N.Y. Tax Law § 9 — Electronic funds transfer by certain taxpayers remitting withholding taxes

§ 9. Electronic funds transfer by certain taxpayers remitting\nwithholding taxes. (a) Definitions. For the purposes of this section:\n (1) The term "commissioner" means the commissioner of taxation and\nfinance.\n (2) The term "educational organization" means a higher educational\ninstitution which\n (A) is authorized by the New York state board of regents to confer\ndegrees, or\n (B) offers a range of registered undergraduate and graduate curricula\nin the liberal arts and sciences, degrees in two or more professional\nfields and doctoral programs in at least three academic fields, or\n (C) is authorized by the New York state board of regents to offer\nundergraduate curricula below the baccalaureate level which normally\nlead to the associate degree,\nas such higher educational institutions are described in subdivisions\n(k), (l) and (m) of section 50.1 of eight New York codes, rules and\nregulations.\n (3) The term "electronic funds transfer" means any transfer of funds,\nother than a transaction originated by check, draft, or similar paper\ninstrument, which is initiated through an electronic terminal,\ntelephonic instrument or computer or magnetic tape so as to order,\ninstruct or authorize a financial institution to debit or credit an\naccount.\n (4) The term "health care provider" means any organization described\nin article twenty-eight or thirty-six of the public health law, or in\narticle thirty-one of the mental hygiene law.\n (5) The term "payment of tax" means the amount of tax that is actually\nremitted upon the filing of a withholding tax return, or is actually\nremitted for the purposes of obtaining an extension to file such a\nreturn.\n (6) The term "reconciliation of withholding" means the quarterly\ncombined withholding, wage reporting and unemployment insurance return\nrequired to be filed for the last calendar quarter of each year, as\nprescribed by paragraph four of subsection (a) of section six hundred\nseventy-four of this chapter.\n (b) General rules. (1) Subject to the requirements contained in\nsubdivisions (c) and (d) of this section, the commissioner shall require\nby regulation that any payment of tax made by a taxpayer who is\nrequired, for either of the semi-annual periods ending June thirtieth or\nDecember thirty-first, to deduct and withhold an aggregate of\nthirty-five thousand dollars or more of withholding taxes pursuant to\npart V of article twenty-two of this chapter, or pursuant to an\nequivalent provision enacted under the authority of article thirty,\nthirty-A or thirty-B of this chapter, or article two-E of the general\ncity law, shall be made, on or before the date prescribed by law, by\nelectronic funds transfer to a bank, banking house or trust company\ndesignated by the commissioner. The commissioner shall designate only\nsuch banks, banking houses or trust companies as are or shall be\ndesignated by the comptroller as depositories pursuant to section one\nhundred seventy-one-a of this chapter, as added by chapter sixty-nine of\nthe laws of nineteen hundred seventy-eight. Notwithstanding any\nprovision of law to the contrary, any such payment shall be deemed to be\nmade on the date the payment is received by the designated depository of\nthe department; provided, however, that at the election of a taxpayer\nsubject to the provisions of this subdivision, mailing by the taxpayer\nof the applicable withholding tax return and a certified check for the\namount of the tax liability on or before the second business day prior\nto the applicable due date otherwise prescribed by law shall fulfill the\nrequirements of this section and shall be deemed to be timely payment of\nsuch tax liability and timely filing of such return.\n (2) (A) On or before the thirtieth calendar day following the date\nregulations implementing the provisions of this section become\neffective, the commissioner shall, by certified mail, notify taxpayers\nrequired to participate in the electronic funds transfer program of\ntheir responsibilities under such program. The notice shall also specify\nthat the first payment of tax by electronic funds transfer shall be made\non an applicable due date occurring on or after thirty calendar days\nfollowing receipt by the taxpayer of the notice; provided, however, that\nthe taxpayer may select an optional applicable due date occurring no\nlater than sixty calendar days following receipt by the taxpayer of the\nnotice.\n (B) (i) By September first, two thousand two, the commissioner shall,\nby certified mail, notify taxpayers newly required to participate in the\nelectronic funds transfer program during the July first, two thousand\ntwo through June thirtieth, two thousand three program period. Such\nnotice shall contain language advising the taxpayer of the enrollment\nprocedure and of the consequences of failure to enroll in such program,\nas well as of the taxpayer's obligation to enroll in the program within\nforty-five calendar days of the mailing of the notice unless such\ntaxpayer challenges such determination of required participation by\nrequesting a hearing within forty-five calendar days of the mailing of\nsuch notice. In addition, such notice shall specify that such a taxpayer\nshall make its first payment of tax by electronic funds transfer by an\napplicable due date in January, two thousand three.\n (ii) By June first, two thousand three and by each succeeding June\nfirst, the commissioner shall, by certified mail, notify taxpayers newly\nrequired to participate in the electronic funds transfer program. Such\nnotice shall contain language advising the taxpayer of the enrollment\nprocedure and of the consequences of failure to enroll in such program,\nas well as of the taxpayer's right to challenge such determination of\nrequired participation provided a hearing is requested within twenty\ncalendar days of the mailing of such notice. In addition, such notice\nshall specify that such a taxpayer shall make its first payment of tax\nby electronic funds transfer by an applicable due date occurring on or\nafter thirty calendar days following receipt by the taxpayer of the\nnotice but no later than sixty calendar days following receipt by the\ntaxpayer of the notice.\n (iii) If a taxpayer does not enroll within forty-five or twenty\ncalendar days (as the case may be) of the mailing of the notice provided\nfor in clause (i) or (ii) of this subparagraph or where a taxpayer's\nchallenge to mandatory participation is not sustained and the taxpayer\nhas not enrolled within ten calendar days of notification thereof, the\ncommissioner shall mail another notice, in addition to making other\nreasonable attempts, to inform the taxpayer of the civil penalty that\nhas been assessed pursuant to subdivision (h) of this section, of the\nopportunity for abatement of such penalty, and of the future penalties\nthat may result from continued failure to enroll.\n (3) Subject to the provisions of subdivision (f) of this section, an\nelectronic funds transfer shall serve as a substitute for the filing of\na withholding tax return.\n (c) Special rules with respect to health care providers and\neducational organizations.\n (1) The provisions of subdivision (b) of this section shall not apply\nto health care providers.\n (2) All of the provisions of this section shall apply to educational\norganizations; provided, however, that any payment of tax which is made\nby an educational organization shall be made by electronic funds\ntransfer on or before the third business day following the date\notherwise prescribed by law; and, provided further, that at the election\nof a taxpayer subject to the provisions of this subdivision, mailing by\nthe taxpayer of the applicable withholding tax return and a certified\ncheck for the amount of the tax liability on or before the first\nbusiness day following the applicable due date otherwise prescribed by\nlaw shall fulfill the requirements of this section and shall be deemed\nto be timely payment of such tax liability and timely filing of such\nreturn.\n (d) Exemptions. A taxpayer shall be exempt from the requirements\ncontained in subdivision (b) of this section if such taxpayer proves to\nthe satisfaction of the commissioner that aggregate tax withheld,\npursuant to the most recent reconciliation of withholding, is less than\none hundred thousand dollars.\n (e) Voluntary participation. A taxpayer may file a request with the\ncommissioner to pay any tax administered by such commissioner by\nelectronic funds transfer in accordance with the provisions of this\nsection. Such request shall be in such form as the commissioner shall\nrequire and shall be granted under such conditions as the commissioner,\nby regulation, deems necessary.\n * (f) Return substitution. An electronic funds transfer shall not\nserve as a substitute for the filing of a withholding tax return if the\ncommissioner determines that such substitution will not ensure the\nproper receipt and crediting of a payment of tax.\n * NB Expired December 31, 1992\n (g) Confidentiality. The department shall assure the confidentiality\nof information supplied by taxpayers in effecting electronic funds\ntransfers in accordance with the provisions of section six hundred\nninety-seven of this chapter or other applicable provisions of this\nchapter. The provisions of article six of the public officers law shall\nnot apply to any such information supplied by taxpayers subject to the\nrequirements of this section.\n (h) Civil penalty for failure to enroll. If a taxpayer required to\nparticipate in the electronic funds transfer program prescribed by this\nsection fails to enroll in such program in accordance with the terms of\nsubparagraph (B) of paragraph two of subdivision (b) of this section,\nsuch taxpayer shall pay a penalty equal to five thousand dollars;\nprovided, however, that if such taxpayer enrolls in the program within\ntwenty calendar days after notification of assessment of such penalty is\nsent by the department by certified mail for program periods beginning\non or after July first, two thousand two, then such penalty shall be\nabated. If such taxpayer continues to fail to enroll in the program\nafter such twenty calendar day period, the taxpayer shall pay an\nadditional penalty of five hundred dollars if the failure is for not\nmore than one month with an additional five hundred dollars for each\nadditional month or fraction thereof during which such failure\ncontinues. The penalty provided by this section shall be paid upon\nnotice and demand and shall be assessed, collected and paid in the same\nmanner as the withholding taxes referred to in paragraph one of\nsubdivision (b) of this section; and any reference in the provisions of\npart VI of article twenty-two of this chapter, which apply to the\nadministration of and procedures with respect to the provisions of this\nsection, shall be deemed also to refer to the penalty provided by this\nsection.\n (i) Regulations. The commissioner shall promulgate regulations\nnecessary to implement this section, which regulations shall include,\nbut shall not be limited to, the following:\n (1) the different methods of effecting electronic funds transfer\nmessages available to taxpayers. Such methods shall include at least two\nmethods in which the transfer can be effected without any charge to the\ntaxpayer for the electronic funds transfer itself, and one of such\nmethods shall not require the taxpayer to disclose financial institution\naccount information to the department;\n (2) the contents of an electronic funds transfer message necessary to\nensure the proper receipt and crediting of a tax payment;\n (3) the means by which taxpayers will be provided acknowledgements of\npayments by electronic funds transfer; and\n (4) delineation of what shall constitute reasonable cause and absence\nof willful neglect for purposes of compliance with the provisions of\nthis section, including the inability of a taxpayer, for reasons beyond\nthe taxpayer's control, to utilize any system of electronic funds\ntransfer required pursuant to this section.\n