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
________________________________________________________________________
1453
2021-2022 Regular Sessions
IN ASSEMBLY
January 11, 2021
___________
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 section 1 of part DDD of chapter 59 of the laws of
3 2019, is amended to read as follows:
4 (1) (i) Except as otherwise permitted in subdivision (d) of section
5 eleven hundred thirty-three of this part, every person required to
6 collect the tax shall collect the tax from the customer when collecting
7 the price, amusement charge or rent to which it applies. If the customer
8 is given any sales slip, invoice, receipt or other statement or memoran-
9 dum of the price, amusement charge or rent paid or payable, the tax
10 shall be stated, charged and shown separately on the first of such docu-
11 ments given to him. The tax shall be paid to the person required to
12 collect it as trustee for and on account of the state.
13 (ii) Every person required to collect the tax shall deposit such tax
14 upon collection into a separate account, in trust for and payable to the
15 commissioner, as provided by subparagraphs (iii) and (iv) of this para-
16 graph at a time and in a manner as determined by the commissioner. All
17 amounts deposited in such account shall be kept in such account until
18 paid over to the commissioner.
19 (iii) If the person required to collect the tax does not accept
20 payments from customers through credit or debit card banking trans-
21 actions, the person required to collect the tax shall establish an
22 account in any banking institution approved by the commissioner and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD05490-01-1
A. 1453 2
1 located in this state the deposits in which are insured by an agency of
2 the federal government. The account shall be held in trust for and paya-
3 ble to the commissioner and the amount of such tax collected shall be
4 kept in such account until payment over to the commissioner. The person
5 required to collect the tax shall authorize the commissioner to debit
6 such account in a manner determined by the commissioner.
7 (iv) If the person required to collect the tax accepts payments from
8 customers using credit or debit cards, the person required to collect
9 the tax shall establish a separate escrow account through an approved
10 credit card processing company (ACCPC) and not through an escrow account
11 of the type described in subparagraph (iii) of this paragraph. The
12 commissioner shall by regulation establish standards for approving cred-
13 it card processing companies for opening and establishing ACCPC escrow
14 accounts for persons required to pay the tax. Persons collecting the tax
15 and required to use ACCPC escrow accounts under this subparagraph shall
16 make daily deposits into their ACCPC escrow account that are an estimate
17 of the amount of taxes they collected that day for all of their taxable
18 sales, both those paid in cash and those paid by credit or debit card.
19 To effectuate the deposit, the ACCPC shall deduct the estimated sales
20 taxes owed from the day's credit and debit card transactions before
21 paying over the receipts from such transactions to the person required
22 to collect the tax. The amount deducted shall be determined by multiply-
23 ing the day's credit and debit card sales by an algorithmic rate which
24 shall be determined when the ACCPC escrow account is established and at
25 least once a year thereafter. The algorithmic rate shall represent an
26 estimated calculation of the amount of taxes collected and owed each day
27 for both cash and credit and debit card sales. The calculation of the
28 person's algorithmic rate shall be certified by a certified public
29 accountant licensed in this state, an attorney licensed in this state or
30 an enrolled agent or registered tax return preparer who has been author-
31 ized by the department to certify the algorithmic rate, as an accurate
32 estimate of the ratio of the person's cash to credit transactions and
33 taxable to non-taxable sales. The commissioner shall promulgate regu-
34 lations defining how the algorithmic rate shall be calculated, setting
35 standards for that calculation, and identifying the process by which
36 licensed or registered professionals may be approved or disapproved by
37 the department to certify the accuracy of the algorithmic rate. Amounts
38 deposited in an ACCPC escrow account shall be held in trust for and
39 payable to the commissioner and shall be kept in such accounts until
40 payment over to the commissioner. Persons collecting the tax and
41 required to use an ACCPC escrow account under this subparagraph shall,
42 upon establishing the account, authorize the commissioner to debit such
43 account in a manner and frequency to be determined by the commissioner.
44 § 2. Paragraph 1 of subdivision (a) of section 1134 of the tax law, as
45 amended by section 160 of part A of chapter 389 of the laws of 1997,
46 subparagraph (iii) as amended by section 44 of part K of chapter 61 of
47 the laws of 2011, is amended to read as follows:
48 (1) (i) Every person required to collect any tax imposed by this arti-
49 cle, other than a person who is a vendor solely by reason of clause (D),
50 (E) or (F) of subparagraph (i) of paragraph eight of subdivision (b) of
51 section eleven hundred one of this article, commencing business or open-
52 ing a new place of business, (ii) every person purchasing or selling
53 tangible personal property for resale commencing business or opening a
54 new place of business, (iii) every person selling petroleum products
55 including persons who or which are not distributors, (iv) every person
56 described in this subdivision who takes possession of or pays for busi-
A. 1453 3
1 ness assets under circumstances requiring notification by such person to
2 the commissioner pursuant to subdivision (c) of section eleven hundred
3 forty-one of this [chapter] part, (v) every person selling cigarettes
4 including persons who or which are not agents, and (vi) every person
5 described in subparagraph (i), (ii), (iii), (iv) or (v) of this para-
6 graph or every person who is a vendor solely by reason of clause (D),
7 (E) or (F) of subparagraph (i) of paragraph eight of subdivision (b) of
8 section eleven hundred one of this article who or which has had its
9 certificate of authority revoked under paragraph four of this subdivi-
10 sion, shall file with the commissioner a certificate of registration, in
11 a form prescribed by the commissioner, at least twenty days prior to
12 commencing business or opening a new place of business or such purchas-
13 ing, selling or taking of possession or payment, whichever comes first.
14 Every person who is a vendor solely by reason of clause (D) of subpara-
15 graph (i) of paragraph eight of subdivision (b) of section eleven
16 hundred one of this article shall file with the commissioner a certif-
17 icate of registration, in a form prescribed by such commissioner, within
18 thirty days after the day on which the cumulative total number of occa-
19 sions that such person came into the state to deliver property or
20 services, for the immediately preceding four quarterly periods ending on
21 the last day of February, May, August and November, exceeds twelve.
22 Every person who is a vendor solely by reason of clause (E) of subpara-
23 graph (i) of paragraph eight of subdivision (b) of section eleven
24 hundred one of this article shall file with the commissioner a certif-
25 icate of registration, in a form prescribed by such commissioner, within
26 thirty days after the day on which the cumulative total, for the imme-
27 diately preceding four quarterly periods ending on the last day of
28 February, May, August and November, of such person's gross receipts from
29 sales of property delivered in this state exceeds three hundred thousand
30 dollars and number of such sales exceeds one hundred. Every person who
31 is a vendor solely by reason of clause (F) of subparagraph (i) of para-
32 graph eight of subdivision (b) of section eleven hundred one of this
33 article shall file with the commissioner a certificate of registration,
34 in a form prescribed by such commissioner, within thirty days after the
35 day on which tangible personal property in which such person retains an
36 ownership interest is brought into this state by the person to whom such
37 property is sold, where the person to whom such property is sold becomes
38 or is a resident or uses such property in any manner in carrying on in
39 this state any employment, trade, business or profession. A person
40 required to file a certificate of registration and who is required to
41 collect the tax as required by subparagraph (i) of paragraph one of
42 subdivision (a) of section eleven hundred thirty-two of this part shall,
43 at the time such certificate is filed, establish an escrow account as
44 required by subparagraphs (ii), (iii) and (iv) of paragraph one of
45 subdivision (a) of section eleven hundred thirty-two of this part.
46 Persons required to establish an escrow account through an approved
47 credit card processing company pursuant to subparagraph (iv) of para-
48 graph one of subdivision (a) of section eleven hundred thirty-two of
49 this part shall establish an algorithmic formula for payment of the
50 estimated collected sales tax and shall file, within three months of
51 filing their certificate of registration a certification from a
52 licensed, registered or approved professional of the type specified in
53 subparagraph (iv) of paragraph one of subdivision (a) of section eleven
54 hundred thirty-two of this part certifying to the accuracy of their
55 method of estimating their daily collection of sales taxes as provided
56 in subparagraph (iv) of paragraph one of subdivision (a) of section
A. 1453 4
1 eleven hundred thirty-two of this part. Information with respect to the
2 notice requirements of a purchaser, transferee or assignee and such
3 person's liability pursuant to the provisions of subdivision (c) of
4 section eleven hundred forty-one of this [chapter] part shall be
5 included in or accompany the certificate of registration form furnished
6 the applicant. The commissioner shall also include with such information
7 furnished to each applicant general information about the tax imposed
8 under this article including information on records to be kept, returns
9 and payments, notification requirements and forms. Such certificate of
10 registration may be amended in accordance with rules promulgated by the
11 commissioner.
12 § 3. Subparagraph (A) of paragraph 4 of subdivision (a) of section
13 1134 of the tax law, as amended by section 5 of part I of chapter 59 of
14 the laws of 2020, is amended to read as follows:
15 (A) Where a person who holds a certificate of authority (i) willfully
16 fails to file a report or return required by this article, (ii) willful-
17 ly files, causes to be filed, gives or causes to be given a report,
18 return, certificate or affidavit required under this article which is
19 false, (iii) willfully fails to comply with the provisions of paragraph
20 two or three of subdivision (e) of section eleven hundred thirty-seven
21 of this [article] part, (iv) willfully fails to prepay, collect, truth-
22 fully account for or pay over any tax imposed under this article or
23 pursuant to the authority of article twenty-nine of this chapter, (v)
24 fails to obtain a bond pursuant to paragraph two of subdivision (e) of
25 section eleven hundred thirty-seven of this part, or willfully fails to
26 [comply with a notice issued by the commissioner pursuant to paragraph
27 three of such subdivision] establish or properly fund an escrow account
28 as required by paragraph one of subdivision (a) of section eleven
29 hundred thirty-two of this of this part or otherwise willfully fails to
30 comply with the requirements of that section, (vi) has been convicted of
31 a crime provided for in this chapter, or (vii) where such person, or any
32 person affiliated with such person as such term is defined in subdivi-
33 sion twenty-one of section four hundred seventy of this chapter, has had
34 a retail dealer registration issued pursuant to section four hundred
35 eighty-a of this chapter revoked pursuant to subparagraph (iii) of para-
36 graph (a) of subdivision four of such section four hundred eighty-a, the
37 commissioner may revoke or suspend such certificate of authority and all
38 duplicates thereof. Provided, however, that the commissioner may revoke
39 or suspend a certificate of authority based on the grounds set forth in
40 clause (vi) of this subparagraph only where the conviction referred to
41 occurred not more than one year prior to the date of revocation or
42 suspension; and provided further that where the commissioner revokes or
43 suspends a certificate of authority based on the grounds set forth in
44 clause (vii) of this subparagraph, such suspension or revocation shall
45 continue for as long as the revocation of the retail dealer registration
46 pursuant to section four hundred eighty-a of this chapter remains in
47 effect.
48 § 4. Subparagraph (A) of paragraph 4 of subdivision (a) of section
49 1134 of the tax law, as amended by section 6 of part I of chapter 59 of
50 the laws of 2020, is amended to read as follows:
51 (A) Where a person who holds a certificate of authority (i) willfully
52 fails to file a report or return required by this article, (ii) willful-
53 ly files, causes to be filed, gives or causes to be given a report,
54 return, certificate or affidavit required under this article which is
55 false, (iii) willfully fails to comply with the provisions of paragraph
56 two or three of subdivision (e) of section eleven hundred thirty-seven
A. 1453 5
1 of this [article] part, (iv) willfully fails to prepay, collect, truth-
2 fully account for or pay over any tax imposed under this article or
3 pursuant to the authority of article twenty-nine of this chapter, (v)
4 willfully fails to establish or properly fund an escrow account as
5 required by paragraph one of subdivision (a) of section eleven hundred
6 thirty-two of this part or otherwise willfully fails to comply with the
7 requirements of that section, or (vi) has been convicted of a crime
8 provided for in this chapter, or [(vi)] (vii) where such person, or any
9 person affiliated with such person as such term is defined in subdivi-
10 sion twenty-one of section four hundred seventy of this chapter, has had
11 a retail dealer registration issued pursuant to section four hundred
12 eighty-a of this chapter suspended or revoked pursuant to subparagraph
13 (iii) of paragraph (a) of subdivision four of such section four hundred
14 eighty-a, the commissioner may revoke or suspend such certificate of
15 authority and all duplicates thereof. Provided, however, that the
16 commissioner may revoke or suspend a certificate of authority based on
17 the grounds set forth in clause [(v)] (vi) of this subparagraph only
18 where the conviction referred to occurred not more than one year prior
19 to the date of revocation or suspension; and provided further that where
20 the commissioner revokes or suspends a certificate of authority based on
21 the grounds set forth in clause [(vi)] (vii) of this subparagraph, such
22 suspension or revocation shall continue for as long as the revocation of
23 the retail dealer registration pursuant to section four hundred eighty-a
24 of this chapter remains in effect.
25 § 5. Paragraph 1 of subdivision (a) of section 1136 of the tax law is
26 REPEALED.
27 § 6. Subdivision (c) of section 1136 of the tax law, as added by chap-
28 ter 93 of the laws of 1965, is amended to read as follows:
29 (c) The [tax commission] commissioner may permit or require returns to
30 be made covering other periods and upon such dates as it may specify. If
31 the tax commission deems it necessary in order to insure the payment of
32 the taxes imposed by this article, it may require returns to be made for
33 shorter periods than those prescribed pursuant to the foregoing subdivi-
34 sions of this section, and upon such dates as it may specify. If the
35 commissioner determines that the person required to collect and pay the
36 tax has established an escrow account as provided by subparagraphs (ii),
37 (iii) and (iv) of paragraph one of subdivision (a) of section eleven
38 hundred thirty-two of this part and that the amount deposited in that
39 escrow account has equaled or exceeded ninety-five percent of the taxes
40 owed for four consecutive quarters, the commissioner shall permit the
41 person to file an annual return in lieu of the returns required by
42 subdivision (a) of this section. The annual return shall reconcile the
43 amounts withheld and paid through the escrow account with the person's
44 annual taxable sales and the return shall be certified as accurate by a
45 licensed, registered or approved professional of the type identified in
46 subparagraph (iv) of paragraph one of subdivision (a) of section eleven
47 hundred thirty-two of this part and shall include a certification as
48 prescribed by the commissioner. The form of the annual return shall be
49 prescribed by the commissioner and shall contain such information as the
50 commissioner may deem necessary for the proper administration of this
51 article. The annual return shall be filed on or before January thirty-
52 first of the year following the calendar year covered by the return.
53 § 7. The opening paragraphs of subdivisions (a) and (b) and subdivi-
54 sion (c) of section 1137 of the tax law, the opening paragraphs of
55 subdivisions (a) and (b) as amended by section 2-f of part M-1 of chap-
A. 1453 6
1 ter 109 of the laws of 2006 and subdivision (c) as amended by chapter
2 155 of the laws of 1982, are amended to read as follows:
3 Every person required to file a return under the preceding section
4 whose total taxable receipts (as "taxable receipts" are described in
5 subdivision (a) of such section), amusement charges and rents are
6 subject to the tax imposed pursuant to subdivisions (a), (c), (d), (e)
7 and (f) of section eleven hundred five of this article shall, at the
8 time of filing such return, pay to the commissioner the total of the
9 following, less any amounts already deposited into the person's escrow
10 account and collected by or available for collection by the
11 commissioner:
12 Every person required to file a return under the preceding section and
13 not subject to the provisions of subdivision (a) of this section shall,
14 at the time of filing such return, pay to the commissioner the taxes
15 imposed by this article and pursuant to article twenty-nine of this
16 chapter as well as all other moneys collected by such person acting or
17 purporting to act under the provisions of this article or of any local
18 law, ordinance or resolution adopted pursuant to such article twenty-
19 nine; provided, however, that if the commissioner shall have fixed an
20 effective rate of tax applicable to any or all of his or her receipts,
21 amusement charges and rents as provided in subdivision (d) of this
22 section, any such person may elect, with reference to such receipts,
23 amusement charges and rents and subject to approval by the commissioner
24 and to such regulations as the commissioner may promulgate, to pay to
25 the commissioner at the time of filing his or her return the total of
26 the following, less any amounts already deposited into the person's
27 escrow account and collected by or available for collection by the
28 commissioner:
29 (c) [(1)] The provisions of subdivisions (a) and (b) of this section
30 shall not be applicable to[: (i)] a person filing a short-form, part-
31 quarterly return as defined in paragraph [(ii)] two of subdivision (a)
32 of section eleven hundred thirty-six [hereof] of this part who, at the
33 time of such filing shall pay to the tax commission one-third of the
34 total state and local sales and compensating use taxes payable by the
35 person to the tax commission in the comparable quarter of the immediate-
36 ly preceding year under this article and as taxes imposed pursuant to
37 the authority of article twenty-nine with respect to all receipts,
38 amusement charges and rents[, or (ii) a person filing a March estimated
39 return as described in paragraph (ii) of subdivision (c) of section
40 eleven hundred thirty-seven-A hereof who, at the time of such filing
41 shall pay to the tax commission one-third of the sales and compensating
42 use taxes payable by such person to the tax commission in the comparable
43 quarter of the immediately preceding year under this article. Notwith-
44 standing the preceding sentence, for the purposes of subparagraph (ii)
45 of this paragraph, the sales and compensating use taxes payable in the
46 comparable quarter of the immediately preceding year shall not include
47 taxes imposed by section eleven hundred seven or eleven hundred eight of
48 this article or pursuant to the authority of article twenty-nine of this
49 chapter.
50 (2) The provisions of subdivisions (a) and (b) of this section, howev-
51 er, shall apply to a person filing a March estimated return as described
52 in paragraph (i) of subdivision (c) of section eleven hundred
53 thirty-seven-A hereof who, at the time of such filing shall pay to the
54 tax commission the sales and compensating use taxes, that are estimated
55 to be payable by such person for such month of March. Notwithstanding
56 the preceding sentence, for the purposes of this paragraph, the sales
A. 1453 7
1 and compensating use taxes that are estimated to be payable by such
2 person for such month of March shall not include taxes imposed by
3 section eleven hundred seven or eleven hundred eight of this article or
4 pursuant to the authority of article twenty-nine of this chapter].
5 § 8. Paragraph 3 of subdivision (e) of section 1137 of the tax law is
6 REPEALED.
7 § 9. Paragraphs 1 and 2 of subdivision (f) of section 1137 of the tax
8 law, paragraph 1 as amended by section 1 of part X of chapter 57 of the
9 laws of 2010 and paragraph 2 as amended by section 1 of part H of chap-
10 ter 62 of the laws of 2006, are amended to read as follows:
11 (1) Except as otherwise provided in this subdivision, a person
12 required to collect tax who files a return required to be filed under
13 section eleven hundred thirty-six of this part for a quarterly or longer
14 period shall be allowed a credit against the taxes and fees required to
15 be reported on, and paid with, such return, in an amount as determined
16 in paragraph two of this subdivision, but only where such person files
17 the return on or before the filing due date and pays or pays over with
18 such return the total amount shown on such return (determined with
19 regard to this subdivision) and further only where the amounts deposited
20 by the person into the person's escrow account during the period covered
21 by the filing are equal to at least ninety-five percent of the total tax
22 due; provided, however, that no credit pursuant to this subdivision
23 shall be allowed for any person who files or is required to file a
24 return pursuant to paragraph two of subdivision (a) of section eleven
25 hundred thirty-six of this part or any person who pays or is required to
26 pay tax pursuant to section ten of this chapter.
27 (2) The amount of the credit authorized by paragraph one of this
28 subdivision shall be five percent of the amount of taxes and fees (but
29 not including any penalty or interest thereon) required to be reported
30 on, and paid or paid over with, the return but only if the return is
31 filed on or before the filing due date, but not more than [two] five
32 hundred dollars, for each quarterly or longer period[, except that, with
33 respect to returns required to be filed for quarterly or longer periods
34 ending on or before the last day of February, two thousand seven, the
35 amount of the credit shall be not more than one hundred seventy-five
36 dollars for each such quarterly or longer period].
37 § 10. Section 1137-A of the tax law is REPEALED.
38 § 11. Section 1145 of the tax law is amended by adding a new subdivi-
39 sion (l) to read as follows:
40 (l)(1) In addition to any other penalty provided by this article or
41 any other law, any person failing to establish or properly fund an
42 escrow account required by subparagraph (i), (ii), (iii) or (iv) of
43 paragraph one of subdivision (a) of section eleven hundred thirty-two of
44 this part shall be subject to an additional penalty of ten percent of
45 the amount of tax due if such failure is for not more than one month,
46 with an additional one percent for each additional month or fraction
47 thereof during which such failure continues, not exceeding thirty
48 percent in the aggregate.
49 (2) If the amount paid by the person required to collect the tax into
50 their escrow account is less than ninety percent than the amount of
51 taxes owed, as shown in the person's quarterly, part-quarterly or annual
52 return, the person shall owe a penalty equal to fifty percent of the
53 delinquency. In addition, if the escrow account maintained by the person
54 is an ACCPC escrow account, the commissioner may issue a notice requir-
55 ing the person to increase the person's algorithmic rate by an amount
56 not exceeding twice the amount of the deficiency and this increased
A. 1453 8
1 algorithmic rate shall continue as long as the commissioner determines
2 that such increased rate is necessary.
3 § 12. This act shall take effect September 1, 2022; provided that the
4 amendments to subparagraph (A) of paragraph 4 of subdivision (a) of
5 section 1134 of the tax law made by section three of this act shall be
6 subject to the expiration and reversion of such subparagraph pursuant to
7 section 23 of part U of chapter 61 of the laws of 2011, as amended, when
8 upon such date the provisions of section four of this act shall take
9 effect. Effective immediately the addition, amendment and/or repeal of
10 any rule or regulation necessary for the implementation of this act on
11 its effective date are authorized to be made and completed on or before
12 such date.
