New York State Offers Tax Amnesty
By David Bunning, Greenberg
Traurig, New York Office
View or download the PDF version of this Alert
New York is currently offering an amnesty on unpaid state taxes. Amnesty
is available for taxpayers who did not file a return, understated a liability
on a return, or have had tax assessed. But the opportunity is fleeting.
Application must be made by January 31, 2003. Because of the broad scope
of the tax amnesty program, if you owe New York State taxes, whether they
have been assessed or not, now is a good time to consider payment.
|"Because of the broad scope of
the tax amnesty program, if you owe New York State taxes, whether
they have been assessed or not, now is a good time to consider payment."
Under the amnesty program, which began on November 18, 2002, non-filers
and those who have underpaid a state tax liability can pay back taxes and
interest at a rate two percentage points lower than the applicable statutory
interest rate, with a waiver of penalties and immunity from future administrative,
civil, and criminal action. To obtain these benefits, a taxpayer must submit
an application for tax amnesty by January 31, 2003 and make full
payment by March 15, 2003 or the date in a bill sent by the New York State
Department of Taxation. Interest rates will return to normal after amnesty
and then will increase by an additional two percentage points on
April 1, 2003.
Taxes and Tax Periods Covered
All tax periods ending on or before December 31, 2000 are covered. 2001
and 2002 taxes do not qualify for amnesty. In the case of sales taxes and
excise taxes with quarterly returns, amnesty applies to tax periods pending
or transactions or uses occurring on or before February 28, 2001. In the
case of the New York State estate tax, amnesty applies to estate tax liabilities
of decedents who died on or before February 1, 2000. The taxes covered are:
- New York State personal income tax, New York City personal income
tax, and the City of Yonkers personal income tax surcharge and nonresident
- Withholding taxes for personal income tax
- Corporation franchise tax and related taxes
- Sales and compensating use tax
- Special tax on passenger car rentals
- Taxes authorized for cities, counties, or school districts
- Motor fuel tax
- Beverage container tax
- Petroleum business tax
- Highway use tax
- Estate tax
- Gift tax
- Generation-skipping transfer tax
- Real property transfer gains tax (repealed for transfers on or after
June 15, 1996).
Amnesty is not available to taxpayers who were granted tax amnesty under
either the 1994 or the 1996-1997 New York State tax amnesty programs for
the type of tax for which amnesty is now sought. However, amnesty is available
for other types of taxes. For example, a taxpayer who received amnesty for
income tax under an earlier tax amnesty program is not eligible for amnesty
for income tax, but is eligible for amnesty for sales tax.
Amnesty is limited to business taxpayers who employ 500 or fewer employees
in the United States on the date the amnesty application is filed.
A taxpayer is not eligible for tax amnesty for a tax and period in which
the taxpayer is a party to a criminal investigation or a pending criminal
or civil litigation. However, a taxpayer is eligible for amnesty with respect
to other taxes and periods. A taxpayer who has been convicted of a crime
related to a tax for which tax amnesty is sought is not eligible for any
period or assessment for that type of tax.
If an application for tax amnesty is denied because of an ongoing criminal
investigation or pending criminal prosecution, the taxpayer may resubmit
the application for amnesty if the criminal proceeding does not result in
conviction even if this occurs after January 31, 2003, the last day to apply
for tax amnesty. Such resubmission must be made within 30 days of official
notice that investigation has been terminated or the conclusion of the criminal
prosecution. If the taxpayer has not been officially notified of the termination
of a criminal investigation, the resubmission must be within five years
and 30 days of the mailing of the notice denying tax amnesty.
If civil litigation is pending, eligibility for amnesty exists if the
applicant withdraws from the litigation before the amnesty is granted. If
the tax for which amnesty is sought is being contested in the Bureau of
Conciliation and Mediation Services or the Division of Tax Appeals, the
case must be withdrawn before tax amnesty is granted.
Application and Payment Due Dates
Mailed applications must be postmarked by January 31, 2003. Online applications
must be submitted by midnight, Eastern Standard Time, on January 31, 2003.
Tax amnesty payments must be made in full by the later of the date set forth
in a tax amnesty bill or March 15, 2003. Amnesty will be denied if the payment
is late. Payment may be made by electronic funds withdrawal or by Discover,
Novus, or Mastercard.
Some of the provisions have not been in previous New York amnesty programs,
such as the reduction of interest and the resubmission of applications in
certain situations after the close of the amnesty period.
Further, amnesty may apply to situations which are not immediately obvious.
For example, if a taxpayer has previously entered into an installment agreement,
the program permits payment of the remaining tax without penalty and with
reduced interest. The savings due to penalty abatement and reduction of
interest may be substantial, particularly if the payments already made were
designated to the payment of tax only. Further, if a tax liability is contested,
a taxpayer may obtain amnesty for a portion of the liability (which must
be paid within the amnesty deadlines) and contest the remainder.
If you owe New York State tax, regardless of the circumstances, you should
consider the amnesty program.
Additional information may be obtained from the New York State tax amnesty
or from Greenberg Traurig. The website, which sports the slogan "Get caught
up... before you get caught," contains questions and answers on a variety
of amnesty-related issues.
The author gratefully acknowledges the assistance of
Charles A. Simmons and
Barbara T. Kaplan with
© 2002 Greenberg Traurig
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