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.
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.