N.Y. Tax Law § 280-a: Rebate for stock transfer tax paid; penalty for false claims

§ 280-a. Rebate for stock transfer tax paid; penalty for false claims.

1. Except as otherwise provided in subdivision fifteen of this section,

where a tax shall have been paid under this article a portion of the

amount paid shall be allowed as a rebate and such portion shall be paid

to the taxpayer but only to the extent that moneys are available for the

payment of such rebates in the stock transfer incentive fund established

pursuant to section ninety-two-i of the state finance law. The portion

of the amount of tax paid which is to be allowed as a rebate shall be

thirty percent of the tax incurred and paid on transactions subject to

the stock transfer tax occurring on and after October first, nineteen

hundred seventy-nine and on or before September thirtieth, nineteen

hundred eighty and sixty percent of the tax incurred and paid on such

transactions occurring on and after October first, nineteen hundred

eighty and on or before September thirtieth, nineteen hundred eighty-one

and all of the amount of tax incurred and paid shall be allowed as a

rebate on transactions subject to the stock transfer tax occurring on

and after October first, nineteen hundred eighty-one.

2. Notwithstanding the provisions of subdivision one of this section

with respect to the percentages of tax allowable as rebates, the portion

of the amount of stock transfer tax paid which is to be allowed as a

rebate to a nonresident shall be fifty percent of the tax incurred and

paid on transactions subject to stock transfer tax occurring on and

after October first, nineteen hundred seventy-seven and on or before

July thirty-first, nineteen hundred seventy-eight and thirty-seven and

one-half percent with respect to such transactions occurring on and

after August first, nineteen hundred seventy-eight and on or before

September thirtieth, nineteen hundred eighty, and thereafter the

portions set forth in subdivision one of this section shall be

applicable.

2-a. In addition to the rebate allowable under the provisions of

subdivision one of this section, the portion of the amount of stock

transfer tax paid which is to be allowed as a rebate to any person,

firm, company or corporation registered with the United States

securities and exchange commission in accordance with subsection (b) of

section fifteen of the securities exchange act of nineteen hundred

thirty-four, as amended, and acting as a dealer in a transaction

described in paragraph (e) of subdivision twelve of this section, other

than such a person, firm, company or corporation liable to file a report

or return under article nine-A of this chapter, or article twenty-three

of this chapter, (as such article was in effect on or before December

thirtieth, nineteen hundred eighty-two), shall be one hundred percent of

the stock transfer tax incurred and paid on transactions subject to the

stock transfer tax executed by such person, firm, company or corporation

pursuant to the acceptance of an order placed through an intermarket

linkage system developed pursuant to subsection (a) of section eleven-A

of such securities exchange act under a plan submitted by one or more

national securities exchanges or national securities associations

registered with such securities and exchange commission occurring on and

after April seventeenth, nineteen hundred seventy-eight and on or before

September thirtieth, nineteen hundred seventy-nine, seventy percent of

the tax incurred and paid on such a transaction occurring on and after

October first, nineteen hundred seventy-nine and on or before September

thirtieth, nineteen hundred eighty and forty percent of the tax incurred

and paid on such a transaction occurring on and after October first,

nineteen hundred eighty and on or before September thirtieth, nineteen

hundred eighty-one. Notwithstanding any other provision of law, the net

amount to be rebated to any such person, firm, company or corporation

under this subdivision with respect to stock transfer tax allowable as

rebates during each of the periods ending on September thirtieth

hereinbefore set forth shall not be allowed or paid prior to the first

day of the eighth month following September thirtieth of each of such

periods nor until the subsequent date on which the commissioner of

taxation and finance shall next determine the amount allowable as

rebates pursuant to the provisions of section ninety-two-i of the state

finance law, provided, however, that the net amount to be allowed for

the April seventeenth, nineteen hundred seventy-eight through September

thirtieth, nineteen hundred seventy-eight period shall not be allowed or

paid until the last business day of June, nineteen hundred seventy-nine.

No rebate shall be allowed under this subdivision with respect to any

stock transfer tax incurred in a market making transaction occurring on

or after October first, nineteen hundred eighty-one. No rebate shall be

allowed or paid under this subdivision for stock transfer tax paid

pursuant to section two hundred seventy-nine-a of this chapter nor shall

any rebate be allowed or paid until the person, firm, company or

corporation claiming the rebate complies with the rules, regulations and

instructions of the state tax commission issued under this article

including furnishing of a just and true book of account within the state

as may be required by the state tax commission.

3. Except as provided in subdivision six of this section, rebates may

be paid only upon the filing of a claim for rebate with the state tax

commission. All claims for rebate shall be presented in such form and

contain such information as the state tax commission, by rule,

regulation or instruction, shall prescribe and shall be presented within

two years after the affixing and cancelling of stock transfer tax stamps

or payment of the tax otherwise than by the use of stamps.

4. Every such claim shall include a certificate by or on behalf of the

party presenting the same to the effect that it is just, true and

correct, that the amount of stock transfer tax stated thereon has been

paid to the state and that the amount of rebate requested is actually

due and owing. The state tax commission, if satisfied that the tax has

actually been paid, shall rebate the same in accordance with the

provisions of this section on the audit and warrant of the state

comptroller on vouchers approved by the commissioner of taxation and

finance.

5. The state tax commission shall grant or deny such claim in the

manner provided in section two hundred eighty of this article and the

remaining provisions of such section, relating to determination of tax,

hearing, decision of the state tax commission, the exclusive manner of

review of such decision, and the requirement of an undertaking, shall

apply to the provisions of this section with the same force and effect

as if the language of such section had been incorporated in full into

this section and had expressly referred to the rebate under this

section, except to the extent that any such provision is either

inconsistent with or not relevant to this section. All of the other

provisions of this article relating to refunds shall apply to the rebate

of tax provided for by this section in the same manner and with the same

force and effect as if the language of such provisions had been

incorporated in full into this section and had expressly referred to the

rebates of tax provided for under this section, except to the extent

that any such provision is either inconsistent with a provision of this

section or is not relevant to this section and except that the term

"refund" as used in such provisions shall be read as "rebate".

6. (a) Notwithstanding the provisions of section two hundred

eighty-one-a of this chapter, the tax imposed by this article may be

paid, and rebates provided for in subdivisions one and two of this

section shall be allowed without the filing of the claim required by

subdivision three of this section, in the manner and upon the filing of

the report referred to in paragraph (b) of this subdivision in the case

where payment of the tax imposed by this article is made by any member

of any securities exchange or any registered dealer who or which is

permitted or required pursuant to the provisions of such section two

hundred eighty-one-a of this chapter to pay such tax without the use of

the stamps prescribed by this article.

(b) On the written report required to be made to or through a

securities exchange located within this state, affiliated clearing

corporation or to a qualified securities exchange, qualified clearing

corporation, authorized agency or the tax commission by each such member

or dealer under such section two hundred eighty-one-a, there shall also

be shown the amount of the rebate of tax shown to be due thereon, which

would be allowable by this section if the full amount of tax is paid

with such report. The net amount required to be paid for the account of

the tax commission to or through such exchange located within this

state, affiliated clearing corporation or to such authorized agency and

remitted to the tax commission pursuant to such section or such amount

required to be paid to the tax commission shall be the amount of tax

shown to be due on such written report (determined without regard to any

rebate allowable under this section) less the amount of any such rebate,

subject to the provisions of subdivision eight of this section.

Notwithstanding the provisions of section two hundred eighty-one-a of

this article, on the next-to-the-last business day of the department of

taxation and finance in each of the months of September, December, March

and June, each such member or dealer shall show on such report the

aggregate amount of rebates shown daily on such report for the period of

three full months ending on such next-to-the-last business day. On the

last business day of each of such months, an amount equal to such

aggregate amount shall be paid by such member or dealer for the account

of the tax commission to or through such exchange located within this

state, affiliated clearing corporation or authorized agency and remitted

by such exchange, affiliated clearing corporation or authorized agency

to the tax commission by separate check or wire transfer. The amount so

remitted shall constitute the total amount of rebates provided in

subdivisions one and two of this section payable in the manner described

in this subdivision, which amount shall be included in the amount

required to be paid from the stock transfer tax fund into the stock

transfer incentive fund on each such last day pursuant to sections

ninety-two-b and ninety-two-i of the state finance law; provided,

however, that if such exchange located within this state, affiliated

clearing corporation, qualified securities exchange, qualified clearing

corporation or authorized agency shall determine that the payment by any

member or dealer of any tax imposed by this article will be jeopardized

by delay, it shall forthwith notify the tax commission of such

condition, or if the tax commission believes that the collection of any

tax will be jeopardized by delay, it may determine the amount of such

tax and assess the same against any such member or dealer prior to the

filing of his report and prior to the date when his report is required

to be made to an exchange located within this state, affiliated clearing

corporation, qualified securities exchange, qualified clearing

corporation or authorized agency. The amount so determined shall become

due and payable to the tax commission by the member or dealer against

whom such a jeopardy assessment is made, as soon as notice thereof is

given to him personally or by registered or certified mail. The

provisions of section two hundred seventy-nine-a shall apply to any such

determination except to the extent that they may be inconsistent with

the provisions of this subdivision. The tax commission may abate any

jeopardy assessment if it finds that jeopardy does not exist. The

collection of any jeopardy assessment may be stayed by filing with the

tax commission a bond issued by a surety company authorized to transact

business in this state and approved by the superintendent of financial

services as to solvency and responsibility, conditioned upon payment of

the amount assessed, or any lesser amount to which such assessment may

be reduced by the tax commission or by a proceeding under article

seventy-eight of the civil practice law and rules as provided in section

two hundred seventy-nine-a of this chapter such payment to be made when

the assessment or any such reduction thereof shall have become final and

not subject to further review. If such a bond is filed and thereafter a

proceeding under article seventy-eight of the civil practice law and

rules is commenced as provided in section two hundred seventy-nine-a,

deposit of the taxes assessed shall not be required as a condition

precedent to the commencement of such proceeding. Where a jeopardy

assessment is made, any property seized for the collection of the tax

shall not be sold (i) until expiration of the time to apply for a

hearing as provided in such section, and (ii) if such application is

timely filed, until the expiration of ninety days after the tax

commission mailed notice of its determination to the person against whom

the assessment is made; provided, however, such property may be sold at

any time if such person has failed to attend a hearing of which he has

been duly notified, or if he consents to the sale, or if the tax

commission determines that the expenses of conservation and maintenance

will greatly reduce the net proceeds, or if the property is perishable.

The amount of any and all rebates of the tax imposed by this article

paid pursuant to this paragraph shall be credited or caused to be

credited by such exchange located within this state, affiliated clearing

corporation, qualified securities exchange, qualified clearing

corporation or authorized agency to or for the benefit of the taxpayer

incurring liability for such tax.

(c) If a rebate is paid in the manner provided in this subdivision, no

further rebate shall be allowable but any stock transfer tax paid to a

member or dealer by a taxpayer otherwise entitled to rebate under this

section shall be paid by such member or dealer to the taxpayer.

(d) The amounts of the rebates provided for under subdivisions one and

two of this section paid in the manner provided in this subdivision

shall be shown separately on all reports prescribed by the tax

commission under such section and shall be evidenced by such

certification as the tax commission may prescribe.

(e) The tax commission may require any such member or registered

dealer to file with the department of taxation and finance a bond issued

by a surety company approved by the superintendent of financial services

as to solvency and responsibility and authorized to transact business in

the state, in such amount as the tax commission may fix, to secure the

payment of any taxes due from such member or dealer pursuant to section

two hundred eighty-one-a. The tax commission may require that such a

bond be filed before any tax due under this article from any such member

or dealer may be reported and paid under the provisions of this

subdivision, or at any time when in its judgment the same is necessary

as a protection to the revenues under this article. In lieu of such

bond, such member or dealer may deposit securities approved by the tax

commission, in such amount as it may prescribe, which securities shall

be kept in the joint custody of the comptroller and the commissioner of

taxation and finance and may be sold by the tax commission if it becomes

necessary so to do in order to recover any sums due from such person

pursuant to this article; but no such sale shall be held until after

such person shall have had opportunity to litigate the validity of any

tax if it elects so to do. Upon any such sale, the surplus, if any,

above the sums due under this article, shall be returned to such member

or dealer.

7. If the commissioner of taxation and finance makes the determination

that rebates payable exceed moneys available in the stock transfer

incentive fund for paying such rebates and if any member or dealer shall

advance and pay the amount of tax, imposed by this article without

taking account of rebates, either for himself or for which any other

taxpayer is entitled to claim a rebate pursuant to the provisions of

subdivision six of this section, such member or dealer shall be entitled

to a rebate for the amount of such tax advanced and paid by him on

behalf of such other taxpayer in the amount of the rebate allowable to

such taxpayer and in the amount of the rebate allowable to himself

whenever such commissioner determines that sufficient funds are

available in the stock transfer incentive fund for paying such rebate.

8. The amount of any erroneous or excessive rebate paid or allowed

under this section may be determined by the state tax commission and may

be recovered from such claimant in the same manner as a tax imposed

under this article, provided, however, that any such determination shall

be made within five years after the date of such erroneous or excessive

rebate.

9. Any taxpayer, broker or dealer who or which files or causes to be

filed any claim for or report of rebate permitted or required under this

article which is willfully false shall be guilty of a felony.

10. If any part of any claim for or report of rebate of stock transfer

tax is false or fraudulent, any person who files such claim or makes

such report shall, in addition to any other penalties provided by this

article, be subject to a penalty of five hundred dollars for each and

every violation. The state tax commission may determine the amount of

any such penalty to be due from any such person in the same manner as

the tax imposed by this article, provided, however, that any such

determination shall be made at any time.

11. The state tax commission shall make rules and regulations and

issue instructions to effectuate the purposes of this section and to

provide for payments to and from and administration of the stock

transfer tax fund and the stock transfer incentive fund and shall have

all the rights and powers as set forth in section two hundred

seventy-six of this article to examine transactions and require records

to be kept and declarations and certifications to be made and kept as

may be required for such purposes. If any member or dealer described in

subdivision six of this section shall violate any provision of this

section or any reasonable rule, regulation or instruction made or issued

pursuant thereto, such member or dealer may upon notice thereof

thereafter be denied rebates by the state tax commission in accordance

with rules and regulations promulgated by such commission. Provided,

that nothing herein shall limit the right to file a claim for rebate

under this section.

12. For the purposes of this section the following terms shall have

the following meanings:

(a) A "nonresident" shall mean an individual or group of individuals

jointly owning securities (but including partnerships only if organized

and operating solely for the purpose of investing in securities) selling

or trading or delivering or transferring on his or their own account,

who is not, or no one of whom is, a resident.

(b) A "resident" means an individual who on the day upon which the tax

imposed by section two hundred seventy of this chapter accrues,

(1) regardless of where he resides or is domiciled, (i) is a member of

a securities exchange within this state which is registered with the

securities and exchange commission of the United States; (ii) is a

dealer in securities required to be registered with the attorney general

of the state of New York; (iii) acts as a dealer in securities or as a

broker or agent in transactions concerned with the sale, purchase,

delivery or transfer of securities; or (iv) is a member of or a person

employed in a managerial capacity by a firm, company, association or

organization, or an officer or director of or a person employed in a

managerial capacity by a corporation, which is a member organization of

a securities exchange, a dealer in securities, or a dealer, broker or

agent, described in clause (i), (ii) or (iii) of this subparagraph, or

(2) is domiciled in this state, unless on such day he maintained no

permanent place of abode in this state, maintained a permanent place of

abode elsewhere and during the one year period ending on such day spent

in the aggregate, not more than thirty days of such period in this

state, or

(3) is not domiciled in this state, but on such day maintained in this

state, a permanent place of abode unless such abode is due solely to

such individual's being in the armed forces of the United States, or

(4) regardless of where he resides, maintains a permanent place of

business within this state or is employed within this state.

(c) No transaction shall be deemed to be a nonresident transaction and

entitled to the rebate payable or allowable in subdivision two unless

(1) the papers or documents upon or to which are required to be placed

or affixed the stamps required by subdivision four of section two

hundred seventy of this chapter, to denote the payment of the proper

amount of the tax imposed by such section to the state tax commission,

have also affixed thereto or placed thereon a declaration in the form

prescribed by the tax commission signed by the person making the sale or

transfer, setting forth facts to show that the transaction is made by a

nonresident; or (2) in the case of transactions executed or effected

within this state (or transactions executed or effected outside this

state but subject to the tax imposed by this article) by any member or

member organization of any securities exchange located within this state

or of any qualified securities exchange which is registered with the

securities and exchange commission of the United States (hereinafter in

this section referred to as a "member of a securities exchange") or by

any person, firm, corporation, company or association required to be

registered with the attorney general of the state of New York as a

dealer in securities other than upon any such exchange (hereinafter in

this section referred to as a "registered dealer"), who is permitted or

required pursuant to any rules and regulations promulgated by the tax

commission pursuant to the provisions of section two hundred

eighty-one-a of this chapter, to pay the tax imposed by this article

without the use of the stamps prescribed by this article, the

transaction is certified, in such form as the tax commission may

prescribe, in the report required to be made to or through such exchange

located within this state, or its affiliated clearing corporation or to

a qualified securities exchange, qualified clearing corporation or any

authorized agency by rules and regulations promulgated by the tax

commission pursuant to section two hundred eighty-one-a of this chapter,

as being a transaction by a nonresident. The certification in such

report may be made by such member of a securities exchange or registered

dealer if he either (i) has obtained from such nonresident a declaration

in the form prescribed by the tax commission, or (ii) has met

requirements set forth in rules and regulations promulgated by the tax

commission establishing that the transaction is made by a nonresident

and (iii) has not, on or after the date of obtaining such declaration or

its delivery and filing, received from such nonresident either a notice

of cancellation, in the form prescribed in clause (iii) of subparagraph

two of paragraph (d) of this subdivision, or has no knowledge or

reasonable grounds to believe that the status of such nonresident as a

nonresident has changed.

(d) (1) Any person who shall knowingly make any false statement in a

declaration provided for by paragraph (c) of this subdivision shall be

guilty of a misdemeanor and upon conviction thereof shall be liable to a

fine of not less than five hundred nor more than one thousand dollars,

or be imprisoned for not more than one year, or be subject to both such

fine and imprisonment, in the discretion of the court.

(2) Any person who--

(i) having executed, filed with and delivered to a member of a

securities exchange or a registered dealer a declaration provided for by

paragraph (c) of this subdivision;

(ii) thereafter ceases knowingly to be a nonresident;

(iii) fails to execute, file and deliver a notice of cancellation of

such declaration, with and to such member or dealer; and

(iv) after ceasing to be such a nonresident and prior to the

execution, filing and delivery of such notice of cancellation, with

intent to cause a rebate to be made from the stock transfer incentive

fund in excess of the rebate allowable to residents under subdivision

one of this section, places and allows to be executed an order with such

member or dealer where the sale, agreement to sell, memorandum of sale,

delivery or transfer of any shares or certificates described in section

two hundred seventy of this chapter is subject to the taxes imposed by

this chapter; shall be guilty of a misdemeanor and upon conviction

thereof shall be liable to a fine of not less than five hundred nor more

than one thousand dollars, or be imprisoned for not more than one year,

or be subject to both such fine and imprisonment, in the discretion of

the court.

(e) The term "market making transaction" shall mean any transaction

involving a sale (including a short sale) by a dealer of shares or

certificates subject to the tax imposed by this article, provided such

shares or certificates are sold:

(1) as stock in trade or inventory or as property held for sale in the

ordinary course of such dealer's trade or business (including transfers

which are part of an underwriting),

(2) in (i) a bona fide arbitrage transaction; (ii) a bona fide hedge

transaction involving a long or short position in any equity security

and a long or short position in a security entitling the holder to

acquire or sell such equity security; or (iii) a risk arbitrage

transaction in connection with a merger, acquisition, tender offer,

recapitalization, reorganization, or similar transaction, or

(3) to offset a transaction made in error.

Provided, however, that, except as to clause (iii) of subparagraph two

of this paragraph, the term "market making transaction" shall not

include any sale of shares or certificates identified in such dealer's

records as a security held for investment within the meaning of section

twelve hundred thirty-six of the internal revenue code.

13. The state tax commission may provide that where a declaration has

been executed, filed and delivered to a member of a securities exchange

or a registered dealer under subdivision one of section two hundred

seventy-a of this article and kept by such member or dealer pursuant to

rules, regulations and instructions of the state tax commission, such

declaration shall constitute the declaration of the nonresident under

subdivision twelve of this section.

14. Where there has been a determination of the maximum amount of tax

on a single qualifying sale under section two hundred seventy-e of this

chapter, the foregoing provisions of this section shall not apply to

such a single qualifying sale until October first, nineteen hundred

seventy-nine and thereafter, provided, however, for the period beginning

October first, nineteen hundred seventy-nine and ending September

thirtieth, nineteen hundred eighty, the portion of the maximum amount of

tax to be rebated on such single qualifying sale shall not exceed thirty

percent.

15. (a) For the purpose of allowing the rebate authorized by this

section to a taxpayer, other than a taxpayer regarding which subdivision

six of this section is applicable, any person liable for the tax imposed

by this article who or which purchases stamps issued to denote the

payment of the tax imposed by this article or any agent of a taxpayer

who purchases such stamps, provided such purchase was made from a fiscal

agent appointed for the sale of such stamps, may claim the rebate

authorized by subdivision one of this section by filing a claim in such

form and containing such information as the state tax commission, by

rule, regulation or instruction shall prescribe, but all such claims

under this subdivision shall be presented within two years after the

purchase of such stamps, provided, however, all such claims must be

accompanied by the receipt for the purchase of stamps in the form

approved by the tax commission. The tax commission, if satisfied that

the moneys from the purchase of such stamps have been paid from the

stock transfer tax fund into the stock transfer incentive fund, shall

rebate the same to the person or agent who or which purchased such

stamps from such fund. All of the other provisions of this section

regarding rebates shall apply to the method of rebate of tax provided

for by this subdivision in the same manner and with the same force and

effect as if the language of such provisions had been incorporated in

full into this subdivision and had expressly referred to the claim for

rebate of tax provided for by this subdivision, except to the extent

that any such provision is either inconsistent with a provision of this

section or is not relevant to this subdivision.

(b) If a rebate is paid in the manner provided in this subdivision, no

further rebate shall be allowable under this section but any stock

transfer tax paid by a taxpayer otherwise entitled to rebate under this

section shall be paid to such taxpayer by the claimant under this

subdivision.

(c) If a rebate is paid in the manner provided by this subdivision,

any refund or redemption allowable by this article shall be reduced by

the amount of rebate allowed and paid pursuant to this subdivision, any

other provision of this article to the contrary notwithstanding.

(d) The state tax commission shall have all the rights and powers as

set forth in section two hundred seventy-six of this article to examine

transactions and require records to be kept by claimant under this

subdivision as if such claimant was a person required to comply with the

provisions of such section two hundred seventy-six.

(e) If any person liable for the tax or any agent of the taxpayer

shall violate any provision of this subdivision or any reasonable rule,

regulation or instruction made or issued pursuant thereto, such person

or agent may upon notice thereof thereafter be denied rebates under this

subdivision by the state tax commission in accordance with rules and

regulations promulgated by such commission. Provided, that nothing

herein shall limit the right to file a claim for rebate under

subdivision three of this section.

(f) If the commissioner of taxation and finance makes the

determination that rebates payable exceed moneys available in the stock

transfer incentive fund for paying such rebates and if any person liable

for the tax imposed by this article or any agent of the taxpayer shall

have purchased stamps to pay the amount of tax imposed by this article

without charging the taxpayer or principal for the amount of the

rebatable portion of the cost of such stamps allowable to such taxpayer

or principal at the time of purchase of such stamps, such person liable

for the tax or such agent shall be entitled to a rebate for such

rebatable portion of such tax advanced and paid by him on behalf of such

other taxpayer in the amount of the rebate allowable to such taxpayer

and in the amount of any rebate allowable to himself whenever such

commissioner determines that sufficient funds are available in the stock

transfer incentive fund for paying such rebate.