S T A T E   O F   N E W   Y O R K
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                                 2422--A

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                            January 15, 2013
                               ___________

Introduced by M. of A. CRESPO -- read once and referred to the Committee
  on Ways and Means -- recommitted to the Committee on Ways and Means in
  accordance  with Assembly Rule 3, sec. 2 -- committee discharged, bill
  amended, ordered reprinted as amended and recommitted to said  commit-
  tee

AN ACT to amend the tax law, in relation to clarifying the recordkeeping
  requirements  for the earned income tax credit and the enhanced earned
  income tax credit

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Subsection (d) of section 606 of the tax law is amended by
adding a new paragraph 8 to read as follows:
  (8) INCOME DOCUMENTATION. ANY TAXPAYER WHO RECEIVES  MORE  THAN  FIFTY
PERCENT  OF  HIS  OR HER INCOME IN CASH WHO IS CLAIMING THE CREDIT UNDER
THIS SUBSECTION MAY FOLLOW THE INCOME DOCUMENTATION STANDARDS SET  FORTH
IN SECTION SIX HUNDRED FIFTY-EIGHT-A OF THIS ARTICLE WHEN APPLICABLE.
  S  2.  Subsection  (d-1)  of  section 606 of the tax law is amended by
adding a new paragraph 9 to read as follows:
  (9) ANY TAXPAYER WHO RECEIVES MORE THAN FIFTY PERCENT OF  HIS  OR  HER
INCOME  IN  CASH  WHO  IS  CLAIMING THE CREDIT UNDER THIS SUBSECTION MAY
PROVE HIS OR HER INCOME BY FOLLOWING THE INCOME DOCUMENTATION  STANDARDS
SET  FORTH  IN  SECTION  SIX  HUNDRED FIFTY-EIGHT-A OF THIS ARTICLE WHEN
APPLICABLE.
  S 3. The tax law is amended by adding a new section 658-a to  read  as
follows:
  S  658-A. INCOME DOCUMENTATION CONCERNING THE EARNED INCOME CREDIT. IN
CONJUNCTION WITH  THE  REQUIREMENTS  SET  FORTH  IN  THIS  CHAPTER,  THE
PROVISIONS  OF  THIS  SECTION  SHALL  APPLY TO ANY TAXPAYER CLAIMING THE
EARNED INCOME CREDIT AS SET FORTH  IN  SUBSECTION  (D)  OF  SECTION  SIX
HUNDRED SIX OF THIS ARTICLE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00956-03-4

              

A. 2422--A                          2

  (A)  INCOME  DOCUMENTATION STANDARDS FOR CASH EARNERS. IF THE TAXPAYER
IS EMPLOYED IN ONE OR MORE OCCUPATIONS WHERE SUCH TAXPAYER RECEIVES MORE
THAN FIFTY PERCENT OF HIS OR HER INCOME IN CASH, SUCH TAXPAYER MAY PROVE
HIS OR HER INCOME BY PRODUCING ONE OF THE FOLLOWING VERIFICATIONS:
  (1)  PERMANENT  BOOKS, ACCOUNTS OR RECORDS KEPT IN A MANNER CONSISTENT
WITH THE RECORDKEEPING PRACTICES OF THE INDUSTRY IN WHICH  THE  TAXPAYER
WORKS.  FOR  THE PURPOSES OF THIS SECTION, "PERMANENT BOOKS, ACCOUNTS OR
RECORDS" SHALL MEAN PAPER  OR  ELECTRONIC  DOCUMENTS  THAT  REFLECT  THE
AMOUNT AND SOURCE OF ALL INCOME EARNED FROM PAID EMPLOYMENT.
  (A)  EXAMPLES  OF  PERMANENT BOOKS, ACCOUNTS OR RECORDS SHALL INCLUDE,
BUT SHALL NOT BE LIMITED TO (I) BANK STATEMENTS  FROM  FINANCIAL  INSTI-
TUTIONS,  (II) ELECTRONIC LEDGERS OR SPREADSHEETS THAT DOCUMENT THE DATE
OF EACH ENTRY, OR (III)  HANDWRITTEN  ACCOUNTS  MAINTAINED  IN  A  BOUND
LEDGER.
  (B)  A  DIFFERENT  LEDGER SHALL BE MAINTAINED FOR EACH TAX YEAR'S CASH
EARNINGS RECORDS, AND EACH RECORD SHALL BE MAINTAINED FOR AT LEAST THREE
YEARS AFTER THE TAX YEAR FOR WHICH IT WAS SUBMITTED.
  (C) ENTRY REQUIREMENTS FOR  HANDWRITTEN  LEDGERS.  (I)  A  HANDWRITTEN
LEDGER  DOCUMENTING  THE  TAXPAYER'S INCOME SHALL LIST, IN CHRONOLOGICAL
ORDER, AN ENTRY FOR EACH TRANSACTION FOR WHICH SUCH TAXPAYER EARNS MONEY
WITH INFORMATION THAT INCLUDES, BUT IS NOT LIMITED TO:
  (I) THE AMOUNT OF MONEY EARNED;
  (II) THE APPROXIMATE TIME AND DATE ON WHICH THE MONEY WAS EARNED; AND
  (III) A BRIEF DESCRIPTION OR LIST OF THE TASK OR TASKS  PERFORMED  FOR
THE MONEY EARNED.
  (II)  SUCH  RECORD  MAY  INCLUDE ENTRIES FOR WORK-RELATED EXPENSES AND
EACH SUCH ENTRY SHALL INCLUDE, BUT IS NOT LIMITED TO:
  (I) THE AMOUNT OF THE WORK-RELATED EXPENSE;
  (II) THE APPROXIMATE  TIME  AND  DATE  THE  WORK-RELATED  EXPENSE  WAS
INCURRED;
  (III) THE NATURE OF THE WORK-RELATED EXPENSE; AND
  (IV) THE DATE ON WHICH THE ENTRY WAS MADE.
  (III)  AN  ENTRY FOR ANY TRANSACTION SHALL BE MADE AS SOON AS POSSIBLE
AFTER THE TRANSACTION OCCURRED.
  (2)  ADDITIONAL  ACCEPTABLE  INCOME  VERIFICATION  DOCUMENTS.  IN  THE
ABSENCE  OF PERMANENT BOOKS, ACCOUNTS OR RECORDS, A TAX FILER MAY VERIFY
INCOME BY PRODUCING TWO OR MORE OF THE FOLLOWING:
  (A) A SIGNED LETTER FROM THE TAXPAYER'S EMPLOYER STATING WAGES PAID;
  (B) STATEMENTS FROM A FINANCIAL INSTITUTION THAT  DEMONSTRATE  REGULAR
DEPOSITS OF EARNINGS;
  (C) RECEIPTS FROM WORK SUPPLIES, INCLUDING BUT NOT LIMITED TO UNIFORMS
AND MATERIALS NEEDED TO COMPLETE A SPECIFIC JOB;
  (D) RECEIPTS FROM LICENSING OR CERTIFICATION FEES, MEMBERSHIP DUES, OR
OTHER PROFESSIONAL DUES;
  (E)  RECEIPTS FROM WORK-RELATED EXPENSES, INCLUDING BUT NOT LIMITED TO
TRANSPORTATION COSTS AND CHILD CARE;
  (F) A SWORN AFFIDAVIT, SIGNED BY THE TAXPAYER, STATING SUCH TAXPAYER'S
POSITION OR TITLE, THE NUMBER OF  WEEKS  WORKED,  THE  NUMBER  OF  HOURS
WORKED  PER  WEEK, THE WAGES EARNED, AND A BRIEF DESCRIPTION OF THE WORK
PERFORMED. A SEPARATE NOTARIZED AFFIDAVIT SHALL BE  COMPLETED  FOR  EACH
JOB;
  (G)  AN  INCOME  AND EXPENSES WORKSHEET COMPLETED WITH A CERTIFIED TAX
PROFESSIONAL.
  (B) ERRORS OR OMISSIONS. OMISSIONS  OR  FAILURES  TO  CORRECT  ENTRIES
SHALL  NOT  BE  SUFFICIENT  IN  AND OF THEMSELVES TO RENDER A TAXPAYER'S

A. 2422--A                          3

RECORDS AS INADEQUATE TO VALIDATE SUCH TAXPAYER'S INCOME FOR  THE  RELE-
VANT TAX YEAR.
  (C)  PRESUMPTION  OF  ACCURACY AND COMPLETENESS. (1) PROVIDED THAT THE
MINIMUM STANDARDS SET FORTH IN THIS SECTION  ARE  MET,  AND  UNLESS  THE
DEPARTMENT  HAS  AFFIRMATIVE EVIDENCE TO DIRECTLY CONTRADICT THE TAXPAY-
ER'S RETURN, THE DEPARTMENT SHALL PRESUME THE ACCURACY AND  COMPLETENESS
OF THE RECORD AND THE GOOD FAITH OF THE TAXPAYER.
  (2)  THE PARTICULAR FORMAT OF THE RECORD SHALL NOT BE USED AS EVIDENCE
OF INSUFFICIENT RECORDKEEPING OR BAD FAITH ON THE PART OF THE TAXPAYER.
  (3) A MID-YEAR CHANGE IN THE FORMAT OF RECORDKEEPING WITHIN  A  SINGLE
LEDGER  SHALL  NOT BE CONSIDERED EVIDENCE OF INCOMPLETE RECORDKEEPING OR
BAD FAITH IF SUCH CHANGE INDICATES AN ATTEMPT TO  IMPROVE  UPON  RECORD-
KEEPING.
  (D)  REPORT.  (1) ON OR BEFORE JUNE THIRTIETH NEXT SUCCEEDING THE DATE
ON WHICH THIS SECTION SHALL HAVE BECOME A LAW, AND ANNUALLY  THEREAFTER,
THE  COMMISSIONER  SHALL SUBMIT A WRITTEN REPORT REGARDING TAXPAYERS WHO
CLAIM THE EARNED INCOME CREDIT AS SET FORTH IN SUBSECTION (D) OF SECTION
SIX HUNDRED SIX OF THIS ARTICLE AND WHO ARE PAID PRINCIPALLY IN CASH.
  (2) THE REPORT MUST CONTAIN THE FOLLOWING INFORMATION ABOUT THE EARNED
INCOME CREDIT CLAIMED UNDER THIS ARTICLE DURING  THE  PREVIOUS  CALENDAR
YEAR:
  (A) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT;
  (B)  THE  NUMBER OF CASH EARNERS CLAIMING THE CREDIT WHO ARE SENT DESK
AUDIT INQUIRY LETTERS;
  (C) THE NUMBER OF RESPONSES TO THE  AUDIT  INQUIRY  LETTERS  THAT  THE
DEPARTMENT RECEIVES;
  (D) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT WHO ARE AUDITED AND
RECEIVE THE CREDIT AS A RESULT; AND
  (E) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT WHO ARE AUDITED AND
ARE DENIED THE CREDIT AS A RESULT.
  (3)  THE CREDIT REPORT MAY ALSO CONTAIN ANY OTHER INFORMATION THAT THE
COMMISSIONER DEEMS TO BE USEFUL IN EVALUATING THE USE OF THE  CREDIT  BY
CASH  EARNERS.  THE  INFORMATION  INCLUDED  IN THE CREDIT REPORT WILL BE
BASED ON THE INFORMATION FILED WITH THE DEPARTMENT DURING  THE  PREVIOUS
CALENDAR YEAR, TO THE EXTENT THAT IT IS PRACTICABLE TO USE THAT INFORMA-
TION.
  S 4. This act shall take effect on the one hundred twentieth day after
it  shall  have become a law. Effective immediately, the commissioner of
taxation and finance is  authorized  to  make  any  addition,  amendment
and/or repeal of any rule or regulation necessary for the implementation
of this act on its effective date on or before such date.