Bill S3944-2011

Relates to personal income tax or corporate franchise tax overpayment

Relates to reversing personal income tax or corporate franchise tax overpayments against estimated tax for the succeeding taxable year in certain circumstances.

Details

  • Same as:
  • Versions
  • Sponsor:
  • Multi-sponsor(s):
  • Co-sponsor(s):
  • Law Section:
  • Law:

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

Votes

VOTE: COMMITTEE VOTE: - Investigations and Government Operations - May 24, 2011
Ayes (7): Marcellino, Alesi, Golden, Nozzolio, Zeldin, Squadron, Diaz
Ayes W/R (1): Peralta

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 Section 3 would also delete references to articles of the Tax Law that have been repealed.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.


Text

STATE OF NEW YORK ________________________________________________________________________ 3944 2011-2012 Regular Sessions IN 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.
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-
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.

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Discuss!

blog comments powered by Disqus