S T A T E O F N E W Y O R K
________________________________________________________________________
5215
2021-2022 Regular Sessions
I N A S S E M B L Y
February 12, 2021
___________
Introduced by M. of A. NIOU -- read once and referred to the Committee
on Ways and Means
AN ACT to amend the tax law, in relation to the imposition of tax on
certain financial transactions
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The tax law is amended by adding a new article 15 to read
as follows:
ARTICLE 15
TAX ON FINANCIAL TRANSACTIONS
SECTION 340. DEFINITIONS.
341. IMPOSITION OF TAX.
342. EXCEPTIONS.
343. LIABILITY FOR TAX.
344. ADMINISTRATION AND REGULATION.
345. INTEREST AND CIVIL PENALTIES.
346. CRIMINAL PENALTIES.
§ 340. DEFINITIONS. 1. SPECIFIED BASE AMOUNT. FOR PURPOSES OF THIS
ARTICLE, THE TERM "SPECIFIED BASE AMOUNT" MEANS:
(A) EXCEPT AS PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION, THE FAIR
MARKET VALUE OF THE SECURITY (DETERMINED AS OF THE TIME OF THE COVERED
TRANSACTION); AND
(B) IN THE CASE OF ANY PAYMENT DESCRIBED IN SUBPARAGRAPH FOUR, FIVE,
OR SIX OF PARAGRAPH (A) OF SUBDIVISION THREE OF THIS SECTION, THE AMOUNT
OF SUCH PAYMENT.
2. COVERED TRANSACTION. FOR PURPOSES OF THIS SECTION, THE TERM
"COVERED TRANSACTION" MEANS:
(A) EXCEPT AS PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION, ANY
PURCHASE IF:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08795-01-1
A. 5215 2
(1) SUCH PURCHASE OCCURS OR IS CLEARED ON A QUALIFIED BOARD OR
EXCHANGE LOCATED IN THE STATE, OR IS EXECUTED BY A BROKER IN THE STATE;
OR
(2) THE PURCHASER OR SELLER IS A NEW YORK STATE RESIDENT OR BUSINESS
WITH A TAXABLE PRESENCE IN THE STATE; AND
(B) ANY TRANSACTION WITH RESPECT TO A SECURITY DESCRIBED IN SUBPARA-
GRAPH FOUR, FIVE, OR SIX OF PARAGRAPH (A) OF SUBDIVISION THREE OF THIS
SECTION, IF:
(1) SUCH SECURITY IS TRADED OR CLEARED ON A QUALIFIED BOARD OR
EXCHANGE LOCATED IN THE STATE, OR IS EXECUTED BY A BROKER IN THE STATE;
OR
(2) ANY PARTY WITH RIGHTS UNDER SUCH SECURITY IS A NEW YORK STATE
RESIDENT OR BUSINESS WITH A TAXABLE PRESENCE IN THE STATE.
3. SECURITY AND OTHER DEFINITIONS. FOR PURPOSES OF THIS SECTION:
(A) THE TERM "SECURITY" MEANS:
(1) ANY SHARE OF STOCK IN A CORPORATION;
(2) ANY PARTNERSHIP OR BENEFICIAL OWNERSHIP INTEREST IN A PARTNERSHIP
OR TRUST;
(3) ANY NOTE, BOND, DEBENTURE, OR OTHER EVIDENCE OF INDEBTEDNESS,
OTHER THAN A STATE OR LOCAL BOND THE INTEREST OF WHICH IS EXCLUDED FROM
GROSS INCOME UNDER SECTION 103(A) OF THE INTERNAL REVENUE CODE;
(4) ANY EVIDENCE OF AN INTEREST IN, OR A DERIVATIVE FINANCIAL INSTRU-
MENT WITH RESPECT TO, ANY SECURITY OR SECURITIES DESCRIBED IN SUBPARA-
GRAPH ONE, TWO, OR THREE OF THIS PARAGRAPH;
(5) ANY DERIVATIVE FINANCIAL INSTRUMENT WITH RESPECT TO ANY CURRENCY
OR COMMODITY INCLUDING NOTIONAL PRINCIPAL CONTRACTS; AND
(6) ANY OTHER DERIVATIVE FINANCIAL INSTRUMENT ANY PAYMENT WITH RESPECT
TO WHICH IS CALCULATED BY REFERENCE TO ANY SPECIFIED INDEX.
(B) THE TERM "DERIVATIVE FINANCIAL INSTRUMENT" INCLUDES ANY OPTION,
FORWARD CONTRACT, FUTURES CONTRACT, NOTIONAL PRINCIPAL CONTRACT, OR ANY
SIMILAR FINANCIAL INSTRUMENT.
(C) THE TERM "SPECIFIED INDEX" MEANS ANY ONE OR MORE OF ANY COMBINA-
TION OF:
(1) A FIXED RATE, PRICE, OR AMOUNT; OR
(2) A VARIABLE RATE, PRICE, OR AMOUNT, WHICH IS BASED ON ANY CURRENT
OBJECTIVELY DETERMINABLE INFORMATION WHICH IS NOT WITHIN THE CONTROL OF
ANY OF THE PARTIES TO THE CONTRACT OR INSTRUMENT AND IS NOT UNIQUE TO
ANY OF THE PARTIES' CIRCUMSTANCES.
(D) (1) AN EXCHANGE SHALL BE TREATED AS THE SALE OF THE PROPERTY
TRANSFERRED AND A PURCHASE OF THE PROPERTY RECEIVED BY EACH PARTY TO THE
EXCHANGE.
(2) IN THE CASE OF A DISTRIBUTION TREATED AS AN EXCHANGE FOR STOCK
UNDER SECTION 302 OR 331 OF THE INTERNAL REVENUE CODE, THE CORPORATION
MAKING SUCH DISTRIBUTION SHALL BE TREATED AS HAVING PURCHASED SUCH STOCK
FOR PURPOSES OF THIS SECTION.
(E) THE TERM "QUALIFIED BOARD OR EXCHANGE" HAS THE MEANING GIVEN SUCH
TERM BY SECTION 1256(G)(7) OF THE INTERNAL REVENUE CODE.
(F) THE TERM "BROKER" HAS THE MEANING GIVEN SUCH TERM BY SECTION
6045(C)(1) OF THE INTERNAL REVENUE CODE.
§ 341. IMPOSITION OF TAX. 1. THERE IS HEREBY IMPOSED A TAX ON EACH
COVERED TRANSACTION WITH RESPECT TO ANY SECURITY.
2. THE TAX IMPOSED UNDER SUBDIVISION ONE OF THIS SECTION WITH RESPECT
TO ANY COVERED TRANSACTION SHALL BE THE APPLICABLE PERCENTAGE OF THE
SPECIFIED BASE AMOUNT WITH RESPECT TO SUCH COVERED TRANSACTION.
THE APPLICABLE PERCENTAGE SHALL BE:
A. 5215 3
(A) ONE-HALF OF ONE PERCENT IN THE CASE OF A SECURITY DESCRIBED IN
SUBPARAGRAPH ONE OR TWO OF PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION
THREE HUNDRED FORTY OF THIS ARTICLE;
(B) ONE-TENTH OF ONE PERCENT IN THE CASE OF A SECURITY DESCRIBED IN
PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION THREE HUNDRED FORTY OF
THIS ARTICLE; AND
(C) FIVE THOUSANDTHS OF ONE PERCENT IN THE CASE OF A SECURITY
DESCRIBED IN SUBPARAGRAPH FOUR, FIVE, OR SIX OF PARAGRAPH (A) OF SUBDI-
VISION THREE OF SECTION THREE HUNDRED FORTY OF THIS ARTICLE.
3. EXCEPT AS OTHERWISE PROVIDED BY THE COMMISSIONER, ANY PAYMENT WITH
RESPECT TO A SECURITY DESCRIBED IN SUBPARAGRAPH FOUR, FIVE, OR SIX OF
PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION THREE HUNDRED FORTY OF
THIS ARTICLE SHALL BE TREATED AS A SEPARATE TRANSACTION FOR PURPOSES OF
THIS SECTION, INCLUDING:
(A) ANY NET INITIAL PAYMENT, NET FINAL OR TERMINATING PAYMENT, OR NET
PERIODICAL PAYMENT WITH RESPECT TO A NOTIONAL PRINCIPAL CONTRACT (OR
SIMILAR FINANCIAL INSTRUMENT);
(B) ANY PAYMENT WITH RESPECT TO ANY FORWARD CONTRACT (OR SIMILAR
FINANCIAL INSTRUMENT); AND
(C) ANY PREMIUM PAID WITH RESPECT TO ANY OPTION (OR SIMILAR FINANCIAL
INSTRUMENT).
§ 342. EXCEPTIONS. 1. NO TAX SHALL BE IMPOSED UNDER THIS ARTICLE ON
ANY COVERED TRANSACTION WITH RESPECT TO THE INITIAL ISSUANCE OF ANY
SECURITY DESCRIBED IN SUBPARAGRAPH ONE, TWO, OR THREE OF PARAGRAPH (A)
OF SUBDIVISION THREE OF SECTION THREE HUNDRED FORTY OF THIS ARTICLE.
2. A NOTE, BOND, DEBENTURE, OR OTHER EVIDENCE OF INDEBTEDNESS WHICH:
(A) IS TRADED ON A TRADING FACILITY LOCATED IN THE UNITED STATES; AND
(B) HAS A FIXED MATURITY OF NOT MORE THAN SIXTY DAYS, SHALL NOT BE
TREATED AS DESCRIBED IN SUBPARAGRAPH THREE OF PARAGRAPH (A) OF SUBDIVI-
SION THREE OF SECTION THREE HUNDRED FORTY OF THIS ARTICLE.
(C) NO TAX SHALL BE IMPOSED UNDER THIS ARTICLE ON ANY COVERED TRANS-
ACTION WITH RESPECT TO WHICH GAIN OR LOSS IS NOT RECOGNIZED BY REASON OF
SECTION 1058 OF THE INTERNAL REVENUE CODE.
§ 343. LIABILITY FOR TAX. 1. THE TAX IMPOSED BY THIS ARTICLE SHALL BE
PAID BY:
(A) IN THE CASE OF A TRANSACTION WHICH OCCURS OR IS CLEARED ON A
FACILITY LOCATED IN THE STATE, SUCH FACILITY; AND
(B) IN THE CASE OF A PURCHASE NOT DESCRIBED IN PARAGRAPH (A) OF THIS
SUBDIVISION WHICH IS EXECUTED BY A BROKER IN THE STATE, THE BROKER.
2. IN THE CASE OF ANY TRANSACTION TO WHICH SUBDIVISION ONE OF THIS
SECTION DOES NOT APPLY, THE TAX IMPOSED BY THIS ARTICLE SHALL BE PAID
BY:
(A) IN THE CASE OF A TRANSACTION DESCRIBED IN PARAGRAPH (A) OF SUBDI-
VISION TWO OF SECTION THREE HUNDRED FORTY OF THIS ARTICLE:
(1) THE PURCHASER IF THE PURCHASER IS A NEW YORK STATE RESIDENT OR
BUSINESS WITH A TAXABLE PRESENCE IN NEW YORK; OR
(2) THE SELLER IF THE PURCHASER IS NOT A NEW YORK STATE RESIDENT OR
BUSINESS WITH A TAXABLE PRESENCE IN NEW YORK; AND
(B) IN THE CASE OF A TRANSACTION DESCRIBED IN PARAGRAPH (B) OF SUBDI-
VISION TWO OF SECTION THREE HUNDRED FORTY OF THIS ARTICLE:
(1) THE PAYOR IF THE PAYOR IS A NEW YORK STATE RESIDENT OR BUSINESS
WITH A TAXABLE PRESENCE IN NEW YORK; OR
(2) THE PAYEE IF THE PAYOR IS NOT A NEW YORK STATE RESIDENT OR BUSI-
NESS WITH A TAXABLE PRESENCE IN NEW YORK.
§ 344. ADMINISTRATION AND REGULATION. 1. THE PARTY LIABLE FOR THE TAX
IMPOSED PURSUANT TO THIS ARTICLE SHALL FILE A RETURN, IN THE FORM AND
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MANNER AND CONTAINING SUCH INFORMATION, AS SHALL BE PRESCRIBED BY THE
COMMISSIONER.
2. THE COMMISSIONER SHALL:
(A) PROVIDE GUIDANCE REGARDING SUCH INFORMATION REPORTING AND OTHER
RELEVANT MATTERS CONCERNING COVERED TRANSACTIONS AS THE COMMISSIONER
DEEMS APPROPRIATE; AND
(B) PRESCRIBE SUCH REGULATIONS AS ARE NECESSARY OR APPROPRIATE TO
PREVENT AVOIDANCE OF THE PURPOSES OF THIS ARTICLE AND OTHERWISE CARRY
OUT ITS PURPOSES.
§ 345. INTEREST AND CIVIL PENALTIES. ANY PERSON FAILING TO FILE A
RETURN OR TO PAY ANY TAX WITHIN THE TIME REQUIRED BY THIS ARTICLE SHALL
BE SUBJECT TO A PENALTY OF TWENTY PERCENT OF THE AMOUNT OF TAX DUE PLUS
AN INTEREST PENALTY OF TWO PERCENT OF SUCH AMOUNT FOR EACH MONTH OF
DELAY OR FRACTION THEREOF AFTER THE EXPIRATION OF THE FIRST MONTH AFTER
SUCH RETURN WAS REQUIRED TO BE FILED OR SUCH TAX BECAME DUE, SUCH INTER-
EST PENALTY SHALL NOT EXCEED TWENTY-FIVE PER CENTUM IN THE AGGREGATE. IF
THE COMMISSIONER DETERMINES THAT SUCH FAILURE OR DELAY WAS DUE TO
REASONABLE CAUSE AND NOT DUE TO WILLFUL NEGLECT, THE COMMISSIONER MAY
REMIT, ABATE OR WAIVE ALL OF SUCH PENALTY AND SUCH INTEREST PENALTY.
§ 346. CRIMINAL PENALTIES. THE CRIMINAL PENALTIES IN SECTIONS EIGHTEEN
HUNDRED ONE, EIGHTEEN HUNDRED TWO, EIGHTEEN HUNDRED THREE, EIGHTEEN
HUNDRED FOUR, EIGHTEEN HUNDRED FIVE, EIGHTEEN HUNDRED SIX, EIGHTEEN
HUNDRED SEVEN AND EIGHTEEN HUNDRED SEVENTEEN OF THIS CHAPTER SHALL APPLY
TO THIS ARTICLE WITH THE SAME FORCE AND EFFECT AS IF THE LANGUAGE OF
THOSE PROVISIONS HAD BEEN SET FORTH IN FULL IN THIS ARTICLE EXCEPT TO
THE EXTENT THAT ANY PROVISION IS EITHER INCONSISTENT WITH A PROVISION OF
THIS ARTICLE OR IS NOT RELEVANT TO THE TAXES IMPOSED BY THIS ARTICLE.
§ 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment shall not affect,
impair, or invalidate the remainder thereof, but shall be confined in
its operation to the clause, sentence, paragraph, subdivision, section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the legislature that this act would have been enacted even if such
invalid provisions had not been included herein.
§ 3. This act shall take effect immediately.