senate Bill S3946

Establishes a 20 year time limit to collect tax liability

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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.962
  • 06 / Jun / 2011
    • 2ND REPORT CAL.
  • 07 / Jun / 2011
    • ADVANCED TO THIRD READING
  • 13 / Jun / 2011
    • SUBSTITUTED BY A7238

Summary

Establishes a 20 year time limit to collect tax liability; 20 years from the first date the commissioner of tax could file a warrant for liability; first date a warrant could be filed is the last day specified for payment by notice and demand issued for the tax liability where there is no right to a hearing with respect to such notice and demand.

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Bill Details

See Assembly Version of this Bill:
A7238
Versions:
S3946
Legislative Cycle:
2011-2012
Law Section:
Tax Law
Laws Affected:
Add §174-b, Tax L

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:S3946

TITLE OF BILL:

An act
to amend the tax law, in relation to providing a
limit on the time to collect tax liabilities

PURPOSE OF BILL:

This bill would provide for a 20-year statute of limitations on the
time to collect tax liabilities.

SUMMARY OF PROVISIONS:

Section 1 of the bill adds a new section 174-b to the Tax Law to
provide for a 20-year statute of limitations on the time to collect
tax liabilities. The statute of limitations will be solely for taxes
administered by the Commissioner of Taxation and Finance
("Commissioner"). A tax liability will not be enforceable and will be
extinguished after 20 years from the first date a warrant could be
filed by the Commissioner. The first date a warrant could be filed
means the day after the last day specified for payment by the notice
and demand issued for the tax liability where there is no right to a
hearing with respect to such notice and demand. Where there is a
right to a hearing with respect to a notice and demand for a tax
liability, the first date a warrant could be filed means the day
after opportunity for a hearing or review has been exhausted. The
Commissioner and the taxpayer can consent in writing to extend the
time period during which tax warrants may be collected.

Section 2 of the bill provides that the bill takes effect immediately.

EXISTING LAW:

The time period during which tax warrants may be collected is governed
by the provisions of CPLR § 211(b). This section provides that a
money judgment, including a tax warrant, is presumed to be paid and
satisfied after the expiration of twenty years from the time when the
party recovering it was first entitled to enforce it. This
presumption is conclusive, except as against a person who within the
twenty years acknowledges an indebtedness in writing, or makes a
payment, including an involuntary payment.

While state law cannot restrict the rights of the IRS to collect
federal tax debt, the CPLR restrictions apply to the Department of
Taxation and Finance ("Tax Department") in its collection of state
tax debts in a similar manner as applicable to private creditors.

LEGISLATIVE HISTORY:

This is a new proposal.

STATEMENT IN SUPPORT:


The intent of this legislation is to limit the period for the Tax
Department to collect unpaid tax liabilities. The acknowledgement or
payment on the debt provisions in the CPLR will no longer extend the
collection period, and thus, the Department will have 20 years from
the first date a warrant could be filed to collect tax liabilities.
After this time, the tax liability will not be enforceable and will
be extinguished.

Enactment of this bill will have a positive result for both the state
and taxpayers.
Taxpayers should have notice of the last date the Tax Department can
enforce the collection of tax liabilities. Pursuant to this proposal,
twenty years after a tax warrant could be filed, the tax liability
will be extinguished. Under current law, the limitation on enforcing
tax collection is not certain, as the period to collect taxes is
extended if the taxpayer acknowledges an indebtedness in writing, or
makes a payment, including an involuntary payment, such as wage
garnishments and bank levies. This proposal would give taxpayers
more certainty in tax enforcement, as the time limit on enforcing tax
collection will not be extended under these circumstances.

Enactment of this bill will help the Tax Department conserve
resources, by eliminating the need to dedicate time and manpower to
the collection of aged and difficult to collect accounts, while at
the same time free the Department to shift those resources toward
more productive uses. Similarly, the exactness of the 20-year time
period during which tax warrants may be collected will eliminate the
need to track acknowledgements, which can be very difficult.

The bill will apply to tax liabilities that could have been warranted
before the bill takes effect. Thus, if the 20-year time limit was up
at the time the bill takes effect, it would be extinguished and would
not be enforceable as of that date. If the 20-year time limit is not
up at the time the bill takes effect, then the tax liability could be
collected and would not be extinguished until the balance of the
20-year period has expired.

BUDGET IMPLICATIONS:

It is estimated that this proposal would result in a negligible animal
revenue loss beginning in State fiscal year 2011-12.

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
________________________________________________________________________

                                  3946

                       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, in relation to providing a limit on the
  time to collect tax liabilities

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

  Section  1.  The  tax  law is amended by adding a new section 174-b to
read as follows:
  S 174-B. LIMITATION ON THE  TIME  TO  COLLECT  TAX  LIABILITIES.    1.
NOTWITHSTANDING  ANY  PROVISION  OF  LAW  TO  THE CONTRARY AND EXCEPT AS
OTHERWISE PROVIDED IN  THIS  SECTION,  A  TAX  LIABILITY  SHALL  NOT  BE
ENFORCEABLE  AND  EVERY TAX LIABILITY SHALL BE EXTINGUISHED AFTER TWENTY
YEARS FROM THE FIRST DATE A WARRANT COULD BE FILED BY THE  COMMISSIONER,
WITHOUT REGARD TO WHETHER THE WARRANT IS FILED. THE FIRST DATE A WARRANT
COULD BE FILED MEANS THE DAY AFTER THE LAST DAY SPECIFIED FOR PAYMENT BY
THE  NOTICE  AND  DEMAND  ISSUED FOR THE TAX LIABILITY WHERE THERE IS NO
RIGHT TO A HEARING WITH RESPECT TO SUCH NOTICE AND DEMAND. THE FIRST DAY
A  WARRANT  COULD  BE  FILED  SHALL  BE  DETERMINED  WITHOUT  REGARD  TO
SUBSECTION  (C)  OF  SECTION  SIX  HUNDRED  NINETY  OR SUBSECTION (C) OF
SECTION ONE THOUSAND NINETY OF THIS  CHAPTER,  UNLESS  THE  COMMISSIONER
ASSESSES THE LIABILITY UNDER EITHER SUCH SUBSECTION (C). WHEN THERE IS A
RIGHT TO A HEARING WITH RESPECT TO A NOTICE AND DEMAND FOR A TAX LIABIL-
ITY, THE FIRST DATE A WARRANT COULD BE FILED MEANS THE DAY THAT OPPORTU-
NITY FOR A HEARING OR REVIEW HAS BEEN EXHAUSTED.
  2.  THIS  SECTION  SHALL  APPLY TO ANY TAX THAT IS ADMINISTERED BY THE
COMMISSIONER. ANY REFERENCE TO "TAX" IN THIS  SECTION  SHALL  BE  DEEMED
ALSO  TO REFER TO SPECIAL ASSESSMENTS, FEES, INTEREST, ADDITIONS TO TAX,
PENALTIES AND OTHER IMPOSITIONS THAT ARE ADMINISTERED BY THE COMMISSION-
ER.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09470-01-1

S. 3946                             2

  3. WHEN, BEFORE THE EXPIRATION OF THE TIME PRESCRIBED IN THIS  SECTION
TO ENFORCE THE COLLECTION OF TAX, BOTH THE COMMISSIONER AND THE TAXPAYER
HAVE  CONSENTED  IN  WRITING  TO ITS COLLECTION AFTER SUCH TIME, THE TAX
LIABILITY SHALL NOT BE EXTINGUISHED AND THE TAX MAY BE COLLECTED AT  ANY
TIME  PRIOR  TO  THE EXPIRATION OF THE PERIOD AGREED UPON. THE PERIOD SO
AGREED UPON MAY BE EXTENDED BY ANY SUBSEQUENT AGREEMENT IN WRITING  MADE
BEFORE THE EXPIRATION OF THE PERIOD PREVIOUSLY AGREED UPON.
  4.  THE  PROVISIONS OF THIS SECTION SHALL SUPPLEMENT OR BE IN ADDITION
TO THE PROCEDURES RELATING TO COLLECTION OR ADMINISTRATION PROVIDED WITH
RESPECT TO ANY TAX COVERED BY THIS SECTION. WHERE A  PROVISION  OF  THIS
SECTION  IS  INCONSISTENT  WITH  ANY SUCH PROVISION WITH RESPECT TO SUCH
TAX, THE PROVISIONS  OF  THIS  SECTION  SHALL  APPLY.  FOR  PURPOSES  OF
SUBSECTION  (C)  OF SECTION SIX HUNDRED NINETY-TWO AND SUBSECTION (C) OF
SECTION ONE THOUSAND NINETY-TWO OF THIS  CHAPTER,  IF  THE  COMMISSIONER
DOES NOT FILE A WARRANT WITHIN SIX YEARS OF ASSESSMENT, THE TIME LIMITA-
TIONS  IN  THIS  SECTION SHALL NOT APPLY AND THE TAX LIABILITY IS EXTIN-
GUISHED. NOTHING IN THIS SECTION  SHALL  BE  CONSTRUED  TO  PREVENT  THE
COMMISSIONER  FROM ACCEPTING ANY PAYMENT FOR A TAX LIABILITY MADE VOLUN-
TARILY BY A TAXPAYER AFTER  THE  TIME  TO  COLLECT  SUCH  LIABILITY  HAS
EXPIRED  AND THE LIABILITY IS EXTINGUISHED. WHEN A WARRANT IS FILED, THE
COMMISSIONER MAY INCLUDE A DATE ON THAT  WARRANT  INDICATING  WHEN  SUCH
WARRANT EXPIRES AND TAX LIABILITY IS EXTINGUISHED.
  5.  IF  A  TAX  LIABILITY  COULD  HAVE BEEN FIRST WARRANTED BEFORE THE
EFFECTIVE DATE OF THIS SECTION, SUCH LIABILITY SHALL NOT BE  ENFORCEABLE
AND  SHALL  BE  EXTINGUISHED  AFTER TWENTY YEARS FROM THE FIRST DATE THE
WARRANT COULD HAVE BEEN FILED BY THE COMMISSIONER.
  S 2. This act shall take effect immediately.

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