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

                                  4801

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                            February 11, 2013
                               ___________

Introduced  by M. of A. PERRY -- read once and referred to the Committee
  on Ways and Means

AN ACT to amend the tax law, in relation to requiring vendors to  estab-
  lish  mandatory  escrow  accounts for sales taxes collected, establish
  the mechanism for those  accounts  and  provide  the  state  with  the
  authority  to  have  immediate access to their collected taxes; and to
  repeal certain provisions of such law relating thereto

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

  Section  1.  Paragraph 1 of subdivision (a) of section 1132 of the tax
law, as amended by chapter 255 of the laws of 1998, is amended  to  read
as follows:
  (1) (I) Every person required to collect the tax shall collect the tax
from the customer when collecting the price, amusement charge or rent to
which  it  applies.  If  the  customer is given any sales slip, invoice,
receipt or other statement or memorandum of the price, amusement  charge
or  rent  paid  or  payable,  the tax shall be stated, charged and shown
separately on the first of such documents given to him. The tax shall be
paid to the person required to collect it as trustee for and on  account
of the state.
  (II)  EVERY  PERSON REQUIRED TO COLLECT THE TAX SHALL DEPOSIT SUCH TAX
UPON COLLECTION INTO A SEPARATE ACCOUNT, IN TRUST FOR AND PAYABLE TO THE
COMMISSIONER, AS PROVIDED BY SUBPARAGRAPHS (III) AND (IV) OF THIS  PARA-
GRAPH  AT A TIME AND IN A MANNER AS DETERMINED BY THE COMMISSIONER.  ALL
AMOUNTS DEPOSITED IN SUCH ACCOUNT SHALL BE KEPT IN  SUCH  ACCOUNT  UNTIL
PAID OVER TO THE COMMISSIONER.
  (III)  IF  THE  PERSON  REQUIRED  TO  COLLECT  THE TAX DOES NOT ACCEPT
PAYMENTS FROM CUSTOMERS THROUGH CREDIT  OR  DEBIT  CARD  BANKING  TRANS-
ACTIONS,  THE  PERSON  REQUIRED  TO  COLLECT  THE TAX SHALL ESTABLISH AN
ACCOUNT IN ANY BANKING INSTITUTION  APPROVED  BY  THE  COMMISSIONER  AND
LOCATED  IN THIS STATE THE DEPOSITS IN WHICH ARE INSURED BY AN AGENCY OF

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00106-01-3
              

A. 4801                             2

THE FEDERAL GOVERNMENT. THE ACCOUNT SHALL BE HELD IN TRUST FOR AND PAYA-
BLE TO THE COMMISSIONER AND THE AMOUNT OF SUCH TAX  COLLECTED  SHALL  BE
KEPT  IN SUCH ACCOUNT UNTIL PAYMENT OVER TO THE COMMISSIONER. THE PERSON
REQUIRED  TO  COLLECT  THE TAX SHALL AUTHORIZE THE COMMISSIONER TO DEBIT
SUCH ACCOUNT IN A MANNER DETERMINED BY THE COMMISSIONER.
  (IV) IF THE PERSON REQUIRED TO COLLECT THE TAX ACCEPTS  PAYMENTS  FROM
CUSTOMERS  USING  CREDIT  OR DEBIT CARDS, THE PERSON REQUIRED TO COLLECT
THE TAX SHALL ESTABLISH A SEPARATE ESCROW ACCOUNT  THROUGH  AN  APPROVED
CREDIT CARD PROCESSING COMPANY (ACCPC) AND NOT THROUGH AN ESCROW ACCOUNT
OF  THE  TYPE  DESCRIBED  IN  SUBPARAGRAPH  (III) OF THIS PARAGRAPH. THE
COMMISSIONER SHALL BY REGULATION ESTABLISH STANDARDS FOR APPROVING CRED-
IT CARD PROCESSING COMPANIES FOR OPENING AND ESTABLISHING  ACCPC  ESCROW
ACCOUNTS FOR PERSONS REQUIRED TO PAY THE TAX. PERSONS COLLECTING THE TAX
AND  REQUIRED TO USE ACCPC ESCROW ACCOUNTS UNDER THIS SUBPARAGRAPH SHALL
MAKE DAILY DEPOSITS INTO THEIR ACCPC ESCROW ACCOUNT THAT ARE AN ESTIMATE
OF THE AMOUNT OF TAXES THEY COLLECTED THAT DAY FOR ALL OF THEIR  TAXABLE
SALES,  BOTH  THOSE PAID IN CASH AND THOSE PAID BY CREDIT OR DEBIT CARD.
TO EFFECTUATE THE DEPOSIT, THE ACCPC SHALL DEDUCT  THE  ESTIMATED  SALES
TAXES  OWED  FROM  THE  DAY'S  CREDIT AND DEBIT CARD TRANSACTIONS BEFORE
PAYING OVER THE RECEIPTS FROM SUCH TRANSACTIONS TO THE  PERSON  REQUIRED
TO COLLECT THE TAX. THE AMOUNT DEDUCTED SHALL BE DETERMINED BY MULTIPLY-
ING  THE  DAY'S CREDIT AND DEBIT CARD SALES BY AN ALGORITHMIC RATE WHICH
SHALL BE DETERMINED WHEN THE ACCPC ESCROW ACCOUNT IS ESTABLISHED AND  AT
LEAST  ONCE  A YEAR THEREAFTER.  THE ALGORITHMIC RATE SHALL REPRESENT AN
ESTIMATED CALCULATION OF THE AMOUNT OF TAXES COLLECTED AND OWED EACH DAY
FOR BOTH CASH AND CREDIT AND DEBIT CARD SALES. THE  CALCULATION  OF  THE
PERSON'S  ALGORITHMIC  RATE  SHALL  BE  CERTIFIED  BY A CERTIFIED PUBLIC
ACCOUNTANT LICENSED IN THIS STATE, AN ATTORNEY LICENSED IN THIS STATE OR
AN ENROLLED AGENT OR REGISTERED TAX RETURN PREPARER WHO HAS BEEN AUTHOR-
IZED BY THE DEPARTMENT TO CERTIFY THE ALGORITHMIC RATE, AS  AN  ACCURATE
ESTIMATE  OF  THE  RATIO OF THE PERSON'S CASH TO CREDIT TRANSACTIONS AND
TAXABLE TO NON-TAXABLE SALES. THE COMMISSIONER  SHALL  PROMULGATE  REGU-
LATIONS  DEFINING  HOW THE ALGORITHMIC RATE SHALL BE CALCULATED, SETTING
STANDARDS FOR THAT CALCULATION, AND IDENTIFYING  THE  PROCESS  BY  WHICH
LICENSED  OR  REGISTERED PROFESSIONALS MAY BE APPROVED OR DISAPPROVED BY
THE DEPARTMENT TO CERTIFY THE ACCURACY OF THE ALGORITHMIC RATE.  AMOUNTS
DEPOSITED  IN  AN  ACCPC  ESCROW  ACCOUNT SHALL BE HELD IN TRUST FOR AND
PAYABLE TO THE COMMISSIONER AND SHALL BE KEPT  IN  SUCH  ACCOUNTS  UNTIL
PAYMENT  OVER  TO  THE  COMMISSIONER.  PERSONS  COLLECTING  THE  TAX AND
REQUIRED TO USE AN ACCPC ESCROW ACCOUNT UNDER THIS  SUBPARAGRAPH  SHALL,
UPON  ESTABLISHING THE ACCOUNT, AUTHORIZE THE COMMISSIONER TO DEBIT SUCH
ACCOUNT IN A MANNER AND FREQUENCY TO BE DETERMINED BY THE COMMISSIONER.
  S 2. Paragraph 1 of subdivision (a) of section 1134 of the tax law, as
amended by section 160 of part A of chapter 389 of  the  laws  of  1997,
subparagraph  (iii)  as amended by section 44 of part K of chapter 61 of
the laws of 2011, is amended to read as follows:
  (1) (i) Every person required to collect any tax imposed by this arti-
cle, other than a person who is a vendor solely by reason of clause (D),
(E) or (F) of subparagraph (i) of paragraph eight of subdivision (b)  of
section eleven hundred one of this article, commencing business or open-
ing  a  new  place  of business, (ii) every person purchasing or selling
tangible personal property for resale commencing business or  opening  a
new  place  of  business,  (iii) every person selling petroleum products
including persons who or which are not distributors, (iv)  every  person
described  in this subdivision who takes possession of or pays for busi-
ness assets under circumstances requiring notification by such person to

A. 4801                             3

the commissioner pursuant to subdivision (c) of section  eleven  hundred
forty-one of this chapter, (v) every person selling cigarettes including
persons  who or which are not agents, and (vi) every person described in
subparagraph  (i),  (ii),  (iii), (iv) or (v) of this paragraph or every
person who is a vendor solely by reason of clause (D),  (E)  or  (F)  of
subparagraph (i) of paragraph eight of subdivision (b) of section eleven
hundred  one  of  this  article  who or which has had its certificate of
authority revoked under paragraph four of this subdivision,  shall  file
with   the  commissioner  a  certificate  of  registration,  in  a  form
prescribed by the commissioner, at least twenty days prior to commencing
business or opening a new place of business or such purchasing,  selling
or  taking of possession or payment, whichever comes first. Every person
who is a vendor solely by reason of clause (D) of  subparagraph  (i)  of
paragraph eight of subdivision (b) of section eleven hundred one of this
article  shall file with the commissioner a certificate of registration,
in a form prescribed by such commissioner, within thirty days after  the
day  on  which the cumulative total number of occasions that such person
came into the state to deliver property or services, for the immediately
preceding four quarterly periods ending on the  last  day  of  February,
May,  August and November, exceeds twelve.  Every person who is a vendor
solely by reason of clause (E) of subparagraph (i) of paragraph eight of
subdivision (b) of section eleven hundred one of this article shall file
with  the  commissioner  a  certificate  of  registration,  in  a   form
prescribed  by  such  commissioner,  within thirty days after the day on
which the cumulative total, for the immediately preceding four quarterly
periods ending on the last day of February, May, August and November, of
such person's gross receipts from sales of property  delivered  in  this
state  exceeds  three  hundred thousand dollars and number of such sales
exceeds one hundred. Every person who is a vendor solely  by  reason  of
clause  (F) of subparagraph (i) of paragraph eight of subdivision (b) of
section eleven hundred one of this article shall file with  the  commis-
sioner  a  certificate  of  registration,  in  a form prescribed by such
commissioner, within  thirty  days  after  the  day  on  which  tangible
personal  property in which such person retains an ownership interest is
brought into this state by the person to whom  such  property  is  sold,
where  the person to whom such property is sold becomes or is a resident
or uses such property in any manner in carrying on  in  this  state  any
employment,  trade, business or profession.  A PERSON REQUIRED TO FILE A
CERTIFICATE OF REGISTRATION AND WHO IS REQUIRED TO COLLECT  THE  TAX  AS
REQUIRED  BY  SUBPARAGRAPH  (I)  OF  PARAGRAPH ONE OF SUBDIVISION (A) OF
SECTION ELEVEN HUNDRED THIRTY-TWO OF THIS PART SHALL, AT THE  TIME  SUCH
CERTIFICATE IS FILED, ESTABLISH AN ESCROW ACCOUNT AS REQUIRED BY SUBPAR-
AGRAPHS  (II),  (III)  AND  (IV)  OF PARAGRAPH ONE OF SUBDIVISION (A) OF
SECTION ELEVEN HUNDRED THIRTY-TWO OF  THIS  PART.  PERSONS  REQUIRED  TO
ESTABLISH  AN  ESCROW ACCOUNT THROUGH AN APPROVED CREDIT CARD PROCESSING
COMPANY PURSUANT TO SUBPARAGRAPH (IV) OF PARAGRAPH  ONE  OF  SUBDIVISION
(A) OF SECTION ELEVEN HUNDRED THIRTY-TWO OF THIS PART SHALL ESTABLISH AN
ALGORITHMIC FORMULA FOR PAYMENT OF THE ESTIMATED COLLECTED SALES TAX AND
SHALL FILE, WITHIN THREE MONTHS OF FILING THEIR CERTIFICATE OF REGISTRA-
TION  A  CERTIFICATION  FROM  A LICENSED, REGISTERED OR APPROVED PROFES-
SIONAL OF THE TYPE SPECIFIED IN SUBPARAGRAPH (IV) OF  PARAGRAPH  ONE  OF
SUBDIVISION (A) OF SECTION ELEVEN HUNDRED THIRTY-TWO OF THIS PART CERTI-
FYING  TO  THE  ACCURACY  OF  THEIR  METHOD  OF  ESTIMATING  THEIR DAILY
COLLECTION OF SALES TAXES AS PROVIDED IN SUBPARAGRAPH (IV) OF  PARAGRAPH
ONE  OF  SUBDIVISION  (A)  OF  SECTION ELEVEN HUNDRED THIRTY-TWO OF THIS
PART. Information with respect to the notice requirements of a  purchas-

A. 4801                             4

er,  transferee  or assignee and such person's liability pursuant to the
provisions of subdivision (c) of section  eleven  hundred  forty-one  of
this chapter shall be included in or accompany the certificate of regis-
tration  form  furnished  the  applicant.  The  commissioner  shall also
include with such information furnished to each applicant general infor-
mation about the tax imposed under this article including information on
records to be kept, returns and payments, notification requirements  and
forms.  Such  certificate  of  registration may be amended in accordance
with rules promulgated by the commissioner.
  S 3. Subparagraph (A) of paragraph 4 of  subdivision  (a)  of  section
1134  of the tax law, as amended by section 21-a of part U of chapter 61
of the laws of 2011, is amended to read as follows:
  (A) Where a person who holds a certificate of authority (i)  willfully
fails to file a report or return required by this article, (ii) willful-
ly  files,  causes  to  be  filed, gives or causes to be given a report,
return, certificate or affidavit required under this  article  which  is
false,  (iii) willfully fails to comply with the provisions of paragraph
two or three of subdivision (e) of section eleven  hundred  thirty-seven
of  this  article,  (iv)  willfully fails to prepay, collect, truthfully
account for or pay over any tax imposed under this article  or  pursuant
to  the  authority  of article twenty-nine of this chapter, (v) fails to
obtain a bond pursuant to paragraph two of subdivision  (e)  of  section
eleven  hundred thirty-seven of this part, or WILLFULLY fails to [comply
with a notice issued by the commissioner pursuant to paragraph three  of
such  subdivision]  ESTABLISH  OR  PROPERLY  FUND  AN  ESCROW ACCOUNT AS
REQUIRED BY PARAGRAPH ONE OF SUBDIVISION (A) OF SECTION  ELEVEN  HUNDRED
THIRTY-TWO  OF THIS PART OR OTHERWISE WILLFULLY FAILS TO COMPLY WITH THE
REQUIREMENTS OF THAT SECTION, or (vi) has  been  convicted  of  a  crime
provided  for  in  this  chapter, the commissioner may revoke or suspend
such certificate of authority  and  all  duplicates  thereof.  Provided,
however,  that  the  commissioner may revoke or suspend a certificate of
authority based on the grounds set forth in clause (vi) of this subpara-
graph only where the conviction referred to occurred not more  than  one
year prior to the date of revocation or suspension.
  S  4.  Subparagraph  (A)  of paragraph 4 of subdivision (a) of section
1134 of the tax law, as amended by chapter 2 of the  laws  of  1995,  is
amended to read as follows:
  (A)  Where a person who holds a certificate of authority (i) willfully
fails to file a report or return required by this article, (ii) willful-
ly files, causes to be filed, gives or causes  to  be  given  a  report,
return,  certificate  or  affidavit required under this article which is
false, (iii) willfully fails to comply with the provisions of  paragraph
two  or  three of subdivision (e) of section eleven hundred thirty-seven
of this article, (iv) willfully fails  to  prepay,  collect,  truthfully
account  for  or pay over any tax imposed under this article or pursuant
to the authority of article twenty-nine of this chapter, [or] (v)  WILL-
FULLY  FAILS TO ESTABLISH OR PROPERLY FUND AN ESCROW ACCOUNT AS REQUIRED
BY PARAGRAPH ONE OF SUBDIVISION (A) OF SECTION ELEVEN HUNDRED THIRTY-TWO
OF THIS PART OR OTHERWISE WILLFULLY FAILS TO COMPLY  WITH  THE  REQUIRE-
MENTS  OF  THAT  SECTION, OR (VI) has been convicted of a crime provided
for in this chapter, the commissioner may revoke or suspend such certif-
icate of authority and all duplicates thereof. Provided,  however,  that
the  commissioner may revoke or suspend a certificate of authority based
on the grounds set forth in clause (v) of this subparagraph  only  where
the  conviction referred to occurred not more than one year prior to the
date of revocation or suspension.

A. 4801                             5

  S 5. Paragraph 1 of subdivision (a) of section 1136 of the tax law  is
REPEALED.
  S 6. Subdivision (c) of section 1136 of the tax law, as added by chap-
ter 93 of the laws of 1965, is amended to read as follows:
  (c) The [tax commission] COMMISSIONER may permit or require returns to
be made covering other periods and upon such dates as it may specify. If
the  tax commission deems it necessary in order to insure the payment of
the taxes imposed by this article, it may require returns to be made for
shorter periods than those prescribed pursuant to the foregoing subdivi-
sions of this section, and upon such dates as it may specify.    IF  THE
COMMISSIONER  DETERMINES THAT THE PERSON REQUIRED TO COLLECT AND PAY THE
TAX HAS ESTABLISHED AN ESCROW ACCOUNT AS PROVIDED BY SUBPARAGRAPHS (II),
(III) AND (IV) OF PARAGRAPH ONE OF SUBDIVISION  (A)  OF  SECTION  ELEVEN
HUNDRED  THIRTY-TWO  OF  THIS PART AND THAT THE AMOUNT DEPOSITED IN THAT
ESCROW ACCOUNT HAS EQUALED OR EXCEEDED NINETY-FIVE PERCENT OF THE  TAXES
OWED  FOR  FOUR  CONSECUTIVE QUARTERS, THE COMMISSIONER SHALL PERMIT THE
PERSON TO FILE AN ANNUAL RETURN IN  LIEU  OF  THE  RETURNS  REQUIRED  BY
SUBDIVISION  (A)  OF THIS SECTION. THE ANNUAL RETURN SHALL RECONCILE THE
AMOUNTS WITHHELD AND PAID THROUGH THE ESCROW ACCOUNT WITH  THE  PERSON'S
ANNUAL  TAXABLE SALES AND THE RETURN SHALL BE CERTIFIED AS ACCURATE BY A
LICENSED, REGISTERED OR APPROVED PROFESSIONAL OF THE TYPE IDENTIFIED  IN
SUBPARAGRAPH  (IV) OF PARAGRAPH ONE OF SUBDIVISION (A) OF SECTION ELEVEN
HUNDRED THIRTY-TWO OF THIS PART AND SHALL  INCLUDE  A  CERTIFICATION  AS
PRESCRIBED  BY  THE COMMISSIONER. THE FORM OF THE ANNUAL RETURN SHALL BE
PRESCRIBED BY THE COMMISSIONER AND SHALL CONTAIN SUCH INFORMATION AS THE
COMMISSIONER MAY DEEM NECESSARY FOR THE PROPER  ADMINISTRATION  OF  THIS
ARTICLE.  THE  ANNUAL  RETURN  SHALL  BE  FILED  ON  OR  BEFORE  JANUARY
THIRTY-FIRST OF THE YEAR FOLLOWING THE  CALENDAR  YEAR  COVERED  BY  THE
RETURN.
  S  7.  The opening paragraphs of subdivisions (a) and (b) and subdivi-
sion (c) of section 1137 of the  tax  law,  the  opening  paragraphs  of
subdivisions  (a) and (b) as amended by section 2-f of part M-1 of chap-
ter 109 of the laws of 2006 and subdivision (c) as  amended  by  chapter
155 of the laws of 1982, are amended to read as follows:
  Every  person  required  to  file a return under the preceding section
whose total taxable receipts (as "taxable  receipts"  are  described  in
subdivision  (a)  of  such  section),  amusement  charges  and rents are
subject to the tax imposed pursuant to subdivisions (a), (c),  (d),  (e)
and  (f)  of  section  eleven hundred five of this article shall, at the
time of filing such return, pay to the commissioner  the  total  of  the
following,  LESS  ANY AMOUNTS ALREADY DEPOSITED INTO THE PERSON'S ESCROW
ACCOUNT  AND  COLLECTED  BY  OR  AVAILABLE   FOR   COLLECTION   BY   THE
COMMISSIONER:
  Every person required to file a return under the preceding section and
not  subject to the provisions of subdivision (a) of this section shall,
at the time of filing such return, pay to  the  commissioner  the  taxes
imposed  by  this  article  and  pursuant to article twenty-nine of this
chapter as well as all other moneys collected by such person  acting  or
purporting  to  act under the provisions of this article or of any local
law, ordinance or resolution adopted pursuant to  such  article  twenty-
nine;  provided,  however,  that if the commissioner shall have fixed an
effective rate of tax applicable to any or all of his or  her  receipts,
amusement  charges  and  rents  as  provided  in subdivision (d) of this
section, any such person may elect, with  reference  to  such  receipts,
amusement  charges and rents and subject to approval by the commissioner
and to such regulations as the commissioner may promulgate,  to  pay  to

A. 4801                             6

the  commissioner  at  the time of filing his or her return the total of
the following, LESS ANY AMOUNTS  ALREADY  DEPOSITED  INTO  THE  PERSON'S
ESCROW  ACCOUNT  AND  COLLECTED  BY  OR  AVAILABLE FOR COLLECTION BY THE
COMMISSIONER:
  (c)  [(1)]  The provisions of subdivisions (a) and (b) of this section
shall not be applicable to[: (i)] a person filing  a  short-form,  part-
quarterly  return  as defined in paragraph [(ii)] (2) of subdivision (a)
of section eleven hundred thirty-six hereof who, at  the  time  of  such
filing  shall pay to the tax commission one-third of the total state and
local sales and compensating use taxes payable by the person to the  tax
commission  in  the comparable quarter of the immediately preceding year
under this article and as taxes imposed pursuant  to  the  authority  of
article  twenty-nine with respect to all receipts, amusement charges and
rents[, or (ii) a person filing a March estimated return as described in
paragraph (ii) of subdivision (c) of section eleven hundred  thirty-sev-
en-A hereof who, at the time of such filing shall pay to the tax commis-
sion  one-third  of the sales and compensating use taxes payable by such
person to the tax commission in the comparable quarter of the immediate-
ly preceding year under  this  article.  Notwithstanding  the  preceding
sentence,  for  the purposes of subparagraph (ii) of this paragraph, the
sales and compensating use taxes payable in the  comparable  quarter  of
the  immediately  preceding  year  shall  not  include  taxes imposed by
section eleven hundred seven or eleven hundred eight of this article  or
pursuant to the authority of article twenty-nine of this chapter.
  (2) The provisions of subdivisions (a) and (b) of this section, howev-
er, shall apply to a person filing a March estimated return as described
in  paragraph  (i)  of subdivision (c) of section eleven hundred thirty-
seven-A hereof who, at the time of such filing  shall  pay  to  the  tax
commission  the  sales and compensating use taxes, that are estimated to
be payable by such person for such month of March.  Notwithstanding  the
preceding  sentence,  for  the purposes of this paragraph, the sales and
compensating use taxes that are estimated to be payable by  such  person
for such month of March shall not include taxes imposed by section elev-
en  hundred seven or eleven hundred eight of this article or pursuant to
the authority of article twenty-nine of this chapter].
  S 8. Paragraph 3 of subdivision (e) of section 1137 of the tax law  is
REPEALED.
  S  9. Paragraphs 1 and 2 of subdivision (f) of section 1137 of the tax
law, paragraph 1 as amended by section 1 of part X of chapter 57 of  the
laws  of 2010 and paragraph 2 as amended by section 1 of part H of chap-
ter 62 of the laws of 2006, are amended to read as follows:
  (1) Except  as  otherwise  provided  in  this  subdivision,  a  person
required  to  collect  tax who files a return required to be filed under
section eleven hundred thirty-six of this part for a quarterly or longer
period shall be allowed a credit against the taxes and fees required  to
be  reported  on, and paid with, such return, in an amount as determined
in paragraph two of this subdivision, but only where such  person  files
the  return  on or before the filing due date and pays or pays over with
such return the total amount  shown  on  such  return  (determined  with
regard to this subdivision) AND FURTHER ONLY WHERE THE AMOUNTS DEPOSITED
BY THE PERSON INTO THE PERSON'S ESCROW ACCOUNT DURING THE PERIOD COVERED
BY THE FILING ARE EQUAL TO AT LEAST NINETY-FIVE PERCENT OF THE TOTAL TAX
DUE;  provided,  however,  that  no  credit pursuant to this subdivision
shall be allowed for any person who files  or  is  required  to  file  a
return  pursuant  to  paragraph two of subdivision (a) of section eleven

A. 4801                             7

hundred thirty-six of this part or any person who pays or is required to
pay tax pursuant to section ten of this chapter.
  (2)  The  amount  of  the  credit  authorized by paragraph one of this
subdivision shall be five percent of the amount of taxes and  fees  (but
not  including  any penalty or interest thereon) required to be reported
on, and paid or paid over with, the return but only  if  the  return  is
filed  on  or  before  the filing due date, but not more than [two] FIVE
hundred dollars, for each quarterly or longer period[, except that, with
respect to returns required to be filed for quarterly or longer  periods
ending  on  or  before the last day of February, two thousand seven, the
amount of the credit shall be not more  than  one  hundred  seventy-five
dollars for each such quarterly or longer period].
  S 10. Section 1137-A of the tax law is REPEALED.
  S  11. Section 1145 of the tax law is amended by adding a new subdivi-
sion (l) to read as follows:
  (L)(1) IN ADDITION TO ANY OTHER PENALTY PROVIDED BY  THIS  ARTICLE  OR
ANY  OTHER  LAW,  ANY  PERSON  FAILING  TO ESTABLISH OR PROPERLY FUND AN
ESCROW ACCOUNT REQUIRED BY SUBPARAGRAPH (I),  (II),  (III)  OR  (IV)  OF
PARAGRAPH ONE OF SUBDIVISION (A) OF SECTION ELEVEN HUNDRED THIRTY-TWO OF
THIS  PART  SHALL  BE SUBJECT TO AN ADDITIONAL PENALTY OF TEN PERCENT OF
THE AMOUNT OF TAX DUE IF SUCH FAILURE IS FOR NOT MORE  THAN  ONE  MONTH,
WITH  AN  ADDITIONAL  ONE  PERCENT FOR EACH ADDITIONAL MONTH OR FRACTION
THEREOF DURING  WHICH  SUCH  FAILURE  CONTINUES,  NOT  EXCEEDING  THIRTY
PERCENT IN THE AGGREGATE.
  (2)  IF THE AMOUNT PAID BY THE PERSON REQUIRED TO COLLECT THE TAX INTO
THEIR ESCROW ACCOUNT IS LESS THAN NINETY  PERCENT  THAN  THE  AMOUNT  OF
TAXES OWED, AS SHOWN IN THE PERSON'S QUARTERLY, PART-QUARTERLY OR ANNUAL
RETURN,  THE  PERSON  SHALL  OWE A PENALTY EQUAL TO FIFTY PERCENT OF THE
DELINQUENCY. IN ADDITION, IF THE ESCROW ACCOUNT MAINTAINED BY THE PERSON
IS AN ACCPC ESCROW ACCOUNT, THE COMMISSIONER MAY ISSUE A NOTICE  REQUIR-
ING  THE  PERSON  TO INCREASE THE PERSON'S ALGORITHMIC RATE BY AN AMOUNT
NOT EXCEEDING TWICE THE AMOUNT OF  THE  DEFICIENCY  AND  THIS  INCREASED
ALGORITHMIC  RATE  SHALL CONTINUE AS LONG AS THE COMMISSIONER DETERMINES
THAT SUCH INCREASED RATE IS NECESSARY.
  S 12. This act shall take effect September 1, 2012; provided that  the
amendments  to  subparagraph  (A)  of  paragraph 4 of subdivision (a) of
section 1134 of the tax law made by section three of this act  shall  be
subject to the expiration and reversion of such subparagraph pursuant to
section 23 of part U of chapter 61 of the laws of 2011, as amended, when
upon  such  date  the  provisions of section four of this act shall take
effect; provided further that the commissioner of taxation  and  finance
shall  promulgate  all  rules and regulations necessary to implement the
provisions of this act on or before its effective date.