N.Y. Comp. Codes R. & Regs. tit. 20 § 78.1

Current through Register Vol. 46, No. 25, June 18, 2024

Section 78.1 - Failure to file a return or to pay the tax

Tax Law, § 481(1)(a)(i)

(a) An agent who or which fails to file a return or fails to pay any tax due on or before the last date prescribed for filing or paying, unless it can be shown that such failure was due to reasonable cause and not due to willful neglect, is subject to a penalty:

(1) of 10 percent of the amount of tax determined to be due pursuant to article 20 of the Tax Law, for the first month or any fraction thereof succeeding the last date prescribed for filing or paying; plus

(2) an additional one percent of the amount of tax determined to be due pursuant to such article, for each additional month or fraction thereof during which such failure continues after the expiration of the first month after such return was required to be filed or such tax became due.

The initial 10 percent and the additional one percent per month may not exceed 30 percent in the aggregate. Thus penalty may accrue for a period of 21 months.

(b) If the tax on cigarettes imposed by article 20 of the Tax Law is not paid on or before the last date prescribed for payment, the person (other than an agent) liable for the payment of such tax, unless it can be shown that such failure was due to reasonable cause and not due to willful neglect, is subject to a penalty:

(1) of 50 percent of the amount of tax determined to be due pursuant to article 20 of the Tax Law, for the first month or any fraction thereof succeeding the last date prescribed for filing or paying; plus

(2) an additional one percent of the amount of tax determined to be due pursuant to such article, for each additional month or fraction thereof during which such failure continues after the expiration of the first month.

(c) The amount of tax determined to be due includes those stamps required for the period and will be reduced by the amount of any part of the tax which is paid, including stamps affixed and cancelled, on or before the date prescribed for payment and by the amount of any credits against the tax which may be claimed on the return whether or not they were in fact claimed. Where an agent has purchased stamps and the Commissioner of Taxation and Finance has permitted the agent to pay for such stamps within 30 days after the date of purchase in accordance with section 472 of the Tax Law, the amount of tax determined to be due will also include any amounts outstanding beyond the 30th day. Further, in computing the additional one percent per month, the amount of tax determined to be due will be reduced by the amount of any part of the tax which is paid before the first day of each month. For purposes of this section, a month constitutes a period which terminates in each calendar month with the date numerically corresponding to the prescribed due date. Where an agent fails to both timely file a return and timely pay any tax due, separate penalties for the failure to file and the failure to pay are not imposed.

(d) Where a return is filed later than 60 days after the last date prescribed for filing, unless it can be shown that such failure was due to reasonable cause and not due to willful neglect, the penalty imposed by this section for failure to file may not be less than $100.00 or 100 percent of the amount of tax required to be shown on the return, whichever is the lower amount. For purposes of this subdivision, the amount of tax required to be shown on the return will 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 credits against the tax which may be claimed upon the return whether or not they were in fact claimed.

Example:

An agent cigarette tax return for January, due February 15th, is filed on June 20th. On audit it is determined that the discrepancy between the stamps required for the period and the stamps used for the period cannot be satisfactorily explained. The amount of tax required to be shown on the return based on an understamping is $200.00, of which $100.00 was paid on June 5th and the balance on June 20th. The penalty imposed is computed as follows:

February 16th through March 15th-$200 at 10%

$20.00

March 16th through April 15th-$200 at 1% 2.00

April 16th through May 15th-$200 at 1% 2.00

May 16th through June 15th-$200 at 1% 2.00

June 16th through June 20th-$100 at 1% 1.00

Total $27.00

Since the return was not filed within 60 days of the due date, the penalty may not be less than the lesser of $100 or 100 percent of $200. Accordingly, a $100 penalty is due.

(e) The penalties pursuant to this section shall be determined, assessed, collected and paid in the same manner as the taxes imposed by article 20 of the Tax Law. Provided however, such penalties shall not be paid by the use of stamps.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 78.1