Opinion
March 24, 1983
Proceeding pursuant to CPLR article 78 (transferred to this court by order of the Supreme Court at Special Term, entered in Albany County) to review a determination of the State Tax Commission which sustained a notice of deficiency for unincorporated business taxes pursuant to article 23 of the Tax Law. Petitioner and his wife filed New York combined income tax returns covering the years 1972 and 1973 upon which petitioner reported receiving "other income" of $30,000 and $37,000, respectively. When petitioner failed to respond to a request for information concerning the source of this income, the Department of Taxation and Finance issued a notice of deficiency informing petitioner it deemed the "other income" to be business income and subject to an unincorporated business tax of $2,585 plus interest and penalties. Upon petitioner's request for a redetermination, a hearing was held at which petitioner neither appeared nor offered any evidence. However, on petitioner's behalf his attorney invoked petitioner's privilege against self incrimination; it is urged that petitioner has a constitutional right to remain silent as to the origin of the income. The commission sustained the notice of deficiency and this proceeding ensued. Although petitioner maintains that the rationale of Garner v. United States ( 424 U.S. 648), in reaffirming United States v. Sullivan ( 274 U.S. 259), justifies his refusal to divulge the derivation of his "other income", we find it unnecessary to even confront this proposition. A taxpayer's reliance on the Fifth Amendment to block disclosure is ineffectual unless he has made "a colorable showing that he is involved in some activity for which he could be criminally prosecuted" ( United States v. Verkuilen, 690 F.2d 648, 654; see United States v. Karsky, 610 F.2d 548, 550, n 5, cert den 444 U.S. 1092). If neither the question nor the setting in which it is asked suggests a real and appreciable danger of self incrimination, the taxpayer is obliged to come forward with some indicia of potential incrimination ( United States v. Neff, 615 F.2d 1235, 1240, cert den 447 U.S. 925). Nothing in this record, apart from his counsel's assertion to that effect, indicates that revelation of the source of petitioner's other income will bring to light his involvement in any criminal activity. That unsupported assertion is an insufficient predicate for the invocation of the privilege ( United States v. Verkuilen, supra; see Edwards v. Commissioner of Internal Revenue, 680 F.2d 1268, 1270). We note also that the hazard of self incrimination through the use of tax returns has been considerably reduced with the enactment of subdivision (e) of section 697 Tax of the Tax Law, which precludes their use in most nontax criminal proceedings (see Matter of New York State Dept. of Taxation Fin. v. New York State Dept. of Law, Statewide Organized Crime Task Force, 44 N.Y.2d 575, 581), making it unavoidable that the taxpayer show something other than a vague and unexplained fear of incrimination. The argument that the assessment of an unincorporated business tax was without foundation is meritless. Given the other information on petitioner's return, attribution of miscellaneous other income to an unincorporated business was obviously reasonable. Furthermore, the failure of petitioner to produce any evidence demonstrating that the assessment was erroneous leaves standing the presumption of correctness which attached to the notice of deficiency (Tax Law, § 689, subd [e]; Matter of Tavolacci v. State Tax Comm., 77 A.D.2d 759). Determination confirmed, and petition dismissed, with costs. Kane, J.P., Main, Mikoll, Yesawich, Jr., and Levine, JJ., concur.