request of the Department submitted to the Governor; however, the budget "shall not be revised or altered in any manner by the commissioner of taxation and finance prior to their submission to the governor." Tax Law §2006(3).

The Division was created to provide for the independent review and resolution of controversies resulting from the Department's determinations. The Division holds administrative hearings for persons appealing a decision of the Department concerning:

[A] tax deficiency, a determination of tax due, a denial of a refund or credit application, a cancellation, revocation or suspension of a license, permit or registration, a denial of an application for a license, permit or registration, or any other notice which gives a person the right to a hearing in the division of tax appeals under this chapter or other law. Tax Law §2008.

The Division is responsible for processing and reviewing petitions; providing a hearing for which the petition was filed; rendering determinations and decisions; and all other matters relating to the administration of the administrative hearing process. The Division is not involved in the administration or collection of taxes, or in any other activity of the Department that is conducted prior to the filing of a petition.

Discussion

Public Officers Law §73(8) provides, in relevant part, that:
No person who has served as a state officer or employee shall within a period of two years after the termination of such service of employment appear or practice before such state agency or receive compensation for any services rendered by such former officer or employee on behalf of any person, firm, corporation, or association in relation to any case, proceeding or application or other matter before such agency. No person who has served as a state officer or employee shall after the termination of such service or employment appear, practice, communicate or otherwise render services before any state agency or receive compensation for any such services rendered by such former officer or employee on behalf of any person, firm, corporation or other entity in relation to any case, proceeding, application or transaction with respect to which such person was directly concerned and in which he personally participated during the period of his service or employment, or which was under his or her active consideration.

The Commission noted in Advisory Opinion No. 88-1 that Public Officers Law §73(8), often referred to as the "revolving door" provision, sets the ground rules for what individuals may do with the knowledge, experience and contacts gained from public service after they terminate their employment with a State agency. The provision contains two distinct prohibitions: a two-year bar on activity before the former State agency, and a lifetime bar related to all State agencies with respect to certain matters in which the individual was personally involved.

The purpose of the revolving door subdivision is to preclude the possibility that a former State employee may leverage his or her knowledge, experience and contacts gained in State service to his or her own advantage or that of a client, thereby securing unwarranted privileges, consideration or action.

Tax Law §2002 clearly provides that the Division "shall be separate from and independent of the authority of the Commissioner of Taxation and Finance" for the specific purpose of providing impartial hearings in tax disputes.(2) The degree of independence provided the Division is considerable. The Division has the power to appoint and remove its own employees and to prepare and submit a budget to the Commissioner of the Department, who may not revise it.(3) The Commission must conclude, therefore, that the Division is a separate, independent State agency for purposes of the post-employment restrictions in Public Officers Law §73(8).(4)

The Commission is mindful of the possibility that, while a State employee, the former Department attorney had an occasional opportunity to appear before the Division representing the Department in some capacity. Although relationships may have developed between the attorney, while he was employed with the State, and employees of the Division, the Department is separate and distinct from the Division. Only if the employee is involved in an appearance before the Division in a matter in which he or she was directly involved and personally participated during the period of his or her State service or employment with the Department would such an appearance or receipt of compensation for any work be prohibited under the lifetime bar.

Conclusion

The Commission concludes that a former employee of the Department of Taxation and Finance who, within two years of termination from the Department, appears or practices before or receives compensation in relation to a matter before the Division of Tax Appeals does not violate the two-year bar contained in §73(8). The activity is not one before the former State agency, the Department of Taxation, from which the individual terminated. The lifetime bar contained in §73(8) precludes appearances or receipt of compensation for any work related to cases before the Division in which the former employee was directly concerned and personally participated during the period of his or her State service or employment or which was under his active consideration while at the Department.

All concur:

Joseph M. Bress, Chair

Angelo Costanza
Norman Lamm
Donald A. Odell, Members

Dated: July 29, 1991


Endnotes

1. For purposes of this opinion, the Tribunal and Division shall be referred to as the "Division."

2. Tax Law §2000.

3. Tax Law §2006.

4. See also Advisory Opinion No. 90-18 in which the Commission concluded the Division and the Department are separate State agencies.



URL: http://www.nysl.nysed.gov/edocs/ethics/91-13.htm