2023 New York Laws › TAX - Tax › Article 27 - Corporate Tax Procedure and Administration › 1085 - Additions to Tax and Civil Penalties.

§  1085.  Additions  to  tax and civil penalties.---(a) (1) Failure to
file return.---(A) In case of failure to file  a  return  under  article
nine,  nine-a,  nine-b  or  nine-c  on  or  before  the  prescribed date
(determined with regard to any extension of time for filing), unless  it
is  shown  that  such  failure is due to reasonable cause and not due to
willful neglect, there shall be added to the amount required to be shown
as tax on such return five percent of the amount  of  such  tax  if  the
failure  is for not more than one month, with an additional five percent
for each additional month or fraction thereof during which such  failure
continues, not exceeding twenty-five percent in the aggregate.
(B) In the case of a failure to file a return of tax within sixty days
of the date prescribed for filing of such return (determined with regard
to  any  extension  of  time  for  filing), unless it is shown that such
failure is due to reasonable cause and not due to willful  neglect,  the
addition  to  tax  under subparagraph (A) of this paragraph shall not be
less than the lesser of one hundred dollars or one  hundred  percent  of
the amount required to be shown as tax on such return.
(C)  For  purposes of this paragraph, the amount of tax required to be
shown on the return shall be reduced by the amount of any  part  of  the
tax  which  is  paid on or before the date prescribed for payment of the
tax and by the amount of any credit against the tax which may be claimed
upon the return.
(2) Failure to pay tax shown on return.--In case of failure to pay the
amounts shown as tax on any return required to be  filed  under  article
nine,  nine-a,  nine-b  or  nine-c  on  or  before  the  prescribed date
(determined with regard to any extension of time for payment), unless it
is shown that such failure is due to reasonable cause  and  not  due  to
willful neglect, there shall be added to the amount shown as tax on such
return one-half of one per cent of the amount of such tax if the failure
is  not  for more than one month, with an additional one-half of one per
cent for each additional month or fraction  thereof  during  which  such
failure  continues, not exceeding twenty-five per cent in the aggregate.
For the purpose of computing the addition for any month  the  amount  of
tax  shown  on  the return shall be reduced by the amount of any part of
the tax which is paid on or before the beginning of such  month  and  by
the  amount  of any credit against the tax which may be claimed upon the
return. If the amount of tax required to be shown on a  return  is  less
than  the  amount  shown  as tax on such return, this paragraph shall be
applied by substituting such lower amount.
(3) Failure to pay tax required to be shown  on  return.--In  case  of
failure  to pay any amount in respect of any tax required to be shown on
a return required to be filed under article nine or nine-a which is  not
so  shown  (including  an  assessment made pursuant to subsection (a) of
section one thousand  eighty-two  of  this  article)  within  twenty-one
calendar  days of the date of a notice and demand therefor (ten business
days if the amount for which such notice and demand is  made  equals  or
exceeds  one  hundred  thousand  dollars),  unless it is shown that such
failure is due to reasonable cause and not due to willful neglect, there
shall be added to the amount of tax stated in  such  notice  and  demand
one-half  of one percent of such tax if the failure is not for more than
one  month,  with  an  additional  one-half  of  one  percent  for  each
additional   month   or  fraction  thereof  during  which  such  failure
continues, not exceeding twenty-five percent in the aggregate.  For  the
purpose  of  computing  the  addition  for  any month, the amount of tax
stated in the notice and demand shall be reduced by the  amount  of  any
part of the tax which is paid before the beginning of such month.
(4) Limitations on additions.--
(A)  With  respect  to  any  return,  the amount of the addition under
paragraph one of this subsection shall be reduced by the amount  of  the
addition  under  paragraph two of this subsection for any month to which
an addition applies under both paragraphs  one  and  two.  In  any  case
described  in  subparagraph (B) of paragraph one of this subsection, the
amount of the addition under such paragraph one  shall  not  be  reduced
below the amount provided in such subparagraph.
(B)  With  respect  to  any return, the maximum amount of the addition
permitted under paragraph three of this subsection shall be  reduced  by
the  amount  of  the  addition  under  paragraph  one of this subsection
(determined without regard to subparagraph (B) of  such  paragraph  one)
which is attributable to the tax for which the notice and demand is made
and which is not paid within ten days of such notice and demand.
(b) Deficiency due to negligence.---(1) If any part of a deficiency is
due  to  negligence  or intentional disregard of this article or article
nine, nine-a, nine-b or nine-c, or rules or regulations thereunder  (but
without  intent  to  defraud), there shall be added to the tax an amount
equal to five percent of the deficiency.
(2) There shall be added  to  the  tax  (in  addition  to  the  amount
determined  under  paragraph  one of this subsection) an amount equal to
fifty percent  of  the  interest  payable  under  section  one  thousand
eighty-four with respect to the portion of the underpayment described in
such   paragraph   one  which  is  attributable  to  the  negligence  or
intentional disregard referred to in such paragraph one, for the  period
beginning  on  the  last  date  prescribed  by  law  for payment of such
underpayment (determined without regard to any extension) and ending  on
the  date  of the assessment of the tax (or, if earlier, the date of the
payment of the tax).
(3) If any payment is shown on a return made by a payor  with  respect
to  dividends,  patronage dividends and interest under subsection (a) of
section six thousand forty-two, subsection (a) of section  six  thousand
forty-four  or  subsection (a) of section six thousand forty-nine of the
internal revenue code of nineteen hundred fifty-four, respectively,  and
the  payee fails to include any portion of such payment in gross income,
as that term is defined in paragraph one of subsection  (d)  of  section
one  thousand  eighty-three, any portion of an underpayment attributable
to such failure shall be treated, for purposes of  this  subsection,  as
due to negligence in the absence of clear and convincing evidence to the
contrary.  If  any penalty is imposed under this subsection by reason of
the preceding sentence, the amount of the penalty imposed  by  paragraph
one  of  this  subsection  shall  be  five percent of the portion of the
underpayment which is attributable  to  the  failure  described  in  the
preceding sentence.
(c)  Failure  to  file declaration or underpayment of estimated tax.--
(1) If any taxpayer fails to file a declaration of estimated  tax  under
article  nine-A  of  this chapter, or fails to pay all or any part of an
amount which is applied as an installment against such estimated tax, it
shall be deemed to have made an underpayment  of  estimated  tax.  There
shall  be  added  to  the  tax  for  the  taxable  year an amount at the
underpayment rate set  by  the  commissioner  pursuant  to  section  one
thousand  ninety-six  of this article, or if no rate is set, at the rate
of seven  and  one-half  percent  per  annum  upon  the  amount  of  the
underpayment  for  the  period  of  the  underpayment but not beyond the
fifteenth day of the fourth month following the  close  of  the  taxable
year.  Provided,  however, that, for taxable years beginning on or after
January first, two thousand seventeen  and  before  January  first,  two
thousand  eighteen,  no amount shall be added to the tax with respect to
the portion of such tax related to the amount of any interest deductions

directly or indirectly attributable to the amount included in exempt CFC
income pursuant to subparagraph (ii) of  paragraph  (b)  of  subdivision
six-a  of section two hundred eight of this chapter or the forty percent
reduction  of  such exempt CFC income in lieu of interest attribution if
the election described in paragraph (b) of  subdivision  six-a  of  such
section  is  made. The amount of the underpayment shall be, with respect
to any installment of estimated tax computed on the basis of either  the
preceding  year's  tax or the second preceding year's tax, the excess of
the amount required to be paid over the  amount,  if  any,  paid  on  or
before  the last day prescribed for such payment or, with respect to any
other installment of estimated tax, the excess  of  the  amount  of  the
installment which would be required to be paid if the estimated tax were
equal  to  ninety-one  percent  of  the  tax shown on the return for the
taxable year (or if no return was filed, ninety-one percent of  the  tax
for  such  year)  over the amount, if any, of the installment paid on or
before the last day prescribed for such payment. In any  case  in  which
there  would be no underpayment if "eighty percent" were substituted for
"ninety-one percent" each place  it  appears  in  this  subsection,  the
addition to the tax shall be equal to seventy-five percent of the amount
otherwise  determined.  No  underpayment  shall  be deemed to exist with
respect to a declaration or installment otherwise due on  or  after  the
termination of existence of the taxpayer.
(2)  For  purposes of applying the addition to tax for an underpayment
of any installment of  estimated  tax  by  a  taxpayer  subject  to  tax
pursuant  to  article  thirty-three  of  this chapter, the amount of tax
shall be determined by using the lesser  of  the  differential  earnings
rate  (as  described  in subsection (c) of section eight hundred nine of
the internal revenue code) of the second tax year preceding the  taxable
year  for  which  the  installment is made, or the differential earnings
rate for the taxable year  for  which  the  installment  is  made.  Such
addition  to  tax shall be applied to any taxable year without regard to
any adjustments to the differential earnings amount under subsection (f)
of section eight hundred nine of the  internal  revenue  code  for  such
year.
(3)  The  provisions of this subsection and subsections (d) and (e) of
this section shall apply  to  the  failure  of  a  taxpayer  to  file  a
declaration  of estimated tax surcharge or the failure to pay all or any
part of an amount which  is  applied  as  an  installment  against  such
estimated tax surcharge pursuant to sections one hundred ninety-seven-a,
one   hundred   ninety-seven-b,  two  hundred  thirteen-a,  two  hundred
thirteen-b, fifteen hundred thirteen and  fifteen  hundred  fourteen  of
this  chapter. For purposes of applying this section and subsections (d)
and  (e)  of  this  section  to  the  estimated  tax  surcharge,   where
appropriate  the  term  "tax" shall be read to mean "tax surcharge," and
the terms "amount required to be paid," "amount which would be  required
to  be  paid,"  and  "amount  which would have been required to be paid"
shall be computed as the product of (1)  such  amount  computed  without
regard  to  the  tax  surcharges  imposed  under  sections  one  hundred
eighty-four-a, one hundred eighty-six-c, one hundred  eighty-eight,  two
hundred  nine-A, two hundred nine-B, fifteen hundred five-a, and fifteen
hundred twenty of this chapter, and (2) the  MTA  percentage.  The  term
"MTA  percentage"  shall mean the product of (A) the tax rate applicable
under such sections imposing such  surcharges  and  (B)  the  percentage
utilized  in determining the portion of the taxpayer's business activity
carried on within  the  metropolitan  commuter  transportation  district
under such sections.
(d)  Exception  to  addition  for  underpayment of estimated tax.--The
addition to tax under subsection (c) with respect to any underpayment of

any amount which is applied as  an  installment  against  estimated  tax
under article nine-a, nine-b or nine-c shall not be imposed if the total
amount  of all payments of estimated tax made on or before the last date
prescribed  for  the  payment  of  any such amount equals or exceeds the
amount which would have been required to be paid on or before such  date
if the estimated tax were whichever of the following is the least--
(1)  The  tax  shown  on  the return of the taxpayer for the preceding
taxable year, if a return showing a liability for tax was filed  by  the
taxpayer  for  the  preceding taxable year and such preceding year was a
taxable year of twelve months, or
(2) An amount equal to the tax computed at the rates applicable to the
taxable year, but otherwise on the basis  of  the  facts  shown  on  the
return  of  the  taxpayer  for, and the law applicable to, the preceding
taxable year, or
(3) Annualized income installment. (A) General.   An amount  equal  to
ninety-one percent of the tax for the taxable year computed on all items
entering  into  the  computation of the tax or taxes of the taxpayer for
the taxable year under article nine,  nine-A  or  thirty-three  of  this
chapter.  For  purposes  of  computing  the  tax, all items of receipts,
income and expenses shall be placed on an annualized basis--
(i) for the first three months of the taxable year, in the case of the
installment required to be paid in the sixth month,
(ii) for the first six months of the taxable year, in the case of  the
installment required to be paid in the ninth month, and
(iii)  for  the  first nine months of the taxable year, in the case of
the installment required to be paid in the twelfth month.
(B)  Special  rules.  For  purposes  of  subparagraph  (A),  items  of
receipts,  income  and  expenses  shall be placed on an annualized basis
by--
(i) multiplying such items by twelve (or, in the  case  of  a  taxable
year  of  less  than  twelve months, the number of months in the taxable
year), and
(ii) dividing the resulting amounts by the number of  months  referred
to  in  subparagraph (A) (or in subparagraph (C), if an election applies
to the taxable year under such subparagraph).
(C) Election for different annualization periods. (i) If the  taxpayer
makes an election under this clause--
(I)  Clause (i) of subparagraph (A) of this paragraph shall be applied
by substituting "four months" for "three months",
(II) Clause (ii) of  subparagraph  (A)  of  this  paragraph  shall  be
applied by substituting "seven months" for "six months",
(III)  Clause  (iii)  of  subparagraph  (A) of this paragraph shall be
applied by substituting "ten months" for "nine months".
(ii) If the taxpayer makes an election under this clause--
(I) Clause (i) of subparagraph (A) of this paragraph shall be  applied
by substituting "five months" for "three months",
(II)  Clause  (ii)  of  subparagraph  (A)  of  this paragraph shall be
applied by substituting "eight months" for "six months",
(III) Clause (iii) of subparagraph (A)  of  this  paragraph  shall  be
applied by substituting "eleven months" for "nine months".
(iii)  An election under clause (i) or (ii) of this subparagraph shall
apply to the taxable year for which made and such an election  shall  be
effective  only  if  made  on or before the date required for filing the
declaration of estimated tax for such taxable year, or
(4) (A) If the base period percentage for any six  consecutive  months
of  the  taxable year equals or exceeds seventy percent, an amount equal
to ninety-one percent of the tax determined in the following manner--
(i) take the items entering into the computation of the tax  or  taxes
of  the  taxpayer  for  the  taxable  year under article nine, nine-A or
thirty-three of this chapter, for all months  during  the  taxable  year
preceding the filing month,
(ii)  divide such amounts by the base period percentage for all months
during the taxable year preceding the filing month,
(iii) determine the tax on the amounts determined under  clause  (ii),
and
(iv) multiply the tax determined under clause (iii) by the base period
percentage  for  the filing month and all months during the taxable year
preceding the filing month.
(B) For purposes of subparagraph (A)--
(i) the base period percentage for any period of months shall  be  the
average percent which the taxable income for the corresponding months in
each  of  the  three preceding taxable years bears to the taxable income
for the three  preceding  taxable  years.  The  tax  commission  may  by
regulations  provide for the determination of the base period percentage
in the case of reorganizations,  new  corporations,  and  other  similar
circumstances, and
(ii)  the term "filing month" means the month in which the installment
is required to be paid.
(5) In the case of any declaration installment, any reduction in  such
installment resulting from the application of paragraph three or four of
this subsection shall be recaptured by increasing the amount of the next
installment  determined under paragraph one or two of this subsection or
paragraph one of subsection (c) of this section by the  amount  of  such
reduction  (and by increasing subsequent installments to the extent that
the reduction has not previously been recaptured under this  paragraph).
For  purposes of the preceding sentence, a declaration installment means
any  installment  of  estimated  tax  other  than  the  mandatory  first
installment  required  under paragraph (a) of subdivision one of section
one hundred ninety-seven-b,  subdivision  (a)  of  section  two  hundred
thirteen-b  or  subdivision  (a)  of section fifteen hundred fourteen of
this chapter.
For  the  purposes  of  this  subsection  the  amounts  specified   in
paragraphs  (2),  (3)  and  (4)  shall be computed without regard to any
increase in the rates applicable to the  taxable  year  which  may  have
become effective after the first day of the seventh month of such year.
(e) (1) Paragraphs (1) and (2) of subsection (d) of this section shall
not   apply   in  the  case  of  any  corporation  (or  any  predecessor
corporation) which had business income, or the portion thereof allocated
within the state, of one million dollars or more for  any  taxable  year
during  the  three  taxable years immediately preceding the taxable year
involved; provided, however, that in the case of a  corporation  subject
to  tax  under section fifteen hundred two-a of this chapter, paragraphs
(1) and (2) of subsection (d) of this section shall not  apply  if  such
corporation  had  entire  net  income,  or the portion thereof allocated
within the state, of one million dollars or more for any  of  the  three
taxable years immediately preceding the taxable year involved, or if the
direct  premiums  subject  to tax under section fifteen hundred two-a of
this chapter of the corporation for any of such three preceding  taxable
years  beginning on or after January first, two thousand three equals or
exceeds three million seven hundred fifty thousand dollars.
(2) In the case of  taxpayers  described  in  paragraph  one  of  this
subsection,  paragraph  one  of  subsection  (c),  subparagraph  (A)  of
paragraph three of subsection (d), and  subparagraph  (A)  of  paragraph
four  of subsection (d) of this section shall be applied by substituting
"one hundred percent" for "ninety-one percent" each place it appears.
(e-1) Waiver  of  addition  for  underpayment  of  estimated  tax.  No
addition  to  tax  shall be imposed under subsection (c) of this section
with  respect  to  any  underpayment  to  the  extent  the  commissioner
determines  that  by  reason  of  casualty,  disaster  or  other unusual
circumstances  the  imposition  of such addition to tax would be against
equity and good conscience.
(f) Deficiency due to fraud.---(1) If any part of a deficiency is  due
to  fraud,  there shall be added to the tax an amount equal to two times
the deficiency.
(2) The addition to tax under this subsection shall be in lieu of  any
other addition to tax imposed by subsection (a) or (b).
(g)  Additional penalty.---Any person who with fraudulent intent shall
fail to pay under article nine, nine-a, nine-b or nine-c, any tax, or to
make, render, sign or certify any return  or  declaration  of  estimated
tax,  or  to supply any information within the time required by or under
such article, shall be liable to penalty of not more than  one  thousand
dollars,  in  addition to any other amounts required under this article,
to be imposed, assessed and collected by the  tax  commission.  The  tax
commission  shall have the power, in its discretion, to waive, reduce or
compromise any penalty under this subsection.
(h) Additions treated as tax.---The additions  to  tax  and  penalties
provided  by this section shall be paid upon notice and demand and shall
be assessed, collected and paid in the same manner  as  taxes,  and  any
reference in this article to tax imposed by article nine, nine-a, nine-b
or  nine-c  shall  be  deemed  also to refer to the additions to tax and
penalties provided by this section. For purposes of section one thousand
eighty-one, this subsection shall not apply to---
(1) any addition to tax under subsection (a) except as to that portion
attributable to a deficiency;
(2) any addition to tax under subsection (c) or (o); and
(3) any additional penalties under subsections (g) and (l).
(i) Determination of deficiency.---For purposes of subsections (b) and
(f), the amount shown as the tax by the taxpayer upon its  return  shall
be  taken  into account in determining the amount of the deficiency only
if such return was filed on or before the last day  prescribed  for  the
filing  of  such return, determined with regard to any extension of time
for such filing.
(j) Person defined.---For purposes of subsections  (g)  and  (l),  the
term  person includes an individual, corporation, partnership or limited
liability  company  or  an  officer  or  employee  of  any   corporation
(including  a  dissolved  corporation),  or  a member or employee of any
partnership, or a member, employee or manager  of  a  limited  liability
company,  who  as  such  officer, employee, manager or member is under a
duty to perform the act in respect of which the violation occurs.
* (k) Substantial understatement of liability.-- (1)  If  there  is  a
substantial  understatement  of tax for any taxable year, there shall be
added to the tax an amount equal to ten percent of  the  amount  of  any
underpayment  attributable  to such understatement. For purposes of this
subsection, there is a substantial understatement of tax for any taxable
year if the amount of the understatement for the  taxable  year  exceeds
the greater of ten percent of the tax required to be shown on the return
for  the  taxable  year  or  five  thousand dollars. For purposes of the
preceding sentence, the term "understatement" means the  excess  of  the
amount  of  the  tax  required to be shown on the return for the taxable
year, over the amount of the tax imposed which is shown  on  the  return
reduced  by  any rebate (within the meaning of subsection (h) of section
one thousand eighty-one of this article). The excess under the preceding
sentence shall be determined without regard to items to which subsection

(k-1) of this section applies. The commissioner may  waive  all  or  any
part of the addition to tax provided by this section on a showing by the
taxpayer that there was reasonable cause for the understatement (or part
thereof) and that the taxpayer acted in good faith.
(2)  The  amount  of  the  understatement  under paragraph one of this
subsection shall be reduced by that portion of the understatement  which
is  attributable to (A) the tax treatment of any item by the taxpayer if
there is or was substantial authority for such  treatment,  or  (B)  any
item  if  the  relevant  facts  affecting  the  item's tax treatment are
adequately disclosed in the return or in a  statement  attached  to  the
return.
(3)(A)  Subparagraph (B) of paragraph two of this subsection shall not
apply to any item attributable to a tax shelter.
(B) For purposes of this paragraph, the term "tax shelter" means
(i) a partnership or other entity,
(ii) any investment plan or arrangement, or
(iii) any other plan or arrangement,
if  a  significant  purpose  of  such  partnership,  entity,  plan,   or
arrangement is the avoidance or evasion of tax.
* NB Effective until July 1, 2029
* (k)   Substantial   understatement  of  liability.--If  there  is  a
substantial understatement of tax for any taxable year, there  shall  be
added  to  the  tax  an amount equal to ten percent of the amount of any
underpayment attributable to such understatement. For purposes  of  this
subsection, there is a substantial understatement of tax for any taxable
year  if  the  amount of the understatement for the taxable year exceeds
the greater of ten percent of the tax required to be shown on the return
for the taxable year or five  thousand  dollars.  For  purposes  of  the
preceding  sentence,  the  term "understatement" means the excess of the
amount of the tax required to be shown on the  return  for  the  taxable
year,  over  the  amount of the tax imposed which is shown on the return
reduced by any rebate (within the meaning of subsection (h)  of  section
one  thousand  eighty-one).  The  amount of such understatement shall be
reduced by that portion of the understatement which is  attributable  to
the  tax  treatment  of  any  item  by  the  taxpayer if there is or was
substantial authority for such treatment, or any item  with  respect  to
which  the  relevant  facts  affecting  the  item's  tax  treatment  are
adequately disclosed in the return or in a  statement  attached  to  the
return.  The tax commission may waive all or any part of the addition to
tax provided by this section on a showing by the taxpayer that there was
reasonable cause for the understatement (or part thereof) and  that  the
taxpayer acted in good faith.
* NB Effective July 1, 2029
* (k-1) Reportable transaction understatement.-- (1) If a taxpayer has
a  reportable  transaction  understatement  for  any taxable year, there
shall be added to the tax an amount  equal  to  twenty  percent  of  the
amount of such understatement.
(2)  For  purposes  of  this section, the term "reportable transaction
understatement" means the sum of
(A) the product of--
(i) the amount of the increase (if any) in  the  applicable  tax  base
which  results  from a difference between the proper tax treatment of an
item to which this section applies and the taxpayer's treatment of  such
item (as shown on the taxpayer's return of tax), and
(ii) the highest rate of tax imposed under the article of this chapter
that applies to the taxpayer, and
(B)  the  amount  of  the decrease (if any) in the aggregate amount of
credits determined under the article of this chapter that applies to the

taxpayer  which  results  from  a  difference  between  the   taxpayer's
treatment  of  an  item  to  which this section applies (as shown on the
taxpayer's return of tax) and the proper tax treatment of such item.
For  purposes  of subparagraph (A) of this paragraph, any reduction of
the excess of deductions allowed for the taxable year over gross  income
for  such  year, and any reduction in the amount of capital losses which
would (without regard to section one thousand two hundred eleven of  the
internal  revenue code) be allowed for such year, shall be treated as an
increase in the applicable tax base.
(3) This subsection shall apply to any item which is attributable to--
(A) any listed transaction, and
(B) any reportable transaction (other than a listed transaction) if  a
significant  purpose  of such transaction is the avoidance or evasion of
tax.
(4) Paragraph one of this subsection shall be applied by  substituting
"thirty percent" for "twenty percent" with respect to the portion of any
reportable   transaction   understatement  with  respect  to  which  the
requirement of clause (i) of subparagraph (B) of paragraph ten  of  this
subsection is not met.
(5)   For   purposes   of   this  subsection,  the  terms  "reportable
transaction" and "listed transaction" have the meanings  given  to  such
terms  by  section  twenty-five  of  this  chapter, the term "reportable
transaction" shall  include  a  "New  York  reportable  transaction"  as
defined  in  such section twenty-five, and the term "listed transaction"
shall include any transaction designated as a tax avoidance  transaction
pursuant to such section twenty-five.
(6)  In the case of an understatement (as defined in subsection (k) of
this section)
(A) the amount of such understatement (determined  without  regard  to
this paragraph) shall be increased by the aggregate amount of reportable
transaction  understatements  for  purposes  of determining whether such
understatement is a substantial understatement under subsection  (k)  of
this  section,  and (B) the addition to tax under subsection (k) of this
section shall apply only to the excess of the amount of the  substantial
understatement  (if  any)  after  the application of subparagraph (A) of
this paragraph over  the  aggregate  amount  of  reportable  transaction
understatements.
(7)  References  to  an understatement (or a deficiency) in subsection
(f) of this section shall  be  treated  as  including  references  to  a
reportable transaction understatement.
(8)   This   subsection   shall  not  apply  to  any  portion  of  any
understatement on which a penalty is imposed  under  subsection  (f)  of
this section.
(9)  Except as provided in regulations prescribed by the commissioner,
in no event shall any  tax  treatment  included  with  an  amendment  or
supplement  to  a return of tax be taken into account in determining the
amount of any reportable transaction understatement if the amendment  or
supplement  is filed after the earlier of the date the taxpayer is first
contacted by the commissioner regarding the examination of the return or
such other date as is specified by the commissioner.
(10)(A) No penalty shall be imposed under this subsection with respect
to any portion of a reportable transaction understatement if it is shown
that there was a reasonable cause for such portion and that the taxpayer
acted in good faith with respect to such portion.
(B) Subparagraph  (A)  of  this  paragraph  shall  not  apply  to  any
reportable transaction understatement unless:
(i)  the  relevant  facts  affecting the tax treatment of the item are
adequately disclosed in accordance  with  section  twenty-five  of  this
chapter,
(ii) there is or was substantial authority for such treatment, and
(iii)  the  taxpayer  reasonably believed that such treatment was more
likely than not the proper treatment.
A taxpayer failing to adequately disclose  in  accordance  with  section
twenty-five of this chapter shall be treated as meeting the requirements
of  clause  (i) of this subparagraph if the penalty for such failure was
rescinded under subsection (p) of this section.
(11)(A) A taxpayer shall be treated as having a reasonable belief with
respect to the tax treatment of an item only if such belief
(i) is based on the facts and law that exist at the time the return of
tax which includes such tax treatment is filed, and
(ii) relates solely to the taxpayer's chances of success on the merits
of such treatment and does not take into account the possibility that  a
return  will not be audited, such treatment will not be raised on audit,
or such treatment will be resolved through settlement if it is raised.
(B)(i) An opinion of a tax advisor may not be relied upon to establish
the reasonable belief of a taxpayer if
(I) the tax advisor is described in clause (ii) of this  subparagraph,
or
(II) the opinion is described in clause (iii) of this subparagraph.
(ii) A tax advisor is described in this clause if the tax advisor:
(I)  is a material advisor (within the meaning of section six thousand
one hundred eleven of the internal revenue code or within  such  meaning
as  it  also  applies to a New York reportable transaction as defined in
section  twenty-five  of  this  chapter)   and   participates   in   the
organization,  management,  promotion,  or sale of the transaction or is
related (within the meaning of subsection (b)  of  section  two  hundred
sixty-seven  of  the  internal revenue code or subsection (b) of section
seven hundred seven of the internal revenue code) to any person  who  so
participates,
(II)  is compensated directly or indirectly by a material advisor with
respect to the transaction,
(III) has a fee arrangement with respect to the transaction  which  is
contingent  on  all  or  part  of  the  intended  tax  benefits from the
transaction being sustained, or
(IV) has a  disqualifying  financial  interest  with  respect  to  the
transaction.
(iii)  For  purposes of clause (i) of this subparagraph, an opinion is
disqualified if the opinion
(I) is based on unreasonable factual or legal  assumptions  (including
assumptions as to future events),
(II)  unreasonably relies on representations, statements, findings, or
agreements of the taxpayer or any other person,
(III) does not identify and consider all relevant facts, or
(IV) fails to meet any  other  requirement  as  the  commissioner  may
prescribe.
* NB Repealed July 1, 2029
(k-2)  No penalty will be imposed pursuant to subsection (c) or (k) of
this section for a taxable year beginning on or after January first, two
thousand eight and before January first,  two  thousand  nine  resulting
from  the  denial  of  an empire zone tax credit claimed by the taxpayer
because an empire zone retention certificate was not issued pursuant  to
subdivision  (w)  of  section  nine  hundred  fifty-nine  of the general
municipal law to the empire zone enterprise which is the basis  for  the
tax credit or credits claimed on the return or report.
(l)  Aiding or assisting in the giving of fraudulent returns, reports,
statements or other documents.--(1) Any person who, with the intent that
tax be evaded, shall, for a fee or other compensation or as an  incident
to  the  performance  of  other  services for which such person receives
compensation,  aid  or  assist  in,  or  procure, counsel, or advise the
preparation or presentation under, or  in  connection  with  any  matter
arising  under article nine, nine-A, nine-B or nine-C of this chapter of
any return, report, declaration, statement or other  document  which  is
fraudulent  or  false  as to any material matter, or supply any false or
fraudulent information, whether or not such falsity or fraud is with the
knowledge or consent of the person authorized  or  required  to  present
such  return, report, declaration, statement or other document shall pay
a penalty not exceeding ten thousand dollars.
(2) For purposes  of  paragraph  one  of  this  subsection,  the  term
"procures"  includes ordering (or otherwise causing) a subordinate to do
an act, and knowing of, and not attempting to prevent, participation  by
a  subordinate  in an act. The term "subordinate" means any other person
(whether or not a director, officer, employee, or agent of the  taxpayer
involved)  over  whose activities the person has direction, supervision,
or control.
(3) For purposes  of  paragraph  one  of  this  subsection,  a  person
furnishing  typing,  reproducing,  or  other  mechanical assistance with
respect to a document shall not be treated as having aided  or  assisted
in the preparation of such document by reason of such assistance.
(4) The penalty imposed by this subsection shall be in addition to any
other penalty provided by law.
(n) Failure to file report of information relating to certain interest
payments.--In case of failure to file the report of information required
under  subdivision  two-a  of  section  two hundred eleven, unless it is
shown that such failure is due  to  reasonable  cause  and  not  due  to
willful  neglect,  there  shall  be  added  to the tax a penalty of five
hundred dollars.
* (p)  Failure  to  disclose   or   provide   reportable   transaction
information.    -- (1) Any person who fails to file, disclose or provide
any  statement,  return  or  other  document  which  is  required  under
subdivision  (a)  of  section  twenty-five  of  this chapter shall pay a
penalty in the amount determined under paragraph two of this subsection.
(2)(A) Except as provided in subparagraph (B) of this  paragraph,  the
amount  of  the  penalty under paragraph one of this subsection shall be
twenty thousand dollars.
(B) The amount of the penalty under paragraph one of  this  subsection
with respect to a listed transaction shall be fifty thousand dollars.
(3)   For   purposes   of   this  subsection,  the  terms  "reportable
transaction" and "listed transaction" shall have the  same  meanings  as
used  in  section  twenty-five  of  this  chapter,  the term "reportable
transaction" shall  include  a  "New  York  reportable  transaction"  as
defined  in  such section twenty-five, and the term "listed transaction"
shall include any transaction designated as a tax avoidance  transaction
pursuant to such section twenty-five.
(4)  The  commissioner  may  rescind all or any portion of any penalty
imposed by this subsection with respect to any violation if
(A) the violation is with respect to a  reportable  transaction  other
than a listed transaction, and
(B)   rescinding   the  penalty  would  promote  compliance  with  the
requirements of this chapter and effective tax administration.
(5) The penalty imposed by this section shall be in  addition  to  any
other penalty imposed by this chapter.
* NB Repealed July 1, 2029
* (q)  Failure to disclose or provide reportable transaction return.--
(1) Any person who fails to file, disclose  or  provide  any  statement,
return  or  other  document  which  is required under subdivision (b) of
section twenty-five of this chapter shall pay a penalty  in  the  amount
determined under paragraph two of this subsection.
(2)(A)  Except  as provided in subparagraph (B) of this paragraph, the
amount of the penalty under paragraph one of this  subsection  shall  be
twenty thousand dollars.
(B)  The  amount of the penalty under paragraph one of this subsection
with respect to a listed transaction shall be the greater of
(i) fifty thousand dollars or,
(ii) fifty percent of the gross income that the organizer or  material
advisor  derived  with respect to activities that were the basis for the
requirement to file, disclose or provide information pursuant to section
six thousand eleven of the internal revenue code,  to  the  extent  such
gross  income  is attributable to the avoidance of any tax imposed under
article nine, nine-A or thirty-three of this chapter.
(C) Clause (ii) of subparagraph (B) of this paragraph shall be applied
by substituting "seventy-five percent" for "fifty percent" in  the  case
of  an  intentional  failure  or  act described in paragraph one of this
subsection.
(3)  For  purposes  of  this   subsection,   the   terms   "reportable
transaction"  and  "listed  transaction" shall have the same meanings as
used in section  twenty-five  of  this  chapter,  the  term  "reportable
transaction"  shall  include  a  "New  York  reportable  transaction" as
defined in such section twenty-five, and the term  "listed  transaction"
shall  include any transaction designated as a tax avoidance transaction
pursuant to such section twenty-five.
(4) The commissioner may rescind all or any  portion  of  any  penalty
imposed by this subsection with respect to any violation if
(A)  the  violation  is with respect to a reportable transaction other
than a listed transaction, and
(B)  rescinding  the  penalty  would  promote  compliance   with   the
requirements of this chapter and effective tax administration.
(5) The penalty imposed by this subsection shall be in addition to any
other  penalty  imposed by this chapter, except that no penalty shall be
imposed under subparagraph (A) or clause  (i)  of  subparagraph  (B)  of
paragraph  two  of  subsection (y) of section six hundred eighty-five of
this chapter for the same failure that is the basis for a penalty  under
this subsection. Nothing in this paragraph shall preclude the imposition
of  a  penalty under clause (ii) of subparagraph (B) of paragraph two of
subsection (y) of section six hundred eighty-five of  this  chapter  for
the  same  failure  that is the basis for a penalty under clause (ii) of
subparagraph (B) of paragraph two of this subsection.
* NB Repealed July 1, 2029
* (r) Failure to maintain list of advisees.-- (1) If any person who is
required to maintain a list under subdivision (c) of section twenty-five
of this chapter fails to make a duplicate of such  list  available  upon
written  request by the commissioner in accordance with such subdivision
within twenty business days after the date of such request, such  person
shall pay a penalty of ten thousand dollars for each day of such failure
after such twentieth day.
(2)  No  penalty  shall be imposed by paragraph one of this subsection
with respect to the failure on  any  day  if  such  failure  is  due  to
reasonable cause.
* NB Repealed July 1, 2029
* (s) Tax preparer penalty.-- (1) If:
(A)  any  part  of any understatement of liability with respect to any
return or claim for refund is due to a position for which there was  not
a  reasonable  belief  that  the tax treatment in that position was more
likely than not the proper treatment,
(B)  any  person  who  is  a  tax return preparer with respect to such
return or claim knew (or reasonably should have known) of such position,
and
(C) such position was not disclosed as provided in subsection  (k)  of
this  section  or there was no reasonable basis for the tax treatment of
that position, such person shall pay a penalty of  up  to  one  thousand
dollars  with  respect  to  such return or claim unless it is shown that
there is reasonable cause for the understatement and such  person  acted
in good faith.
(2) If any part of any understatement of liability with respect to any
return or claim for refund is due
(A) to a willful attempt in any manner to understate the liability for
tax by a person who is a tax return preparer with respect to such return
or claim, or
(B)  to  any reckless or intentional disregard of rules or regulations
by any such person, such person shall  pay  a  penalty  of  up  to  five
thousand  dollars  with respect to such return or claim. With respect to
any return or claim, the amount of the penalty payable by any person  by
reason  of  this paragraph shall be reduced by the amount of the penalty
paid by such person by reason of paragraph one of this subsection.
(3) For purposes of  this  subsection,  the  term  "understatement  of
liability"  means  any  understatement  of  the  net amount payable with
respect to any tax imposed under article nine, nine-A or thirty-three of
this chapter or any  overstatement  of  the  net  amount  creditable  or
refundable with respect to any such tax.
(4)  This  subsection  shall not apply if the penalty under subsection
(l) of this section is imposed on the tax return preparer  with  respect
to such understatement.
* NB Repealed July 1, 2029
* (t) Promoting abusive tax shelters.-- (1) Any person who
(A)(i) organizes (or assists in the organization of)
(I) a partnership or other entity,
(II) any investment plan or arrangement, or
(III) any other plan or arrangement, or
(ii) participates (directly or indirectly) in the sale of any interest
in  an  entity  or plan or arrangement referred to in clause (i) of this
subparagraph, and
(B) makes or furnishes or causes another person to make or furnish (in
connection with such organization or sale)
(i) a statement with respect to the allowability of any  deduction  or
credit,  the  excludability  of any income, or the securing of any other
tax  benefit  by  reason  of  holding  an  interest  in  the  entity  or
participating  in  the plan or arrangement which the person knows or has
reason to know is false or fraudulent as to any material matter, or
(ii) a gross valuation overstatement as to any material matter, and
(C) satisfies any of the following conditions
(i) the person is organized in this state,
(ii) the person is doing business in this state,
(iii) the person is deriving income in this state, or
(iv)  the  person  conducts  any  of  the  activities   described   in
subparagraph (A) or (B) of this paragraph within the state of New York,
shall  pay,  with respect to each activity described in subparagraph (A)
of this paragraph, a penalty equal to one thousand dollars  or,  if  the
person  establishes  that it is lesser, one hundred percent of the gross

income derived (or to be derived) by such person from such  activity  to
the  extent  such gross income is attributed to the avoidance of any tax
imposed under articles nine, nine-A or  thirty-three  of  this  chapter;
provided,  however,  that if an activity with respect to which a penalty
imposed under this subsection involves a statement described  in  clause
(i) of subparagraph (B) of paragraph one of this subsection, the penalty
shall  be  equal  to fifty percent of the gross income derived (or to be
derived) from that activity within the state by the person on which  the
penalty  is  imposed. For purposes of the preceding sentence, activities
described in clause (i) of  subparagraph  (A)  of  this  paragraph  with
respect  to  each  entity  or arrangement shall be treated as a separate
activity and participation in each sale  described  in  clause  (ii)  of
subparagraph (A) of this paragraph shall be so treated.
(2)(A)  For  purposes  of  this  subsection, the term "gross valuation
overstatement" means any statement as to the value of  any  property  or
services if--
(i)  the  value  so  stated  exceeds two hundred percent of the amount
determined to be the correct valuation, and
(ii) the value of such property or services is directly related to the
amount of any deduction or credit allowable under this  chapter  to  any
participant.
(B) The commissioner may waive all or any part of the penalty provided
by  paragraph one of this subsection with respect to any gross valuation
overstatement on a showing that there was a  reasonable  basis  for  the
valuation and that such valuation was made in good faith.
(3) The penalty imposed by this subsection shall be in addition to any
other penalty provided by law.
* NB Repealed July 1, 2029
(u)  False or fraudulent document penalty. Any taxpayer that submits a
false or fraudulent document to the department  will  be  subject  to  a
penalty  of  one hundred dollars per document submitted, or five hundred
dollars per tax return submitted. This penalty will be  in  addition  to
any other penalty or addition provided by law.
(v)  Failure  to  supply  all  the  information required or to provide
correct information in secretary of state statements. Unless it is shown
that such failure to provide the statement and information  required  by
section  four  hundred  eight  of the business corporation law is due to
reasonable cause and not to willful neglect, there  shall,  upon  notice
and demand by the commissioner and in the same manner as tax, be paid by
the  taxpayer  failing  to  supply  complete  and correct information, a
penalty of two hundred fifty dollars per corporation required to provide
such information.