BILL NUMBER:  S4443

 TITLE OF BILL :

An act to amend the tax law, in relation to requiring employers to
notify employees that they may be eligible for federal and New York
state earned income tax credits (EITC)

 PURPOSE :

This bill would require employers to notify employees that they may be
eligible for a State or federal Earned Income Tax Credit (EITC).

 SUMMARY OF PROVISIONS :

Section 1 of the bill would amend Tax Law § 606(d) (6) to provide
that:(1) employers with persons in their employ in New York State for
whom they must furnish an annual wage summary must furnish to each
such employee a notice that he or she may be eligible for a State or
federal EITC; (2) one Department of Taxation and Finance shall
promulgate guidance specifying the minimum requirements of such
notice; (3) such notice must be furnished with, or within one week
before or after, the annual wage summary; (4) such notice may be
provided by hand delivery, electronic or regular mail; and (5) the
employer may choose to provide notice only to those employees whose
gross incomes do not equal or exceed $60,000, or the maximum income at
              

which an employee may be eligible for the EITC, whichever is higher.

Section 2 of the bill would provide for an effective date of January
1, 2018.

 EXISTING LAW :

26 V.S.C. § 32 authorizes a federal EITC for eligible individuals and
sets forth the amount of the credit.

Tax Law § 606(d) authorizes a State EITC for individuals who are
eligible for a federal EITC pursuant to 26 V.5.0 § 32, and provides
that the State EITC will be calculated at 30% of the federal EITC.

Tax Law § 606(d) (46) provides that the Commissioner of the Department
of Taxation and Finance must make efforts at least every three years
to notify individuals of their potential eligibility for an EITC.

 JUSTIFICATION :

The federal EITC, enacted in 1975, is a refundable federal income tax
credit for low to moderate income working individuals and families.
The federal EITC was enacted in part to offset the burden of social
security taxes and to provide an incentive to work. The EITC can
result in a reduction of taxes owed, and when it exceeds the amount of
taxes owed, it results in a tax refund to those who claim and qualify
for the credit. New York State enacted a companion EITC in 1994, which
is available to individuals who qualify for the federal EITC and
provides them with a State tax credit equal to 30 percent of the
applicable federal EITC.

Maximum credits range from $569 for an individual with no children to
as much' as $6,217 for a married couple with two or more children.

The EITC is one of the most effective tools in helping people escape
poverty and transition from public assistance. For example, an
individual working full-time at $6.50 per hour and earning $17,000 per
year could effectively realize more than a 23 percent increase in
income, or an effective hourly rate of $11.39, after receipt of the
state and federal EITC
The EITC, when coupled with other supports available to low-income
families, such food stamps and the low income home energy assistance
program, can lift them out of poverty and off of public assistance.

Despite the effectiveness at this tool, it is estimated that as many
as 20 percent of chose eligible do not claim the credit. To qualify,
taxpayers must meet certain requirements and file a tax return, even
if they did not earn enough money to be obligated to file a return.
This bill aims to ensure that all New York State taxpayers who are
potentially eligible are informed of the EITC at or near the time that
the annual ware statement is provided.

This bill also aims to give employers as much flexibility as possible
in the content, form, and breadth of distribution. For administrative
ease, many employers will choose to provide notice to all taxpayers;
however, employers will have the option of providing notice only to
those individuals whose gross annual incomes do not exceed $60,000 or
the maximum income at which an employee may be eligible for an EITC,
whichever is higher. In addition, employers will have the option of
providing notice by hand delivery, regular mail or electronically.

 LEGISLATIVE HISTORY :

2011-2012: S.366-A - Died in Committee;
2013-2014: S.1375-A - Died in Committee

 FISCAL IMPLICATIONS :

There are no significant fiscal impacts associated with this proposal.

 EFFECTIVE DATE :
This bill would take effect January 1, 2020.