Provides for a refund of any excess amount of tax paid after reduction of other credits and the credit for long-term care insurance.
TITLE OF BILL: An act to amend the tax law, in relation to providing a refund for excess tax paid after long-term insurance credit is applied
SUMMARY OF PROVISIONS: This bill amends the tax law to provide that residents of the state shall be entitled to a refund, rather than a carry-over credit, for applicable payments made for long-term care insurance premiums.
Section 1 amends subsection (aa) of section 606 of the Tax Law to provide that the credit allowable under the subsection, if it exceeds the tax as reduced by the credit, shall be refunded as an overpayment, without interest. Nonresidents and part-year residents will continue to be eligible for the credit, and will be entitled to carry such credits forward to be deducted in future years.
Section 2 provides that this act shall take effect immediately and shall apply to taxable years beginning on or after the first of January next succeeding the date on which it shall have become law.
PURPOSE AND JUSTIFICATION: Long term care is an ever-growing component of the cost of Medicaid in New York State. It is important to encourage citizens to make arrangements to cover the cost of nursing home care through long-term care insurance, both to protect their assets from the high cost of such care, and to control the cost to the state for such care. Most people can expect that they will have many years of retirement before they may find themselves in need of long term care. However, retirement often brings reduced income and reduced state taxes, so that many retirees may not be able to take full advantage of the tax credit for long-term care insurance. This bill will give greater encouragement for all taxpayers, and particularly retired taxpayers, to obtain and maintain long-term care insurance.
EXISTING LAW: Currently, twenty percent of the cost of long term care insurance is allowed as a credit against state income taxes. If the credit exceeds the amount of taxes due, the balance can be carried forward to future tax years.
PRIOR LEGISLATIVE HISTORY: 2010 - S.3520/A.6780 -- INVESTIGATIONS/Ways & Means 2007-08 - S.4345/A.7681 -- INVESTIGATIONS/GOV'T OPS/Ways & Means 2006 - S.7260/A.10771 - RULES/Ways & Means
FISCAL IMPLICATIONS: To be determined.
EFFECTIVE DATE: This act shall take effect immediately, with provisions.
STATE OF NEW YORK ________________________________________________________________________ 3522 2011-2012 Regular Sessions IN SENATE February 24, 2011 ___________Introduced by Sens. RANZENHOFER, DeFRANCISCO, JOHNSON, LARKIN -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations AN ACT to amend the tax law, in relation to providing a refund for excess tax paid after long-term insurance credit is applied THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subsection (aa) of section 606 of the tax law, as amended by section 1 of part P of chapter 61 of the laws of 2005, is amended to read as follows: (aa) Long-term care insurance credit. (1) Residents. A taxpayer shall be allowed a credit against the tax imposed by this article equal to twenty percent of the premium paid during the taxable year for long-term care insurance. In order to qualify for such credit, the taxpayer's premium payment must be for the purchase of or for continuing coverage under a long-term care insurance policy that qualifies for such credit pursuant to section one thousand one hundred seventeen of the insurance law.
[If the amount of the credit allowable under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess may be carried over to the following year or years and may be deducted from the taxpayer's tax for such year or years.]THE CREDIT UNDER THIS SUBSECTION SHALL BE ALLOWED AGAINST THE TAXES IMPOSED BY THIS ARTICLE FOR THE TAXABLE YEAR REDUCED BY THE CREDITS PERMITTED BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX AS SO REDUCED, THE TAXPAYER MAY RECEIVE, AND THE COMPTROLLER, SUBJECT TO A CERTIFICATE OF THE COMMIS- SIONER, SHALL REFUND AS AN OVERPAYMENT, WITHOUT INTEREST, THE AMOUNT OF SUCH EXCESS. (2) Nonresidents and part-year residents. In the case of a nonresident taxpayer or a part-year resident taxpayer, the credit determined under this subsection shall be limited to the amount determined by multiplying the amount of such credit by the New York source fraction as set forthEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02577-01-1 S. 3522 2
in paragraph three of subsection (e) of section six hundred one of this article.
[The credit as so limited shall be applied as provided in para- graph one of this subsection.]IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS. S 2. This act shall take effect immediately and shall apply to taxable years beginning on or after the first of January next succeeding the date on which it shall have become a law.