Establishes a 20 year time limit to collect tax liability; 20 years from the first date the commissioner of tax could file a warrant for liability; first date a warrant could be filed is the last day specified for payment by notice and demand issued for the tax liability where there is no right to a hearing with respect to such notice and demand.
Ayes (29): DeFrancisco, Johnson, Alesi, Bonacic, Farley, Flanagan, Fuschillo, Golden, Griffo, Lanza, Larkin, Little, Marcellino, Nozzolio, Robach, Saland, Seward, Young, Krueger, Breslin, Diaz, Dilan, Gianaris, Montgomery, Oppenheimer, Perkins, Rivera, Stavisky, Stewart-Cousins
Ayes W/R (3): Hannon, LaValle, Peralta
Nays (1): Parker
Excused (2): Duane, Kruger
TITLE OF BILL:
An act to amend the tax law, in relation to providing a limit on the time to collect tax liabilities
PURPOSE OF BILL:
This bill would provide for a 20-year statute of limitations on the time to collect tax liabilities.
SUMMARY OF PROVISIONS:
Section 1 of the bill adds a new section 174-b to the Tax Law to provide for a 20-year statute of limitations on the time to collect tax liabilities. The statute of limitations will be solely for taxes administered by the Commissioner of Taxation and Finance ("Commissioner"). A tax liability will not be enforceable and will be extinguished after 20 years from the first date a warrant could be filed by the Commissioner. The first date a warrant could be filed means the day after the last day specified for payment by the notice and demand issued for the tax liability where there is no right to a hearing with respect to such notice and demand. Where there is a right to a hearing with respect to a notice and demand for a tax liability, the first date a warrant could be filed means the day after opportunity for a hearing or review has been exhausted. The Commissioner and the taxpayer can consent in writing to extend the time period during which tax warrants may be collected.
Section 2 of the bill provides that the bill takes effect immediately.
The time period during which tax warrants may be collected is governed by the provisions of CPLR § 211(b). This section provides that a money judgment, including a tax warrant, is presumed to be paid and satisfied after the expiration of twenty years from the time when the party recovering it was first entitled to enforce it. This presumption is conclusive, except as against a person who within the twenty years acknowledges an indebtedness in writing, or makes a payment, including an involuntary payment.
While state law cannot restrict the rights of the IRS to collect federal tax debt, the CPLR restrictions apply to the Department of Taxation and Finance ("Tax Department") in its collection of state tax debts in a similar manner as applicable to private creditors.
This is a new proposal.
STATEMENT IN SUPPORT:
The intent of this legislation is to limit the period for the Tax Department to collect unpaid tax liabilities. The acknowledgement or payment on the debt provisions in the CPLR will no longer extend the collection period, and thus, the Department will have 20 years from the first date a warrant could be filed to collect tax liabilities. After this time, the tax liability will not be enforceable and will be extinguished.
Enactment of this bill will have a positive result for both the state and taxpayers. Taxpayers should have notice of the last date the Tax Department can enforce the collection of tax liabilities. Pursuant to this proposal, twenty years after a tax warrant could be filed, the tax liability will be extinguished. Under current law, the limitation on enforcing tax collection is not certain, as the period to collect taxes is extended if the taxpayer acknowledges an indebtedness in writing, or makes a payment, including an involuntary payment, such as wage garnishments and bank levies. This proposal would give taxpayers more certainty in tax enforcement, as the time limit on enforcing tax collection will not be extended under these circumstances.
Enactment of this bill will help the Tax Department conserve resources, by eliminating the need to dedicate time and manpower to the collection of aged and difficult to collect accounts, while at the same time free the Department to shift those resources toward more productive uses. Similarly, the exactness of the 20-year time period during which tax warrants may be collected will eliminate the need to track acknowledgements, which can be very difficult.
The bill will apply to tax liabilities that could have been warranted before the bill takes effect. Thus, if the 20-year time limit was up at the time the bill takes effect, it would be extinguished and would not be enforceable as of that date. If the 20-year time limit is not up at the time the bill takes effect, then the tax liability could be collected and would not be extinguished until the balance of the 20-year period has expired.
It is estimated that this proposal would result in a negligible animal revenue loss beginning in State fiscal year 2011-12.
The bill would take effect immediately upon enactment.
STATE OF NEW YORK ________________________________________________________________________ 3946 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, in relation to providing a limit on the time to collect tax liabilities THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The tax law is amended by adding a new section 174-b to read as follows: S 174-B. LIMITATION ON THE TIME TO COLLECT TAX LIABILITIES. 1. NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY AND EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, A TAX LIABILITY SHALL NOT BE ENFORCEABLE AND EVERY TAX LIABILITY SHALL BE EXTINGUISHED AFTER TWENTY YEARS FROM THE FIRST DATE A WARRANT COULD BE FILED BY THE COMMISSIONER, WITHOUT REGARD TO WHETHER THE WARRANT IS FILED. THE FIRST DATE A WARRANT COULD BE FILED MEANS THE DAY AFTER THE LAST DAY SPECIFIED FOR PAYMENT BY THE NOTICE AND DEMAND ISSUED FOR THE TAX LIABILITY WHERE THERE IS NO RIGHT TO A HEARING WITH RESPECT TO SUCH NOTICE AND DEMAND. THE FIRST DAY A WARRANT COULD BE FILED SHALL BE DETERMINED WITHOUT REGARD TO SUBSECTION (C) OF SECTION SIX HUNDRED NINETY OR SUBSECTION (C) OF SECTION ONE THOUSAND NINETY OF THIS CHAPTER, UNLESS THE COMMISSIONER ASSESSES THE LIABILITY UNDER EITHER SUCH SUBSECTION (C). WHEN THERE IS A RIGHT TO A HEARING WITH RESPECT TO A NOTICE AND DEMAND FOR A TAX LIABIL- ITY, THE FIRST DATE A WARRANT COULD BE FILED MEANS THE DAY THAT OPPORTU- NITY FOR A HEARING OR REVIEW HAS BEEN EXHAUSTED. 2. THIS SECTION SHALL APPLY TO ANY TAX THAT IS ADMINISTERED BY THE COMMISSIONER. ANY REFERENCE TO "TAX" IN THIS SECTION SHALL BE DEEMED ALSO TO REFER TO SPECIAL ASSESSMENTS, FEES, INTEREST, ADDITIONS TO TAX, PENALTIES AND OTHER IMPOSITIONS THAT ARE ADMINISTERED BY THE COMMISSION- ER.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09470-01-1 S. 3946 2
3. WHEN, BEFORE THE EXPIRATION OF THE TIME PRESCRIBED IN THIS SECTION TO ENFORCE THE COLLECTION OF TAX, BOTH THE COMMISSIONER AND THE TAXPAYER HAVE CONSENTED IN WRITING TO ITS COLLECTION AFTER SUCH TIME, THE TAX LIABILITY SHALL NOT BE EXTINGUISHED AND THE TAX MAY BE COLLECTED AT ANY TIME PRIOR TO THE EXPIRATION OF THE PERIOD AGREED UPON. THE PERIOD SO AGREED UPON MAY BE EXTENDED BY ANY SUBSEQUENT AGREEMENT IN WRITING MADE BEFORE THE EXPIRATION OF THE PERIOD PREVIOUSLY AGREED UPON. 4. THE PROVISIONS OF THIS SECTION SHALL SUPPLEMENT OR BE IN ADDITION TO THE PROCEDURES RELATING TO COLLECTION OR ADMINISTRATION PROVIDED WITH RESPECT TO ANY TAX COVERED BY THIS SECTION. WHERE A PROVISION OF THIS SECTION IS INCONSISTENT WITH ANY SUCH PROVISION WITH RESPECT TO SUCH TAX, THE PROVISIONS OF THIS SECTION SHALL APPLY. FOR PURPOSES OF SUBSECTION (C) OF SECTION SIX HUNDRED NINETY-TWO AND SUBSECTION (C) OF SECTION ONE THOUSAND NINETY-TWO OF THIS CHAPTER, IF THE COMMISSIONER DOES NOT FILE A WARRANT WITHIN SIX YEARS OF ASSESSMENT, THE TIME LIMITA- TIONS IN THIS SECTION SHALL NOT APPLY AND THE TAX LIABILITY IS EXTIN- GUISHED. NOTHING IN THIS SECTION SHALL BE CONSTRUED TO PREVENT THE COMMISSIONER FROM ACCEPTING ANY PAYMENT FOR A TAX LIABILITY MADE VOLUN- TARILY BY A TAXPAYER AFTER THE TIME TO COLLECT SUCH LIABILITY HAS EXPIRED AND THE LIABILITY IS EXTINGUISHED. WHEN A WARRANT IS FILED, THE COMMISSIONER MAY INCLUDE A DATE ON THAT WARRANT INDICATING WHEN SUCH WARRANT EXPIRES AND TAX LIABILITY IS EXTINGUISHED. 5. IF A TAX LIABILITY COULD HAVE BEEN FIRST WARRANTED BEFORE THE EFFECTIVE DATE OF THIS SECTION, SUCH LIABILITY SHALL NOT BE ENFORCEABLE AND SHALL BE EXTINGUISHED AFTER TWENTY YEARS FROM THE FIRST DATE THE WARRANT COULD HAVE BEEN FILED BY THE COMMISSIONER. S 2. This act shall take effect immediately.