N.Y. TAX Law § 685 — New York Code / Act TAX / Article 22 / Part 6 / Section 685
Additions to tax and civil penalties
Status: in_force

§ 685. Additions to tax and civil penalties.--(a) (1) Failure to file\ntax return.--\n  (A) In case of failure to file a tax return under this article on or\nbefore the prescribed date (determined with regard to any extension of\ntime for filing), unless it is shown that such failure is due to\nreasonable cause and not due to willful neglect, there shall be added to\nthe amount required to be shown as tax on such return five percent of\nthe amount of such tax if the failure is for not more than one month,\nwith an additional five percent for each additional month or fraction\nthereof during which such failure continues, not exceeding twenty-five\npercent in the aggregate.\n  (B) In the case of a failure to file a return of tax within sixty days\nof the date prescribed for filing of such return (determined with regard\nto any extension of time for filing), unless it is shown that such\nfailure is due to reasonable cause and not due to willful neglect, the\naddition to tax under subparagraph (A) of this paragraph shall not be\nless than the lesser of one hundred dollars or one hundred percent of\nthe amount required to be shown as tax on such return.\n  (C) For purposes of this paragraph, the amount of tax required to be\nshown on the return shall be reduced by the amount of any part of the\ntax which is paid on or before the date prescribed for payment of the\ntax and by the amount of any credit against the tax which may be claimed\nupon the return.\n  (2) Failure to pay tax shown on return.--In case of failure to pay the\namounts shown as tax on any return required to be filed under this\narticle on or before the prescribed date (determined with regard to any\nextension of time for payment), unless it is shown that such failure is\ndue to reasonable cause and not due to willful neglect, there shall be\nadded to the amount shown as tax on such return one-half of one per cent\nof the amount of such tax if the failure is not for more than one month,\nwith an additional one-half of one per cent for each additional month or\nfraction thereof during which such failure continues, not exceeding\ntwenty-five per cent in the aggregate. For the purpose of computing the\naddition for any month, the amount of tax shown on the return shall be\nreduced by the amount of any part of the tax which is paid on or before\nthe beginning of such month and by the amount of any credit against the\ntax which may be claimed upon the return. If the amount of tax required\nto be shown on a return is less than the amount shown as tax on such\nreturn, this paragraph shall be applied by substituting such lower\namount.\n  (3) Failure to pay tax required to be shown on return.--In case of\nfailure to pay any amount in respect of any tax required to be shown on\na return required to be filed under this article which is not so shown\n(including an assessment made pursuant to subsection (a) of section six\nhundred eighty-two of this article) within twenty-one calendar days of\nthe date of a notice and demand therefor (ten business days if the\namount for which such notice and demand is made equals or exceeds one\nhundred thousand dollars), unless it is shown that such failure is due\nto reasonable cause and not due to willful neglect, there shall be added\nto the amount of tax stated in such notice and demand one-half of one\npercent of such tax if the failure is not for more than one month, with\nan additional one-half of one percent for each additional month or\nfraction thereof during which such failure continues, not exceeding\ntwenty-five percent in the aggregate. For the purpose of computing the\naddition for any month, the amount of tax stated in the notice and\ndemand shall be reduced by the amount of any part of the tax which is\npaid before the beginning of such month.\n  (4) Limitations on additions.--\n  (A) With respect to any return, the amount of the addition under\nparagraph one of this subsection shall be reduced by the amount of the\naddition under paragraph two of this subsection for any month to which\nan addition applies under both paragraphs one and two. In any case\ndescribed in subparagraph (B) of such paragraph one, the amount of the\naddition under such paragraph one shall not be reduced below the amount\nprovided in such subparagraph.\n  (B) With respect to any return, the maximum amount of the addition\npermitted under paragraph three of this subsection shall be reduced by\nthe amount of the addition under paragraph one of this subsection\n(determined without regard to subparagraph (B) of such paragraph) which\nis attributable to the tax for which the notice and demand is made and\nwhich is not paid within ten days of such notice and demand.\n  (b) Deficiency due to negligence.--\n  (1) If any part of a deficiency is due to negligence or intentional\ndisregard of this article or rules or regulations hereunder (but without\nintent to defraud), there shall be added to the tax an amount equal to\nfive percent of the deficiency.\n  (2) There shall be added to the tax (in addition to the amount\ndetermined under paragraph one of this subsection) an amount equal to\nfifty percent of the interest payable under section six hundred\neighty-four with respect to the portion of the underpayment described in\nsuch paragraph one which is attributable to the negligence or\nintentional disregard referred to in such paragraph one, for the period\nbeginning on the last date prescribed by law for payment of such\nunderpayment (determined without regard to any extension) and ending on\nthe date of the assessment of the tax (or, if earlier, the date of the\npayment of the tax).\n  (3) If any payment is shown on a return made by a payor with respect\nto dividends, patronage dividends and interest under subsection (a) of\nsection six thousand forty-two, subsection (a) of section six thousand\nforty-four or subsection (a) of section six thousand forty-nine of the\ninternal revenue code, respectively, and the payee fails to include any\nportion of such payment in New York adjusted gross income, any portion\nof an underpayment attributable to such failure shall be treated, for\npurposes of this subsection, as due to negligence in the absence of\nclear and convincing evidence to the contrary. If any penalty is imposed\nunder this subsection by reason of the preceding sentence, the amount of\nthe penalty imposed by paragraph one of this subsection shall be five\npercent of the portion of the underpayment which is attributable to the\nfailure described in the preceding sentence.\n  (c) Failure by individual to pay estimated income tax.--\n  (1) Addition to the tax.--Except as otherwise provided in this\nsubsection and subsection (d) of this section, in the case of any\nunderpayment of estimated tax by an individual, there shall be added to\nthe tax under this article for the taxable year an amount determined by\napplying the underpayment rate established under subsection (j) of\nsection six hundred ninety-seven of this part, or if no rate is set, at\nthe rate of seven and one-half percent per annum, to the amount of the\nunderpayment for the period of the underpayment. Such period shall run\nfrom the due date for the required installment to the earlier of the\nfifteenth day of the fourth month following the close of the taxable\nyear or, with respect to any portion of the underpayment, the date on\nwhich such portion is paid. For purposes of determining such date, a\npayment of estimated tax shall be credited against unpaid required\ninstallments in the order in which such installments are required to be\npaid. There shall be four required installments for each taxable year,\ndue on April fifteenth, June fifteenth and September fifteenth of such\ntaxable year and on January fifteenth of the following taxable year.\n  (2) Amount of underpayment.--For purposes of paragraph one, the amount\nof the underpayment shall be the excess of the required installment over\nthe amount, if any, of the installment paid on or before the due date\nfor the installment.\n  (3) Required installment. (A) Except as provided in paragraph four of\nthis subsection, the amount of any required installment shall be\ntwenty-five percent of the required annual payment.\n  (B) The required annual payment is the lesser of\n  (i) ninety percent of the tax shown on the return for the taxable year\n(or, if no return is filed, ninety percent of the tax for such year), or\n  (ii) one hundred percent of the tax shown on the return of the\nindividual for the preceding taxable year. Provided, however, the tax\nshown on such return for taxable years beginning in two thousand two\nshall be the tax calculated as if such years began in two thousand\nthree. Provided further, however, that the tax shown on such return for\ntaxable years beginning in two thousand eight shall be calculated as if\nparagraph three of subsection (f) of section six hundred fifteen of this\narticle has been in effect for taxable years beginning in two thousand\neight. Further provided that the tax shown on such return for taxable\nyears beginning in two thousand eight shall be the tax calculated as if\nsuch years began in two thousand nine. Provided, however, that the tax\nshown on such return for taxable years beginning in two thousand nine\nshall be calculated as if paragraph two of subsection (g) of section six\nhundred fifteen of this article was in effect for taxable years\nbeginning in two thousand nine and ending before two thousand thirteen.\n  Clause (ii) of this subparagraph shall not apply if the preceding\ntaxable year was not a taxable year of twelve months or if the\nindividual did not file a return for such preceding taxable year.\n  (C) Limitation on use of preceding year's tax.\n  (i) General. If the New York adjusted gross income shown on the return\nof the individual for the preceding taxable year exceeds one hundred\nfifty thousand dollars, clause (ii) of subparagraph (B) of this\nparagraph shall be applied by substituting "one hundred ten percent" for\n"one hundred percent".\n  (ii) Separate returns. In the case of a husband and wife who file\nseparate returns pursuant to subsection (b) of section six hundred\nfifty-one for the taxable year for which the amount of the installment\nis being determined, clause (i) of this subparagraph shall be applied by\nsubstituting "seventy-five thousand dollars" for "one hundred fifty\nthousand dollars".\n  (4) Annualized income installment.--(A) In general.--In the case of\nany required installment, if the individual establishes that the\nannualized income installment determined under subparagraph (B) of this\nparagraph is less than the amount determined under paragraph three, the\nannualized income installment shall be the required installment. Any\nreduction in a required installment resulting from the application of\nthis subparagraph shall be recaptured by increasing the amount of the\nnext required installment determined under paragraph three by the amount\nof such reduction, and by increasing successive required installments as\nnecessary to effect full recapture.\n  (B) Determination of annualized income installment.--In the case of\nany required installment, the annualized income installment is the\nexcess, if any, of an amount equal to the applicable percentage of the\ntax for the taxable year computed by placing on an annualized basis the\ntaxable income for months in the taxable year ending before the due date\nfor the installment, over the aggregate amount of any prior required\ninstallments for the taxable year. The applicable percentage of the tax\nshall be twenty-two and one-half percent in the case of the first\ninstallment, forty-five percent in the case of the second installment,\nsixty-seven and one-half percent in the case of the third installment\nand ninety percent in the case of the fourth installment, and shall be\ncomputed without regard to any increase in the rates applicable to the\ntaxable year unless such increase was enacted at least thirty days prior\nto the due date of the installment.\n  (5) Definitions and special rules.--(A) Definition of the term tax and\napplication of credits against tax.--For purposes of this subsection and\nsubsection (d), the term "tax" means the tax imposed under this article\nminus the credits against tax allowed under this article, other than the\ncredit under section six hundred seventy-three, relating to tax withheld\non wages. The credit allowed under section six hundred seventy-three for\nthe taxable year shall be deemed a payment of estimated tax, and an\nequal part of such amount shall be deemed paid on each installment due\ndate for such taxable year, unless the taxpayer establishes the dates on\nwhich all amounts were actually withheld, in which case the amounts so\nwithheld shall be deemed payments of estimated tax on the dates on which\nsuch amounts were actually withheld.\n  (B) Special rule where return filed on or before January\nthirty-first.--If, on or before January thirty-first of the following\ntaxable year, the taxpayer files a return for the taxable year and pays\nin full the amount computed on the return as payable, then no addition\nto tax shall be imposed under paragraph one with respect to any\nunderpayment of the fourth required installment for the taxable year.\n  (C) Special rules for farmers and fishermen.--For purposes of this\nsubsection, if an individual is a farmer or fisherman for any taxable\nyear there shall be only one required installment for the taxable year,\ndue on January fifteenth of the following taxable year in an amount\nequal to the required annual payment determined under paragraph three by\nsubstituting sixty-six and two-thirds percent for ninety percent and\nwithout regard to subparagraph (C) of paragraph three of this\nsubsection. Subparagraph (B) of this paragraph shall be applied by\nsubstituting March first for January thirty-first and by treating the\nrequired installment under this subparagraph as the fourth required\ninstallment. An individual is a farmer or fisherman for any taxable year\nif the individual's federal gross income from farming or fishing\n(including oyster farming) for the taxable year is at least two-thirds\nof the total federal gross income from all sources for the taxable year\nor if such individual's federal gross income from farming or fishing\n(including oyster farming) shown on the return of the individual for the\npreceding taxable year is at least two-thirds of the total federal gross\nincome from all sources shown on such return.\n  (D) Fiscal years.--In applying this subsection to a taxable year\nbeginning on any date other than January first, there shall be\nsubstituted, for the months specified in this subsection, the months\nwhich correspond thereto.\n  (E) Short taxable year.--This subsection shall be applied to taxable\nyears of less than twelve months in accordance with regulations\nprescribed by the tax commission.\n  (F) Joint estimated tax of husband and wife.--A husband and wife may\nmake the required annual payment determined under paragraph three as if\nthey were one taxpayer, in which case the liability under paragraph one\nwith respect to the estimated tax shall be joint and several. No such\njoint payment may be made if husband and wife are separated under a\ndecree of divorce or separate maintenance, or if they have different\ntaxable years. If a joint payment is made but husband and wife determine\ntheir taxes under this article separately, the estimated tax for such\nyear may be treated as the estimated tax of either husband or wife, or\nmay be divided between them, as they may elect.\n  (6) Trusts and certain estates. (A) General. This subsection shall\napply to any trust or estate except as provided in subparagraphs (B) and\n(C) of this paragraph.\n  (B) Exception for estates and certain trusts. This subsection shall\nnot apply with respect to any taxable year ending before the date two\nyears after the date of the decedent's death to (i) the estate of such\ndecedent or (ii) any trust all of which was treated (under subpart E of\npart I of subchapter J of chapter one of the internal revenue code) as\nowned by the decedent and to which the residue of the decedent's estate\nwill pass under his will (or, if no will is admitted to probate, which\nis the trust primarily responsible for paying debts, taxes and expenses\nof administration).\n  (C) Special rule for annualizations. In the case of any estate or\ntrust, subparagraph (B) of paragraph four of this subsection shall be\napplied by substituting "ending before the date one month before the due\ndate for the installment" for "ending before the due date for the\ninstallment".\n  (D) In the case of a trust, the trustee may elect to treat any portion\nof a payment of estimated tax made by such trust for any taxable year of\nthe trust as a payment made by a beneficiary of such trust. Any amount\nso treated shall be treated as paid or credited to the beneficiary on\nthe last day of such taxable year, and for purposes of this subsection,\nthe amount so treated shall not be treated as a payment of estimated tax\nmade by the trust, but shall be treated as a payment of estimated tax\nmade by such beneficiary on the January fifteenth following the end of\nthe trust's taxable year.\n  (E) An election under subparagraph (D) of this paragraph shall be made\non or before the sixty-fifth day after the close of the taxable year and\nin such manner as the commissioner of taxation and finance may\nprescribe.\n  (F) Extension to last year of estate.--In the case of a taxable year\nreasonably expected to be the last taxable year of an estate, any\nreference in subparagraph (D) of this paragraph to a trust shall be\ntreated as including a reference to an estate, and the fiduciary of the\nestate shall be treated as the trustee.\n  (d) Exceptions to addition to tax for failure to pay estimated income\ntax.--\n  (1) Where tax is small amount.--No addition to tax shall be imposed\nunder subsection (c) for any taxable year if the tax shown on the return\nfor such taxable year (or, if no return is filed, the tax), reduced by\nthe credit allowable under section six hundred seventy-three, is less\nthan three hundred dollars.\n  (2) Where no tax liability for preceding taxable year.--No addition to\ntax shall be imposed under subsection (c) for any taxable year if the\npreceding taxable year was a taxable year of twelve months, the\nindividual did not have any liability for tax under this article for the\npreceding taxable year and throughout the preceding taxable year the\nindividual was a resident of this state or a nonresident or part-year\nresident who had New York source income.\n  (3) Installment due on or after individual's death.--No addition to\ntax shall be imposed under subsection (c) with respect to any\ninstallment due on or after the individual's death.\n  (4) Waiver in certain cases.--(A) In general.--No addition to tax\nshall be imposed under subsection (c) with respect to any underpayment\nto the extent the tax commission determines that by reason of casualty,\ndisaster or other unusual circumstances the imposition of such addition\nto tax would be against equity and good conscience.\n  (B) Newly retired or disabled individuals.--No addition to tax shall\nbe imposed under subsection (c) with respect to any underpayment if the\ntax commission determines that in the taxable year for which estimated\npayments were required to be made or in the taxable year preceding such\ntaxable year the taxpayer retired after having attained age sixty-two or\nbecame disabled, and that such underpayment was due to reasonable cause\nand not to willful neglect.\n  (e) Deficiency due to fraud.--(1) If any part of a deficiency is due\nto fraud, there shall be added to the tax an amount equal to two times\nthe deficiency.\n  (2) The addition to tax under this subsection shall be in lieu of any\nother addition to tax imposed by subsection (a) or (b).\n  (3) In the case of a joint return under section six hundred fifty-one,\nthis subsection shall not apply with respect to the tax of a spouse\nunless some part of the underpayment is due to the fraud of such spouse.\n  (f) Non-willful failure to pay withholding tax.-- If any employer,\nwithout intent to evade or defeat any tax imposed by this article or the\npayment thereof, shall fail to make a return and pay a tax withheld by\nhim at the time required by or under the provisions of section six\nhundred seventy-four, such employer shall be liable for such tax and\nshall pay the same together with interest thereon and the addition to\ntax provided in subsection (a), and such interest and addition to tax\nshall not be charged to or collected from the employee by the employer.\nThe tax commission shall have the same rights and powers for the\ncollection of such tax, interest and addition to tax against such\nemployer as are now prescribed by this article for the collection of tax\nagainst an individual taxpayer.\n  (g) Willful failure to collect and pay over tax.-- Any person required\nto collect, truthfully account for, and pay over the tax imposed by this\narticle who willfully fails to collect such tax or truthfully account\nfor and pay over such tax or willfully attempts in any manner to evade\nor defeat the tax or the payment thereof, shall, in addition to other\npenalties provided by law, be liable to a penalty equal to the sum of\n(i) the total amount of the tax evaded, or not collected, or not\naccounted for and paid over, and (ii) the interest that has accrued on\nthe total amount of tax evaded on the date this penalty is first imposed\nuntil this penalty is paid with interest thereon. No addition to tax\nunder subsections (b) or (e) of this section shall be imposed for any\noffense to which this subsection applies. The tax commission shall have\nthe power, in its discretion, to waive, reduce or compromise any penalty\nunder this subsection.\n  (h) Failure to file certain information returns.-- (1) Except as\notherwise provided in this paragraph, in case of each failure to file a\nstatement of a payment to another person, required under authority of\nsubsection (d) of section six hundred fifty-eight (relating to\ninformation at source) on the date prescribed therefor (determined with\nregard to any extension of time for filing), unless it is shown that\nsuch failure is due to reasonable cause and not to willful neglect,\nthere shall, upon notice and demand by the commissioner and in the same\nmanner as tax, be paid by the person so failing to file the statement, a\npenalty of fifty dollars for each statement not so filed, but the total\namount imposed on the delinquent person for all such failures during any\ncalendar year shall not exceed ten thousand dollars.\n  (2) If any partnership, S corporation, or trust required to file a\nreturn or report under subsection (c) or subsection (f) of section six\nhundred fifty-eight or under section six hundred fifty-nine or six\nhundred fifty-nine-a of this article for any taxable year fails to file\nsuch return or report at the time prescribed therefor (determined with\nregard to any extension of time for filing), or files a return or report\nwhich fails to show the information required under such subsection (c)\nof section six hundred fifty-nine of this article, or files a return or\nreport which fails to show the information required under subsection (d)\nof section six hundred fifty-nine-a of this article, unless it is shown\nthat such failure is due to reasonable cause and not due to willful\nneglect, there shall, upon notice and demand by the commissioner and in\nthe same manner as tax, be paid by the partnership or S corporation a\npenalty for each month (or fraction thereof) during which such failure\ncontinues (but not to exceed five months). The amount of such penalty\nfor any month is the product of fifty dollars, multiplied by the number\nof partners in the partnership or shareholders in the S corporation\nduring any part of the taxable year who were subject to tax under this\narticle during any part of such taxable year, except that, in the case\nof a trust, the penalty shall be equal to one hundred fifty dollars a\nmonth up to a maximum of fifteen hundred dollars per taxable year.\n  (i) Additional penalty.--Any person who with fraudulent intent shall\nfail to pay, or to deduct or withhold and pay, any tax, or to make,\nrender, sign or certify any return, or to supply any information within\nthe time required by or under this article, shall be liable to penalty\nof not more than one thousand dollars, in addition to any other amounts\nrequired under this article, to be imposed, assessed and collected by\nthe tax commission. The tax commission shall have the power, in its\ndiscretion, to waive, reduce or compromise any penalty under this\nsubsection.\n  (j) Fraudulent statement or failure to furnish statement to employee.\n-- In addition to any criminal penalties provided by law, any person\nrequired under the provisions of section six hundred seventy-two to\nfurnish a statement to an employee, who wilfully furnishes a false or\nfraudulent statement, or who wilfully fails to furnish a statement in\nthe manner, at the time, and showing the information required under\nsection six hundred seventy-two, or regulations prescribed thereunder,\nshall for each such failure be subject to a penalty under this article\nof fifty dollars.\n  (k) Failure to supply identifying numbers. -- If any person who is\nrequired by regulations prescribed under subsection (b) of section six\nhundred fifty-eight\n  (1) to include his identifying number in any return, statement, or\nother document;\n  (2) to furnish his identifying number to another person; or\n  (3) to include in any return, statement or other document made with\nrespect to another person the identifying number of such other person,\nfails to comply with such requirement at the time prescribed by such\nregulations, such person shall, unless it is shown that such failure is\ndue to reasonable cause and not due to willful neglect, pay a penalty of\nfive dollars for each such failure described in paragraph one of this\nsubsection and fifty dollars for each such failure described in\nparagraphs two and three of this subsection, except that the total\namount imposed on such person for all such failures during any calendar\nyear shall not exceed ten thousand dollars; except that for failure to\ninclude his own identification number in any return, statement or other\ndocument, such penalty shall not be imposed unless such person shall\nhave failed to supply his identification number to the tax commission\nwithin thirty days after demand therefor.\n  (l) Additions treated as tax. -- The additions to tax and penalties\nprovided by this section shall be paid upon notice and demand and shall\nbe assessed, collected and paid in the same manner as taxes, and any\nreference in this article to income tax or tax imposed by this article,\nshall be deemed also to refer to the additions to tax and penalties\nprovided by this section. For purposes of section six hundred\neighty-one, this subsection shall not apply to --\n  (1) any addition to tax under subsection (a) except as to that portion\nattributable to a deficiency;\n  (2) any addition to tax under subsection (c);\n  (3) any penalty under subsection (h) and any additional penalty under\nsubsection (i); and\n  (4) any penalties under subsections (j), (k), (q), (r), (s), (u), (v)\nand (w).\n  (m) Determination of deficiency. -- For purposes of subsections (b)\nand (e), the amount shown as the tax by the taxpayer upon his return\nshall be taken into account in determining the amount of the deficiency\nonly if such return was filed on or before the last day prescribed for\nthe filing of such return, determined with regard to any extension of\ntime for such filing.\n  (n) Person defined. For purposes of subsections (g), (i), (o), (q) and\n(r), the term person includes an individual, corporation, partnership or\nlimited liability company or an officer or employee of any corporation\n(including a dissolved corporation), or a member or employee of any\npartnership, or a member, manager or employee of a limited liability\ncompany, who as such officer, employee, manager or member is under a\nduty to perform the act in respect of which the violation occurs.\n  (o) Failure to make deposits of taxes. -- In case of failure by any\nperson required by this article, or by regulations of the tax commission\nunder this article, to deposit on the date prescribed therefor any\namount of tax imposed by this article in a depository authorized\npursuant to subsection (a) of section six hundred ninety-two of this\narticle to receive such deposits, unless it is shown that such failure\nis due to reasonable cause and not due to willful neglect, there shall\nbe imposed on such person a penalty of five per cent of the amount of\nthe underpayment. For purposes of this subsection the term\n"underpayment" means the excess of the amount of the tax required to be\nso deposited over the amount, if any, thereof, deposited on or before\nthe date prescribed therefor.\n  * (p) Substantial understatement of liability.-- (1) If there is a\nsubstantial understatement of income tax for any taxable year, there\nshall be added to the tax an amount equal to ten percent of the amount\nof any underpayment attributable to such understatement. For purposes of\nthis subsection, there is a substantial understatement of income tax for\nany taxable year if the amount of the understatement for the taxable\nyear exceeds the greater of ten percent of the tax required to be shown\non the return for the taxable year, or two thousand dollars. For\npurposes of the preceding sentence, the term "understatement" means the\nexcess of the amount of the tax required to be shown on the return for\nthe taxable year, over the amount of tax imposed which is shown on the\nreturn reduced by any rebate (within the meaning of subsection (g) of\nsection six hundred eighty-one). The excess under the preceding sentence\nshall be determined without regard to items to which subsection (p-1) of\nthis section applies. The commissioner may waive all or any part of the\naddition to tax provided by this subsection on a showing by the taxpayer\nthat there was reasonable cause for the understatement, or part thereof,\nand that the taxpayer acted in good faith.\n  (2) The amount of the understatement under paragraph (1) shall be\nreduced by that portion of the understatement which is attributable to\n(A) the tax treatment of any item by the taxpayer if there is or was\nsubstantial authority for such treatment, or (B) any item if the\nrelevant facts affecting the item's tax treatment are adequately\ndisclosed in the return or in a statement attached to the return.\n  (3)(A) Subparagraph (B) of paragraph two of this subsection shall not\napply to any item attributable to a tax shelter.\n  (B) For purposes of this paragraph, the term "tax shelter" means\n  (i) a partnership or other entity,\n  (ii) any investment plan or arrangement, or\n  (iii) any other plan or arrangement,\nif a significant purpose of such partnership, entity, plan, or\narrangement is the avoidance or evasion of tax.\n  * NB Effective until July 1, 2029\n  * (p) Substantial understatement of liability.--If there is a\nsubstantial understatement of income tax for any taxable year, there\nshall be added to the tax an amount equal to ten percent of the amount\nof any underpayment attributable to such understatement. For purposes of\nthis subsection, there is a substantial understatement of income tax for\nany taxable year if the amount of the understatement for the taxable\nyear exceeds the greater of ten percent of the tax required to be shown\non the return for the taxable year, or two thousand dollars. For\npurposes of the preceding sentence, the term "understatement" means the\nexcess of the amount of the tax required to be shown on the return for\nthe taxable year, over the amount of tax imposed which is shown on the\nreturn reduced by any rebate (within the meaning of subsection (g) of\nsection six hundred eighty-one). The amount of such understatement shall\nbe reduced by that portion of the understatement which is attributable\nto the tax treatment of any item by the taxpayer if there is or was\nsubstantial authority for such treatment, or any item with respect to\nwhich the relevant facts affecting the item's tax treatment are\nadequately disclosed in the return or in a statement attached to the\nreturn. The tax commission may waive all or any part of the addition to\ntax provided by this subsection on a showing by the taxpayer that there\nwas reasonable cause for the understatement, or part thereof, and that\nthe taxpayer acted in good faith.\n  * NB Effective July 1, 2029\n  * (p-1) Reportable transaction understatement.-- (1) If a taxpayer has\na reportable transaction understatement for any taxable year, there\nshall be added to the tax an amount equal to twenty percent of the\namount of such understatement.\n  (2) For purposes of this section, the term "reportable transaction\nunderstatement" means the sum of:\n  (A) the product of--\n  (i) the amount of the increase (if any) in the applicable tax base\nwhich results from a difference between the proper tax treatment of an\nitem to which this section applies and the taxpayer's treatment of such\nitem (as shown on the taxpayer's return of tax), and\n  (ii) the highest rate of tax imposed by this article, and\n  (B) the amount of the decrease (if any) in the aggregate amount of\ncredits determined under this article which results from a difference\nbetween the taxpayer's treatment of an item to which this section\napplies (as shown on the taxpayer's return of tax) and the proper tax\ntreatment of such item.\n  For purposes of subparagraph (A) of this paragraph, any reduction of\nthe excess of deductions allowed for the taxable year over gross income\nfor such year, and any reduction in the amount of capital losses which\nwould (without regard to section one thousand two hundred eleven of the\ninternal revenue code) be allowed for such year, shall be treated as an\nincrease in the applicable tax base.\n  (3) This subsection shall apply to any item which is attributable to--\n  (A) any listed transaction, and\n  (B) any reportable transaction (other than a listed transaction) if a\nsignificant purpose of such transaction is the avoidance or evasion of\ntax.\n  (4) Paragraph one of this subsection shall be applied by substituting\n"thirty percent" for "twenty percent" with respect to the portion of any\nreportable transaction understatement with respect to which the\nrequirement of clause (i) of subparagraph (B) of paragraph ten of this\nsubsection is not met.\n  (5) For purposes of this subsection, the terms "reportable\ntransaction" and "listed transaction" have the meanings given to such\nterms by section twenty-five of this chapter, the term "reportable\ntransaction" shall include a "New York reportable transaction" as\ndefined in such section twenty-five, and the term "listed transaction"\nshall include any transaction designated as a tax avoidance transaction\npursuant to such section twenty-five.\n  (6) In the case of an understatement (as defined in subsection (p) of\nthis section):\n  (A) the amount of such understatement (determined without regard to\nthis paragraph) shall be increased by the aggregate amount of reportable\ntransaction understatements for purposes of determining whether such\nunderstatement is a substantial understatement under subsection (p) of\nthis section, and (B) the addition to tax under subsection (p) of this\nsection shall apply only to the excess of the amount of the substantial\nunderstatement (if any) after the application of this subparagraph over\nthe aggregate amount of reportable transaction understatements.\n  (7) References to an understatement (or a deficiency) in subsection\n(e) of this section shall be treated as including references to a\nreportable transaction understatement.\n  (8) This subsection shall not apply to any portion of any\nunderstatement on which a penalty is imposed under subsection (e) of\nthis section.\n  (9) Except as provided in regulations prescribed by the commissioner,\nin no event shall any tax treatment included with an amendment or\nsupplement to a return of tax be taken into account in determining the\namount of any reportable transaction understatement if the amendment or\nsupplement is filed after the earlier of the date the taxpayer is first\ncontacted by the commissioner regarding the examination of the return or\nsuch other date as is specified by the commissioner.\n  (10)(A) No penalty shall be imposed under this subsection with respect\nto any portion of a reportable transaction understatement if it is shown\nthat there was a reasonable cause for such portion and that the taxpayer\nacted in good faith with respect to such portion.\n  (B) Subparagraph (A) of this paragraph shall not apply to any\nreportable transaction understatement unless\n  (i) the relevant facts affecting the tax treatment of the item are\nadequately disclosed in accordance with section twenty-five of this\nchapter,\n  (ii) there is or was substantial authority for such treatment, and\n  (iii) the taxpayer reasonably believed that such treatment was more\nlikely than not the proper treatment.\nA taxpayer failing to adequately disclose in accordance with section\ntwenty-five of this chapter shall be treated as meeting the requirements\nof clause (i) of this subparagraph if the penalty for such failure was\nrescinded under subsection (x) of this section.\n  (11)(A) A taxpayer shall be treated as having a reasonable belief with\nrespect to the tax treatment of an item only if such belief\n  (i) is based on the facts and law that exist at the time the return\nwhich includes such tax treatment is filed, and\n  (ii) relates solely to the taxpayer's chances of success on the merits\nof such treatment and does not take into account the possibility that a\nreturn will not be audited, such treatment will not be raised on audit,\nor such treatment will be resolved through settlement if it is raised.\n  (B)(i) An opinion of a tax advisor may not be relied upon to establish\nthe reasonable belief of a taxpayer if\n  (I) the tax advisor is described in clause (ii) of this subparagraph,\nor\n  (II) the opinion is described in clause (iii) of this subparagraph.\n  (ii) A tax advisor is described in this clause if the tax advisor\n  (I) is a material advisor (within the meaning of section six thousand\none hundred eleven of the internal revenue code or within such meaning\nas it also applies to a New York reportable transaction as defined in\nsection twenty-five of this chapter) and participates in the\norganization, management, promotion, or sale of the transaction or is\nrelated (within the meaning of subsection (b) of section two hundred\nsixty-seven of the internal revenue code or subsection (b) of section\nseven hundred seven of the internal revenue code) to any person who so\nparticipates,\n  (II) is compensated directly or indirectly by a material advisor with\nrespect to the transaction,\n  (III) has a fee arrangement with respect to the transaction which is\ncontingent on all or part of the intended tax benefits from the\ntransaction being sustained, or\n  (IV) has a disqualifying financial interest with respect to the\ntransaction.\n  (iii) For purposes of clause (i) of this subparagraph, an opinion is\ndisqualified if the opinion\n  (I) is based on unreasonable factual or legal assumptions (including\nassumptions as to future events),\n  (II) unreasonably relies on representations, statements, findings, or\nagreements of the taxpayer or any other person,\n  (III) does not identify and consider all relevant facts, or\n  (IV) fails to meet any other requirement as the commissioner may\nprescribe.\n  * NB Repealed July 1, 2029\n  (p-2) No penalty will be imposed pursuant to subsection (c) or (p) of\nthis section for a taxable year beginning on or after January first, two\nthousand eight and before January first, two thousand nine resulting\nfrom the denial of an empire zone tax credit claimed by the taxpayer\nbecause an empire zone retention certificate was not issued pursuant to\nsubdivision (w) of section nine hundred fifty-nine of the general\nmunicipal law to the empire zone enterprise which is the basis for the\ntax credit or credits claimed on the return.\n  (q) Frivolous tax returns and specified frivolous submissions.-- (1)\nIf any individual files what purports to be a return of any tax imposed\nby this article but which does not contain information on which the\nsubstantial correctness of the self-assessment may be judged, or\ncontains information that on its face indicates that the self-assessment\nis substantially incorrect; and such conduct is due to a position which\nis frivolous, including a position identified as frivolous under\nparagraph three of this subsection, or an intent to delay or impede the\nadministration of this article, then such individual shall pay a penalty\nnot exceeding five thousand dollars. This penalty shall be in addition\nto any other penalty provided by law.\n  (2) Penalty for specified frivolous submissions. (A) Any person who\nsubmits a specified frivolous submission shall pay a penalty of five\nthousand dollars. This penalty shall be in addition to any other penalty\nprovided by law.\n  (B) The term "specified frivolous submission" means a specified\nsubmission if any portion of that submission (i) is based on a position\nthat the commissioner has identified as frivolous under paragraph three\nof this subdivision, or (ii) reflects a desire to delay or impede the\nadministration of this chapter.\n  (C) The term "specified submission" means a request for conciliation\nconference, a petition to the division of tax appeals, an application\nfor an installment payment agreement, or an offer in compromise.\n  (D) If the commissioner provides an individual with notice that a\nsubmission is a specified frivolous submission and that person withdraws\nthe submission within thirty days after such notice, the penalty imposed\nunder this paragraph will not apply with respect to that submission.\n  (3) Listing of frivolous positions. The commissioner will prescribe\n(and periodically revise) a list of positions that the commissioner has\nidentified as frivolous for purposes of this subsection.\n  (4) Reduction of penalty. The commissioner may reduce the amount of\nany penalty imposed under this section if the commissioner determines\nthat such a reduction would promote compliance with and administration\nof this chapter.\n  (r) Aiding or assisting in the giving of fraudulent returns, reports,\nstatements or other documents.--(1) Any person who, with the intent that\ntax be evaded, shall, for a fee or other compensation or as an incident\nto the performance of other services for which such person receives\ncompensation, aid or assist in, or procure, counsel, or advise the\npreparation or presentation under, or in connection with any matter\narising under this article of any return, report, declaration, statement\nor other document which is fraudulent or false as to any material\nmatter, or supply any false or fraudulent information, whether or not\nsuch falsity or fraud is with the knowledge or consent of the person\nauthorized or required to present such return, report, declaration,\nstatement or other document shall pay a penalty not exceeding five\nthousand dollars.\n  (2) For purposes of paragraph one of this subsection, the term\n"procures" includes ordering (or otherwise causing) a subordinate to do\nan act, and knowing of, and not attempting to prevent, participation by\na subordinate in an act. The term "subordinate" means any other person\n(whether or not a director, officer, employee, or agent of the taxpayer\ninvolved) over whose activities the person has direction, supervision,\nor control.\n  (3) For purposes of paragraph one of this subsection, a person\nfurnishing typing, reproducing, or other mechanical assistance with\nrespect to a document shall not be treated as having aided or assisted\nin the preparation of such document by reason of such assistance.\n  (4) The penalty imposed by this subsection shall be in addition to any\nother penalty provided by law.\n  (s) False information with respect to withholding.--In addition to any\ncriminal penalty provided by law, if any individual makes a statement\nunder section six hundred seventy-one which results in a decrease in the\namounts deducted and withheld under part five of this article, and as of\nthe time such statement was made, there was no reasonable basis for such\nstatement, such individual shall pay a penalty of five hundred dollars\nfor such statement. The tax commission shall waive the penalty imposed\nunder this subsection if the taxes imposed with respect to the\nindividual under this article for the taxable year are equal to or less\nthan the sum of the credits against such taxes allowed by this article,\nand the payments of estimated tax which are considered payments on\naccount of such taxes.\n  (t) Unwarranted reduction in utility costs in an empire zone. If\nduring a taxable year a taxpayer has received a reduction in the rate\ncharged for gas, electric, steam or water sold, or gas, electric, steam\nor water service rendered, pursuant to subdivision eight of section one\nhundred eighty-six-a of this chapter, based upon a certification as to\nthe claiming of a credit under subsection (k) of section six hundred six\nof this article, and it is finally determined that such taxpayer is not\nentitled to such credit in any part, such taxpayer shall be liable to a\npenalty in an amount equal to such reduction in cost, with interest from\nthe last day of such year, at the rate applicable to underpayments of\ntax pursuant to this article. The tax commission shall have the power,\nin its discretion, to waive, reduce or compromise such penalty.\n  (u) Failure of tax return preparer to conform to certain\nrequirements.--(1) Failure to sign return or claim for refund. If a tax\nreturn preparer who is required pursuant to paragraph one of subsection\n(g) of section six hundred fifty-eight of this article to sign a return\nor claim for refund fails to comply with such requirement with respect\nto such return or claim for refund, the tax return preparer shall be\nsubject to a penalty of two hundred fifty dollars for each such failure\nto sign, unless it is shown that such failure is due to reasonable cause\nand not due to willful neglect. The maximum penalty imposed under this\nparagraph on any tax return preparer with respect to returns filed\nduring any calendar year by the tax return preparer must not exceed ten\nthousand dollars. Provided, however, that if a tax return preparer has\nbeen penalized under this paragraph for a preceding calendar year and\nagain fails to sign his or her name on any return that requires the tax\nreturn preparer's signature during a subsequent calendar year, then the\npenalty under this paragraph for each failure will be five hundred\ndollars, and no annual cap will apply. This paragraph shall not apply if\nthe penalty under paragraph three of subsection (g) of section\nthirty-two of this chapter is imposed on the tax return preparer with\nrespect to such return or claim for refund.\n  (2) Failure to furnish identifying number. If a tax return preparer\nfails to include any identifying number required to be included on any\nreturn or claim for refund pursuant to paragraph two of subsection (g)\nof section six hundred fifty-eight of this article, the tax return\npreparer shall be subject to a penalty of one hundred dollars for each\nsuch failure, unless it is shown that such failure is due to reasonable\ncause and not willful neglect. The maximum penalty imposed under this\nparagraph on any tax return preparer with respect to returns filed\nduring any calendar year must not exceed two thousand five hundred\ndollars; provided, however, that if a tax return preparer has been\npenalized under this paragraph for a preceding calendar year and again\nfails to include the identifying number on one or more returns during a\nsubsequent calendar year, then the penalty under this paragraph for each\nfailure will be two hundred fifty dollars, and no annual cap will apply.\nthis paragraph shall not apply if the penalty under paragraph four of\nsubsection (g) of section thirty-two of this chapter is imposed on the\ntax return preparer with respect to such return or claim for refund.\n  (3) Failure to furnish copy to taxpayer. Any person who is a tax\nreturn preparer with respect to any return or claim for refund, who is\nrequired under paragraph three of subsection (g) of section six hundred\nfifty-eight of this article to furnish a copy of such return or claim\nfor refund to the taxpayer, and who fails to comply with such provision\nwith respect to such return or claim for refund, shall be subject to a\npenalty of fifty dollars for each such failure, unless it is shown that\nsuch failure is due to reasonable cause and not due to willful neglect.\nThe maximum penalty imposed under this paragraph on any person with\nrespect to returns or claims for refund filed during any calendar year\nshall not exceed twenty-five thousand dollars.\n  (4) Failure to retain copy or list. Any person who is a tax return\npreparer with respect to any return or claim for refund, who is required\nunder paragraph four of subsection (g) of section six hundred\nfifty-eight of this article to: (i) retain a copy of such return or\nclaim for refund or retain on a list the name and taxpayer identifying\nnumber of the taxpayer for whom such return or claim for refund was\nprepared and (ii) make such copy or list available for inspection upon\nrequest by the commissioner, and who fails to comply with the retention\nrequirement or who complies with the retention requirement but fails to\ncomply with such request by the commissioner, shall be subject to a\npenalty of fifty dollars for each such failure, unless it is shown that\nsuch failure is due to reasonable cause and not due to willful neglect.\nThe maximum penalty imposed under this paragraph on any person with\nrespect to any calendar year shall not exceed twenty-five thousand\ndollars.\n  * (5) Failure to electronically file. If a tax return preparer is\nrequired to file returns electronically pursuant to paragraph ten of\nsubsection (g) of section six hundred fifty-eight of this article, and\nsuch preparer fails to file one or more of such returns electronically,\nthen such preparer shall be subject to a penalty of fifty dollars for\neach such failure to electronically file a return, unless it is shown\nthat such failure is due to reasonable cause and not due to willful\nneglect.\n  * NB Effective January 1, 2030\n  (6) For purposes of this subsection, the term "tax return preparer"\nshall have the same meaning as defined in paragraph five of subsection\n(g) of section six hundred fifty-eight of this article.\n  (v) Failure to perform certain acts with respect to the quarterly\ncombined withholding, wage reporting and unemployment insurance return.\n(1) Failure to file. (A) Delinquency. (i) General. If an employer fails\nto file a quarterly combined withholding, wage reporting and\nunemployment insurance return, or any portion thereof, as required by\nparagraph four of subsection (a) of section six hundred seventy-four of\nthis article, then such employer shall, unless it is shown that such\nfailure is due to reasonable cause and not due to willful neglect, pay a\npenalty equal to the greater of one thousand dollars or the product of\nfifty dollars multiplied by the number of employees shown on the last\nquarterly combined withholding, wage reporting and unemployment\ninsurance return filed by such employer, or if no such return has been\nfiled, the number of employees may be estimated by the commissioner from\nany information in the commissioner's possession. The total amount of\nthe penalty imposed by this clause on an employer for any such failure\nshall not exceed ten thousand dollars.\n  (ii) Coordination of delinquency penalty with other additions to tax\nand penalties for failure to file. Except as otherwise provided in\nsubparagraph (C) of this paragraph, an employer failing to file the\nquarterly combined withholding, wage reporting and unemployment\ninsurance return, or any portion thereof, shall only be liable for the\npenalty prescribed by this subparagraph; such employer shall not be\nliable for the addition to tax prescribed by paragraph one of subsection\n(a) of this section or for the penalty prescribed by paragraph (b) of\nsubdivision two of section five hundred eighty-one of the labor law.\n  (B) Late filing. (i) Within thirty days of notice. If an employer\nfails to file a quarterly combined withholding, wage reporting and\nunemployment insurance return, or any portion thereof, by the due date\nprescribed by paragraph four of subsection (a) of section six hundred\nseventy-four of this article, but files such return or any such portion\nthereof within thirty days after the date the department sends notice of\nsuch failure to such employer by certified mail, then the penalty\nprescribed by subparagraph (A) of this paragraph shall be abated. In\naddition, such employer shall not be liable for the addition to tax\nprescribed by paragraph one of subsection (a) of this section and the\npenalty prescribed by paragraph (b) of subdivision two of section five\nhundred eighty-one of the labor law. Provided, however, such employer\nshall remain liable for the other additions to tax prescribed by\nsubsection (a) of this section, if applicable. Provided, further, that\nwhere such employer fails to file such return or any such portion\nthereof by the due date prescribed by paragraph four of subsection (a)\nof section six hundred seventy-four of this article but is not liable\nfor the penalty prescribed by subparagraph (A) of this paragraph for\nsuch failure because such employer complied with the provisions of this\nclause or clause (iii) of this subparagraph, and where within four\nsuccessive calendar quarters of such initial failure to file by the\nprescribed due date, such employer again fails to file such return or\nportion thereof by such due date, then the provisions of this clause\nrelating to abatement and non-imposition of other additions to tax and\npenalties for failure to file shall not apply to any such failure within\nsuch four successive calendar quarters. In such a case, if such employer\nfiles such return or portion thereof within thirty days after the date\nthe department sends notice of such second failure by certified mail,\nsuch employer shall be liable for a penalty equal to the lesser of the\nproduct of fifty dollars multiplied by the number of employees actually\nshown on such employer's late filed quarterly combined withholding, wage\nreporting and unemployment insurance return, but not less than one\nthousand dollars nor more than ten thousand dollars, or the sum of the\naddition to tax prescribed by paragraph one of subsection (a) of this\nsection and the penalty prescribed by paragraph (b) of subdivision two\nof section five hundred eighty-one of the labor law.\n  (ii) After thirty days of notice. If an employer fails to file a\nquarterly combined withholding, wage reporting and unemployment\ninsurance return, or any portion thereof, by the due date prescribed by\nparagraph four of subsection (a) of section six hundred seventy-four of\nthis article, but files such return or any such portion thereof more\nthan thirty days after the date the department sends notice of such\nfailure to file to such employer by certified mail, then such employer\nshall be liable for a penalty equal to the greater of the product of\nfifty dollars multiplied by the number of employees actually shown on\nsuch employer's late filed quarterly combined withholding, wage\nreporting and unemployment insurance return, but not less than one\nthousand dollars nor more than ten thousand dollars, or the sum of the\naddition to tax prescribed by paragraph one of subsection (a) of this\nsection and the penalty prescribed by paragraph (b) of subdivision two\nof section five hundred eighty-one of the labor law.\n  (iii) Late filing prior to notice. If an employer fails to file a\nquarterly combined withholding, wage reporting and unemployment\ninsurance return, or portion thereof, by the due date prescribed by\nparagraph four of subsection (a) of section six hundred seventy-four of\nthis article but files such return or any such portion thereof before\nthe department sends notice of such failure to file by certified mail,\nthen the penalty prescribed by subparagraph (A) of this paragraph shall\nnot be imposed. In addition, such employer shall not be liable for the\naddition to tax prescribed by paragraph one of subsection (a) of this\nsection and the penalty prescribed by paragraph (b) of subdivision two\nof section five hundred eighty-one of the labor law. Provided, however,\nsuch employer shall remain liable for the other additions to tax\nprescribed by subsection (a) of this section, if applicable. Provided,\nfurther, that where such employer fails to file such return or any such\nportion thereof by the due date prescribed by paragraph four of\nsubsection (a) of section six hundred seventy-four of this article but\nis not liable for the penalty prescribed by subparagraph (A) of this\nparagraph for such failure because such employer complied with the\nprovisions of this clause or clause (i) of this subparagraph, and where\nwithin four successive calendar quarters of such initial failure to file\nby the prescribed due date, such employer again fails to file such\nreturn or any such portion thereof by such due date, then the provisions\nof this clause relating to non-imposition of penalties and other\nadditions to tax for failure to file shall not apply to any such failure\nwithin such four successive calendar quarters. In such a case, if such\nemployer files such return or portion thereof before the department\nsends notice of such failure by certified mail, such employer shall be\nliable for a penalty equal to the lesser of the product of fifty dollars\nmultiplied by the number of employees actually shown on such employer's\nlate filed quarterly combined withholding, wage reporting and\nunemployment insurance return, but not less than one thousand dollars\nnor more than ten thousand dollars, or the sum of the addition to tax\nprescribed by paragraph one of subsection (a) of this section and the\npenalty prescribed by paragraph (b) of subdivision two of section five\nhundred eighty-one of the labor law.\n  (C) Audit following failure to file. If an employer fails to file a\nquarterly combined withholding, wage reporting and unemployment\ninsurance return and an audit is subsequently commenced with respect to\nsuch employer by the department, the department of labor or both, such\nemployer shall, in addition to the penalty prescribed by subparagraph\n(A) of this paragraph, be liable for the addition to tax prescribed by\nparagraph one of subsection (a) of this section, the penalty prescribed\nby paragraph (b) of subdivision two of section five hundred eighty-one\nof the labor law, or both, as applicable.\n  (D) Protests and collection. The department of labor shall adjudicate\nall disputes regarding the imposition of the penalty prescribed by this\nparagraph (whether alone or in conjunction with the addition to tax\nprescribed by paragraph one of subsection (a) of this section and the\npenalty prescribed by paragraph (b) of subdivision two of section five\nhundred eighty-one of the labor law), in accordance with the provisions\ncontained in article eighteen of the labor law; provided, however, that\nthe department shall adjudicate disputes in accordance with the\nprocedures prescribed by this chapter where (i) an employer only fails\nto file the portion of a quarterly combined withholding, wage reporting\nand unemployment insurance return relating to withholding reconciliation\ninformation, (ii) the penalty prescribed by clause (iii) of subparagraph\n(B) of this paragraph is imposed, or (iii) the department conducts an\naudit described in subparagraph (C) of this paragraph with respect to\nwithholding tax liability. Once the penalty prescribed by this paragraph\nis finally determined and no longer subject to administrative or\njudicial review, the amount thereof shall be deemed to be an obligation\nowed jointly to the department and the department of labor, and either\nof such departments may collect such amount in accordance with the\nprocedures prescribed by this chapter or the labor law, as applicable.\nAny penalty amount so collected shall, if necessary, be allocated as\nbetween the withholding tax program and the unemployment insurance\nprogram, and shall be deposited and disposed of by the respective\ndepartment in accordance with applicable law.\n  (3) Failure to provide complete and correct employee withholding\nreconciliation information. In the case of a failure by an employer to\nprovide complete and correct quarterly withholding information relating\nto individual employees on a quarterly combined withholding, wage\nreporting and unemployment insurance return covering each calendar\nquarter of a year, such employer shall, unless it is shown that such\nfailure is due to reasonable cause and not due to willful neglect, pay a\npenalty equal to the product of one hundred dollars multiplied by the\nnumber of employees for whom such information is incomplete or\nincorrect; provided, however, that if the number of such employees\ncannot be determined from the quarterly combined withholding, wage\nreporting and unemployment insurance return, the commissioner may\nutilize any information in the commissioner's possession in making such\ndetermination. The total amount of the penalty imposed pursuant to this\nparagraph on an employer for any such failure for each calendar quarter\nof a year shall not exceed twenty thousand dollars.\n  (4) Failure to provide complete and correct quarterly withholding\ninformation not relating to individual employees. In the case of a\nfailure by an employer to provide complete and correct quarterly\nwithholding information not relating to individual employees on a\nquarterly combined withholding, wage reporting and unemployment\ninsurance return, such employer shall, unless it is shown that such\nfailure is due to reasonable cause and not due to willful neglect, pay a\npenalty equal to five percent of the quarterly withholding tax liability\nrequired to be shown by such employer for the quarter covered by such\nreturn, or if such liability required to be shown by such employer for\nthe quarter cannot be ascertained, the commissioner may estimate such\nliability from any information in the commissioner's possession. If such\nemployer provides complete and correct quarterly withholding information\nnot relating to individual employees within thirty days after the\ndepartment sends notice of such failure to the employer by certified\nmail, then such penalty shall be abated. No penalty under this paragraph\nshall be imposed if the department is able to properly verify and\nreconcile withholding and wage reporting information using the\ninformation furnished by the employer. The total amount of the penalty\nimposed pursuant to this paragraph on an employer for any such failure\nshall not exceed ten thousand dollars.\n  (5) Failure to file using prescribed format. In the case of a failure\nby an employer to file a quarterly combined withholding, wage reporting\nand unemployment insurance return using the format prescribed by the\ndepartment pursuant to the authority of paragraph two of subsection (d)\nof section six hundred fifty-eight of this article and regulations\npromulgated thereunder, such employer shall, unless it is shown that\nsuch failure is due to reasonable cause and not due to willful neglect,\npay a penalty equal to the product of fifty dollars multiplied by the\nnumber of employees required to be shown on such return. If such\nemployer files such return using the prescribed format within thirty\ndays after the department sends notice of such failure to the employer\nby certified mail, then such penalty shall be abated. The total amount\nof the penalty imposed pursuant to this paragraph on an employer for any\nsuch failure shall not exceed ten thousand dollars.\n  (6) Except as otherwise provided in this subsection, and except for\nthe penalties prescribed by paragraph one of subsection (h) and\nsubsection (k) of this section, the penalties prescribed by this\nsubsection shall be in addition to any other penalty or addition to tax\nprovided by law.\n  (w) Failure to file report regarding newly hired or re-hired\nemployees.  If any employer required to file a report pursuant to\nsection one hundred seventy-one-h of this chapter fails to file such\nreport at the time prescribed therefor, or files a report which fails to\nshow the information required pursuant to such section one hundred\nseventy-one-h, unless it is shown that such failure is due to reasonable\ncause and not due to willful neglect, there shall, upon notice and\ndemand by the commissioner and in the same manner as tax, be paid by the\nemployer a penalty equal to the product of twenty dollars, multiplied by\nthe number of employees the employer failed to report, but the total\namount imposed on the employer for all such failures during any calendar\nyear shall not exceed ten thousand dollars. If the failure is a result\nof a conspiracy between the employer and the employee to not supply the\nrequired report or to supply a false or incomplete report, the penalty\nshall be equal to the product of four hundred fifty dollars multiplied\nby the number of employees the employer failed to report.\n  * (x) Failure to disclose or provide reportable transaction\ninformation.-- (1) Any person who fails to file, disclose or provide any\nstatement, return or other document which is required under subdivision\n(a) of section twenty-five of this chapter shall pay a penalty in the\namount determined under paragraph two of this subsection.\n  (2)(A) Except as provided in subparagraph (B) of this paragraph, the\namount of the penalty under paragraph one of this subsection shall be\nten thousand dollars.\n  (B) The amount of the penalty under paragraph one of this subsection\nwith respect to a listed transaction shall be twenty-five thousand\ndollars.\n  (3) For purposes of this subsection, the terms "reportable\ntransaction" and "listed transaction" shall have the same meanings as\nused in section twenty-five of this chapter, and the term "reportable\ntransaction" shall include a "New York reportable transaction" as\ndefined in such section twenty-five, and the term "listed transaction"\nshall include any transaction designated as a tax avoidance transaction\npursuant to such section twenty-five.\n  (4) The commissioner may rescind all or any portion of any penalty\nimposed by this subsection with respect to any violation if\n  (A) the violation is with respect to a reportable transaction other\nthan a listed transaction, and\n  (B) rescinding the penalty would promote compliance with the\nrequirements of this chapter and effective tax administration.\n  (5) The penalty imposed by this section shall be in addition to any\nother penalty imposed by this chapter.\n  * NB Repealed July 1, 2029\n  * (y) Failure to disclose or provide reportable transaction return.--\n(1) Any person who fails to file, disclose or provide any statement,\nreturn or other document which is required under subdivision (b) of\nsection twenty-five of this chapter shall pay a penalty in the amount\ndetermined under paragraph two of this subsection.\n  (2)(A) Except as provided in subparagraph (B) of this paragraph, the\namount of the penalty under paragraph one of this subsection shall be\ntwenty thousand dollars.\n  (B) The amount of the penalty under paragraph one of this subsection\nwith respect to a listed transaction shall be the greater of\n  (i) fifty thousand dollars or,\n  (ii) fifty percent of the gross income that the organizer or material\nadvisor derived with respect to activities that were the basis for the\nrequirement to file, disclose or provide information pursuant to section\nsix thousand eleven of the internal revenue code, to the extent such\ngross income is attributable to the avoidance of any tax imposed under\nthis article.\n  (C) Clause (ii) of subparagraph (B) of this paragraph shall be applied\nby substituting "seventy-five percent" for "fifty percent" in the case\nof an intentional failure or act described in paragraph one of this\nsubsection.\n  (3) For purposes of this subsection, the terms "reportable\ntransaction" and "listed transaction" shall have the same meanings as\nused in section twenty-five of this chapter, the term "reportable\ntransaction" shall include a "New York reportable transaction" as\ndefined in such section twenty-five, and the term "listed transaction"\nshall include any transaction designated as a tax avoidance transaction\npursuant to such section twenty-five.\n  (4) The commissioner may rescind all or any portion of any penalty\nimposed by this subsection with respect to any violation if\n  (A) the violation is with respect to a reportable transaction other\nthan a listed transaction, and\n  (B) rescinding the penalty would promote compliance with the\nrequirements of this chapter and effective tax administration.\n  (5) The penalty imposed by this subsection shall be in addition to any\nother penalty imposed by this chapter, except that no penalty shall be\nimposed under subparagraph (A) or clause (i) of subparagraph (B) of\nparagraph two of subsection (q) of section one thousand eighty-five of\nthis chapter for the same failure that is the basis for a penalty under\nthis subsection. Nothing in this paragraph shall preclude the imposition\nof a penalty under clause (ii) of subparagraph (B) of paragraph two of\nsubsection (q) of section one thousand eighty-five of this chapter for\nthe same failure that is the basis for a penalty under clause (ii) of\nsubparagraph (B) of paragraph two of this subsection.\n  * NB Repealed July 1, 2029\n  * (z) Failure to maintain list of advisees.-- (1) If any person who is\nrequired to maintain a list under subdivision (c) of section twenty-five\nof this chapter fails to make a duplicate of such list available, upon\nwritten request by the commissioner in accordance with such subsection\nwithin twenty business days after the date of the request, such person\nshall pay a penalty of ten thousand dollars for each day of such failure\nafter such twentieth day.\n  (2) No penalty shall be imposed by paragraph one of this subsection\nwith respect to the failure on any day if such failure is due to\nreasonable cause.\n  * NB Repealed July 1, 2029\n  (aa) Tax preparer penalty.-- (1) If a tax return preparer takes a\nposition on any income tax return or credit claim form that either\nunderstates the tax liability or increases the claim for a refund, and\nthe preparer knew, or reasonably should have known, that said position\nwas not proper, and such position was not adequately disclosed on the\nreturn or in a statement attached to the return, such income tax\npreparer shall pay a penalty of between one hundred and one thousand\ndollars.\n  (2) If a tax return preparer takes a position on any income tax return\nor credit claim form that either understates the tax liability or\nincreases the claim for a refund and the understatement of the tax\nliability or the increased claim for refund is due to the preparer's\nreckless or intentional disregard of the law, rules or regulations, such\npreparer shall pay a penalty of between five hundred and five thousand\ndollars. The amount of the penalty payable by any person by reason of\nthis paragraph shall be reduced by the amount of the penalty paid by\nsuch person by reason of paragraph one of this subsection.\n  (3) For purposes of this subsection, the term "understatement of tax\nliability" means any understatement of the net amount payable with\nrespect to any tax imposed under this article or any overstatement of\nthe net amount creditable or refundable with respect to any such tax.\n  (4) For purposes of this subsection, the term "tax return prepared"\nshall have the same meaning as defined in paragraph five of subsection\n(g) of section six hundred fifty-eight of this article.\n  (5) This subsection shall not apply if the penalty under subsection\n(r) of this section is imposed on the tax return preparer with respect\nto such understatement.\n  * (bb) Promoting abusive tax shelters.-- (1) Any person who\n  (A)(i) organizes (or assists in the organization of)\n  (I) a partnership or other entity,\n  (II) any investment plan or arrangement, or\n  (III) any other plan or arrangement, or\n  (ii) participates (directly or indirectly) in the sale of any interest\nin an entity or plan or arrangement referred to in clause (i) of this\nsubparagraph, and\n  (B) makes or furnishes or causes another person to make or furnish (in\nconnection with such organization or sale)\n  (i) a statement with respect to the allowability of any deduction or\ncredit, the excludability of any income, or the securing of any other\ntax benefit by reason of holding an interest in the entity or\nparticipating in the plan or arrangement which the person knows or has\nreason to know is false or fraudulent as to any material matter, or\n  (ii) a gross valuation overstatement as to any material matter, and\n  (C) satisfies any of the following conditions\n  (i) the person is organized in this state,\n  (ii) the person is doing business in this state,\n  (iii) the person is deriving income in this state, or\n  (iv) the person conducts any of the activities described in\nsubparagraph (A) or (B) of this paragraph within the state of New York,\nshall pay, with respect to each activity described in subparagraph (A)\nof this paragraph, a penalty equal to one thousand dollars or, if the\nperson establishes that it is lesser, one hundred percent of the gross\nincome derived (or to be derived) by such person from such activity to\nthe extent such gross income is attributable to the avoidance of any tax\nimposed under this article; provided, however, that if an activity with\nrespect to which a penalty imposed under this subsection involves a\nstatement described in clause (i) of subparagraph (B) of paragraph one\nof this subsection, the penalty shall be equal to fifty percent of the\ngross income derived (or to be derived) from that activity within the\nstate by the person on which the penalty is imposed. For purposes of the\npreceding sentence, activities described in clause (i) of subparagraph\n(A) of this paragraph with respect to each entity or arrangement shall\nbe treated as a separate activity and participation in each sale\ndescribed in clause (ii) of subparagraph (A) of this paragraph shall be\nso treated.\n  (2)(A) For purposes of this subsection, the term "gross valuation\noverstatement" means any statement as to the value of any property or\nservices if\n  (i) the value so stated exceeds two hundred percent of the amount\ndetermined to be the correct valuation, and\n  (ii) the value of such property or services is directly related to the\namount of any deduction or credit allowable under this chapter to any\nparticipant.\n  (B) The commissioner may waive all or any part of the penalty provided\nby paragraph one of this subsection with respect to any gross valuation\noverstatement on a showing that there was a reasonable basis for the\nvaluation and that such valuation was made in good faith.\n  (3) The penalty imposed by this subsection shall be in addition to any\nother penalty provided by law.\n  * NB Repealed July 1, 2029\n  (cc) False or fraudulent document penalty. Any taxpayer that submits a\nfalse or fraudulent document to the department will be subject to a\npenalty of one hundred dollars per document submitted, or five hundred\ndollars per tax return submitted. This penalty will be in addition to\nany other penalty or addition provided by law.\n  (dd) Failure to supply all the information required or to provide\ncorrect information in secretary of state statements. Unless it is shown\nthat such failure to provide the statement and information required by\nsubdivision (e) of section three hundred one of the limited liability\ncompany law, subdivision (g) of section 121-1500 of the partnership law,\nand subdivision (f) of section 121-1502 of the partnership law is due to\nreasonable cause and not to willful neglect, there shall, upon notice\nand demand by the commissioner and in the same manner as tax, be paid by\nthe entity failing to supply complete and correct information, a penalty\nof two hundred and fifty dollars per limited liability company,\nregistered limited liability partnership or New York registered foreign\nlimited liability partnership required to provide such information on\nits filing fee payment form.\n