2023 New York Laws › TAX - Tax › Article 1 - Short Title; Definitions; Miscellaneous › 9 - Electronic Funds Transfer by Certain Taxpayers Remitting Withholding Taxes.

§   9.  Electronic  funds  transfer  by  certain  taxpayers  remitting
withholding taxes. (a) Definitions. For the purposes of this section:
(1) The term "commissioner" means the  commissioner  of  taxation  and
finance.
(2)  The  term  "educational  organization" means a higher educational
institution which
(A) is authorized by the New York state board  of  regents  to  confer
degrees, or
(B)  offers a range of registered undergraduate and graduate curricula
in the liberal arts and sciences, degrees in two  or  more  professional
fields and doctoral programs in at least three academic fields, or
(C)  is  authorized  by  the  New York state board of regents to offer
undergraduate curricula below the  baccalaureate  level  which  normally
lead to the associate degree,
as  such  higher  educational institutions are described in subdivisions
(k), (l) and (m) of section 50.1 of eight  New  York  codes,  rules  and
regulations.
(3)  The term "electronic funds transfer" means any transfer of funds,
other than a transaction originated by check, draft,  or  similar  paper
instrument,   which   is   initiated  through  an  electronic  terminal,
telephonic instrument or computer or  magnetic  tape  so  as  to  order,
instruct  or  authorize  a  financial  institution to debit or credit an
account.
(4) The term "health care provider" means any  organization  described
in  article  twenty-eight  or thirty-six of the public health law, or in
article thirty-one of the mental hygiene law.
(5) The term "payment of tax" means the amount of tax that is actually
remitted upon the filing of a withholding tax  return,  or  is  actually
remitted  for  the  purposes  of  obtaining  an extension to file such a
return.
(6) The term  "reconciliation  of  withholding"  means  the  quarterly
combined  withholding,  wage reporting and unemployment insurance return
required to be filed for the last calendar  quarter  of  each  year,  as
prescribed  by  paragraph  four of subsection (a) of section six hundred
seventy-four of this chapter.
(b) General rules.  (1)  Subject  to  the  requirements  contained  in
subdivisions (c) and (d) of this section, the commissioner shall require
by  regulation  that  any  payment  of  tax  made  by  a taxpayer who is
required, for either of the semi-annual periods ending June thirtieth or
December  thirty-first,  to  deduct  and  withhold   an   aggregate   of
thirty-five  thousand  dollars  or more of withholding taxes pursuant to
part V of  article  twenty-two  of  this  chapter,  or  pursuant  to  an
equivalent  provision  enacted  under  the  authority of article thirty,
thirty-A or thirty-B of this chapter, or article two-E  of  the  general
city  law,  shall  be  made, on or before the date prescribed by law, by
electronic funds transfer to a bank,  banking  house  or  trust  company
designated  by  the  commissioner. The commissioner shall designate only
such banks, banking houses  or  trust  companies  as  are  or  shall  be
designated  by  the  comptroller as depositories pursuant to section one
hundred seventy-one-a of this chapter, as added by chapter sixty-nine of
the  laws  of  nineteen  hundred  seventy-eight.   Notwithstanding   any
provision of law to the contrary, any such payment shall be deemed to be
made on the date the payment is received by the designated depository of
the  department;  provided,  however, that at the election of a taxpayer
subject to the provisions of this subdivision, mailing by  the  taxpayer
of  the  applicable withholding tax return and a certified check for the
amount of the tax liability on or before the second business  day  prior
to the applicable due date otherwise prescribed by law shall fulfill the

requirements of this section and shall be deemed to be timely payment of
such tax liability and timely filing of such return.
(2)  (A)  On  or  before the thirtieth calendar day following the date
regulations  implementing  the  provisions  of   this   section   become
effective,  the  commissioner shall, by certified mail, notify taxpayers
required to participate in the  electronic  funds  transfer  program  of
their responsibilities under such program. The notice shall also specify
that the first payment of tax by electronic funds transfer shall be made
on  an  applicable  due  date occurring on or after thirty calendar days
following receipt by the taxpayer of the notice; provided, however, that
the taxpayer may select an optional applicable  due  date  occurring  no
later  than sixty calendar days following receipt by the taxpayer of the
notice.
(B) (i) By September first, two thousand two, the commissioner  shall,
by certified mail, notify taxpayers newly required to participate in the
electronic  funds  transfer  program during the July first, two thousand
two through June thirtieth, two  thousand  three  program  period.  Such
notice  shall  contain  language advising the taxpayer of the enrollment
procedure and of the consequences of failure to enroll in such  program,
as  well as of the taxpayer's obligation to enroll in the program within
forty-five calendar days of  the  mailing  of  the  notice  unless  such
taxpayer  challenges  such  determination  of  required participation by
requesting a hearing within forty-five calendar days of the  mailing  of
such notice. In addition, such notice shall specify that such a taxpayer
shall  make  its first payment of tax by electronic funds transfer by an
applicable due date in January, two thousand three.
(ii) By June first, two thousand three and  by  each  succeeding  June
first, the commissioner shall, by certified mail, notify taxpayers newly
required  to  participate in the electronic funds transfer program. Such
notice shall contain language advising the taxpayer  of  the  enrollment
procedure  and of the consequences of failure to enroll in such program,
as well as of the taxpayer's right to challenge  such  determination  of
required  participation  provided  a  hearing is requested within twenty
calendar days of the mailing of such notice. In  addition,  such  notice
shall  specify  that such a taxpayer shall make its first payment of tax
by electronic funds transfer by an applicable due date occurring  on  or
after  thirty  calendar  days  following  receipt by the taxpayer of the
notice but no later than sixty calendar days following  receipt  by  the
taxpayer of the notice.
(iii)  If  a  taxpayer  does  not  enroll  within forty-five or twenty
calendar days (as the case may be) of the mailing of the notice provided
for in clause (i) or (ii) of this subparagraph  or  where  a  taxpayer's
challenge  to  mandatory participation is not sustained and the taxpayer
has not enrolled within ten calendar days of notification  thereof,  the
commissioner  shall  mail  another  notice,  in addition to making other
reasonable attempts, to inform the taxpayer of the  civil  penalty  that
has  been  assessed  pursuant to subdivision (h) of this section, of the
opportunity for abatement of such penalty, and of the  future  penalties
that may result from continued failure to enroll.
(3)  Subject  to the provisions of subdivision (f) of this section, an
electronic funds transfer shall serve as a substitute for the filing  of
a withholding tax return.
(c)   Special   rules  with  respect  to  health  care  providers  and
educational organizations.
(1) The provisions of subdivision (b) of this section shall not  apply
to health care providers.
(2)  All  of the provisions of this section shall apply to educational
organizations; provided, however, that any payment of tax which is  made

by  an  educational  organization  shall  be  made  by  electronic funds
transfer on  or  before  the  third  business  day  following  the  date
otherwise prescribed by law; and, provided further, that at the election
of  a taxpayer subject to the provisions of this subdivision, mailing by
the taxpayer of the applicable withholding tax return  and  a  certified
check  for  the  amount  of  the  tax  liability  on or before the first
business day following the applicable due date otherwise  prescribed  by
law  shall  fulfill the requirements of this section and shall be deemed
to be timely payment of such tax liability and  timely  filing  of  such
return.
(d)  Exemptions.  A  taxpayer  shall  be  exempt from the requirements
contained in subdivision (b) of this section if such taxpayer proves  to
the  satisfaction  of  the  commissioner  that  aggregate  tax withheld,
pursuant to the most recent reconciliation of withholding, is less  than
one hundred thousand dollars.
(e)  Voluntary  participation.  A taxpayer may file a request with the
commissioner to  pay  any  tax  administered  by  such  commissioner  by
electronic  funds  transfer  in  accordance  with the provisions of this
section. Such request shall be in such form as  the  commissioner  shall
require  and shall be granted under such conditions as the commissioner,
by regulation, deems necessary.
* (f) Return substitution. An  electronic  funds  transfer  shall  not
serve  as a substitute for the filing of a withholding tax return if the
commissioner determines that  such  substitution  will  not  ensure  the
proper receipt and crediting of a payment of tax.
* NB Expired December 31, 1992
(g)  Confidentiality.  The department shall assure the confidentiality
of information supplied  by  taxpayers  in  effecting  electronic  funds
transfers  in  accordance  with  the  provisions  of section six hundred
ninety-seven of this chapter or  other  applicable  provisions  of  this
chapter.  The provisions of article six of the public officers law shall
not apply to any such information supplied by taxpayers subject  to  the
requirements of this section.
(h)  Civil  penalty  for  failure to enroll. If a taxpayer required to
participate in the electronic funds transfer program prescribed by  this
section  fails to enroll in such program in accordance with the terms of
subparagraph (B) of paragraph two of subdivision (b)  of  this  section,
such  taxpayer  shall  pay  a  penalty  equal  to five thousand dollars;
provided, however, that if such taxpayer enrolls in the  program  within
twenty calendar days after notification of assessment of such penalty is
sent  by  the department by certified mail for program periods beginning
on or after July first, two thousand two, then  such  penalty  shall  be
abated.  If  such  taxpayer  continues  to fail to enroll in the program
after such twenty  calendar  day  period,  the  taxpayer  shall  pay  an
additional  penalty  of  five  hundred dollars if the failure is for not
more than one month with an additional five  hundred  dollars  for  each
additional   month   or  fraction  thereof  during  which  such  failure
continues. The penalty provided by  this  section  shall  be  paid  upon
notice  and demand and shall be assessed, collected and paid in the same
manner as  the  withholding  taxes  referred  to  in  paragraph  one  of
subdivision  (b) of this section; and any reference in the provisions of
part VI of article twenty-two  of  this  chapter,  which  apply  to  the
administration  of and procedures with respect to the provisions of this
section, shall be deemed also to refer to the penalty provided  by  this
section.
(i)   Regulations.   The  commissioner  shall  promulgate  regulations
necessary to implement this section, which  regulations  shall  include,
but shall not be limited to, the following:
(1)  the  different  methods  of  effecting  electronic funds transfer
messages available to taxpayers. Such methods shall include at least two
methods in which the transfer can be effected without any charge to  the
taxpayer  for  the  electronic  funds  transfer  itself, and one of such
methods shall not require the taxpayer to disclose financial institution
account information to the department;
(2)  the contents of an electronic funds transfer message necessary to
ensure the proper receipt and crediting of a tax payment;
(3) the means by which taxpayers will be provided acknowledgements  of
payments by electronic funds transfer; and
(4)  delineation of what shall constitute reasonable cause and absence
of willful neglect for purposes of compliance  with  the  provisions  of
this  section, including the inability of a taxpayer, for reasons beyond
the taxpayer's control,  to  utilize  any  system  of  electronic  funds
transfer required pursuant to this section.