S T A T E O F N E W Y O R K
________________________________________________________________________
6315
2017-2018 Regular Sessions
I N A S S E M B L Y
March 2, 2017
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Introduced by M. of A. CRESPO -- read once and referred to the Committee
on Ways and Means
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) INCOME DOCUMENTATION. ANY TAXPAYER WHO RECEIVES MORE THAN FIFTY
PERCENT OF HIS OR HER INCOME IN CASH WHO IS CLAIMING THE CREDIT UNDER
THIS SUBSECTION MAY FOLLOW THE INCOME DOCUMENTATION STANDARDS SET FORTH
IN SECTION SIX HUNDRED FIFTY-EIGHT-A OF THIS ARTICLE WHEN APPLICABLE.
§ 2. Subsection (d-1) of section 606 of the tax law is amended by
adding a new paragraph 9 to read as follows:
(9) ANY TAXPAYER WHO RECEIVES MORE THAN FIFTY PERCENT OF HIS OR HER
INCOME IN CASH WHO IS CLAIMING THE CREDIT UNDER THIS SUBSECTION MAY
PROVE HIS OR HER INCOME BY FOLLOWING THE INCOME DOCUMENTATION STANDARDS
SET FORTH IN SECTION SIX HUNDRED FIFTY-EIGHT-A OF THIS ARTICLE WHEN
APPLICABLE.
§ 3. The tax law is amended by adding a new section 658-a to read as
follows:
§ 658-A. INCOME DOCUMENTATION CONCERNING THE EARNED INCOME 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 CREDIT AS SET FORTH IN SUBSECTION (D) OF SECTION SIX
HUNDRED SIX OF THIS ARTICLE.
(A) INCOME DOCUMENTATION STANDARDS FOR CASH EARNERS. IF THE TAXPAYER
IS EMPLOYED IN ONE OR MORE OCCUPATIONS WHERE SUCH TAXPAYER RECEIVES MORE
THAN FIFTY PERCENT OF HIS OR HER INCOME IN CASH, SUCH TAXPAYER MAY PROVE
HIS OR HER INCOME BY PRODUCING ONE OF THE FOLLOWING VERIFICATIONS:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01853-01-7
A. 6315 2
(1) PERMANENT BOOKS, ACCOUNTS OR RECORDS KEPT IN A MANNER CONSISTENT
WITH THE RECORDKEEPING PRACTICES OF THE INDUSTRY IN WHICH THE TAXPAYER
WORKS. FOR THE PURPOSES OF THIS SECTION, "PERMANENT BOOKS, ACCOUNTS OR
RECORDS" SHALL MEAN PAPER OR ELECTRONIC DOCUMENTS THAT REFLECT THE
AMOUNT AND SOURCE OF ALL INCOME EARNED FROM PAID EMPLOYMENT.
(A) EXAMPLES OF PERMANENT BOOKS, ACCOUNTS OR RECORDS SHALL INCLUDE,
BUT SHALL NOT BE LIMITED TO (I) BANK STATEMENTS FROM FINANCIAL INSTI-
TUTIONS, (II) ELECTRONIC LEDGERS OR SPREADSHEETS THAT DOCUMENT THE DATE
OF EACH ENTRY, OR (III) HANDWRITTEN ACCOUNTS MAINTAINED IN A BOUND
LEDGER.
(B) A DIFFERENT LEDGER SHALL 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.
(C) ENTRY REQUIREMENTS FOR HANDWRITTEN LEDGERS. (I) A HANDWRITTEN
LEDGER DOCUMENTING THE TAXPAYER'S INCOME SHALL LIST, IN CHRONOLOGICAL
ORDER, AN ENTRY FOR EACH TRANSACTION FOR WHICH SUCH TAXPAYER EARNS MONEY
WITH INFORMATION THAT INCLUDES, BUT IS NOT LIMITED TO:
(I) THE AMOUNT OF MONEY EARNED;
(II) THE APPROXIMATE TIME AND DATE ON WHICH THE MONEY WAS EARNED; AND
(III) A BRIEF DESCRIPTION OR LIST OF THE TASK OR TASKS PERFORMED FOR
THE MONEY EARNED.
(II) SUCH RECORD MAY INCLUDE ENTRIES FOR WORK-RELATED EXPENSES AND
EACH SUCH ENTRY SHALL INCLUDE, BUT IS NOT LIMITED TO:
(I) THE AMOUNT OF THE WORK-RELATED EXPENSE;
(II) THE APPROXIMATE TIME AND DATE THE WORK-RELATED EXPENSE WAS
INCURRED;
(III) THE NATURE OF THE WORK-RELATED EXPENSE; AND
(IV) THE DATE ON WHICH THE ENTRY WAS MADE.
(III) AN ENTRY FOR ANY TRANSACTION SHALL BE MADE AS SOON AS POSSIBLE
AFTER THE TRANSACTION OCCURRED.
(2) ADDITIONAL ACCEPTABLE INCOME VERIFICATION DOCUMENTS. IN THE
ABSENCE OF PERMANENT BOOKS, ACCOUNTS OR RECORDS, A TAX FILER MAY VERIFY
INCOME BY PRODUCING TWO OR MORE OF THE FOLLOWING:
(A) A SIGNED LETTER FROM THE TAXPAYER'S EMPLOYER STATING WAGES PAID;
(B) STATEMENTS FROM A FINANCIAL INSTITUTION THAT DEMONSTRATE REGULAR
DEPOSITS OF EARNINGS;
(C) RECEIPTS FROM WORK SUPPLIES, INCLUDING BUT NOT LIMITED TO UNIFORMS
AND MATERIALS NEEDED TO COMPLETE A SPECIFIC JOB;
(D) RECEIPTS FROM LICENSING OR CERTIFICATION FEES, MEMBERSHIP DUES, OR
OTHER PROFESSIONAL DUES;
(E) RECEIPTS FROM WORK-RELATED EXPENSES, INCLUDING BUT NOT LIMITED TO
TRANSPORTATION COSTS AND CHILD CARE;
(F) A SWORN AFFIDAVIT, SIGNED BY THE TAXPAYER, STATING SUCH TAXPAYER'S
POSITION OR TITLE, THE NUMBER OF WEEKS WORKED, THE NUMBER OF HOURS
WORKED PER WEEK, THE WAGES EARNED, AND A BRIEF DESCRIPTION OF THE WORK
PERFORMED. A SEPARATE NOTARIZED AFFIDAVIT SHALL BE COMPLETED FOR EACH
JOB;
(G) AN INCOME AND EXPENSES WORKSHEET COMPLETED WITH A CERTIFIED TAX
PROFESSIONAL.
(B) ERRORS OR OMISSIONS. OMISSIONS OR FAILURES TO CORRECT ENTRIES
SHALL NOT BE SUFFICIENT IN AND OF THEMSELVES TO RENDER A TAXPAYER'S
RECORDS AS INADEQUATE TO VALIDATE SUCH TAXPAYER'S INCOME FOR THE RELE-
VANT TAX YEAR.
(C) PRESUMPTION OF ACCURACY AND COMPLETENESS. (1) PROVIDED THAT THE
MINIMUM STANDARDS SET FORTH IN THIS SECTION ARE MET, AND UNLESS THE
DEPARTMENT HAS AFFIRMATIVE EVIDENCE TO DIRECTLY CONTRADICT THE TAXPAY-
A. 6315 3
ER'S RETURN, THE DEPARTMENT SHALL PRESUME THE ACCURACY AND COMPLETENESS
OF THE RECORD AND THE GOOD FAITH OF THE TAXPAYER.
(2) 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) 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.
(D) REPORT. (1) ON OR BEFORE JUNE THIRTIETH NEXT SUCCEEDING THE DATE
ON WHICH THIS SECTION SHALL HAVE BECOME A LAW, AND ANNUALLY THEREAFTER,
THE COMMISSIONER SHALL SUBMIT A WRITTEN REPORT REGARDING TAXPAYERS WHO
CLAIM THE EARNED INCOME CREDIT AS SET FORTH IN SUBSECTION (D) OF SECTION
SIX HUNDRED SIX OF THIS ARTICLE AND WHO ARE PAID PRINCIPALLY IN CASH.
(2) THE REPORT MUST CONTAIN THE FOLLOWING INFORMATION ABOUT THE EARNED
INCOME CREDIT CLAIMED UNDER THIS ARTICLE DURING THE PREVIOUS CALENDAR
YEAR:
(A) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT;
(B) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT WHO ARE SENT DESK
AUDIT INQUIRY LETTERS;
(C) THE NUMBER OF RESPONSES TO THE AUDIT INQUIRY LETTERS THAT THE
DEPARTMENT RECEIVES;
(D) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT WHO ARE AUDITED AND
RECEIVE THE CREDIT AS A RESULT; AND
(E) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT WHO ARE AUDITED AND
ARE DENIED THE CREDIT AS A RESULT.
(3) THE CREDIT REPORT MAY ALSO CONTAIN ANY OTHER INFORMATION THAT THE
COMMISSIONER DEEMS TO BE USEFUL IN EVALUATING THE USE OF THE CREDIT BY
CASH EARNERS. THE INFORMATION INCLUDED IN THE CREDIT REPORT WILL BE
BASED ON THE INFORMATION FILED WITH THE DEPARTMENT DURING THE PREVIOUS
CALENDAR YEAR, TO THE EXTENT THAT IT IS PRACTICABLE TO USE THAT INFORMA-
TION.
§ 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.