Establishes a recordkeeping voluntary compliance program with regard to sales tax liability

BILL NUMBER:S4944

Title of bill

An act to amend the tax law, in relation to establishing the recordkeeping voluntary compliance program for purposes of sales tax liability

Purpose

This bill would adds a new section 1135-a to the tax law to require the establishment of a sales tax recordkeeping voluntary compliance program which will provide an incentive for taxpayers to facilitate and modernize their recordkeeping ability for purposes of complying with the state sales tax law.

Summary of provisions

This bill would add a new section 1135-a to the tax law to require that the Commissioner of Taxation and Finance develop and administer a voluntary recordkeeping sales tax compliance program which would allow the Commissioner to enter into agreements with eligible taxpayers and require that they maintain books and records for purposes of complying with the sales tax in the future which may include, but is not limited to the use of a point of sale system.

A new tax law section 1138 is also added to provide that a taxpayer who is a party to a recordkeeping voluntary compliance agreement may not be subject to an estimation of sales taxes due which is based upon the department's use of external indices, unless the taxpayer is in substantial non-compliance with the voluntary recordkeeping agreement.

Justification

New York State has hired hundreds of new auditors over the past few years and they have been caused much hardship upon unsuspecting business taxpayers who may not have been fully aware of the complexities of New York State's sales tax requirements. Thousands of retail merchants across the state have been subject to new audit tactics apparently designed to generate as much revenue as possible. The best way to avoid a sales tax assessment is to be properly informed of the sales tax laws and to keep books and records in accordance with the Department of Tax and Finances requirements. Failure to do so will result in a merchant's sales tax assessment being determined based on an external index which may reflect much higher prices for goods and services than the price actually received by the merchant and reflected on the merchant's books and records. The current system can result in extremely high and inaccurate assessments. Relatively small errors in recordkeeping by retail merchants can expose them to large and sometimes outrageous assessments for outstanding sales taxes. This bill provides an incentive to retail merchants to take certain actions designed to ensure they maintain complete auditable sales records. It increases the likelihood that these merchants will comply with the sales .tax laws, generating more revenue for the state and reducing the need for sales tax enforcement expenditures. In addition, by providing this incentive to retail merchants, the state is also helping to ensure their long term stability. Given the significant economic benefits these small business owners generate

for the state, helping them to succeed is a worthwhile government venture.

Legislative history

New Bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.