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History
- Referred to investigations and government operations
Full text
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Sponsor's memo
Title of bill
An act to amend the tax law, in relation to the failure of a responsible person to collect and pay over withholding tax
Purpose of bill
To eliminate a disparity in the collection of trust fund taxes for which there is no known policy or legislative basis.
Summary of provisions
Amends Section 1133 of the tax law to add a new subdivision (f).
Justification
As currently written, Section 1131(1) appears on its face to impose absolute liability for unpaid sales taxes on all members of an LLC and on all limited partners of a limited partnership, without regard to whether the member or limited partner had an active role or significant involvement in the financial affairs or management of the business.
This amendment to the NYS Tax Law, section 1133, liability for the tax, will now allow the responsible person concept to be applied uniformly to the determination of who is responsible for unpaid trust fund taxes owed by a business, without regard to the type of tax (sales or withholding tax) or the form of the business entity.
Section 121-303 of the NY Partnership Law similarly insulates limited partners from the debts of a partnership.
This change would eliminate a disparity in the collection of trust fund taxes for which there is no known policy or legislative basis. If not corrected, Section 1131 (1) exposes mere passive investors in the LLCs and limited partnerships to personal liability for unpaid sales taxes of a business.
Prior legislative history
None.
Fiscal implications
None.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.