Makes technical changes relating to the rescindment of certificates of authority clarifying that a failure to file a report or return relates only to the person's obligation to pay taxes.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5430
SPONSOR: Tapia TITLE OF BILL:
An act to amend the tax law, in relation to making technical changes
relating to the rescindment of certificates of authority
PURPOSE:
Makes technical changes relating to the rescindment of certificates of
authority.
SUMMARY OF PROVISIONS:
Section one: Amends subparagraph A of paragraph 4 of subdivision a of
section 1134 of the tax law with respect to only the person's obligation
to pay taxes.
Section two: Amends subparagraph A of paragraph 4 of subdivision a of
section 1134 with respect to only the person's obligation to pay taxes.
Section three: Provides for an effective date.
EXISTING LAW:
Section 1134 of the tax law.
JUSTIFICATION:
NY State Sales Tax Collection and Regulating the Certificate of Authori-
ty Sellers of products in New York State are subject to sales tax and
must obtain a Certificate of Authority and register with the New York
State Tax Department. The Certificate of Authority gives the seller the
right to collect tax on their taxable sale's and to issue and accept
most New York State sales tax exemption certificates. Generally, the
seller collects the tax from the purchaser and remits it to New York
State.
Wholesale sellers collecting sales taxes from customers must ensure that
they are accurately collecting these taxes, and that their customers are
fully compliant with accurately reporting those taxes that they are
paying.
Wholesale sellers who do not collect sales taxes from their customers
must nevertheless report their sales to the New York State Tax Depart-
ment in the form of "information returns" so that the Department knows
what taxes must be paid by the wholesale sellers' customers. Proper
reporting is often complicated given the diverse and complex retail
environment in New York City, where there are tens of thousands of small
and immigrant-owned businesses who are not English speakers, and who
often lack a full understanding of their tax obligations. This can, and
often does, make it difficult for the wholesale sellers to report accu-
rate information to the Department.
Given this challenge, the Department's recent determination to penalize
wholesale sellers for inaccurate or incomplete Information returns has
gone overboard. In addition to fines for such non-compliance, which the
proposed bill does not change, the Department is attempting to rescind
the wholesale seller's Certificate of Authority - with the obvious
effect of putting them out of business. This overreaching penalty can
put hundreds of community workers out of work, as well as deprive New
York State of significant tax dollars from the wholesale seller.
In order to ensure that the process is both efficient and fair to both
retailers and wholesalers, the legislation proposed here limits the
taxing authority's ability to remove a wholesaler's Certificate of
Authority to willful acts and/or adjudicated crimes by the wholesale
seller that cause a failure to properly collect and remit sales tax
revenues from customers to the Department. The bill thus only removes
the Department's ability to rescind a Certificate of Authority for prob-
lems associated with a seller's filing of information returns.
Proper oversight that includes the drastically punitive response of
rescission of a seller's Certificate of Authority should be implemented
only for those who fail to pay their own taxes.
LEGISLATIVE HISTORY:
New Bill
FISCAL IMPLICATIONS:
None
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to any and all
notices for rescindment issued on and after January 1, 2015
STATE OF NEW YORK
________________________________________________________________________
5430
2025-2026 Regular Sessions
IN ASSEMBLY
February 14, 2025
___________
Introduced by M. of A. TAPIA -- read once and referred to the Committee
on Ways and Means
AN ACT to amend the tax law, in relation to making technical changes
relating to the rescindment of certificates of authority
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subparagraph (A) of paragraph 4 of subdivision (a) of
2 section 1134 of the tax law, as amended by section 2 of part P of chap-
3 ter 59 of the laws of 2021, is amended to read as follows:
4 (A) Where a person who holds a certificate of authority, and with
5 respect to only the person's obligation to pay taxes, (i) willfully
6 fails to file a report or return required by this article, (ii) willful-
7 ly files, causes to be filed, gives or causes to be given a report,
8 return, certificate or affidavit required under this article which is
9 false, (iii) willfully fails to comply with the provisions of paragraph
10 two or three of subdivision (e) of section eleven hundred thirty-seven
11 of this [article] part, (iv) willfully fails to prepay, collect, truth-
12 fully account for or pay over any tax imposed under this article or
13 pursuant to the authority of article twenty-nine of this chapter, (v)
14 fails to obtain a bond pursuant to paragraph two of subdivision (e) of
15 section eleven hundred thirty-seven of this part, or fails to comply
16 with a notice issued by the commissioner pursuant to paragraph three of
17 such subdivision, (vi) has been convicted of a crime provided for in
18 this chapter, (vii) where such person, or any person affiliated with
19 such person as such term is defined in subdivision twenty-one of section
20 four hundred seventy of this chapter, has had a retail dealer registra-
21 tion issued pursuant to section four hundred eighty-a of this chapter
22 revoked pursuant to subparagraph (iii) of paragraph (a) of subdivision
23 four of such section four hundred eighty-a, or (viii) has not obtained a
24 valid retail dealer registration under section four hundred eighty-a of
25 this chapter and such person possesses or sells unstamped or unlawfully
26 stamped packages of cigarettes three or more times within a period of
27 five years, the commissioner may revoke or suspend such certificate of
28 authority and all duplicates thereof. Provided, however, that the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08163-01-5
A. 5430 2
1 commissioner may revoke or suspend a certificate of authority based on
2 (a) the grounds set forth in clause (vi) of this subparagraph only where
3 the conviction referred to occurred not more than one year prior to the
4 date of revocation or suspension; and provided further that where the
5 commissioner revokes or suspends a certificate of authority based on the
6 grounds set forth in clause (vii) of this subparagraph, such suspension
7 or revocation shall continue for as long as the revocation of the retail
8 dealer registration pursuant to section four hundred eighty-a of this
9 chapter remains in effect, or (b) the grounds set forth in clause (viii)
10 of this subparagraph, such suspension or revocation shall be for a peri-
11 od of five years.
12 § 2. Subparagraph (A) of paragraph 4 of subdivision (a) of section
13 1134 of the tax law, as amended by section 2-a of part P of chapter 59
14 of the laws of 2021, is amended to read as follows:
15 (A) Where a person who holds a certificate of authority, and with
16 respect to only the person's obligation to pay taxes, (i) willfully
17 fails to file a report or return required by this article, (ii) willful-
18 ly files, causes to be filed, gives or causes to be given a report,
19 return, certificate or affidavit required under this article which is
20 false, (iii) willfully fails to comply with the provisions of paragraph
21 two or three of subdivision (e) of section eleven hundred thirty-seven
22 of this [article] part, (iv) willfully fails to prepay, collect, truth-
23 fully account for or pay over any tax imposed under this article or
24 pursuant to the authority of article twenty-nine of this chapter, (v)
25 has been convicted of a crime provided for in this chapter, (vi) where
26 such person, or any person affiliated with such person as such term is
27 defined in subdivision twenty-one of section four hundred seventy of
28 this chapter, has had a retail dealer registration issued pursuant to
29 section four hundred eighty-a of this chapter suspended or revoked
30 pursuant to subparagraph (iii) of paragraph (a) of subdivision four of
31 such section four hundred eighty-a, or (vii) has not obtained a valid
32 retail dealer registration under section four hundred eighty-a of this
33 chapter and such person possesses or sells unstamped or unlawfully
34 stamped packages of cigarettes three or more times within a period of
35 five years, the commissioner may revoke or suspend such certificate of
36 authority and all duplicates thereof. Provided, however, that the
37 commissioner may revoke or suspend a certificate of authority based on
38 (a) the grounds set forth in clause (v) of this subparagraph only where
39 the conviction referred to occurred not more than one year prior to the
40 date of revocation or suspension; and provided further that where the
41 commissioner revokes or suspends a certificate of authority based on the
42 grounds set forth in clause (vi) of this subparagraph, such suspension
43 or revocation shall continue for as long as the revocation of the retail
44 dealer registration pursuant to section four hundred eighty-a of this
45 chapter remains in effect, or (b) the grounds set forth in clause (vii)
46 of this subparagraph, such suspension or revocation shall be for a peri-
47 od of five years.
48 § 3. This act shall take effect immediately and shall apply to any and
49 all notices for rescindment issued on and after January 1, 2016;
50 provided that the amendments to subparagraph (A) of paragraph 4 of
51 subdivision (a) of section 1134 of the tax law made by section one of
52 this act shall be subject to the expiration and reversion of such
53 subparagraph pursuant to subdivision (e) of section 23 of part U of
54 chapter 61 of the laws of 2011, as amended, when upon such date the
55 provisions of section two of this act shall take effect.
