N.Y. Comp. Codes R. & Regs. tit. 20 § 411.3

Current through Register Vol. 46, No. 45, November 2, 2024

Section 411.3 - Deposit of other security

Tax Law, § 283(3)

(a) In lieu of the bond required by section 411.2 of this Part, an applicant or a distributor may deposit with the Department of Taxation and Finance other security, approved by the department in such amounts as it may require. Among the kinds of security which may be accepted are the following:

(1) certificated United States Treasury bonds;

(2) certificated bonds of New York State;

(3) certificated bonds of any political subdivision of New York State having general governmental powers and in connection with which the credit of the political subdivision is pledged for the payment of the interest and principal due on such bonds;

(4) bank passbooks and certificates of deposit;

(5) irrevocable standby letters of credit made payable to the New York State Department of Taxation and Finance; and

(6) other forms of security acceptable to the Department of Taxation and Finance.

(b)

(1) Treasury, State or political subdivision bonds.

(i) Bonds offered as collateral under this section must be certificated and may be either bearer or registered bonds, having maturity dates at least five years subsequent to the date of deposit with the Department of Taxation of Finance. If such bonds are of the coupon type, the interest coupons must be attached. Certificated registered bonds offered as collateral must be in the name of the distributor and must be accompanied by a properly executed assignment or power of attorney with respect to such bonds in such form as the Department of Taxation and Finance may require.

(ii) Any interest accruing on bonds offered as collateral under this section shall belong to the distributor.

(2) Bank passbooks and certificates of deposit.

Bank passbooks and certificates of deposit offered as collateral under this section must represent money on deposit with a financial institution approved by the Department of Taxation and Finance. Certificates of deposit must have maturity dates at least one year subsequent to the date of deposit with the Department of Taxation and Finance. Additionally, bank passbooks and certificates of deposit offered under this section must be:

(i) prepared in the name of the distributor;

(ii) accompanied by a signed undated withdrawal slip;

(iii) accompanied by a letter prepared on the letterhead of the bank and signed by an officer of the bank:

(a) identifying the passbooks or certificates of deposit by account number and confirming that withdrawal of principal from the passbook or certificate of deposit offered as collateral will not be permitted without written consent from the New York State Department of Taxation and Finance; and

(b) stating that any right of setoff which the bank may possess against the distributor resulting from a defaulted obligation of such person shall be subservient to the interest of the Department of Taxation and Finance in the passbook or certificate of deposit offered as collateral; and

(iv) accompanied by a properly completed letter of transmittal in such form as the Department of Taxation and Finance may require, advising that the proceeds of such passbook account or certificates of deposit may be withdrawn by the department and applied against any obligations due it; provided, however, that any interest accruing on such accounts or certificates shall belong to the distributor.

(3) Standby letters of credit.

Standby letters of credit offered as collateral under this section must:

(i) be irrevocable for such period of time as the Department of Taxation and Finance shall determine;

(ii) be made payable to the New York State Department of Taxation and Finance;

(iii) be issued or confirmed by a bank approved by the Department of Taxation and Finance; and

(iv) contain such other payment terms as are acceptable to the Department of Taxation and Finance.

(c) Any security deposited under this section must have a fair market value at least equal to the amount of the bond required pursuant to section 411.2 of this Part. Fair market value greater than par value on maturity will not be recognized. Bonds of New York State and political subdivisions thereof, United States Treasury bonds, and other marketable securities will be kept in the joint custody of the Comptroller and the Commissioner of Taxation and Finance. Such securities may be sold by the Department of Taxation and Finance, should it become necessary to do so in order to recover any sums due from a distributor pursuant to article 12-A of the Tax Law and pursuant to articles 28 and 29 of such law with respect to sales and uses of motor fuel. No such sale shall be had until a distributor has had opportunity to have the validity of the tax finally and irrevocably fixed in the manner set forth in section 288 or section 1138 of the Tax Law, as the case may be, if such distributor timely elects to do so.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 411.3