S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2037
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 23, 2023
                                ___________
 
 Introduced  by  M.  of  A. WALKER, CRUZ -- read once and referred to the
   Committee on Ways and Means
 
 AN ACT to amend the tax law, in relation to establishing the NYC under 3
   act
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1. This act shall be known and may be cited as the "NYC under
 3 act".
   § 2. The tax law is amended by adding a new article 24-C  to  read  as
 follows:
                               ARTICLE 24-C
                              NYC UNDER 3 ACT
 SECTION 880. DEFINITIONS.
         881. IMPOSITION OF TAX AND RATE.
         882. PASS THROUGH OF TAX PROHIBITED.
         883. EXEMPTION OVERRIDE.
         884. PAYMENT OF TAX.
         885. DEPOSIT AND DISPOSITION OF REVENUE.
         886. PROCEDURAL PROVISIONS.
         887. ENFORCEMENT WITH OTHER TAXES.
   § 880. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE:
   (A)  EMPLOYER.  EMPLOYER  MEANS  AN  EMPLOYER  REQUIRED BY SECTION SIX
 HUNDRED SEVENTY-ONE OF THIS CHAPTER TO  DEDUCT  AND  WITHHOLD  TAX  FROM
 WAGES,  THAT  HAS A PAYROLL EXPENSE IN EXCESS OF SIX HUNDRED TWENTY-FIVE
 THOUSAND DOLLARS IN ANY CALENDAR QUARTER; OTHER THAN:
   (1) ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES;
   (2) THE UNITED NATIONS;
   (3) AN INTERSTATE AGENCY OR PUBLIC CORPORATION CREATED PURSUANT TO  AN
 AGREEMENT OR COMPACT WITH ANOTHER STATE OR THE DOMINION OF CANADA; OR
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06742-01-3
 A. 2037                             2

              

   (4)  (I)  ANY  NON-PROFIT  EARLY  CHILDHOOD  SERVICES  PROVIDER  WHICH
 RECEIVES FUNDING FROM THE FEDERAL OR STATE GOVERNMENT, OR ANY MUNICIPAL,
 STATE OR FEDERAL AGENCY, OR POLITICAL SUBDIVISION.
   (II)  AS  USED  IN  THIS  SECTION, THE TERM "EARLY CHILDHOOD SERVICES"
 SHALL MEAN SERVICES WHICH INCLUDE, BUT ARE NOT LIMITED  TO,  REGISTERED,
 CERTIFIED  OR  LICENSED  CARE IN FAMILY DAY CARE HOMES; GROUP FAMILY DAY
 CARE HOMES; SCHOOL-AGE CHILD CARE PROGRAMS;  HEAD  START  PROGRAMS;  DAY
 CARE CENTERS; CHILD CARE WHICH MAY BE PROVIDED WITHOUT A PERMIT, CERTIF-
 ICATE  OR  REGISTRATION IN ACCORDANCE WITH THIS STATUTE; EARLY CHILDHOOD
 EDUCATION PROGRAMS APPROVED BY THE STATE EDUCATION DEPARTMENT; AND  CARE
 PROVIDED  IN A CHILDREN'S CAMP AS DEFINED IN SECTION FOURTEEN HUNDRED OF
 THE PUBLIC HEALTH LAW.
   (B) PAYROLL EXPENSE. PAYROLL EXPENSE MEANS WAGES AND  COMPENSATION  AS
 DEFINED  IN SECTIONS 3121 AND 3231 OF THE INTERNAL REVENUE CODE (WITHOUT
 REGARD TO SECTION 3121(A)(1) AND SECTION 3231(E)(2)(A)(I)), PAID TO  ALL
 COVERED EMPLOYEES.
   (C)  COVERED  EMPLOYEE.  COVERED  EMPLOYEE  MEANS  AN  EMPLOYEE WHO IS
 EMPLOYED IN A CITY WITH A POPULATION OF ONE MILLION OR MORE.
   § 881. IMPOSITION OF TAX AND RATE.  FOR THE PURPOSE  OF  PROVIDING  AN
 ADDITIONAL STABLE AND RELIABLE DEDICATED FUNDING SOURCE TO ADDRESS CHILD
 CARE  AFFORDABILITY,  ACCESSIBILITY, AND QUALITY FOR FAMILIES WITH CHIL-
 DREN UNDER THREE YEARS OF AGE IN A CITY WITH A POPULATION OF ONE MILLION
 OR MORE, A TAX  IS  HEREBY  IMPOSED  ON  EMPLOYERS  AND  INDIVIDUALS  AS
 FOLLOWS:  FOR  EMPLOYERS  WHO  ENGAGE IN BUSINESS IN A CITY WITH A POPU-
 LATION OF ONE MILLION OR MORE, THE TAX IS  IMPOSED  AT  A  RATE  OF  (A)
 FIFTEEN  HUNDREDTHS  (.15)  PERCENT OF THE PAYROLL EXPENSE FOR EMPLOYERS
 WITH PAYROLL EXPENSE IN  EXCESS  OF  SIX  HUNDRED  TWENTY-FIVE  THOUSAND
 DOLLARS AND NOT MORE THAN ONE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
 PER  CALENDAR  QUARTER,  (B)  EIGHTEEN  HUNDREDTHS  (.18) PERCENT OF THE
 PAYROLL EXPENSE FOR EMPLOYERS WITH PAYROLL  EXPENSE  IN  EXCESS  OF  ONE
 MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS AND NOT MORE THAN TWO MILLION
 FIVE  HUNDRED  THOUSAND DOLLARS PER CALENDAR QUARTER, AND (C) TWENTY-TWO
 HUNDREDTHS (.22) PERCENT OF  THE  PAYROLL  EXPENSE  FOR  EMPLOYERS  WITH
 PAYROLL  EXPENSE  IN EXCESS OF TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
 PER CALENDAR QUARTER.  IF THE EMPLOYER IS A PROFESSIONAL EMPLOYER ORGAN-
 IZATION, AS DEFINED IN SECTION NINE HUNDRED SIXTEEN OF  THE  LABOR  LAW,
 THE  EMPLOYER'S  TAX  SHALL  BE  CALCULATED  BY  DETERMINING THE PAYROLL
 EXPENSE ATTRIBUTABLE TO EACH CLIENT WHO HAS ENTERED INTO A  PROFESSIONAL
 EMPLOYER  AGREEMENT  WITH  SUCH  ORGANIZATION  AND  THE  PAYROLL EXPENSE
 ATTRIBUTABLE TO SUCH ORGANIZATION  ITSELF,  MULTIPLYING  EACH  OF  THOSE
 PAYROLL  EXPENSE  AMOUNTS BY THE APPLICABLE RATE SET FORTH IN THIS PARA-
 GRAPH AND ADDING THOSE PRODUCTS TOGETHER.
   § 882. PASS THROUGH OF TAX PROHIBITED. AN EMPLOYER CANNOT DEDUCT  FROM
 THE  WAGES OR COMPENSATION OF AN EMPLOYEE ANY AMOUNT THAT REPRESENTS ALL
 OR ANY PORTION OF THE TAX IMPOSED ON THE EMPLOYER UNDER THIS ARTICLE.
   § 883. EXEMPTION OVERRIDE. (A) EXCEPT AS PROVIDED IN SUBSECTION (B) OF
 THIS SECTION, ANY EXEMPTION FROM TAX SPECIFIED IN  ANY  OTHER  NEW  YORK
 STATE LAW WILL NOT APPLY TO THE TAX IMPOSED BY THIS ARTICLE.
   (B) IF A TAX-FREE NY AREA APPROVED PURSUANT TO THE PROVISIONS OF ARTI-
 CLE  TWENTY-ONE OF THE ECONOMIC DEVELOPMENT LAW IS LOCATED WITHIN A CITY
 WITH A POPULATION OF ONE MILLION OR MORE, THE PAYROLL  EXPENSE  IN  SUCH
 TAX-FREE  NY  AREA  OF  ANY  EMPLOYER  THAT  IS LOCATED IN SUCH AREA AND
 ACCEPTED INTO THE START-UP NY PROGRAM  SHALL  BE  EXEMPT  FROM  THE  TAX
 IMPOSED UNDER THIS ARTICLE.
   § 884. PAYMENT OF TAX. EMPLOYERS WITH PAYROLL EXPENSE. THE TAX IMPOSED
 ON  THE PAYROLL EXPENSE OF EMPLOYERS UNDER SECTION EIGHT HUNDRED EIGHTY-
 A. 2037                             3
 
 ONE OF THIS ARTICLE MUST BE PAID  AT  THE  SAME  TIME  THE  EMPLOYER  IS
 REQUIRED  TO  REMIT  PAYMENTS  UNDER SECTION SIX HUNDRED SEVENTY-FOUR OF
 THIS CHAPTER; PROVIDED HOWEVER, THAT EMPLOYERS SUBJECT TO THE PROVISIONS
 IN  SECTION NINE OF THIS CHAPTER MUST PAY THE TAX ON THE PAYROLL EXPENSE
 AT THE SAME TIME AS THE WITHHOLDING TAX REMITTED  UNDER  THE  ELECTRONIC
 PAYMENT  REPORTING  SYSTEM  AND  THE  ELECTRONIC  FUNDS  TRANSFER SYSTEM
 AUTHORIZED BY SECTION NINE OF THIS CHAPTER.
   § 885. DEPOSIT AND DISPOSITION OF REVENUE. (A)  THE  TAXES,  INTEREST,
 AND  PENALTIES  IMPOSED BY THIS ARTICLE AND COLLECTED OR RECEIVED BY THE
 COMMISSIONER SHALL BE DEPOSITED DAILY WITH SUCH RESPONSIBLE BANKS, BANK-
 ING HOUSES OR TRUST COMPANIES, AS MAY BE DESIGNATED BY  THE  COMPTROLLER
 OF  THE CITY OF NEW YORK, TO THE CREDIT OF SUCH COMPTROLLER IN TRUST FOR
 THE CITY OF NEW YORK.  SUCH DEPOSITS SHALL BE KEPT  SEPARATE  AND  APART
 FROM ALL OTHER MONEY IN THE POSSESSION OF THE COMPTROLLER OF THE CITY OF
 NEW YORK. THE COMPTROLLER OF THE CITY OF NEW YORK SHALL REQUIRE ADEQUATE
 SECURITY  FROM ALL SUCH DEPOSITORIES.  OF THE TOTAL REVENUE COLLECTED OR
 RECEIVED UNDER THIS ARTICLE, THE COMPTROLLER OF THE  CITY  OF  NEW  YORK
 SHALL  RETAIN SUCH AMOUNT AS THE COMMISSIONER MAY DETERMINE TO BE NECES-
 SARY FOR REFUNDS UNDER THIS ARTICLE. THE COMPTROLLER OF THE CITY OF  NEW
 YORK  IS  AUTHORIZED AND DIRECTED TO DEDUCT FROM THE AMOUNTS IT RECEIVES
 UNDER THIS ARTICLE, BEFORE DEPOSIT INTO THE TRUST ACCOUNTS DESIGNATED BY
 SUCH COMPTROLLER, A REASONABLE AMOUNT NECESSARY TO EFFECTUATE REFUNDS OF
 THE DEPARTMENT TO REIMBURSE THE DEPARTMENT FOR  THE  COSTS  INCURRED  TO
 ADMINISTER, COLLECT AND DISTRIBUTE THE TAXES IMPOSED BY THIS ARTICLE.
   (B)  AFTER  RESERVING  SUCH AMOUNT FOR SUCH REFUNDS AND DEDUCTING SUCH
 AMOUNTS FOR SUCH COSTS, AS  PROVIDED  FOR  IN  SUBSECTION  (A)  OF  THIS
 SECTION,  THE  COMMISSIONER SHALL CERTIFY TO THE COMPTROLLER OF THE CITY
 OF NEW YORK THE AMOUNT OF ALL REVENUES  SO  RECEIVED  DURING  THE  PRIOR
 MONTH  AS  A RESULT OF THE TAXES, INTEREST AND PENALTIES SO IMPOSED. THE
 AMOUNT OF REVENUES SO CERTIFIED SHALL BE PAID OVER BY THE FIFTEENTH  AND
 THE  FINAL BUSINESS DAY OF EACH SUCCEEDING MONTH FROM SUCH ACCOUNT WITH-
 OUT APPROPRIATION INTO THE GENERAL FUND OF THE CITY OF NEW YORK.
   § 886. PROCEDURAL PROVISIONS. (A) GENERAL. ALL PROVISIONS  OF  ARTICLE
 TWENTY-TWO OF THIS CHAPTER SHALL APPLY TO THE PROVISIONS OF THIS ARTICLE
 IN THE SAME MANNER AND WITH THE SAME FORCE AND EFFECT AS IF THE LANGUAGE
 OF ARTICLE TWENTY-TWO OF THIS CHAPTER HAD BEEN INCORPORATED IN FULL INTO
 THIS  ARTICLE  AND  HAD  BEEN  SPECIFICALLY  ADJUSTED  FOR AND EXPRESSLY
 REFERRED TO THE TAX IMPOSED BY THIS ARTICLE, EXCEPT TO THE  EXTENT  THAT
 ANY PROVISION IS EITHER INCONSISTENT WITH A PROVISION OF THIS ARTICLE OR
 IS NOT RELEVANT TO THIS ARTICLE. NOTWITHSTANDING THE PRECEDING SENTENCE,
 NO  CREDIT AGAINST TAX IN ARTICLE TWENTY-TWO OF THIS CHAPTER CAN BE USED
 TO OFFSET THE TAX DUE UNDER THIS ARTICLE.
   (B) COMBINED FILINGS. NOTWITHSTANDING ANY  OTHER  PROVISIONS  OF  THIS
 ARTICLE:
   (1) THE COMMISSIONER MAY REQUIRE THE FILING OF A COMBINED RETURN WHICH
 MAY  ALSO  INCLUDE ANY OF THE RETURNS REQUIRED TO BE FILED BY A TAXPAYER
 PURSUANT TO THE PROVISIONS OF SECTION  SIX  HUNDRED  FIFTY-ONE  OF  THIS
 CHAPTER  AND WHICH MAY BE REQUIRED TO BE FILED BY SUCH TAXPAYER PURSUANT
 TO ANY LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY  OF  ARTICLE  THIRTY,
 THIRTY-A OR THIRTY-B OF THIS CHAPTER.
   (2)  WHERE  A  COMBINED  RETURN  IS  REQUIRED, AND WITH RESPECT TO THE
 PAYMENT OF ESTIMATED TAX, THE COMMISSIONER MAY ALSO REQUIRE THE  PAYMENT
 TO  IT  OF  A  SINGLE  AMOUNT WHICH SHALL EQUAL THE TOTAL OF THE AMOUNTS
 (TOTAL TAXES LESS ANY CREDITS OR REFUNDS) WHICH WOULD HAVE BEEN REQUIRED
 TO BE PAID WITH THE RETURNS OR IN PAYMENT OF ESTIMATED TAX  PURSUANT  TO
 THE  PROVISIONS OF THIS ARTICLE, THE PROVISIONS OF ARTICLE TWENTY-TWO OF
 A. 2037                             4

 THIS CHAPTER, AND THE PROVISIONS OF LOCAL LAWS ENACTED UNDER THE AUTHOR-
 ITY OF ARTICLE THIRTY, THIRTY-A OR THIRTY-B OF THIS CHAPTER.
   (3)  NOTWITHSTANDING  ANY  OTHER LAW TO THE CONTRARY, THE COMMISSIONER
 MAY REQUIRE THAT ALL FILINGS OF FORMS  OR  RETURNS  UNDER  THIS  ARTICLE
 SHALL BE FILED ELECTRONICALLY AND ALL PAYMENTS OF TAX MUST BE PAID ELEC-
 TRONICALLY.
   § 887. ENFORCEMENT WITH OTHER TAXES. (A) JOINT ASSESSMENT. IF THERE IS
 ASSESSED  A  TAX  UNDER  THIS  ARTICLE  AND THERE IS ALSO ASSESSED A TAX
 AGAINST THE SAME TAXPAYER PURSUANT TO ARTICLE TWENTY-TWO OF THIS CHAPTER
 OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE  THIR-
 TY,  THIRTY-A,  OR  THIRTY-B  OF  THIS  CHAPTER, AND PAYMENT OF A SINGLE
 AMOUNT IS REQUIRED UNDER THE PROVISIONS OF THIS  ARTICLE,  SUCH  PAYMENT
 SHALL  BE DEEMED TO HAVE BEEN MADE WITH RESPECT TO THE TAXES SO ASSESSED
 IN PROPORTION TO THE AMOUNTS OF SUCH TAXES DUE,  INCLUDING  TAX,  PENAL-
 TIES, INTEREST AND ADDITIONS TO TAX.
   (B)  JOINT ACTION. IF THE COMMISSIONER TAKES ACTION UNDER SUCH ARTICLE
 TWENTY-TWO OR UNDER A LOCAL LAW ENACTED PURSUANT  TO  THE  AUTHORITY  OF
 ARTICLE  THIRTY,  THIRTY-A,  OR THIRTY-B OF THIS CHAPTER WITH RESPECT TO
 THE ENFORCEMENT AND COLLECTION OF THE TAX OR TAXES ASSESSED  UNDER  SUCH
 ARTICLES,  THE  COMMISSIONER  SHALL,  WHENEVER  POSSIBLE  AND NECESSARY,
 ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION  UNDER  SIMILAR  ENFORCEMENT
 AND COLLECTION PROVISIONS OF THE TAX IMPOSED BY THIS ARTICLE.
   (C)  APPORTIONMENT  OF  MONEYS  COLLECTED  BY JOINT ACTION. ANY MONEYS
 COLLECTED AS A RESULT OF SUCH JOINT ACTION SHALL BE DEEMED TO HAVE  BEEN
 COLLECTED  IN  PROPORTION  TO THE AMOUNTS DUE, INCLUDING TAX, PENALTIES,
 INTEREST AND ADDITIONS TO TAX, UNDER ARTICLE TWENTY-TWO OF THIS  CHAPTER
 OR  UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHORITY OF ARTICLE THIR-
 TY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER AND THE TAX  IMPOSED  BY  THIS
 ARTICLE.
   (D)  JOINT  DEFICIENCY  ACTION.  WHENEVER  THE  COMMISSIONER TAKES ANY
 ACTION WITH RESPECT TO A DEFICIENCY OF INCOME TAX UNDER ARTICLE  TWENTY-
 TWO OF THIS CHAPTER OR UNDER A LOCAL LAW ENACTED PURSUANT TO THE AUTHOR-
 ITY OF ARTICLE THIRTY, THIRTY-A, OR THIRTY-B OF THIS CHAPTER, OTHER THAN
 THE ACTION SET FORTH IN SUBSECTION (A) OF THIS SECTION, THE COMMISSIONER
 MAY IN HIS OR HER DISCRETION ACCOMPANY SUCH ACTION WITH A SIMILAR ACTION
 UNDER THIS ARTICLE.
   § 3. This act shall take effect immediately.