N.Y. Comp. Codes R. & Regs. tit. 20 § 450.1

Current through Register Vol. 46, No. 51, December 18, 2024

Section 450.1 - Bond or other security

(a) Where the Tax Commission, in its discretion, deems it necessary to protect the revenue to be obtained pursuant to article 13-A of the Tax Law it may require any person which is a petroleum business as defined in section 300 (c) of the Tax Law to file with the Department of Taxation and Finance a bond or other security. Such bond must be issued by a surety company approved by the New York State Superintendent of Insurance as to solvency and responsibility and authorized to transact business in New York State. In lieu of a bond a petroleum business may deposit with the Department of Taxation and Finance other security approved by the Tax Commission. Among the kinds of security which will 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) financial institution pass books 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 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 filing with the Department of Taxation and 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 petroleum business 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. Any interest accruing on bonds offered as collateral under this section shall belong to the petroleum business.

(2) Financial institution passbooks and certificates of deposit offered as collateral under this section must represent money on deposit with a financial institution. Certificates of deposit must have maturity dates at least one year subsequent to the date of filing with the Department of Taxation and Finance. Additionally financial institution passbooks and certificates of deposit offered under this section must be:

(i) prepared in the name of the petroleum business;

(ii) accompanied by a signed undated withdrawal slip;

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

(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 petroleum business 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;

(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 accounts 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 petroleum business.

(3) 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 must have a fair market value at least equal to the amount required pursuant to section 450.2 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 securities shall 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 such petroleum business pursuant to article 13-A of the Tax Law. No such sale shall be made until a petroleum business shall have opportunity to have the validity of the tax finally determined in the manner set forth in article 27 of the Tax Law. Upon any such sale the surplus, if any, shall be returned to such petroleum business.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 450.1