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A04887 Summary:

BILL NOA04887
 
SAME ASNo Same As
 
SPONSORPerry
 
COSPNSR
 
MLTSPNSR
 
Amd §§1132, 1134, 1136, 1137 & 1145, rpld §1136 sub (a) ¶1, §1137 sub (e) ¶3, §1137-A, Tax L
 
Requires vendors to establish mandatory escrow accounts for sales taxes collected, establish the mechanism for those accounts and provide the state with the authority to have immediate access to their collected taxes.
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A04887 Actions:

BILL NOA04887
 
02/05/2019referred to ways and means
01/08/2020referred to ways and means
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A04887 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          4887
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 5, 2019
                                       ___________
 
        Introduced  by M. of A. PERRY -- read once and referred to the Committee
          on Ways and Means
 
        AN ACT to amend the tax law, in relation to requiring vendors to  estab-
          lish  mandatory  escrow  accounts for sales taxes collected, establish
          the mechanism for those  accounts  and  provide  the  state  with  the
          authority  to  have  immediate access to their collected taxes; and to
          repeal certain provisions of such law relating thereto
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Paragraph 1 of subdivision (a) of section 1132 of the tax
     2  law, as amended by chapter 255 of the laws of 1998, is amended  to  read
     3  as follows:
     4    (1) (i) Every person required to collect the tax shall collect the tax
     5  from the customer when collecting the price, amusement charge or rent to
     6  which  it  applies.  If  the  customer is given any sales slip, invoice,
     7  receipt or other statement or memorandum of the price, amusement  charge
     8  or  rent  paid  or  payable,  the tax shall be stated, charged and shown
     9  separately on the first of such documents given to him. The tax shall be
    10  paid to the person required to collect it as trustee for and on  account
    11  of the state.
    12    (ii)  Every  person required to collect the tax shall deposit such tax
    13  upon collection into a separate account, in trust for and payable to the
    14  commissioner, as provided by subparagraphs (iii) and (iv) of this  para-
    15  graph  at a time and in a manner as determined by the commissioner.  All
    16  amounts deposited in such account shall be kept in  such  account  until
    17  paid over to the commissioner.
    18    (iii)  If  the  person  required  to  collect  the tax does not accept
    19  payments from customers through credit  or  debit  card  banking  trans-
    20  actions,  the  person  required  to  collect  the tax shall establish an
    21  account in any banking institution  approved  by  the  commissioner  and
    22  located  in this state the deposits in which are insured by an agency of
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05244-01-9

        A. 4887                             2
 
     1  the federal government. The account shall be held in trust for and paya-
     2  ble to the commissioner and the amount of such tax  collected  shall  be
     3  kept  in such account until payment over to the commissioner. The person
     4  required  to  collect  the tax shall authorize the commissioner to debit
     5  such account in a manner determined by the commissioner.
     6    (iv) If the person required to collect the tax accepts  payments  from
     7  customers  using  credit  or debit cards, the person required to collect
     8  the tax shall establish a separate escrow account  through  an  approved
     9  credit card processing company (ACCPC) and not through an escrow account
    10  of  the  type  described  in  subparagraph  (iii) of this paragraph. The
    11  commissioner shall by regulation establish standards for approving cred-
    12  it card processing companies for opening and establishing  ACCPC  escrow
    13  accounts for persons required to pay the tax. Persons collecting the tax
    14  and  required to use ACCPC escrow accounts under this subparagraph shall
    15  make daily deposits into their ACCPC escrow account that are an estimate
    16  of the amount of taxes they collected that day for all of their  taxable
    17  sales,  both  those paid in cash and those paid by credit or debit card.
    18  To effectuate the deposit, the ACCPC shall deduct  the  estimated  sales
    19  taxes  owed  from  the  day's  credit and debit card transactions before
    20  paying over the receipts from such transactions to the  person  required
    21  to collect the tax. The amount deducted shall be determined by multiply-
    22  ing  the  day's credit and debit card sales by an algorithmic rate which
    23  shall be determined when the ACCPC escrow account is established and  at
    24  least  once  a year thereafter.  The algorithmic rate shall represent an
    25  estimated calculation of the amount of taxes collected and owed each day
    26  for both cash and credit and debit card sales. The  calculation  of  the
    27  person's  algorithmic  rate  shall  be  certified  by a certified public
    28  accountant licensed in this state, an attorney licensed in this state or
    29  an enrolled agent or registered tax return preparer who has been author-
    30  ized by the department to certify the algorithmic rate, as  an  accurate
    31  estimate  of  the  ratio of the person's cash to credit transactions and
    32  taxable to non-taxable sales. The commissioner  shall  promulgate  regu-
    33  lations  defining  how the algorithmic rate shall be calculated, setting
    34  standards for that calculation, and identifying  the  process  by  which
    35  licensed  or  registered professionals may be approved or disapproved by
    36  the department to certify the accuracy of the algorithmic rate.  Amounts
    37  deposited  in  an  ACCPC  escrow  account shall be held in trust for and
    38  payable to the commissioner and shall be kept  in  such  accounts  until
    39  payment  over  to  the  commissioner.  Persons  collecting  the  tax and
    40  required to use an ACCPC escrow account under this  subparagraph  shall,
    41  upon  establishing the account, authorize the commissioner to debit such
    42  account in a manner and frequency to be determined by the commissioner.
    43    § 2. Paragraph 1 of subdivision (a) of section 1134 of the tax law, as
    44  amended by section 160 of part A of chapter 389 of  the  laws  of  1997,
    45  subparagraph  (iii)  as amended by section 44 of part K of chapter 61 of
    46  the laws of 2011, is amended to read as follows:
    47    (1) (i) Every person required to collect any tax imposed by this arti-
    48  cle, other than a person who is a vendor solely by reason of clause (D),
    49  (E) or (F) of subparagraph (i) of paragraph eight of subdivision (b)  of
    50  section eleven hundred one of this article, commencing business or open-
    51  ing  a  new  place  of business, (ii) every person purchasing or selling
    52  tangible personal property for resale commencing business or  opening  a
    53  new  place  of  business,  (iii) every person selling petroleum products
    54  including persons who or which are not distributors, (iv)  every  person
    55  described  in this subdivision who takes possession of or pays for busi-
    56  ness assets under circumstances requiring notification by such person to

        A. 4887                             3
 
     1  the commissioner pursuant to subdivision (c) of section  eleven  hundred
     2  forty-one  of  this  [chapter] part, (v) every person selling cigarettes
     3  including persons who or which are not agents,  and  (vi)  every  person
     4  described  in  subparagraph  (i), (ii), (iii), (iv) or (v) of this para-
     5  graph or every person who is a vendor solely by reason  of  clause  (D),
     6  (E)  or (F) of subparagraph (i) of paragraph eight of subdivision (b) of
     7  section eleven hundred one of this article who  or  which  has  had  its
     8  certificate  of  authority revoked under paragraph four of this subdivi-
     9  sion, shall file with the commissioner a certificate of registration, in
    10  a form prescribed by the commissioner, at least  twenty  days  prior  to
    11  commencing  business or opening a new place of business or such purchas-
    12  ing, selling or taking of possession or payment, whichever comes  first.
    13  Every  person who is a vendor solely by reason of clause (D) of subpara-
    14  graph (i) of paragraph  eight  of  subdivision  (b)  of  section  eleven
    15  hundred  one  of this article shall file with the commissioner a certif-
    16  icate of registration, in a form prescribed by such commissioner, within
    17  thirty days after the day on which the cumulative total number of  occa-
    18  sions  that  such  person  came  into  the  state to deliver property or
    19  services, for the immediately preceding four quarterly periods ending on
    20  the last day of February, May,  August  and  November,  exceeds  twelve.
    21  Every  person who is a vendor solely by reason of clause (E) of subpara-
    22  graph (i) of paragraph  eight  of  subdivision  (b)  of  section  eleven
    23  hundred  one  of this article shall file with the commissioner a certif-
    24  icate of registration, in a form prescribed by such commissioner, within
    25  thirty days after the day on which the cumulative total, for  the  imme-
    26  diately  preceding  four  quarterly  periods  ending  on the last day of
    27  February, May, August and November, of such person's gross receipts from
    28  sales of property delivered in this state exceeds three hundred thousand
    29  dollars and number of such sales exceeds one hundred. Every  person  who
    30  is  a vendor solely by reason of clause (F) of subparagraph (i) of para-
    31  graph eight of subdivision (b) of section eleven  hundred  one  of  this
    32  article  shall file with the commissioner a certificate of registration,
    33  in a form prescribed by such commissioner, within thirty days after  the
    34  day  on which tangible personal property in which such person retains an
    35  ownership interest is brought into this state by the person to whom such
    36  property is sold, where the person to whom such property is sold becomes
    37  or is a resident or uses such property in any manner in carrying  on  in
    38  this  state  any  employment,  trade, business or profession.   A person
    39  required to file a certificate of registration and who  is  required  to
    40  collect  the  tax  as  required  by subparagraph (i) of paragraph one of
    41  subdivision (a) of section eleven hundred thirty-two of this part shall,
    42  at the time such certificate is filed, establish an  escrow  account  as
    43  required  by  subparagraphs  (ii),  (iii)  and  (iv) of paragraph one of
    44  subdivision (a) of section  eleven  hundred  thirty-two  of  this  part.
    45  Persons  required  to  establish  an  escrow account through an approved
    46  credit card processing company pursuant to subparagraph  (iv)  of  para-
    47  graph  one  of  subdivision  (a) of section eleven hundred thirty-two of
    48  this part shall establish an algorithmic  formula  for  payment  of  the
    49  estimated  collected  sales  tax  and shall file, within three months of
    50  filing  their  certificate  of  registration  a  certification  from   a
    51  licensed,  registered  or approved professional of the type specified in
    52  subparagraph (iv) of paragraph one of subdivision (a) of section  eleven
    53  hundred  thirty-two  of  this  part  certifying to the accuracy of their
    54  method of estimating their daily collection of sales taxes  as  provided
    55  in  subparagraph  (iv)  of  paragraph  one of subdivision (a) of section
    56  eleven hundred thirty-two of this part. Information with respect to  the

        A. 4887                             4

     1  notice  requirements  of  a  purchaser,  transferee or assignee and such
     2  person's liability pursuant to the  provisions  of  subdivision  (c)  of
     3  section  eleven  hundred  forty-one  of  this  [chapter]  part  shall be
     4  included  in or accompany the certificate of registration form furnished
     5  the applicant. The commissioner shall also include with such information
     6  furnished to each applicant general information about  the  tax  imposed
     7  under  this article including information on records to be kept, returns
     8  and payments, notification requirements and forms. Such  certificate  of
     9  registration  may be amended in accordance with rules promulgated by the
    10  commissioner.
    11    § 3. Subparagraph (A) of paragraph 4 of  subdivision  (a)  of  section
    12  1134  of the tax law, as amended by section 21-a of part U of chapter 61
    13  of the laws of 2011, is amended to read as follows:
    14    (A) Where a person who holds a certificate of authority (i)  willfully
    15  fails to file a report or return required by this article, (ii) willful-
    16  ly  files,  causes  to  be  filed, gives or causes to be given a report,
    17  return, certificate or affidavit required under this  article  which  is
    18  false,  (iii) willfully fails to comply with the provisions of paragraph
    19  two or three of subdivision (e) of section eleven  hundred  thirty-seven
    20  of  this [article] part, (iv) willfully fails to prepay, collect, truth-
    21  fully account for or pay over any tax  imposed  under  this  article  or
    22  pursuant  to  the  authority of article twenty-nine of this chapter, (v)
    23  fails to obtain a bond pursuant to paragraph two of subdivision  (e)  of
    24  section  eleven hundred thirty-seven of this part, or willfully fails to
    25  [comply with a notice issued by the commissioner pursuant  to  paragraph
    26  three  of such subdivision] establish or properly fund an escrow account
    27  as required by paragraph  one  of  subdivision  (a)  of  section  eleven
    28  hundred  thirty-two  of this part or otherwise willfully fails to comply
    29  with the requirements of that section, or (vi) has been convicted  of  a
    30  crime  provided  for  in  this  chapter,  the commissioner may revoke or
    31  suspend such  certificate  of  authority  and  all  duplicates  thereof.
    32  Provided, however, that the commissioner may revoke or suspend a certif-
    33  icate of authority based on the grounds set forth in clause (vi) of this
    34  subparagraph  only  where  the  conviction referred to occurred not more
    35  than one year prior to the date of revocation or suspension.
    36    § 4. Subparagraph (A) of paragraph 4 of  subdivision  (a)  of  section
    37  1134  of  the  tax  law, as amended by chapter 2 of the laws of 1995, is
    38  amended to read as follows:
    39    (A) Where a person who holds a certificate of authority (i)  willfully
    40  fails to file a report or return required by this article, (ii) willful-
    41  ly  files,  causes  to  be  filed, gives or causes to be given a report,
    42  return, certificate or affidavit required under this  article  which  is
    43  false,  (iii) willfully fails to comply with the provisions of paragraph
    44  two or three of subdivision (e) of section eleven  hundred  thirty-seven
    45  of  this [article] part, (iv) willfully fails to prepay, collect, truth-
    46  fully account for or pay over any tax  imposed  under  this  article  or
    47  pursuant  to  the authority of article twenty-nine of this chapter, [or]
    48  (v) willfully fails to establish or properly fund an escrow  account  as
    49  required  by  paragraph one of subdivision (a) of section eleven hundred
    50  thirty-two of this part or otherwise willfully fails to comply with  the
    51  requirements  of  that  section,  or  (vi) has been convicted of a crime
    52  provided for in this chapter, the commissioner  may  revoke  or  suspend
    53  such  certificate  of  authority  and  all duplicates thereof. Provided,
    54  however, that the commissioner may revoke or suspend  a  certificate  of
    55  authority  based on the grounds set forth in clause (v) of this subpara-

        A. 4887                             5
 
     1  graph only where the conviction referred to occurred not more  than  one
     2  year prior to the date of revocation or suspension.
     3    §  5. Paragraph 1 of subdivision (a) of section 1136 of the tax law is
     4  REPEALED.
     5    § 6. Subdivision (c) of section 1136 of the tax law, as added by chap-
     6  ter 93 of the laws of 1965, is amended to read as follows:
     7    (c) The [tax commission] commissioner may permit or require returns to
     8  be made covering other periods and upon such dates as it may specify. If
     9  the tax commission deems it necessary in order to insure the payment  of
    10  the taxes imposed by this article, it may require returns to be made for
    11  shorter periods than those prescribed pursuant to the foregoing subdivi-
    12  sions  of  this  section, and upon such dates as it may specify.  If the
    13  commissioner determines that the person required to collect and pay  the
    14  tax has established an escrow account as provided by subparagraphs (ii),
    15  (iii)  and  (iv)  of  paragraph one of subdivision (a) of section eleven
    16  hundred thirty-two of this part and that the amount  deposited  in  that
    17  escrow  account has equaled or exceeded ninety-five percent of the taxes
    18  owed for four consecutive quarters, the commissioner  shall  permit  the
    19  person  to  file  an  annual  return  in lieu of the returns required by
    20  subdivision (a) of this section. The annual return shall  reconcile  the
    21  amounts  withheld  and paid through the escrow account with the person's
    22  annual taxable sales and the return shall be certified as accurate by  a
    23  licensed,  registered or approved professional of the type identified in
    24  subparagraph (iv) of paragraph one of subdivision (a) of section  eleven
    25  hundred  thirty-two  of  this  part and shall include a certification as
    26  prescribed by the commissioner. The form of the annual return  shall  be
    27  prescribed by the commissioner and shall contain such information as the
    28  commissioner  may  deem  necessary for the proper administration of this
    29  article. The annual return shall be filed on or before  January  thirty-
    30  first of the year following the calendar year covered by the return.
    31    §  7.  The opening paragraphs of subdivisions (a) and (b) and subdivi-
    32  sion (c) of section 1137 of the  tax  law,  the  opening  paragraphs  of
    33  subdivisions  (a) and (b) as amended by section 2-f of part M-1 of chap-
    34  ter 109 of the laws of 2006 and subdivision (c) as  amended  by  chapter
    35  155 of the laws of 1982, are amended to read as follows:
    36    Every  person  required  to  file a return under the preceding section
    37  whose total taxable receipts (as "taxable  receipts"  are  described  in
    38  subdivision  (a)  of  such  section),  amusement  charges  and rents are
    39  subject to the tax imposed pursuant to subdivisions (a), (c),  (d),  (e)
    40  and  (f)  of  section  eleven hundred five of this article shall, at the
    41  time of filing such return, pay to the commissioner  the  total  of  the
    42  following,  less  any amounts already deposited into the person's escrow
    43  account  and  collected  by  or  available   for   collection   by   the
    44  commissioner:
    45    Every person required to file a return under the preceding section and
    46  not  subject to the provisions of subdivision (a) of this section shall,
    47  at the time of filing such return, pay to  the  commissioner  the  taxes
    48  imposed  by  this  article  and  pursuant to article twenty-nine of this
    49  chapter as well as all other moneys collected by such person  acting  or
    50  purporting  to  act under the provisions of this article or of any local
    51  law, ordinance or resolution adopted pursuant to  such  article  twenty-
    52  nine;  provided,  however,  that if the commissioner shall have fixed an
    53  effective rate of tax applicable to any or all of his or  her  receipts,
    54  amusement  charges  and  rents  as  provided  in subdivision (d) of this
    55  section, any such person may elect, with  reference  to  such  receipts,
    56  amusement  charges and rents and subject to approval by the commissioner

        A. 4887                             6
 
     1  and to such regulations as the commissioner may promulgate,  to  pay  to
     2  the  commissioner  at  the time of filing his or her return the total of
     3  the following, less any amounts  already  deposited  into  the  person's
     4  escrow  account  and  collected  by  or  available for collection by the
     5  commissioner:
     6    (c) [(1)] The provisions of subdivisions (a) and (b) of  this  section
     7  shall  not  be  applicable to[: (i)] a person filing a short-form, part-
     8  quarterly return as defined in paragraph [(ii)] two of  subdivision  (a)
     9  of  section  eleven hundred thirty-six [hereof] of this part who, at the
    10  time of such filing shall pay to the tax  commission  one-third  of  the
    11  total  state  and  local sales and compensating use taxes payable by the
    12  person to the tax commission in the comparable quarter of the immediate-
    13  ly preceding year under this article and as taxes  imposed  pursuant  to
    14  the  authority  of  article  twenty-nine  with  respect to all receipts,
    15  amusement charges and rents[, or (ii) a person filing a March  estimated
    16  return  as  described  in  paragraph  (ii) of subdivision (c) of section
    17  eleven hundred thirty-seven-A hereof who, at the  time  of  such  filing
    18  shall  pay to the tax commission one-third of the sales and compensating
    19  use taxes payable by such person to the tax commission in the comparable
    20  quarter of the immediately preceding year under this  article.  Notwith-
    21  standing  the  preceding sentence, for the purposes of subparagraph (ii)
    22  of this paragraph, the sales and compensating use taxes payable  in  the
    23  comparable  quarter  of the immediately preceding year shall not include
    24  taxes imposed by section eleven hundred seven or eleven hundred eight of
    25  this article or pursuant to the authority of article twenty-nine of this
    26  chapter.
    27    (2) The provisions of subdivisions (a) and (b) of this section, howev-
    28  er, shall apply to a person filing a March estimated return as described
    29  in  paragraph  (i)  of  subdivision  (c)  of  section   eleven   hundred
    30  thirty-seven-A  hereof  who, at the time of such filing shall pay to the
    31  tax commission the sales and compensating use taxes, that are  estimated
    32  to  be  payable  by such person for such month of March. Notwithstanding
    33  the preceding sentence, for the purposes of this  paragraph,  the  sales
    34  and  compensating  use  taxes  that  are estimated to be payable by such
    35  person for such month of  March  shall  not  include  taxes  imposed  by
    36  section  eleven hundred seven or eleven hundred eight of this article or
    37  pursuant to the authority of article twenty-nine of this chapter].
    38    § 8. Paragraph 3 of subdivision (e) of section 1137 of the tax law  is
    39  REPEALED.
    40    §  9. Paragraphs 1 and 2 of subdivision (f) of section 1137 of the tax
    41  law, paragraph 1 as amended by section 1 of part X of chapter 57 of  the
    42  laws  of 2010 and paragraph 2 as amended by section 1 of part H of chap-
    43  ter 62 of the laws of 2006, are amended to read as follows:
    44    (1) Except  as  otherwise  provided  in  this  subdivision,  a  person
    45  required  to  collect  tax who files a return required to be filed under
    46  section eleven hundred thirty-six of this part for a quarterly or longer
    47  period shall be allowed a credit against the taxes and fees required  to
    48  be  reported  on, and paid with, such return, in an amount as determined
    49  in paragraph two of this subdivision, but only where such  person  files
    50  the  return  on or before the filing due date and pays or pays over with
    51  such return the total amount  shown  on  such  return  (determined  with
    52  regard to this subdivision) and further only where the amounts deposited
    53  by the person into the person's escrow account during the period covered
    54  by the filing are equal to at least ninety-five percent of the total tax
    55  due;  provided,  however,  that  no  credit pursuant to this subdivision
    56  shall be allowed for any person who files  or  is  required  to  file  a

        A. 4887                             7

     1  return  pursuant  to  paragraph two of subdivision (a) of section eleven
     2  hundred thirty-six of this part or any person who pays or is required to
     3  pay tax pursuant to section ten of this chapter.
     4    (2)  The  amount  of  the  credit  authorized by paragraph one of this
     5  subdivision shall be five percent of the amount of taxes and  fees  (but
     6  not  including  any penalty or interest thereon) required to be reported
     7  on, and paid or paid over with, the return but only  if  the  return  is
     8  filed  on  or  before  the filing due date, but not more than [two] five
     9  hundred dollars, for each quarterly or longer period[, except that, with
    10  respect to returns required to be filed for quarterly or longer  periods
    11  ending  on  or  before the last day of February, two thousand seven, the
    12  amount of the credit shall be not more  than  one  hundred  seventy-five
    13  dollars for each such quarterly or longer period].
    14    § 10. Section 1137-A of the tax law is REPEALED.
    15    §  11. Section 1145 of the tax law is amended by adding a new subdivi-
    16  sion (l) to read as follows:
    17    (l)(1) In addition to any other penalty provided by  this  article  or
    18  any  other  law,  any  person  failing  to establish or properly fund an
    19  escrow account required by subparagraph (i),  (ii),  (iii)  or  (iv)  of
    20  paragraph one of subdivision (a) of section eleven hundred thirty-two of
    21  this  part  shall  be subject to an additional penalty of ten percent of
    22  the amount of tax due if such failure is for not more  than  one  month,
    23  with  an  additional  one  percent for each additional month or fraction
    24  thereof during  which  such  failure  continues,  not  exceeding  thirty
    25  percent in the aggregate.
    26    (2)  If the amount paid by the person required to collect the tax into
    27  their escrow account is less than ninety  percent  than  the  amount  of
    28  taxes owed, as shown in the person's quarterly, part-quarterly or annual
    29  return,  the  person  shall  owe a penalty equal to fifty percent of the
    30  delinquency. In addition, if the escrow account maintained by the person
    31  is an ACCPC escrow account, the commissioner may issue a notice  requir-
    32  ing  the  person  to increase the person's algorithmic rate by an amount
    33  not exceeding twice the amount of  the  deficiency  and  this  increased
    34  algorithmic  rate  shall continue as long as the commissioner determines
    35  that such increased rate is necessary.
    36    § 12. This act shall take effect September 1, 2020; provided that  the
    37  amendments  to  subparagraph  (A)  of  paragraph 4 of subdivision (a) of
    38  section 1134 of the tax law made by section three of this act  shall  be
    39  subject to the expiration and reversion of such subparagraph pursuant to
    40  section 23 of part U of chapter 61 of the laws of 2011, as amended, when
    41  upon  such  date  the  provisions of section four of this act shall take
    42  effect.  Effective immediately the addition, amendment and/or repeal  of
    43  any  rule  or regulation necessary for the implementation of this act on
    44  its effective date are authorized to be made and completed on or  before
    45  such date.
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