Requires the commissioner of taxation and finance, when using external indices to determine sales and compensating use tax due because of failure to file a return or filing of an incorrect return, to use external indices which reflect local economic conditions.
Ayes (51): Addabbo, Avella, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Felder, Flanagan, Fuschillo, Gallivan, Gianaris, Gipson, Golden, Griffo, Grisanti, Hassell-Thomps, Kennedy, Klein, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Parker, Peralta, Ritchie, Robach, Savino, Seward, Skelos, Smith, Stavisky, Stewart-Cousin, Tkaczyk, Valesky, Young, Zeldin
Nays (6): Hoylman, Krueger, Rivera, Sanders, Serrano, Squadron
Absent (4): Adams, Hannon, Marchione, Sampson
Excused (2): Perkins, Ranzenhofer
TITLE OF BILL: An act to amend the tax law, in relation to the determination of sales and compensating use taxes due
PURPOSE: This bill would require that any external economic indices used by the Department of Taxation and Finance in estimating sales tax payments due must utilize regional economic indices to reflect the wide variation of the costs of goods and services sold throughout the state.
SUMMARY OF PROVISIONS: This bill would amend subdivision (a) of section 1138 of the tax law by adding a new paragraph (5) to require that whenever the Commissioner of Taxation and Finance is determining the amount of sales tax owed, in instances in where a required sales tax filing has not been made or there has been an incorrect or insufficient sales tax payment, the Commissioner must utilize a regional economic index to estimating the correct tax payment to be made.
JUSTIFICATION: New York State has hired hundreds of new auditors over the past few years and unleashed them on unsuspecting taxpayers. Thousands of retail merchants across the state have been subject to new audit tactics apparently designed to generate as much revenue as possible. The most insidious of these tactics is the practice of determining a merchant's sales tax assessment based on external indices rather than the merchant's records. Oftentimes the external indices are not based on local standards thereby leading to drastically distorted assessments far exceeding any reasonable estimate. One of the most common indices used by the Department is based on an analysis of less than 100 businesses. The Department continues to use this index in spite of a specific note by the study's authors that it is not statically reliable for such purposes. This bill would prohibit the Department of Tax and Finance from using any external index that does not reflect local economic conditions. It ensures that anytime a sales tax assessment is imposed on a retail merchant not based on the merchant's records it will be more fair since the merchant's local area will be the basis of comparison. These business owners are the backbone of the state's economy and deserve to have their taxes determined in a fair manner. This bill will restore fairness to the tax assessment process and help retail merchants in New York live up to their legitimate tax assessments.
LEGISLATIVE HISTORY: 2011,2012: S.4943/A.8129 Passed the Senate
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 2710 2013-2014 Regular Sessions IN SENATE January 23, 2013 ___________Introduced by Sens. YOUNG, RANZENHOFER -- read twice and ordered print- ed, and when printed to be committed to the Committee on Investi- gations and Government Operations AN ACT to amend the tax law, in relation to the determination of sales and compensating use taxes due THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision (a) of section 1138 of the tax law is amended by adding a new paragraph 5 to read as follows: (5) WHENEVER A RETURN REQUIRED BY THIS ARTICLE IS NOT FILED, OR IF A RETURN WHEN FILED IS INCORRECT OR INSUFFICIENT, AND THE AMOUNT OF TAX DUE IS DETERMINED BY THE COMMISSIONER FROM SUCH INFORMATION AS MAY BE AVAILABLE PURSUANT TO PARAGRAPH ONE OF THIS SUBDIVISION, ANY EXTERNAL INDICES USED TO ESTIMATE THE TAX DUE SHALL REFLECT THE LOCAL ECONOMIC CONDITIONS. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD06950-01-3