N.Y. Tax Law § 681: Notice of deficiency

§ 681. Notice of deficiency.--(a) General.--If upon examination of a

taxpayer's return under this article the tax commission determines that

there is a deficiency of income tax, it may mail a notice of deficiency

to the taxpayer. If a taxpayer fails to file an income tax return

required under this article, the tax commission is authorized to

estimate the taxpayer's New York taxable income and tax thereon, from

any information in its possession, and to mail a notice of deficiency to

the taxpayer. A notice of deficiency shall be mailed by certified or

registered mail to the taxpayer at his last known address in or out of

this state. If a husband and wife are jointly liable for tax, a notice

of deficiency may be a single joint notice, except that if the tax

commission has been notified by either spouse that separate residences

have been established, then, in lieu of the single joint notice, a

duplicate original of the joint notice shall be mailed to each spouse at

his or her last known address in or out of this state. If the taxpayer

is deceased or under a legal disability, a notice of deficiency may be

mailed to his last known address in or out of this state, unless the tax

commission has received notice of the existence of a fiduciary

relationship with respect to the taxpayer.

(b) Notice of deficiency as assessment.--After ninety days from the

mailing of a notice of deficiency, such notice shall be an assessment of

the amount of tax specified in such notice, together with the interest,

additions to tax and penalties stated in such notice, except only for

any such tax or other amounts as to which the taxpayer has within such

ninety day period filed with the tax commission a petition under section

six hundred eighty-nine. If the notice of deficiency is addressed to a

person outside of the United States, such period shall be one hundred

fifty days instead of ninety days.

(c) Restrictions on assessment and levy.--No assessment of a

deficiency in tax and no levy or proceeding in court for its collection

shall be made, begun or prosecuted, except as otherwise provided in

section six hundred ninety-four, until a notice of deficiency has been

mailed to the taxpayer, nor until the expiration of the time for filing

a petition contesting such notice, nor, if a petition with respect to

the taxable year has been filed with the tax commission, until the

decision of the tax commission has become final. For exception in the

case of judicial review of the decision of the tax commission, see

subsection (c) of section six hundred ninety.

(d) Exceptions for mathematical or clerical errors.--If a mathematical

or clerical error appears on a return (including an overstatement of the

credit for income tax withheld at the source, or of the amount paid as

estimated income tax), the commissioner shall notify the taxpayer that

an amount of tax in excess of that shown upon the return is due, and

that such excess has been assessed. Such notice shall not be considered

as a notice of deficiency for the purposes of this section, subsection

(f) of section six hundred eighty-seven (limiting credits or refunds

after petition to the division of tax appeals), subsection (b) of

section six hundred eighty-nine (authorizing the filing of a petition

with the division of tax appeals based on a notice of deficiency), or

article forty of this chapter, nor shall such assessment or collection

be prohibited by the provisions of subsection (c).

(e) Exceptions where federal changes, corrections or disallowances are

not reported.---

(1) If the taxpayer or employer fails to comply with section six

hundred fifty-nine or section six hundred fifty-nine-a, instead of the

mode and time of assessment provided for in subsection (b) of this

section, the commissioner may assess a deficiency based upon such

federal change, correction or disallowance by mailing to the taxpayer a

notice of additional tax due specifying the amount of the deficiency,

and such deficiency, together with the interest, additions to tax and

penalties stated in such notice, shall be deemed assessed on the date

such notice is mailed unless within thirty days after the mailing of

such notice a report of the federal change, correction or disallowance

or an amended return, where such return was required by section six

hundred fifty-nine or section six hundred fifty-nine-a, is filed

accompanied by a statement showing wherein such federal determination

and such notice of additional tax due are erroneous.

(2) Such notice shall not be considered as a notice of deficiency for

the purposes of this section, subsection (f) of section six hundred

eighty-seven (limiting credits or refunds after petition to the division

of tax appeals), or subsection (b) of section six hundred eighty-nine

(authorizing the filing of a petition with the division of tax appeals

based on a notice of deficiency), nor shall such assessment or the

collection thereof be prohibited by the provisions of subsection (c).

(3) If spouses are jointly liable for tax, a notice of additional tax

due may be a single joint notice, except that if the commissioner has

been notified by either spouse that separate residences have been

established, then, in lieu of the joint notice, a duplicate original of

the joint notice shall be mailed to each spouse at their last known

address in or out of this state. If the taxpayer is deceased or under a

legal disability, a notice of additional tax due may be mailed to their

last known address in or out of this state, unless the commissioner has

received notice of the existence of a fiduciary relationship with

respect to the taxpayer.

(f) Waiver of restrictions.--The taxpayer shall at any time (whether

or not a notice of deficiency has been issued) have the right to waive

the restrictions on assessment and collection of the whole or any part

of the deficiency by a signed notice in writing filed with the tax

commission.

(g) Deficiency defined.--For purposes of this article, a deficiency

means the amount of the tax imposed by this article, less (i) the amount

shown as the tax upon the taxpayer's return (whether the return was made

or the tax computed by him or by the tax commission), and less (ii) the

amounts previously assessed (or collected without assessment) as a

deficiency and plus (iii) the amount of any rebates. For the purpose of

this definition, the tax imposed by this article and the tax shown on

the return shall both be determined without regard to payments on

account of estimated tax or the credit for withholding tax; and a rebate

means so much of an abatement, credit, refund or other repayment

(whether or not erroneous) made on the ground that the amounts entering

into the definition of a deficiency showed a balance in favor of the

taxpayer.