Requires wholesalers of motor fuel to register and file returns

Summary of specific provisions

Section 1. Amends section 282 of the tax law by adding a new subdivision 27 to define "wholesaler of motor fuel"

Section 2. Adds a new section 283-d to the tax law. This section requires wholesalers to register with the department of Taxation. The Commissioner may require a wholesaler to file a bond with the department before registering. This is in the amount subject to discretion of commissioner and may be sold in order to recover against wholesalers after litigation, any surplus to be returned. Stipulates reasons to refuse an application for registration. Delineates grounds for cancellation or suspension of registration and grounds for cancellation or suspension prior to a hearing.

Section 3. Amends section 287 of the tax law by adding a new subdivision 3. All wholesalers must file every Month number of gallons of motor fuel purchased and sold by the wholesaler in the state during preceding month

Section 4. Amends section 1102 of the tax law by adding a new subdivision (f). Allows for credits and refunds of tax imposed in certain circumstances outlined in § 1111(3)(e)

Section 5: Amends subdivision (e) of section 1111 by adding a new paragraph 3. Relating to purchasing/selling in areas with higher or lower prepaid motor. taxes; payments to tax department or credit/refund to wholesaler

Section 6: Adds a new section 1812-g to the tax law. Designates persons not registered as wholesaler but sells motor fuel, other than retail sellers, of committing a class E felony.

Justification

Currently, wholesalers of motor fuel are not registered and are not required to file motor fuel information returns with the Department of Taxation and Finance (DTF). The lack of registration and information return filing requirements seriously hampers the ability of DTF to monitor motor fuel from importation into this State to the retail station. By not having to register and report purchase and sale information some wholesalers of motor fuel have been able to evade State and local taxes without detection. To close this loophole, it is necessary to require wholesalers of motor fuel to both register and report all their purchases and sales within this State. This bill would also address a problem that arose when the prepaid sales tax rates on motor fuel were raised in the 2014-15 State Budget. There are now three regions for which motor fuel is prepaid with

differing rates. The prepaid sales tax on motor fuel is paid based upon the tax region into which it is imported. Thereafter, wholesalers of motor fuel may move motor fuel from one region to another. This structure has created additional incentives for tax evasion since wholesalers are able to purchase motor fuel in a lower tax region and sell in a higher tax region. This bill would require wholesalers of motor fuel to report purchases and sales and account for any difference in regional rates.

This is a necessary tax enforcement initiative. This bill requires the registration in the following two zones only: The first region shall consist of the localities included in the metropolitan commuter transportation district created and established pursuant to section twelve hundred sixty-two of the public authorities law, excluding all localities included in the counties of Nassau and Suffolk. The second region shall consist of the localities included in the counties of Nassau and Suffolk.

Prior legislative history

New Bill.

Fiscal implications

Would increase All Funds tax receipts by $5 million in 2015-16 and $10 million annually thereafter.

Effective date

This act shall take effect immediately; provided, however, that sections two, three, four, five and six of this act shall take effect December 1, 2015. Effective immediately, any rules, regulations and agreements necessary to implement the provisions of this act on its effective date are authorized and directed to be completed on or before such date.