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BILL NUMBER:S952

TITLE OF BILL: An act to amend the tax law, the multiple dwelling law, and the multiple residence law, in relation to disallowing corporate and personal income tax deductions for property in continued noncompliance with regards to rent impairing violations

PURPOSE: This bill would disallow State income tax deductions for owners of substandard residential rental property.

SUMMARY OF PROVISIONS: Section 210 of the tax law is amended by adding a new subdivision 24-a. Subsection (b) of section 612 of the tax law is amended by adding a new paragraph 39. Section 303 of the multiple dwelling law is amended with 2 new subdivisions, 1b and 1c. Section 303 of the multiple residence law is amended by adding a new subdivision 7.

JUSTIFICATION: This bill provides local officials with additional means of dealing with the problem of substandard rental housing. If the owner derives rental income from this substandard housing, and refuses to comply with a notice of the violations, this bill provides that any tax deductions taken for interest, taxes, depreciation or amortization paid with respect to the housing cannot be allowed in the computation of the owner's personal income or corporate tax liability. The State of New York should not allow landlords who maintain substandard property, much of which is used for illegal purposes to receive tax breaks on such property. This bill will stop such parties as demonstrated in California which enacted similar legislation.

LEGISLATIVE HISTORY: S.3498 of 2005/2006; S.628 of 2007/2008; S.601 of 2009/10

FISCAL IMPLICATIONS: None to the State; provides additional revenue to local governments.

EFFECTIVE DATE: This act shall take effect immediately.

Text

STATE OF NEW YORK
________________________________________________________________________

952

2011-2012 Regular Sessions

IN SENATE

(PREFILED)

January 5, 2011
___________

Introduced  by  Sen.  MARCELLINO  -- 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, the multiple dwelling law, and the multiple
  residence  law,  in  relation  to  disallowing  corporate and personal
  income tax deductions for property  in  continued  noncompliance  with
  regard to rent impairing violations

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 210 of the tax law  is  amended  by  adding  a  new
subdivision 24-a to read as follows:
  24-A.  NOTWITHSTANDING  ANY  CONTRARY  PROVISION  OF LAW, NO DEDUCTION
SHALL BE PERMITTED FOR INTEREST, TAXES,  DEPRECIATION,  OR  AMORTIZATION
PAID  OR INCURRED IN THE TAXABLE YEAR FOR ANY PROPERTY OFFERED FOR LEASE
WHICH IS IN  CONTINUED  NONCOMPLIANCE  WITH  REGARD  TO  RENT  IMPAIRING
VIOLATIONS  AS DEFINED BY: (A) LOCAL LAWS, REGULATIONS, OR ORDINANCES OR
(B) PARAGRAPH A OF SUBDIVISION TWO OF SECTION THREE HUNDRED TWO-A OF THE
MULTIPLE DWELLING LAW AND SECTION THREE HUNDRED FIVE-A OF  THE  MULTIPLE
RESIDENCE  LAW.  FOR THE PURPOSES OF THIS SECTION, "CONTINUED NONCOMPLI-
ANCE" SHALL MEAN  THAT  SUCH  VIOLATION  OR  VIOLATIONS  HAVE  NOT  BEEN
CORRECTED  WITHIN  THE  PRESCRIBED  COMPLIANCE  PERIOD,  DESPITE WRITTEN
NOTIFICATION TO THE OWNER BY  THE  LOCAL  DEPARTMENT  CHARGED  WITH  THE
ENFORCEMENT OF SUCH LAWS, REGULATIONS, OR ORDINANCES. WITH THE EXCEPTION
OF  REASONABLE  ADMINISTRATIVE EXPENSES, ALL ADDITIONAL REVENUE REALIZED
AND COLLECTED BY THE DEPARTMENT AS A RESULT OF ANY DEDUCTION  DISALLOWED
IN  ACCORDANCE WITH THE PROVISIONS OF THIS SUBDIVISION SHALL BE REMITTED
TO THE LOCALITY IN WHICH THE  PROPERTY  WHICH  IS  THE  SUBJECT  OF  THE
VIOLATION IS LOCATED IN ORDER TO PROMOTE AND ENHANCE HOUSING MAINTENANCE
ENFORCEMENT EFFORTS IN SUCH LOCALITY.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04408-01-1
S. 952                              2

  S 2. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 40 to read as follows:
  (40)  DEDUCTIONS, INCLUDING INTEREST, TAXES, DEPRECIATION, AND AMORTI-
ZATION ALLOWED IN DETERMINING FEDERAL ADJUSTED GROSS INCOME AND INCURRED
IN THE TAXABLE YEAR ON ANY  PROPERTY  OFFERED  FOR  LEASE  WHICH  IS  IN
CONTINUED  NONCOMPLIANCE  WITH  REGARD  TO  RENT IMPAIRING VIOLATIONS AS
DEFINED IN SECTION TWO HUNDRED TEN OF THIS CHAPTER.
  S 3. Section 303 of the multiple dwelling law is amended by adding two
new subdivisions 1-b and 1-c to read as follows:
  1-B. NOTWITHSTANDING ANY CONTRARY  PROVISION  OF  LAW,  LOCAL  HOUSING
ENTITIES  OR DEPARTMENTS RESPONSIBLE FOR THE TRACKING AND/OR MAINTAINING
OF RECORDS, FILES AND/OR AFFIDAVITS OF PERSONS FOUND TO BE IN  CONTINUED
NONCOMPLIANCE  WITH  REGARD  TO RENT IMPAIRING VIOLATIONS SHALL SUBMIT A
LISTING OF THOSE PERSONS FOUND IN NONCOMPLIANCE TO THE DIVISION OF HOUS-
ING AND COMMUNITY RENEWAL WITHIN THIRTY DAYS AFTER  THE  THIRD  RECORDED
VIOLATION.  FOR  THE  PURPOSES  OF THIS SECTION, THE TERM "PERSON" SHALL
INCLUDE THE OWNER, MORTGAGEE, VENDEE, FIRM OR CORPORATION IN  POSSESSION
OF  OR DIRECTLY IN CONTROL OF A DWELLING OR PART THEREOF. THE TERM "RENT
IMPAIRING VIOLATIONS" SHALL BE DEFINED BY: (A) LOCAL  LAWS,  REGULATIONS
OR  ORDINANCES,  OR  (B) PARAGRAPH A OF SUBDIVISION TWO OF SECTION THREE
HUNDRED TWO-A OF THIS ARTICLE AND SECTION THREE HUNDRED  FIVE-A  OF  THE
MULTIPLE  RESIDENCE LAW.  "CONTINUED NONCOMPLIANCE", FOR THE PURPOSES OF
THIS SECTION, SHALL MEAN THAT SUCH VIOLATION OR VIOLATIONS HAVE NOT BEEN
CORRECTED WITHIN  THE  PRESCRIBED  COMPLIANCE  PERIOD,  DESPITE  WRITTEN
NOTIFICATION  TO  THE  OWNER  BY  THE  LOCAL DEPARTMENT CHARGED WITH THE
ENFORCEMENT OF SUCH LAWS, REGULATIONS OR ORDINANCES.
  1-C. (A) WHEN THE COMPLIANCE PERIOD PRESCRIBED BY THE  DEPARTMENT  FOR
THE  CORRECTION OF: (1) A RENT IMPAIRING VIOLATION AS DEFINED IN SECTION
THREE HUNDRED TWO-A OF THIS ARTICLE; OR (2)  A  VIOLATION  OF  STATE  OR
LOCAL  LAW,  ORDINANCE  OR REGULATION, WHICH CONSTITUTES A THREAT TO THE
LIFE, HEALTH OR SAFETY OF THE PUBLIC HAS EXPIRED, THE  DEPARTMENT  SHALL
MAIL  TO  THE  BUILDING  OWNER  A NOTICE OF NONCOMPLIANCE. THE NOTICE OF
NONCOMPLIANCE SHALL BE MAILED BY CERTIFIED MAIL TO THE BUILDING OWNER AT
HIS OR HER LAST KNOWN ADDRESS, AND SHALL ADVISE SUCH  OWNER  (A)  OF  AN
INTENT  TO  NOTIFY  THE DIVISION OF HOUSING AND COMMUNITY RENEWAL WITHIN
THIRTY DAYS OF THE  THIRD  RECORDED  NONCOMPLIANCE  AND  THE  SUBSEQUENT
NOTIFICATION  OF  THE DEPARTMENT OF TAXATION AND FINANCE BY THE DIVISION
AFTER TEN DAYS, AND (B) A GENERAL DESCRIPTION OF THE TAX CONSEQUENCES OF
SUCH FILING WITH THE DEPARTMENT OF TAXATION AND FINANCE. AFTER THE EXPI-
RATION OF SUCH TEN DAY PERIOD, THE DIVISION MAY NOTIFY THE DEPARTMENT OF
TAXATION AND FINANCE OF SUCH NONCOMPLIANCE. SUCH  NOTICE  SHALL  INCLUDE
THE  NAME OF THE OWNER OR OWNERS, THE LOCATION OF THE DWELLING, THE DATE
THE VIOLATION OR VIOLATIONS WERE RECORDED AND SUCH OTHER INFORMATION  AS
THE  DEPARTMENT  OF  TAXATION AND FINANCE MAY REQUEST.  IN THE EVENT THE
PERIOD OF NONCOMPLIANCE DOES NOT  COVER  AN  ENTIRE  TAXABLE  YEAR,  THE
DEDUCTIONS  SHALL  BE  DENIED  AT  THE RATE OF ONE-TWELFTH FOR EACH FULL
MONTH OR PART THEREOF DURING THE PERIOD OF NONCOMPLIANCE.
  (B) FOR PURPOSES OF THIS SUBDIVISION, A NOTICE OF NONCOMPLIANCE  SHALL
NOT  BE  MAILED BY THE ENFORCEMENT DEPARTMENT TO THE DIVISION OF HOUSING
AND COMMUNITY RENEWAL IF THE VIOLATION WAS CAUSED SOLELY  BY  REASON  OF
NATURAL  DISASTER  EXCEPT WHERE SUCH CONDITION REMAINS FOR MORE THAN SIX
MONTHS.
  S 4. Section 303 of the multiple residence law is amended by adding  a
new subdivision 7 to read as follows:
  7.  A. WHEN THE COMPLIANCE PERIOD PRESCRIBED BY THE DEPARTMENT FOR THE
CORRECTION OF: (I) A RENT IMPAIRING  VIOLATION  AS  DEFINED  IN  SECTION
S. 952                              3

THREE HUNDRED TWO-A OF THE MULTIPLE DWELLING LAW; OR (II) A VIOLATION OF
STATE  OR LOCAL LAW, ORDINANCE OR REGULATION, WHICH CONSTITUTES A THREAT
TO THE LIFE, HEALTH AND SAFETY OF THE PUBLIC HAS EXPIRED, THE DEPARTMENT
SHALL  MAIL  TO THE BUILDING OWNER A NOTICE OF NONCOMPLIANCE. THE NOTICE
OF NONCOMPLIANCE SHALL BE MAILED BY CERTIFIED MAIL TO THE BUILDING OWNER
AT HIS OR HER LAST KNOWN ADDRESS, AND SHALL ADVISE SUCH OWNER (1) OF  AN
INTENT  TO  NOTIFY  THE DIVISION OF HOUSING AND COMMUNITY RENEWAL WITHIN
THIRTY DAYS OF THE  THIRD  RECORDED  NONCOMPLIANCE  AND  THE  SUBSEQUENT
NOTIFICATION  OF  THE DEPARTMENT OF TAXATION AND FINANCE BY THE DIVISION
AFTER TEN DAYS, AND (2) A GENERAL DESCRIPTION OF THE TAX CONSEQUENCES OF
SUCH FILING WITH THE DEPARTMENT OF TAXATION AND FINANCE. AFTER THE EXPI-
RATION OF SUCH TEN DAY PERIOD, THE DIVISION MAY NOTIFY THE DEPARTMENT OF
TAXATION AND FINANCE OF SUCH NONCOMPLIANCE. SUCH  NOTICE  SHALL  INCLUDE
THE  NAME OF THE OWNER OR OWNERS, THE LOCATION OF THE DWELLING, THE DATE
THE VIOLATION OR VIOLATIONS WERE RECORDED AND SUCH OTHER INFORMATION  AS
THE  DEPARTMENT  OF  TAXATION AND FINANCE MAY REQUEST.  IN THE EVENT THE
PERIOD OF NONCOMPLIANCE DOES NOT  COVER  AN  ENTIRE  TAXABLE  YEAR,  THE
DEDUCTIONS  SHALL  BE  DENIED  AT  THE RATE OF ONE-TWELFTH FOR EACH FULL
MONTH OR PART THEREOF DURING THE PERIOD OF NONCOMPLIANCE.
  B. FOR PURPOSES OF THIS SUBDIVISION, A NOTICE OF  NONCOMPLIANCE  SHALL
NOT  BE  MAILED BY THE ENFORCEMENT DEPARTMENT TO THE DIVISION OF HOUSING
AND COMMUNITY RENEWAL IF THE VIOLATION WAS CAUSED SOLELY  BY  REASON  OF
NATURAL  DISASTER  EXCEPT WHERE SUCH CONDITION REMAINS FOR MORE THAN SIX
MONTHS.
  S 5. This act shall take effect immediately and shall apply to taxable
years beginning on or after the first of January of the  year  in  which
this  act  shall have become a law, and to all violations recorded on or
after such date.