Budget Includes Moratorium On Personal Income Tax Filing Penalty

Penalties on Individuals Filing Personal Income Tax Returns on Paper Removed From the 2012-2013 Budget

March 30, 2012

(Albany) Assemblymember Kevin Cahill (D – Ulster / Dutchess) announced that the final budget will not include penalties for individuals who choose to submit their personal income tax returns through the mail instead of electronically. The fees, which would have ranged between $25 and $50 depending on the nature of the filing, were part of existing law as New York State transitions to electronic filing. Assemblymember Cahill, the main sponsor of legislation that would repeal the penalties (A.9528), helped remove the provision from the final budget, delaying it’s implementation for at least a year.

“The Tax Department would have forced taxpayers who wished to submit paper filings to jump through unnecessary hoops instead of incentivizing them to e-file, as the law intended,” said Assemblymember Cahill.

The penalties would have applied to individuals who prepared their personal income tax returns using authorized tax software but chose to submit their documents on paper. The law allows the State to waive the fee in certain instances, but the Department of Taxation and Finance has failed clearly define how those exemptions would be applied.

“Because the Department of Taxation and Finance could not identify specific processes to obtain an exemption, there was a risk that many paper filers would be subjected to the penalty outside the intent of the law. New Yorkers deserve a logical, comprehensible tax code. As written, this legislation is simply bad public policy and needed to be revisited.”

This moratorium on the filing fee applies retroactively to those who may have already submitted their return this year. The measure provides the public with a chance to learn the benefits of electronic filing and gives the Tax Department the time necessary to develop orderly regulations.

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