§ 28-17 Accounting Periods and Methods.

   (a)   Accounting periods. (Administrative Code, § 11-513(a)). The taxable year for which the unincorporated business taxable income is to be computed and for which an unincorporated business tax return is to be made shall be the same as the taxpayer's taxable year for Federal income tax purposes. The taxable year under Chapter 5 of Title 11 of the Administrative Code will accordingly be the accounting period covered by the taxpayer's Federal income tax return whether such period be a calendar year, a properly established fiscal year, a taxable period consisting of 52 or 53 weeks, or an accounting period of less than 12 months permitted or required under the Federal Internal Revenue Code. If a taxpayer does not have a taxable year for Federal income tax purposes, the unincorporated business taxable income shall be computed and the return shall be made for the calendar year, unless the Commissioner of Finance authorizes the use of some different accounting period.

   (b)   Accounting methods. (Administrative Code, § 11-513(b)).

      (1)   The accounting method or basis on which the unincorporated business taxable income is to be computed shall be the same as the taxpayer's method of accounting for Federal income tax purposes. In addition to the overall basis of accounting (such as cash basis or accrual basis), the term "method of accounting" means the accounting treatment accorded particular items of income or deduction, such as installment sales, long-term contracts, depreciation, research and development costs, etc. The accounting method used for Federal income tax purposes shall also be applied to items of gross income and deduction derived from or connected with the unincorporated business which are includible in the unincorporated business tax return, but which are not required to be reported in the taxpayer's Federal income tax return.

      (2)   In the absence of an accounting method for Federal income tax purposes, the unincorporated business taxable income shall be computed in accordance with the method regularly employed in keeping the books of the taxpayer, if such method clearly reflects income. If the books of such a taxpayer do not clearly reflect income, or if no books are kept, the computation of the unincorporated business taxable income shall be made in such manner as, in the opinion of the Commissioner of Finance, does clearly reflect the income.

   (c)   Change of accounting period. (Administrative Code, § 11-513(c)(1)).

      (1)   If a taxpayer's taxable year for Federal income tax purposes is changed, the taxable year or accounting period for which the unincorporated business tax return is made shall also be changed at the same time to coincide with the new Federal income tax accounting period or taxable year. Where a taxable year or accounting period of less than 12 months results from a change of accounting period, annualization of the unincorporated business income is not required. In such a case, however, the unincorporated business $5,000 annual exemption must be prorated in the manner prescribed in 19 RCNY § 28-09.

      (2)   A taxpayer whose accounting period is changed for Federal income tax purposes is not required to apply for or obtain permission to make a similar change with respect to unincorporated business income tax returns required under Chapter 5 of Title 11 of the Administrative Code. In such a case, however, there should be filed with the first return made for the new accounting period under Chapter 5 of Title 11 a copy of the consent of the Commissioner of Internal Revenue to the change for Federal income tax purposes, or if no consent is required, a statement to that effect referring to the particular provisions of the Internal Revenue Code, or regulations thereunder, authorizing the change.

      (3)   In the case of a taxpayer who has an established accounting period for Federal income tax purposes, no change of accounting period for unincorporated business tax purposes (other than one required by reason of a change of the Federal accounting period as set forth in paragraph (1) of this subdivision (c)) will be permitted.

      (4)   A taxpayer who has no established accounting period for Federal income tax purposes, but has such a period for New York City unincorporated business income tax purposes, shall not make any change of accounting period without first obtaining the consent of the Commissioner of Finance. An application for permission to make such change shall state the reasons therefor and must be made on or before the last day of the month following the close of the short period for which a return is required to effect the change of accounting period. If the Commissioner of Finance approves the change of accounting period, he will advise the taxpayer as to the effective date of such change and as to any short period returns required as the result thereof.

   (d)   Change of accounting method. (Administrative Code § 11-513(c)(2)).

      (1)   If a taxpayer's method of accounting for Federal income tax purposes is changed, the accounting method employed in making the unincorporated business tax return shall also be changed at the same time to the new method permitted or required to be used in the taxpayer's Federal income tax return. Upon a change of accounting method under this paragraph, any adjustments which are determined to be necessary solely by reason of the change in order to prevent amounts from being duplicated or omitted shall (subject to the applicable modifications prescribed by 19 RCNY §§ 28-05 and 28-06) be taken into account to the extent that they are required to be taken into account in determining the taxpayer's gross income and deductions for Federal income tax purposes for the year of the change.

      (2)   A taxpayer whose method of accounting is changed under the provisions of paragraph (1) of this subdivision (d) is not required to apply for or obtain the permission or consent of the Commissioner of Finance to the change for unincorporated business tax purposes. In such a case, however, there must be filed with the first tax return in which the new accounting method is used a copy of the consent of the Commissioner of Internal Revenue to the change for Federal income tax purposes, together with the statement referred to in paragraph (4) of this subdivision (d), including complete details of any adjustments with respect to items of income or deduction permitted or required to be made as an incident to the change of accounting method for Federal income tax purposes.

      (3)   A taxpayer who has a method of accounting for Federal income tax purposes will not be permitted to make any change of the accounting method used in the unincorporated business tax return other than one required by reason of a change in the Federal method as set forth in paragraph (1) of this subdivision (d).

      (4)   A taxpayer who has no accounting method for Federal income tax purposes, but who has a method of accounting which has been accepted or prescribed by the Commissioner of Finance for New York City unincorporated business tax purposes, shall not make any change with respect to such New York City accounting method without obtaining the prior consent of the Commissioner of Finance. An application for permission to change the method of accounting under this paragraph (4) must be made within 90 days after the beginning of the taxable period to which the proposed change will relate. Such application shall be accompanied by a statement specifying the nature of the taxpayer's business, the present method of accounting, the method to which a change is desired, the taxable year in which the change is to be effected, the classes of items to receive different treatment under the new system, and all items which would be duplicated or omitted as a result of the proposed changes. If such a taxpayer later adopts a Federal method of accounting and such method differs from the method used under the New York City unincorporated business tax, the taxpayer must conform the City method of accounting to the Federal. If a taxpayer's method of accounting is changed under this paragraph (4), any adjustments which the Commissioner of Finance determines to be necessary solely by reason of the change in order to prevent amounts from being duplicated or omitted in computing taxable income shall (subject to the applicable modifications prescribed by 19 RCNY §§ 28-05 and 28-06) be taken into account for the year of the change.

      (5)   For purposes of this section and 19 RCNY § 28-17(e), the term "change of accounting method" includes any change or modification of the manner of, or basis for, determining the amount of, or the time for, the reporting or deducting of any item of unincorporated business gross income or deduction, or the net amount of all such items, which would constitute a change in accounting method for Federal income tax purposes. The term "year of the change," as used in these regulations, means a taxable year for which the taxable income of the taxpayer is computed under a method of accounting different from the one used in the preceding taxable year or accounting period. (For limitations on amount of additional taxes resulting from changes in accounting methods, see: 19 RCNY § 28-17(e).)

   (e)   Limitations on additional tax resulting from changes in accounting methods. (Administrative Code § 11-513(c)(2) and (3)).

      (1)   Change other than from accrual to installment method of accounting.

         (i)   If a taxpayer's method of accounting is changed, other than from an accrual to an installment method, there shall be taken into account in computing unincorporated business taxable income for the taxable year of the change those adjustments which are determined to be necessary to prevent amounts from being duplicated or omitted. The adjustments necessitated by reason of such change in accounting method may result in an amount of unincorporated business tax for the year of the change in excess of the unincorporated business tax which would have been determined had there not been such a change in the method of accounting. In such event, the additional unincorporated business tax for the year of change resulting from such adjustments shall not be greater than if such adjustments were ratably allocated and included for the taxable year of the change and the preceding taxable years, not in excess of two, during which the taxpayer used the method of accounting from which the change was made.

         (ii)   The taxpayer shall submit a statement with his unincorporated business tax return for the year of the change, setting forth the following information and calculations:

            (A)   Each adjustment necessitated by the change.

            (B)   The net amount of the adjustments. This means the consolidation of the adjustments (whether the amounts thereof represent increases or decreases in items of income or deductions) arising with respect to balances in various accounts at the beginning of the taxable year of the change. Where the change in the method of accounting occurs by reason of a Federal change, this net amount shall be the same for unincorporated business tax purposes as it is for Federal income tax purposes, except to the extent of any modifications described in the sections and subdivisions pertaining to such adjustments.

            (C)   The unincorporated business tax for the taxable year of the change with the net amount of adjustments included in the computation of unincorporated business taxable income.

            (D)   The unincorporated business tax for the taxable year of the change computed as if the net amount of such adjustments were not included in the computation of unincorporated business taxable income.

            (E)   The additional unincorporated business tax, if any, incurred solely by reason of the net amount of adjustments included in unincorporated business taxable income, computed by subtracting item (D) from item (C).

            (F)   The allocation of the net amount of adjustments (item (B)) to the taxable year of the change and the preceding taxable year or years, not in excess of two, during which the taxpayer used the method of accounting from which the change is made. The amount to be allocated to each such year is determined by dividing the net amount of adjustments into as many equal parts as there are taxable years involved (either two taxable years or three taxable years, including the taxable year of the change).

            (G)   The unincorporated business taxable income for the year of the change and for the preceding year or two years, as the case may be, computed both (a) without any amount of the net adjustments, and (b) with the addition of the appropriate share of the net adjustments as determined under item (F).

            (H)   The additional unincorporated business tax which would result for each of the above taxable years chosen in item (F) by the addition to the unincorporated business taxable income in each such year of the appropriate share of the net adjustments.

            (I)   The total amount of such additional tax for the years involved.

         (iii)   If the amount described in item (I) exceeds the amount described in item (E), the taxpayer shall compute his unincorporated business tax for the year of the change without a ratable allocation of the net adjustments to any preceding year or years. If the amount described in item (E) exceeds the amount described in item (I), the amount of such excess shall be subtracted from the City unincorporated business tax for the year of the change as determined under item (C). The resulting sum is the amount of New York City unincorporated business tax due for the taxable year of the change.

Example: Assume that the taxpayer is an individual proprietor who used the cash method in 1981 and 1982, but changed to an accrual basis for 1983. In 1981 and 1982, he had unincorporated business taxable income of $16,000 and $7,000, respectively, figured on a cash basis. In 1983 he had unincorporated business taxable income of $11,000 figured on an accrual basis. The unincorporated business taxable income for each of the years 1981, 1982 and 1983 was arrived at as follows:

	1981	1982	1983
Unincorporated business gross income pursuant to 19 RCNY § 28-05	$36,000	$28,000	$30,000
Less unincorporated business deductions pursuant to 19 RCNY § 28-06	$10,000	$13,000	$10,000
Unincorporated business taxable income before deduction for personal services pursuant to 19 RCNY § 28-08 and exemption pursuant to 19 RCNY § 28-09	$26,000	$15,000	$20,000
Less deduction for personal services pursuant to 19 RCNY § 28-08	$5,000	$3,000	$4,000
Less $5,000 exemption pursuant to 19 RCNY § 28-09	$5,000	$5,000	$5,000
Total deduction and exemption pursuant to 19 RCNY §§ 28-08 and 28-09	$10,000	$8,000	$9,000
Unincorporated business taxable income	$16,000	$7,000	$11,000
Unincorporated business tax	$640	$280	$440

 

Assume further that the taxpayer's books at the beginning of 1983 included the following accounts: accounts receivable $15,000; accounts payable $8,000; inventory $5,000. The amount of unincorporated business taxable income due for the taxable year of the change is computed in the following manner: Subject to the amount of any modifications required under these regulations, the unincorporated business taxable income for the year of the change, including the net amount of adjustments (see: items (ii)(A) and (ii)(B) of this subdivision (e)), would be $22,000, computed as follows:

Unincorporated business taxable income on accrual basis before deduction for personal services under 19 RCNY § 28-08 and the exemption under 19 RCNY § 28-09 (new method but before adjustments)	$20,000
(a) Adjustments:
Add: Items not previously reported as income: Accounts receivable 1/1/83	$15,000
Items previously deducted but constituting marketable business assets: Inventory 1/1/83	5,000
Total to be added	$20,000
Subtract: Items not previously deducted: Accounts payable 1/1/83	$8,000
(b) Net amount of adjustments (increase)		$12,000
Unincorporated business taxable income after adjustments but before deduction for personal services under 19 RCNY § 28-08 and exemption under 19 RCNY § 28-09		$32,000
Subtract: Allowance for personal services under 19 RCNY § 28-08	$5,000
Exemption under 19 RCNY § 28-09	$5,000	$10,000
(c) Unincorporated business taxable income after adjustments		$22,000
The net additional tax for the year of the change described in item (ii)(E) of this paragraph (1) is computed as follows:
(d) Tax due on unincorporated business taxable income for the year of change, including the net amount of adjustments ($22,000)		$880
(e) Tax due on unincorporated business taxable income for taxable year of change, excluding above adjustments ($11,000)		$440
(f) Net additional tax due		$440

 

Since the taxpayer used the cash method for the two years preceding the change-over year, the adjustments for 1983 determined to be necessary solely by reason of the change, amount to $12,000. The taxpayer may reduce the tax on the increase by allocating the $12,000 as follows: $4,000 to 1981, $4,000 to 1982, and $4,000 to 1983 (see: items (ii)(F) to (H) of this paragraph (1)). The net tax due for the year of change is then computed in the following manner:

	1981	1982	1983
Unincorporated business taxable income before adjustments and before deduction for personal services under 19 RCNY § 28-08 and the exemption under 19 RCNY § 28-09	$26,000	$15,000	$20,000
Add: Net adjustments	$4,000	$4,000	$4,000
	$30,000	$19,000	$24,000
Subtract: Allowance for personal services pursuant to 19 RCNY § 28-09	$5,000	$3,800	$4,800
Subtract: $5,000 exemption pursuant to § 28-09	$5,000	$5,000	$5,000
Total Subtractions	$10,000	$8,800	$9,800
Unincorporated business taxable income after adjustments	$20,000	$10,200	$14,200
Unincorporated business tax after adjustments	$800	$408	$568
Unincorporated business tax before adjustments	$640	$280	$440
Increase in tax due to adjustments	$160	$128	$128
Total increase in tax attributable to adjustments ($160 and $128 and $128)			$416
Net additional tax determined at item (f) above			$440
Excess			$24
Total tax determined at item (d) above		$880
Less excess shown above		$24
Net tax due for year of change		$856

 

      (2)   Change from accrual to installment method of accounting.

         (i)   General. If a taxpayer has changed his method of accounting from an accrual to an installment method, any installment payments actually received in the year of change or in subsequent taxable years (such year or years being referred to as "adjustment years"), on account of sales or other dispositions of property made in any taxable year prior to the year of the change (and already accrued in income), are also required to be included in unincorporated business gross income of the year of receipt. Therefore, profits attributable to installment sales which were taxed in the year of sale because the taxpayer was then on the accrual method of accounting would also be taxed in the adjustment years (that is, during the years the installments are actually received) after the change to the installment method of accounting. To avoid such duplication of tax, any additional tax for the adjustment years attributable to the receipt of installment payments properly accrued in a prior year shall be reduced as explained in paragraph (2)(ii) of this subdivision (e), by an amount equal to the portion of tax for the prior year attributable to the prior accrual of income from installment sales included in unincorporated business gross income in the adjustment years.

         (ii)   Reduction in tax for adjustment year. To give effect to the foregoing, the tax for an adjustment year shall be reduced by the lower of the following amounts:

            (A)   that proportion of the tax for the prior year (in which the installment sales were reported on the accrual basis) which the amount of installment sales gross profits reportable in the prior year of sale and in the adjustment year bears to the unincorporated business gross income for such prior year of sale;

            (B)   the excess, if any, of the amount of the tax for the adjustment year on the entire unincorporated business taxable income over the amount of tax for such year computed without regard to the amount of the installment sales gross profits reported in both the prior year of accrual and in the adjustment year. Where previously reported installments received in an adjustment year include installments on sales made in more than one prior year, the reduction allowable with respect to the installments for each prior year shall be computed separately. In such a case, the excess tax calculated under subparagraph (ii)(B) of this paragraph (2), computed with respect to the installments from all prior years, shall be prorated over the several prior years in proportion to the amount of the duplicated installment sales profits attributable to each such prior year.

Example: The computation of the reduction of tax for the adjustment year is illustrated by the following example:

	1981 (accrual basis)	1982 (adjustment year)	1983 (adjustment year)
Gross profit from installment sales (receivable in five installments)	$10,000	$2,000 (from 1981 sales) $3,000 (from 1982 sales)	$2,000 (from 1981 sales) $3,000 (from 1982 sales) $5,000 (from 1983 sales)
Other unincorporated business gross income	$86,000	$41,000	$23,000
Total unincorporated business gross income	$96,000	$46,000	$33,000
Unincorporated business deductions under 19 RCNY § 28-06	$6,000	$6,000	$18,000
Unincorporated business taxable income before deduction for personal services under 19 RCNY § 28-08 and exemption under 19 RCNY § 28-09	$90,000	$40,000	$15,000
Less allowance for personal services under 19 RCNY § 28-08 and exemption under 19 RCNY § 28-09	$10,000	$10,000	$8,000
Unincorporated business taxable income	$80,000	$30,000	$7,000
Unincorporated business tax	$3,200	$1,200	$280

 

Computation of adjustment – 1982: 

Tax attributable to 1981 installment payments in 1982 (first adjustment year), the year in which the change was made from the accrual basis to the installment basis:

Tax on 1982 taxable income including gross profit from 1981 sales		$1,200
Tax on taxable income excluding such gross profit:
Taxable income before deduction for personal services under 19 RCNY § 28-08 and exemption under 19 RCNY § 28-09	$40,000
Less gross profit from 1981 sales accrued in prior year	$2,000
	$38,000
Less deduction for personal services under 19 RCNY § 28-08 and exemption under 19 RCNY § 28-09	$10,000
Revised taxable income	$28,000
Tax on revised taxable income		$1,120
Additional tax attributable to prior year installment payments		$80
Tax attributable to prior inclusion in 1981:	$2,000 × $3,200 = $66.67 $96,000

 

Therefore, the tax for 1982 (first adjustment year) may be reduced by $66.67, the lesser of the two amounts computed above.

Computation of adjustment – 1983: 

Tax attributable to 1981 installment payments in 1983 (second adjustment year):

Tax on 1983 taxable income, including gross profit from 1981 sales		$280
Tax on taxable income, excluding such gross profit:
Taxable income before deduction for personal services under 19 RCNY § 28-08 and exemption under 19 RCNY § 28-09	$15,000
Less gross profit from 1981 sales accrued in a prior year	$2,000
	$13,000
Less deduction for personal services under 19 RCNY § 28-08 and exemption under 19 RCNY § 28-09	$7,600
Revised taxable income	$5,400
Tax on revised taxable income		$216
Additional tax attributable to prior year installment payments		$64
Tax attributable to prior inclusion in 1981:	$2,000 × $3,200 = $66.67 $96,000

 

Therefore, the tax for 1983 (second adjustment year) may be reduced by $64.00, the lesser of the two amounts computed above.

         (iii)   Statement to be attached to return. A taxpayer who changes from the accrual method to the installment method under this section shall attach a statement to his unincorporated business tax return for each adjustment year. This statement must show

            (A)   the pertinent facts as to sales in each year preceding the year of change;

            (B)   the number of remaining taxable years over which it will be necessary to compute adjustments; and

            (C)   a schedule showing the computation as prescribed in this subdivision (e) of the adjustment for the taxable year.

§ 28-18 Returns and Payment of Tax.

   (a)   Returns – filing requirements. (Administrative Code § 11-514(a)). For taxable years beginning after 1986 but before 1997, a return on a form prescribed by the Commissioner of Finance must be made and filed for each taxable year by or for every unincorporated business which is carried on in this City to any extent, and which has either unincorporated business gross income of more than $10,000, computed without deduction for cost of goods sold or services performed and without regard to allocation under 19 RCNY § 28-07, regardless of whether or not it has unincorporated business taxable income, or any amount of unincorporated business taxable income. In addition, for taxable years beginning after 1996, a return on a form prescribed by the Commissioner of Finance must be made and filed for each taxable year by or for every unincorporated business that is carried on in this City to any extent and that has either (1) unincorporated business gross income, computed without deduction for cost of goods sold or services performed and without regard to allocation, of more than $25,000 in the case of a partnership, or more than $75,000 for any other unincorporated business, regardless of whether it has unincorporated business taxable income, or (2) unincorporated business taxable income of more than $15,000 in the case of a partnership, or more than $35,000 for any other unincorporated business. Any return required under this subdivision (a) shall be made by the individual or unincorporated entity who or which was engaged in the conduct or the liquidation of the business, unless such individual is deceased, or unless such individual or entity is under a disability, in which case the return shall be made and filed by the executor or administrator (in the case of a deceased individual), or by any fiduciary or other person charged with the property of the individual or entity, or by a duly authorized agent. The foregoing provision regarding the filing of returns by fiduciaries or agents in the case of death or disability of an individual taxpayer does not relieve the taxpayer or his estate from liability if such fiduciary, agent or other person omits or fails to file any return required under Chapter 5 of Title 11 of the Administrative Code. If an individual or other unincorporated entity is engaged in several distinct business activities, only one return shall be filed. In such a case, however, a separate schedule for each activity should be filed with the return.

   (a-1)   Simplified return. The Commissioner of Finance may prescribe a form which may be filed voluntarily by a business whose income falls below the amount that would require the filing of a return under the Administrative Code. This filing will constitute the filing of a return pursuant to these rules and § 11-523 of the Administrative Code, which states (subject to the exceptions provided in subdivision (c) of that section) that if a return was filed, unincorporated business tax may be assessed only within three years after the return was filed.

   (b)   Time for filing. Where the taxable year covered by a return required under Chapter 5 of Title 11 of the Administrative Code is a calendar year, the return must be filed on or before April 15th of the following year. In all other cases where the taxable year is a fiscal year, the return must be filed on or before the 15th day of the fourth month following the close of the fiscal year. For purposes of determining the due date for the filing of a return under this subdivision (b), the term "taxable year" means the accounting period of the individual, fiduciary, partnership or other unincorporated entity for Federal income tax purposes (see: 19 RCNY § 28-17(a)), without regard to whether the business was carried on or was being liquidated during the entire period covered by such taxable year.

Example 1: New businesses. If an individual, fiduciary or other unincorporated entity having a previously established accounting period for Federal income tax purposes begins business during the year, such established accounting period shall be the taxable year for unincorporated business tax purposes. If an individual, fiduciary or other unincorporated entity having no previously established accounting period begins to carry on an unincorporated business, the taxable year for purposes of filing the first unincorporated business tax return shall be the taxable year properly adopted or prescribed for Federal income tax purposes.

Example 2: Business terminated. If the unincorporated business of an individual is terminated and completely liquidated during the year, the unincorporated business tax return for the year of termination shall be a return for the established taxable year for Federal income tax purposes, and shall be filed on or before the 15th day of the fourth month following the close of such year. If the unincorporated business of an estate, trust, partnership or other unincorporated entity is terminated and completely liquidated during the year and such complete termination and liquidation results in an accounting period of less than 12 months for Federal income tax purposes, such period shall be the taxable year for the return for the year of termination for unincorporated business tax purposes, and an unincorporated business income tax return shall be filed on or before the 15th day of the fourth month following the close of such accounting period. In the event the termination of an estate, trust, partnership or other entity for Federal income tax purposes does not, by reason of liquidating activities of the entity, constitute complete termination for unincorporated business tax purposes, any new accounting period resulting from the termination for Federal income tax purposes shall become the taxable year for purposes of filing the unincorporated business tax returns for the year of termination of the entity for Federal income tax purposes and for subsequent taxable years under Chapter 5 of Title 11 of the Administrative Code.

   (c)   Extension of time for filing returns. (Administrative Code § 11-517).

      (1)   The Commissioner of Finance may grant reasonable extensions of time for filing returns whenever good cause exists. An application for an extension of time must be made prior to the due date of the return.

      (2)   An automatic six months extension of time to file for taxpayers required to file form NYC 202 (individuals, estates or trusts) will be granted only on condition that form NYC-62 (Application for Automatic Extension of Time to File for Individuals, Estates or Trusts) is filed and a properly estimated tax is paid on or before the due date of the return for the taxable period for which the extension is requested. Such application must set forth the amount of tax which the taxpayer properly estimates it will be required to pay. An automatic six month extension of time to file for taxpayers required to file form NYC 204 (partnerships) will be granted only on condition that form NYC-64 (Application for Automatic Extension of Time to File for Partnerships) is filed and a properly estimated tax is paid on or before the due date of the return for the taxable period for which the extension is requested. Such application must set forth the amount of tax which the taxpayer properly estimates it will be required to pay. The amount of tax will be deemed to be properly estimated if the tax paid is either:

         (i)   not less than ninety percent of the tax as finally determined, or

         (ii)   not less than the tax shown on the taxpayer's return for the preceding taxable year, if such preceding year was a taxable year of 12 months; provided, however, in the case of any taxpayer which had unincorporated business taxable income, or the portion thereof allocated within the City, of one million dollars or more for any taxable year during the three years immediately preceding the taxable year involved, such amount shall be deemed an amount properly estimated only if it meets the conditions of subparagraph (i) of this paragraph. Failure to meet any of the requirements in this paragraph (2) makes the application invalid and any return filed after the due date will be treated as a late filed return.

      (3)   Except for taxpayers outside the United States, no additional extension for filing a return may be granted beyond the six months specified in paragraph (2) of this subdivision (c). For taxpayers outside the United States, an application for an additional extension may be made in writing before the expiration of the previous extension. The application must include the following information:

         (i)   the taxpayer's complete name and address,

         (ii)   the taxpayer's employer identification number or social security number,

         (iii)   the tax period for which an extension is requested, and

         (iv)   the reason for requesting the additional extension. If the U.S. Internal Revenue Service has granted a taxpayer who is outside the United States an extension of time to file his Federal income tax return beyond the City's automatic extension period described in paragraph (2) of this subdivision (c), the taxpayer will automatically be entitled to an additional extension of time to file a New York City unincorporated business tax return. This additional extension, to coincide with the Federal extension, will be granted without additional application, as long as a copy of the approved Federal extension is attached to the annual unincorporated business tax return when filed. A partnership is entitled to the automatic additional extension only where the partnership itself has been granted an extension of time to file its Federal partnership return.

      (4)   An extension of time to file a New York City unincorporated business tax return automatically extends the time for payment of the unincorporated business tax balance due, after the payment of the properly estimated tax, to the same date. Interest, however, must be paid at the rate prescribed by the Commissioner of Finance pursuant to the authority of § 11-537(f) of the Administrative Code on any balance of unincorporated business tax due from the original due date of the unincorporated business tax return (determined without regard to any extensions of time) to the date of payment.

   (d)   Place for filing returns. (Administrative Code § 11-515). Unincorporated business tax returns must be delivered or mailed to the City of New York, Department of Finance, at the address listed in the instructions for each return.

   (e)   Payment of tax. The unincorporated business tax is due and payable in full on or before the date prescribed by 19 RCNY § 28-18(b) for the filing of the return of the taxpayer. Where the return of a taxpayer is filed by a fiduciary, agent or other person under 19 RCNY § 28-18(a), such filing does not relieve the taxpayer from liability for any unpaid tax due under Chapter 5 of Title 11 of the Administrative Code, as shown on the return or otherwise determined or assessed.

   (f)   Last day a Saturday, Sunday or legal holiday. (Administrative Code § 11-531(c)). 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 payment 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.

   (g)   Mailing of returns. (Administrative Code § 11-531(a)). The provisions of the regulations of the Commissioner of Finance relating to the mailing rules for New York City income and excise taxes apply with respect to unincorporated business tax returns and payments. Generally, those regulations pro vide 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.

   (h)   Signing of returns and other documents. (Administrative Code § 11-516).

      (1)   General. Any return, declaration, statement or other document required to be made pursuant to Chapter 5 of Title 11 of the Administrative Code shall be signed in accordance with instructions prescribed by the Commissioner of Finance. The fact that an individual's name is signed to a return, declaration, statement, or other document, shall be prima facie evidence for all purposes that the return, declaration, statement or other document was actually signed by him.

      (2)   Partnerships. Any return, statement or other document required of a partnership shall be signed by one or more partners. The fact that a partner's name is signed to a return, statement, or other document, shall be prima facie evidence for all purposes that such partner is authorized to sign on behalf of the partnership.

      (3)   Certifications. The making or filing of any return, declaration, statement or other document or copy thereof required to be made or filed pursuant to Chapter 5 of Title 11 of the Administrative Code, including a copy of a Federal return, shall constitute a certification by the person making or filing such return, declaration, statement or other document or copy thereof that the statements contained therein are true and that any copy filed is a true copy.

   (i)   Signing of returns prepared by a person other than the taxpayer. (Administrative Code § 11-516).

      (1)   If a return required by Chapter 5 of Title 11 of the Administrative Code is prepared for the taxpayer by another person, other than a regular full-time employee of the taxpayer, for a fee or other compensation or as an incident of the performance of other services for which such person received compensation, such person shall sign the return on the line designated "Signature of preparer other than taxpayer," and shall also enter thereon his address and the date when he signs the return. Such signature may be either written, stamped or otherwise legibly imprinted and shall constitute a certificate by such person that, based on all information of which he has any knowledge, the return is correct and the statements contained therein are true.

      (2)   Any such person who fails to sign a return as required by this subdivision (i) may be liable for the penalties provided for in § 11-525 and § 11-535(g) of the Administrative Code.

      (3)   As used in this subdivision (i), the word "person" includes partnerships and corporations.

      (4)   This subdivision (i) in no way affects the taxpayer's obligation to sign and certify his return.

   (j)   Electronic filing and payment. Pursuant to 19 RCNY § 17-03, the Commissioner may authorize the electronic filing of returns, reports, or other forms, and the electronic payment of tax required by this chapter.

   (j)   Reporting requirements for parking services provided to tenants. Administrative Code § 11-502(d). For taxable years beginning on or after July 1, 1996, an owner, lessee or fiduciary holding, leasing or managing real property and operating a garage or other similar facility at any such property that is open to the public must provide the following information for each such garage or similar facility on a return as required by subdivision (a) of this 19 RCNY § 28-18 in order to treat parking, garaging or motor vehicle storage services provided to tenants at any such property as incidental to the holding, leasing or management of the real property and not part of an unincorporated business. A return must be filed and the following information submitted regardless of whether, taking into account the exclusion of the income from the provision of parking or similar services to tenants, the taxpayer's gross income from all unincorporated businesses carried on in whole or in part in the City would be below that necessitating the filing of a return under subdivision (a) of this 19 RCNY § 28-18. Failure to submit the following information for a garage or similar facility at any such property in any material respect will result in parking, garaging or vehicle storage services rendered to tenants at that property being subject to the tax imposed by Chapter 5 of Title 11 of the Administrative Code. However, inadvertent omissions of information for an insignificant number of tenants or minor inadvertent factual errors will not cause such services to be taxable. The taxpayer must submit with the return required by subdivision (a) of this 19 RCNY § 28-18 a statement for each garage or other similar facility for which an exclusion is claimed pursuant to 19 RCNY § 28-02(h)(2)(iii) containing:

      (1)   the parking facility name;

      (2)   the parking facility address;

      (3)   the license number of the facility, if applicable;

      (4)   the licensed capacity of the facility, if licensed;

      (5)   the total number of transactions and amount of receipts for the taxable year from all sales of parking services including prepaid parking services, all parking services provided without charge and all parking services paid for by a person other than the person whose vehicle is parked, garaged or stored (such as a merchant validation of a parking ticket);

      (6)   the total number of transactions and amount of receipts from sales of monthly or longer term parking services, including a designation of each transaction and receipt as exempt from the eight percent Manhattan parking tax, where applicable; and

      (7)   the total number of transactions and amount of receipts from sales of monthly or longer term parking services provided to tenants. The taxpayer must maintain records containing the name, address, and license plate number for each tenant and must make such records available to the Department upon request.

§ 28-19 Returns, Notices, Records and Statements.

   (a)   Permanent books of account or records. (Administrative Code § 11-518(a)). Every taxpayer shall keep such permanent books of account or records, including inventories, as are sufficient to establish the amount of gross income, deductions, credits and other matters required to be shown by such taxpayer in any return of such tax or information. The Commissioner of Finance is authorized to prescribe the contents and form of returns and statements and may require the inclusion of a return, document, or statement of any information he deems necessary for the proper enforcement of Chapter 5 of Title 11 of the Administrative Code.

   (b)   Form of records. No particular form is required for keeping the records, but such systems of accounting shall be used as will enable the Commissioner of Finance to ascertain whether liability for tax is incurred and, if so, the correctness of the amounts required to be reported in any tax return.

   (c)   Requiring returns, statements, or the keeping of records. The Com missioner of Finance may require any person to make such returns, render such statements, furnish such copies of Federal income tax returns and of Federal audit determinations, or keep such specific records as the Commissioner of Finance may deem necessary to verify whether or not such person is complying or has complied with Chapter 5 of Title 11 of the Administrative Code.

   (d)   Copies of returns, schedules and statements. Every person who is required by these regulations or by instructions applicable to any form prescribed thereunder to keep a copy of any return, schedule, statement or other document, shall keep such copy as a part of his records.

   (e)   Place for keeping records. The books and records required by these regulations shall be kept at locations accessible to the representatives of the Commissioner of Finance, and shall be made available for inspection by such representatives.

   (f)   Retention of records. The books and records required to be kept by these regulations shall be retained so long as the contents thereof may become material in the administration of Chapter 5 of Title 11 of the Administrative Code.

   (g)   Notice of qualification as receiver, etc. (Administrative Code § 11-518(b)). Every receiver, trustee in bankruptcy, assignee for benefit of creditors, or other like fiduciary of a taxpayer subject to the tax imposed by Chapter 5 of Title 11 of the Administrative Code, required under the Internal Revenue Code and its applicable regulations to give notice of his qualification to act in such capacity must, within the same required period, give like written notice to the Commissioner of Finance (see: Internal Revenue Code § 6036, and subsection (a) of § 3-01.6036-1 of the Internal Revenue Code Regulations).

§ 28-20 Report of Change in Federal or New York State Taxable Income or New York State Sales and Compensating Use Tax Liability.

   (a)   Report of change in Federal or New York State taxable income. (Administrative Code § 11-519)

   If the amount of the taxpayer's Federal or New York State taxable income reported on the Federal or New York State income tax return is changed or corrected by the United States Internal Revenue Service or the New York State Department of Taxation and Finance or other competent authority, or changed as a result of a renegotiation of a contract or subcontract with the United States or the State of New York, or if the taxpayer, pursuant to subsection (d) of § 6213 of the Internal Revenue Code, executes a notice of waiver of the restrictions on assessment and collection provided in subsection (a) of said section of the Internal Revenue Code, or if a taxpayer, pursuant to subdivision (f) of § 681 of the New York Tax Law, executes a notice of waiver of the restrictions provided in subdivision (c) of said section of the New York Tax Law, and such change, correction or waiver pertains to the unincorporated business gross income or unincorporated business deductions of the taxpayer, a report of such change, correction or waiver, and the changes or correction in his Federal or New York State taxable income on which it is based, must be filed within ninety days after the final determination of such change, correction, or renegotiation, or such execution of such notice of waiver. The taxpayer shall concede the accuracy of such determination or state wherein it is erroneous. Any taxpayer filing an amended Federal or New York State income tax return shall also file within ninety days thereafter an amended return under these regulations for New York City unincorporated business tax purposes.

   (b)   Report of change of New York State sales and compensating use tax. (Administrative Code § 11-519.1)

   Where the State Tax Commission changes or corrects a taxpayer's sales and compensating use tax liability with respect to the purchase or use of items for which a sales or compensating use tax credit against the tax imposed by Chapter 5 of Title 11 of the Administrative Code was claimed (see: 19 RCNY § 28-03(c)(3)), the taxpayer shall report such change or correction to the Commissioner of Finance within ninety days of the final determination of such change or correction, and shall concede the accuracy of such determination or state wherein it is erroneous. Any taxpayer filing an amended return or report relating to the purchase or use of such items shall also file within ninety days thereafter a copy of such amended return or report with the Commissioner of Finance.

   (c)   Form of report of change in Federal or New York State taxable income or New York State sales and compensating use tax liability. The report referred to in 19 RCNY § 28-20(a) shall be made on Form NYC-115. The report referred to in 19 RCNY § 28-20(b) shall be made on Form NYC-116. It must be accompanied by a copy of the final Federal or New York State determination or renegotiation agreement as well as any other pertinent data in all cases in which a refund based on such final determination or renegotiation agreement is claimed. Where additional tax is due, the taxpayer may, in lieu of a copy of the final determination or renegotiation agreement, give full details of the changes in taxable income on Form NYC-115 or the changes in sales and compensating use tax liability on Form NYC-116. The report on Form NYC-115 or Form NYC-116 shall be accompanied by full payment of any tax shown to be due thereon and shall be forwarded separately from, and not as part of, any other report or return. The report must be made by the taxpayer regardless of whether he believes any modification of his tax liability is required.

   (d)   Federal or New York State changes not binding. The Commissioner of Finance is not required to accept as correct any change in taxable income or sales and compensating use tax liability as hereinabove set forth, but may conduct an independent audit or investigation in regard thereto.

   (e)   Final determination. A final determination for purposes of this section includes but is not limited to the following instances:

      (1)   A closing agreement made under § 7121 of the Internal Revenue Code of 1954, or with the New York State Tax Commission, finally and irrevocably adjusting and settling a taxpayer's liability.

      (2)   An allowance by the Commissioner of Internal Revenue or the New York State Tax Commission of a refund of any part of the tax shown on the taxpayer's return or of any deficiency thereafter assessed, whether such refund is made on the Commissioner's or State Tax Commission's own motion or pursuant to a judgment of a court.

      (3)   The 90-day deficiency notice pursuant to § 6212 of the Internal Revenue Code of 1954 or § 681 of the Tax Law of the State of New York, or the 90-day Notice of Determination pursuant to § 1138 of the Tax Law of New York, unless a timely petition to redetermine the deficiency is filed in the Tax Court of the United States or with the New York State Division of Tax Appeals, in which event the judgment of the court of last resort affirming the deficiency, or the redetermination of the deficiency pursuant to a judgment of the court of last resort, is the final determination.

      (4)   The assessment of a deficiency pursuant to a waiver filed under § 6213 of the Internal Revenue Code of 1954 or § 681 of the Tax Law of the State of New York, where no 90-day deficiency notice is issued.

      (5)   The filing of a signed consent irrevocably and finally fixing sales and use tax liability under § 1138 of the Tax Law of the State of New York.

   (f)   Recomputation of tax. (Administrative Code § 11-523(c)(3) and (9) and § 11-527(c) and (k)). If the report of a change in Federal or New York State taxable income or New York State sales and compensating use tax liability or an amended New York City return conforming to an amended Federal or New York State return is filed after expiration of the period otherwise prescribed for assessment or refund, the amount of any assessment, credit or refund shall not exceed the increase or reduction in tax attributable to such Federal or New York State change or to the items amended on the taxpayer's amended Federal or New York State return.

§ 28-21 Interest and Penalties.

   (a)   Interest on underpayments. (Administrative Code § 11-524).

      (1)   If any amount of tax is not paid on or before the last date prescribed for payment (without regard to any extension of time granted for payment), interest on such amount at the rate prescribed by the law and the regulations of the Commissioner of Finance shall be paid for the period from such last date to the date of payment. No interest shall be paid if the amount thereof is less than one dollar.

      (2)   Exception as to estimated tax. This subdivision (a) shall not apply to any failure to pay estimated tax under § 11-512 of the Administrative Code.

      (3)   Exception for mathematical error. No interest shall be imposed on any underpayment of tax due solely to mathematical error if the taxpayer files a return within the time prescribed in 19 RCNY § 28-18 (including any extension of time) and pays the amount of underpayment within three months after the due date of such return, as it may be extended.

      (4)   Suspension of interest on deficiencies. If a waiver of restrictions on assessment of a deficiency has been filed by the taxpayer, and if notice and demand by the Commissioner of Finance for payment of such deficiency is not made within 30 days after the filing of such waiver, interest shall not be imposed on such deficiency for the period beginning immediately after such 30th day and ending with the date of notice and demand.

      (5)   Tax reduced by carryback. If the amount of tax for any taxable year is reduced by reason of a carryback of a net operating loss, such reduction in tax shall not affect the computation of interest under this subdivision (a) for the period ending with the filing date for the taxable year in which the net operating loss arises, determined without regard to extensions of time to file.

Example: Partnership ABC has an unincorporated business tax deficiency of $1,000 for its taxable year ended December 31, 1983, due April 15, 1984. It sustains a loss for the year ended December 31, 1984, which when carried back to tax year 1983 reduces the deficiency for that year to $600. Interest accrues at the statutory rate (compounded) on $1,000 to April 15, 1985 (the filing date for the year of loss) and then on $600 to the date of payment.

      (6)   Interest on penalties or additions to tax. Interest shall be imposed under paragraph (1) of this subdivision (a) in respect to any assessable penalty or addition to tax only if such assessable penalty or addition to tax is not paid within ten days from the date of the notice and demand therefor under subdivision (b) of § 11-532 of the Administrative Code, and in such case interest shall be imposed only for the period from the date of the notice and demand to the date of payment.

      (7)   Payment prior to notice of deficiency. If, prior to the mailing to the taxpayer of a notice of deficiency under subdivision (b) of § 11-521 of the Administrative Code, the Commissioner of Finance mails to the taxpayer a notice of proposed increase of tax and within 30 days after the date of the notice of proposed increase the taxpayer pays all amounts shown on the notice to be due to the Commissioner of Finance, no interest under this subdivision (a) on the amount so paid shall be imposed for the period after the date of such notice of proposed increase.

      (8)   Payment within ninety days after notice of deficiency. If a notice of deficiency under § 11-521 of the Administrative Code is mailed to the taxpayer, and the total amount specified in such notice is paid on or before the 90th day after the date of mailing, interest under this subdivision (a) shall not be imposed for the period after the date of the notice.

      (9)   Payment within ten days after notice and demand. If notice and demand is made for payment of any amount under subdivision (b) of § 11-532 of the Administrative Code, and if such amount is paid within ten days after the date of such notice and demand, interest paid under this subdivision (a) on the amount so paid shall not be imposed for the period after the date of such notice and demand.

      (10)   Interest on erroneous refund. Any portion of tax or other amount which has been erroneously refunded, and which is recoverable by the Commissioner of Finance, shall bear interest at the rate set by the Commissioner of Finance from the date of the payment of the refund, but only if it appears that any part of the refund was induced by fraud or a misrepresentation of a material fact.

      (11)   Satisfaction by credits. If any portion of a tax is satisfied by credit of an overpayment, no interest shall be imposed under this subdivision (a) on the portion of the tax so satisfied for any period during which, if the credit had not been made, interest would have been allowable with respect to such overpayment.

   (b)   Additions to tax and civil penalties. (Administrative Code § 11-525).

      (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 (b)) 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 of the amount of such tax for each month or fraction thereof during which such failure continues, not exceeding 25 percent 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 tax return 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, 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 (b)) and not due to willful neglect, there shall be added to the amount shown as tax on such return one-half of one percent of the amount of such tax for each month or fraction thereof during which such failure continues, not exceeding 25 percent 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 within ten 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 (b)) 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 of such tax for each month or fraction thereof during which such failure continues, not exceeding 25 percent 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 month be more than five percent.

            (B)   If paragraphs (1) and (2) of this subdivision (b) 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 under paragraph (1) and one-half of one percent under paragraph (2) for each month up to and including the first five months. After the first five months, the addition of one-half per month pursuant to paragraph (2) will apply for the next 45 months for a maximum aggregate of 47 1/2 percent addition to tax. However, in any case described in subparagraph (1)(ii) of this subdivision (b) (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 paragraph (i.e. the lesser of $100 or 100% of the tax due).

            (C)   If paragraphs (1) and (3) of this subdivision (b) are both applicable, the maximum amount of the addition to tax may not exceed 25 percent in the aggregate. The maximum amount of the addition to tax pursuant to paragraph (3) of this subdivision (b) shall be reduced by the amount of the addition to tax pursuant to paragraph (1) of this subdivision (b) (determined without regard to subparagraph (1)(i) of this subdivision (b)) which is attributable to the tax for which the notice and demand is made and which is not paid within ten days of such notice and demand.

         (ii)   The provisions of this paragraph (4) may be illustrated by the following examples:

Example 1: 

   (i)   Assume the taxpayer filed his tax return for the year January 1, 1983 to December 31, 1983 (due April 15, 1984) on July 30, 1984, 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 August 26, 1984. 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 April 16 through August 15, and 0.5% for the fractional part of the month from August 16 through August 26) 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 April 16 through July 15 and 5% for the fractional part of the month from July 16 through July 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

 

   (ii)   A notice and demand for the $200 deficiency is issued on September 8, 1984, but the taxpayer does not pay the deficiency until August 23, 1985. 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 September 19, 1984, through August 18, 1985, and 0.5% for the fractional part of the month from August 19 through August 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 2: A taxpayer files his tax return for the year January 1, 1983 to December 31, 1983 on December 2, 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 December 2, 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 April 16 through September 15 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) of this subdivision (b) 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 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)   inability to obtain and assemble essential information required for the preparation of a complete return despite reasonable efforts;

         (iv)   any other cause for 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 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 (6)(i) of this subdivision) an amount equal to 50 percent of the interest payable under 19 RCNY § 28-21(a) with respect to the portion of the underpayment prescribed in such paragraph (6)(i) which is attributable to the negligence or intentional disregard referred to in such subparagraph (6)(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).

         (iii)   If any payment is shown on a return made by a payor with respect to dividends, patronage dividends and interest under subsection (a) of § 6042, subsection (a) of § 6044 or subsection (a) of § 6049 of the Internal Revenue Code, respectively, and the payee fails to include any portion of such payment in unincorporated business gross income, as that term is defined in 19 RCNY § 28-05, any portion of a deficiency attributable to such failure shall be treated, for purposes of this paragraph (6), as due to negligence in the absence of clear and convincing evidence to the contrary. If any addition to tax is imposed under this paragraph (6) by reason of the preceding sentence, the amount of the addition to tax imposed by paragraph (6)(i) of this subdivision (b) shall be five percent of the portion of the deficiency which is attributable to the failure described in the preceding sentence.

      (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 50 percent 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 paragraph (7)(i) of this subdivision) an amount equal to 50 percent of the interest payable under 19 RCNY § 28-21(a) with respect to the portion of the underpayment described in such paragraph (7)(i) which is attributable to fraud, for the period beginning on the last day prescribed by law for payment of such underpayment (determined with out 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 25 percent penalty due to willful neglect for failure to file a return due to willful neglect, five percent penalty due to negligence and the additional one-half of one percent per month penalty pursuant to paragraphs (2) and (3) of this subdivision (b).

      (8)   Any person who fails to pay tax, or to make, render, sign or certify any return, or declaration of estimated tax, or to supply any information within the required time, with fraudulent intent, shall be liable for a penalty of not more than $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 (8).

      (9)   Substantial understatement of liability. If there is a substantial understatement of tax for any taxable year, there shall be added to the tax an amount equal to ten percent of the amount of any underpayment attributable to such understatement. For purposes of this paragraph (9), there is a substantial understatement of tax for any taxable year if the amount of the understatement for the taxable year exceeds the greater of ten percent of the tax required to be shown on the return for the taxable year, or $5,000. For purposes of the preceding sentence, the term "under statement" means the excess of the amount of the tax required to be shown on the return for the taxable year, over the amount of the tax imposed which is shown on the return, reduced by any rebate (within the meaning of § 11-521(g) of the Administrative Code). The amount of such understatement [under the preceding sentence] shall be reduced by that portion of the understatement which is attributable to the tax treatment of any item by the taxpayer if there is or was substantial authority for such treatment, or any item with respect to which the relevant facts affecting the item's tax treatment are adequately disclosed in the return or in a statement attached to the return. The Commissioner of Finance may waive all or any part of the addition to tax provided by this paragraph (9) on a showing by the taxpayer that there was reasonable cause for the understatement (or part thereof) and that the taxpayer acted in good faith.

      (10)   Aiding or assisting in the giving of fraudulent returns, reports, statements or other documents. (i) Any person who, with the intent that tax be evaded, shall, for a fee or other compensation or as an incident to the performance of other services for which such person receives compensation, aid or assist in, or procure, counsel, or advise the preparation or presentation under, or in connection with any matter arising under the law of any return, report, declaration, statement or other document which is fraudulent or false as to any material matter, or supply any false or fraudulent information, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, report, declaration, statement or other document shall pay a penalty not exceeding ten thousand dollars.

         (ii)   For purposes of paragraph (10)(i) of this subdivision, the term "procures" includes ordering (or otherwise causing) a subordinate to do an act, and knowing of, and not attempting to prevent, participation by a subordinate in an act. The term "subordinate" means any other person (whether or not a member, employee, or agent of the taxpayer involved) over whose activities the person has direction, supervision, or control.

         (iii)   For purposes of paragraph (10)(i) of this subdivision, a person furnishing typing, reproducing, or other mechanical assistance with respect to a document shall not be treated as having aided or assisted in the preparation of such document by reason of such assistance.

         (iv)   The penalty imposed by this paragraph (10) shall be in addition to any other penalty provided by law.

   (c)   Failure to file declaration or underpayment of estimated tax. (Administrative Code § 11-525(c)). If any taxpayer fails to file a declaration of estimated tax or fails to pay all or any part of an installment of estimated tax, he shall be deemed to have made an underpayment of estimated tax. There shall be added to the tax for the taxable year an amount at the rate set by the law and the regulations of the Commissioner of Finance upon the amount of the underpayment for the period of the underpayment but not beyond the 15th day of the fourth month following the close of the taxable year. The amount of the underpayment shall be the excess of the amount of the installment which would be required to be paid if the estimated tax were equal to 90 percent of the tax shown on the return for the taxable year (or if no return was filed, 90 percent of the tax for such year) over the amount, if any, of the installment paid on or before the last day prescribed for such payment. No underpayment shall be deemed to exist with respect to a declaration or installment otherwise due on or after the taxpayer's death. In any case in which there would be no underpayment if this paragraph were applied by substituting "80 percent" for "90 percent" where it appears in the second preceding sentence, the addition to tax under this subdivision shall be equal to 75 percent of the amount otherwise determined under this section.

   (d)   Exception to addition for underpayment of estimated tax. (Administrative Code § 11-525(d)).

      (1)   The addition to tax under 19 RCNY § 28-21(c) with respect to any underpayment of any installment, shall not be imposed if the total amount of all payments of estimated tax made on or before the last date prescribed for the payment of such installment equals or exceeds whichever of the follow ing is the lesser:

         (i)   The amount which would have been required to be paid on or before such date if the estimated tax were whichever of the following is the least:

            (A)   The tax shown on the return of the taxpayer for the preceding taxable year, if a return showing a liability for tax was filed by the taxpayer for the preceding taxable year and such preceding year was a taxable year of 12 months, or

            (B)   An amount equal to the tax computed, at the rates applicable to the taxable year, but otherwise on the basis of the facts shown on his return for, and the law applicable to, the preceding taxable year, or

            (C)   An amount equal to 90 percent of the tax for the taxable year computed by placing on an annualized basis the unincorporated business taxable income for the months in the taxable year ending before the month in which the installment is required to be paid. For purposes of this subparagraph (i), the unincorporated business taxable income shall be placed on an annualized basis by: (a) multiplying by 12 (or, in the case of a taxable year of less than 12 months, the number of months in the taxable year) the unincorporated business taxable income for the months in the taxable year ending before the month in which the installment is required to be paid, and (b) dividing the resulting amount by the number of months in the taxable year ending before the month in which such installment date falls, or

            (D)   (a)   If the base period percentage for any six consecutive months of the taxable year equals or exceeds 70 percent, an amount equal to 90 percent of the tax determined in the following manner:

                  (1)   take the unincorporated business taxable income for all months during the taxable year preceding the filing month.

                  (2)   divide such amount by the base period percentage for all months during the taxable year preceding the filing month,

                  (3)   determine the tax on the amounts determined under subparagraph (i)(D)(a)(2), and

                  (4)   multiply the tax determined under subparagraph (i)(D)(a)(3) by the base period percentage for the filing month and all months during the taxable year preceding the filing month.

               (b)   For purposes of subparagraph (i)(D)(a) 

                  (1)   the base period percentage for any period of months shall be the average percent which the unincorporated business taxable income for the corresponding months in each of the three preceding years bears to the unincorporated business taxable income for the three preceding taxable years.

                  (2)   the term "filing month" means the month in which the installment is require to be paid; or

         (ii)   An amount equal to 90 percent of the tax computed, at the rates applicable to the taxable year, on the basis of the actual unincorporated business taxable income for the months in the taxable year ending before the month in which the installment is required to be paid.

      (2)   (i)   Except as provided in paragraph (1)(ii) hereof, subparagraphs (i)(A) and (i)(B) of paragraph (1) of this subdivision (d) shall not apply in the case of any taxpayer which had unincorporated business taxable income, or the portion thereof allocated within the City, of $1 million or more for any taxable year during the three taxable years immediately preceding the taxable year involved.

         (ii)   For taxable years beginning in 1983, the amount treated as the estimated tax under subparagraphs (i)(A) and (i)(B) of paragraph (1) of this subdivision (d) shall in no event be less than 75 percent of the tax shown on the return for the taxable year beginning in 1983 or, if no return was filed, 75 percent of the tax for such year.

   (e)   Criminal penalties. (Administrative Code, Chapter 40 of Title 11).

      (1)   Failure to file a return or report; supply information; or supplying false information. (Administrative Code § 11-4002). Any person who, with intent to evade any tax imposed or any requirement of law or any lawful requirement of the Commissioner of Finance, shall fail to make, render, sign, certify or file any return or report, or to supply any information within the time required by or under the provisions of the law, or who, with like intent, shall supply any false or fraudulent information, shall be guilty of a misdemeanor.

      (2)   False returns or reports. (Administrative Code § 11-4004).

         (i)   Any person who, with intent to evade any tax imposed by or any requirement of law, or any lawful requirement of the Commissioner of Finance, shall make, render, sign, certify or file any false or fraudulent return or report, declaration or statement shall be guilty of a misdemeanor.

         (ii)   Any person who, with intent to evade any tax imposed, files a false or fraudulent return or report and, with such intent, substantially understates on such return or report his tax liability shall be guilty of a class E felony.

         (iii)   For purposes of subparagraph (ii) of this paragraph (2) the term "substantially understates" refers to the excess amount of the tax required to be shown on the return or report for the taxable year or other applicable taxable period over the amount of the tax imposed which is shown on the return or report, provided that the excess is more than $1,500, and provided that the taxpayer, acting without reasonable ground for belief that his conduct is lawful, intended to evade at least said amount of such excess.

      (3)   Aiding or assisting in the giving of fraudulent returns, reports, statements or other documents. (Administrative Code § 11-4005).

         (i)   Any person who, with the intent that any tax imposed, or any lawful requirement of the Commissioner of Finance be evaded, shall, for a fee or other compensation or as an incident to the performance of other services for which such person receives compensation, aid or assist in, or procure, counsel, or advise the preparation or presentation under, or in connection with any matter arising under the law of any return, report, declaration, statement or other document which is fraudulent or false as to any material matter, or supply any false or fraudulent information, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, report, declaration, statement or other document shall be guilty of a misdemeanor.

         (ii)   Any person who, with the intent that any tax imposed be evaded, shall, for a fee or other compensation or as an incident to the performance of other services for which such person receives compensation, aid or assist in, or procure, counsel, or advise the preparation of any return or report, which is filed, and which is fraudulent or false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, and thereby causes, by means of a common scheme or plan, an under statement of tax liability of one or more persons of more than $1,500 in the aggregate, shall be guilty of a class E felony. The term "under statement" shall mean the excess of the amount of the tax required to be shown on the return or report over the amount of the tax imposed which is shown on the return or report.

      (4)   Failure to pay tax. (Administrative Code § 11-4006). Any person, who, with intent to evade any tax imposed or any requirement of law or any lawful requirement of the Commissioner of Finance, shall fail to pay the tax, shall be guilty of a misdemeanor.

      (5)   Failure to obey subpoena; false testimony. (Administrative Code § 11-4007).

         (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.

   (f)   Commissioners Certificate. (Administrative Code § 11-531(d)). The certificate of the Commissioner of Finance to the effect that a tax has not been paid, that a return or declaration of estimated tax has not been filed, or that information has not been supplied, as required by or under the provisions of Chapter 5 of Title 11 of the Administrative Code, shall be prima facie evidence that such tax has not been paid, that such return or declaration has not been filed, or that such information has not been supplied.