BILL NUMBER: S1174
TITLE OF BILL :
An act to amend the tax law, in relation to filing of amended personal
income tax returns
This bill equates the rights and responsibilities of a New York
taxpayer, who is also a taxpayer in another state, when the other
state makes changes or corrections in income tax returns filed with
that state, to the rights and responsibilities of a New York taxpayer
when the Internal Revenue Service makes changes or corrections in a
federal income tax return.
SUMMARY OF PROVISIONS :
Section one states Legislative findings that the complexity of income
tax laws, particularly affecting income earned in one state by a
taxpayer residing in another state, has contributed to unfair
situations. The Legislature determines to remedy this problem by
treating changes to a New York taxpayer's obligations to another state
in the same fashion as changes made to federal obligations. Section
two amends section 659 of the Tax Law to provide that the rights and
responsibilities of a New York taxpayer when his or her income tax
obligations to another state are changed or corrected by that state
will be the same as currently provided when a change or correction in
federal tax obligations is made by the Internal Revenue Service.
Section three amends section 687 of the Tax Law to expand a cross
reference to section 659 by deleting restrictive references to
"federal" changes or corrections. Section four enacts a transition
provision which provides to current taxpayers an extension of time for
filing a claim for credit of taxes paid to another state in a similar
fashion as the amendments to sections 659 and 687 will provide to
future taxpayers. Section five is the effective date.
EXISTING LAW :
Existing section 659 of the Tax Law establishes the rights and
responsibilities of a New York taxpayer when that taxpayer's federal
income tax return is changed or corrected by the Internal Revenue
Service. Generally, the taxpayer must file an amended New York State
income tax return reflecting the changes within 90 days after a final
federal determination. Existing section 687 of the Tax Law then
provides that when a taxpayer files an amended state return pursuant
to section 659, that taxpayer may claim a New York State credit or
refund within two years of the final federal determination.
The Tax Law has long recognized the inter-relationship between federal
income tax returns and New York State income tax returns filed by the
same taxpayer. When changes or corrections to federal returns are made
by the Internal Revenue Service, a New York taxpayer is given time to
file parallel amendments to his or her state return, and to pay
additional taxes or to receive the benefit of additional credits or
refunds. There is no equivalent provision when a resident New York
taxpayer files income tax returns with both New York and another state
or states. Because of this omission, a taxpayer may be substantially
harmed if another state makes a change -- after the effectiveness of
New York's statute of limitations -- which results in increased taxes
owed to that state, but reduced taxes owed to New York. In that case,
the taxpayer must pay the other state, but is too late to claim a
refund from New York, causing the taxpayer to pay the same tax twice.
This bill would treat the other state's change the same as if it were
a change made by the IRS, so the New York taxpayer has two years from
the change in order to file for a credit or refund, regardless of the
statute of limitations on the original New York filing.
LEGISLATIVE HISTORY :
2006: S.6683B/A.9896B, Passed Senate.
2007: S.920/A.1644, Passed Senate
2008: S.920/A.10103, Passed Senate/Referred to Ways & Means
FISCAL IMPLICATIONS :
Minimal. Any credits or refunds properly belong to the taxpayer,
LOCAL FISCAL IMPLICATIONS :
EFFECTIVE DATE :
Immediate. Transition provisions permit existing taxpayers to file for
applicable credits on returns filed up to three years past the current
statute of limitations, while the new Tax Law provisions are
applicable to tax years starting on or after January 1, 2010.
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