S T A T E O F N E W Y O R K
________________________________________________________________________
7766--B
I N S E N A T E
May 7, 2010
___________
Introduced by Sen. FOLEY -- read twice and ordered printed, and when
printed to be committed to the Committee on Investigations and Govern-
ment Operations -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee
AN ACT to amend the tax law, in relation to tax on certain financial
services to debt evading foreign states
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. The tax law is amended by adding a new article 15 to read
2 as follows:
3 ARTICLE 15
4 TAX ON PROVISION OF CERTAIN FINANCIAL SERVICES TO DEBT
5 EVADING FOREIGN STATES
6 SECTION 330. DEFINITIONS.
7 331. IMPOSITION OF TAX.
8 332. REPORTS AND ADDITIONAL MEASURES.
9 S 330. DEFINITIONS. AS USED IN THIS ARTICLE:
10 (A) "AGENCY OR INSTRUMENTALITY OF A FOREIGN STATE" MEANS ANY ENTITY
11 WHICH:
12 (1) IS A SEPARATE LEGAL PERSON, CORPORATE OR OTHERWISE; AND
13 (2) IS AN ORGAN OF A FOREIGN STATE OR A PROVINCE OR POLITICAL SUBDIVI-
14 SION THEREOF, OR A MAJORITY OF WHOSE SHARES OR OTHER OWNERSHIP INTEREST
15 IS OWNED BY A FOREIGN STATE OR A PROVINCE OR POLITICAL SUBDIVISION THER-
16 EOF; AND
17 (3) IS NEITHER A CITIZEN OF A STATE OF THE UNITED STATES, NOR CREATED
18 UNDER THE LAWS OF ANY THIRD COUNTRY.
19 (B) "FINAL JUDGMENT" MEANS ANY JUDGMENT THAT IS NO LONGER ELIGIBLE TO
20 BE APPEALED TO ANY COURT.
21 (C) "FINANCIAL INSTITUTION" MEANS THE OFFICE OR BRANCH IN NEW YORK OF
22 ANY BANK, WHETHER FOREIGN OR DOMESTIC, THAT IS REGULATED BY THE NEW YORK
23 BANKING DEPARTMENT OR ANY AGENCY OR DEPARTMENT OF THE UNITED STATES, OR
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD17221-04-0
S. 7766--B 2
1 ANY TRUST COMPANY OR ANY OTHER PROVIDER OF PAYING AGENT SERVICES, PAYING
2 AGENT SERVICES, OR ANY OTHER SIMILAR OR ANY OTHER SERVICES.
3 (D) "PAYING AGENT AND FISCAL AGENT SERVICES" MEANS THE PAYMENT BY A
4 FINANCIAL INSTITUTION OF PRINCIPAL OR INTEREST ON A BOND, NOTE AND OTHER
5 OBLIGATION ISSUED BY DEBT EVADING FOREIGN STATES.
6 (E) "FOREIGN STATE" MEANS ANY GOVERNMENTAL UNIT OTHER THAN THE UNITED
7 STATES, OR ANY STATE, DISTRICT, COMMONWEALTH, TERRITORY OR INSULAR
8 POSSESSION THEREOF, AND INCLUDES A PROVINCE OR POLITICAL SUBDIVISION OF
9 A FOREIGN STATE.
10 (F) "DEBT EVADING FOREIGN STATE" MEANS ANY FOREIGN STATE THAT:
11 (1) HAS ONE OR MORE FINAL JUDGMENTS ENTERED AGAINST IT BY ANY STATE OR
12 FEDERAL COURT LOCATED IN NEW YORK, INCLUDING ANY FINAL JUDGMENT
13 ORIGINALLY ISSUED IN A FOREIGN COURT THAT IS FILED OR REGISTERED IN NEW
14 YORK, IN THE COMBINED AMOUNT OF WHICH JUDGMENTS EXCEEDS ONE HUNDRED
15 MILLION DOLLARS;
16 (2) FAILS TO SATISFY IN FULL ANY SUCH JUDGMENT FOR A PERIOD OF MORE
17 THAN TWO YEARS AFTER THE JUDGMENT BECOMES A FINAL JUDGMENT, REGARDLESS
18 OF WHETHER SUCH JUDGMENT BECAME A FINAL JUDGMENT BEFORE THE DATE OF THE
19 ENACTMENT OF THIS SUBDIVISION; AND
20 (3) IS NOT A FOREIGN STATE ELIGIBLE FOR:
21 (I) FINANCING THROUGH THE INTERNATIONAL DEVELOPMENT ASSOCIATION
22 (UNLESS SUCH STATE IS ELIGIBLE FOR FINANCING FROM THE INTERNATIONAL BANK
23 FOR RECONSTRUCTION AND DEVELOPMENT); OR
24 (II) DEBT RELIEF UNDER THE ENHANCED HIPC INITIATIVE (AS DEFINED IN
25 SECTION 1625(E)(3) OF THE UNITED STATES INTERNATIONAL FINANCIAL INSTI-
26 TUTIONS ACT); OR
27 (III) DEBT RELIEF UNDER THE MULTILATERAL DEBT RELIEF INITIATIVE OF THE
28 INTERNATIONAL MONETARY FUND.
29 (4) FOR PURPOSES OF THIS ARTICLE, REFERENCES TO A DEBT EVADING FOREIGN
30 STATE SHALL INCLUDE AGENCY OR INSTRUMENTALITY OF A FOREIGN STATE AND
31 STATE-OWNED CORPORATION OF A DEBT EVADING FOREIGN STATE, AS DEFINED IN
32 THIS SECTION.
33 (G) STATE-OWNED CORPORATION OF A DEBT EVADING FOREIGN STATE MEANS ANY
34 CORPORATION OR ENTITY (OTHER THAN A NATURAL PERSON), A MAJORITY OF THE
35 SHARES OR OTHER OWNERSHIP INTEREST OF WHICH IS HELD, EITHER DIRECTLY OR
36 INDIRECTLY, BY A DEBT EVADING FOREIGN STATE OR BY AN AGENCY OR INSTRU-
37 MENTALITY OF A DEBT EVADING FOREIGN STATE.
38 (H) STATE MEANS EACH OF THE SEVERAL STATES, THE DISTRICT OF COLUMBIA,
39 AND ANY COMMONWEALTH, TERRITORY OR POSSESSION OF THE UNITED STATES.
40 S 331. IMPOSITION OF TAX. (A) THERE IS HEREBY IMPOSED AND SHALL BE
41 PAID A TAX ON ANY PROVISION OF PAYING AGENT SERVICES OR FISCAL AGENT
42 SERVICES BY A FINANCIAL INSTITUTION TO A DEBT EVADING FOREIGN STATE.
43 (B) THE TAX IMPOSED SHALL BE AT A RATE OF FOUR PERCENT OF THE GROSS
44 AMOUNT DISBURSED BY THE FINANCIAL INSTITUTION IN RELATION TO AND AT THE
45 TIME OF EACH PROVISION OF SUCH SERVICE.
46 (C) THE ULTIMATE INCIDENCE OF AND LIABILITY FOR THE TAX SHALL BE UPON
47 THE DEBT EVADING FOREIGN STATE ON BEHALF OF WHICH SUCH PAYING AGENT
48 SERVICE OR FISCAL AGENT SERVICE IS PROVIDED. A FINANCIAL INSTITUTION
49 THAT PROVIDES SUCH SERVICES TO A DEBT EVADING FOREIGN STATE SHALL BE
50 RESPONSIBLE FOR THE COLLECTION OF THE TAX FROM SUCH DEBT EVADING FOREIGN
51 STATE AND FOR THE REMISSION OF THE TAX TO THE TAX COMMISSION. IN THE
52 EVENT A FINANCIAL INSTITUTION DISBURSES ANY FUNDS IN RELATION TO THE
53 PROVISION OF A PAYING AGENT SERVICE OR FISCAL AGENT SERVICE WITHOUT
54 REMITTING THE TAX IMPOSED BY OR PURSUANT TO THIS ARTICLE TO THE TAX
55 COMMISSION, SUCH FINANCIAL INSTITUTION SHALL BE LIABLE FOR THE FULL
S. 7766--B 3
1 AMOUNT OF SUCH TAX IMPOSED WHICH SHALL BE IMMEDIATELY DUE AND PAYABLE TO
2 THE TAX COMMISSION.
3 S 332. REPORTS AND ADDITIONAL MEASURES. (A) THE DEPARTMENT SHALL, ON A
4 MONTHLY BASIS, REVIEW THE RECORDS OF UNSATISFIED JUDGMENTS ENTERED IN
5 ALL FEDERAL AND STATE COURTS LOCATED IN THIS STATE TO IDENTIFY ALL DEBT
6 EVADING FOREIGN STATES.
7 (B) THE DEPARTMENT SHALL, ON A MONTHLY BASIS, POST TO ITS WEBSITE THE
8 IDENTITIES OF ALL DEBT EVADING FOREIGN STATES OR OTHERWISE PUBLISH SUCH
9 IDENTITIES IN ANY OTHER MANNER REASONABLY CALCULATED TO GIVE NOTICE TO
10 FINANCIAL INSTITUTIONS IN NEW YORK. ANY FINANCIAL INSTITUTION SUBJECT TO
11 THIS ACT SHALL HAVE THE ABSOLUTE RIGHT TO RELY UPON THE LIST OF DEBT
12 EVADING FOREIGN STATES POSTED OR PUBLISHED BY THE DEPARTMENT FOR THE
13 PURPOSE OF COMPLYING WITH THIS ARTICLE.
14 (C) THE DEPARTMENT SHALL REPORT TO THE OFFICE OF THE NEW YORK ATTORNEY
15 GENERAL THE NAMES OF ANY FINANCIAL INSTITUTIONS THAT THE DEPARTMENT
16 DETERMINES IS NOT COMPLYING WITH THIS ARTICLE.
17 (D) THE DEPARTMENT AND THE ATTORNEY GENERAL MAY CONSIDER DOCUMENTS AND
18 OTHER INFORMATION RECEIVED FROM THIRD PARTIES, FINANCIAL INSTITUTIONS
19 AND DEBT EVADING FOREIGN STATES TO DETERMINE WHETHER A FOREIGN STATE IS
20 A DEBT EVADING FOREIGN STATE.
21 (E) AT SUCH TIME AS THE DEPARTMENT DETERMINES THAT A FOREIGN STATE NO
22 LONGER QUALIFIES AS A DEBT EVADING FOREIGN STATE, IT SHALL REMOVE FROM
23 ITS WEBSITE THE DESIGNATION OF THE FOREIGN STATE AS A DEBT EVADING
24 FOREIGN STATE OR TAKE SUCH OTHER ACTION AS IS REASONABLY CALCULATED TO
25 GIVE NOTICE TO FINANCIAL INSTITUTIONS IN NEW YORK THAT SUCH FOREIGN
26 STATE IS NO LONGER DESIGNATED AS A DEBT EVADING FOREIGN STATE.
27 S 2. The tax law is amended by adding a new section 1816 to read as
28 follows:
29 S 1816. PROVISION OF CERTAIN FINANCIAL SERVICES TO DEBT EVADING
30 FOREIGN STATES TAX; ATTEMPT TO EVADE OR DEFEAT TAX. ANY FINANCIAL INSTI-
31 TUTION THAT WILLFULLY ATTEMPTS IN ANY MANNER TO EVADE OR DEFEAT ANY TAX
32 IMPOSED BY OR PURSUANT TO ARTICLE FIFTEEN OF THIS CHAPTER OR THE PAYMENT
33 THEREOF SHALL, IN ADDITION TO OTHER PENALTIES PROVIDED BY LAW, BE GUILTY
34 OF A MISDEMEANOR PUNISHABLE BY A FINE OF NOT MORE THAN TEN THOUSAND
35 DOLLARS PER OCCURRENCE.
36 S 3. This act shall take effect on the thirtieth day after it shall
37 have become a law and shall apply to any disbursement of funds in
38 connection with the provision of a paying agent service or fiscal agent
39 service occurring on or after such date.