senate Bill S3260A

2013-2014 Legislative Session

Enacts the anti-automated sales suppression act

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Archive: Last Bill Status - In Committee


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

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Jan 24, 2014 print number 3260a
amend and recommit to consumer protection
Jan 08, 2014 referred to consumer protection
Jan 31, 2013 referred to consumer protection

Bill Amendments

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A (Active)
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A (Active)

Co-Sponsors

S3260 - Bill Details

Current Committee:
Law Section:
General Business Law
Laws Affected:
Add §396-ttt, Gen Bus L; add §1113, Tax L
Versions Introduced in 2011-2012 Legislative Session:
S2852A

S3260 - Bill Texts

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Enacts the anti-automated sales suppression act.

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BILL NUMBER:S3260

TITLE OF BILL: An act to amend the general business law and the tax
law, in relation to enacting the anti-automated sales suppression act

PURPOSE: 1. Establishes prohibitions, presumptions and penalties
related to the use or sale of automated sales suppression technology.
2. Creates an automated sales suppression tax amnesty program.

SUMMARY OF PROVISIONS:

§ 2. 396-ttt. Automated Sales Suppression Countermeasures.

1. Definitions.

2. Zapper and phantom-ware prohibitions and presumptions.

3. Zapper and phantom-ware penalties.

§ 3 1113. Automated Sales Tax Suppression Tax Amnesty.

1. Establishes an amnesty program for individuals who have used
zappers or phantom-ware to distort their sales tax liabilities to the
State.

2. Applicable tax liabilities for taxable periods ending or
transactions or uses occurring on or before February 28, 2012.

3. Amnesty eligibility.

4. Penalty waivers for amnesty program participants.

5. Prohibitions against civil, administrative or criminal actions or
proceedings concerning a tax liability which is subject to a waiver.

6. Excludes from the amnesty program taxpayers who are part of various
types of criminal, investigation or administrative proceeding or civil
or criminal litigation.

7. Amnesty tax return forms.

8. Refund prohibitions.

9. More refund prohibitions.

10. Amnesty program payment requirements.

11. Amnesty program administration.

12. Definitions.

13. Monthly zapper tax amnesty reports.

14. Final zapper tax amnesty report, due February 28, 2014.

§ 4. Effective Date


EXISTING LAW: None.

JUSTIFICATION: For years, foreign countries with national sales taxes
have struggled to combat technology that enables retailers to skim
sales taxes and under report other tax liabilities (e.g. personal
income tax, corporate income tax) by concealing from auditors their
actual sales data. This technology, which includes so-called "zappers"
and "phantom-ware," automatically suppresses digital sales figures
recorded at electronic cash registers.

It is difficult for auditors to detect the use of zappers and
phantom-ware through the traditional process of cross checking
transaction documents because the technology conceals almost all
traces of the digital manipulation. Countries such as Germany and
Greece have required retailers to install technological counter
measures that make it easier for auditors to detect the Use of zappers
and Phantom-ware.

Because the United States lacks a national sales tax, there is no
federal initiative to combat this tax fraud and most states are
ill-prepared to deal with this issue. Nationwide, only a handful of
people have been Caught using this technology, including two in
Michigan and one in Connecticut. Richard T. Ainsworth, a Boston
University School of Law tax professor and a leading expert on
zappers, has published several papers documenting the spread of
zappers and phantom-ware in Quebec, Greece, Germany, the Netherlands
and other European nations. Given that the first zappers were made in
the united states and that this technology is widely used in the
Canadian province just above New York's northern border, it is
imperative for the State to address this issue.

The legislation would establish prohibitions, presumptions and
penalties related to the use and sale of automated sales suppression
technology. These prohibitions, presumptions and penalties are modeled
after provisions in Quebec's anti-zapper statutes. A first-of-its kind
tax amnesty program would also be established under this legislation
for taxpayers with tax liabilities stemming from the use of zappers or
phantom-ware.

FISCAL IMPACTS: Through the enforcement of the penalties and
prohibitions established by this legislation and aggressive auditing,
New York State could recover an estimated $107.9 million to $197.8
million of the estimated $1.796 billion the State fails to collect
annually from the restaurant industry due to automated sales
suppression technology, according to Richard T. Ainsworth, an Adjunct
Professor of Law at Boston University School of Law and the Tax
Director of International Government Affairs at ADP. These estimates
are based on the 6 percent-to-11 percent recovery rates that European
nations such as the Netherlands, have experienced after enacting
similar statutory prohibitions and penalties for zappers and
phantom-ware.

The $1.796 billion statewide estimate, also provided by Professor
Ainsworth, is based on zapper-related income and consumption tax
information from the Canadian province of Quebec, which has conducted
multiple studies over the past decade on the impact of automated sales
suppression technology in the Canadian province. The $1.798 billion


estimate assumes that if New York State's economy is three times the
size of Quebec's economy then the volume of restaurant business in New
York is approximately three times the volume of restaurant business in
Quebec.

The estimate is also based on the assumption that New Yorkers eat out
at least as much as people in Quebec do, and pay for their meals in
cash roughly at the same ratio as they do in Quebec. Statistical
measures for losses in other sectors of the cash economy have not been
performed in Quebec, and Professor Ainsworth has not estimated or
speculated on the size of additional losses in New York from similar
sales suppression activities in other vulnerable sectors of the
economy.

EFFECTIVE DATE: This act shall take effect ninety days after
enactment.

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

                                  3260

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 31, 2013
                               ___________

Introduced  by  Sens.  KRUEGER, ADDABBO, DILAN, PARKER, STAVISKY -- read
  twice and ordered printed, and when printed to  be  committed  to  the
  Committee on Consumer Protection

AN ACT to amend the general business law and the tax law, in relation to
  enacting the anti-automated sales suppression act

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

  Section 1. Short title. This act shall be known and may  be  cited  as
the "anti-automated sales suppression act".
  S  2. The general business law is amended by adding a new section 396-
ttt to read as follows:
  S 396-TTT. AUTOMATED SALES SUPPRESSION.   1. DEFINITIONS. AS  USED  IN
THIS SECTION:
  (A)  "AUTOMATED  SALES  SUPPRESSION  DEVICE"  OR "ZAPPER" SHALL MEAN A
SOFTWARE PROGRAM, CARRIED ON A MEMORY  STICK,  REMOVABLE  COMPACT  DISC,
ACCESSED  THROUGH  AN INTERNET LINK OR ACCESSED THROUGH ANY OTHER MEANS,
THAT FALSIFIES THE ELECTRONIC RECORDS OF POINT-OF-SALE SYSTEMS  FOR  THE
PURPOSE OF TAX EVASION.
  (B)  "CERTIFICATE OF INCORPORATION" SHALL MEAN A CERTIFICATE OF INCOR-
PORATION AS DEFINED IN SUBPARAGRAPH THREE OF PARAGRAPH  (A)  OF  SECTION
ONE HUNDRED TWO OF THE BUSINESS CORPORATION LAW.
  (C)  "DEPARTMENT"  SHALL  MEAN  THE  STATE  DEPARTMENT OF TAXATION AND
FINANCE.
  (D) "ELECTRONIC CASH REGISTER" SHALL MEAN A DEVICE THAT KEEPS A REGIS-
TER OR SUPPORTING DOCUMENTS THROUGH THE MEANS OF AN ELECTRONIC DEVICE OR
COMPUTER SYSTEM DESIGNED TO RECORD TRANSACTION DATA FOR THE  PURPOSE  OF
COMPUTING,  COMPILING  OR  PROCESSING  RETAIL  SALES TRANSACTION DATA IN
WHATEVER MANNER.
  (E) "PHANTOM-WARE" SHALL MEAN A HIDDEN, PRE-INSTALLED OR INSTALLED  AT
A  LATER  TIME  PROGRAMMING OPTION EMBEDDED IN THE OPERATING SYSTEM OF A
ELECTRONIC CASH REGISTER OR HARD WIRED INTO THE ELECTRONIC CASH REGISTER

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07090-01-3

S. 3260                             2

THAT CAN BE USED TO CREATE A VIRTUAL SECOND  TILL  AND  MAY  PRESERVE  A
DIGITAL  RECORD  OR MAY ELIMINATE, OR MANIPULATE RECORDS THAT MAY OR MAY
NOT BE PRESERVED IN DIGITAL FORMATS TO REPRESENT THE TRUE OR MANIPULATED
RECORD OF TRANSACTIONS IN THE ELECTRONIC CASH REGISTER.
  (F)  "SUPPORTING  DOCUMENTS" SHALL MEAN ANY RECEIPT, INVOICE OR REPORT
THAT PROVIDES A RECORD OR TRANSACTION DATA OR TRANSACTION REPORTS.
  (G) "TRANSACTION DATA" SHALL INCLUDE ITEMS PURCHASED  BY  A  CUSTOMER,
THE  PRICE  FOR  EACH  ITEM, A TAXABILITY DETERMINATION FOR EACH ITEM, A
SEGREGATED TAX AMOUNT FOR EACH OF THE TAXED ITEMS, THE AMOUNT OF CASH OR
CREDIT TENDERED, THE NET AMOUNT RETURNED TO THE CUSTOMER IN CHANGE,  THE
DATE  AND  TIME  OF  THE  PURCHASE, THE NAME, ADDRESS AND IDENTIFICATION
NUMBER OF THE VENDOR, AND THE RECEIPT OR INVOICE NUMBER  OF  THE  TRANS-
ACTION.
  (H)  "TRANSACTION  REPORTS"  SHALL  MEAN A REPORT DOCUMENTING, BUT NOT
LIMITED TO, THE SALES, TAXES COLLECTED, MEDIA TOTALS AND DISCOUNT  VOIDS
AT  AN  ELECTRONIC CASH REGISTER THAT IS PRINTED ON A CASH REGISTER TAPE
AT THE END OF A DAY OR SHIFT, OR A REPORT DOCUMENTING EVERY ACTION AT AN
ELECTRONIC CASH REGISTER THAT IS STORED ELECTRONICALLY.
  2. PROHIBITIONS AND PRESUMPTIONS. (A) FUNCTIONS ALTERING DATA  PROHIB-
ITED.  NO  FUNCTION OF ANY ELECTRONIC CASH REGISTER OR ELECTRONIC COMPO-
NENT THAT IS OR MAY BE INSTALLED IN  THE  ELECTRONIC  CASH  REGISTER  TO
MODIFY, CORRECT, DELETE, CANCEL OR OTHERWISE ALTER DATA WITHOUT PRESERV-
ING  THE  ORIGINAL  DATA  AND ITS SUBSEQUENT MODIFICATIONS, CORRECTIONS,
DELETIONS, CANCELLATIONS OR ALTERATIONS MAY BE USED.
  (B) PRESUMPTION. ANY PERSON WHO KEEPS A REGISTER OR  SUPPORTING  DOCU-
MENTS  IN  ACCORDANCE WITH PARAGRAPH (A) OF THIS SUBDIVISION BY MEANS OF
SUCH AN ELECTRONIC DEVICE OR COMPUTER SYSTEM IS PRESUMED  TO  HAVE  USED
SUCH  A FUNCTION IF A COMPUTER PROGRAM OR AN ELECTRONIC COMPONENT HAVING
A FUNCTION DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION  IS  FOUND  IN
ANY PREMISES OR PLACE IN WHICH THE PERSON CARRIES ON A BUSINESS OR KEEPS
PROPERTY  OR  IN WHICH THE PERSON DOES ANYTHING RELATING TO ANY BUSINESS
OR KEEPS OR SHOULD KEEP REGISTERS PURSUANT TO  A  FISCAL  LAW.  HOWEVER,
SUCH  PRESUMPTION DOES NOT APPLY WHERE THE FUNCTION IS A STANDARD COMPO-
NENT OF SOFTWARE OR A SOFTWARE SUBSYSTEM OF A COMPUTER  SYSTEM  THAT  IS
INHERENT IN THE OPERATION OF A COMPUTER.
  (C)  REBUTTAL. THE FOREGOING PRESUMPTION DESCRIBED IN PARAGRAPH (B) OF
THIS SUBDIVISION MAY BE REBUTTED BY PROVING TO THE NEW  YORK  STATE  TAX
APPEALS  TRIBUNAL  THAT  THE  COMPUTER  PROGRAM  OR ELECTRONIC COMPONENT
CONTAINED THE FUNCTION DESCRIBED IN PARAGRAPH (A)  OF  THIS  SUBDIVISION
WITHOUT  THE  KNOWLEDGE OR CONSENT OF THE PERSON KEEPING THE REGISTER OR
THE SUPPORTING DOCUMENTS.
  (D) PROHIBITIONS. NO PERSON MAY DESIGN, MANUFACTURE OR INSTALL,  SELL,
LEASE  OR  OTHERWISE MAKE AVAILABLE TO ANOTHER PERSON, UPDATE, MAINTAIN,
UPGRADE, ALTER OR SERVICE A  COMPUTER  PROGRAM  FUNCTION  OR  ELECTRONIC
COMPONENT THE USE OF WHICH IS PROHIBITED BY PARAGRAPH (A) OF THIS SUBDI-
VISION,  OR  IN  ANY WAY OFFER TO INSTALL, SELL, LEASE OR OTHERWISE MAKE
AVAILABLE TO ANOTHER PERSON, UPDATE, MAINTAIN, UPGRADE, ALTER OR SERVICE
SUCH A COMPUTER PROGRAM FUNCTION OR ELECTRONIC COMPONENT.
  3. PENALTIES. (A) EVERY PERSON WHO VIOLATES PARAGRAPH (A) OF  SUBDIVI-
SION TWO OF THIS SECTION IS GUILTY OF AN OFFENSE AND IS LIABLE TO A FINE
OF  NO LESS THAN TWO THOUSAND DOLLARS BUT NO MORE THAN TWENTY-FIVE THOU-
SAND DOLLARS AND, FOR A SECOND OFFENSE WITHIN FIVE YEARS, TO A  FINE  OF
NO  LESS  THAN TWENTY-FIVE THOUSAND DOLLARS BUT NO MORE THAN ONE HUNDRED
THOUSAND DOLLARS AND, FOR A  THIRD  OR  SUBSEQUENT  OFFENSE  WITHIN  TEN
YEARS,  TO  A  FINE  OF NO LESS THAN ONE HUNDRED THOUSAND DOLLARS BUT NO
MORE THAN FIVE HUNDRED THOUSAND DOLLARS.

S. 3260                             3

  (B) IN ADDITION TO THE FINE OF TWENTY-FIVE  THOUSAND  DOLLARS  AND  NO
MORE  THAN  ONE  HUNDRED THOUSAND DOLLARS PRESCRIBED IN PARAGRAPH (A) OF
THIS SUBDIVISION FOR A SECOND OFFENSE, IN  CASES  WHEN  THE  PERSON  WHO
VIOLATES  PARAGRAPH  (A) OF SUBDIVISION TWO OF THIS SECTION IS GUILTY OF
AN  OFFENSE ALSO HOLDS THE LICENSE FOR THE BUSINESS AT WHICH THE OFFENSE
OCCURRED, THE DEPARTMENT OF STATE  SHALL  SUSPEND  FOR  FIVE  YEARS  THE
CERTIFICATE  OF  INCORPORATION  HELD BY THE AFOREMENTIONED OFFENDER, WHO
SHALL ALSO BE PROHIBITED FROM APPLYING  FOR  ANY  OTHER  CERTIFICATE  OF
INCORPORATION FOR FIVE YEARS.
  (C)  A  PERSON  IS  GUILTY OF AN OFFENSE AND IS LIABLE TO A FINE OF NO
LESS THAN TWENTY-FIVE THOUSAND DOLLARS AND NO  MORE  THAN  FIVE  HUNDRED
THOUSAND  DOLLARS  AND, FOR A SUBSEQUENT OFFENSE WITHIN FIVE YEARS, TO A
FINE OF NO LESS THAN ONE HUNDRED THOUSAND DOLLARS AND NO MORE  THAN  ONE
MILLION DOLLARS, IF THE PERSON:
  (I)  CONTRAVENES THE PROVISIONS OF PARAGRAPH (D) OF SUBDIVISION TWO OF
THIS SECTION; OR
  (II) CONSPIRES WITH ANOTHER PERSON TO COMMIT AN OFFENSE UNDER SUBPARA-
GRAPH (I) OF THIS PARAGRAPH.
  (D) IN ADDITION TO THE FINE OF ONE HUNDRED  THOUSAND  DOLLARS  TO  ONE
MILLION  DOLLARS  PRESCRIBED  IN PARAGRAPH (C) OF THIS SUBDIVISION FOR A
SUBSEQUENT OFFENSE, THE OFFENDER MAY BE IMPRISONED FOR NO MORE THAN  TWO
YEARS.
  S  3.  The  tax law is amended by adding a new section 1113 to read as
follows:
  S 1113. AUTOMATED SALES TAX SUPPRESSION TAX AMNESTY. 1.  NOTWITHSTAND-
ING THE PROVISIONS OF ANY OTHER LAW TO THE  CONTRARY,  THERE  IS  HEREBY
ESTABLISHED  AN  AMNESTY PROGRAM TO BE ADMINISTERED BY THE COMMISSIONER,
TO BE EFFECTIVE FOR THE PERIOD AS PRESCRIBED BY SUCH  COMMISSIONER,  FOR
ALL  ELIGIBLE  TAXPAYERS  AS  DESCRIBED  IN  SUBDIVISION  THREE  OF THIS
SECTION, OWING ANY TAX OR SURCHARGE IMPOSED BY THIS ARTICLE OR BY  ARTI-
CLES  NINE, NINE-A, THIRTEEN-A, EIGHTEEN, TWENTY, TWENTY-TWO AND TWENTY-
EIGHT-A OF THIS CHAPTER AND ACCRUED AS A  RESULT  OF  ANY  VIOLATION  OF
PARAGRAPH (A) OF SUBDIVISION ONE OF SECTION THREE HUNDRED NINETY-SIX-TTT
OF THE GENERAL BUSINESS LAW.
  2.  SUCH  AMNESTY PROGRAM SHALL APPLY TO TAX LIABILITIES FOR THE TAXES
SET FORTH IN SUBDIVISION ONE OF THIS SECTION  ("DESIGNATED  TAXES")  FOR
TAXABLE  PERIODS  ENDING  OR TRANSACTIONS OR USES OCCURRING ON OR BEFORE
FEBRUARY TWENTY-EIGHTH, TWO THOUSAND THIRTEEN.
  3. FOR PURPOSES OF THE AMNESTY PROGRAM ESTABLISHED UNDER THIS SECTION,
AND SUBJECT TO THE PROVISIONS OF SUBDIVISION TWELVE OF THIS SECTION,  AN
ELIGIBLE  TAXPAYER  IS AN INDIVIDUAL, PARTNERSHIP, ESTATE, TRUST, CORPO-
RATION, LIMITED LIABILITY COMPANY, JOINT STOCK  COMPANY,  OR  ANY  OTHER
COMPANY,  TRUSTEE,  RECEIVER,  ASSIGNEE,  REFEREE, SOCIETY, ASSOCIATION,
BUSINESS OR ANY OTHER PERSON AS DESCRIBED IN THIS CHAPTER, WHO OR  WHICH
HAS  A  TAX LIABILITY WITH REGARD TO THE LIABILITY DESCRIBED IN SUBDIVI-
SION ONE OF THIS SECTION FOR THE PERIOD OF TIME DESCRIBED IN SUBDIVISION
TWO OF THIS SECTION.
  4. THE AMNESTY PROGRAM ESTABLISHED BY THIS SECTION SHALL PROVIDE, THAT
UPON APPLICATION FOR A WAIVER  OF  TAX,  INCLUDING  APPLICABLE  RETURNS,
WHICH  APPLICATION  AND  RETURNS  SHALL BE IN SUCH FORM AND SUBMITTED IN
SUCH MANNER AS PRESCRIBED BY THE COMMISSIONER, BY AN ELIGIBLE  TAXPAYER,
AND  UPON  PAYMENT IN SUCH FORM AND IN SUCH MANNER AS PRESCRIBED BY SUCH
COMMISSIONER, WHICH PAYMENT SHALL EITHER ACCOMPANY SUCH  APPLICATION  OR
BE  MADE WITHIN THE TIME STATED ON A BILL ISSUED BY SUCH COMMISSIONER TO
SUCH TAXPAYER, OF THE AMOUNT OF A TAX LIABILITY UNDER ONE OR MORE OF THE
DESIGNATED TAXES WITH RESPECT TO WHICH AMNESTY IS SOUGHT,  PLUS  RELATED

S. 3260                             4

INTEREST,  SUCH  COMMISSIONER  SHALL  WAIVE  ANY  APPLICABLE  PENALTIES,
INCLUDING THE ADDITIONAL RATE OF INTEREST PRESCRIBED UNDER SECTION ELEV-
EN HUNDRED FORTY-FIVE OF THIS ARTICLE ("INTEREST  PENALTY"),  AND  SHALL
REDUCE  BY  TWO  PERCENT THE APPLICABLE RATE OF INTEREST ASSOCIATED WITH
SUCH LIABILITY, FOR THE FOLLOWING:
  (A) FAILURE TO PAY ANY SUCH TAX LIABILITY;
  (B) FAILURE TO FILE A RETURN OR REPORT WITH RESPECT TO  ANY  SUCH  TAX
LIABILITY.
  5.  NO CIVIL, ADMINISTRATIVE OR CRIMINAL ACTION OR PROCEEDING CONCERN-
ING TAX LIABILITY WHICH IS THE SUBJECT  OF  A  WAIVER  APPROVED  BY  THE
COMMISSIONER  SHALL  BE  BROUGHT AGAINST A TAXPAYER ELIGIBLE FOR AMNESTY
UNDER THE PROVISIONS OF THIS SECTION PROVIDED THE  TAXPAYER  REMAINS  IN
COMPLIANCE  WITH THE PROVISIONS OF THIS SECTION. FAILURE TO PAY ALL SUCH
TAXES, PLUS RELATED INTEREST BY THE LATER OF MARCH FIFTEENTH, TWO  THOU-
SAND  FOURTEEN,  OR  THE DATE PRESCRIBED FOR PAYMENT ON A BILL ISSUED BY
SUCH COMMISSIONER, SHALL INVALIDATE ANY AMNESTY GRANTED PURSUANT TO  THE
AMNESTY PROGRAM ESTABLISHED UNDER THIS SECTION.
  6.  AMNESTY  SHALL  NOT BE GRANTED TO A TAXPAYER WHO IS A PARTY TO ANY
CRIMINAL INVESTIGATION BEING CONDUCTED BY AN AGENCY OF THE STATE OR  ANY
POLITICAL SUBDIVISION THEREOF, IS A PARTY TO ANY ADMINISTRATIVE PROCEED-
ING  OR CIVIL OR CRIMINAL LITIGATION WHICH IS PENDING ON THE DATE OF THE
TAXPAYER'S APPLICATION IN  THE  BUREAU  OF  CONCILIATION  AND  MEDIATION
SERVICES,  THE DIVISION OF TAX APPEALS OR ANY COURT OF THIS STATE OR THE
UNITED STATES, RELATING TO ANY ACTION OR FAILURE TO  ACT  WHICH  IS  THE
BASIS  FOR  THE  PENALTY  OR  INTEREST  WITH RESPECT TO WHICH AMNESTY IS
SOUGHT. AMNESTY SHALL ALSO NOT BE GRANTED TO ANY TAXPAYER WHO  HAS  BEEN
CONVICTED  OF A CRIME RELATING TO A TAX THAT IS THE BASIS OF THE PENALTY
OR INTEREST WITH RESPECT TO WHICH AMNESTY IS SOUGHT FOR  ANY  PERIOD  OR
ASSESSMENT  FOR  THAT TAX.   AN ADMINISTRATIVE PROCEEDING OR CIVIL LITI-
GATION SHALL BE DEEMED NOT TO BE PENDING ON THE DATE OF THE  APPLICATION
IF  THE  TAXPAYER  WITHDRAWS FROM SUCH PROCEEDING OR LITIGATION PRIOR TO
THE GRANTING OF AMNESTY.
  7. AMNESTY TAX RETURN FORMS SHALL BE IN A FORM, CONTAIN SUCH  INFORMA-
TION  AND  BE  SUBMITTED  AS  PRESCRIBED  BY  THE COMMISSIONER AND SHALL
PROVIDE FOR SPECIFICATIONS BY THE APPLICANT OF THE  TAX  LIABILITY  WITH
RESPECT TO WHICH AMNESTY IS SOUGHT. THE APPLICANT MUST ALSO PROVIDE SUCH
ADDITIONAL INFORMATION AS IS REQUIRED BY THE COMMISSIONER. AMNESTY SHALL
BE  GRANTED  ONLY  WITH  RESPECT TO THE TAX LIABILITIES SPECIFIED BY THE
TAXPAYER ON SUCH FORMS.  ANY RETURN OR REPORT FILED  UNDER  THE  AMNESTY
PROGRAM  ESTABLISHED HEREIN IS SUBJECT TO VERIFICATION AND ASSESSMENT AS
PROVIDED BY STATUTE. IF THE APPLICANT FILES A FALSE  OR  FRAUDULENT  TAX
RETURN  OR  REPORT,  OR  ATTEMPTS IN ANY MANNER TO DEFEAT OR EVADE A TAX
UNDER THE AMNESTY PROGRAM, AMNESTY SHALL BE DENIED OR RESCINDED.
  8. NO REFUND SHALL BE GRANTED OR CREDIT ALLOWED WITH  RESPECT  TO  ANY
PENALTY  OR  INTEREST  PAID  PRIOR  TO THE TIME THE TAXPAYER APPLIES FOR
AMNESTY PURSUANT TO SUBDIVISION FOUR OF THIS SECTION.
  9. UNLESS THE COMMISSIONER ON HIS OR HER OWN INITIATIVE  RE-CALCULATES
THE AMOUNT OF TAX DUE, INCLUDING APPLICABLE INTEREST, NO REFUND SHALL BE
GRANTED  OR CREDIT ALLOWED WITH RESPECT TO ANY TAXES, INCLUDING APPLICA-
BLE INTEREST, PAID UNDER THIS PROGRAM.
  10. WITH RESPECT TO ANY EXISTING INSTALLMENT PAYMENT AGREEMENT  OF  AN
ELIGIBLE  TAXPAYER, WHERE SUCH AGREEMENT APPLIES TO A TAX LIABILITY WITH
RESPECT TO WHICH AMNESTY IS SOUGHT BY SUCH TAXPAYER, NOTWITHSTANDING ANY
TERMS OF SUCH AGREEMENT TO THE CONTRARY, SUCH TAXPAYER, AS  A  CONDITION
OF  RECEIVING  AMNESTY, MUST PAY ANY SUCH LIABILITY IN FULL BY THE LATER

S. 3260                             5

OF THE LAST DAY OF THE PRESCRIBED AMNESTY PERIOD, OR THE DATE PRESCRIBED
THEREFOR ON A BILL ISSUED BY THE COMMISSIONER.
  11.  THE  COMMISSIONER  SHALL  PROMULGATE REGULATIONS, ISSUE FORMS AND
INSTRUCTIONS AND TAKE ANY AND ALL OTHER ACTIONS NECESSARY  TO  IMPLEMENT
THE  PROVISIONS  OF  THE AMNESTY PROGRAM ESTABLISHED UNDER THIS SECTION.
THE COMMISSIONER SHALL PUBLICIZE THE AMNESTY PROGRAM PROVIDED FOR HEREIN
SO AS TO MAXIMIZE PUBLIC AWARENESS OF AND PARTICIPATION IN SUCH PROGRAM.
  12. (A) FOR PURPOSES OF THIS SUBDIVISION, THE  TERM  "TAXPAYER"  SHALL
INCLUDE  ANY  PERSON SUBJECT TO ANY TAX REFERENCED IN SUBDIVISION ONE OF
THIS SECTION OR ANY PERSON REQUIRED TO COLLECT ANY SUCH TAX.
  (B) THE AMNESTY PROGRAM PROVIDED FOR IN THIS SECTION SHALL  NOT  APPLY
TO  A  TAXPAYER  WHICH  HAS  MORE  THAN  FIVE HUNDRED EMPLOYEES OR WHOSE
COMBINED FILING GROUP HAS MORE THAN FIVE HUNDRED EMPLOYEES IN THE UNITED
STATES ON THE DATE OF THE TAXPAYER'S APPLICATION.   THE  TERM  "PENALTY"
SHALL  NOT  INCLUDE  THE PENALTY IMPOSED UNDER SUBSECTION (G) OF SECTION
SIX HUNDRED EIGHTY-FIVE OF  THIS  CHAPTER,  THE  PENALTY  IMPOSED  UNDER
SUBDIVISION  TWO OF SECTION TWO HUNDRED EIGHTY-NINE-B OF THIS CHAPTER OR
THE PENALTY IMPOSED UNDER  SUBDIVISION  (A)  OF  SECTION  THREE  HUNDRED
FIFTEEN  OF  THIS CHAPTER BY REASON OF ITS INCORPORATION BY REFERENCE OF
SUCH PENALTY IMPOSED UNDER SUBDIVISION TWO OF SECTION TWO HUNDRED EIGHT-
Y-NINE-B OF THIS CHAPTER.
  13. FOR PURPOSES OF ACCOUNTING FOR THE MONEYS  AND  REVENUES  RECEIVED
UNDER  THE  AMNESTY  PROGRAM  ESTABLISHED  PURSUANT TO THIS SECTION, THE
COMMISSIONER SHALL REPORT THE GROSS  REVENUE  COLLECTED  UNDER  THE  TAX
PURSUANT  TO  THE  TAX  AMNESTY  PROGRAM. SUCH REPORT SHALL BE MADE ON A
MONTHLY BASIS, COMMENCING THE FIRST MONTH AFTER THE AMNESTY  PROGRAM  IS
ESTABLISHED  AND  ENDING WITH THE LAST MONTH ENDING IMMEDIATELY PRIOR TO
THE ISSUANCE OF THE FINAL REPORT REQUIRED PURSUANT  TO  THIS  ACT.  SUCH
REPORTS SHALL INCLUDE INFORMATION CONCERNING THE GROSS REVENUE COLLECTED
UNDER EACH TAX.
  14.  ON  OR  BEFORE FEBRUARY TWENTY-EIGHTH, TWO THOUSAND FOURTEEN, THE
COMMISSIONER SHALL SUBMIT A REPORT TO THE CHAIRMAN OF THE ASSEMBLY  WAYS
AND  MEANS  COMMITTEE,  THE RANKING MINORITY MEMBER OF THE ASSEMBLY WAYS
AND MEANS COMMITTEE, THE CHAIRMAN OF THE SENATE FINANCE  COMMITTEE,  THE
RANKING MINORITY MEMBER OF THE SENATE FINANCE COMMITTEE AND THE DIRECTOR
OF  THE DIVISION OF THE BUDGET REGARDING THE AMNESTY PROGRAM ESTABLISHED
PURSUANT TO THIS ACT. THE REPORT SHALL CONTAIN THE FOLLOWING INFORMATION
AS OF THE REPORT CUTOFF DATE:
  (A) THE NUMBER OF CASES IN WHICH REQUESTS  FOR  PENALTY  AND  INTEREST
PENALTY WAIVERS WERE MADE;
  (B)  THE NUMBER OF CASES BY TAX AREA IN WHICH REQUESTS FOR PENALTY AND
INTEREST PENALTY WAIVERS WERE APPROVED;
  (C) THE AMOUNT OF TAX AND INTEREST DUE IN ALL APPROVED AND  UNAPPROVED
CASES  BY TAX AREA AND THE AMOUNT OF PENALTY FOR UNAPPROVED CASES BY TAX
AREA, BUT NOT INCLUDING INTEREST ON PENALTY;
  (D) THE AMOUNT OF PENALTY AND INTEREST PENALTY WAIVED IN ALL  APPROVED
CASES BY TAX AREA BUT NOT INCLUDING INTEREST ON PENALTY;
  (E)  THE  GROSS REVENUE COLLECTED UNDER EACH TAX AND THE YEAR OR OTHER
APPLICABLE PERIOD FOR OR DURING WHICH THE LIABILITY WAS INCURRED;
  (F) THE AMOUNT  OF  MONEY  SPENT  ON  ADVERTISING,  NOTIFICATION,  AND
OUTREACH ACTIVITIES, BY EACH ACTIVITY, AND A DESCRIPTION OF THE FORM AND
CONTENT OF SUCH ACTIVITIES, BY EACH ACTIVITY;
  (G)  THE  AMOUNT  PAID  BY  THE  DEPARTMENT  FOR SERVICES AND EXPENSES
RELATED TO THE ESTABLISHMENT OF THE AMNESTY PROGRAM;

S. 3260                             6

  (H) AN ESTIMATE OF THE AMOUNT  OF  REVENUE  FORGONE  AS  A  RESULT  OF
DIVERTING  STAFF OF THE DEPARTMENT FROM REGULAR WORK RESPONSIBILITIES TO
WORK ON THE AMNESTY PROGRAM;
  (I) AN ESTIMATE OF THE AMOUNT OF REVENUE RECEIVED DURING THE PERIOD OF
THE  AMNESTY PROGRAM PROVIDED FOR HEREIN WHICH WOULD HAVE OTHERWISE BEEN
RECEIVED DURING ANOTHER PERIOD; AND
  (J) AN ESTIMATE OF THE NET REVENUE GENERATED FROM THE AMNESTY PROGRAM.
  S 4. This act shall take effect on the ninetieth day  after  it  shall
have become a law.

Co-Sponsors

S3260A (ACTIVE) - Bill Details

Current Committee:
Law Section:
General Business Law
Laws Affected:
Add §396-ttt, Gen Bus L; add §1113, Tax L
Versions Introduced in 2011-2012 Legislative Session:
S2852A

S3260A (ACTIVE) - Bill Texts

view summary

Enacts the anti-automated sales suppression act.

view sponsor memo
BILL NUMBER:S3260A

TITLE OF BILL: An act to amend the general business law and the tax
law, in relation to enacting the anti-automated sales suppression act

PURPOSE:

1. Establishes prohibitions, presumptions and penalties related to the
use or sale of automated sales suppression technology. 2. Creates an
automated sales suppression tax amnesty program.

SUMMARY OF PROVISIONS:

§ 2. 396-ttt. Automated Sales Suppression Countermeasures.

1. Definitions.

2. Zapper and phantom-ware prohibitions and presumptions.

3. Zapper and phantom-ware penalties.

§ 3 1113. Automated Sales Tax Suppression Tax Amnesty.

1. Establishes an amnesty program for individuals who have used
zappers or phantom-ware to distort their sales tax liabilities to the
State.

2. Applicable tax liabilities for taxable periods ending or
transactions or uses occurring on or before February 28, 2022.

3. Amnesty eligibility.

4. Penalty waivers for amnesty program participants.

5. Prohibitions against civil, administrative or criminal actions or
proceedings concerning a tax liability which is subject to a waiver.

6. Excludes from the amnesty program taxpayers who are part of various
types of criminal, investigation or administrative proceeding or civil
or criminal litigation.

7. Amnesty tax return forms.

8. Refund prohibitions.

9. More refund prohibitions.

10. Amnesty program payment requirements.

11. Amnesty program administration.

12. Definitions.

13. Monthly zapper tax amnesty reports.

14. Final zapper tax amnesty report, due February 28, 2014.


§ 4. Effective Date

EXISTING LAW:

None.

JUSTIFICATION:

For years, foreign countries with national sales taxes have struggled
to combat technology that enables retailers to skim sales taxes and
under report other tax liabilities (e.g. personal income tax,
corporate income tax) by concealing from auditors their actual sales
data. This technology, which includes so-called "zappers" and
"phantom-ware," automatically suppresses digital sales figures
recorded at electronic cash registers.

It is difficult for auditors to detect the use of zappers and
phantom-ware through the traditional process of cross checking
transaction documents because the technology conceals almost all
traces of the digital manipulation. Countries such as Germany and
Greece have required retailers to install technological counter
measures that make it easier for auditors to detect the Use of zappers
and Phantom-ware.

Because the United States lacks a national sales tax, there is no
federal initiative to combat this tax fraud and most states are
ill-prepared to deal with this issue. Nationwide, only a handful of
people have been Caught using this technology, including two in
Michigan and one in Connecticut. Richard T. Ainsworth, a Boston
University School of Law tax professor and a leading expert on
zappers, has published several papers documenting the spread of
zappers and phantom-ware in Quebec, Greece, Germany, the Netherlands
and other European nations. Given that the first zappers were made in
the united states and that this technology is widely used in the
Canadian province just above New York's northern border, it is
imperative for the State to address this issue.

The legislation would establish prohibitions, presumptions and
penalties related to the use and sale of automated sales suppression
technology. These prohibitions, presumptions and penalties are modeled
after provisions in Quebec's anti-zapper statutes. A first-of-its kind
tax amnesty program would also be established under this legislation
for taxpayers with tax liabilities stemming from the use of zappers or
phantom-ware.

FISCAL IMPACTS:

Through the enforcement of the penalties and prohibitions established
by this legislation and aggressive auditing, New York State could
recover an estimated $107.9 million to $197.8 million of the estimated
$1.796 billion the State fails to collect annually from the restaurant
industry due to automated sales suppression technology, according to
Richard T. Ainsworth, an Adjunct Professor of Law at Boston University
School of Law and the Tax Director of International Government Affairs
at ADP. These estimates are based on the 6 percent-to-11 percent
recovery rates that European nations such as the Netherlands, have


experienced after enacting similar statutory prohibitions and
penalties for zappers and phantom-ware.

The $1.796 billion statewide estimate, also provided by Professor
Ainsworth, is based on zapper-related income and consumption tax
information from the Canadian province of Quebec, which has conducted
multiple studies over the past decade on the impact of automated sales
suppression technology in the Canadian province. The $1.798 billion
estimate assumes that if New York State's economy is three times the
size of Quebec's economy then the volume of restaurant business in New
York is approximately three times the volume of restaurant business in
Quebec.

The estimate is also based on the assumption that New Yorkers eat out
at least as much as people in Quebec do, and pay for their meals in
cash roughly at the same ratio as they do in Quebec. Statistical
measures for losses in other sectors of the cash economy have not been
performed in Quebec, and Professor Ainsworth has not estimated or
speculated on the size of additional losses in New York from similar
sales suppression activities in other vulnerable sectors of the
economy.

EFFECTIVE DATE: This act shall take effect ninety days after
enactment.

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

                                 3260--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 31, 2013
                               ___________

Introduced  by  Sens.  KRUEGER, ADDABBO, DILAN, PARKER, STAVISKY -- read
  twice and ordered printed, and when printed to  be  committed  to  the
  Committee  on  Consumer  Protection -- recommitted to the Committee on
  Consumer Protection in accordance  with  Senate  Rule  6,  sec.  8  --
  committee  discharged,  bill amended, ordered reprinted as amended and
  recommitted to said committee

AN ACT to amend the general business law and the tax law, in relation to
  enacting the anti-automated sales suppression act

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

  Section  1.  Short  title. This act shall be known and may be cited as
the "anti-automated sales suppression act".
  S 2. The general business law is amended by adding a new section  396-
ttt to read as follows:
  S  396-TTT.  AUTOMATED SALES SUPPRESSION.   1. DEFINITIONS. AS USED IN
THIS SECTION:
  (A) "AUTOMATED SALES SUPPRESSION DEVICE"  OR  "ZAPPER"  SHALL  MEAN  A
SOFTWARE  PROGRAM,  CARRIED  ON  A MEMORY STICK, REMOVABLE COMPACT DISC,
ACCESSED THROUGH AN INTERNET LINK OR ACCESSED THROUGH ANY  OTHER  MEANS,
THAT  FALSIFIES  THE ELECTRONIC RECORDS OF POINT-OF-SALE SYSTEMS FOR THE
PURPOSE OF TAX EVASION.
  (B) "CERTIFICATE OF INCORPORATION" SHALL MEAN A CERTIFICATE OF  INCOR-
PORATION  AS  DEFINED  IN SUBPARAGRAPH THREE OF PARAGRAPH (A) OF SECTION
ONE HUNDRED TWO OF THE BUSINESS CORPORATION LAW.
  (C) "DEPARTMENT" SHALL MEAN  THE  STATE  DEPARTMENT  OF  TAXATION  AND
FINANCE.
  (D) "ELECTRONIC CASH REGISTER" SHALL MEAN A DEVICE THAT KEEPS A REGIS-
TER OR SUPPORTING DOCUMENTS THROUGH THE MEANS OF AN ELECTRONIC DEVICE OR
COMPUTER  SYSTEM  DESIGNED TO RECORD TRANSACTION DATA FOR THE PURPOSE OF
COMPUTING, COMPILING OR PROCESSING  RETAIL  SALES  TRANSACTION  DATA  IN
WHATEVER MANNER.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07090-02-4

S. 3260--A                          2

  (E)  "PHANTOM-WARE" SHALL MEAN A HIDDEN, PRE-INSTALLED OR INSTALLED AT
A LATER TIME PROGRAMMING OPTION EMBEDDED IN THE OPERATING  SYSTEM  OF  A
ELECTRONIC CASH REGISTER OR HARD WIRED INTO THE ELECTRONIC CASH REGISTER
THAT  CAN  BE  USED  TO  CREATE A VIRTUAL SECOND TILL AND MAY PRESERVE A
DIGITAL  RECORD  OR MAY ELIMINATE, OR MANIPULATE RECORDS THAT MAY OR MAY
NOT BE PRESERVED IN DIGITAL FORMATS TO REPRESENT THE TRUE OR MANIPULATED
RECORD OF TRANSACTIONS IN THE ELECTRONIC CASH REGISTER.
  (F) "SUPPORTING DOCUMENTS" SHALL MEAN ANY RECEIPT, INVOICE  OR  REPORT
THAT PROVIDES A RECORD OR TRANSACTION DATA OR TRANSACTION REPORTS.
  (G)  "TRANSACTION  DATA"  SHALL INCLUDE ITEMS PURCHASED BY A CUSTOMER,
THE PRICE FOR EACH ITEM, A TAXABILITY DETERMINATION  FOR  EACH  ITEM,  A
SEGREGATED TAX AMOUNT FOR EACH OF THE TAXED ITEMS, THE AMOUNT OF CASH OR
CREDIT  TENDERED, THE NET AMOUNT RETURNED TO THE CUSTOMER IN CHANGE, THE
DATE AND TIME OF THE PURCHASE,  THE  NAME,  ADDRESS  AND  IDENTIFICATION
NUMBER  OF  THE  VENDOR, AND THE RECEIPT OR INVOICE NUMBER OF THE TRANS-
ACTION.
  (H) "TRANSACTION REPORTS" SHALL MEAN A  REPORT  DOCUMENTING,  BUT  NOT
LIMITED  TO, THE SALES, TAXES COLLECTED, MEDIA TOTALS AND DISCOUNT VOIDS
AT AN ELECTRONIC CASH REGISTER THAT IS PRINTED ON A CASH  REGISTER  TAPE
AT THE END OF A DAY OR SHIFT, OR A REPORT DOCUMENTING EVERY ACTION AT AN
ELECTRONIC CASH REGISTER THAT IS STORED ELECTRONICALLY.
  2.  PROHIBITIONS AND PRESUMPTIONS. (A) FUNCTIONS ALTERING DATA PROHIB-
ITED. NO FUNCTION OF ANY ELECTRONIC CASH REGISTER OR  ELECTRONIC  COMPO-
NENT  THAT  IS  OR  MAY  BE INSTALLED IN THE ELECTRONIC CASH REGISTER TO
MODIFY, CORRECT, DELETE, CANCEL OR OTHERWISE ALTER DATA WITHOUT PRESERV-
ING THE ORIGINAL DATA AND  ITS  SUBSEQUENT  MODIFICATIONS,  CORRECTIONS,
DELETIONS, CANCELLATIONS OR ALTERATIONS MAY BE USED.
  (B)  PRESUMPTION.  ANY PERSON WHO KEEPS A REGISTER OR SUPPORTING DOCU-
MENTS IN ACCORDANCE WITH PARAGRAPH (A) OF THIS SUBDIVISION BY  MEANS  OF
SUCH  AN  ELECTRONIC  DEVICE OR COMPUTER SYSTEM IS PRESUMED TO HAVE USED
SUCH A FUNCTION IF A COMPUTER PROGRAM OR AN ELECTRONIC COMPONENT  HAVING
A  FUNCTION  DESCRIBED  IN PARAGRAPH (A) OF THIS SUBDIVISION IS FOUND IN
ANY PREMISES OR PLACE IN WHICH THE PERSON CARRIES ON A BUSINESS OR KEEPS
PROPERTY OR IN WHICH THE PERSON DOES ANYTHING RELATING TO  ANY  BUSINESS
OR  KEEPS  OR  SHOULD  KEEP REGISTERS PURSUANT TO A FISCAL LAW. HOWEVER,
SUCH PRESUMPTION DOES NOT APPLY WHERE THE FUNCTION IS A STANDARD  COMPO-
NENT  OF  SOFTWARE  OR A SOFTWARE SUBSYSTEM OF A COMPUTER SYSTEM THAT IS
INHERENT IN THE OPERATION OF A COMPUTER.
  (C) REBUTTAL. THE FOREGOING PRESUMPTION DESCRIBED IN PARAGRAPH (B)  OF
THIS  SUBDIVISION  MAY  BE REBUTTED BY PROVING TO THE NEW YORK STATE TAX
APPEALS TRIBUNAL THAT  THE  COMPUTER  PROGRAM  OR  ELECTRONIC  COMPONENT
CONTAINED  THE  FUNCTION  DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION
WITHOUT THE KNOWLEDGE OR CONSENT OF THE PERSON KEEPING THE  REGISTER  OR
THE SUPPORTING DOCUMENTS.
  (D)  PROHIBITIONS. NO PERSON MAY DESIGN, MANUFACTURE OR INSTALL, SELL,
LEASE OR OTHERWISE MAKE AVAILABLE TO ANOTHER PERSON,  UPDATE,  MAINTAIN,
UPGRADE,  ALTER  OR  SERVICE  A  COMPUTER PROGRAM FUNCTION OR ELECTRONIC
COMPONENT THE USE OF WHICH IS PROHIBITED BY PARAGRAPH (A) OF THIS SUBDI-
VISION, OR IN ANY WAY OFFER TO INSTALL, SELL, LEASE  OR  OTHERWISE  MAKE
AVAILABLE TO ANOTHER PERSON, UPDATE, MAINTAIN, UPGRADE, ALTER OR SERVICE
SUCH A COMPUTER PROGRAM FUNCTION OR ELECTRONIC COMPONENT.
  3.  PENALTIES. (A) EVERY PERSON WHO VIOLATES PARAGRAPH (A) OF SUBDIVI-
SION TWO OF THIS SECTION IS GUILTY OF AN OFFENSE AND IS LIABLE TO A FINE
OF NO LESS THAN TWO THOUSAND DOLLARS BUT NO MORE THAN TWENTY-FIVE  THOU-
SAND  DOLLARS  AND, FOR A SECOND OFFENSE WITHIN FIVE YEARS, TO A FINE OF
NO LESS THAN TWENTY-FIVE THOUSAND DOLLARS BUT NO MORE THAN  ONE  HUNDRED

S. 3260--A                          3

THOUSAND  DOLLARS  AND,  FOR  A  THIRD  OR SUBSEQUENT OFFENSE WITHIN TEN
YEARS, TO A FINE OF NO LESS THAN ONE HUNDRED  THOUSAND  DOLLARS  BUT  NO
MORE THAN FIVE HUNDRED THOUSAND DOLLARS.
  (B)  IN  ADDITION  TO  THE FINE OF TWENTY-FIVE THOUSAND DOLLARS AND NO
MORE THAN ONE HUNDRED THOUSAND DOLLARS PRESCRIBED IN  PARAGRAPH  (A)  OF
THIS  SUBDIVISION  FOR  A  SECOND  OFFENSE, IN CASES WHEN THE PERSON WHO
VIOLATES PARAGRAPH (A) OF SUBDIVISION TWO OF THIS SECTION IS  GUILTY  OF
AN  OFFENSE ALSO HOLDS THE LICENSE FOR THE BUSINESS AT WHICH THE OFFENSE
OCCURRED, THE DEPARTMENT OF STATE  SHALL  SUSPEND  FOR  FIVE  YEARS  THE
CERTIFICATE  OF  INCORPORATION  HELD BY THE AFOREMENTIONED OFFENDER, WHO
SHALL ALSO BE PROHIBITED FROM APPLYING  FOR  ANY  OTHER  CERTIFICATE  OF
INCORPORATION FOR FIVE YEARS.
  (C)  A  PERSON  IS  GUILTY OF AN OFFENSE AND IS LIABLE TO A FINE OF NO
LESS THAN TWENTY-FIVE THOUSAND DOLLARS AND NO  MORE  THAN  FIVE  HUNDRED
THOUSAND  DOLLARS  AND, FOR A SUBSEQUENT OFFENSE WITHIN FIVE YEARS, TO A
FINE OF NO LESS THAN ONE HUNDRED THOUSAND DOLLARS AND NO MORE  THAN  ONE
MILLION DOLLARS, IF THE PERSON:
  (I)  CONTRAVENES THE PROVISIONS OF PARAGRAPH (D) OF SUBDIVISION TWO OF
THIS SECTION; OR
  (II) CONSPIRES WITH ANOTHER PERSON TO COMMIT AN OFFENSE UNDER SUBPARA-
GRAPH (I) OF THIS PARAGRAPH.
  (D) IN ADDITION TO THE FINE OF ONE HUNDRED  THOUSAND  DOLLARS  TO  ONE
MILLION  DOLLARS  PRESCRIBED  IN PARAGRAPH (C) OF THIS SUBDIVISION FOR A
SUBSEQUENT OFFENSE, THE OFFENDER MAY BE IMPRISONED FOR NO MORE THAN  TWO
YEARS.
  S  3.  The  tax law is amended by adding a new section 1113 to read as
follows:
  S 1113. AUTOMATED SALES TAX SUPPRESSION TAX AMNESTY. 1.  NOTWITHSTAND-
ING THE PROVISIONS OF ANY OTHER LAW TO THE  CONTRARY,  THERE  IS  HEREBY
ESTABLISHED  AN  AMNESTY PROGRAM TO BE ADMINISTERED BY THE COMMISSIONER,
TO BE EFFECTIVE FOR THE PERIOD AS PRESCRIBED BY SUCH  COMMISSIONER,  FOR
ALL  ELIGIBLE  TAXPAYERS  AS  DESCRIBED  IN  SUBDIVISION  THREE  OF THIS
SECTION, OWING ANY TAX OR SURCHARGE IMPOSED BY THIS ARTICLE OR BY  ARTI-
CLES  NINE, NINE-A, THIRTEEN-A, EIGHTEEN, TWENTY, TWENTY-TWO AND TWENTY-
EIGHT-A OF THIS CHAPTER AND ACCRUED AS A  RESULT  OF  ANY  VIOLATION  OF
PARAGRAPH (A) OF SUBDIVISION ONE OF SECTION THREE HUNDRED NINETY-SIX-TTT
OF THE GENERAL BUSINESS LAW.
  2.  SUCH  AMNESTY PROGRAM SHALL APPLY TO TAX LIABILITIES FOR THE TAXES
SET FORTH IN SUBDIVISION ONE OF THIS SECTION  ("DESIGNATED  TAXES")  FOR
TAXABLE  PERIODS  ENDING  OR TRANSACTIONS OR USES OCCURRING ON OR BEFORE
FEBRUARY TWENTY-EIGHTH, TWO THOUSAND FOURTEEN.
  3. FOR PURPOSES OF THE AMNESTY PROGRAM ESTABLISHED UNDER THIS SECTION,
AND SUBJECT TO THE PROVISIONS OF SUBDIVISION TWELVE OF THIS SECTION,  AN
ELIGIBLE  TAXPAYER  IS AN INDIVIDUAL, PARTNERSHIP, ESTATE, TRUST, CORPO-
RATION, LIMITED LIABILITY COMPANY, JOINT STOCK  COMPANY,  OR  ANY  OTHER
COMPANY,  TRUSTEE,  RECEIVER,  ASSIGNEE,  REFEREE, SOCIETY, ASSOCIATION,
BUSINESS OR ANY OTHER PERSON AS DESCRIBED IN THIS CHAPTER, WHO OR  WHICH
HAS  A  TAX LIABILITY WITH REGARD TO THE LIABILITY DESCRIBED IN SUBDIVI-
SION ONE OF THIS SECTION FOR THE PERIOD OF TIME DESCRIBED IN SUBDIVISION
TWO OF THIS SECTION.
  4. THE AMNESTY PROGRAM ESTABLISHED BY THIS SECTION SHALL PROVIDE, THAT
UPON APPLICATION FOR A WAIVER  OF  TAX,  INCLUDING  APPLICABLE  RETURNS,
WHICH  APPLICATION  AND  RETURNS  SHALL BE IN SUCH FORM AND SUBMITTED IN
SUCH MANNER AS PRESCRIBED BY THE COMMISSIONER, BY AN ELIGIBLE  TAXPAYER,
AND  UPON  PAYMENT IN SUCH FORM AND IN SUCH MANNER AS PRESCRIBED BY SUCH
COMMISSIONER, WHICH PAYMENT SHALL EITHER ACCOMPANY SUCH  APPLICATION  OR

S. 3260--A                          4

BE  MADE WITHIN THE TIME STATED ON A BILL ISSUED BY SUCH COMMISSIONER TO
SUCH TAXPAYER, OF THE AMOUNT OF A TAX LIABILITY UNDER ONE OR MORE OF THE
DESIGNATED TAXES WITH RESPECT TO WHICH AMNESTY IS SOUGHT,  PLUS  RELATED
INTEREST,  SUCH  COMMISSIONER  SHALL  WAIVE  ANY  APPLICABLE  PENALTIES,
INCLUDING THE ADDITIONAL RATE OF INTEREST PRESCRIBED UNDER SECTION ELEV-
EN HUNDRED FORTY-FIVE OF THIS ARTICLE ("INTEREST  PENALTY"),  AND  SHALL
REDUCE  BY  TWO  PERCENT THE APPLICABLE RATE OF INTEREST ASSOCIATED WITH
SUCH LIABILITY, FOR THE FOLLOWING:
  (A) FAILURE TO PAY ANY SUCH TAX LIABILITY;
  (B) FAILURE TO FILE A RETURN OR REPORT WITH RESPECT TO  ANY  SUCH  TAX
LIABILITY.
  5.  NO CIVIL, ADMINISTRATIVE OR CRIMINAL ACTION OR PROCEEDING CONCERN-
ING TAX LIABILITY WHICH IS THE SUBJECT  OF  A  WAIVER  APPROVED  BY  THE
COMMISSIONER  SHALL  BE  BROUGHT AGAINST A TAXPAYER ELIGIBLE FOR AMNESTY
UNDER THE PROVISIONS OF THIS SECTION PROVIDED THE  TAXPAYER  REMAINS  IN
COMPLIANCE  WITH THE PROVISIONS OF THIS SECTION. FAILURE TO PAY ALL SUCH
TAXES, PLUS RELATED INTEREST BY THE LATER OF MARCH FIFTEENTH, TWO  THOU-
SAND  FIFTEEN,  OR  THE  DATE PRESCRIBED FOR PAYMENT ON A BILL ISSUED BY
SUCH COMMISSIONER, SHALL INVALIDATE ANY AMNESTY GRANTED PURSUANT TO  THE
AMNESTY PROGRAM ESTABLISHED UNDER THIS SECTION.
  6.  AMNESTY  SHALL  NOT BE GRANTED TO A TAXPAYER WHO IS A PARTY TO ANY
CRIMINAL INVESTIGATION BEING CONDUCTED BY AN AGENCY OF THE STATE OR  ANY
POLITICAL SUBDIVISION THEREOF, IS A PARTY TO ANY ADMINISTRATIVE PROCEED-
ING  OR CIVIL OR CRIMINAL LITIGATION WHICH IS PENDING ON THE DATE OF THE
TAXPAYER'S APPLICATION IN  THE  BUREAU  OF  CONCILIATION  AND  MEDIATION
SERVICES,  THE DIVISION OF TAX APPEALS OR ANY COURT OF THIS STATE OR THE
UNITED STATES, RELATING TO ANY ACTION OR FAILURE TO  ACT  WHICH  IS  THE
BASIS  FOR  THE  PENALTY  OR  INTEREST  WITH RESPECT TO WHICH AMNESTY IS
SOUGHT. AMNESTY SHALL ALSO NOT BE GRANTED TO ANY TAXPAYER WHO  HAS  BEEN
CONVICTED  OF A CRIME RELATING TO A TAX THAT IS THE BASIS OF THE PENALTY
OR INTEREST WITH RESPECT TO WHICH AMNESTY IS SOUGHT FOR  ANY  PERIOD  OR
ASSESSMENT  FOR  THAT TAX.   AN ADMINISTRATIVE PROCEEDING OR CIVIL LITI-
GATION SHALL BE DEEMED NOT TO BE PENDING ON THE DATE OF THE  APPLICATION
IF  THE  TAXPAYER  WITHDRAWS FROM SUCH PROCEEDING OR LITIGATION PRIOR TO
THE GRANTING OF AMNESTY.
  7. AMNESTY TAX RETURN FORMS SHALL BE IN A FORM, CONTAIN SUCH  INFORMA-
TION  AND  BE  SUBMITTED  AS  PRESCRIBED  BY  THE COMMISSIONER AND SHALL
PROVIDE FOR SPECIFICATIONS BY THE APPLICANT OF THE  TAX  LIABILITY  WITH
RESPECT TO WHICH AMNESTY IS SOUGHT. THE APPLICANT MUST ALSO PROVIDE SUCH
ADDITIONAL INFORMATION AS IS REQUIRED BY THE COMMISSIONER. AMNESTY SHALL
BE  GRANTED  ONLY  WITH  RESPECT TO THE TAX LIABILITIES SPECIFIED BY THE
TAXPAYER ON SUCH FORMS.  ANY RETURN OR REPORT FILED  UNDER  THE  AMNESTY
PROGRAM  ESTABLISHED HEREIN IS SUBJECT TO VERIFICATION AND ASSESSMENT AS
PROVIDED BY STATUTE. IF THE APPLICANT FILES A FALSE  OR  FRAUDULENT  TAX
RETURN  OR  REPORT,  OR  ATTEMPTS IN ANY MANNER TO DEFEAT OR EVADE A TAX
UNDER THE AMNESTY PROGRAM, AMNESTY SHALL BE DENIED OR RESCINDED.
  8. NO REFUND SHALL BE GRANTED OR CREDIT ALLOWED WITH  RESPECT  TO  ANY
PENALTY  OR  INTEREST  PAID  PRIOR  TO THE TIME THE TAXPAYER APPLIES FOR
AMNESTY PURSUANT TO SUBDIVISION FOUR OF THIS SECTION.
  9. UNLESS THE COMMISSIONER ON HIS OR HER OWN INITIATIVE  RE-CALCULATES
THE AMOUNT OF TAX DUE, INCLUDING APPLICABLE INTEREST, NO REFUND SHALL BE
GRANTED  OR CREDIT ALLOWED WITH RESPECT TO ANY TAXES, INCLUDING APPLICA-
BLE INTEREST, PAID UNDER THIS PROGRAM.
  10. WITH RESPECT TO ANY EXISTING INSTALLMENT PAYMENT AGREEMENT  OF  AN
ELIGIBLE  TAXPAYER, WHERE SUCH AGREEMENT APPLIES TO A TAX LIABILITY WITH
RESPECT TO WHICH AMNESTY IS SOUGHT BY SUCH TAXPAYER, NOTWITHSTANDING ANY

S. 3260--A                          5

TERMS OF SUCH AGREEMENT TO THE CONTRARY, SUCH TAXPAYER, AS  A  CONDITION
OF  RECEIVING  AMNESTY, MUST PAY ANY SUCH LIABILITY IN FULL BY THE LATER
OF THE LAST DAY OF THE PRESCRIBED AMNESTY PERIOD, OR THE DATE PRESCRIBED
THEREFOR ON A BILL ISSUED BY THE COMMISSIONER.
  11.  THE  COMMISSIONER  SHALL  PROMULGATE REGULATIONS, ISSUE FORMS AND
INSTRUCTIONS AND TAKE ANY AND ALL OTHER ACTIONS NECESSARY  TO  IMPLEMENT
THE  PROVISIONS  OF  THE AMNESTY PROGRAM ESTABLISHED UNDER THIS SECTION.
THE COMMISSIONER SHALL PUBLICIZE THE AMNESTY PROGRAM PROVIDED FOR HEREIN
SO AS TO MAXIMIZE PUBLIC AWARENESS OF AND PARTICIPATION IN SUCH PROGRAM.
  12. (A) FOR PURPOSES OF THIS SUBDIVISION, THE  TERM  "TAXPAYER"  SHALL
INCLUDE  ANY  PERSON SUBJECT TO ANY TAX REFERENCED IN SUBDIVISION ONE OF
THIS SECTION OR ANY PERSON REQUIRED TO COLLECT ANY SUCH TAX.
  (B) THE AMNESTY PROGRAM PROVIDED FOR IN THIS SECTION SHALL  NOT  APPLY
TO  A  TAXPAYER  WHICH  HAS  MORE  THAN  FIVE HUNDRED EMPLOYEES OR WHOSE
COMBINED FILING GROUP HAS MORE THAN FIVE HUNDRED EMPLOYEES IN THE UNITED
STATES ON THE DATE OF THE TAXPAYER'S APPLICATION.   THE  TERM  "PENALTY"
SHALL  NOT  INCLUDE  THE PENALTY IMPOSED UNDER SUBSECTION (G) OF SECTION
SIX HUNDRED EIGHTY-FIVE OF  THIS  CHAPTER,  THE  PENALTY  IMPOSED  UNDER
SUBDIVISION  TWO OF SECTION TWO HUNDRED EIGHTY-NINE-B OF THIS CHAPTER OR
THE PENALTY IMPOSED UNDER  SUBDIVISION  (A)  OF  SECTION  THREE  HUNDRED
FIFTEEN  OF  THIS CHAPTER BY REASON OF ITS INCORPORATION BY REFERENCE OF
SUCH PENALTY IMPOSED UNDER SUBDIVISION TWO OF SECTION TWO HUNDRED EIGHT-
Y-NINE-B OF THIS CHAPTER.
  13. FOR PURPOSES OF ACCOUNTING FOR THE MONEYS  AND  REVENUES  RECEIVED
UNDER  THE  AMNESTY  PROGRAM  ESTABLISHED  PURSUANT TO THIS SECTION, THE
COMMISSIONER SHALL REPORT THE GROSS  REVENUE  COLLECTED  UNDER  THE  TAX
PURSUANT  TO  THE  TAX  AMNESTY  PROGRAM. SUCH REPORT SHALL BE MADE ON A
MONTHLY BASIS, COMMENCING THE FIRST MONTH AFTER THE AMNESTY  PROGRAM  IS
ESTABLISHED  AND  ENDING WITH THE LAST MONTH ENDING IMMEDIATELY PRIOR TO
THE ISSUANCE OF THE FINAL REPORT REQUIRED PURSUANT  TO  THIS  ACT.  SUCH
REPORTS SHALL INCLUDE INFORMATION CONCERNING THE GROSS REVENUE COLLECTED
UNDER EACH TAX.
  14.  ON  OR  BEFORE  FEBRUARY TWENTY-EIGHTH, TWO THOUSAND FIFTEEN, THE
COMMISSIONER SHALL SUBMIT A REPORT TO THE CHAIRMAN OF THE ASSEMBLY  WAYS
AND  MEANS  COMMITTEE,  THE RANKING MINORITY MEMBER OF THE ASSEMBLY WAYS
AND MEANS COMMITTEE, THE CHAIRMAN OF THE SENATE FINANCE  COMMITTEE,  THE
RANKING MINORITY MEMBER OF THE SENATE FINANCE COMMITTEE AND THE DIRECTOR
OF  THE DIVISION OF THE BUDGET REGARDING THE AMNESTY PROGRAM ESTABLISHED
PURSUANT TO THIS ACT. THE REPORT SHALL CONTAIN THE FOLLOWING INFORMATION
AS OF THE REPORT CUTOFF DATE:
  (A) THE NUMBER OF CASES IN WHICH REQUESTS  FOR  PENALTY  AND  INTEREST
PENALTY WAIVERS WERE MADE;
  (B)  THE NUMBER OF CASES BY TAX AREA IN WHICH REQUESTS FOR PENALTY AND
INTEREST PENALTY WAIVERS WERE APPROVED;
  (C) THE AMOUNT OF TAX AND INTEREST DUE IN ALL APPROVED AND  UNAPPROVED
CASES  BY TAX AREA AND THE AMOUNT OF PENALTY FOR UNAPPROVED CASES BY TAX
AREA, BUT NOT INCLUDING INTEREST ON PENALTY;
  (D) THE AMOUNT OF PENALTY AND INTEREST PENALTY WAIVED IN ALL  APPROVED
CASES BY TAX AREA BUT NOT INCLUDING INTEREST ON PENALTY;
  (E)  THE  GROSS REVENUE COLLECTED UNDER EACH TAX AND THE YEAR OR OTHER
APPLICABLE PERIOD FOR OR DURING WHICH THE LIABILITY WAS INCURRED;
  (F) THE AMOUNT  OF  MONEY  SPENT  ON  ADVERTISING,  NOTIFICATION,  AND
OUTREACH ACTIVITIES, BY EACH ACTIVITY, AND A DESCRIPTION OF THE FORM AND
CONTENT OF SUCH ACTIVITIES, BY EACH ACTIVITY;
  (G)  THE  AMOUNT  PAID  BY  THE  DEPARTMENT  FOR SERVICES AND EXPENSES
RELATED TO THE ESTABLISHMENT OF THE AMNESTY PROGRAM;

S. 3260--A                          6

  (H) AN ESTIMATE OF THE AMOUNT  OF  REVENUE  FORGONE  AS  A  RESULT  OF
DIVERTING  STAFF OF THE DEPARTMENT FROM REGULAR WORK RESPONSIBILITIES TO
WORK ON THE AMNESTY PROGRAM;
  (I) AN ESTIMATE OF THE AMOUNT OF REVENUE RECEIVED DURING THE PERIOD OF
THE  AMNESTY PROGRAM PROVIDED FOR HEREIN WHICH WOULD HAVE OTHERWISE BEEN
RECEIVED DURING ANOTHER PERIOD; AND
  (J) AN ESTIMATE OF THE NET REVENUE GENERATED FROM THE AMNESTY PROGRAM.
  S 4. This act shall take effect on the ninetieth day  after  it  shall
have become a law.

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