Establishes a recordkeeping voluntary compliance program with regard to sales tax liability.
TITLE OF BILL: An act to amend the tax law, in relation to establishing the recordkeeping voluntary compliance program for purposes of sales tax liability
PURPOSE: This bill would adds a new section 1135-a to the tax law to require the establishment of a sales tax recordkeeping voluntary compliance program which will provide an incentive for taxpayers to facilitate and modernize their recordkeeping ability for purposes of complying with the state sales tax law.
SUMMARY OF PROVISIONS: This bill would add a new section 1135-a to the tax law to require that the Commissioner of Taxation and Finance develop and administer a voluntary recordkeeping sales tax compliance program which would allow the Commissioner to enter into agreements with eligible taxpayers and require that they maintain books and records for purposes of complying with the sales tax in the future which may include, but is not limited to the use of a point of sale system.
A new tax law section 1138 is also added to provide that a taxpayer who is a party to a recordkeeping voluntary compliance agreement may not be subject to an estimation of sales taxes due which is based upon the department's use of external indices, unless the taxpayer is in substantial non-compliance with the voluntary recordkeeping agreement.
JUSTIFICATION: New York State has hired hundreds of new auditors over the past few years and they have been caused much hardship upon unsuspecting business taxpayers who may not have been fully aware of the complexities of New York State's sales tax requirements. Thousands of retail merchants across the state have been subject to new audit tactics apparently designed to generate as much revenue as possible. The best way to avoid a sales tax assessment is to be properly informed of the sales tax laws and to keep books and records in accordance with the Department of Tax and Finances requirements. Failure to do so will result in a merchant's sales tax assessment being determined based on an external index which may reflect much higher prices for goods and services than the price actually received by the merchant and reflected on the merchant's books and records. The current system can result in extremely high and inaccurate assessments. Relatively small errors in recordkeeping by retail merchants can expose them to large and sometimes outrageous assessments for outstanding sales taxes. This bill provides an incentive to retail merchants to take certain actions designed to ensure they maintain complete auditable sales records. It increases the likelihood that these merchants will comply with the sales .tax laws, generating more revenue for the state and reducing the need for sales tax enforcement expenditures. In addition, by providing this incentive to retail merchants, the state is also helping to ensure their long term stability. Given the significant economic benefits these small business owners generate
for the state, helping them to succeed is a worthwhile government venture.
LEGISLATIVE HISTORY: New Bill.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 4944 2011-2012 Regular Sessions IN SENATE May 2, 2011 ___________Introduced by Sen. YOUNG -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to establishing the recordkeep- ing voluntary compliance program for purposes of sales tax liability 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 1135-a to read as follows: S 1135-A. RECORDKEEPING VOLUNTARY COMPLIANCE PROGRAM. 1. NOTWITH- STANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, THERE SHALL BE ESTABLISHED A RECORDKEEPING VOLUNTARY COMPLIANCE PROGRAM TO BE ADMINIS- TERED BY THE COMMISSIONER, FOR ALL ELIGIBLE TAXPAYERS. 2. FOR PURPOSES OF THIS SECTION, AN "ELIGIBLE TAXPAYER" IS AN INDIVID- UAL, PARTNERSHIP, ESTATE, TRUST, CORPORATION, LIMITED LIABILITY COMPANY, JOINT STOCK COMPANY, OR ANY OTHER COMPANY, TRUSTEE, RECEIVER, ASSIGNEE, REFEREE, SOCIETY, ASSOCIATION, BUSINESS OR ANY OTHER PERSON SUBJECT TO SALES TAX IMPOSED BY OR PURSUANT TO THE AUTHORITY OF THIS CHAPTER. 3. THE COMMISSIONER IS AUTHORIZED TO ENTER INTO A RECORDKEEPING VOLUN- TARY COMPLIANCE AGREEMENT WITH AN ELIGIBLE TAXPAYER. A RECORDKEEPING VOLUNTARY COMPLIANCE AGREEMENT SHALL BE IN A FORM TO BE ESTABLISHED BY THE COMMISSIONER AND INCLUDE SUCH TERMS AS THE COMMISSIONER MAY REASON- ABLY REQUIRE TO REQUIRE THE ELIGIBLE TAXPAYER TO MAINTAIN BOOKS AND RECORDS IN A FORM PURSUANT TO SECTION ELEVEN HUNDRED THIRTY-FIVE OF THIS PART AND TO COMPLY WITH THIS CHAPTER IN THE FUTURE INCLUDING, BUT NOT LIMITED TO REQUIRING THE USE OF CERTIFIED POINT OF SALES SYSTEMS. S 2. Section 1138 of the tax law is amended by adding a new subdivi- sion (e) to read as follows: (E) NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, A TAXPAYER THAT IS A PARTY TO A RECORDKEEPING VOLUNTARY COMPLIANCE AGREE- MENT PURSUANT TO SECTION ELEVEN HUNDRED THIRTY-FIVE-A OF THIS PART SHALLEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11114-01-1 S. 4944 2
NOT BE SUBJECT TO THE PROVISIONS OF PARAGRAPH ONE OF SUBDIVISION (A) OF THIS SECTION AND NO TAX SHALL BE ESTIMATED ON THE BASIS OF EXTERNAL INDICES UNLESS THE COMMISSIONER FINDS THAT THE TAXPAYER IS IN SUBSTAN- TIAL NON-COMPLIANCE WITH ITS RECORDKEEPING VOLUNTARY COMPLIANCE AGREE- MENT. S 3. This act shall take effect immediately.