By ADAM SICHKO
asichko@bizjournals.com | 518-640-6818

Business groups, wary of progress stalling, continue to try to ease the state's tax-audit tactics as Gov. David Paterson's administration winds down.

A Buffalo assemblyman has pledged to push legislative changes early next year if the state Department of Taxation and Finance doesn't act before then.

Small businesses including restaurants, bars, convenience stores and others lashed out earlier this year at what they called overly aggressive and arbitrary tax audits.

Allegations of tens of thousands of dollars in unpaid sales taxes rocked the business community, which questioned the methods behind the ongoing audits.

"Where does common sense come in? It reeks of arrogance," said Richard Sampson, president of the New York State Restaurant Association.

Early signs indicate the tax department is willing to adapt its approach, business groups said. They credit the state for listening to their concerns.

In May, the office of state Comptroller Thomas DiNapoli began an investigation into the department's audit practices.

The National Federation of Independent Business requested the audit. DiNapoli has not announced any audit results yet.

Assemblyman Mark Schroeder (D-Buffalo) organized a meeting last month between 30 restaurant and bar owners and acting Tax Commissioner Jamie Woodward. Another meeting with her will be held by mid-December.

"It's unethical, the way they're doing it. It is despicable behavior," Schroeder said.

"These restaurants are actually afraid of their government because it could take them out of business and ruin their families. That's wrong. After all, where are we?" he said.

The state has escalated efforts to unearth taxpayers skimping on their taxes. The state has said it is to ensure some businesses don't cheat and then enjoy an unfair edge over competitors.

The state planned 1,300 restaurant audits alone this year, double the number from last year.

The state budget calls for hiring 330 people in tax compliance to generate an extra $220 million.

The move comes as the state faces a deficit of $9 billion and growing.

Schroeder and others say they worry about the standard lull in the weeks before a pending change in governors, as well as the impact of state retirements.

Gov.-elect Andrew Cuomo is expected to appoint a new chief of the tax department. William Comiskey, who was the top tax enforcement officer, started a new job at Hodgson Russ LLP on Nov. 1.

It's unclear why Comiskey left, although he could have taken the state's early-retirement incentive.

Sampson said he doesn't expect anything to be resolved this year. Schroeder was more optimistic.

"I'd view them more as willing partners," he said.

This article originally appeared in The Business Review of Albany.