senate Bill S1985

Amended

Clarifies the recordkeeping requirements for the earned income tax credit and the enhanced earned income tax credit

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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

  • 09 / Jan / 2013
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 08 / Jan / 2014
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 29 / Jan / 2014
    • AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 29 / Jan / 2014
    • PRINT NUMBER 1985A

Summary

Clarifies the recordkeeping requirements for the earned income tax credit and the enhanced earned income tax credit.

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Bill Details

See Assembly Version of this Bill:
A2422
Versions:
S1985
S1985A
Legislative Cycle:
2013-2014
Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd §606, add §658-a, Tax L
Versions Introduced in 2011-2012 Legislative Cycle:
S7064, A9965

Sponsor Memo

BILL NUMBER:S1985

TITLE OF BILL: An act to amend the tax law, in relation to clarifying
the recordkeeping requirements for the earned income tax credit and the
enhanced earned income tax credit

PURPOSE: This bill clearly delineates the record keeping requirements
for any taxpayer paid principally in cash who is claiming the earned
income tax credit or enhanced earned income tax credit.

SUMMARY OF PROVISIONS: The bill makes changes to the provisions of the
Tax Law concerning various record keeping requirements to properly docu-
ment qualification for the earned income tax credit or enhanced earned
income tax credit:

o Subsection (d) of section 606 of the Tax law is amended by adding a
new paragraph 8 concerning recordkeeping for cash earners and require
compliance with requirements set forth in section 658-a.

o Section 2, subsection (d-l) of section 606 of the Tax Law is amended
by adding a new paragraph 9 to clarify acceptable record keeping methods
for any taxpayer who earns in cash and who is claiming the earned income
tax credit or enhanced earned income tax credit.

o The bill amends Tax Law by adding a new section 658-a concerning prop-
er income documentation. Section 658-a allows a taxpayer who has one or
more jobs where taxpayer is paid principally in cash to provide proof of
income by producing permanent books or records which are in paper or
electronic form reflecting the amount and source of all income earned; a
brief description of tasks or work performed, and a list of work related
expenses when applicable. Separate books and records should be kept for
each tax year's earnings. Records should be kept for three years.

o Section 658-a allows for other means to document cash income other
than permanent books or records. Cash earners may use two of the follow-
ing; a sworn affidavit signed by the filer, signed letter from employer
stating wages paid, income and expenses worksheet completed with a
certified tax professional, bank statements, receipts from a check cash-
er reflecting regular receipt of wages, photocopies of checks, receipts
from work related expenses.

EXISTING LAW: Expands upon subsection (d) of section 606 of the Tax Law
dealing with the earned income credit. Adds new paragraph 8.

JUSTIFICATION: There are examples of taxpayers who earn their wages
predominantly in cash and who are eligible for and claim the Earned
Income Tax Credit. The Department of Taxation and Finance denies many
of the claims due to lack of sufficient income documentation, but
approves other claims when the income documentation provided is equally
scant. This bill will clearly set standards that the Department of Tax
and Finance may implement so that cash earners will know what income

documentation methods are acceptable so that they may receive the earned
income tax credit.

LEGISLATIVE HISTORY: 2012 - S.7064 - Referred to Investigations and
Government Operations

FISCAL IMPLICATIONS: None.

LOCAL FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect on the one hundred twentieth
day after it shall have become law. Effective immediately, the Commis-
sioner of Taxation and Finance is authorized to make any addition.
amendment and/or repeal of any rule or regulation necessary for the
implementation of this act on its effective date on or before such date.
First day of October after having become a law - applicable to all rule-
making notices initially prepared on or after such date.

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

                                  1985

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by Sen. CARLUCCI -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law, in relation to clarifying the recordkeeping
  requirements for the earned income tax credit and the enhanced  earned
  income tax credit

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

  Section 1. Subsection (d) of section 606 of the tax law is amended  by
adding a new paragraph 8 to read as follows:
  (8)  RECORDKEEPING.  IN ADDITION TO ANY OTHER REQUIREMENT SET FORTH IN
THIS CHAPTER, ANY TAXPAYER PAID PRINCIPALLY IN CASH WHO IS CLAIMING  THE
EARNED  INCOME  TAX CREDIT PURSUANT TO THIS SUBSECTION SHALL COMPLY WITH
THE  RECORDKEEPING  REQUIREMENTS  SET  FORTH  IN  SECTION  SIX   HUNDRED
FIFTY-EIGHT-A OF THIS ARTICLE WHEN APPLICABLE.
  S  2.  Subsection  (d-1)  of  section 606 of the tax law is amended by
adding a new paragraph 9 to read as follows:
  (9) IN ADDITION TO ANY OTHER REQUIREMENT SET FORTH  IN  THIS  CHAPTER,
ANY  TAXPAYER  WHO  IS  CLAIMING  THE  ENHANCED EARNED INCOME TAX CREDIT
PURSUANT TO THIS SUBSECTION SHALL COMPLY WITH THE RECORDKEEPING REQUIRE-
MENTS SET FORTH IN SECTION SIX HUNDRED  FIFTY-EIGHT-A  OF  THIS  ARTICLE
WHEN APPLICABLE.
  S  3.  The tax law is amended by adding a new section 658-a to read as
follows:
  S 658-A. INCOME DOCUMENTATION CONCERNING THE EARNED INCOME TAX CREDIT.
IN CONJUNCTION WITH THE REQUIREMENTS SET  FORTH  IN  THIS  CHAPTER,  THE
PROVISIONS  OF  THIS  SECTION  SHALL  APPLY TO ANY TAXPAYER CLAIMING THE
EARNED INCOME TAX CREDIT AS SET FORTH IN SUBSECTION (D) OF  SECTION  SIX
HUNDRED SIX OF THIS ARTICLE:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00956-01-3

S. 1985                             2

  (A)  INCOME DOCUMENTATION STANDARDS FOR CASH EARNERS.  IF THE TAXPAYER
IS EMPLOYED IN ONE OR MORE JOBS WHERE SUCH TAXPAYER IS PAID  PRINCIPALLY
IN  CASH,  SUCH TAXPAYER MAY PROVE HIS OR HER INCOME BY PRODUCING ONE OF
THE FOLLOWING VERIFICATIONS:
  (1)  "PERMANENT  BOOKS  OR  RECORDS" ARE PAPER OR ELECTRONIC DOCUMENTS
THAT REFLECT THE AMOUNT AND  SOURCE  OF  ALL  INCOME  EARNED  FROM  PAID
EMPLOYMENT.
  (2)  EXAMPLES  OF  "PERMANENT  BOOKS  OR  RECORDS" INCLUDE BUT ARE NOT
LIMITED TO:
  (A) STATEMENTS FROM  FINANCIAL  INSTITUTIONS  REFLECTING  DEPOSITS  OF
MONEY EARNED;
  (B) ELECTRONIC LEDGERS OR SPREADSHEETS; OR
  (C) HANDWRITTEN ACCOUNTS MAINTAINED IN A BOUND LEDGER.
  (3)  A  DIFFERENT LEDGER SHOULD BE MAINTAINED FOR EACH TAX YEAR'S CASH
EARNINGS RECORDS, AND EACH RECORD SHALL BE MAINTAINED FOR AT LEAST THREE
YEARS AFTER THE TAX YEAR FOR WHICH IT WAS SUBMITTED.
  (B) ENTRY REQUIREMENTS FOR HANDWRITTEN LEDGERS.  (1) SUCH RECORD SHALL
INCLUDE, IN CHRONOLOGICAL ORDER, AN ENTRY FOR EACH TRANSACTION FOR WHICH
SUCH TAXPAYER EARNS MONEY WITH INFORMATION THAT  INCLUDES,  BUT  IS  NOT
LIMITED TO:
  (A) THE AMOUNT OF MONEY EARNED;
  (B)  THE  APPROXIMATE  TIME  AND DATE ON WHICH THE MONEY WAS EARNED OR
RECEIVED;
  (C) THE PORTION OF THE MONEY  RECEIVED,  IF  ANY,  THAT  WENT  TO  THE
TAXPAYER'S EMPLOYER;
  (D) A BRIEF DESCRIPTION OR LIST OF THE TASK OR TASKS PERFORMED FOR THE
MONEY EARNED.
  (2) SUCH RECORD MAY INCLUDE ENTRIES FOR WORK-RELATED EXPENSES AND EACH
SUCH ENTRY MAY INCLUDE, BUT NOT BE LIMITED TO THE:
  (A) AMOUNT OF THE WORK-RELATED EXPENSE;
  (B) APPROXIMATE TIME AND DATE THE WORK-RELATED EXPENSE WAS INCURRED;
  (C) NATURE OF THE WORK-RELATED EXPENSE; AND
  (D) DATE ON WHICH THE ENTRY WAS MADE.
  (3)  AN  ENTRY  FOR  ANY TRANSACTION SHALL BE MADE AS SOON AS POSSIBLE
AFTER THE TRANSACTION OCCURRED; PROVIDED, HOWEVER, THAT A CORRECTION  TO
AN  ENTRY SHALL NOT BE INVALID IF IT IS MADE MORE THAN THIRTY DAYS AFTER
THE TRANSACTION FOR WHICH SUCH ENTRY WAS MADE.
  (C) ADDITIONAL ACCEPTABLE INCOME VERIFICATION DOCUMENTS.  (1)  IN  THE
ABSENCE  OF PERMANENT BOOKS OR RECORDS, A TAX FILER MAY VERIFY INCOME BY
PRODUCING TWO OR MORE OF THE FOLLOWING:
  (A) A SWORN AFFIDAVIT, SIGNED  BY  THE  FILER,  STATING:  POSITION  OR
TITLE,  NUMBER  OF  WEEKS  WORKED,  NUMBER OF HOURS WORKED PER WEEK, THE
WAGES EARNED AND A BRIEF DESCRIPTION OF WORK PERFORMED. A SEPARATE NOTA-
RIZED AFFIDAVIT SHOULD BE COMPLETED FOR EACH JOB;
  (B) RECEIPTS  FROM  WORK  SUPPLIES,  INCLUDING  BUT  NOT  LIMITED  TO:
UNIFORMS AND MATERIALS NEEDED TO COMPLETE A SPECIFIC JOB;
  (C) RECEIPTS FROM LICENSING OR CERTIFICATION FEES, MEMBERSHIP DUES, OR
OTHER PROFESSIONAL DUES;
  (D) RECEIPTS FROM WORK-RELATED EXPENSES, INCLUDING BUT NOT LIMITED TO,
TRANSPORTATION COSTS AND CHILD CARE;
  (E) SIGNED LETTER FROM EMPLOYER STATING WAGES PAID;
  (F)  INCOME  AND  EXPENSES  WORKSHEET  COMPLETED  WITH A CERTIFIED TAX
PROFESSIONAL;
  (G) RECEIPTS FROM A CHECK CASHER REFLECTING REGULAR RECEIPT OF WAGES;
  (H) PHOTOCOPIES OF CHECKS, OR PAY ENVELOPS, GIVEN TO THE  TAXPAYER  AS
PAYMENT FOR GOODS OR SERVICES.

S. 1985                             3

  (D)  ERRORS OR OMISSIONS. A DE MINIMIS NUMBER OF OMISSIONS OR FAILURES
TO CORRECT ENTRIES SHALL NOT BE SUFFICIENT IN AND OF ITSELF TO RENDER  A
TAXPAYER'S RECORDS INADEQUATE TO VALIDATE THAT TAXPAYER'S INCOME FOR THE
RELEVANT TAX YEAR.
  (E) PRESUMPTION OF ACCURACY AND COMPLETENESS. (1) SO LONG AS THE MINI-
MUM  REQUIREMENTS  SET  FORTH  IN  THIS  SECTION ARE MET, AND UNLESS THE
DEPARTMENT HAS AFFIRMATIVE EVIDENCE TO DIRECTLY CONTRADICT  THE  TAXPAY-
ER'S  RETURN, THE DEPARTMENT SHALL PRESUME THE ACCURACY AND COMPLETENESS
OF THE RECORD AND THE GOOD FAITH OF THE TAXPAYER.
  (2) PROVIDED THE MINIMUM REQUIREMENTS SET FORTH IN  THIS  SECTION  ARE
MET,  THE  PARTICULAR FORMAT OF THE RECORD SHALL NOT BE USED AS EVIDENCE
OF INSUFFICIENT RECORDKEEPING OR BAD FAITH ON THE PART OF THE TAXPAYER.
  (3) PROVIDED THE MINIMUM REQUIREMENTS SET FORTH IN  THIS  SECTION  ARE
MET,  A  MID-YEAR  CHANGE IN THE FORMAT OF RECORDKEEPING WITHIN A SINGLE
LEDGER SHALL NOT BE CONSIDERED EVIDENCE OF INCOMPLETE  RECORDKEEPING  OR
BAD  FAITH  IF  SUCH CHANGE INDICATES AN ATTEMPT TO IMPROVE UPON RECORD-
KEEPING.
  S 4. This act shall take effect on the one hundred twentieth day after
it shall have become a law. Effective immediately, the  commissioner  of
taxation  and  finance  is  authorized  to  make any addition, amendment
and/or repeal of any rule or regulation necessary for the implementation
of this act on its effective date on or before such date.

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