Provides that the income level for the requirement to file a personal income tax return shall be the dollar amount of the New York standard deduction.
BILL NUMBER: S1763
TITLE OF BILL : An act to amend the tax law, in relation to the requirement to file a personal income tax return
PURPOSE : To set minimum personal income tax filing levels at the level of the standard deduction based upon New York adjusted gross income, rather than the arbitrary $4,000 which is currently in statute. The change would mean that most persons with no State personal income tax liability or refundable credits would be exempt from having to file State tax returns.
SUMMARY OF PROVISIONS : Amends sec. 651 of the Tax Law to replace the statutory $4,000 filing minimum with a minimum equal to the standard deduction. Applies a base of New York adjusted gross income, rather than the federal adjusted gross income.
EXISTING LAW : Existing law requires filing of a State return by persons required to file a federal return or with a federal adjusted gross income of $4,000 or more, regardless of whether or not State tax is owed.
JUSTIFICATION : The current $4,000 minimum filing limit has been in statute for many years, and forces persons who owe no taxes and who file no federal returns to file State income tax returns. This is a burden for low income persons, particularly senior citizens.
It also adds administrative costs for the Department of Taxation and Finance which must process numerous returns for which no tax is due.
Persons with incomes lower than the standard deduction owe no tax and this will eliminate the patently unnecessary filing.
Use of the New York adjusted gross income, instead of the federal adjusted gross income, will especially benefit senior citizens subject to New York's $20,000 pension and annuity exemption.
The Department of Taxation and Finance estimates that approximately 530,000 persons with no tax liability and no refunds or refundable credits will be removed from filing requirements. Many of these would be retirees with mostly exempt pension or annuity income.
LEGISLATIVE HISTORY : Similar bills include: 1992: A.5591/S.3497 referred to Assembly Ways & Means, favorably reported from Senate Investigations & Taxation to Senate Finance. 1993-1994: A.1481/S.907 referred to Assembly Ways & Means, passed Senate in 1993. 1995: S.2305 passed Senate. 1996: S.2305B passed Senate. 1997 and 1998: S.2275 referred to Investigations, Taxation, and Government Operations. 1999: S.1603A/A.6434 (Governor's Executive Budget proposal) included similar language as originally introduced. 1999 and 2000: S.1544 referred to Investigations, Taxation, and Government Operations. 2001 and 2002: S.1601 passed Senate in 2002. 2003 and 2004: S.979B passed Senate in 2003. 2005 and 2006: S.1849A/A.7712A passed Senate in 2006. 2007 and 2008: passed Senate in 2007 and 2008.
FISCAL IMPLICATIONS : Expected to reduce administrative costs of State Department of Taxation and Finance by $1 million annually.
LOCAL FISCAL IMPLICATIONS : None.
EFFECTIVE DATE : Immediate, and applies to taxable years beginning after 2009.
STATE OF NEW YORK ________________________________________________________________________ 1763 2009-2010 Regular Sessions IN SENATE February 6, 2009 ___________Introduced by Sen. FARLEY -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to the requirement to file a personal income tax return THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph 1 of subsection (a) of section 651 of the tax law, as amended by chapter 333 of the laws of 1987, is amended to read as follows: (1) every resident individual (A)
[required to file a federal income tax return for the taxable year, or (B)]having [federal]NEW YORK adjusted gross income for the taxable year [, increased by the modifica- tions under subsection (b) of section six hundred twelve,]in excess of [four thousand dollars, or in excess of]his OR HER New York standard deduction, [if lower,]or [(C)](B) subject to tax under section six hundred two OF THIS ARTICLE, or [(D)](C) having received during the taxable year a lump sum distribution any portion of which is subject to tax under section six hundred three OF THIS ARTICLE; S 2. This act shall take effect immediately and shall apply to all taxable years beginning on or after the first of January next succeeding the date on which this act shall have become a law.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD01766-01-9