N.Y. Tax Law § 681 — Notice of deficiency

§ 681. Notice of deficiency.--(a) General.--If upon examination of a\ntaxpayer's return under this article the tax commission determines that\nthere is a deficiency of income tax, it may mail a notice of deficiency\nto the taxpayer. If a taxpayer fails to file an income tax return\nrequired under this article, the tax commission is authorized to\nestimate the taxpayer's New York taxable income and tax thereon, from\nany information in its possession, and to mail a notice of deficiency to\nthe taxpayer. A notice of deficiency shall be mailed by certified or\nregistered mail to the taxpayer at his last known address in or out of\nthis state. If a husband and wife are jointly liable for tax, a notice\nof deficiency may be a single joint notice, except that if the tax\ncommission has been notified by either spouse that separate residences\nhave been established, then, in lieu of the single joint notice, a\nduplicate original of the joint notice shall be mailed to each spouse at\nhis or her last known address in or out of this state. If the taxpayer\nis deceased or under a legal disability, a notice of deficiency may be\nmailed to his last known address in or out of this state, unless the tax\ncommission has received notice of the existence of a fiduciary\nrelationship with respect to the taxpayer.\n (b) Notice of deficiency as assessment.--After ninety days from the\nmailing of a notice of deficiency, such notice shall be an assessment of\nthe amount of tax specified in such notice, together with the interest,\nadditions to tax and penalties stated in such notice, except only for\nany such tax or other amounts as to which the taxpayer has within such\nninety day period filed with the tax commission a petition under section\nsix hundred eighty-nine. If the notice of deficiency is addressed to a\nperson outside of the United States, such period shall be one hundred\nfifty days instead of ninety days.\n (c) Restrictions on assessment and levy.--No assessment of a\ndeficiency in tax and no levy or proceeding in court for its collection\nshall be made, begun or prosecuted, except as otherwise provided in\nsection six hundred ninety-four, until a notice of deficiency has been\nmailed to the taxpayer, nor until the expiration of the time for filing\na petition contesting such notice, nor, if a petition with respect to\nthe taxable year has been filed with the tax commission, until the\ndecision of the tax commission has become final. For exception in the\ncase of judicial review of the decision of the tax commission, see\nsubsection (c) of section six hundred ninety.\n (d) Exceptions for mathematical or clerical errors.--If a mathematical\nor clerical error appears on a return (including an overstatement of the\ncredit for income tax withheld at the source, or of the amount paid as\nestimated income tax), the commissioner shall notify the taxpayer that\nan amount of tax in excess of that shown upon the return is due, and\nthat such excess has been assessed. Such notice shall not be considered\nas a notice of deficiency for the purposes of this section, subsection\n(f) of section six hundred eighty-seven (limiting credits or refunds\nafter petition to the division of tax appeals), subsection (b) of\nsection six hundred eighty-nine (authorizing the filing of a petition\nwith the division of tax appeals based on a notice of deficiency), or\narticle forty of this chapter, nor shall such assessment or collection\nbe prohibited by the provisions of subsection (c).\n (e) Exceptions where federal changes, corrections or disallowances are\nnot reported.---\n (1) If the taxpayer or employer fails to comply with section six\nhundred fifty-nine or section six hundred fifty-nine-a, instead of the\nmode and time of assessment provided for in subsection (b) of this\nsection, the commissioner may assess a deficiency based upon such\nfederal change, correction or disallowance by mailing to the taxpayer a\nnotice of additional tax due specifying the amount of the deficiency,\nand such deficiency, together with the interest, additions to tax and\npenalties stated in such notice, shall be deemed assessed on the date\nsuch notice is mailed unless within thirty days after the mailing of\nsuch notice a report of the federal change, correction or disallowance\nor an amended return, where such return was required by section six\nhundred fifty-nine or section six hundred fifty-nine-a, is filed\naccompanied by a statement showing wherein such federal determination\nand such notice of additional tax due are erroneous.\n (2) Such notice shall not be considered as a notice of deficiency for\nthe purposes of this section, subsection (f) of section six hundred\neighty-seven (limiting credits or refunds after petition to the division\nof tax appeals), or subsection (b) of section six hundred eighty-nine\n(authorizing the filing of a petition with the division of tax appeals\nbased on a notice of deficiency), nor shall such assessment or the\ncollection thereof be prohibited by the provisions of subsection (c).\n (3) If spouses are jointly liable for tax, a notice of additional tax\ndue may be a single joint notice, except that if the commissioner has\nbeen notified by either spouse that separate residences have been\nestablished, then, in lieu of the joint notice, a duplicate original of\nthe joint notice shall be mailed to each spouse at their last known\naddress in or out of this state. If the taxpayer is deceased or under a\nlegal disability, a notice of additional tax due may be mailed to their\nlast known address in or out of this state, unless the commissioner has\nreceived notice of the existence of a fiduciary relationship with\nrespect to the taxpayer.\n (f) Waiver of restrictions.--The taxpayer shall at any time (whether\nor not a notice of deficiency has been issued) have the right to waive\nthe restrictions on assessment and collection of the whole or any part\nof the deficiency by a signed notice in writing filed with the tax\ncommission.\n (g) Deficiency defined.--For purposes of this article, a deficiency\nmeans the amount of the tax imposed by this article, less (i) the amount\nshown as the tax upon the taxpayer's return (whether the return was made\nor the tax computed by him or by the tax commission), and less (ii) the\namounts previously assessed (or collected without assessment) as a\ndeficiency and plus (iii) the amount of any rebates. For the purpose of\nthis definition, the tax imposed by this article and the tax shown on\nthe return shall both be determined without regard to payments on\naccount of estimated tax or the credit for withholding tax; and a rebate\nmeans so much of an abatement, credit, refund or other repayment\n(whether or not erroneous) made on the ground that the amounts entering\ninto the definition of a deficiency showed a balance in favor of the\ntaxpayer.\n