N.Y. Tax Law § 997: Extensions of time for payment of estate tax where estate consists largely of interest in closely held businesses

§ 997. Extensions of time for payment of estate tax where estate

consists largely of interest in closely held businesses. The provisions

of section 6166 of the internal revenue code shall apply to this section

to the same extent as if such section of such code were contained in and

made part of this section (whether or not a federal estate tax return is

required to be filed) except as provided herein:

(a) The phrase "adjusted gross estate" shall be read as "adjusted

federal gross estate determined without reference to paragraphs (1), (2)

and (3) of subsection (a) of section nine hundred fifty-four" of this

article.

(b) The phrase "section 2001" shall be read as "section nine hundred

fifty-two or section nine hundred sixty" of this article.

(c) The phrase "the date prescribed by section 6151(a) for payment of

the tax" shall be read as "the date prescribed by this article for the

payment of the tax (without regard to any extension of time)".

(d) The term "secretary" shall be read as "commissioner of taxation

and finance".

(e) Election. The election under this section shall not be allowed

unless a similar election was made and allowed with respect to the

federal estate tax return required to be filed under the provisions of

the internal revenue code. If such election was made for the purposes of

the federal estate tax, the time for making the election under this

article shall be the same as is required under the federal estate tax.

Where no federal estate tax return is required to be filed, the election

with respect to the tax imposed under this article shall be made no

later than the date prescribed for the filing of the return under this

article (including extensions thereof) or any time thereafter as the

commissioner of taxation and finance may by regulation prescribe.

(f) The commissioner of taxation and finance may, at any time, require

a bond to be filed with him, which bond has been issued by a surety

company approved by the superintendent of financial services as to

solvency and responsibility and authorized to transact business in this

state or other security acceptable to such commissioner, in an amount

not exceeding twice the amount for which the time for payment has been

extended under this section, to secure the payment of the estate tax and

interest, the time for payment of which has been extended under this

section.

(g) If an acceleration of payment occurs with respect to the tax

imposed by this article, the extension of time for payment of the tax

imposed by this article shall cease to apply and any unpaid portion of

the tax payable in installments shall be paid upon notice and demand

from the commissioner of taxation and finance. If any such acceleration

of payment is avoided by a payment within six months of the due date

thereof, then the provisions of subsection (j) of this section with

respect to a two percent rate of interest shall not apply to said

payment and there is imposed a penalty of five percent of the amount of

such payment multiplied by the number of months, or fractions thereof,

after the due date of the payment and before payment is made. Such

acceleration of payment shall occur if:

(1) any installment of estate tax imposed by this article is not paid

on or before the date fixed for its payment (including any extension of

time for the payment of such installment), or

(2) the executor has been notified by the commissioner of taxation and

finance that a bond or other security is required, but no such bond or

other security has been filed within thirty days from the date of

mailing of such notification, or

(3) an acceleration of payment has occurred with respect to the

election by the executor to pay part or all of the federal estate tax in

installments or, where no federal estate tax return is required to be

filed, an acceleration of payment has occurred by virtue of the

provisions of subsection (g) of section 6166 of the internal revenue

code.

(h) The commissioner of taxation and finance may, for reasonable cause

and if his interests would not be jeopardized thereby, extend the time

for payment of any part of any installment under this subsection,

including any part of a deficiency prorated to any installment under

this subsection, for a reasonable period (1) not in excess of ten years

from the date prescribed for the filing of the return under this article

(without regard to any extension of time to file) or (2) if the date

prescribed for such filing is earlier than the date which is twelve

months after the due date of the last installment, such later date.

(i) If the time for payment of any amount of tax has been extended

under this subsection, interest shall be paid annually together with the

installment of tax on any unpaid portion of such amount (including the

amount of any deficiency), at the rate prescribed in subsection (b) of

section nine hundred seventy-six of this article with respect to

extensions of time for payment of estate tax (other than the extensions

of time provided for in this section) or as otherwise provided for in

subsection (j) of this section.

(j) If the time for payment of any amount of tax has been extended

under this section, the provisions of section 6166 of the internal

revenue code applicable to the payment of interest are modified as

follows:

(1) Interest on the two percent portion of such amount shall be paid

at the rate of two percent per annum. For purposes of this section, the

amount of any deficiency which is prorated to installments payable under

this section, shall be treated as an amount of tax payable in

installments under such section.

(2) For purposes of this paragraph, the term "two percent portion"

means the lesser of fifty-four thousand dollars or the amount of the tax

imposed by this article which is extended as provided in this section.

(3) If the amount of tax imposed by this article which is extended

exceeds the two percent portion, any payment of a portion of such amount

shall, for purposes of computing interest for periods after such

payment, be treated as reducing the two percent portion by an amount

which bears the same ratio to the amount of such payment as the amount

of the two percent portion (determined without regard to this paragraph)

bears to the amount of tax which is extended.

(4) Interest on any portion of the amount of tax which is not

includible in the two percent portion of such amount shall be payable at

the rate provided for in subsection (i) of this section.

(5) (A) Interest payable on any unpaid portion of the amount of tax

due attributable to the first five years after the date prescribed for

payment of the tax shall be paid annually;

(B) interest payable on any unpaid portion of such amount of tax

attributable to any period after the five year period referred to in

subparagraph (A) of this paragraph shall be paid annually at the same

time as and as part of, each installment payment of the tax;

(C) in the case of a deficiency to which subsection (e) of section

6166 of the internal revenue code applies is determined after the close

of the five year period referred to in subparagraph (A) of this

paragraph, interest attributable to such five year period, and interest

assigned under subparagraph (B) of this paragraph to any installment,

the date of payment of which has arrived on or before the date of such

determination, shall be paid upon notice and demand from the

commissioner of taxation and finance; and

(D) if the executor has selected a period shorter than five years,

such shorter period shall be substituted for five years in subparagraphs

(A), (B) and (C) of this paragraph. Any period of time selected for the

purposes of the tax under this article shall in no event be greater than

the period of time selected for the purpose of the estate tax imposed by

the internal revenue code.

(k) The lien of the tax provided for in section nine hundred

eighty-two of this article shall be applicable to the same extent as if

no election had been made to extend the time for payment of estate tax

under this section.