N.Y. TAX Law § 1085 — New York Code / Act TAX / Article 27 / Section 1085
Additions to tax and civil penalties
Status: in_force

§ 1085. Additions to tax and civil penalties.---(a) (1) Failure to\nfile return.---(A) In case of failure to file a return under article\nnine, nine-a, nine-b or nine-c on or before the prescribed date\n(determined with regard to any extension of time for filing), unless it\nis shown that such failure is due to reasonable cause and not due to\nwillful neglect, there shall be added to the amount required to be shown\nas tax on such return five percent of the amount of such tax if the\nfailure is for not more than one month, with an additional five percent\nfor each additional month or fraction thereof during which such failure\ncontinues, not exceeding twenty-five percent 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 article\nnine, nine-a, nine-b or nine-c on or before the prescribed date\n(determined with regard to any extension of time for payment), unless it\nis shown that such failure is due to reasonable cause and not due to\nwillful neglect, there shall be added to the amount shown as tax on such\nreturn one-half of one per cent of the amount of such tax if the failure\nis not for more than one month, with an additional one-half of one per\ncent for each additional month or fraction thereof during which such\nfailure continues, not exceeding twenty-five per cent in the aggregate.\nFor the purpose of computing the addition for any month the amount of\ntax shown on the return shall be reduced by the amount of any part of\nthe tax which is paid on or before the beginning of such month and by\nthe amount of any credit against the tax which may be claimed upon the\nreturn. If the amount of tax required to be shown on a return is less\nthan the amount shown as tax on such return, this paragraph shall be\napplied by substituting such lower amount.\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 article nine or nine-a which is not\nso shown (including an assessment made pursuant to subsection (a) of\nsection one thousand eighty-two of this article) within twenty-one\ncalendar days of the date of a notice and demand therefor (ten business\ndays if the amount for which such notice and demand is made equals or\nexceeds one hundred thousand dollars), unless it is shown that such\nfailure is due to reasonable cause and not due to willful neglect, there\nshall be added to the amount of tax stated in such notice and demand\none-half of one percent of such tax if the failure is not for more than\none month, with an additional one-half of one percent for each\nadditional month or fraction thereof during which such failure\ncontinues, not exceeding twenty-five percent in the aggregate. For the\npurpose of computing the addition for any month, the amount of tax\nstated in the notice and demand shall be reduced by the amount of any\npart of the tax which is paid 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 paragraph one of this subsection, the\namount of the addition under such paragraph one shall not be reduced\nbelow the amount provided 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 one)\nwhich is attributable to the tax for which the notice and demand is made\nand which is not paid within ten days of such notice and demand.\n  (b) Deficiency due to negligence.---(1) If any part of a deficiency is\ndue to negligence or intentional disregard of this article or article\nnine, nine-a, nine-b or nine-c, or rules or regulations thereunder (but\nwithout intent to defraud), there shall be added to the tax an amount\nequal to five 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 one thousand\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 of nineteen hundred fifty-four, respectively, and\nthe payee fails to include any portion of such payment in gross income,\nas that term is defined in paragraph one of subsection (d) of section\none thousand eighty-three, any portion of an underpayment attributable\nto such failure shall be treated, for purposes of this subsection, as\ndue to negligence in the absence of clear and convincing evidence to the\ncontrary. If any penalty is imposed under this subsection by reason of\nthe preceding sentence, the amount of the penalty imposed by paragraph\none of this subsection shall be five percent of the portion of the\nunderpayment which is attributable to the failure described in the\npreceding sentence.\n  (c) Failure to file declaration or underpayment of estimated tax.--\n(1) If any taxpayer fails to file a declaration of estimated tax under\narticle nine-A of this chapter, or fails to pay all or any part of an\namount which is applied as an installment against such estimated tax, it\nshall be deemed to have made an underpayment of estimated tax. There\nshall be added to the tax for the taxable year an amount at the\nunderpayment rate set by the commissioner pursuant to section one\nthousand ninety-six of this article, or if no rate is set, at the rate\nof seven and one-half percent per annum upon the amount of the\nunderpayment for the period of the underpayment but not beyond the\nfifteenth day of the fourth month following the close of the taxable\nyear. Provided, however, that, for taxable years beginning on or after\nJanuary first, two thousand seventeen and before January first, two\nthousand eighteen, no amount shall be added to the tax with respect to\nthe portion of such tax related to the amount of any interest deductions\ndirectly or indirectly attributable to the amount included in exempt CFC\nincome pursuant to subparagraph (ii) of paragraph (b) of subdivision\nsix-a of section two hundred eight of this chapter or the forty percent\nreduction of such exempt CFC income in lieu of interest attribution if\nthe election described in paragraph (b) of subdivision six-a of such\nsection is made. The amount of the underpayment shall be, with respect\nto any installment of estimated tax computed on the basis of either the\npreceding year's tax or the second preceding year's tax, the excess of\nthe amount required to be paid over the amount, if any, paid on or\nbefore the last day prescribed for such payment or, with respect to any\nother installment of estimated tax, the excess of the amount of the\ninstallment which would be required to be paid if the estimated tax were\nequal to ninety-one percent of the tax shown on the return for the\ntaxable year (or if no return was filed, ninety-one percent of the tax\nfor such year) over the amount, if any, of the installment paid on or\nbefore the last day prescribed for such payment. In any case in which\nthere would be no underpayment if "eighty percent" were substituted for\n"ninety-one percent" each place it appears in this subsection, the\naddition to the tax shall be equal to seventy-five percent of the amount\notherwise determined. No underpayment shall be deemed to exist with\nrespect to a declaration or installment otherwise due on or after the\ntermination of existence of the taxpayer.\n  (2) For purposes of applying the addition to tax for an underpayment\nof any installment of estimated tax by a taxpayer subject to tax\npursuant to article thirty-three of this chapter, the amount of tax\nshall be determined by using the lesser of the differential earnings\nrate (as described in subsection (c) of section eight hundred nine of\nthe internal revenue code) of the second tax year preceding the taxable\nyear for which the installment is made, or the differential earnings\nrate for the taxable year for which the installment is made. Such\naddition to tax shall be applied to any taxable year without regard to\nany adjustments to the differential earnings amount under subsection (f)\nof section eight hundred nine of the internal revenue code for such\nyear.\n  (3) The provisions of this subsection and subsections (d) and (e) of\nthis section shall apply to the failure of a taxpayer to file a\ndeclaration of estimated tax surcharge or the failure to pay all or any\npart of an amount which is applied as an installment against such\nestimated tax surcharge pursuant to sections one hundred ninety-seven-a,\none hundred ninety-seven-b, two hundred thirteen-a, two hundred\nthirteen-b, fifteen hundred thirteen and fifteen hundred fourteen of\nthis chapter. For purposes of applying this section and subsections (d)\nand (e) of this section to the estimated tax surcharge, where\nappropriate the term "tax" shall be read to mean "tax surcharge," and\nthe terms "amount required to be paid," "amount which would be required\nto be paid," and "amount which would have been required to be paid"\nshall be computed as the product of (1) such amount computed without\nregard to the tax surcharges imposed under sections one hundred\neighty-four-a, one hundred eighty-six-c, one hundred eighty-eight, two\nhundred nine-A, two hundred nine-B, fifteen hundred five-a, and fifteen\nhundred twenty of this chapter, and (2) the MTA percentage. The term\n"MTA percentage" shall mean the product of (A) the tax rate applicable\nunder such sections imposing such surcharges and (B) the percentage\nutilized in determining the portion of the taxpayer's business activity\ncarried on within the metropolitan commuter transportation district\nunder such sections.\n  (d) Exception to addition for underpayment of estimated tax.--The\naddition to tax under subsection (c) with respect to any underpayment of\nany amount which is applied as an installment against estimated tax\nunder article nine-a, nine-b or nine-c shall not be imposed if the total\namount of all payments of estimated tax made on or before the last date\nprescribed for the payment of any such amount equals or exceeds the\namount which would have been required to be paid on or before such date\nif the estimated tax were whichever of the following is the least--\n  (1) The tax shown on the return of the taxpayer for the preceding\ntaxable year, if a return showing a liability for tax was filed by the\ntaxpayer for the preceding taxable year and such preceding year was a\ntaxable year of twelve months, or\n  (2) An amount equal to the tax computed at the rates applicable to the\ntaxable year, but otherwise on the basis of the facts shown on the\nreturn of the taxpayer for, and the law applicable to, the preceding\ntaxable year, or\n  (3) Annualized income installment. (A) General.  An amount equal to\nninety-one percent of the tax for the taxable year computed on all items\nentering into the computation of the tax or taxes of the taxpayer for\nthe taxable year under article nine, nine-A or thirty-three of this\nchapter. For purposes of computing the tax, all items of receipts,\nincome and expenses shall be placed on an annualized basis--\n  (i) for the first three months of the taxable year, in the case of the\ninstallment required to be paid in the sixth month,\n  (ii) for the first six months of the taxable year, in the case of the\ninstallment required to be paid in the ninth month, and\n  (iii) for the first nine months of the taxable year, in the case of\nthe installment required to be paid in the twelfth month.\n  (B) Special rules. For purposes of subparagraph (A), items of\nreceipts, income and expenses shall be placed on an annualized basis\nby--\n  (i) multiplying such items by twelve (or, in the case of a taxable\nyear of less than twelve months, the number of months in the taxable\nyear), and\n  (ii) dividing the resulting amounts by the number of months referred\nto in subparagraph (A) (or in subparagraph (C), if an election applies\nto the taxable year under such subparagraph).\n  (C) Election for different annualization periods. (i) If the taxpayer\nmakes an election under this clause--\n  (I) Clause (i) of subparagraph (A) of this paragraph shall be applied\nby substituting "four months" for "three months",\n  (II) Clause (ii) of subparagraph (A) of this paragraph shall be\napplied by substituting "seven months" for "six months",\n  (III) Clause (iii) of subparagraph (A) of this paragraph shall be\napplied by substituting "ten months" for "nine months".\n  (ii) If the taxpayer makes an election under this clause--\n  (I) Clause (i) of subparagraph (A) of this paragraph shall be applied\nby substituting "five months" for "three months",\n  (II) Clause (ii) of subparagraph (A) of this paragraph shall be\napplied by substituting "eight months" for "six months",\n  (III) Clause (iii) of subparagraph (A) of this paragraph shall be\napplied by substituting "eleven months" for "nine months".\n  (iii) An election under clause (i) or (ii) of this subparagraph shall\napply to the taxable year for which made and such an election shall be\neffective only if made on or before the date required for filing the\ndeclaration of estimated tax for such taxable year, or\n  (4) (A) If the base period percentage for any six consecutive months\nof the taxable year equals or exceeds seventy percent, an amount equal\nto ninety-one percent of the tax determined in the following manner--\n  (i) take the items entering into the computation of the tax or taxes\nof the taxpayer for the taxable year under article nine, nine-A or\nthirty-three of this chapter, for all months during the taxable year\npreceding the filing month,\n  (ii) divide such amounts by the base period percentage for all months\nduring the taxable year preceding the filing month,\n  (iii) determine the tax on the amounts determined under clause (ii),\nand\n  (iv) multiply the tax determined under clause (iii) by the base period\npercentage for the filing month and all months during the taxable year\npreceding the filing month.\n  (B) For purposes of subparagraph (A)--\n  (i) the base period percentage for any period of months shall be the\naverage percent which the taxable income for the corresponding months in\neach of the three preceding taxable years bears to the taxable income\nfor the three preceding taxable years. The tax commission may by\nregulations provide for the determination of the base period percentage\nin the case of reorganizations, new corporations, and other similar\ncircumstances, and\n  (ii) the term "filing month" means the month in which the installment\nis required to be paid.\n  (5) In the case of any declaration installment, any reduction in such\ninstallment resulting from the application of paragraph three or four of\nthis subsection shall be recaptured by increasing the amount of the next\ninstallment determined under paragraph one or two of this subsection or\nparagraph one of subsection (c) of this section by the amount of such\nreduction (and by increasing subsequent installments to the extent that\nthe reduction has not previously been recaptured under this paragraph).\nFor purposes of the preceding sentence, a declaration installment means\nany installment of estimated tax other than the mandatory first\ninstallment required under paragraph (a) of subdivision one of section\none hundred ninety-seven-b, subdivision (a) of section two hundred\nthirteen-b or subdivision (a) of section fifteen hundred fourteen of\nthis chapter.\n  For the purposes of this subsection the amounts specified in\nparagraphs (2), (3) and (4) shall be computed without regard to any\nincrease in the rates applicable to the taxable year which may have\nbecome effective after the first day of the seventh month of such year.\n  (e) (1) Paragraphs (1) and (2) of subsection (d) of this section shall\nnot apply in the case of any corporation (or any predecessor\ncorporation) which had business income, or the portion thereof allocated\nwithin the state, of one million dollars or more for any taxable year\nduring the three taxable years immediately preceding the taxable year\ninvolved; provided, however, that in the case of a corporation subject\nto tax under section fifteen hundred two-a of this chapter, paragraphs\n(1) and (2) of subsection (d) of this section shall not apply if such\ncorporation had entire net income, or the portion thereof allocated\nwithin the state, of one million dollars or more for any of the three\ntaxable years immediately preceding the taxable year involved, or if the\ndirect premiums subject to tax under section fifteen hundred two-a of\nthis chapter of the corporation for any of such three preceding taxable\nyears beginning on or after January first, two thousand three equals or\nexceeds three million seven hundred fifty thousand dollars.\n  (2) In the case of taxpayers described in paragraph one of this\nsubsection, paragraph one of subsection (c), subparagraph (A) of\nparagraph three of subsection (d), and subparagraph (A) of paragraph\nfour of subsection (d) of this section shall be applied by substituting\n"one hundred percent" for "ninety-one percent" each place it appears.\n  (e-1) Waiver of addition for underpayment of estimated tax. No\naddition to tax shall be imposed under subsection (c) of this section\nwith respect to any underpayment to the extent the commissioner\ndetermines that by reason of casualty, disaster or other unusual\ncircumstances the imposition of such addition to tax would be against\nequity and good conscience.\n  (f) 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  (g) Additional penalty.---Any person who with fraudulent intent shall\nfail to pay under article nine, nine-a, nine-b or nine-c, any tax, or to\nmake, render, sign or certify any return or declaration of estimated\ntax, or to supply any information within the time required by or under\nsuch article, shall be liable to penalty of not more than one thousand\ndollars, in addition to any other amounts required under this article,\nto be imposed, assessed and collected by the tax commission. The tax\ncommission shall have the power, in its discretion, to waive, reduce or\ncompromise any penalty under this subsection.\n  (h) 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 tax imposed by article nine, nine-a, nine-b\nor nine-c shall be deemed also to refer to the additions to tax and\npenalties provided by this section. For purposes of section one thousand\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) or (o); and\n  (3) any additional penalties under subsections (g) and (l).\n  (i) Determination of deficiency.---For purposes of subsections (b) and\n(f), the amount shown as the tax by the taxpayer upon its return shall\nbe taken into account in determining the amount of the deficiency only\nif such return was filed on or before the last day prescribed for the\nfiling of such return, determined with regard to any extension of time\nfor such filing.\n  (j) Person defined.---For purposes of subsections (g) and (l), the\nterm person includes an individual, corporation, partnership or limited\nliability 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, employee or manager 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  * (k) Substantial understatement of liability.-- (1) If there is a\nsubstantial understatement of tax for any taxable year, there shall be\nadded to the tax an amount equal to ten percent of the amount of any\nunderpayment attributable to such understatement. For purposes of this\nsubsection, there is a substantial understatement of tax for any taxable\nyear if the amount of the understatement for the taxable year exceeds\nthe greater of ten percent of the tax required to be shown on the return\nfor the taxable year or five thousand dollars. For purposes of the\npreceding sentence, the term "understatement" means the excess of the\namount of the tax required to be shown on the return for the taxable\nyear, over the amount of the tax imposed which is shown on the return\nreduced by any rebate (within the meaning of subsection (h) of section\none thousand eighty-one of this article). The excess under the preceding\nsentence shall be determined without regard to items to which subsection\n(k-1) of this section applies. The commissioner may waive all or any\npart of the addition to tax provided by this section on a showing by the\ntaxpayer that there was reasonable cause for the understatement (or part\nthereof) and that the taxpayer acted in good faith.\n  (2) The amount of the understatement under paragraph one of this\nsubsection shall be reduced by that portion of the understatement which\nis attributable to (A) the tax treatment of any item by the taxpayer if\nthere is or was substantial authority for such treatment, or (B) any\nitem if the relevant facts affecting the item's tax treatment are\nadequately disclosed in the return or in a statement attached to the\nreturn.\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  * (k) Substantial understatement of liability.--If there is a\nsubstantial understatement of tax for any taxable year, there shall be\nadded to the tax an amount equal to ten percent of the amount of any\nunderpayment attributable to such understatement. For purposes of this\nsubsection, there is a substantial understatement of tax for any taxable\nyear if the amount of the understatement for the taxable year exceeds\nthe greater of ten percent of the tax required to be shown on the return\nfor the taxable year or five thousand dollars. For purposes of the\npreceding sentence, the term "understatement" means the excess of the\namount of the tax required to be shown on the return for the taxable\nyear, over the amount of the tax imposed which is shown on the return\nreduced by any rebate (within the meaning of subsection (h) of section\none thousand eighty-one). The amount of such understatement shall be\nreduced by that portion of the understatement which is attributable to\nthe 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 section on a showing by the taxpayer that there was\nreasonable cause for the understatement (or part thereof) and that the\ntaxpayer acted in good faith.\n  * NB Effective July 1, 2029\n  * (k-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 under the article of this chapter\nthat applies to the taxpayer, and\n  (B) the amount of the decrease (if any) in the aggregate amount of\ncredits determined under the article of this chapter that applies to the\ntaxpayer which results from a difference between the taxpayer's\ntreatment of an item to which this section applies (as shown on the\ntaxpayer's return of tax) and the proper tax treatment 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 (k) 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 (k) of\nthis section, and (B) the addition to tax under subsection (k) of this\nsection shall apply only to the excess of the amount of the substantial\nunderstatement (if any) after the application of subparagraph (A) of\nthis paragraph over the aggregate amount of reportable transaction\nunderstatements.\n  (7) References to an understatement (or a deficiency) in subsection\n(f) 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 (f) 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 (p) 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 of\ntax which 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  (k-2) No penalty will be imposed pursuant to subsection (c) or (k) 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 or report.\n  (l) 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 article nine, nine-A, nine-B or nine-C of this chapter of\nany return, report, declaration, statement or other document which is\nfraudulent or false as to any material matter, or supply any false or\nfraudulent information, whether or not such falsity or fraud is with the\nknowledge or consent of the person authorized or required to present\nsuch return, report, declaration, statement or other document shall pay\na penalty not exceeding ten thousand 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  (n) Failure to file report of information relating to certain interest\npayments.--In case of failure to file the report of information required\nunder subdivision two-a of section two hundred eleven, unless it is\nshown that such failure is due to reasonable cause and not due to\nwillful neglect, there shall be added to the tax a penalty of five\nhundred dollars.\n  * (p) Failure to disclose or provide reportable transaction\ninformation.  -- (1) Any person who fails to file, disclose or provide\nany statement, return or other document which is required under\nsubdivision (a) of section twenty-five of this chapter shall pay a\npenalty in the amount 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\ntwenty thousand dollars.\n  (B) The amount of the penalty under paragraph one of this subsection\nwith respect to a listed transaction shall be fifty thousand dollars.\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 section shall be in addition to any\nother penalty imposed by this chapter.\n  * NB Repealed July 1, 2029\n  * (q) 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\narticle nine, nine-A or thirty-three of this chapter.\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 (y) of section six hundred 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 (y) of section six hundred 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  * (r) 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 subdivision\nwithin twenty business days after the date of such 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  * (s) Tax preparer penalty.-- (1) If:\n  (A) any part of any understatement of liability with respect to any\nreturn or claim for refund is due to a position for which there was not\na reasonable belief that the tax treatment in that position was more\nlikely than not the proper treatment,\n  (B) any person who is a tax return preparer with respect to such\nreturn or claim knew (or reasonably should have known) of such position,\nand\n  (C) such position was not disclosed as provided in subsection (k) of\nthis section or there was no reasonable basis for the tax treatment of\nthat position, such person shall pay a penalty of up to one thousand\ndollars with respect to such return or claim unless it is shown that\nthere is reasonable cause for the understatement and such person acted\nin good faith.\n  (2) If any part of any understatement of liability with respect to any\nreturn or claim for refund is due\n  (A) to a willful attempt in any manner to understate the liability for\ntax by a person who is a tax return preparer with respect to such return\nor claim, or\n  (B) to any reckless or intentional disregard of rules or regulations\nby any such person, such person shall pay a penalty of up to five\nthousand dollars with respect to such return or claim. With respect to\nany return or claim, the amount of the penalty payable by any person by\nreason of this paragraph shall be reduced by the amount of the penalty\npaid by such person by reason of paragraph one of this subsection.\n  (3) For purposes of this subsection, the term "understatement of\nliability" means any understatement of the net amount payable with\nrespect to any tax imposed under article nine, nine-A or thirty-three of\nthis chapter or any overstatement of the net amount creditable or\nrefundable with respect to any such tax.\n  (4) This subsection shall not apply if the penalty under subsection\n(l) of this section is imposed on the tax return preparer with respect\nto such understatement.\n  * NB Repealed July 1, 2029\n  * (t) 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 attributed to the avoidance of any tax\nimposed under articles nine, nine-A or thirty-three of this chapter;\nprovided, however, that if an activity with respect to which a penalty\nimposed under this subsection involves a statement described in clause\n(i) of subparagraph (B) of paragraph one of this subsection, the penalty\nshall be equal to fifty percent of the gross income derived (or to be\nderived) from that activity within the state by the person on which the\npenalty is imposed. For purposes of the preceding sentence, activities\ndescribed in clause (i) of subparagraph (A) of this paragraph with\nrespect to each entity or arrangement shall be treated as a separate\nactivity and participation in each sale described in clause (ii) of\nsubparagraph (A) of this paragraph shall be so 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  (u) 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  (v) 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\nsection four hundred eight of the business corporation 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 taxpayer failing to supply complete and correct information, a\npenalty of two hundred fifty dollars per corporation required to provide\nsuch information.\n