Greenberg Traurig Alert

New York State Offers Tax Amnesty

October 28, 1996

New York State is again offering amnesty for certain state tax liabilities. Any person or entity who owes money to New York State for back taxes, whether those taxes are assessed or not, can pay the tax and interest and have the penalty (and interest on the penalty) abated by acting within the 3-month amnesty period. The amnesty period runs from November 1, 1996 to January 31, 1997. Non-filers and those who have underpaid a liability can file returns, and pay back taxes and interest, in exchange for a waiver of penalties and immunity from future administrative, civil, and criminal action being taken. Eligible Taxpayers who do not take advantage of it will be subject to an additional 5% penalty.

Taxes Covered

The tax periods covered are those with years ending on or before December 31, 1994. The taxes covered without special limitations are:

• New York State personal income tax, and local personal income tax collected on the same return, i.e., New York City personal income tax, and nonresident earnings tax and the Yonkers personal income tax surcharge and nonresident earnings tax,
• withholding taxes for New York State, New York City, and Yonkers, but not the penalty personally imposed on officers, etc. for failure to withhold,
• sales and use tax,
• motor fuel tax,
• beverage container tax,
• highway use tax,
• estate tax, and
• gift tax.

The taxes covered with special limitations are:

• oil company taxes,
• transportation and transmission taxes,
• business corporation taxes,
• petroleum business taxes,
• unincorporated business taxes.

Amnesty for these taxes is limited to taxpayers who employ 500 or fewer employees in the United States on the date the amnesty application is filed. Amnesty for oil company and transportation taxes is not available to taxpayers primarily engaged in the business of aviation.

Eligibility Restrictions

Amnesty is not available to taxpayers who received any benefit under the 1985/1986 or the 1994 amnesty programs for the tax type for which amnesty is now sought, but is available for other types of taxes. For example, a taxpayer who received amnesty for income tax is not eligible for amnesty for income tax, but is eligible for amnesty for a different type of tax.

Amnesty is not available to an applicant who is a party to any criminal investigation conducted by New York State or any of its political subdivisions.

Amnesty is not available to an applicant who is a party to any related civil or criminal litigation pending in any court on the date of the amnesty application. If civil litigation is pending, eligibility for amnesty exists if the applicant withdraws from litigation before the amnesty is granted. The granting of amnesty will be conditioned on the applicant's withdrawal from a proceeding before the Bureau of Conciliation and Mediation Services or the Division of Tax Appeals involving the matter for which amnesty is sought.

Other

In the case of "severe financial hardship" the applicant may be able to make installment payments of 50% of the amount due on application, and pay the balance in two installments by March 15, 1997. Certain taxpayers who are eligible for amnesty, but choose not to participate, will be subject to an additional penalty of 5%, in addition to any other penalty, and tax and interest owed.

New York City Amnesty

There is not a formal amnesty program in effect for New York City, but the City may adopt a similar, but more informal, program for abatement of penalties where tax and interest are paid in full.