§ 685. Additions to tax and civil penalties.--(a) (1) Failure to file
tax return.--

(A) In case of failure to file a tax return under this article on or
before the prescribed date (determined with regard to any extension of
time for filing), unless it is shown that such failure is due to
reasonable cause and not due to willful neglect, there shall be added to
the amount required to be shown as tax on such return five percent of
the amount of such tax if the failure is for not more than one month,
with an additional five percent for each additional month or fraction
thereof during which such failure continues, not exceeding twenty-five
percent in the aggregate.

(B) In the case of a failure to file a return of tax within sixty days
of the date prescribed for filing of such return (determined with regard
to any extension of time for filing), unless it is shown that such
failure is due to reasonable cause and not due to willful neglect, the
addition to tax under subparagraph (A) of this 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.

(C) For purposes of this paragraph, 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.

(2) Failure to pay tax shown on return.--In case of failure to pay the
amounts shown as tax on any return required to be filed under this
article on or before the prescribed date (determined with regard to any
extension of time for payment), unless it is shown that such failure is
due to reasonable cause and not due to willful neglect, there shall be
added to the amount shown as tax on such return one-half of one per cent
of the amount of such tax if the failure is not for more than one month,
with an additional one-half of one per cent for each additional month or
fraction thereof during which such failure continues, not exceeding
twenty-five per cent in the aggregate. For the purpose of computing the
addition for any month, the amount of tax shown on the return shall be
reduced by the amount of any part of the tax which is paid on or before
the beginning of such month and by the amount of any credit against the
tax which may be claimed upon the return. If the amount of tax required
to be shown on a return is less than the amount shown as tax on such
return, this paragraph shall be applied by substituting such lower
amount.

(3) Failure to pay tax required to be shown on return.--In case of
failure to pay any amount in respect of any tax required to be shown on
a return required to be filed under this article which is not so shown
(including an assessment made pursuant to subsection (a) of section six
hundred eighty-two of this article) within twenty-one calendar days of
the date of a notice and demand therefor (ten business days if the
amount for which such notice and demand is made equals or exceeds one
hundred thousand dollars), unless it is shown that such failure is due
to reasonable cause and not due to willful neglect, there shall be added
to the amount of tax stated in such notice and demand one-half of one
percent of such tax if the failure is not for more than one month, with
an additional one-half of one percent for each additional month or
fraction thereof during which such failure continues, not exceeding
twenty-five percent in the aggregate. For the purpose of computing the
addition for any month, the amount of tax stated in the notice and
demand shall be reduced by the amount of any part of the tax which is
paid before the beginning of such month.

(4) Limitations on additions.--

(A) With respect to any return, the amount of the addition under
paragraph one of this subsection shall be reduced by the amount of the
addition under paragraph two of this subsection for any month to which
an addition applies under both paragraphs one and two. In any case
described in subparagraph (B) of such paragraph one, the amount of the
addition under such paragraph one shall not be reduced below the amount
provided in such subparagraph.

(B) With respect to any return, the maximum amount of the addition
permitted under paragraph three of this subsection shall be reduced by
the amount of the addition under paragraph one of this subsection
(determined without regard to subparagraph (B) of such paragraph) which
is attributable to the tax for which the notice and demand is made and
which is not paid within ten days of such notice and demand.

(b) Deficiency due to negligence.--

(1) If any part of a deficiency is due to negligence or intentional
disregard of this article or rules or regulations hereunder (but without
intent to defraud), there shall be added to the tax an amount equal to
five percent of the deficiency.

(2) There shall be added to the tax (in addition to the amount
determined under paragraph one of this subsection) an amount equal to
fifty percent of the interest payable under section six hundred
eighty-four with respect to the portion of the underpayment described in
such paragraph one which is attributable to the negligence or
intentional disregard referred to in such paragraph one, for the period
beginning on the last date prescribed by law for payment of such
underpayment (determined without regard to any extension) and ending on
the date of the assessment of the tax (or, if earlier, the date of the
payment of the tax).

(3) If any payment is shown on a return made by a payor with respect
to dividends, patronage dividends and interest under subsection (a) of
section six thousand forty-two, subsection (a) of section six thousand
forty-four or subsection (a) of section six thousand forty-nine of the
internal revenue code, respectively, and the payee fails to include any
portion of such payment in New York adjusted gross income, any portion
of an underpayment attributable to such failure shall be treated, for
purposes of this subsection, as due to negligence in the absence of
clear and convincing evidence to the contrary. If any penalty is imposed
under this subsection by reason of the preceding sentence, the amount of
the penalty imposed by paragraph one of this subsection shall be five
percent of the portion of the underpayment which is attributable to the
failure described in the preceding sentence.

(c) Failure by individual to pay estimated income tax.--

(1) Addition to the tax.--Except as otherwise provided in this
subsection and subsection (d) of this section, in the case of any
underpayment of estimated tax by an individual, there shall be added to
the tax under this article for the taxable year an amount determined by
applying the underpayment rate established under subsection (j) of
section six hundred ninety-seven of this part, or if no rate is set, at
the rate of seven and one-half percent per annum, to the amount of the
underpayment for the period of the underpayment. Such period shall run
from the due date for the required installment to the earlier of the
fifteenth day of the fourth month following the close of the taxable
year or, with respect to any portion of the underpayment, the date on
which such portion is paid. For purposes of determining such date, a
payment of estimated tax shall be credited against unpaid required
installments in the order in which such installments are required to be
paid. There shall be four required installments for each taxable year,
due on April fifteenth, June fifteenth and September fifteenth of such
taxable year and on January fifteenth of the following taxable year.

(2) Amount of underpayment.--For purposes of paragraph one, the amount
of the underpayment shall be the excess of the required installment over
the amount, if any, of the installment paid on or before the due date
for the installment.

(3) Required installment. (A) Except as provided in paragraph four of
this subsection, the amount of any required installment shall be
twenty-five percent of the required annual payment.

(B) The required annual payment is the lesser of

(i) ninety percent of the tax shown on the return for the taxable year
(or, if no return is filed, ninety percent of the tax for such year), or

(ii) one hundred percent of the tax shown on the return of the
individual for the preceding taxable year. Provided, however, the tax
shown on such return for taxable years beginning in two thousand two
shall be the tax calculated as if such years began in two thousand
three. Provided further, however, that the tax shown on such return for
taxable years beginning in two thousand eight shall be calculated as if
paragraph three of subsection (f) of section six hundred fifteen of this
article has been in effect for taxable years beginning in two thousand
eight. Further provided that the tax shown on such return for taxable
years beginning in two thousand eight shall be the tax calculated as if
such years began in two thousand nine. Provided, however, that the tax
shown on such return for taxable years beginning in two thousand nine
shall be calculated as if paragraph two of subsection (g) of section six
hundred fifteen of this article was in effect for taxable years
beginning in two thousand nine and ending before two thousand thirteen.

Clause (ii) of this subparagraph shall not apply if the preceding
taxable year was not a taxable year of twelve months or if the
individual did not file a return for such preceding taxable year.

(C) Limitation on use of preceding year's tax.

(i) General. If the New York adjusted gross income shown on the return
of the individual for the preceding taxable year exceeds one hundred
fifty thousand dollars, clause (ii) of subparagraph (B) of this
paragraph shall be applied by substituting "one hundred ten percent" for
"one hundred percent".

(ii) Separate returns. In the case of a husband and wife who file
separate returns pursuant to subsection (b) of section six hundred
fifty-one for the taxable year for which the amount of the installment
is being determined, clause (i) of this subparagraph shall be applied by
substituting "seventy-five thousand dollars" for "one hundred fifty
thousand dollars".

(4) Annualized income installment.--(A) In general.--In the case of
any required installment, if the individual establishes that the
annualized income installment determined under subparagraph (B) of this
paragraph is less than the amount determined under paragraph three, the
annualized income installment shall be the required installment. Any
reduction in a required installment resulting from the application of
this subparagraph shall be recaptured by increasing the amount of the
next required installment determined under paragraph three by the amount
of such reduction, and by increasing successive required installments as
necessary to effect full recapture.

(B) Determination of annualized income installment.--In the case of
any required installment, the annualized income installment is the
excess, if any, of an amount equal to the applicable percentage of the
tax for the taxable year computed by placing on an annualized basis the
taxable income for months in the taxable year ending before the due date
for the installment, over the aggregate amount of any prior required
installments for the taxable year. The applicable percentage of the tax
shall be twenty-two and one-half percent in the case of the first
installment, forty-five percent in the case of the second installment,
sixty-seven and one-half percent in the case of the third installment
and ninety percent in the case of the fourth installment, and shall be
computed without regard to any increase in the rates applicable to the
taxable year unless such increase was enacted at least thirty days prior
to the due date of the installment.

(5) Definitions and special rules.--(A) Definition of the term tax and
application of credits against tax.--For purposes of this subsection and
subsection (d), the term "tax" means the tax imposed under this article
minus the credits against tax allowed under this article, other than the
credit under section six hundred seventy-three, relating to tax withheld
on wages. The credit allowed under section six hundred seventy-three for
the taxable year shall be deemed a payment of estimated tax, and an
equal part of such amount shall be deemed paid on each installment due
date for such taxable year, unless the taxpayer establishes the dates on
which all amounts were actually withheld, in which case the amounts so
withheld shall be deemed payments of estimated tax on the dates on which
such amounts were actually withheld.

(B) Special rule where return filed on or before January
thirty-first.--If, on or before January thirty-first of the following
taxable year, the taxpayer files a return for the taxable year and pays
in full the amount computed on the return as payable, then no addition
to tax shall be imposed under paragraph one with respect to any
underpayment of the fourth required installment for the taxable year.

(C) Special rules for farmers and fishermen.--For purposes of this
subsection, if an individual is a farmer or fisherman for any taxable
year there shall be only one required installment for the taxable year,
due on January fifteenth of the following taxable year in an amount
equal to the required annual payment determined under paragraph three by
substituting sixty-six and two-thirds percent for ninety percent and
without regard to subparagraph (C) of paragraph three of this
subsection. Subparagraph (B) of this paragraph shall be applied by
substituting March first for January thirty-first and by treating the
required installment under this subparagraph as the fourth required
installment. An individual is a farmer or fisherman for any taxable year
if the individual's federal gross income from farming or fishing
(including oyster farming) for the taxable year is at least two-thirds
of the total federal gross income from all sources for the taxable year
or if such individual's federal gross income from farming or fishing
(including oyster farming) shown on the return of the individual for the
preceding taxable year is at least two-thirds of the total federal gross
income from all sources shown on such return.

(D) Fiscal years.--In applying this subsection to a taxable year
beginning on any date other than January first, there shall be
substituted, for the months specified in this subsection, the months
which correspond thereto.

(E) Short taxable year.--This subsection shall be applied to taxable
years of less than twelve months in accordance with regulations
prescribed by the tax commission.

(F) Joint estimated tax of husband and wife.--A husband and wife may
make the required annual payment determined under paragraph three as if
they were one taxpayer, in which case the liability under paragraph one
with respect to the estimated tax shall be joint and several. No such
joint payment may be made if husband and wife are separated under a
decree of divorce or separate maintenance, or if they have different
taxable years. If a joint payment is made but husband and wife determine
their taxes under this article separately, the estimated tax for such
year may be treated as the estimated tax of either husband or wife, or
may be divided between them, as they may elect.

(6) Trusts and certain estates. (A) General. This subsection shall
apply to any trust or estate except as provided in subparagraphs (B) and
(C) of this paragraph.

(B) Exception for estates and certain trusts. This subsection shall
not apply with respect to any taxable year ending before the date two
years after the date of the decedent's death to (i) the estate of such
decedent or (ii) any trust all of which was treated (under subpart E of
part I of subchapter J of chapter one of the internal revenue code) as
owned by the decedent and to which the residue of the decedent's estate
will pass under his will (or, if no will is admitted to probate, which
is the trust primarily responsible for paying debts, taxes and expenses
of administration).

(C) Special rule for annualizations. In the case of any estate or
trust, subparagraph (B) of paragraph four of this subsection shall be
applied by substituting "ending before the date one month before the due
date for the installment" for "ending before the due date for the
installment".

(D) In the case of a trust, the trustee may elect to treat any portion
of a payment of estimated tax made by such trust for any taxable year of
the trust as a payment made by a beneficiary of such trust. Any amount
so treated shall be treated as paid or credited to the beneficiary on
the last day of such taxable year, and for purposes of this subsection,
the amount so treated shall not be treated as a payment of estimated tax
made by the trust, but shall be treated as a payment of estimated tax
made by such beneficiary on the January fifteenth following the end of
the trust's taxable year.

(E) An election under subparagraph (D) of this paragraph shall be made
on or before the sixty-fifth day after the close of the taxable year and
in such manner as the commissioner of taxation and finance may
prescribe.

(F) Extension to last year of estate.--In the case of a taxable year
reasonably expected to be the last taxable year of an estate, any
reference in subparagraph (D) of this paragraph to a trust shall be
treated as including a reference to an estate, and the fiduciary of the
estate shall be treated as the trustee.

(d) Exceptions to addition to tax for failure to pay estimated income
tax.--

(1) Where tax is small amount.--No addition to tax shall be imposed
under subsection (c) for any taxable year if the tax shown on the return
for such taxable year (or, if no return is filed, the tax), reduced by
the credit allowable under section six hundred seventy-three, is less
than three hundred dollars.

(2) Where no tax liability for preceding taxable year.--No addition to
tax shall be imposed under subsection (c) for any taxable year if the
preceding taxable year was a taxable year of twelve months, the
individual did not have any liability for tax under this article for the
preceding taxable year and throughout the preceding taxable year the
individual was a resident of this state or a nonresident or part-year
resident who had New York source income.

(3) Installment due on or after individual's death.--No addition to
tax shall be imposed under subsection (c) with respect to any
installment due on or after the individual's death.

(4) Waiver in certain cases.--(A) In general.--No addition to tax
shall be imposed under subsection (c) with respect to any underpayment
to the extent the tax commission determines that by reason of casualty,
disaster or other unusual circumstances the imposition of such addition
to tax would be against equity and good conscience.

(B) Newly retired or disabled individuals.--No addition to tax shall
be imposed under subsection (c) with respect to any underpayment if the
tax commission determines that in the taxable year for which estimated
payments were required to be made or in the taxable year preceding such
taxable year the taxpayer retired after having attained age sixty-two or
became disabled, and that such underpayment was due to reasonable cause
and not to willful neglect.

(e) Deficiency due to fraud.--(1) If any part of a deficiency is due
to fraud, there shall be added to the tax an amount equal to two times
the deficiency.

(2) The addition to tax under this subsection shall be in lieu of any
other addition to tax imposed by subsection (a) or (b).

(3) In the case of a joint return under section six hundred fifty-one,
this subsection shall not apply with respect to the tax of a spouse
unless some part of the underpayment is due to the fraud of such spouse.

(f) Non-willful failure to pay withholding tax.-- If any employer,
without intent to evade or defeat any tax imposed by this article or the
payment thereof, shall fail to make a return and pay a tax withheld by
him at the time required by or under the provisions of section six
hundred seventy-four, such employer shall be liable for such tax and
shall pay the same together with interest thereon and the addition to
tax provided in subsection (a), and such interest and addition to tax
shall not be charged to or collected from the employee by the employer.
The tax commission shall have the same rights and powers for the
collection of such tax, interest and addition to tax against such
employer as are now prescribed by this article for the collection of tax
against an individual taxpayer.

(g) Willful failure to collect and pay over tax.-- Any person required
to collect, truthfully account for, and pay over the tax imposed by this
article who willfully fails to collect such tax or truthfully account
for and pay over such tax or willfully attempts in any manner to evade
or defeat the tax or the payment thereof, shall, in addition to other
penalties provided by law, be liable to a penalty equal to the sum of
(i) the total amount of the tax evaded, or not collected, or not
accounted for and paid over, and (ii) the interest that has accrued on
the total amount of tax evaded on the date this penalty is first imposed
until this penalty is paid with interest thereon. No addition to tax
under subsections (b) or (e) of this section shall be imposed for any
offense to which this subsection applies. The tax commission shall have
the power, in its discretion, to waive, reduce or compromise any penalty
under this subsection.

(h) Failure to file certain information returns.-- (1) Except as
otherwise provided in this paragraph, in case of each failure to file a
statement of a payment to another person, required under authority of
subsection (d) of section six hundred fifty-eight (relating to
information at source) on the date prescribed therefor (determined with
regard to any extension of time for filing), unless it is shown that
such failure is due to reasonable cause and not to willful neglect,
there shall, upon notice and demand by the commissioner and in the same
manner as tax, be paid by the person so failing to file the statement, a
penalty of fifty dollars for each statement not so filed, but the total
amount imposed on the delinquent person for all such failures during any
calendar year shall not exceed ten thousand dollars.

(2) If any partnership, S corporation, or trust required to file a
return or report under subsection (c) or subsection (f) of section six
hundred fifty-eight or under section six hundred fifty-nine of this
article for any taxable year fails to file such return or report at the
time prescribed therefor (determined with regard to any extension of
time for filing), or files a return or report which fails to show the
information required under such subsection (c) or section six hundred
fifty-nine of this article, unless it is shown that such failure is due
to reasonable cause and not due to willful neglect, there shall, upon
notice and demand by the commissioner and in the same manner as tax, be
paid by the partnership or S corporation a penalty for each month (or
fraction thereof) during which such failure continues (but not to exceed
five months). The amount of such penalty for any month is the product of
fifty dollars, multiplied by the number of partners in the partnership
or shareholders in the S corporation during any part of the taxable year
who were subject to tax under this article during any part of such
taxable year, except that, in the case of a trust, the penalty shall be
equal to one hundred fifty dollars a month up to a maximum of fifteen
hundred dollars per taxable year.

(i) Additional penalty.--Any person who with fraudulent intent shall
fail to pay, or to deduct or withhold and pay, any tax, or to make,
render, sign or certify any return, or to supply any information within
the time required by or under this article, shall be liable to penalty
of not more than one thousand dollars, in addition to any other amounts
required under this article, to be imposed, assessed and collected by
the tax commission. The tax commission shall have the power, in its
discretion, to waive, reduce or compromise any penalty under this
subsection.

(j) Fraudulent statement or failure to furnish statement to employee.
-- In addition to any criminal penalties provided by law, any person
required under the provisions of section six hundred seventy-two to
furnish a statement to an employee, who wilfully furnishes a false or
fraudulent statement, or who wilfully fails to furnish a statement in
the manner, at the time, and showing the information required under
section six hundred seventy-two, or regulations prescribed thereunder,
shall for each such failure be subject to a penalty under this article
of fifty dollars.

(k) Failure to supply identifying numbers. -- If any person who is
required by regulations prescribed under subsection (b) of section six
hundred fifty-eight

(1) to include his identifying number in any return, statement, or
other document;

(2) to furnish his identifying number to another person; or

(3) to include in any return, statement or other document made with
respect to another person the identifying number of such other person,
fails to comply with such requirement at the time prescribed by such
regulations, such person shall, unless it is shown that such failure is
due to reasonable cause and not due to willful neglect, pay a penalty of
five dollars for each such failure described in paragraph one of this
subsection and fifty dollars for each such failure described in
paragraphs two and three of this subsection, except that the total
amount imposed on such person for all such failures during any calendar
year shall not exceed ten thousand dollars; except that for failure to
include his own identification number in any return, statement or other
document, such penalty shall not be imposed unless such person shall
have failed to supply his identification number to the tax commission
within thirty days after demand therefor.

(l) Additions treated as tax. -- The additions to tax and penalties
provided by this section shall be paid upon notice and demand and shall
be assessed, collected and paid in the same manner as taxes, and any
reference in this article to income tax or tax imposed by this article,
shall be deemed also to refer to the additions to tax and penalties
provided by this section. For purposes of section six hundred
eighty-one, this subsection shall not apply to --

(1) any addition to tax under subsection (a) except as to that portion
attributable to a deficiency;

(2) any addition to tax under subsection (c);

(3) any penalty under subsection (h) and any additional penalty under
subsection (i); and

(4) any penalties under subsections (j), (k), (q), (r), (s), (u), (v)
and (w).

(m) Determination of deficiency. -- For purposes of subsections (b)
and (e), the amount shown as the tax by the taxpayer upon his return
shall be taken into account in determining the amount of the deficiency
only if such return was filed on or before the last day prescribed for
the filing of such return, determined with regard to any extension of
time for such filing.

(n) Person defined. For purposes of subsections (g), (i), (o), (q) and
(r), the term person includes an individual, corporation, partnership or
limited liability company or an officer or employee of any corporation
(including a dissolved corporation), or a member or employee of any
partnership, or a member, manager or employee of a limited liability
company, who as such officer, employee, manager or member is under a
duty to perform the act in respect of which the violation occurs.

(o) Failure to make deposits of taxes. -- In case of failure by any
person required by this article, or by regulations of the tax commission
under this article, to deposit on the date prescribed therefor any
amount of tax imposed by this article in a depository authorized
pursuant to subsection (a) of section six hundred ninety-two of this
article to receive such deposits, unless it is shown that such failure
is due to reasonable cause and not due to willful neglect, there shall
be imposed on such person a penalty of five per cent of the amount of
the underpayment. For purposes of this subsection the term
"underpayment" means the excess of the amount of the tax required to be
so deposited over the amount, if any, thereof, deposited on or before
the date prescribed therefor.

* (p) Substantial understatement of liability.-- (1) If there is a
substantial understatement of income tax for any taxable year, there
shall be added to the tax an amount equal to ten percent of the amount
of any underpayment attributable to such understatement. For purposes of
this subsection, there is a substantial understatement of income tax for
any taxable year if the amount of the understatement for the taxable
year exceeds the greater of ten percent of the tax required to be shown
on the return for the taxable year, or two thousand dollars. For
purposes of the preceding sentence, the term "understatement" means the
excess of the amount of the tax required to be shown on the return for
the taxable year, over the amount of tax imposed which is shown on the
return reduced by any rebate (within the meaning of subsection (g) of
section six hundred eighty-one). The excess under the preceding sentence
shall be determined without regard to items to which subsection (p-1) of
this section applies. The commissioner may waive all or any part of the
addition to tax provided by this subsection on a showing by the taxpayer
that there was reasonable cause for the understatement, or part thereof,
and that the taxpayer acted in good faith.

(2) The amount of the understatement under paragraph (1) shall be
reduced by that portion of the understatement which is attributable to
(A) the tax treatment of any item by the taxpayer if there is or was
substantial authority for such treatment, or (B) any item if the
relevant facts affecting the item's tax treatment are adequately
disclosed in the return or in a statement attached to the return.

(3)(A) Subparagraph (B) of paragraph two of this subsection shall not
apply to any item attributable to a tax shelter.

(B) For purposes of this paragraph, the term "tax shelter" means

(i) a partnership or other entity,

(ii) any investment plan or arrangement, or

(iii) any other plan or arrangement,
if a significant purpose of such partnership, entity, plan, or
arrangement is the avoidance or evasion of tax.

* NB Effective until July 1, 2024

* (p) Substantial understatement of liability.--If there is a
substantial understatement of income tax for any taxable year, there
shall be added to the tax an amount equal to ten percent of the amount
of any underpayment attributable to such understatement. For purposes of
this subsection, there is a substantial understatement of income tax for
any taxable year if the amount of the understatement for the taxable
year exceeds the greater of ten percent of the tax required to be shown
on the return for the taxable year, or two thousand dollars. For
purposes of the preceding sentence, the term "understatement" means the
excess of the amount of the tax required to be shown on the return for
the taxable year, over the amount of tax imposed which is shown on the
return reduced by any rebate (within the meaning of subsection (g) of
section six hundred eighty-one). The amount of such understatement shall
be reduced by that portion of the understatement which is attributable
to the tax treatment of any item by the taxpayer 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. The tax commission may waive all or any part of the addition to
tax provided by this subsection on a showing by the taxpayer that there
was reasonable cause for the understatement, or part thereof, and that
the taxpayer acted in good faith.

* NB Effective July 1, 2024

* (p-1) Reportable transaction understatement.-- (1) If a taxpayer has
a reportable transaction understatement for any taxable year, there
shall be added to the tax an amount equal to twenty percent of the
amount of such understatement.

(2) For purposes of this section, the term "reportable transaction
understatement" means the sum of:

(A) the product of--

(i) the amount of the increase (if any) in the applicable tax base
which results from a difference between the proper tax treatment of an
item to which this section applies and the taxpayer's treatment of such
item (as shown on the taxpayer's return of tax), and

(ii) the highest rate of tax imposed by this article, and

(B) the amount of the decrease (if any) in the aggregate amount of
credits determined under this article which results from a difference
between the taxpayer's treatment of an item to which this section
applies (as shown on the taxpayer's return of tax) and the proper tax
treatment of such item.

For purposes of subparagraph (A) of this paragraph, any reduction of
the excess of deductions allowed for the taxable year over gross income
for such year, and any reduction in the amount of capital losses which
would (without regard to section one thousand two hundred eleven of the
internal revenue code) be allowed for such year, shall be treated as an
increase in the applicable tax base.

(3) This subsection shall apply to any item which is attributable to--

(A) any listed transaction, and

(B) any reportable transaction (other than a listed transaction) if a
significant purpose of such transaction is the avoidance or evasion of
tax.

(4) Paragraph one of this subsection shall be applied by substituting
"thirty percent" for "twenty percent" with respect to the portion of any
reportable transaction understatement with respect to which the
requirement of clause (i) of subparagraph (B) of paragraph ten of this
subsection is not met.

(5) For purposes of this subsection, the terms "reportable
transaction" and "listed transaction" have the meanings given to such
terms by section twenty-five of this chapter, the term "reportable
transaction" shall include a "New York reportable transaction" as
defined in such section twenty-five, and the term "listed transaction"
shall include any transaction designated as a tax avoidance transaction
pursuant to such section twenty-five.

(6) In the case of an understatement (as defined in subsection (p) of
this section):

(A) the amount of such understatement (determined without regard to
this paragraph) shall be increased by the aggregate amount of reportable
transaction understatements for purposes of determining whether such
understatement is a substantial understatement under subsection (p) of
this section, and (B) the addition to tax under subsection (p) of this
section shall apply only to the excess of the amount of the substantial
understatement (if any) after the application of this subparagraph over
the aggregate amount of reportable transaction understatements.

(7) References to an understatement (or a deficiency) in subsection
(e) of this section shall be treated as including references to a
reportable transaction understatement.

(8) This subsection shall not apply to any portion of any
understatement on which a penalty is imposed under subsection (e) of
this section.

(9) Except as provided in regulations prescribed by the commissioner,
in no event shall any tax treatment included with an amendment or
supplement to a return of tax be taken into account in determining the
amount of any reportable transaction understatement if the amendment or
supplement is filed after the earlier of the date the taxpayer is first
contacted by the commissioner regarding the examination of the return or
such other date as is specified by the commissioner.

(10)(A) No penalty shall be imposed under this subsection with respect
to any portion of a reportable transaction understatement if it is shown
that there was a reasonable cause for such portion and that the taxpayer
acted in good faith with respect to such portion.

(B) Subparagraph (A) of this paragraph shall not apply to any
reportable transaction understatement unless

(i) the relevant facts affecting the tax treatment of the item are
adequately disclosed in accordance with section twenty-five of this
chapter,

(ii) there is or was substantial authority for such treatment, and

(iii) the taxpayer reasonably believed that such treatment was more
likely than not the proper treatment.
A taxpayer failing to adequately disclose in accordance with section
twenty-five of this chapter shall be treated as meeting the requirements
of clause (i) of this subparagraph if the penalty for such failure was
rescinded under subsection (x) of this section.

(11)(A) A taxpayer shall be treated as having a reasonable belief with
respect to the tax treatment of an item only if such belief

(i) is based on the facts and law that exist at the time the return
which includes such tax treatment is filed, and

(ii) relates solely to the taxpayer's chances of success on the merits
of such treatment and does not take into account the possibility that a
return will not be audited, such treatment will not be raised on audit,
or such treatment will be resolved through settlement if it is raised.

(B)(i) An opinion of a tax advisor may not be relied upon to establish
the reasonable belief of a taxpayer if

(I) the tax advisor is described in clause (ii) of this subparagraph,
or

(II) the opinion is described in clause (iii) of this subparagraph.

(ii) A tax advisor is described in this clause if the tax advisor

(I) is a material advisor (within the meaning of section six thousand
one hundred eleven of the internal revenue code or within such meaning
as it also applies to a New York reportable transaction as defined in
section twenty-five of this chapter) and participates in the
organization, management, promotion, or sale of the transaction or is
related (within the meaning of subsection (b) of section two hundred
sixty-seven of the internal revenue code or subsection (b) of section
seven hundred seven of the internal revenue code) to any person who so
participates,

(II) is compensated directly or indirectly by a material advisor with
respect to the transaction,

(III) has a fee arrangement with respect to the transaction which is
contingent on all or part of the intended tax benefits from the
transaction being sustained, or

(IV) has a disqualifying financial interest with respect to the
transaction.

(iii) For purposes of clause (i) of this subparagraph, an opinion is
disqualified if the opinion

(I) is based on unreasonable factual or legal assumptions (including
assumptions as to future events),

(II) unreasonably relies on representations, statements, findings, or
agreements of the taxpayer or any other person,

(III) does not identify and consider all relevant facts, or

(IV) fails to meet any other requirement as the commissioner may
prescribe.

* NB Repealed July 1, 2024

(p-2) No penalty will be imposed pursuant to subsection (c) or (p) of
this section for a taxable year beginning on or after January first, two
thousand eight and before January first, two thousand nine resulting
from the denial of an empire zone tax credit claimed by the taxpayer
because an empire zone retention certificate was not issued pursuant to
subdivision (w) of section nine hundred fifty-nine of the general
municipal law to the empire zone enterprise which is the basis for the
tax credit or credits claimed on the return.

(q) Frivolous tax returns and specified frivolous submissions.-- (1)
If any individual files what purports to be a return of any tax imposed
by this article but which does not contain information on which the
substantial correctness of the self-assessment may be judged, or
contains information that on its face indicates that the self-assessment
is substantially incorrect; and such conduct is due to a position which
is frivolous, including a position identified as frivolous under
paragraph three of this subsection, or an intent to delay or impede the
administration of this article, then such individual shall pay a penalty
not exceeding five thousand dollars. This penalty shall be in addition
to any other penalty provided by law.

(2) Penalty for specified frivolous submissions. (A) Any person who
submits a specified frivolous submission shall pay a penalty of five
thousand dollars. This penalty shall be in addition to any other penalty
provided by law.

(B) The term "specified frivolous submission" means a specified
submission if any portion of that submission (i) is based on a position
that the commissioner has identified as frivolous under paragraph three
of this subdivision, or (ii) reflects a desire to delay or impede the
administration of this chapter.

(C) The term "specified submission" means a request for conciliation
conference, a petition to the division of tax appeals, an application
for an installment payment agreement, or an offer in compromise.

(D) If the commissioner provides an individual with notice that a
submission is a specified frivolous submission and that person withdraws
the submission within thirty days after such notice, the penalty imposed
under this paragraph will not apply with respect to that submission.

(3) Listing of frivolous positions. The commissioner will prescribe
(and periodically revise) a list of positions that the commissioner has
identified as frivolous for purposes of this subsection.

(4) Reduction of penalty. The commissioner may reduce the amount of
any penalty imposed under this section if the commissioner determines
that such a reduction would promote compliance with and administration
of this chapter.

(r) Aiding or assisting in the giving of fraudulent returns, reports,
statements or other documents.--(1) Any person who, with the intent that
tax be evaded, shall, for a fee or other compensation or as an incident
to the performance of other services for which such person receives
compensation, aid or assist in, or procure, counsel, or advise the
preparation or presentation under, or in connection with any matter
arising under this article of any return, report, declaration, statement
or other document which is fraudulent or false as to any material
matter, or supply any false or fraudulent information, whether or not
such falsity or fraud is with the knowledge or consent of the person
authorized or required to present such return, report, declaration,
statement or other document shall pay a penalty not exceeding five
thousand dollars.

(2) For purposes of paragraph one of this subsection, the term
"procures" includes ordering (or otherwise causing) a subordinate to do
an act, and knowing of, and not attempting to prevent, participation by
a subordinate in an act. The term "subordinate" means any other person
(whether or not a director, officer, employee, or agent of the taxpayer
involved) over whose activities the person has direction, supervision,
or control.

(3) For purposes of paragraph one of this subsection, a person
furnishing typing, reproducing, or other mechanical assistance with
respect to a document shall not be treated as having aided or assisted
in the preparation of such document by reason of such assistance.

(4) The penalty imposed by this subsection shall be in addition to any
other penalty provided by law.

(s) False information with respect to withholding.--In addition to any
criminal penalty provided by law, if any individual makes a statement
under section six hundred seventy-one which results in a decrease in the
amounts deducted and withheld under part five of this article, and as of
the time such statement was made, there was no reasonable basis for such
statement, such individual shall pay a penalty of five hundred dollars
for such statement. The tax commission shall waive the penalty imposed
under this subsection if the taxes imposed with respect to the
individual under this article for the taxable year are equal to or less
than the sum of the credits against such taxes allowed by this article,
and the payments of estimated tax which are considered payments on
account of such taxes.

(t) Unwarranted reduction in utility costs in an empire zone. If
during a taxable year a taxpayer has received a reduction in the rate
charged for gas, electric, steam or water sold, or gas, electric, steam
or water service rendered, pursuant to subdivision eight of section one
hundred eighty-six-a of this chapter, based upon a certification as to
the claiming of a credit under subsection (k) of section six hundred six
of this article, and it is finally determined that such taxpayer is not
entitled to such credit in any part, such taxpayer shall be liable to a
penalty in an amount equal to such reduction in cost, with interest from
the last day of such year, at the rate applicable to underpayments of
tax pursuant to this article. The tax commission shall have the power,
in its discretion, to waive, reduce or compromise such penalty.

(u) Failure of tax return preparer to conform to certain
requirements.--(1) Failure to sign return or claim for refund. If a tax
return preparer who is required pursuant to paragraph one of subsection
(g) of section six hundred fifty-eight of this article to sign a return
or claim for refund fails to comply with such requirement with respect
to such return or claim for refund, the tax return preparer shall be
subject to a penalty of two hundred fifty dollars for each such failure
to sign, unless it is shown that such failure is due to reasonable cause
and not due to willful neglect. The maximum penalty imposed under this
paragraph on any tax return preparer with respect to returns filed
during any calendar year by the tax return preparer must not exceed ten
thousand dollars. Provided, however, that if a tax return preparer has
been penalized under this paragraph for a preceding calendar year and
again fails to sign his or her name on any return that requires the tax
return preparer's signature during a subsequent calendar year, then the
penalty under this paragraph for each failure will be five hundred
dollars, and no annual cap will apply. This paragraph shall not apply if
the penalty under paragraph three of subsection (g) of section
thirty-two of this chapter is imposed on the tax return preparer with
respect to such return or claim for refund.

(2) Failure to furnish identifying number. If a tax return preparer
fails to include any identifying number required to be included on any
return or claim for refund pursuant to paragraph two of subsection (g)
of section six hundred fifty-eight of this article, the tax return
preparer shall be subject to a penalty of one hundred dollars for each
such failure, unless it is shown that such failure is due to reasonable
cause and not willful neglect. The maximum penalty imposed under this
paragraph on any tax return preparer with respect to returns filed
during any calendar year must not exceed two thousand five hundred
dollars; provided, however, that if a tax return preparer has been
penalized under this paragraph for a preceding calendar year and again
fails to include the identifying number on one or more returns during a
subsequent calendar year, then the penalty under this paragraph for each
failure will be two hundred fifty dollars, and no annual cap will apply.
this paragraph shall not apply if the penalty under paragraph four of
subsection (g) of section thirty-two of this chapter is imposed on the
tax return preparer with respect to such return or claim for refund.

(3) Failure to furnish copy to taxpayer. Any person who is a tax
return preparer with respect to any return or claim for refund, who is
required under paragraph three of subsection (g) of section six hundred
fifty-eight of this article to furnish a copy of such return or claim
for refund to the taxpayer, and who fails to comply with such provision
with respect to such return or claim for refund, shall be subject to a
penalty of fifty dollars for each such failure, unless it is shown that
such failure is due to reasonable cause and not due to willful neglect.
The maximum penalty imposed under this paragraph on any person with
respect to returns or claims for refund filed during any calendar year
shall not exceed twenty-five thousand dollars.

(4) Failure to retain copy or list. Any person who is a tax return
preparer with respect to any return or claim for refund, who is required
under paragraph four of subsection (g) of section six hundred
fifty-eight of this article to: (i) retain a copy of such return or
claim for refund or retain on a list the name and taxpayer identifying
number of the taxpayer for whom such return or claim for refund was
prepared and (ii) make such copy or list available for inspection upon
request by the commissioner, and who fails to comply with the retention
requirement or who complies with the retention requirement but fails to
comply with such request by the commissioner, shall be subject to a
penalty of fifty dollars for each such failure, unless it is shown that
such failure is due to reasonable cause and not due to willful neglect.
The maximum penalty imposed under this paragraph on any person with
respect to any calendar year shall not exceed twenty-five thousand
dollars.

* (5) Failure to electronically file. If a tax return preparer is
required to file returns electronically pursuant to paragraph ten of
subsection (g) of section six hundred fifty-eight of this article, and
such preparer fails to file one or more of such returns electronically,
then such preparer shall be subject to a penalty of fifty dollars for
each such failure to electronically file a return, unless it is shown
that such failure is due to reasonable cause and not due to willful
neglect.

* NB Effective January 1, 2025

(6) For purposes of this subsection, the term "tax return preparer"
shall have the same meaning as defined in paragraph five of subsection
(g) of section six hundred fifty-eight of this article.

(v) Failure to perform certain acts with respect to the quarterly
combined withholding, wage reporting and unemployment insurance return.
(1) Failure to file. (A) Delinquency. (i) General. If an employer fails
to file a quarterly combined withholding, wage reporting and
unemployment insurance return, or any portion thereof, as required by
paragraph four of subsection (a) of section six hundred seventy-four of
this article, then such employer shall, unless it is shown that such
failure is due to reasonable cause and not due to willful neglect, pay a
penalty equal to the greater of one thousand dollars or the product of
fifty dollars multiplied by the number of employees shown on the last
quarterly combined withholding, wage reporting and unemployment
insurance return filed by such employer, or if no such return has been
filed, the number of employees may be estimated by the commissioner from
any information in the commissioner's possession. The total amount of
the penalty imposed by this clause on an employer for any such failure
shall not exceed ten thousand dollars.

(ii) Coordination of delinquency penalty with other additions to tax
and penalties for failure to file. Except as otherwise provided in
subparagraph (C) of this paragraph, an employer failing to file the
quarterly combined withholding, wage reporting and unemployment
insurance return, or any portion thereof, shall only be liable for the
penalty prescribed by this subparagraph; such employer shall not be
liable for the addition to tax prescribed by paragraph one of subsection
(a) of this section or for the penalty prescribed by paragraph (b) of
subdivision two of section five hundred eighty-one of the labor law.

(B) Late filing. (i) Within thirty days of notice. If an employer
fails to file a quarterly combined withholding, wage reporting and
unemployment insurance return, or any portion thereof, by the due date
prescribed by paragraph four of subsection (a) of section six hundred
seventy-four of this article, but files such return or any such portion
thereof within thirty days after the date the department sends notice of
such failure to such employer by certified mail, then the penalty
prescribed by subparagraph (A) of this paragraph shall be abated. In
addition, such employer shall not be liable for the addition to tax
prescribed by paragraph one of subsection (a) of this section and the
penalty prescribed by paragraph (b) of subdivision two of section five
hundred eighty-one of the labor law. Provided, however, such employer
shall remain liable for the other additions to tax prescribed by
subsection (a) of this section, if applicable. Provided, further, that
where such employer fails to file such return or any such portion
thereof by the due date prescribed by paragraph four of subsection (a)
of section six hundred seventy-four of this article but is not liable
for the penalty prescribed by subparagraph (A) of this paragraph for
such failure because such employer complied with the provisions of this
clause or clause (iii) of this subparagraph, and where within four
successive calendar quarters of such initial failure to file by the
prescribed due date, such employer again fails to file such return or
portion thereof by such due date, then the provisions of this clause
relating to abatement and non-imposition of other additions to tax and
penalties for failure to file shall not apply to any such failure within
such four successive calendar quarters. In such a case, if such employer
files such return or portion thereof within thirty days after the date
the department sends notice of such second failure by certified mail,
such employer shall be liable for a penalty equal to the lesser of the
product of fifty dollars multiplied by the number of employees actually
shown on such employer's late filed quarterly combined withholding, wage
reporting and unemployment insurance return, but not less than one
thousand dollars nor more than ten thousand dollars, or the sum of the
addition to tax prescribed by paragraph one of subsection (a) of this
section and the penalty prescribed by paragraph (b) of subdivision two
of section five hundred eighty-one of the labor law.

(ii) After thirty days of notice. If an employer fails to file a
quarterly combined withholding, wage reporting and unemployment
insurance return, or any portion thereof, by the due date prescribed by
paragraph four of subsection (a) of section six hundred seventy-four of
this article, but files such return or any such portion thereof more
than thirty days after the date the department sends notice of such
failure to file to such employer by certified mail, then such employer
shall be liable for a penalty equal to the greater of the product of
fifty dollars multiplied by the number of employees actually shown on
such employer's late filed quarterly combined withholding, wage
reporting and unemployment insurance return, but not less than one
thousand dollars nor more than ten thousand dollars, or the sum of the
addition to tax prescribed by paragraph one of subsection (a) of this
section and the penalty prescribed by paragraph (b) of subdivision two
of section five hundred eighty-one of the labor law.

(iii) Late filing prior to notice. If an employer fails to file a
quarterly combined withholding, wage reporting and unemployment
insurance return, or portion thereof, by the due date prescribed by
paragraph four of subsection (a) of section six hundred seventy-four of
this article but files such return or any such portion thereof before
the department sends notice of such failure to file by certified mail,
then the penalty prescribed by subparagraph (A) of this paragraph shall
not be imposed. In addition, such employer shall not be liable for the
addition to tax prescribed by paragraph one of subsection (a) of this
section and the penalty prescribed by paragraph (b) of subdivision two
of section five hundred eighty-one of the labor law. Provided, however,
such employer shall remain liable for the other additions to tax
prescribed by subsection (a) of this section, if applicable. Provided,
further, that where such employer fails to file such return or any such
portion thereof by the due date prescribed by paragraph four of
subsection (a) of section six hundred seventy-four of this article but
is not liable for the penalty prescribed by subparagraph (A) of this
paragraph for such failure because such employer complied with the
provisions of this clause or clause (i) of this subparagraph, and where
within four successive calendar quarters of such initial failure to file
by the prescribed due date, such employer again fails to file such
return or any such portion thereof by such due date, then the provisions
of this clause relating to non-imposition of penalties and other
additions to tax for failure to file shall not apply to any such failure
within such four successive calendar quarters. In such a case, if such
employer files such return or portion thereof before the department
sends notice of such failure by certified mail, such employer shall be
liable for a penalty equal to the lesser of the product of fifty dollars
multiplied by the number of employees actually shown on such employer's
late filed quarterly combined withholding, wage reporting and
unemployment insurance return, but not less than one thousand dollars
nor more than ten thousand dollars, or the sum of the addition to tax
prescribed by paragraph one of subsection (a) of this section and the
penalty prescribed by paragraph (b) of subdivision two of section five
hundred eighty-one of the labor law.

(C) Audit following failure to file. If an employer fails to file a
quarterly combined withholding, wage reporting and unemployment
insurance return and an audit is subsequently commenced with respect to
such employer by the department, the department of labor or both, such
employer shall, in addition to the penalty prescribed by subparagraph
(A) of this paragraph, be liable for the addition to tax prescribed by
paragraph one of subsection (a) of this section, the penalty prescribed
by paragraph (b) of subdivision two of section five hundred eighty-one
of the labor law, or both, as applicable.

(D) Protests and collection. The department of labor shall adjudicate
all disputes regarding the imposition of the penalty prescribed by this
paragraph (whether alone or in conjunction with the addition to tax
prescribed by paragraph one of subsection (a) of this section and the
penalty prescribed by paragraph (b) of subdivision two of section five
hundred eighty-one of the labor law), in accordance with the provisions
contained in article eighteen of the labor law; provided, however, that
the department shall adjudicate disputes in accordance with the
procedures prescribed by this chapter where (i) an employer only fails
to file the portion of a quarterly combined withholding, wage reporting
and unemployment insurance return relating to withholding reconciliation
information, (ii) the penalty prescribed by clause (iii) of subparagraph
(B) of this paragraph is imposed, or (iii) the department conducts an
audit described in subparagraph (C) of this paragraph with respect to
withholding tax liability. Once the penalty prescribed by this paragraph
is finally determined and no longer subject to administrative or
judicial review, the amount thereof shall be deemed to be an obligation
owed jointly to the department and the department of labor, and either
of such departments may collect such amount in accordance with the
procedures prescribed by this chapter or the labor law, as applicable.
Any penalty amount so collected shall, if necessary, be allocated as
between the withholding tax program and the unemployment insurance
program, and shall be deposited and disposed of by the respective
department in accordance with applicable law.

(3) Failure to provide complete and correct employee withholding
reconciliation information. In the case of a failure by an employer to
provide complete and correct quarterly withholding information relating
to individual employees on a quarterly combined withholding, wage
reporting and unemployment insurance return covering each calendar
quarter of a year, such employer shall, unless it is shown that such
failure is due to reasonable cause and not due to willful neglect, pay a
penalty equal to the product of one hundred dollars multiplied by the
number of employees for whom such information is incomplete or
incorrect; provided, however, that if the number of such employees
cannot be determined from the quarterly combined withholding, wage
reporting and unemployment insurance return, the commissioner may
utilize any information in the commissioner's possession in making such
determination. The total amount of the penalty imposed pursuant to this
paragraph on an employer for any such failure for each calendar quarter
of a year shall not exceed twenty thousand dollars.

(4) Failure to provide complete and correct quarterly withholding
information not relating to individual employees. In the case of a
failure by an employer to provide complete and correct quarterly
withholding information not relating to individual employees on a
quarterly combined withholding, wage reporting and unemployment
insurance return, such employer shall, unless it is shown that such
failure is due to reasonable cause and not due to willful neglect, pay a
penalty equal to five percent of the quarterly withholding tax liability
required to be shown by such employer for the quarter covered by such
return, or if such liability required to be shown by such employer for
the quarter cannot be ascertained, the commissioner may estimate such
liability from any information in the commissioner's possession. If such
employer provides complete and correct quarterly withholding information
not relating to individual employees within thirty days after the
department sends notice of such failure to the employer by certified
mail, then such penalty shall be abated. No penalty under this paragraph
shall be imposed if the department is able to properly verify and
reconcile withholding and wage reporting information using the
information furnished by the employer. The total amount of the penalty
imposed pursuant to this paragraph on an employer for any such failure
shall not exceed ten thousand dollars.

(5) Failure to file using prescribed format. In the case of a failure
by an employer to file a quarterly combined withholding, wage reporting
and unemployment insurance return using the format prescribed by the
department pursuant to the authority of paragraph two of subsection (d)
of section six hundred fifty-eight of this article and regulations
promulgated thereunder, such employer shall, unless it is shown that
such failure is due to reasonable cause and not due to willful neglect,
pay a penalty equal to the product of fifty dollars multiplied by the
number of employees required to be shown on such return. If such
employer files such return using the prescribed format within thirty
days after the department sends notice of such failure to the employer
by certified mail, then such penalty shall be abated. The total amount
of the penalty imposed pursuant to this paragraph on an employer for any
such failure shall not exceed ten thousand dollars.

(6) Except as otherwise provided in this subsection, and except for
the penalties prescribed by paragraph one of subsection (h) and
subsection (k) of this section, the penalties prescribed by this
subsection shall be in addition to any other penalty or addition to tax
provided by law.

(w) Failure to file report regarding newly hired or re-hired
employees. If any employer required to file a report pursuant to
section one hundred seventy-one-h of this chapter fails to file such
report at the time prescribed therefor, or files a report which fails to
show the information required pursuant to such section one hundred
seventy-one-h, unless it is shown that such failure is due to reasonable
cause and not due to willful neglect, there shall, upon notice and
demand by the commissioner and in the same manner as tax, be paid by the
employer a penalty equal to the product of twenty dollars, multiplied by
the number of employees the employer failed to report, but the total
amount imposed on the employer for all such failures during any calendar
year shall not exceed ten thousand dollars. If the failure is a result
of a conspiracy between the employer and the employee to not supply the
required report or to supply a false or incomplete report, the penalty
shall be equal to the product of four hundred fifty dollars multiplied
by the number of employees the employer failed to report.

* (x) Failure to disclose or provide reportable transaction
information.-- (1) Any person who fails to file, disclose or provide any
statement, return or other document which is required under subdivision
(a) of section twenty-five of this chapter shall pay a penalty in the
amount determined under paragraph two of this subsection.

(2)(A) Except as provided in subparagraph (B) of this paragraph, the
amount of the penalty under paragraph one of this subsection shall be
ten thousand dollars.

(B) The amount of the penalty under paragraph one of this subsection
with respect to a listed transaction shall be twenty-five thousand
dollars.

(3) For purposes of this subsection, the terms "reportable
transaction" and "listed transaction" shall have the same meanings as
used in section twenty-five of this chapter, and the term "reportable
transaction" shall include a "New York reportable transaction" as
defined in such section twenty-five, and the term "listed transaction"
shall include any transaction designated as a tax avoidance transaction
pursuant to such section twenty-five.

(4) The commissioner may rescind all or any portion of any penalty
imposed by this subsection with respect to any violation if

(A) the violation is with respect to a reportable transaction other
than a listed transaction, and

(B) rescinding the penalty would promote compliance with the
requirements of this chapter and effective tax administration.

(5) The penalty imposed by this section shall be in addition to any
other penalty imposed by this chapter.

* NB Repealed July 1, 2024

* (y) Failure to disclose or provide reportable transaction return.--
(1) Any person who fails to file, disclose or provide any statement,
return or other document which is required under subdivision (b) of
section twenty-five of this chapter shall pay a penalty in the amount
determined under paragraph two of this subsection.

(2)(A) Except as provided in subparagraph (B) of this paragraph, the
amount of the penalty under paragraph one of this subsection shall be
twenty thousand dollars.

(B) The amount of the penalty under paragraph one of this subsection
with respect to a listed transaction shall be the greater of

(i) fifty thousand dollars or,

(ii) fifty percent of the gross income that the organizer or material
advisor derived with respect to activities that were the basis for the
requirement to file, disclose or provide information pursuant to section
six thousand eleven of the internal revenue code, to the extent such
gross income is attributable to the avoidance of any tax imposed under
this article.

(C) Clause (ii) of subparagraph (B) of this paragraph shall be applied
by substituting "seventy-five percent" for "fifty percent" in the case
of an intentional failure or act described in paragraph one of this
subsection.

(3) For purposes of this subsection, the terms "reportable
transaction" and "listed transaction" shall have the same meanings as
used in section twenty-five of this chapter, the term "reportable
transaction" shall include a "New York reportable transaction" as
defined in such section twenty-five, and the term "listed transaction"
shall include any transaction designated as a tax avoidance transaction
pursuant to such section twenty-five.

(4) The commissioner may rescind all or any portion of any penalty
imposed by this subsection with respect to any violation if

(A) the violation is with respect to a reportable transaction other
than a listed transaction, and

(B) rescinding the penalty would promote compliance with the
requirements of this chapter and effective tax administration.

(5) The penalty imposed by this subsection shall be in addition to any
other penalty imposed by this chapter, except that no penalty shall be
imposed under subparagraph (A) or clause (i) of subparagraph (B) of
paragraph two of subsection (q) of section one thousand eighty-five of
this chapter for the same failure that is the basis for a penalty under
this subsection. Nothing in this paragraph shall preclude the imposition
of a penalty under clause (ii) of subparagraph (B) of paragraph two of
subsection (q) of section one thousand eighty-five of this chapter for
the same failure that is the basis for a penalty under clause (ii) of
subparagraph (B) of paragraph two of this subsection.

* NB Repealed July 1, 2024

* (z) Failure to maintain list of advisees.-- (1) If any person who is
required to maintain a list under subdivision (c) of section twenty-five
of this chapter fails to make a duplicate of such list available, upon
written request by the commissioner in accordance with such subsection
within twenty business days after the date of the request, such person
shall pay a penalty of ten thousand dollars for each day of such failure
after such twentieth day.

(2) No penalty shall be imposed by paragraph one of this subsection
with respect to the failure on any day if such failure is due to
reasonable cause.

* NB Repealed July 1, 2024

(aa) Tax preparer penalty.-- (1) If a tax return preparer takes a
position on any income tax return or credit claim form that either
understates the tax liability or increases the claim for a refund, and
the preparer knew, or reasonably should have known, that said position
was not proper, and such position was not adequately disclosed on the
return or in a statement attached to the return, such income tax
preparer shall pay a penalty of between one hundred and one thousand
dollars.

(2) If a tax return preparer takes a position on any income tax return
or credit claim form that either understates the tax liability or
increases the claim for a refund and the understatement of the tax
liability or the increased claim for refund is due to the preparer's
reckless or intentional disregard of the law, rules or regulations, such
preparer shall pay a penalty of between five hundred and five thousand
dollars. The amount of the penalty payable by any person by reason of
this paragraph shall be reduced by the amount of the penalty paid by
such person by reason of paragraph one of this subsection.

(3) For purposes of this subsection, the term "understatement of tax
liability" means any understatement of the net amount payable with
respect to any tax imposed under this article or any overstatement of
the net amount creditable or refundable with respect to any such tax.

(4) For purposes of this subsection, the term "tax return prepared"
shall have the same meaning as defined in paragraph five of subsection
(g) of section six hundred fifty-eight of this article.

(5) This subsection shall not apply if the penalty under subsection
(r) of this section is imposed on the tax return preparer with respect
to such understatement.

* (bb) Promoting abusive tax shelters.-- (1) Any person who

(A)(i) organizes (or assists in the organization of)

(I) a partnership or other entity,

(II) any investment plan or arrangement, or

(III) any other plan or arrangement, or

(ii) participates (directly or indirectly) in the sale of any interest
in an entity or plan or arrangement referred to in clause (i) of this
subparagraph, and

(B) makes or furnishes or causes another person to make or furnish (in
connection with such organization or sale)

(i) a statement with respect to the allowability of any deduction or
credit, the excludability of any income, or the securing of any other
tax benefit by reason of holding an interest in the entity or
participating in the plan or arrangement which the person knows or has
reason to know is false or fraudulent as to any material matter, or

(ii) a gross valuation overstatement as to any material matter, and

(C) satisfies any of the following conditions

(i) the person is organized in this state,

(ii) the person is doing business in this state,

(iii) the person is deriving income in this state, or

(iv) the person conducts any of the activities described in
subparagraph (A) or (B) of this paragraph within the state of New York,
shall pay, with respect to each activity described in subparagraph (A)
of this paragraph, a penalty equal to one thousand dollars or, if the
person establishes that it is lesser, one hundred percent of the gross
income derived (or to be derived) by such person from such activity to
the extent such gross income is attributable to the avoidance of any tax
imposed under this article; provided, however, that if an activity with
respect to which a penalty imposed under this subsection involves a
statement described in clause (i) of subparagraph (B) of paragraph one
of this subsection, the penalty shall be equal to fifty percent of the
gross income derived (or to be derived) from that activity within the
state by the person on which the penalty is imposed. For purposes of the
preceding sentence, activities described in clause (i) of subparagraph
(A) of this paragraph with respect to each entity or arrangement shall
be treated as a separate activity and participation in each sale
described in clause (ii) of subparagraph (A) of this paragraph shall be
so treated.

(2)(A) For purposes of this subsection, the term "gross valuation
overstatement" means any statement as to the value of any property or
services if

(i) the value so stated exceeds two hundred percent of the amount
determined to be the correct valuation, and

(ii) the value of such property or services is directly related to the
amount of any deduction or credit allowable under this chapter to any
participant.

(B) The commissioner may waive all or any part of the penalty provided
by paragraph one of this subsection with respect to any gross valuation
overstatement on a showing that there was a reasonable basis for the
valuation and that such valuation was made in good faith.

(3) The penalty imposed by this subsection shall be in addition to any
other penalty provided by law.

* NB Repealed July 1, 2024

(cc) False or fraudulent document penalty. Any taxpayer that submits a
false or fraudulent document to the department will be subject to a
penalty of one hundred dollars per document submitted, or five hundred
dollars per tax return submitted. This penalty will be in addition to
any other penalty or addition provided by law.

(dd) Failure to supply all the information required or to provide
correct information in secretary of state statements. Unless it is shown
that such failure to provide the statement and information required by
subdivision (e) of section three hundred one of the limited liability
company law, subdivision (g) of section 121-1500 of the partnership law,
and subdivision (f) of section 121-1502 of the partnership law is due to
reasonable cause and not to willful neglect, there shall, upon notice
and demand by the commissioner and in the same manner as tax, be paid by
the entity failing to supply complete and correct information, a penalty
of two hundred and fifty dollars per limited liability company,
registered limited liability partnership or New York registered foreign
limited liability partnership required to provide such information on
its filing fee payment form.