N.Y. Tax Law § 10: Electronic funds transfer by certain taxpayers remitting sales and compensating use taxes, prepaid sales and compensating use taxes on mo...

§ 10. Electronic funds transfer by certain taxpayers remitting sales

and compensating use taxes, prepaid sales and compensating use taxes on

motor fuel and diesel motor fuel, and motor fuel and petroleum business

taxes. (a) Definitions. For purposes of this section:

(1) The term "commissioner" means the commissioner of taxation and

finance.

(2) The term "electronic funds transfer" has the meaning prescribed in

paragraph three of subdivision (a) of section nine of this chapter.

(3) The term "federal employer identification number" means the number

assigned in accordance with section six thousand one hundred nine of the

United States internal revenue code of nineteen hundred eighty-six, and

amendments thereto, and regulations promulgated thereunder.

(4) The term "separate New York state employer identification number"

means a number assigned by the department which is either a suffix to

the federal employer identification number or an identifying number

unrelated to the federal employer identification number.

(5) The term "payment of tax" means a payment or payment over of the

taxes described in subparagraphs (A), (B) and (C) of paragraph one of

subdivision (b) of this section.

(6) The term "taxpayer" means the person required to make a payment of

tax.

(b) Participation rules. (1) General. Notwithstanding any other

provision of law to the contrary, if, on or after June first of any

year, during the June first through May thirty-first period which

immediately precedes the previous June first through May thirty-first

period, a taxpayer was liable for

(A) more than five hundred thousand dollars of state and local sales

and compensating use taxes imposed by article twenty-eight and pursuant

to the authority of article twenty-nine of this chapter where such taxes

are administered by the commissioner, or

(B) more than five million dollars of prepaid state and local sales

and compensating use taxes on motor fuel and diesel motor fuel imposed

pursuant to section eleven hundred two of this chapter, or

(C) more than five million dollars of the total of the tax on gasoline

and similar motor fuel and the tax on petroleum businesses imposed by

and pursuant to the authority of articles twelve-A and thirteen-A of

this chapter, then such taxpayer shall make payments of the taxes for

which such dollar threshold was met by electronic funds transfer or

certified check in accordance with the provisions of subdivision (c) of

this section.

(2) Special transitional rule. Notwithstanding the provisions of

paragraph one of this subdivision, for purposes of determining whether a

taxpayer described in subparagraph (C) of such paragraph shall be

required to initially participate in the program prescribed by this

section, if such taxpayer was liable for more than three million seven

hundred fifty thousand dollars in total article twelve-A and thirteen-A

taxes during the September first, nineteen hundred ninety through May

thirty-first, nineteen hundred ninety-one period, then such taxpayer

shall make payments of tax by electronic funds transfer or certified

check in accordance with the provisions of this section.

(3) Disaggregation. Every taxpayer who is identified by either its own

federal employer identification number or its own separate New York

state employer identification number shall be treated as a separate

taxpayer for purposes of determining whether the dollar thresholds

specified in paragraph one or two of this subdivision have been met. A

taxpayer seeking a separate New York state employer identification

number for a branch or division may apply to the commissioner for such a

number. The commissioner, at his or her discretion, may assign such

number upon a showing by the taxpayer of a legitimate business purpose

for such request.

(4) Hardship. (A) If a taxpayer having liability described in

subparagraph (A) of paragraph one of this subdivision can demonstrate to

the satisfaction of the commissioner that (i) for the two most recent

consecutive quarters, the state and local sales and compensating use

taxes properly payable by such taxpayer are less than fifty percent of

the state and local sales and compensating use taxes properly payable by

such taxpayer for the comparable two quarters of the preceding year and

(ii) the sum of such taxpayer's state and local sales and compensating

use tax liability for such most recent consecutive quarters together

with the product of the state and local sales and compensating use taxes

properly payable by such taxpayer for the two consecutive quarters

immediately preceding the quarters referred to in clause (i) of this

subparagraph multiplied by the percentage arrived at under such clause

is less than two hundred fifty thousand dollars in amount, then such

taxpayer shall not be required to participate in the program prescribed

by this section for the remaining quarters of the sales tax year ending

on the next May thirty-first and for the immediately succeeding four

sales tax quarters.

(B) If a taxpayer having liability described in subparagraph (B) or

(C) of paragraph one of this subdivision can demonstrate to the

satisfaction of the commissioner that (i) for the most recent six-month

period, (I) the prepaid state and local sales and compensating use taxes

on motor fuel and diesel motor fuel or (II) the total article twelve-A

and thirteen-A taxes, as the case may be, properly payable by such

taxpayer are less than fifty percent of such applicable taxes described

in subclause (I) or (II), as the case may be, properly payable by such

taxpayer for the comparable six-month period of the preceding year and

(ii) the sum of such taxpayer's liability for such applicable taxes for

the most recent six months together with the product of such applicable

taxes properly payable by such taxpayer for the six-month period

immediately preceding the six-month period referred to in clause (i) of

this subparagraph multiplied by the percentage arrived at under such

clause is less than two and one-half million dollars in amount, then

such taxpayer shall not be required to participate in the program

prescribed by this section for the remaining months of the period ending

on the next May thirty-first and for the immediately succeeding twelve

months.

(D) If a taxpayer required to remit state and local sales and

compensating use taxes by electronic funds transfer or certified check

pursuant to the provisions of this section can demonstrate to the

satisfaction of the commissioner that (i) such taxpayer's liability for

state and local sales and compensating use taxes was less than four

million dollars during the period described in paragraph one of this

subdivision, and (ii) in any two sales tax quarters within the most

recent four consecutive sales tax quarters, such taxpayer was a

materialman within the meaning of section two of the lien law, primarily

engaged in furnishing building materials to contractors, subcontractors

or repairmen for the improvement of real property improved or to be

improved with a residential dwelling unit, and authorized by such law to

file a mechanic's lien upon such real property and improvement, then

such taxpayer need not remit state and local sales and compensating use

taxes by electronic funds transfer or certified check for the remainder

of the program period in accordance with the timing requirements of

subdivision (c) of this section, but may instead remit such taxes by

electronic funds transfer or certified check at the same time that

payment is required to be made for part-quarterly and quarterly returns

required to be filed under article twenty-eight and pursuant to the

authority of article twenty-nine of this chapter, in the amount required

under or pursuant to such articles at such time. The due date prescribed

by this subparagraph shall be deemed to be the applicable due date for

purposes of this section for taxpayers qualifying under this

subparagraph. The provisions of this section shall apply to taxpayers

qualifying under this subparagraph, except to the extent that any such

provision is either inconsistent with a provision of this subparagraph

or is not relevant to this subparagraph.

(c) Payment rules. (1) Payment by electronic funds transfer or

certified check. On or before the third business day following the

twenty-second day of each calendar month:

(A) a taxpayer having liability described in subparagraph (A) of

paragraph one of subdivision (b) of this section shall, notwithstanding

any provision of this chapter to the contrary, remit by electronic funds

transfer or certified check: (i) either (I) seventy-five percent of

one-third of the state and local sales and compensating use taxes

properly payable by such taxpayer for the comparable quarter of the

preceding year; or

(II) such taxpayer's total liability for state and local sales and

compensating use taxes during the period ending on such twenty-second

day of the month, provided, however, that in such instance no penalty or

interest shall be payable pursuant to paragraph two of subdivision (g)

of this section if such taxpayer timely remits a payment of tax in an

amount not less than ninety percent of the taxes as finally determined

to be due and payable for such period; and

(ii) (I) for payments of tax due in the month of January, February,

April, May, July, August, October or November, such taxpayer's remaining

liability, if any, for state and local sales and compensating use taxes

for the immediately preceding calendar month; or

(II) for payments of tax due in the month of March, June, September or

December, such taxpayer's remaining liability, if any, for state and

local sales and compensating use taxes for the immediately preceding

sales tax quarter;

(B) a taxpayer having liability described in subparagraph (B) of

paragraph one of subdivision (b) of this section shall remit by

electronic funds transfer or certified check either:

(i) three-fourths of the prepaid state and local sales and

compensating use taxes on motor fuel and diesel motor fuel properly

payable by such taxpayer for the comparable month of the preceding year;

or

(ii) its total liability for prepaid state and local sales and

compensating use taxes on motor fuel and diesel motor fuel during the

period ending on such twenty-second day of the month, provided, however,

that in such instance no penalty or interest shall be payable pursuant

to paragraph two of subdivision (g) of this section if such taxpayer

timely remits a payment of tax in an amount not less than ninety percent

of the taxes as finally determined to be due and payable for such

period;

(C) a taxpayer having liability described in subparagraph (C) of

paragraph one of subdivision (b) of this section shall remit by

electronic funds transfer or certified check either:

(i) three-fourths of the total article twelve-A and article thirteen-A

taxes properly payable by such taxpayer for the comparable month of the

preceding year; or

(ii) its total liability for such taxes during the period ending on

such twenty-second day of the month, provided, however, that in such

instance no penalty or interest shall be payable pursuant to paragraph

two of subdivision (g) of this section if such taxpayer timely remits a

payment of tax in an amount not less than ninety percent of the taxes as

finally determined to be due and payable for such period.

(2) Filing obligations and payment of remaining liabilities. (A) A

taxpayer having liability described in subparagraph (A) of paragraph one

of subdivision (b) of this section shall, notwithstanding any provision

of this chapter to the contrary, file only the quarterly returns

required under article twenty-eight and pursuant to the authority of

article twenty-nine of this chapter for each of the periods for which

such returns are filed under and pursuant to the authority of such

articles; provided, however, that for those months for which a return is

not required to be filed pursuant to the provisions of this

subparagraph, the making of a payment of tax by electronic funds

transfer or certified check covering any period shall be deemed to

constitute the filing of a return for purposes of subdivision (b) of

section eleven hundred forty-seven of this chapter with respect to such

period.

(B) A taxpayer having liability described in subparagraph (B) of

paragraph one of subdivision (b) of this section shall file the returns

required under section eleven hundred two of this chapter and shall pay

to the commissioner the amounts required to be paid with such returns,

less the amounts remitted by electronic funds transfer or certified

check under this section, for each of the periods for which such returns

are filed under such section.

(C) A taxpayer having liability described in subparagraph (C) of

paragraph one of subdivision (b) of this section shall file the returns

required under and pursuant to the authority of articles twelve-A and

thirteen-A of this chapter and shall pay to the commissioner the amounts

required to be paid with such returns, less the amounts remitted by

electronic funds transfer or certified check under this section, for

each of the periods for which such returns are filed under and pursuant

to the authority of such articles.

(3) Payment date; payment by certified check. Payment of tax by

electronic funds transfer or certified check shall be made to a bank,

banking house or trust company designated by the commissioner. The

commissioner shall designate only such banks, banking houses or trust

companies as are or shall be designated by the comptroller as

depositories pursuant to section one hundred seventy-one-a of this

chapter, as added by chapter sixty-nine of the laws of nineteen hundred

seventy-eight. Notwithstanding any other provision of law to the

contrary, any electronic funds transfer shall be deemed to be made on

the date payment is received by the depository of the department,

provided, however, that at the election of a taxpayer subject to the

provisions of this section, mailing by the taxpayer of a certified check

for the amount of the tax liability on or before the second business day

prior to the applicable due date prescribed by paragraph one of this

subdivision shall fulfill the requirements with respect to payments of

tax by electronic funds transfer prescribed by this section and shall be

deemed to be timely payment of such tax liability.

(4) Special payment rule. If a taxpayer is liable for payment of taxes

described in two or more of subparagraphs (A), (B) and (C) of paragraph

one of subdivision (b) of this section, then such taxpayer shall make

separate payment by electronic funds transfer or certified check of the

taxes described in each of such subparagraphs.

(d) Enrollment and initial payment; duration of participation. Within

forty-five days after each June first, the commissioner shall notify by

certified or registered mail all taxpayers required to participate in

the program prescribed by this section. Such notice shall contain

language advising the taxpayer of the enrollment procedure and of the

consequences of failure to enroll in such program, as well as of a

taxpayer's right to challenge such determination of required

participation provided a hearing is requested within forty days of the

mailing of such notice. If a taxpayer does not enroll within forty days

of the mailing of such certified or registered notice of required

participation or where a taxpayer's challenge is not sustained and the

taxpayer has not enrolled within ten days of notification thereof, the

commissioner shall mail another notice, in addition to making other

reasonable attempts, to inform the taxpayer of the civil penalty that

has been assessed pursuant to paragraph one of subdivision (g) of this

section, of the opportunity for abatement of such penalty, and of the

future penalties that may result from continued failure to enroll and

failure to pay by electronic funds transfer or certified check or to

file; provided, however, that for the program period beginning December

first, nineteen hundred ninety-two through August thirty-first, nineteen

hundred ninety-three, the thirty-day period referred to in this sentence

shall be read as forty-five days. A taxpayer shall make its first

payment of tax by electronic funds transfer or certified check on or

before the applicable due date prescribed by subdivision (c) of this

section for the month of December in nineteen hundred ninety-two, the

month of September in nineteen hundred ninety-three and the month of

September for any year thereafter. Unless otherwise provided by this

section, such taxpayer shall continue to make payments of tax by

electronic funds transfer or certified check in accordance with the

provisions of this section through the succeeding month of August and

shall continue to make such payments of tax for each succeeding

September-to-August period where such taxpayer meets the criteria of

subdivision (b) of this section and is properly notified by the

commissioner pursuant to the enrollment provisions of this subdivision.

Provided, however, that:

(1) A taxpayer described in subparagraph (A) of paragraph one of

subdivision (b) of this section who is newly required to participate in

the program for the September first, nineteen hundred ninety-four

through August thirty-first, nineteen hundred ninety-five period shall

have forty-five days to enroll in the program and shall make its first

payment of tax by electronic funds transfer or certified check on or

before the applicable due date prescribed by subdivision (c) of this

section for the month of December in nineteen hundred ninety-four; and

(2) A taxpayer described in subparagraph (A) of paragraph one of

subdivision (b) of this section who is newly required to participate in

the program for the September first, nineteen hundred ninety-five

through August thirty-first, nineteen hundred ninety-six period shall

make its first payment of tax by electronic funds transfer or certified

check on or before the applicable due date prescribed by subdivision (c)

of this section for the month of December in nineteen hundred

ninety-five.

(e) Voluntary participation. A taxpayer who is not required to

participate in the program prescribed by this section but who is

required to remit any of the taxes specified in subparagraph (A), (B) or

(C) of paragraph one of subdivision (b) of this section may file a

request with the commissioner to remit any of such taxes by electronic

funds transfer or certified check in accordance with the provisions of

this section. Such request shall be in a form as the commissioner shall

require and shall be granted under such conditions as the commissioner

in his or her discretion shall deem necessary.

(f) Confidentiality. The department shall assure the confidentiality

of information supplied by taxpayers in effecting payments of tax

pursuant to this section in accordance with the provisions of sections

three hundred fourteen and eleven hundred forty-six of this chapter and

any other applicable provisions of law. The provisions of article six of

the public officers law shall not apply to any such information supplied

by taxpayers subject to this section.

(g) Civil penalties and interest. (1) Failure to enroll. If a taxpayer

required to participate in the program prescribed by this section fails

to enroll in such program in accordance with the terms set forth in

subdivision (d) of this section, such taxpayer shall pay a penalty equal

to five thousand dollars; provided, however, that if such taxpayer

enrolls in the program within thirty days after notification of

assessment of such penalty is sent by the department by certified or

registered mail return receipt requested, then such penalty shall be

abated. If such taxpayer continues to fail to enroll in the program

after such thirty-day period, the taxpayer shall pay an additional

penalty of five hundred dollars if the failure is for not more than one

month, with an additional five hundred dollars for each additional month

or fraction thereof during which such failure continues.

(2) Failure to pay or late payment. (A) A taxpayer required or

approved to participate in the program prescribed by this section who

fails to make a payment of tax by electronic funds transfer or certified

check on or before the applicable due date prescribed by subdivision (c)

of this section, or who fails to pay any tax required to be remitted on

or before such applicable due date shall, in the case of the taxes

imposed pursuant to article twenty-eight and pursuant to the authority

of article twenty-nine of this chapter, be liable for penalty and

interest as prescribed by subparagraphs (i) and (ii) of paragraph one of

subdivision (a) of section eleven hundred forty-five of this chapter,

and in the case of the taxes imposed by and pursuant to the authority of

articles twelve-A and thirteen-A of this chapter, be liable for penalty

and interest as prescribed by paragraphs (a) and (b) of subdivision one

of section two hundred eighty-nine-b of this chapter.

(B) Notwithstanding any provision of law to the contrary, if a

taxpayer described in subparagraph (B) or (C) of paragraph one of

subdivision (b) of this section fails to make a payment of tax by

electronic funds transfer or certified check on or before the applicable

due date prescribed by subdivision (c) of this section or fails to pay

any tax required to be remitted on or before such applicable due date,

as prescribed by subparagraph (A) of this paragraph, and also fails to

pay or pay over to the commissioner the amounts required to be paid or

paid over with the applicable return described in paragraph two of

subdivision (c) of this section due the twentieth day of the following

month, then penalty and interest for such additional failure, as

provided by subparagraphs (i) and (ii) of paragraph one of subdivision

(a) of section eleven hundred forty-five of this chapter or paragraphs

(a) and (b) of subdivision one of section two hundred eighty-nine-b of

this chapter, as the case may be, shall be computed on the amount equal

to the difference between the total of the amount of tax due or

determined to be due with such return and the total of the amount of tax

required to be paid by electronic funds transfer or certified check on

or before the applicable due date prescribed by subdivision (c) of this

section for the preceding month.

(3) Failure to file required returns. A taxpayer required or approved

to participate in the program prescribed by this section who complies

with the payment requirements of subdivision (c) of this section

(including the payment of remaining liabilities described in paragraph

two of such subdivision), but who fails to file any return required

pursuant to article twelve-A, thirteen-A, twenty-eight or twenty-nine of

this chapter, as the case may be, for the period for which such payments

were timely and fully paid or paid over, shall be liable for a penalty

equal to five hundred dollars.

(h) Administration. Except as otherwise provided in this section, the

provisions of part IV of article twenty-eight of this chapter shall

apply to the administration of and procedures with respect to the

provisions of this section relating to the taxes described by

subparagraph (A) of paragraph one of subdivision (b) of this section,

the provisions of section eleven hundred two of this chapter relating to

the administration of and procedures with respect to such section shall

apply to the administration of and procedures with respect to the

provisions of this section relating to the taxes described by

subparagraph (B) of such paragraph one, and the provisions of article

twelve-A relating to the administration of and procedures with respect

to such article shall apply to the provisions of this section relating

to the taxes described in subparagraph (C) of such paragraph one.

(i) Regulations. The commissioner shall have the authority to

promulgate regulations in order to implement the provisions of this

section.