S3944-2011 Actions

• Jun 15, 2011: SUBSTITUTED BY A7239
• Jun 7, 2011: ADVANCED TO THIRD READING
• Jun 6, 2011: 2ND REPORT CAL.
• Jun 2, 2011: 1ST REPORT CAL.961
• May 24, 2011: REPORTED AND COMMITTED TO FINANCE
• Mar 10, 2011: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

S3944-2011 Meetings

S3944-2011 Calendars

S3944-2011 Votes

S3944-2011 Memo

BILL NUMBER:S3944

TITLE OF BILL:

An act
to amend the tax law
and the administrative code of the city of New York,
in relation to reversing
the crediting of a personal income tax or corporate
franchise tax overpayment against estimated tax for
the succeeding taxable year in certain circumstances

PURPOSE OF BILL:

This bill would allow the election to credit a personal income tax or
corporate franchise tax overpayment to estimated tax for the
succeeding taxable year to be reversed upon good cause shown by the
taxpayer.

SUMMARY OF PROVISIONS:

Sections 1 and 3 of this bill would amend Tax Law �� 686(e) and
1086(b) to allow taxpayers to request the reversal of the crediting of
their personal income tax or corporate franchise tax overpayment to
estimated tax for the succeeding taxable year on or before the
prescribed filing date of the return for the succeeding taxable year,
plus any extension granted.
Section 3 would also delete references to articles of the Tax Law that
have been repealed.

Section 5 of the bill would make corresponding amendments to
Administrative Code of the City of New York � 11-1786(e) for the
New York City personal income tax on residents.

Under these amendments, if good cause is shown, the crediting will be
reversed, and the Commissioner of Taxation and Finance may, in his or
her discretion, credit the overpayment against a liability of the
taxpayer or refund the overpayment without interest. However, the
taxpayer would not be relieved of liability for penalties for an
underpayment of estimated tax caused by the reversal of the credit.
The decision of the Commissioner to grant or deny the request would
be final and would not be subject to any further administrative or
judicial review.

Sections 2, 4 and 6 of the bill would amend cross-references to Tax
Law �� 686(e) and 1086(b), and Administrative Code of the City of New
York � 11-1786(e).

Section 7 of the bill provides that it would take effect immediately.

EXISTING LAW:

When a taxpayer files a personal income tax or corporate franchise tax
return and has an overpayment (credits and prepayments are more than
the tax owed), an election may be made by
the taxpayer to have some or all of the overpayment refunded or


credited to estimated tax for the succeeding taxable year. Tax Law
686(e) and 1086(b), and Administrative Code of the City of New York
11-1786(e) provide that if an overpayment is credited against
estimated tax for the succeeding taxable year, the amount is
considered to be a payment of tax for the succeeding taxable year and
no claim for credit or refund of the overpayment will be allowed for
the taxable year for which the overpayment arises.

LEGISLATIVE HISTORY:

This bill was introduced in the Senate as S. 3886 on April 2, 2009 and
a same-as bill was introduced as A.8175 on May 6, 2009 in the
Assembly. The Assembly passed A.8175 on June 2, 2009, but it failed
to pass in the Senate and was returned to the Assembly. The Assembly
passed A. 8175 again on March 9, 2010, and it was referred to the
Senate Committee on Investigations and Government Operations. No
further action was taken on the bill in the 2010 Legislative Session.

STATEMENT IN SUPPORT:

The virtually irreversible election to credit an overpayment to
estimated tax for the succeeding taxable year has at times caused
problems for taxpayers. In some cases, because of a software or return
preparation error, the overpayment has been entered on the
credit-to estimated-tax line rather than on the refund line. Taxpayers
who expected a refund have been frustrated by the inability to
correct this error. Further, a taxpayer may become aware of another
liability before the due date of the return for the succeeding
taxable year and may prefer to use the overpayment against that
liability instead of using it to pay estimated tax for the next year.

In addition, there may be other situations that would call for
reversing the crediting of an overpayment, such as a significant
change in the taxpayer's economic situation. The ability to request
the reversal of the crediting of the overpayment to estimated tax
would last until the prescribed due date of the return for the
succeeding taxable year, plus any extensions granted the...taxpayer.
Once the return for the succeeding taxable year is filed, the
taxpayer would be able t6 request any overpayment on that return be
refunded or credited against estimated tax liabilities for the next
succeeding taxable year.

The decision to grant or deny the request is in the discretion of the
Commissioner of Taxation and Finance. To promote efficient settlement
of the affected tax years, the Commissioner's decision would not be
subject to further administrative or judicial review.

BUDGET IMPLICATIONS:

There are no known budget implications associated with this bill.

EFFECTIVE DATE:

The bill would take effect immediately upon enactment.

S3944-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         3944
 2011-2012 Regular Sessions
 I N  SENATE
 March 10, 2011
 
 Introduced by Sen. DeFRANCISCO -- (at request of the Department of Taxa
 tion  and Finance) -- 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 and the administrative code of the city of
 New York, in relation to reversing the crediting of a personal  income
 tax  or  corporate franchise tax overpayment against estimated tax for
 the succeeding taxable year in certain circumstances
 THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section 1. Subsection (e) of section 686 of the tax law, as amended by
 chapter 65 of the laws of 1985, is amended to read as follows:

 (e)  Credits against estimated tax.--The [tax commission] COMMISSIONER
 may prescribe regulations providing for the crediting against the  esti
 mated  income tax for any taxable year of the amount determined to be an
 overpayment of the income tax for a preceding taxable year. If any over
 payment of income tax is so claimed as a credit  against  estimated  tax
 for  the  succeeding  taxable year, such amount shall be considered as a
 payment of the income tax for the succeeding taxable year, and no  claim
 for  credit or refund of such overpayment shall be allowed for the taxa
 ble year for which the overpayment arises, EXCEPT UPON  REQUEST  TO  THE
 COMMISSIONER  ON OR BEFORE THE LAST DAY PRESCRIBED FOR THE FILING OF THE
 RETURN FOR THE SUCCEEDING TAXABLE YEAR, DETERMINED WITH  REGARD  TO  ANY
 EXTENSION  OF  TIME  GRANTED.  IF  GOOD CAUSE IS SHOWN FOR REVERSING THE
 CREDIT, THE COMMISSIONER MAY, IN HIS OR HER DISCRETION, CREDIT THE OVER
 PAYMENT AGAINST A LIABILITY OR REFUND THE OVERPAYMENT WITHOUT  INTEREST.
 PROVIDED,  THE  PERSON  WHO MADE THE OVERPAYMENT WILL NOT BE RELIEVED OF
 LIABILITY FOR ANY PENALTY IMPOSED FOR A CONSEQUENT UNDERPAYMENT OF ESTI
 MATED TAX FOR THE SUCCEEDING TAXABLE YEAR. THE DECISION OF  THE  COMMIS
 SIONER  TO GRANT OR DENY THE REQUEST IS FINAL AND NOT SUBJECT TO FURTHER
 ADMINISTRATIVE OR JUDICIAL REVIEW.
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD09459-01-1
 
       S. 3944                             2
 

S 2. Subsection (k) of section 687 of the tax law, as amended by chap
 ter 1014 of the laws of 1968, is amended to read as follows:

 (k)  Cross  reference.--  For  provision barring refund of overpayment
 credited against tax of a succeeding year, EXCEPT FOR GOOD CAUSE  SHOWN,
 see subsection (e) of section six hundred eighty-six.
 

S  3. Subsection (b) of section 1086 of the tax law, as added by chap
 ter 188 of the laws of 1964, is amended to read as follows:

 (b) Credits against estimated tax.---The [tax commission] COMMISSIONER
 may prescribe regulations providing for the crediting against the  esti
 mated  tax under article nine-a[, nine-b or nine-c] for any taxable year
 of the amount determined to be an overpayment of tax  under  [any]  such
 article  for  a  preceding taxable year. If any overpayment of tax is so
 claimed as a credit against estimated tax  for  the  succeeding  taxable
 year,  such  amount  shall  be  considered as a payment of the tax under
 article nine-a[, nine-b or nine-c] OF THIS CHAPTER  for  the  succeeding
 taxable  year  (whether or not claimed as a credit in the declaration of
 estimated tax for such succeeding taxable year), and no claim for credit
 or refund of such overpayment shall be allowed for the taxable year  for
 which the overpayment arises, EXCEPT UPON REQUEST TO THE COMMISSIONER ON
 OR  BEFORE  THE LAST DAY PRESCRIBED FOR THE FILING OF THE RETURN FOR THE
 SUCCEEDING TAXABLE YEAR, DETERMINED WITH REGARD TO ANY EXTENSION OF TIME
 GRANTED.  IF GOOD CAUSE IS SHOWN FOR REVERSING THE CREDIT,  THE  COMMIS
 SIONER  MAY,  IN HIS OR HER DISCRETION, CREDIT THE OVERPAYMENT AGAINST A
 LIABILITY OR REFUND THE  OVERPAYMENT  WITHOUT  INTEREST.  PROVIDED,  THE
 PERSON  WHO  MADE  THE OVERPAYMENT WILL NOT BE RELIEVED OF LIABILITY FOR
 ANY PENALTY IMPOSED FOR A CONSEQUENT UNDERPAYMENT OF ESTIMATED  TAX  FOR
 THE  SUCCEEDING  TAXABLE YEAR. THE DECISION OF THE COMMISSIONER TO GRANT
 OR DENY THE REQUEST IS FINAL AND NOT SUBJECT TO  FURTHER  ADMINISTRATIVE
 OR JUDICIAL REVIEW.
 

S  4. Subsection (j) of section 1087 of the tax law, as added by chap
 ter 188 of the laws of 1964, is amended to read as follows:

 (j) Cross reference.--For  provision  barring  refund  of  overpayment
 credited  against tax of a succeeding year, EXCEPT FOR GOOD CAUSE SHOWN,
 see subsection (b) of section one thousand eighty-six.
 

S 5. Subdivision (e) of section 11-1786 of the administrative code  of
 the  city of New York, as renumbered by chapter 639 of the laws of 1986,
 is amended to read as follows:

 (e) Credits against estimated tax. The [tax  commission]  COMMISSIONER
 OF  TAXATION  AND  FINANCE  may  prescribe regulations providing for the
 crediting against the estimated income tax for any taxable year  of  the
 amount determined to be an overpayment of the income tax for a preceding
 taxable year. If any overpayment of income tax is so claimed as a credit
 against estimated tax for the succeeding taxable year, such amount shall
 be  considered as a payment of the income tax for the succeeding taxable
 year, and no claim for credit or refund of  such  overpayment  shall  be
 allowed  for  the  taxable year for which the overpayment arises, EXCEPT
 UPON REQUEST TO THE COMMISSIONER OF TAXATION AND FINANCE  ON  OR  BEFORE
 THE  LAST DAY PRESCRIBED FOR THE FILING OF THE RETURN FOR THE SUCCEEDING
 TAXABLE YEAR, DETERMINED WITH REGARD TO ANY EXTENSION OF  TIME  GRANTED.
 IF  GOOD  CAUSE  IS  SHOWN FOR REVERSING THE CREDIT, THE COMMISSIONER OF
 TAXATION AND FINANCE MAY, IN HIS OR HER DISCRETION, CREDIT THE  OVERPAY
 MENT  AGAINST  A  LIABILITY  OR REFUND THE OVERPAYMENT WITHOUT INTEREST.
 PROVIDED, THE PERSON WHO MADE THE OVERPAYMENT WILL NOT  BE  RELIEVED  OF
 LIABILITY FOR ANY PENALTY IMPOSED FOR A CONSEQUENT UNDERPAYMENT OF ESTI
 MATED  TAX  FOR THE SUCCEEDING TAXABLE YEAR. THE DECISION OF THE COMMIS
 
       S. 3944                             3
 SIONER OF TAXATION AND FINANCE TO GRANT OR DENY THE REQUEST IS FINAL AND
 NOT SUBJECT TO FURTHER ADMINISTRATIVE OR JUDICIAL REVIEW.
 

S  6. Subdivision (k) of section 11-1787 of the administrative code of
 the city of New York, as amended by chapter 639 of the laws of 1986,  is
 amended to read as follows:

 (k) Cross reference. For provision barring refund of overpayment cred
 ited  against tax of a succeeding year, EXCEPT FOR GOOD CAUSE SHOWN, see
 subdivision (e) of section 11-1786.
 

S 7. This act shall take effect immediately.

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