Bill Text: NY S01985 | 2013-2014 | General Assembly | Amended
Bill Title: Clarifies the recordkeeping requirements for the earned income tax credit and the enhanced earned income tax credit.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-01-29 - PRINT NUMBER 1985A [S01985 Detail]
Download: New_York-2013-S01985-Amended.html
S T A T E O F N E W Y O R K
________________________________________________________________________
1985--A
2013-2014 Regular Sessions
I N S E N A T E
(PREFILED)
January 9, 2013
___________
Introduced by Sen. CARLUCCI -- read twice and ordered printed, and when
printed to be committed to the Committee on Investigations and Govern-
ment Operations -- recommitted to the Committee on Investigations and
Government Operations in accordance with Senate Rule 6, sec. 8 --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee
AN ACT to amend the tax law, in relation to clarifying the recordkeeping
requirements for the earned income tax credit and the enhanced earned
income tax credit
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Subsection (d) of section 606 of the tax law is amended by
2 adding a new paragraph 8 to read as follows:
3 (8) INCOME DOCUMENTATION. ANY TAXPAYER WHO RECEIVES MORE THAN FIFTY
4 PERCENT OF HIS OR HER INCOME IN CASH WHO IS CLAIMING THE CREDIT UNDER
5 THIS SUBSECTION MAY FOLLOW THE INCOME DOCUMENTATION STANDARDS SET FORTH
6 IN SECTION SIX HUNDRED FIFTY-EIGHT-A OF THIS ARTICLE WHEN APPLICABLE.
7 S 2. Subsection (d-1) of section 606 of the tax law is amended by
8 adding a new paragraph 9 to read as follows:
9 (9) ANY TAXPAYER WHO RECEIVES MORE THAN FIFTY PERCENT OF HIS OR HER
10 INCOME IN CASH WHO IS CLAIMING THE CREDIT UNDER THIS SUBSECTION MAY
11 PROVE HIS OR HER INCOME BY FOLLOWING THE INCOME DOCUMENTATION STANDARDS
12 SET FORTH IN SECTION SIX HUNDRED FIFTY-EIGHT-A OF THIS ARTICLE WHEN
13 APPLICABLE.
14 S 3. The tax law is amended by adding a new section 658-a to read as
15 follows:
16 S 658-A. INCOME DOCUMENTATION CONCERNING THE EARNED INCOME CREDIT. IN
17 CONJUNCTION WITH THE REQUIREMENTS SET FORTH IN THIS CHAPTER, THE
18 PROVISIONS OF THIS SECTION SHALL APPLY TO ANY TAXPAYER CLAIMING THE
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00956-02-4
S. 1985--A 2
1 EARNED INCOME CREDIT AS SET FORTH IN SUBSECTION (D) OF SECTION SIX
2 HUNDRED SIX OF THIS ARTICLE.
3 (A) INCOME DOCUMENTATION STANDARDS FOR CASH EARNERS. IF THE TAXPAYER
4 IS EMPLOYED IN ONE OR MORE OCCUPATIONS WHERE SUCH TAXPAYER RECEIVES MORE
5 THAN FIFTY PERCENT OF HIS OR HER INCOME IN CASH, SUCH TAXPAYER MAY PROVE
6 HIS OR HER INCOME BY PRODUCING ONE OF THE FOLLOWING VERIFICATIONS:
7 (1) PERMANENT BOOKS, ACCOUNTS OR RECORDS KEPT IN A MANNER CONSISTENT
8 WITH THE RECORDKEEPING PRACTICES OF THE INDUSTRY IN WHICH THE TAXPAYER
9 WORKS. FOR THE PURPOSES OF THIS SECTION, "PERMANENT BOOKS, ACCOUNTS OR
10 RECORDS" SHALL MEAN PAPER OR ELECTRONIC DOCUMENTS THAT REFLECT THE
11 AMOUNT AND SOURCE OF ALL INCOME EARNED FROM PAID EMPLOYMENT.
12 (A) EXAMPLES OF PERMANENT BOOKS, ACCOUNTS OR RECORDS SHALL INCLUDE,
13 BUT SHALL NOT BE LIMITED TO (I) BANK STATEMENTS FROM FINANCIAL INSTI-
14 TUTIONS, (II) ELECTRONIC LEDGERS OR SPREADSHEETS THAT DOCUMENT THE DATE
15 OF EACH ENTRY, OR (III) HANDWRITTEN ACCOUNTS MAINTAINED IN A BOUND
16 LEDGER.
17 (B) A DIFFERENT LEDGER SHALL BE MAINTAINED FOR EACH TAX YEAR'S CASH
18 EARNINGS RECORDS, AND EACH RECORD SHALL BE MAINTAINED FOR AT LEAST THREE
19 YEARS AFTER THE TAX YEAR FOR WHICH IT WAS SUBMITTED.
20 (C) ENTRY REQUIREMENTS FOR HANDWRITTEN LEDGERS. (I) A HANDWRITTEN
21 LEDGER DOCUMENTING THE TAXPAYER'S INCOME SHALL LIST, IN CHRONOLOGICAL
22 ORDER, AN ENTRY FOR EACH TRANSACTION FOR WHICH SUCH TAXPAYER EARNS MONEY
23 WITH INFORMATION THAT INCLUDES, BUT IS NOT LIMITED TO:
24 (I) THE AMOUNT OF MONEY EARNED;
25 (II) THE APPROXIMATE TIME AND DATE ON WHICH THE MONEY WAS EARNED; AND
26 (III) A BRIEF DESCRIPTION OR LIST OF THE TASK OR TASKS PERFORMED FOR
27 THE MONEY EARNED.
28 (II) SUCH RECORD MAY INCLUDE ENTRIES FOR WORK-RELATED EXPENSES AND
29 EACH SUCH ENTRY SHALL INCLUDE, BUT IS NOT LIMITED TO:
30 (I) THE AMOUNT OF THE WORK-RELATED EXPENSE;
31 (II) THE APPROXIMATE TIME AND DATE THE WORK-RELATED EXPENSE WAS
32 INCURRED;
33 (III) THE NATURE OF THE WORK-RELATED EXPENSE; AND
34 (IV) THE DATE ON WHICH THE ENTRY WAS MADE.
35 (III) AN ENTRY FOR ANY TRANSACTION SHALL BE MADE AS SOON AS POSSIBLE
36 AFTER THE TRANSACTION OCCURRED.
37 (2) ADDITIONAL ACCEPTABLE INCOME VERIFICATION DOCUMENTS. IN THE
38 ABSENCE OF PERMANENT BOOKS, ACCOUNTS OR RECORDS, A TAX FILER MAY VERIFY
39 INCOME BY PRODUCING TWO OR MORE OF THE FOLLOWING:
40 (A) A SIGNED LETTER FROM THE TAXPAYER'S EMPLOYER STATING WAGES PAID;
41 (B) STATEMENTS FROM A FINANCIAL INSTITUTION THAT DEMONSTRATE REGULAR
42 DEPOSITS OF EARNINGS;
43 (C) RECEIPTS FROM WORK SUPPLIES, INCLUDING BUT NOT LIMITED TO UNIFORMS
44 AND MATERIALS NEEDED TO COMPLETE A SPECIFIC JOB;
45 (D) RECEIPTS FROM LICENSING OR CERTIFICATION FEES, MEMBERSHIP DUES, OR
46 OTHER PROFESSIONAL DUES;
47 (E) RECEIPTS FROM WORK-RELATED EXPENSES, INCLUDING BUT NOT LIMITED TO
48 TRANSPORTATION COSTS AND CHILD CARE;
49 (F) A SWORN AFFIDAVIT, SIGNED BY THE TAXPAYER, STATING SUCH TAXPAYER'S
50 POSITION OR TITLE, THE NUMBER OF WEEKS WORKED, THE NUMBER OF HOURS
51 WORKED PER WEEK, THE WAGES EARNED, AND A BRIEF DESCRIPTION OF THE WORK
52 PERFORMED. A SEPARATE NOTARIZED AFFIDAVIT SHALL BE COMPLETED FOR EACH
53 JOB;
54 (G) AN INCOME AND EXPENSES WORKSHEET COMPLETED WITH A CERTIFIED TAX
55 PROFESSIONAL.
S. 1985--A 3
1 (B) ERRORS OR OMISSIONS. OMISSIONS OR FAILURES TO CORRECT ENTRIES
2 SHALL NOT BE SUFFICIENT IN AND OF THEMSELVES TO RENDER A TAXPAYER'S
3 RECORDS AS INADEQUATE TO VALIDATE SUCH TAXPAYER'S INCOME FOR THE RELE-
4 VANT TAX YEAR.
5 (C) PRESUMPTION OF ACCURACY AND COMPLETENESS. (1) PROVIDED THAT THE
6 MINIMUM STANDARDS SET FORTH IN THIS SECTION ARE MET, AND UNLESS THE
7 DEPARTMENT HAS AFFIRMATIVE EVIDENCE TO DIRECTLY CONTRADICT THE TAXPAY-
8 ER'S RETURN, THE DEPARTMENT SHALL PRESUME THE ACCURACY AND COMPLETENESS
9 OF THE RECORD AND THE GOOD FAITH OF THE TAXPAYER.
10 (2) THE PARTICULAR FORMAT OF THE RECORD SHALL NOT BE USED AS EVIDENCE
11 OF INSUFFICIENT RECORDKEEPING OR BAD FAITH ON THE PART OF THE TAXPAYER.
12 (3) A MID-YEAR CHANGE IN THE FORMAT OF RECORDKEEPING WITHIN A SINGLE
13 LEDGER SHALL NOT BE CONSIDERED EVIDENCE OF INCOMPLETE RECORDKEEPING OR
14 BAD FAITH IF SUCH CHANGE INDICATES AN ATTEMPT TO IMPROVE UPON RECORD-
15 KEEPING.
16 (D) REPORT. (1) ON OR BEFORE JUNE THIRTIETH NEXT SUCCEEDING THE DATE
17 ON WHICH THIS SECTION SHALL HAVE BECOME A LAW, AND ANNUALLY THEREAFTER,
18 THE COMMISSIONER SHALL SUBMIT A WRITTEN REPORT REGARDING TAXPAYERS WHO
19 CLAIM THE EARNED INCOME CREDIT AS SET FORTH IN SUBSECTION (D) OF SECTION
20 SIX HUNDRED SIX OF THIS ARTICLE AND WHO ARE PAID PRINCIPALLY IN CASH.
21 (2) THE REPORT MUST CONTAIN THE FOLLOWING INFORMATION ABOUT THE EARNED
22 INCOME CREDIT CLAIMED UNDER THIS ARTICLE DURING THE PREVIOUS CALENDAR
23 YEAR:
24 (A) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT;
25 (B) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT WHO ARE SENT DESK
26 AUDIT INQUIRY LETTERS;
27 (C) THE NUMBER OF RESPONSES TO THE AUDIT INQUIRY LETTERS THAT THE
28 DEPARTMENT RECEIVES;
29 (D) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT WHO ARE AUDITED AND
30 RECEIVE THE CREDIT AS A RESULT; AND
31 (E) THE NUMBER OF CASH EARNERS CLAIMING THE CREDIT WHO ARE AUDITED AND
32 ARE DENIED THE CREDIT AS A RESULT.
33 (3) THE CREDIT REPORT MAY ALSO CONTAIN ANY OTHER INFORMATION THAT THE
34 COMMISSIONER DEEMS TO BE USEFUL IN EVALUATING THE USE OF THE CREDIT BY
35 CASH EARNERS. THE INFORMATION INCLUDED IN THE CREDIT REPORT WILL BE
36 BASED ON THE INFORMATION FILED WITH THE DEPARTMENT DURING THE PREVIOUS
37 CALENDAR YEAR, TO THE EXTENT THAT IT IS PRACTICABLE TO USE THAT INFORMA-
38 TION.
39 S 4. This act shall take effect on the one hundred twentieth day after
40 it shall have become a law. Effective immediately, the commissioner of
41 taxation and finance is authorized to make any addition, amendment
42 and/or repeal of any rule or regulation necessary for the implementation
43 of this act on its effective date on or before such date.
