Senate Bill S4722A

                                 BILL NUMBER:  S4722A

 TITLE OF BILL :  An act to amend the tax law, in relation to
decreasing interest due on underpayment of tax or erroneous refunds
relating to personal income tax and sales and compensating use taxes

 PURPOSE :

This bill decreases interest due on underpayment of tax or erroneous
refunds relating to personal income tax and sales and compensating use
taxes

 SUMMARY OF PROVISIONS :

Section 1. Subsections (a) and (j) of section 684 of the tax law, as
amended by section 2 of subpart D of part V-1 of chapter 57 of the
laws of 2009, are amended to read as follows:

(a) General.--If any amount of income tax is not paid on or before the
last date prescribed in this article for payment, interest on such
amount at the underpayment rate set at the rate of three percent per
annum shall be paid for the period from such last date to the date
paid, whether or not any extension of time for payment was granted.
Interest under this subsection shall not be paid if the amount thereof
is less than one hundred dollars. If the time for filing of a return
of tax withheld by an employer is extended, the employer shall pay
              

interest for the period for which the extension is granted and may not
charge such interest to the employee.

(j) Interest on erroneous refund.--Any portion of tax or other amount
which has been erroneously refunded, and which is recoverable by the
commissioner, shall bear interest at the underpayment rate set at the
rate of three percent per annum from the date of the payment of the
refund, but only if it appears that any part of the refund was induced
by fraud or a misrepresentation of a material fact.

§ 2. Subparagraphs (i) and (vi) of paragraph 1 of subdivision (a) of
section 1145 of the tax law, subparagraph (i) as amended by chapter
411 of the laws of 1986 and subparagraph (vi) as amended by chapter 65
of the laws of 1985, are amended to read as follows:

(i) Any person failing to file a return or to pay or pay over any tax
to the tax commissioner within the time required by or pursuant to
this article shall be subject to a penalty of (ten) five percent of
the amount of tax due if such failure is for not more than one month,
with an additional (one) one-half percent for each additional month or
fraction thereof during which such failure continues, not exceeding
thirty percent in the aggregate. Provided, however, in the case of a
failure to file such return within sixty days of the date prescribed
for filing of such return by or pursuant to this article the penalty
imposed by this sub-paragraph shall not be less than the lesser of one
hundred dollars or one hundred percent of the amount required to be
shown as tax on such return. For the purpose of the preceding
sentence, the amount of tax required to be shown on the return shall
be reduced by the amount of any part of the tax which is paid on or
before the date prescribed for payment of the tax and by the amount of
any credit against the tax which may be claimed upon the return. In
the case of a failure to file a return by a person required to
register with the tax commission as provided in section eleven hundred
thirty-four, in no event shall the penalty for failure to file a
return be less than fifty dollars.

(ii) If any amount of tax is not paid on or before the last date
prescribed in this article for payment, interest on such amount at the
rate of (fourteen and one-half) seven and one quarter percent per
annum or at the underpayment rate set by the commissioner pursuant to
section eleven hundred forty-two of this part, whichever is greater,
shall be paid for the period from such last date to the date paid,
whether or not any extension of time for payment was granted.
Interest under this subparagraph shall not be paid if the amount
thereof is less than one dollar.

(vi) Any person required by this article to file a return, who omits
from the total amount of state and local sales and compensating use
taxes required to be shown on a return an amount which is in excess of
twenty-five percent of the amount of such taxes required to be shown
on the return shall be subject to a penalty equal to five percent of
the amount of such omission. The amount of the omission under the
preceding sentence shall be reduced by that portion of the omission
which is attributable to the tax treatment of any item by such person
if there is or was substantial authority for such treatment, or any
item with respect to which the relevant facts affecting the item's tax
treatment are adequately disclosed in the return or in a statement
attached to the return. If the tax commission determines that such
omission was due to reasonable cause and not due to willful neglect,
it shall remit all of such penalty. The penalty provided for in this
subparagraph shall not apply to any return of estimated tax required
to be filed under section eleven hundred thirty-seven-A.

§ 3. This act shall take effect immediately and shall apply to all tax
years commencing on and after January 1, 2018.

 EXISTING LAW :

None

 JUSTIFICATION :

This bill addresses the extremely high interest rates attached to
penalties imposed on individuals living and doing business in New York
State. These interest rates were implemented decades when the economy
was in much better shape. Today they must be more reasonable and more
affordable for New Yorkers. At a time when the governor is,
encouraging businesses come to New York from other parts of the nation
with sizable tax breaks, we must also do all we can to help existing
New York businesses get through the hardships they face. The
presumption of nefarious intent is poor public policy.  We must
continue to strive to make New York State tax friendly because it is
in the best interest of every resident living and doing business here.
We are duty-bound to encourage new and existing business while getting
away from the old image of being one of the toughest and most
expensive states in which to do business in.

Between 1980 and 1990 all interest rates were high. Whether it was
interest on a student loan or a mortgage, people strained every month
to pay them. That said eventually many student loans fell into default
and people walked away from them. The mortgage industry did not fare
any better. Back then home mortgage interest rates ranged anywhere
between 11.13 % in April of 1980 to 13.15 % in January 1981.  Today
those same interest rates are as low as 3.61 percentage as seen on Oct
27, 2016.

The time has come to reevaluate New York State policies, penalties and
interest rates associated with sales and income taxes. How much is too
much for New Yorkers? We speak about wanting to help small businesses
and individuals but we never address fundamental problems associated
with them. Let us face it, we all know people who are struggling or
have struggled in their businesses and life from time to time. When
this happens, there are those who fall behind in their taxes and what
happens? New York agencies impose fines worth tens of thousands of
dollars in penalties and interest. I believe we as a government should

be in the business of helping New Yorkers and addressing their needs,
not putting them out of business.

Below is an example of an actual incident:

Example; A business owed the New York State Tax Department $60,000.00
in Sales tax. The owner was unable to pay the sales tax bill on time
because of other business expenses. The Tax department notified the
business owner that the business was delinquent and a penalty of
$60,000 would be attached to the initial amount owed, making the total
$120,000.00. The owner hired an attorney, and eventually, after months
of discussions, the New York State Tax Department settled for
$97,000.00. The tax department offered the business owner a payment
plan, if that is what you want to call it. The plan consisted of 48
payments of $2,000.00 each (with interest) each, plus the initial
$60,000.00 making the total, with interest spread out over 4 years a
total of $156,000.00. He decided get a loan for $97,000.00.
Fortunately, the business owner and his family was well known in the
community so he was able to get the loan. Others may not have been so
fortunate.

I do not think New York State should be benefiting from a New Yorker's
hardship. Whether it be in business or their personal life. I have
been told that interest rates can only be addressed legislatively. I
hope you will agree and support me on this issue. The governor's
office has been searching for ways to improve how we do business in
New York State. This is just one way

 LEGISLATIVE HISTORY :

None

 FISCAL IMPLICATIONS :

To be determined

 LOCAL FISCAL IMPLICATIONS :

To be determined

 EFFECTIVE DATE :
This act shall take effect immediately and shall apply to all tax
years commencing on and after January 1, 2018.