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(a) Civil penalties. Any person failing to file a return or to pay over any tax due prior to February 24, 1983, within the time required by law shall be subject to a penalty of five per cent of the amount due. If the Commissioner of Finance is satisfied that the delay was excusable he may remit all or any part of such penalty. With respect to returns or payments which become due on or after February 24, 1983, the following penalties apply:
(1) Failure to file return.
(i) In case of failure to file a return on or before the prescribed date (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause (see: paragraph (5) of this subdivision (a)) and not due to willful neglect, there is to be added to the amount required to be shown as tax on such return five percent (5%) of the amount of such tax for each month or fraction thereof during which such failure continues, not exceeding twenty-five percent (25%) in the aggregate.
(ii) With respect to returns required to be filed on or after July 16, 1985, in the case of a failure to file a return of tax within 60 days of the date prescribed for filing of such return (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, the addition to tax under subparagraph (i) of this paragraph shall not be less than the lesser of one hundred dollars ($100.) or one hundred percent (100%) of the amount required to be shown as tax on such return.
(iii) For purposes of subparagraphs (i) and (ii) of this paragraph (1), the amount of tax required to be shown on the return shall 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 credit against the tax which may be claimed on the return.
(2) Failure to pay tax shown on return. In case of failure to pay the amount shown as tax on a return to be filed on or before the prescribed date (determined with regard to any extension of time for payment), unless it is shown that such failure is due to reasonable cause (see: paragraph (5) of this subdivision (a)) and not due to willful neglect, there shall be added to the amount shown as tax on such return one-half of one percent (1/2%) of the amount of such tax for each month or fraction thereof during which such failure continues, not exceeding twenty-five percent (25%) in the aggregate. For the purpose of computing the addition for any month the amount of tax shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the beginning of such month and by the amount of any credit against the tax which may be claimed on the return. If the amount of tax required to be shown on a return is less than the amount shown as tax on such return, this paragraph shall be applied by substituting such lower amount.
(3) Failure to pay tax required to be shown on return. In case of failure to pay any amount in respect of any tax required to be shown on a return required to be filed which is not so shown (including a determination made pursuant to 19 RCNY § 25-07), within ten (10) days of the date of notice and demand, unless it is shown that such failure is due to reasonable cause (see: paragraph (5) of this subdivision (a)) and not due to willful neglect, there shall be added to the amount of tax stated in such notice and demand one-half of one percent (1/2%) of such tax for each month or fraction thereof during which such failure continues, not exceeding twenty-five percent (25%) in the aggregate. For the purpose of computing the addition for any month, the amount of tax stated in the notice and demand shall be reduced by the amount of any part of the tax which is paid before the beginning of such month.
(4) Limitations on additions.
(i) With respect to any return the amount of the addition to tax is limited to the following
(A) At no time will the addition for one (1) month be more than five percent (5%).
(B) If paragraphs (1) and (2) of this subdivision (a) are both applicable, the addition under paragraph (1) is reduced by the addition under paragraph (2). Thus, the addition to tax will be four and one-half percent (4 1/2%) under paragraph (1) and one-half of one percent (1/2%) under paragraph (2) for each month up to and including the first five (5) months. After the first five (5) months, the addition of one-half of one percent (l/2%) per month pursuant to paragraph (2) will apply for the next forty-five (45) months for a maximum aggregate of forty-seven and one-half percent (47 1/2%) addition to tax. However, in any case described in subparagraph (ii) of paragraph (1) of this subdivision (relating to returns filed after 60 days of the due date) the amount of the addition to tax under such paragraph (1) shall not be reduced below the amount provided in such subparagraph (i.e. the lesser of $100 or 100% of the tax due).
(C) If paragraphs (1) and (3) of this subdivision are both applicable, the maximum amount of the addition to tax may not exceed twenty-five percent (25%) in the aggregate. The maximum amount of the addition to tax pursuant to paragraph (3) of this subdivision shall be reduced by the amount of the addition to tax pursuant to paragraph (1) of this subdivision (determined without regard to subparagraph (ii) of such paragraph (1)) which is attributable to the tax for which the notice and demand is made and which is not paid within ten (10) days of such notice and demand.
(ii) The provisions of this paragraph may be illustrated by the following examples:
Example A(a): Assume the taxpayer filed his tax return for the tax year beginning June 1, 1983 (due June 25, 1983) on September 30, 1983, and the failure to file on or before the prescribed date is not due to reasonable cause. The tax shown on the return is $800 and a deficiency of $200 is subsequently assessed, making the tax required to be shown on the return, $1,000. The amount shown due on the return of $800 is paid on October 31, 1983. The failure to pay on or before the prescribed date is not due to reasonable cause. There will be imposed, in addition to interest, an additional amount under paragraph (2), of $20.00, which is 2.5 percent (2% for the 4 months from June 26 through October 25, and 0.5% for the fractional part of the month from October 26 through October 31) of the amount shown due on the return of $800. There will also be imposed an additional amount under paragraph (1) of $184, determined as follows:
20 percent (5% per month for the 3 months from June 26 through September 25 and 5% for the fractional part of the month from September 26 through September 30) of the amount due of $1,000 required to be shown on the return | $200 |
Reduced by the amount of the addition imposed under paragraph (2) for those months | $16 |
Addition to tax under paragraph (1) | $184 |
Example A(b): A notice and demand for the $200 deficiency is issued on January 8, 1984, but the taxpayer does not pay the deficiency until December 23, 1984. In addition to interest there will be imposed an additional amount under paragraph (3) of $10, determined as follows:
Addition computed without regard to limitation: 6 percent (5 1/2% for the 11 months from January 19, 1984, through December 18, 1984, and 0.5% for the fractional part of the month from December 19 through December 23)of the amount stated in the notice and demand ($200) | $12 |
Limitation on addition: 25 percent of the amount stated in the notice and demand ($200) | $50 |
Reduced by the part of the addition under paragraph (1) for failure to file attributable to the $200 deficiency (20% of $200) | $40 |
Maximum amount of the addition under paragraph (3) | $10 |
Example B: A taxpayer files his tax return for the tax year beginning June 1, 1983, on February 14, 1984, and such delinquency is not due to reasonable cause. The balance due, as shown on the return, of $500 is paid when the return is filed on February 14, 1984. In addition to interest and the addition for failure to pay under paragraph (2) of $20 (8 months at 0.5% per month, 4%), there will also be imposed an additional amount under paragraph (1) of $112.50, determined as follows:
Penalty at 5% for maximum of 5 months, 25% of $500 | $125.00 |
Less reduction for the amount of the addition under paragraph (2): | |
Amount imposed under paragraph (2) for failure to pay for the months in which there is also an addition for failure to file – 2 1/2 percent for the 5 months June 26 through November 29 of the net amount due ($500) | $12.50 |
Addition to tax under paragraph (1) | $112.50 |
(5) Reasonable cause as used in paragraphs (1), (2) and (3) must be affirmatively shown in a written statement. The taxpayer's previous compliance record may be taken into account. Grounds for reasonable cause, where clearly established, may include the following:
(i) death or serious illness of the responsible officer or employee of the taxpayer, or his unavoidable absence from his usual place of business;
(ii) destruction of the taxpayer's place of business or business records by fire or other casualty;
(iii) timely prepared reports misplaced by a responsible employee and discovered after the due date;
(iv) inability to obtain and assemble essential information required for the preparation of a complete return despite reasonable efforts;
(v) any other cause or delinquency which appears to a person of ordinary prudence and intelligence as a reasonable cause for delay in filing a return and which clearly indicates an absence of gross negligence or willful intent to disobey the taxing statutes. Past performance should be taken into account. Ignorance of the law, however, will not be considered reasonable cause.
(6) Underpayment due to negligence.
(i) If any part of an underpayment is due to negligence or intentional disregard of the law or rules or regulations thereunder (but without intent to defraud), there shall be added to the tax a penalty in an amount equal to five percent (5%) of the underpayment.
(ii) With respect to taxes required to be paid on or after July 16, 1985, there shall be added to the tax (in addition to the amount determined under subparagraph (i) of this paragraph) an amount equal to fifty percent of the interest payable under 19 RCNY § 25-13 with respect to the portion of the underpayment described in such subparagraph (i) which is attributable to the negligence or intentional disregard referred to in such subparagraph (i), for the period beginning on the last date prescribed by law for payment of such underpayment (determined without regard to any extension) and ending on the date of the assessment of the tax (or, if earlier, the date of the payment of the tax).
(7) Underpayment due to fraud.
(i) If any part of an underpayment is due to fraud, there shall be added to the tax a penalty in an amount equal to fifty percent (50%) of the underpayment.
(ii) With respect to taxes required to be paid on or after July 16, 1985, there shall be added to the tax (in addition to the penalty determined under subparagraph (i) of this paragraph) an amount equal to fifty percent of the interest payable under 19 RCNY § 25-13 with respect to the portion of the underpayment described in such subparagraph (i) which is attributable to fraud, for the period beginning on the last day prescribed by law for payment of such underpayment (determined without regard to any extension) and ending on the date of the assessment of the tax (or, if earlier, the date of the payment of the tax).
(iii) The penalty under this paragraph (paragraph 7) shall be in lieu of the maximum twenty-five percent (25%) penalty due to willful neglect for failure to file a return, (paragraph (1)), the additional one-half of one percent (1/2%) per month for failure to pay tax shown on a return (paragraph (2)), the additional one-half of one percent (1/2%) per month for failure to pay tax required to be shown on a return (paragraph (3)), and the five percent (5%) penalty due to negligence (paragraph (6)).
(8) Any person who fails to pay tax, or to make, render, sign or certify any return, or to supply any information within the required time, with fraudulent intent, shall be liable for a penalty of not more than one thousand dollars ($1,000), in addition to any other amounts required under the law to be imposed, assessed and collected by the Commissioner of Finance. The Commissioner of Finance has the power, in his discretion, to waive, reduce or compromise any penalty under this paragraph.
(9) The additions to tax and penalties provided by this subdivision shall be paid and enforced in the same manner as taxes.
(10) Whenever a penalty is assessed for failure to pay the tax when due, an application for the remission thereof may be made to the Commissioner of Finance. Such application must be made by the person against whom the penalty is assessed, and must set forth the grounds upon which the remission is requested.
(b) Criminal penalties.
(1) Failure to obey subpoena; false testimony.
(i) Any person who, being duly subpoenaed in connection with a matter arising under the law, to attend as a witness or to produce books, accounts, records, memoranda, documents or other papers,
(A) fails or refuses to attend without lawful excuse,
(B) refuses to be sworn,
(C) refuses to answer any material and proper question, or
(D) refuses, after reasonable notice, to produce books, papers and documents in his possession or under his control which constitute material and proper evidence shall be guilty of a misdemeanor.
(ii) Any person who shall testify falsely in any material matter pending before the Commissioner of Finance shall be guilty of and punishable for perjury.
(2) Willful failure to file a return or report or pay tax. Any person required to pay any tax or make any return or report, who willfully fails to pay such tax or make such return or report, at the time or times so required, shall be guilty of a misdemeanor.
(3) Fraudulent returns, reports, statements or other documents.
(i) Any person who willfully makes and subscribes any return, report, statement or other document which is required to be filed with or furnished to the Commissioner of Finance or to any person, pursuant to the provisions of the law, which he does not believe to be true and correct as to every material matter shall be guilty of a misdemeanor.
(ii) Any person who willfully delivers or discloses to the Commissioner of Finance or to any person, pursuant to the provisions of the law, any list, return, report, account, statement or other document known by him to be fraudulent or to be false as to any material matter shall be guilty of a misdemeanor.
(iii) For purposes of this paragraph, the omission by any person of any material matter with intent to deceive shall constitute the delivery or disclosure of a document known by him to be fraudulent or to be false as to any material matter.
(4) Failure to keep records. Any person who willfully fails to keep or retain any records required to be kept or retained by the law shall be guilty of a misdemeanor.
(5) Commissioner's Certificate. The certificate of the Commissioner of Finance to the effect that a tax has not been paid, that a return has not been filed, that information has not been supplied or that records have not been retained shall be prima facie evidence thereof.
(a) Any notice authorized or required under the provisions of the law may be given by mailing the same to the person for whom it is intended in a postpaid envelope addressed to such person at the address given in the last return filed by him pursuant to the provisions of the law or in any application made by him, or if no return has been filed or application made, then to such address as may be obtainable. The mailing of such notice shall be presumptive evidence of the receipt of the same by the person to whom addressed. Any period of time which is determined according to the provisions of the law by the giving of notice shall commence to run from the date of mailing of such notice.
(b) The provisions of the Civil Practice Law and Rules or any other law relative to limitations of time for the enforcement of a civil remedy shall not apply to any proceeding or action taken by the City to levy, appraise, assess, determine or enforce the collection of any tax, penalty or interest provided by the law. However, except in the case of a willfully false or fraudulent return with intent to evade the tax, no assessment of additional tax shall be made after the expiration of more than three years from the date of the filing of the return; provided, however, that where no return has been filed as provided by law, the tax may be assessed at any time.
(c) Where, before the expiration of the period prescribed herein for the assessment of an additional tax, a taxpayer has consented in writing that such period be extended, the amount of such additional tax due may be determined at any time within such extended period. The period so extended may be further extended by subsequent consents in writing made before the expiration of the extended period.
(d) The provisions of the regulations of the Commissioner relating to the mailing rules for New York City income and excise tax apply with respect to retail licensee tax returns and payments. Generally, those regulations provide that if a tax return or payment properly addressed with sufficient postage prepaid is delivered to the Department of Finance by U.S. mail after the due date, the date of the U.S. Postal Service postmark stamped on the envelope will be deemed the date of delivery, provided the postmark date falls on or before the due date. Non-U.S. Postal Service postmarks will also be recognized, provided delivery to the Department of Finance occurs within five days of the postmark date. If the five-day limit is exceeded, the taxpayer must establish that the item was actually deposited in the mail by the due date, that the delay in receipt was due to a delay in the transmission of the mail, and the cause of the delay.
(e) When the last day prescribed in these regulations for filing a return or paying a tax (including the last day covered by an extension of time) falls on Saturday, Sunday or a legal holiday in the State of New York, the filing of such return or paying of such tax will be considered timely if it is filed or paid on the next succeeding date which is not a Saturday, Sunday or legal holiday.