senate Bill S3944

Relates to personal income tax or corporate franchise tax overpayment

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 10 / Mar / 2011
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 24 / May / 2011
    • REPORTED AND COMMITTED TO FINANCE
  • 02 / Jun / 2011
    • 1ST REPORT CAL.961
  • 06 / Jun / 2011
    • 2ND REPORT CAL.
  • 07 / Jun / 2011
    • ADVANCED TO THIRD READING
  • 15 / Jun / 2011
    • SUBSTITUTED BY A7239

Summary

Relates to reversing personal income tax or corporate franchise tax overpayments against estimated tax for the succeeding taxable year in certain circumstances.

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Bill Details

See Assembly Version of this Bill:
A7239
Versions:
S3944
Legislative Cycle:
2011-2012
Law Section:
Tax Law
Laws Affected:
Amd §§686, 687, 1086 & 1087, Tax L; amd §§11-1786 & 11-1787, NYC Ad Cd

Votes

7
0
7
Aye
0
Nay
1
aye with reservations
0
absent
0
excused
0
abstained
show Investigations and Government Operations committee vote details

Sponsor Memo

BILL NUMBER:S3944

TITLE OF BILL:

An act
to amend the tax law
and the administrative code of the city of New York,
in relation to reversing
the crediting of a personal income tax or corporate
franchise tax overpayment against estimated tax for
the succeeding taxable year in certain circumstances

PURPOSE OF BILL:

This bill would allow the election to credit a personal income tax or
corporate franchise tax overpayment to estimated tax for the
succeeding taxable year to be reversed upon good cause shown by the
taxpayer.

SUMMARY OF PROVISIONS:

Sections 1 and 3 of this bill would amend Tax Law §§ 686(e) and
1086(b) to allow taxpayers to request the reversal of the crediting of
their personal income tax or corporate franchise tax overpayment to
estimated tax for the succeeding taxable year on or before the
prescribed filing date of the return for the succeeding taxable year,
plus any extension granted.
Section 3 would also delete references to articles of the Tax Law that
have been repealed.

Section 5 of the bill would make corresponding amendments to
Administrative Code of the City of New York § 11-1786(e) for the
New York City personal income tax on residents.

Under these amendments, if good cause is shown, the crediting will be
reversed, and the Commissioner of Taxation and Finance may, in his or
her discretion, credit the overpayment against a liability of the
taxpayer or refund the overpayment without interest. However, the
taxpayer would not be relieved of liability for penalties for an
underpayment of estimated tax caused by the reversal of the credit.
The decision of the Commissioner to grant or deny the request would
be final and would not be subject to any further administrative or
judicial review.

Sections 2, 4 and 6 of the bill would amend cross-references to Tax
Law §§ 686(e) and 1086(b), and Administrative Code of the City of New
York § 11-1786(e).

Section 7 of the bill provides that it would take effect immediately.

EXISTING LAW:

When a taxpayer files a personal income tax or corporate franchise tax
return and has an overpayment (credits and prepayments are more than
the tax owed), an election may be made by
the taxpayer to have some or all of the overpayment refunded or


credited to estimated tax for the succeeding taxable year. Tax Law
686(e) and 1086(b), and Administrative Code of the City of New York
11-1786(e) provide that if an overpayment is credited against
estimated tax for the succeeding taxable year, the amount is
considered to be a payment of tax for the succeeding taxable year and
no claim for credit or refund of the overpayment will be allowed for
the taxable year for which the overpayment arises.

LEGISLATIVE HISTORY:

This bill was introduced in the Senate as S. 3886 on April 2, 2009 and
a same-as bill was introduced as A.8175 on May 6, 2009 in the
Assembly. The Assembly passed A.8175 on June 2, 2009, but it failed
to pass in the Senate and was returned to the Assembly. The Assembly
passed A. 8175 again on March 9, 2010, and it was referred to the
Senate Committee on Investigations and Government Operations. No
further action was taken on the bill in the 2010 Legislative Session.

STATEMENT IN SUPPORT:

The virtually irreversible election to credit an overpayment to
estimated tax for the succeeding taxable year has at times caused
problems for taxpayers. In some cases, because of a software or return
preparation error, the overpayment has been entered on the
credit-to estimated-tax line rather than on the refund line. Taxpayers
who expected a refund have been frustrated by the inability to
correct this error. Further, a taxpayer may become aware of another
liability before the due date of the return for the succeeding
taxable year and may prefer to use the overpayment against that
liability instead of using it to pay estimated tax for the next year.

In addition, there may be other situations that would call for
reversing the crediting of an overpayment, such as a significant
change in the taxpayer's economic situation. The ability to request
the reversal of the crediting of the overpayment to estimated tax
would last until the prescribed due date of the return for the
succeeding taxable year, plus any extensions granted the...taxpayer.
Once the return for the succeeding taxable year is filed, the
taxpayer would be able t6 request any overpayment on that return be
refunded or credited against estimated tax liabilities for the next
succeeding taxable year.

The decision to grant or deny the request is in the discretion of the
Commissioner of Taxation and Finance. To promote efficient settlement
of the affected tax years, the Commissioner's decision would not be
subject to further administrative or judicial review.

BUDGET IMPLICATIONS:

There are no known budget implications associated with this bill.

EFFECTIVE DATE:

The bill would take effect immediately upon enactment.


view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3944

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 10, 2011
                               ___________

Introduced by Sen. DeFRANCISCO -- (at request of the Department of Taxa-
  tion  and Finance) -- read twice and ordered printed, and when printed
  to be committed to the  Committee  on  Investigations  and  Government
  Operations

AN  ACT  to amend the tax law and the administrative code of the city of
  New York, in relation to reversing the crediting of a personal  income
  tax  or  corporate franchise tax overpayment against estimated tax for
  the succeeding taxable year in certain circumstances

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subsection (e) of section 686 of the tax law, as amended by
chapter 65 of the laws of 1985, is amended to read as follows:
  (e)  Credits against estimated tax.--The [tax commission] COMMISSIONER
may prescribe regulations providing for the crediting against the  esti-
mated  income tax for any taxable year of the amount determined to be an
overpayment of the income tax for a preceding taxable year. If any over-
payment of income tax is so claimed as a credit  against  estimated  tax
for  the  succeeding  taxable year, such amount shall be considered as a
payment of the income tax for the succeeding taxable year, and no  claim
for  credit or refund of such overpayment shall be allowed for the taxa-
ble year for which the overpayment arises, EXCEPT UPON  REQUEST  TO  THE
COMMISSIONER  ON OR BEFORE THE LAST DAY PRESCRIBED FOR THE FILING OF THE
RETURN FOR THE SUCCEEDING TAXABLE YEAR, DETERMINED WITH  REGARD  TO  ANY
EXTENSION  OF  TIME  GRANTED.  IF  GOOD CAUSE IS SHOWN FOR REVERSING THE
CREDIT, THE COMMISSIONER MAY, IN HIS OR HER DISCRETION, CREDIT THE OVER-
PAYMENT AGAINST A LIABILITY OR REFUND THE OVERPAYMENT WITHOUT  INTEREST.
PROVIDED,  THE  PERSON  WHO MADE THE OVERPAYMENT WILL NOT BE RELIEVED OF
LIABILITY FOR ANY PENALTY IMPOSED FOR A CONSEQUENT UNDERPAYMENT OF ESTI-
MATED TAX FOR THE SUCCEEDING TAXABLE YEAR. THE DECISION OF  THE  COMMIS-
SIONER  TO GRANT OR DENY THE REQUEST IS FINAL AND NOT SUBJECT TO FURTHER
ADMINISTRATIVE OR JUDICIAL REVIEW.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09459-01-1

S. 3944                             2

  S 2. Subsection (k) of section 687 of the tax law, as amended by chap-
ter 1014 of the laws of 1968, is amended to read as follows:
  (k)  Cross  reference.--  For  provision barring refund of overpayment
credited against tax of a succeeding year, EXCEPT FOR GOOD CAUSE  SHOWN,
see subsection (e) of section six hundred eighty-six.
  S  3. Subsection (b) of section 1086 of the tax law, as added by chap-
ter 188 of the laws of 1964, is amended to read as follows:
  (b) Credits against estimated tax.---The [tax commission] COMMISSIONER
may prescribe regulations providing for the crediting against the  esti-
mated  tax under article nine-a[, nine-b or nine-c] for any taxable year
of the amount determined to be an overpayment of tax  under  [any]  such
article  for  a  preceding taxable year. If any overpayment of tax is so
claimed as a credit against estimated tax  for  the  succeeding  taxable
year,  such  amount  shall  be  considered as a payment of the tax under
article nine-a[, nine-b or nine-c] OF THIS CHAPTER  for  the  succeeding
taxable  year  (whether or not claimed as a credit in the declaration of
estimated tax for such succeeding taxable year), and no claim for credit
or refund of such overpayment shall be allowed for the taxable year  for
which the overpayment arises, EXCEPT UPON REQUEST TO THE COMMISSIONER ON
OR  BEFORE  THE LAST DAY PRESCRIBED FOR THE FILING OF THE RETURN FOR THE
SUCCEEDING TAXABLE YEAR, DETERMINED WITH REGARD TO ANY EXTENSION OF TIME
GRANTED.  IF GOOD CAUSE IS SHOWN FOR REVERSING THE CREDIT,  THE  COMMIS-
SIONER  MAY,  IN HIS OR HER DISCRETION, CREDIT THE OVERPAYMENT AGAINST A
LIABILITY OR REFUND THE  OVERPAYMENT  WITHOUT  INTEREST.  PROVIDED,  THE
PERSON  WHO  MADE  THE OVERPAYMENT WILL NOT BE RELIEVED OF LIABILITY FOR
ANY PENALTY IMPOSED FOR A CONSEQUENT UNDERPAYMENT OF ESTIMATED  TAX  FOR
THE  SUCCEEDING  TAXABLE YEAR. THE DECISION OF THE COMMISSIONER TO GRANT
OR DENY THE REQUEST IS FINAL AND NOT SUBJECT TO  FURTHER  ADMINISTRATIVE
OR JUDICIAL REVIEW.
  S  4. Subsection (j) of section 1087 of the tax law, as added by chap-
ter 188 of the laws of 1964, is amended to read as follows:
  (j) Cross reference.--For  provision  barring  refund  of  overpayment
credited  against tax of a succeeding year, EXCEPT FOR GOOD CAUSE SHOWN,
see subsection (b) of section one thousand eighty-six.
  S 5. Subdivision (e) of section 11-1786 of the administrative code  of
the  city of New York, as renumbered by chapter 639 of the laws of 1986,
is amended to read as follows:
  (e) Credits against estimated tax. The [tax  commission]  COMMISSIONER
OF  TAXATION  AND  FINANCE  may  prescribe regulations providing for the
crediting against the estimated income tax for any taxable year  of  the
amount determined to be an overpayment of the income tax for a preceding
taxable year. If any overpayment of income tax is so claimed as a credit
against estimated tax for the succeeding taxable year, such amount shall
be  considered as a payment of the income tax for the succeeding taxable
year, and no claim for credit or refund of  such  overpayment  shall  be
allowed  for  the  taxable year for which the overpayment arises, EXCEPT
UPON REQUEST TO THE COMMISSIONER OF TAXATION AND FINANCE  ON  OR  BEFORE
THE  LAST DAY PRESCRIBED FOR THE FILING OF THE RETURN FOR THE SUCCEEDING
TAXABLE YEAR, DETERMINED WITH REGARD TO ANY EXTENSION OF  TIME  GRANTED.
IF  GOOD  CAUSE  IS  SHOWN FOR REVERSING THE CREDIT, THE COMMISSIONER OF
TAXATION AND FINANCE MAY, IN HIS OR HER DISCRETION, CREDIT THE  OVERPAY-
MENT  AGAINST  A  LIABILITY  OR REFUND THE OVERPAYMENT WITHOUT INTEREST.
PROVIDED, THE PERSON WHO MADE THE OVERPAYMENT WILL NOT  BE  RELIEVED  OF
LIABILITY FOR ANY PENALTY IMPOSED FOR A CONSEQUENT UNDERPAYMENT OF ESTI-
MATED  TAX  FOR THE SUCCEEDING TAXABLE YEAR. THE DECISION OF THE COMMIS-

S. 3944                             3

SIONER OF TAXATION AND FINANCE TO GRANT OR DENY THE REQUEST IS FINAL AND
NOT SUBJECT TO FURTHER ADMINISTRATIVE OR JUDICIAL REVIEW.
  S  6. Subdivision (k) of section 11-1787 of the administrative code of
the city of New York, as amended by chapter 639 of the laws of 1986,  is
amended to read as follows:
  (k) Cross reference. For provision barring refund of overpayment cred-
ited  against tax of a succeeding year, EXCEPT FOR GOOD CAUSE SHOWN, see
subdivision (e) of section 11-1786.
  S 7. This act shall take effect immediately.

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