BILL NUMBER:S4943

TITLE OF BILL:
An act
to amend the tax law, in relation to the determination of sales and
compensating use taxes due

PURPOSE:
This bill would require that any external economic indices used by the
Department of Taxation and Finance in estimating sales tax payments
due must utilize regional economic indices to reflect the wide
variation of the costs of goods and services sold throughout the state.

SUMMARY OF PROVISIONS:
This bill would amend subdivision (a) of section 1138 of the tax law
by adding a new paragraph (5) to require that whenever the
Commissioner of Taxation and Finance is determining the amount of
sales t.ax owed, in instances in where a required sales tax filing
has not been made or there has been an incorrect or insufficient
sales tax payment, the Commissioner must utilize a regional economic
index to estimating the correct tax payment to be made.

JUSTIFICATION:
New York State has hired hundreds of new auditors over the past few
years and unleashed them on unsuspecting taxpayers. Thousands of
retail merchants across the state have been subject to new audit
              

tactics apparently designed to generate as much revenue as possible.
The most insidious of these tactics is the practice of determining a
merchant's sales tax assessment based on external indices rather than
the merchant's records. Often times the external indices are not based
on local standards thereby leading to drastically distorted
assessments far exceeding any reasonable estimate. One of the most
common indices used by the Department is based on an analysis of less
than 100 businesses. The Department continues to use this index in
spite of a specific note by the study's authors that it is not
statically reliable for such purposes. This bill would prohibit the
Department of Tax and Finance from using any external index that does
not reflect local economic conditions. It ensures that anytime a
sales tax assessment is imposed on a retail merchant not based on the
merchant's records it will be more fair since the merchant's local
area will be the basis of comparison.
These business owners are the backbone of the state's economy and
deserve to have their taxes determined in a fair manner. This bill
will restore fairness to the tax assessment process and help retail
merchants in New York live up to their legitimate tax assessments.

LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This act shall take effect immediately.