§ 659-a. Reporting of federal partnership adjustments. (a) If any item
required to be shown on a federal partnership return, for any
partnership that has a resident partner or any income derived from New
York sources, including any gross income, gain, loss, deduction,
penalty, credit, or tax for any year of such partnership, including any
amount of any partner's distributive share, is changed or corrected by
the commissioner of internal revenue or other officer of the United
States or other competent authority, and the partnership is issued an
adjustment under section sixty-two hundred twenty-five of the internal
revenue code or makes a federal election for alternative payment with
the internal revenue service as part of a partnership level audit, or
files an administrative adjustment request, the partnership shall
report, in the manner prescribed by the commissioner, each change or
correction in sufficient detail to allow for the computation of the New
York tax change or correction for the reviewed year within ninety days
after the date of each final federal determination, or ninety days after
the filing of an administrative adjustment request.

(b) Definitions. As used in this section, the following terms shall
have the following meanings:

(1) "Administrative adjustment request" means an administrative
adjustment request filed by a partnership under section sixty-two
hundred twenty-seven of the internal revenue code.

(2) "Direct partner" means a partner that holds an interest directly
in an impacted partnership during the reviewed year.

(3) "Federal election for alternative payment" means the election
described in section sixty-two hundred twenty-six of the internal
revenue code, relating to alternative payment of imputed underpayment by
partnership.

(4) "Final federal adjustment" means a change to an item of gross
income, gain, loss, deduction, penalty, credit, or a partner's
distributive share, of an impacted partnership determined under section
sixty-two hundred twenty-five of the internal revenue code that is
considered fixed and final under the internal revenue code.

(5) "Final federal determination date" means the date on which each
adjustment or resolution resulting from an internal revenue service
examination is assessed pursuant to section sixty-two hundred three of
the internal revenue code.

(6) "Impacted partnership" means a partnership that (i) was issued a
final federal adjustment; or (ii) made a federal election for
alternative payment with the internal revenue service as part of a
federal partnership level audit; or (iii) filed an administrative
adjustment request with the internal revenue service.

(7) "Indirect partner" means a partner, member, or shareholder in a
partnership or other pass-through entity that itself held an interest
indirectly, or through another indirect partner, in an impacted
partnership during the reviewed year.

(8) "New York election for alternative payment" means the election
described in paragraph three of subsection (d) of this section, relating
to payment by the impacted partnership in lieu of taxes owed by its
direct and indirect partners.

(9) "Reviewed year" has the meaning provided in paragraph one of
subsection (d) of section sixty-two hundred twenty-five of the internal
revenue code.

(10) "Tiered partner" means any partner in an impacted partnership
where such partner is a partnership, S corporation, or other
pass-through entity for New York tax purposes.

(c) Reporting adjustments to federal taxable income. Where
partnerships and partners were required to report final federal
adjustments or administrative adjustment requests for federal purposes
by taking such adjustments into account on a timely filed amended
federal income tax return for the reviewed year, such partnerships and
partners shall report and pay any New York tax owed under article
nine-A, twenty-two, thirty-three, or any law authorized by article
thirty of this chapter in the same manner for the reviewed year. Such
partnerships and partners shall report final federal adjustments arising
from an audit or other action by the internal revenue service or
reported by the taxpayer on a timely filed amended federal income tax
return, including a return or other similar report filed pursuant to
section sixty-two hundred twenty-five of the internal revenue code, or
federal claim for refund by filing a federal adjustments report and, if
applicable, such partnerships and partners shall pay the additional tax
due no later than one hundred eighty days after the final determination
date.

(d) Reporting federal adjustments pursuant to a partnership level
audit and administrative adjustment request. Except for adjustments
required to be reported under subsection (c) of this section,
partnerships and partners shall report final federal adjustments arising
from a partnership level audit or an administrative adjustment request
and make payments as required under this subsection in the year of
adjustment.

(1) Unless a de minimis exception applies, impacted partnerships must
report any final federal adjustments and administrative adjustment
requests regardless of tax impact. Such report must include the impacted
partnership's direct and indirect partner identifying information and
any other information the commissioner may require.

(2) Except for those subject to a properly made election for
alternative payment under paragraph three of this subsection, any
changes or corrections made by the internal revenue service pursuant to
such a final federal adjustment or as a result of an administrative
adjustment request must be reported by the impacted partnership as
follows:

(A) No later than ninety days after the final determination date, the
partnership shall:

(i) file a completed federal adjustments report, including any
information as required by the commissioner;

(ii) notify each of its direct partners of their distributive share of
the final federal adjustment, including any information required by the
commissioner;

(iii) file an amended return as required under paragraph one of
subsection (c) of section six hundred fifty-eight and section six
hundred fifty-nine of this article for the reviewed year;

(iv) file an amended group return if the partnership originally filed
a group return, and remit the additional amount that would have been due
under subsection (c) of section six hundred fifty-eight of this article
had the final federal adjustments been properly reported originally as
required; and

(v) remit any additional amounts that would have been due under
paragraph four of subsection (c) of section six hundred fifty-eight of
this article had the final federal adjustments been properly originally
reported as required.

(B) No later than one hundred eighty days after the final
determination date, each direct partner of an impacted partnership that
is taxed under article nine-A, twenty-two, thirty-three, or any law
authorized by article thirty of this chapter, other than a direct
partner that is included on a group return under clause (iv) of
subparagraph (A) of this paragraph, shall:

(i) file a federal adjustments report reporting their distributive
share of the adjustments reported to them by the impacted partnership
under clause (ii) of subparagraph (A) of this paragraph; and

(ii) remit any additional amount of tax due, plus any penalty and
interest computed under this article based on the due date of the
originally filed return for the reviewed year, less any credit for
amounts paid or withheld and remitted on behalf of the direct partner.

(3) New York election for alternative payment by the partnership. An
impacted partnership making an election under this subsection shall:

(A) no later than ninety days after the final determination date, file
a completed federal adjustments report, including any information as
required by the commissioner, and provide notice, in the manner required
by the commissioner, that it is making the election under this
subsection.

(B) no later than one hundred eighty days after the final
determination date, pay an amount, in lieu of taxes owed by its direct
and indirect partners. Such amount shall be determined based on the sum
of the following:

(i) for direct partners subject to tax pursuant to article nine-A or
thirty-three of this chapter in the reviewed year, the partner's
distributive share of gross income or gain and deduction apportioned to
New York using the apportionment rules described in article nine-A of
this chapter multiplied by the highest tax rate under such article
nine-A in effect for the reviewed year; and

(ii) for a direct partner subject to tax under this article that is
treated as a nonresident pursuant to paragraph two of subsection (b) of
section six hundred five of this article in the reviewed year, the
partner's distributive share of gross income or gain and deduction
allocated to New York using the allocation rules described in this
article multiplied by the highest tax rate under this article in effect
for the reviewed year; and

(iii) for a direct partner subject to tax under this article that is
treated as a resident pursuant to paragraph one of subsection (b) of
section six hundred five of this article in the reviewed year, the
partner's distributive share of gross income or gain and deduction
multiplied by the highest tax rate under this article in effect for the
reviewed year; and

(iv) for a direct partner subject to tax under article thirty of this
chapter that is treated as a resident pursuant to subsection (a) of
section thirteen hundred five of this chapter in the reviewed year, the
amount described in clause (iii) of this subparagraph and the partner's
distributive share of gross income or gain and deduction multiplied by
the highest tax rate under section thirteen hundred four of this chapter
in effect for the reviewed year; and

(v) for tiered partners, include the sum of:

(I) the amount of gross income, gain or deduction from the adjustment
that would ultimately flow to a taxpayer subject to tax under article
nine-A or thirty-three of this chapter in the reviewed year apportioned
to New York using the apportionment rules described in article nine-A of
this chapter multiplied by the highest tax rate under such article
nine-A in effect for the reviewed year; and

(II) the amount of gross income, gain or deduction from the adjustment
that would ultimately flow to a taxpayer subject to tax under this
article and treated as a nonresident pursuant to paragraph two of
subsection (b) of section six hundred five of this article in the
reviewed year allocated to New York using the allocation rules described
in this article multiplied by the highest tax rate under this article in
effect for the reviewed year; and

(III) the amount of gross income, gain or deduction from the
adjustment that would ultimately flow to a taxpayer subject to tax under
this article and treated as a resident pursuant to paragraph one of
subsection (b) of section six hundred five of this article in the
reviewed year multiplied by the highest tax rate under this article in
effect for the reviewed year; and

(IV) any amount of gross income, gain or deduction from the adjustment
that cannot be established to be properly allocable to a taxpayer
described in items (I) or (II) of this clause, multiplied by the highest
tax rate under this article in effect for the reviewed year; and

(vi) any applicable penalty and interest as required by this article.

(4) Tiered partners. The direct and indirect partners of an impacted
partnership that are tiered partners, and all of the partners of those
tiered partners that are subject to tax under article nine-a,
twenty-two, thirty-three, or any law authorized by article thirty of
this chapter, are subject to the reporting and payment requirements of
paragraph two of this subsection and the tiered partners are entitled to
make the elections provided in paragraphs three and five of this
subsection. The tiered partners or their partners shall make all
required reports and payments no later than ninety days after the time
for filing and furnishing statements to tiered partners and their
partners pursuant to section sixty-two hundred twenty-six of the
internal revenue code and the regulations thereunder.

(5) Modified reporting and payment method. In the manner required by
the commissioner, an impacted partnership or tiered partner may enter
into an agreement with the commissioner to utilize an alternative
reporting and payment method, including applicable time requirements or
any other provision of this section, if the impacted partnership or
tiered partner demonstrates that the requested method will reasonably
provide for the reporting and payment of taxes, penalties, and interest
due under the provisions of this section, or if the impacted partnership
or tiered partner can show that their direct partners have agreed to
allow a refund of the tax to the entity. Application for approval of an
alternative reporting and payment method must be made by the impacted
partnership or tiered partner within the time for election as provided
in paragraph three or four of this subsection, as appropriate.

(6) Effect of election by impacted partnership or tiered partner and
payment of amount due. (A) The election made pursuant to paragraph three
or five of this subsection is irrevocable, unless the commissioner, in
their discretion, determines otherwise.

(B) If properly reported and paid by the impacted partnership or
tiered partner, the amount determined in subparagraph (B) of paragraph
three of this subsection, or similarly under an optional election
pursuant to paragraph five of this subsection, will be treated as a
payment in lieu of taxes owed by its direct and indirect partners, to
the extent applicable, on the same final federal adjustment. The direct
partners or indirect partners may not take any deduction or credit for
this amount or claim a refund of such amount. Provided, however, that
nothing in this paragraph shall preclude a resident direct partner from
claiming a credit against taxes paid to the commissioner pursuant to
article twenty-two of this chapter for any amounts paid by the impacted
partnership or tiered partner on such resident partner's behalf to
another state or local tax jurisdiction in accordance with the
provisions of section six hundred twenty of this article.

(7) Failure of impacted partnership or tiered partner to report or
remit. Nothing in this section shall prevent the commissioner from
assessing direct or indirect partners for any taxes due, using the best
information available, in the event that an impacted partnership, or a
direct or indirect partner of an impacted partnership, fails to timely
report or remit any report or additional taxes due required by this
section for any reason.

(e) De minimis exception. The commissioner shall have the discretion
to promulgate regulations to establish a de minimis amount upon which a
taxpayer shall not be required to comply with subsections (c) and/or (d)
of this section.

(f) Estimated tax payments during the course of a federal audit. An
impacted partnership may make estimated payments of the tax expected to
result from a pending internal revenue service audit, prior to the due
date of the federal adjustments report and prior to filing the report
with the commissioner. If an impacted partnership makes an estimated
payment under this subsection, other than an estimated payment made
under paragraph four of subsection (c) of section six hundred
fifty-eight of this article, such estimated payment must be accompanied
by an irrevocable election under paragraph three of subsection (d) of
this section. The estimated tax payments shall be credited against any
tax liability ultimately found to be due and will limit the accrual of
further statutory interest on such amount. If the estimated tax payments
exceed the final tax liability and statutory interest ultimately
determined to be due, the taxpayer is entitled to a refund or credit of
the excess, provided the taxpayer files a federal adjustments report or
claim for refund or credit of tax pursuant to section six hundred
eighty-six of this article, no later than one year following the final
determination date.

(g) Claims for refund or credits of tax arising from a final federal
adjustment. Except for final federal adjustments required to be reported
for the year of the adjustment, a taxpayer may file a claim for refund
or credit of tax arising from federal adjustments on or before the later
of:

(1) the expiration of the last day for filing a claim for refund or
credit pursuant to section six hundred eighty-seven of this article,
including any extensions; or

(2) one year from the date a federal adjustment report pursuant to
subsection (c) or (d) of this section, as applicable, was due, including
any extensions pursuant to subsection (h) of this section.

(h) Scope of adjustments and extensions of time. (1) Unless otherwise
agreed in writing by the taxpayer and the commissioner, any adjustments
by the commissioner or the taxpayer made after the period of limitations
for assessment or refund has terminated under article nine-A,
twenty-two, thirty-three, or any law authorized by article thirty of
this chapter, is limited to changes to the taxpayer's tax liability
arising from such a final federal adjustment.

(2) The time periods provided for in this section may be extended:

(A) automatically, upon written notice to the commissioner, by sixty
days for an impacted partnership or tiered partner which has ten
thousand or more direct partners; or

(B) by written agreement between the taxpayer and the commissioner.

(3) Any extension granted under this subsection for filing a federal
adjustments report extends the last day prescribed by law for assessing
any additional tax arising from the adjustments to federal taxable
income and the period for filing a claim for refund or credit of taxes
under article nine-A, twenty-two, thirty-three, or any law authorized by
article thirty of this chapter.