NATIONAL ASSOCIATION OF INDEPENDENT INSURERS, ET AL., APPELLANTS, v. STATE OF
NEW YORK, ET AL., RESPONDENTS.
89 N.Y.2d 950, 678 N.E.2d 465, 655 N.Y.S.2d 853 (N.Y. Feb 06, 1997).
February 6, 1997
2 No. 7 (1997 NY Int. 8)
Decided February 6, 1997
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This memorandum is uncorrected and subject to revision before
publication in the New York Reports.
Alvin K. Hellerstein, for Appellants.
August L. Fietkau, for Respondents.
MEMORANDUM:
The order of the Appellate Division should be affirmed with costs.
In an effort to ensure payment of sales tax revenue to the State, the
Legislature in 1991 changed the manner in which motor vehicle damage
insurance awards are to be paid by enacting Article 15 of the Tax Law.
Pursuant to Article 15, insurance carriers are required to send the
sales tax component of an insurance award directly to the State
Commissioner of Taxation and Finance (see, Tax Law § 341(b), (c)).
Claimant is then sent a credit voucher, which can be remitted to the
repair shop or dealer in lieu of sales tax, if the vehicle is repaired
or replaced within a year (see, Tax Law § 341(d)(1), (2)).
Plaintiffs, 13 insurance carriers and their trade association, seek a
declaration that Article 15 is facially unconstitutional and an
injunction to prevent its implementation. Plaintiffs argue that
Article 15 violates their due process rights because it does not allow
for a refund in the event that the funds remitted to the State by
insurers exceed the amount of sales tax actually assessed. Plaintiffs
further contend that, because repair shops and dealers are not
required to accept the vouchers (see, Tax Law §§ 341(d)(2)), a
claimant may be required to pay sales tax that the insurer has already
remitted to the Commissioner, thereby resulting in an unconstitutional
double taxation without possibility of a refund.
A presumption of constitutionality attaches to Article 15, and this
Court is required "to avoid interpreting (it) in a way that would
render it unconstitutional if such a construction can be avoided"
(Alliance of American Insurers v Chu, 77 NY2d 573, 585). Plaintiffs'
SNIPPETS:
NATIONAL ASSOCIATION OF INDEPENDENT INSURERS, ET AL., APPELLANTS, v.
This memorandum is uncorrected and subject to revision before publication in the New York
August L. Fietkau, for Respondents.
The order of the Appellate Division should be affirmed with costs.
In an effort to ensure payment of sales tax revenue to the State, the Legislature in 1991
Pursuant to Article 15, insurance carriers are required to send the sales tax component of an
Claimant is then sent a credit voucher, which can be remitted to the repair shop or dealer in
Plaintiffs, 13 insurance carriers and their trade association, seek a declaration that
Plaintiffs argue that Article 15 violates their due process rights because it does not allow
Plaintiffs further contend that, because repair shops and dealers are not required to accept
A presumption of constitutionality attaches to Article 15, and this Court is required "to
Plaintiffs' facial constitutional challenge hinges on speculative assertions regarding
At this point, then, we cannot presume that it will result in overpayment of taxes or double
Article 15 does not on its face preclude the Commissioner from refunding excessive or double
This general refund provision is not inconsistent with the two specific sales tax refund
The constitutionality of the statute as applied to a particular claimant or insurer might be
Chief Judge Kaye and Judges Bellacosa, Smith, Levine, Ciparick and Wesley concur.
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