N.Y. Comp. Codes R. & Regs. tit. 20 § 176.1
Tax Law, § 676
If an employer fails to deduct and withhold New York State personal income tax, as required by section 671 of the Tax Law and this Article, and thereafter the New York State income tax against which the New York state personal income tax required to be deducted and withheld may be credited is paid, the New York State personal income tax required to be deducted and withheld will not be collected from the employer. Such payment does not, however, operate to relieve the employer from liability for penalties, interest or additions to the New York State personal income tax applicable in respect of such failure to deduct and withhold. The employer will not be relieved under this provision from his liability for payment of the New York State personal income tax required to be deducted and withheld, unless he can show that the New York State income tax against which the New York State personal income tax, required to be deducted and withheld under section 671 of the Tax Law and this Article, may be credited has been paid. (See section 684 and 685 of the Tax Law with regard to interest, additions to tax and civil penalties.)
N.Y. Comp. Codes R. & Regs. Tit. 20 § 176.1