N.Y. Comp. Codes R. & Regs. tit. 20 § 52.2

Current through Register Vol. 46, No. 50, December 11, 2024

Section 52.2 - Payment of tax by brokers through clearing corporation

(a) The taxes imposed by article 12 of the Tax Law on any sale, delivery or transfer of stock or other corporate certificates, executed or effected within the State of New York by a member of any securities exchange within the State of New York which is registered with the Securities and Exchange Commission of the United States, shall be paid to the affiliated clearing corporation of or for such exchange, for the account of the commissioner, by such member (hereinafter called the broker) without the use of the stamps prescribed by said article 12. In the case of sales, deliveries or transfers made on a securities exchange, or otherwise, by a broker who is a member of more than one such exchange, such broker shall choose the clearing corporation affiliated with one such exchange through which he shall pay the taxes on all his transactions. Such choice when made shall be irrevocable except upon the written consent of the commissioner.

(b) Every broker shall, for each full business day upon which such clearing corporation is clearing or settling, make a report to such clearing corporation as provided in subdivision (c) of this section. The report shall show the amount of stock transfer taxes payable on all sales, deliveries or transfers executed or effected by such broker which under the rules of such exchange or otherwise are due for clearance or settlement on that day by such broker and such other information as the commissioner may prescribe. The report shall also authorize and direct such clearing corporation to remit to the commissioner or the commissioner's duly designated depositary, when due, the amount of taxes shown upon the report to be payable and to charge such amount to the account of the broker making the report. Additionally the report shall show the amount of the rebate of tax due, as provided for in section 280-a (6) of the Tax Law. Such report shall be provided to such clearing corporation not later than the business day following that for which the report is made. The amount of taxes so required to be reported must be shown in a separate account on the general ledger of the broker, and the postings to such account shall clearly refer to the books of original entry showing separately the tax required to be reported on:

(1) New York Stock Exchange transactions;

(2) American Stock Exchange transactions; and

(3) all other transactions, so that they may be readily audited by the department.

(c) Form and certification of reports provided to clearing corporations.

(1) Forms of reports. The information required to be provided to a clearing corporation pursuant to sections 280-a (6) and 281-a (1) of the Tax Law and this section may be provided:

(i) by means of a hard-copy, paper report containing such information provided to the clearing corporation by the broker on a form prescribed by the commissioner for such purpose; or

(ii) by means of the electronic transmission of such information from the broker to the clearing corporation, in accordance with a procedural rule adopted by such clearing corporation and approved by the department and by the Securities and Exchange Commission of the United States. If the reporting method provided for by this subparagraph is used, the transmitted information must include all information that would otherwise have been included in the hard-copy, paper report prescribed by the commissioner in subparagraph (i) of this paragraph.

(2) Regardless of which method (as described in subparagraph [1][i] or [ii] of this subdivision) is used by a broker to provide the required information to the clearing corporation, such information is subject to all of the record retention and examination provisions of section 276 of the Tax Law.

(3) Certification of reports. Each broker must certify to the clearing corporation as follows as to the accuracy and completeness of the information presented in its reports to such clearing corporation:

(i) in the case of a broker that provides the clearing corporation with hard-copy, paper reports of the required information (as provided in subparagraph [1][i] of this subdivision), such certification shall be contained within each such report.

(ii) in the case of a broker that provides the clearing corporation with reports through the electronic transmission of the required information (as provided in subparagraph [1][ii] of this subdivision), such broker must execute a comprehensive certification with such clearing corporation that shall be applicable to all such electronically transmitted reports, subject to the renewal of such comprehensive certification with the clearing corporation in accordance with the provisions of its adopted rule regarding such electronically transmitted reports.

(d) Each such clearing corporation shall remit to the depositary designated by the commissioner the aggregate amount of all taxes received by it. Such remittance shall be made quarterly, in accordance with the provisions of paragraph (b) of subdivision (6) of section 280-a of the Tax Law. Checks will be accepted by the depositary, subject to final payment. The remittance shall be accompanied by a report and schedule on forms prescribed by the commissioner.

(e) Every broker executing or effecting a sale, delivery or transfer where the taxes are paid through a clearing corporation shall impress, by rubber stamp or otherwise (see section 50.1[k] of this Title):

(1) on the certificate of stock or other corporate certificate where such certificate is delivered pursuant to a balance order issued by the clearing corporation;

(2) on each page of a copy of the sale contract list and supplemental sale contract list retained by the broker; and

(3) on the comparison notice filed with the clearing corporation, covering sales of cleared securities made with their clearing brokers, a certification stating that the applicable taxes will be paid through a clearing corporation and identifying by name such clearing corporation.

Such certification shall bear the facsimile signature of the broker and the rubber stamp, if used, shall be kept in the possession of the broker and used only by him or his duly designated representative.

(f) A certificate of stock or other corporate certificate which is presented for transfer shall, if the tax will be paid through a clearing corporation, be accompanied by a memorandum of sale bearing the certification described in subdivision (e) of this section or there shall be impressed upon it a certification in stating the number of shares transferred and that the applicable taxes will be paid through an identified clearing corporation on behalf of the broker.

Such certification shall be dated and shall bear the facsimile signature of the broker and the rubber stamp, if used, shall be kept in the possession of the broker and used only by him or his duly designated representative.

(g) Where a broker sells shares of stock of a corporation for a registered owner thereof and purchases the same number of shares of the same stock as buying broker for a customer, the broker may use a certificate setting forth the facts of both transactions for use in obtaining a transfer on the books of the corporation from the name of such registered owner to the name of such buying customer, provided there is impressed upon an accompanying memorandum of sale or upon the certificate of stock or other corporate certificate presented for transfer, a rubber stamp certification describing in detail the transaction and stating that the transfer was exempt under section 270 (5) of the Tax Law and that evidence supporting such exemption is maintained by the broker.

Such certification shall be dated and shall bear the facsimile signature of the broker and the rubber stamp shall be kept in the possession of the broker and used only by him or his duly designated representative.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 52.2