§ 688. Interest on overpayment.--(a) General.--Notwithstanding the
provisions of section sixteen of the state finance law, interest shall
be allowed and paid as follows at the overpayment rate set by the
commissioner pursuant to section six hundred ninety-seven, or if no rate
is set, at the rate of six per cent per annum upon any overpayment in
respect of the tax imposed by this article:

(1) from the date of the overpayment to the due date of an amount
against which a credit is taken;

(2) from the date of the overpayment to a date (to be determined by
the commissioner) preceding the date of a refund check by not more than
thirty days, whether or not such refund check is accepted by the
taxpayer after tender of such check to the taxpayer. The acceptance of
such check shall be without prejudice to any right of the taxpayer to
claim any additional overpayment and interest thereon.

(3) Late returns. Notwithstanding the provisions of paragraph one or
two of this subsection, in the case of a return of tax which is filed
after the last date prescribed for filing such return (determined with
regard to extensions), no interest shall be allowed or paid for any day
before the date on which the return is filed.

(4) Interest on certain refunds. To the extent provided for in
regulations promulgated by the commissioner of taxation and finance, if
an item of income, gain, loss, deduction or credit is changed from the
taxable year or period in which it is reported to the taxable year or
period in which it belongs and the change results in an underpayment in
a taxable year or period and an overpayment in some other taxable year
or period, the provisions of paragraph three of this subsection with
respect to an overpayment shall not be applicable to the extent that the
limitation in such paragraph on the right to interest would result in a
taxpayer not being allowed interest for a length of time with respect to
an overpayment while being required to pay interest on an equivalent
amount of the related underpayment. However, this paragraph shall not be
construed as limiting or mitigating the effect of any statute of
limitations or any other provision of law relating to the authority of
such commissioner to issue a notice of deficiency or to allow a credit
or refund on an overpayment.

(5) Amounts of less than five dollars. No interest shall be allowed or
paid if the amount thereof is less than five dollars.

(b) Advance payment of tax, payment of estimated tax, and credit for
income tax withholding.--The provisions of subsections (h) and (i) of
section six hundred eighty-seven applicable in determining the date of
payment of tax for purposes of determining the period of limitations on
credit or refund, shall be applicable in determining the date of payment
for purposes of this section.

(c) Income tax refund within forty-five days of claim for
overpayment.--If any overpayment of tax imposed by this article is
credited or refunded within forty-five days after the last date
prescribed (or permitted by extension of time) for filing the return of
such tax on which such overpayment was claimed or within forty-five days
after such return was filed, whichever is later, or within six months
after a demand is filed pursuant to paragraph six of subsection (b) of
section six hundred fifty-one of this chapter, no interest shall be
allowed under this section on any such overpayment. In regard to an
amended return claiming such overpayment or a claim for credit or refund
on which such overpayment was claimed, if such overpayment is refunded
within forty-five days of filing such return or such claim, no interest
shall be allowed from the date such return or such claim is filed until
the day the refund is made. For purposes of this subsection, any amended
return or claim for credit or refund filed before the last day
prescribed (or permitted by extension of time) for the filing of the
return of tax for such year shall be considered as filed on such last
day.

(d) Refund of income tax caused by carryback.--For purposes of this
section, if any overpayment of tax imposed by this article results from
a carryback of a net operating loss, such overpayment shall be deemed
not to have been made prior to the filing date for the taxable year in
which such net operating loss arises. Such filing date shall be
determined without regard to extensions of time to file. For purposes of
subsection (c) of this section any overpayment described herein shall be
treated as an overpayment for the loss year and such subsection shall be
applied with respect to such overpayment by treating the return for the
loss year as not filed before claim for such overpayment is filed. The
term "loss year" means the taxable year in which such loss arises.

(e) No interest until return in processible form.

(1) For purposes of subsections (a) and (c) of this section, a return
shall not be treated as filed until it is filed in processible form.

(2) For purposes of paragraph one of this subsection, a return is in a
processible form if--

(A) such return is filed on a permitted form, and

(B) such return contains--

(i) the taxpayer's name, address, and identifying number and the
required signatures, and

(ii) sufficient required information (whether on the return or on
required attachments) to permit the mathematical verification of tax
liability shown on the return.

(f) Overpayment credited against past-due support, or against a
past-due legally enforceable debt, or a city of New York tax warrant
judgment debt, or defaulted guaranteed student, state university or city
university loans.--If interest is payable pursuant to this section on
that portion of an overpayment of tax imposed by this article which is
certified by the commissioner of taxation and finance to the comptroller
as the amount to be credited against past-due support, or against a
past-due legally enforceable debt, or a city of New York tax warrant
judgment debt, or the amount of a default in repayment of a guaranteed
student, state university or city university loan, as the case may be,
pursuant to the provisions of section one hundred seventy-one-c, section
one hundred seventy-one-d, section one hundred seventy-one-e, section
one hundred seventy-one-f or section one hundred seventy-one-l of this
chapter, such portion of such an overpayment shall cease to bear
interest on the date of such certification.

(g) Cross-reference.--For provision with respect to interest after
failure to file notice of federal change under section six hundred
fifty-nine, see subsection (c) of section six hundred eighty-seven.

(h) Notwithstanding any other provisions in this section, for taxable
years beginning on or after January first, two thousand eight and before
January first, two thousand nine, interest will be allowed on an
overpayment on any return or report on which one or more empire zone tax
credits are claimed, only from the one hundred eightieth day after the
taxpayer files with the department an empire zone retention certificate
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 or report.