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.