S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6404
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               March 7, 2019
                                ___________
 
 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.
              

                                                            LBD10287-01-9

 A. 6404                             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. 6404                             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.