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Department of Taxation and Finance

2007 Rule reviews

Pursuant to section 207 of the State Administrative Procedure Act (SAPA) the Department of Taxation and Finance must review all rules, with certain exceptions, adopted on or after January 1, 1997, after five years, and, thereafter, at five year intervals. In 2007, the Department must review rules that were adopted during 2002 and 1997 to determine whether these rules should be retained as written or modified. Accordingly, the Department intends to review the following rules during 2007, and invites written comments on the continuation or modification of these rules in order to assist the Department in the required review. We will consider comments that are received by February 20, 2007. Any questions concerning the items listed in this rule review or comments regarding the continuation of the rules being reviewed should be referred to: Office of Counsel, Department of Taxation and Finance, W.A. Harriman Campus, Building 9, Room 200, Albany, New York 12227. Telephone: (518) 530-4153, Email address: tax.regulations@tax.ny.gov.

Agenda items

20 NYCRR Subparts 5-9, 20-4, 32-2 and section 106.8 (Empire Zone Wage Tax Credit)

20 NYCRR Subparts 5-9, 20-4, 32-2 and section 106.8 (Empire Zone Wage Tax Credit) Filed January 25, 2002; published February 13, 2002; effective February 13, 2002. Need: This rule eliminated obsolete and statutory material and areas of Franchise Tax on Banking Corporations, Franchise Taxes on Insurance Corporations and New York State Personal Income Tax regulations, relating to the Empire Zone (EZ) Wage Tax Credit, that parallel provisions in the Business Corporation Franchise Tax regulations. In addition, the rule contained amendments to reflect existing Department policy with respect to the EZ Wage Tax Credit. Legal Basis: Tax Law, sections 171, subd. First; 697(a); and 1096(a). (TAF-49-01-00002-A)

20 NYCRR Parts 70, 74, 79, 80, and 82 (Cigarette Tax)

20 NYCRR Parts 70, 74, 79, 80, and 82 (Cigarette Tax) Filed March 12, 2002; published March 27, 2002; effective April 3, 2002, except for the amendment to section 79.2 which was effective March 12, 2002 (emergency adoption). Filed May 14, 2002; published May 29, 2002; effective May 29, 2002 (permanent adoption). Need: This rule reflected the statutory increase in the rate of New York State cigarette excise tax that was effective on April 3, 2002; provided for commissions allowable to cigarette tax agents based on the face value of cigarette tax stamps as of April 3, 2002; effectuated the floor tax on cigarettes and unaffixed stamps in inventory as of the close of business on April 2, 2002; and more realistically reflected the basic cost of cigarettes in the cigarette marketing standards illustrations. (It is noted that portions of the subject regulations were subsequently amended based on Chapter 93 of the Laws of 2002, affecting the New York City rates of tax. [TAF-37-02-00005-A]) Legal Basis: Tax Law sections 171, subd. First; 475 (not subdivided); and L. 2002, ch. 1. (TAF-13-02-00010-A)

20 NYCRR Sections 527.4(b), (c), and 527.5(b)(3) (Clothing Alterations)

20 NYCRR Sections 527.4(b), (c), and 527.5(b)(3) (Clothing Alterations) Filed June 17, 2002; published July 3, 2002; effective September 1, 2002. Need: This rule provided that reasonable charges for alterations to all items of clothing are treated as tailoring, a service that is specifically excluded from New York State and local sales and compensating use taxes.  Prior to these amendments, the exclusion from tax depended upon who altered the clothing (e.g., an independent tailor or the clothing retailer) and whether the clothing itself was new, used, taxable, or exempt from tax. The amendments also made technical corrections to the subject sections of the regulations. Legal Basis: Tax Law sections 171, subd. First; 1142(1) and (8); and 1250 (not subdivided). (TAF-13-02-00008-A)

20 NYCRR Sections 89.1 and 89.3 (Tobacco Products Tax)

20 NYCRR Sections 89.1 and 89.3 (Tobacco Products Tax) Filed June 17, 2002; published July 3, 2002; effective July 2, 2002, except for the addition of section 89.3 which was effective June 17, 2002 (emergency adoption). Filed August 26, 2002; published September 11, 2002; effective September 11, 2002 (permanent adoption). Need: This rule reflected the statutory increase in the rate of tobacco products excise tax that was effective July 2, 2002, and effectuated the floor tax on tobacco products in inventory as of the close of business on July 1, 2002. Legal Basis: Tax Law sections 171, subd. First; 471-b; 471-c; 472; 473-a; and 475 (not subdivided); and L. 2002, ch. 85. (TAF-27-02-00006-A)

20 NYCRR Parts 74, 80, and 82 (Increased Rate of New York City Excise Tax on Cigarettes)

20 NYCRR Parts 74, 80, and 82 (Increased Rate of New York City Excise Tax on Cigarettes) Filed June 28, 2002; published July 17, 2002; effective July 2, 2002, except for the amendment to section 74.2 which was effective June 28, 2002 (emergency adopt). Filed September 17, 2002; published October 2, 2002; effective September 17, 2002 (emergency re-adopt). Filed October 29, 2002; published November 13, 2002; effective November 13, 2002 (permanent adopt). Need: This rule reflected the statutory increase in the rate of New York City excise tax on cigarettes that was effective on June 30, 2002, ensured that the commissions paid by New York State to licensed cigarette agents were preserved notwithstanding the New York City tax rate increase and more realistically reflected the basic cost of cigarettes in the cigarette marketing standards illustrations. Legal Basis: Tax Law sections 171, subd. First; and 475 (not subdivided); and L. 2002, ch. 93 and New York City Local Law 10, enacted June 30, 2002. (TAF-37-02-00005-A)

20 NYCRR Part 151 (Group Nonresident Income Tax Returns)

20 NYCRR Part 151 (Group Nonresident Income Tax Returns) Filed January 9, 1997; published January 29, 1997, effective January 29,1997. Need: This rule expanded the privilege of filing group nonresident income tax returns to more partnerships; clarified the Department's policy allowing certain limited liability partnerships and limited liability companies to file group returns; and allowed nonresident athletes the election to be included on a group individual nonresident income tax return. These amendments made it easier for members of these groups to file their personal income tax returns. These provisions were amended in 1998 to further expand the privilege of filing group returns to other groups and make other beneficial changes. This rule was previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on November 6, 2002. Legal Basis: Tax Law, sections 171, subd. First; 697(a); 651; 658(a) and 658(c). (TAF-45-96-00002-A)

20 NYCRR Part 6 (CT-4 Filing Rules)

20 NYCRR Part 6 (CT-4 Filing Rules) Filed March 5, 1997; published March 26, 1997, effective March 26, 1997. Need: This rule eliminated certain restrictions on who may file Form CT-4, General Business Corporation Franchise Tax Return (short form), thereby increasing the number of taxpayers eligible to file the short form. This rule was previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on July 24, 2002. Legal Basis: Tax Law, sections 171, subd. First; 211.1; and 1096(a). (TAF-02-97-00001-A)

20 NYCRR Section 528.7 (Farmers' Exempt Purchases)

20 NYCRR Section 528.7 (Farmers' Exempt Purchases) Filed May 14, 1997; published June 4, 1997; effective September 1, 1997. Need: This rule provided that personal protective equipment purchased by farmers for use directly and predominantly in farm production and construction materials that become integral component parts of the foundations of farm silos are exempt from New York State and local sales and compensating use taxes. The amendments also made technical corrections to section 528.7. The amendments were previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review, substantial changes to section 528.7 of the regulations were adopted based on statutory changes in 1999 and 2000, which significantly broadened the subject exemptions from tax.  (See TAF‑10‑04‑00025‑A; filed April 29, 2004; published May19, 2004, effective May 19, 2004.) However, certain technical corrections that were made in 1997 were continued without modification, specifically the cross-reference added to section 528.7(c) and the clarifying amendments made to section 528.7(c)(1)(iii). Therefore, only these technical corrections remain from the 1997 rule and are subject to review in 2007. Legal Basis: Tax Law sections 171, subd. First; 1115(a)(6); 1142(1); and 1250 (not subdivided). (TAF-12-97-00014-A)

20 NYCRR Section 533.3 (Filing of Sales and Use Tax Returns)

20 NYCRR Section 533.3 (Filing of Sales and Use Tax Returns). Filed June 25, 1997; published July 16, 1997, effective July 16, 1997. Need: This rule allowed vendors with ranges of annual sales and use tax liabilities of $250 to $3,000 to file annual, rather than quarterly, sales and use tax returns. This rule also made technical corrections to sections 533.3 and 561.13 of the Sales and Use Taxes Regulations. This rule was previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on August 21, 2002. Legal Basis:  Tax Law, sections 171, subd. First; 1136(a), (b), and (c); 1142(1); 1250 (not subdivided); and 1251(c). (TAF-18-97-00008-A).

20 NYCRR Part 2390 (Power of Attorney) and Section 4000.2(b) (Bureau of Conciliation and Mediation Services, Procedural Rules)

20 NYCRR Part 2390 (Power of Attorney) and Section 4000.2(b) (Bureau of Conciliation and Mediation Services, Procedural Rules) Filed August 6, 1997; published August 27, 1997; effective August 27, 1997. Need: Part 2390 provides practical requirements as to where a power of attorney is required by the Division of Taxation, and as to the form and content of a power of attorney. Section 4000.2(b) was amended to reflect that an agent who is enrolled to practice before the Internal Revenue Service may act as a representative in a conciliation conference proceeding. This rule was previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on June 19, 2002. Legal Basis: Tax Law sections 171, subd. First; and 170.3-a(d). (TAF-22-97-00001-A)

20 NYCRR Part 2391 (Service of Process)

20 NYCRR Part 2391 (Service of Process) Filed October 16, 1997; published November 5, 1997, effective November 5, 1997. Need: This rule added new provisions to provide information to any person commencing an action or proceeding involving the Commissioner or Department (except the Division of Tax Appeals or the Tax Appeals Tribunal) by setting forth the procedure for service of process on the Commissioner or Department.  The rule was previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on June 19, 2002. Legal Basis: Tax Law, section 171, subd. First; Civil Practice Law and Rules, section 307. (TAF-34-97-00003-A).

20 NYCRR Article 1 (Elimination of Unnecessary Provisions of Art. 1 of the Personal Income Tax Regulations (entitled "General"))

20 NYCRR Article 1 (Elimination of Unnecessary Provisions of Art. 1 of the Personal Income Tax Regulations (entitled "General")) Filed October 16, 1997; published November 5, 1997, effective November 5, 1997. Need: This rule repealed certain provisions that were unnecessary because the provisions repeated statutory material which did not require additional interpretation by regulation. Approximately 30 pages of unnecessary regulations were eliminated while retaining and recodifying necessary provisions. This rule was previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on October 16, 2002. Legal Basis: Tax Law, sections 171, subd. First; 697(a); 601 (e); and 606(b) and (e). (TAF-34-97-00004-A)

20 NYCRR Parts 5, 20, 32, 106 (Repeal of Parallel Credit Provisions)

20 NYCRR Parts 5, 20, 32, 106 (Repeal of Parallel Credit Provisions) Filed November 21, 1997; published December 10, 1997, effective December 10, 1997. Need: This rule reduced regulatory language on tax credits previously paralleled within Corporation Tax, Bank Tax, Insurance Tax, and Personal Income Tax regulations. Additionally, there were amendments which updated the rule to reflect legislative changes in the Empire Zone Investment Tax Credit, the Empire Zone Capital Credit and the Special Mortgage Recording Tax Credit. This rule was previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on February 26, 2003.Legal Basis: Tax Law, sections 171, subd. First; 191; 210 (20) (a), (b), (c) and (d); 210 (12-B) (d); 606 (j);   683 (c) (9); 697 (a); 1096 (a); 1456 (d); and 1511 (h). (TAF-38-97-00004-A)

20 NYCRR Parts 6, 8 and 21 (Repeal of the 30 day Rule)

20 NYCRR Parts 6, 8 and 21 (Repeal of the 30 day Rule) Filed December 23, 1997; published January 7, 1998, effective January 7, 1998. Need: This rule eliminated the requirement, and thereby the burden, that business and banking corporations request permission to file combined reports, or to change the composition of a combined group, within 30 days of the close of the taxable year. This rule was previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on July 24, 2002. Legal Basis: Tax Law, sections 171, subd. First; 211.4; and 1096(a). (TAF-44-97-00001-A)

20 NYCRR Part 2400 (Action for Failure to Release a Lien)

20 NYCRR Part 2400 (Action for Failure to Release a Lien) Filed December 23, 1997; published January 7, 1998; effective January 1, 1998 (emergency adoption). Filed February 25, 1998; effective January 1, 1998 and applicable to damages arising on or after January 1, 1998 (permanent adoption). Need: This rule implemented provisions of Chapter 577 of the Laws of 1997 and provides taxpayers with guidance on administrative review of a "notice of failure to release a lien". The rule also provides for the type of bond or other security which is acceptable to effectuate a release of lien. This rule was previously reviewed as part of the Department's 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on July 10, 2002. Legal Basis: Tax Law, sections 171, subd. First; and 3032(a) and (d), and section 56(j) of Chapter 577 of the Laws of 1997. (TAF-01-98-00007-EP)

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