Authorizes the department of taxation and finance to implement a tax amnesty program

Summary of specific provisions

Section 1(a) establishes the amnesty program and specifies types of taxes or surcharges that are eligible for forgiveness under the amnesty program.

Section 1(b) establishes that the amnesty program is applicable to tax liabilities for taxable periods ending or transactions or uses occurring on or before December 31, 2007, except for those taxes identified in section 1(a) that require the filing of a return on a quarterly basis, for which eligibility for amnesty extends through February 2008.

Section 1(c) identifies the types of taxpayers eligible for amnesty.

Section 1(d) enables the Commissioner of Taxation and Finance (the commissioner) to waive penalties and interest on penalties for taxes paid under the amnesty program.

Section 1(e) limits participation in the amnesty program to those who have not participated in previous amnesties established in chapter 170 of the laws of 1994 or chapter 309 of the laws of 1996.

Section 1(f) excludes participation in the amnesty program by taxpayers party to a criminal investigation or criminal or civil litigation by an agency of the state or have been convicted of a crime relating to a tax that is eligible for forgiveness under the amnesty program.

Section 1(g) authorizes the commissioner to prescribe the specific amnesty tax return forms to be used and to compel the submission by an applicant of any additional information the commissioner may require. Further provides that amnesty under the program shall be denied or rescinded if the applicant files a false or fraudulent tax return or report, or attempts in any manner to defeat or evade a tax under the amnesty program.

Section 1(h) restricts the amnesty to unpaid penalties and interest on penalties on delinquent taxes. Section 1(i) bars refunds or credits under the amnesty unless through a motion by the commissioner.

Section 1(j) requires the taxpayer to make final payments on existing installment plans for which the amnesty applies by the end of the amnesty period or by a date prescribed on a bill issued by the commissioner.

Section 1(k) requires the commissioner to advertise the amnesty program and take other necessary measures to implement the program

Section 1(l) excludes large companies from the amnesty program and particular penalties in the tax law

Section 1(m) establishes that tax amnesty return forms be treated similarly to other tax reports and returns for privacy and legal purposes

Section 1(n) repeals section 266 of chapter 309 of the laws of 1996 relating to augmentation of penalties, except in circumstances where a penalty has already been augmented pursuant to such section

Section 2 requires the commissioner to issue monthly reports of gross revenues collected under the tax amnesty program.

Section 3 requires the commissioner to issue a report to legislative leaders and the Division of Budget on the tax amnesty program detailing number of cases for which penalties and interest penalty waivers were made, gross revenues collected, amount of money spent on marketing, the opportunity cost of the program, among other elements of the program.

Justification

During these difficult fiscal times, it is important that there is shared sacrifice on the part of all New Yorkers. While the vast majority of New Yorkers pay their taxes, the Department of Taxation and Finance reports that 439,279 taxpayers owe a combined $2.5 billion in outstanding and collectible tax liabilities (as of April 30, 2009). It is only fair that all efforts are made by delinquent taxpayers to pay these taxes, and all efforts by the Department of Taxation and Finance are made to collect them. The collection of delinquent taxes will help to alleviate state budget shortfalls, fund important programs, or pay for property tax relief to New York residents.

Historically, states have conducted tax amnesties when they needed to generate revenue, usually during economic downturns. In 2002, a total of 13 amnesties took place nationwide (still the record for one year), with 2003 a close second at 10. Since the first amnesty took place in Arizona in 1982, amnesties have become more commonplace, with 41 offered since 2000. In New York State, the first general tax amnesty program was offered in 1985-86. Since that time, six additional amnesty related programs have been offered: a targeted amnesty in 1994, a second general tax amnesty in 1996-97, a third general tax amnesty in 2002-03, a tax shelter voluntary compliance initiative (VCI) in 2005-06, a re-opening of the 2005-06 VCI for a brief period of time in 2008-09, and the creation of a permanent voluntary disclosure program in the 2008-09 budget.

Tax amnesty programs have been successful in other states, including Indiana and Oklahoma, where collections by the Asset Performance Group (a division of Sallie Mae) has exceeded public goals. For example, The Indiana Department of Revenue sought to recover $65 million in delinquent taxes in 2005. During an eight week voluntary compliance period (September-November, 2005), APG successfully returned $255 million to Indiana taxpayers.

Similar success in New York State could generate much-needed revenues to alleviate the fiscal crisis.

Prior legislative history

New bill

Fiscal implications

Bill will generate revenue for the state

Effective date

This act shall take effect immediately.