What's happening
This bill requires that when estimating unpaid sales and use taxes, external indices must reflect local economic conditions.
Why it matters
Ensures fairer tax assessments. By requiring that external indices used to estimate unpaid sales and use taxes consider local economic conditions, the bill aims to prevent over- or underestimation based on statewide or national averages that might not reflect a community’s actual economic reality.
Protects small businesses and taxpayers. This change could help shield small businesses or individuals in economically struggling areas from being unfairly burdened by tax assessments that don’t account for their local economic context.
Improves accuracy and equity in tax enforcement. The amendment encourages the use of more precise and context-sensitive data, potentially leading to more accurate tax bills and reducing disputes between taxpayers and the tax authority.
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Who cares
Businesses with missing, incorrect or insufficient sales and use tax returns
The bill would require any external indices used to estimate their tax due to reflect local economic conditions.
New York State tax commissioner and tax auditors
The bill would constrain their choice of external indices when estimating sales and use taxes from available information.
Tax accountants and attorneys representing businesses
The local-economic-conditions requirement would provide a standard for reviewing tax estimates based on external indices.
Headline styles
Use Local Data for Tax
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to finance
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
971
2019-2020 Regular Sessions
IN SENATE
January 9, 2019
Introduced by Sens. YOUNG, RANZENHOFER -- read twice and ordered printed, and when printed to be committed to the Committee on Finance
AN ACT to amend the tax law, in relation to the determination of sales and compensating use taxes due
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision (a) of section 1138 of the tax law is amended by adding a new paragraph 5 to read as follows:
(5) Whenever a return required by this article is not filed, or if a return when filed is incorrect or insufficient, and the amount of tax due is determined by the commissioner from such information as may be available pursuant to paragraph one of this subdivision, any external indices used to estimate the tax due shall reflect the local economic conditions.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03735-01-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to the deter- mination of sales and compensating use taxes due
Purpose
This bill would require that any external economic indices used by the Department of Taxation and Finance in estimating sales tax payments due must utilize regional economic indices to reflect the wide variation of the costs of goods and services sold throughout the state.
Summary of provisions
Section 1: Amends subdivision (a) of section 1138 of the tax law by adding a new paragraph (5) to require that whenever the Commissioner of Taxation and Finance is determining the amount of sales tax owed, in instances in where a required sales tax filing has not been made or there has been an incorrect or insufficient sales tax payment, the Commissioner must utilize a regional economic index to estimating the correct tax payment to be made.
Justification
New York State has hired hundreds of new auditors over the past several years and unleashed them on unsuspecting taxpayers. Thousands of retail merchants across the state have been subject to new audit tactics appar- ently designed to generate as much revenue as possible. The most insid- ious of these tactics is the practice of determining a merchant's sales tax assessment based on external indices rather than the merchant's records. Oftentimes, the external indices are not based on local stand- ards thereby leading to drastically distorted assessments far exceeding any reasonable estimate. One of the most common indices used by the Department is based on an analysis of less than 100 businesses. The Department continues to use this index, in spite of a specific note by the study's authors that it is not statically reliable for such purposes.
The state legislature and the executive have most recently acknowledged the need for the state to accommodate regional differences in pricing, wages and purchasing power through the enactment of a minimum wage law that imposes a differing minimum wage threshold based upon regional economic differences within the state.
This bill would expand this policy by prohibiting the Department of Tax and Finance from using any external index that does not reflect local economic conditions. It ensures that anytime a sales tax assessment is imposed on a retail merchant not based on the merchant's records it will be more equitable since the merchant's local area will be the basis of comparison. These business owners are the backbone of the state's econo- my and deserve to have their taxes determined in a fair manner. This bill will restore fairness to the tax assessment process and help retail merchants in New York live up to their legitimate tax assessments.
Legislative history
2018: S.561/A.3924 Committed to Rules 2017: S.561/A.3924 Passed Senate 2015,2016: S.3013/A.4569 Passed Senate 2014: S.2710/A.5936 Committed to Rules 2013: S.2710/A.5936 Passed Senate 2011,2012: S.4943/A.8129 Passed the Senate
Fiscal implications
None.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.