§ 129. Notice of deficiency. (a) General.--If upon examination of a
taxpayer's return under this title the director of finance determines
that there is a deficiency of income tax, he may mail a notice of
deficiency to the taxpayer. If a taxpayer fails to file a return
required under this title, the director of finance is authorized to
estimate the taxpayer's city unincorporated business taxable income and
tax thereon, from any information in his possession, and to mail a
notice of deficiency to the taxpayer. A notice of deficiency shall be
mailed by certified or registered mail to the taxpayer at his last known
address in or out of the city. If the taxpayer is deceased or under a
legal disability, a notice of deficiency may be mailed to his last known
address in or out of the city, unless the director of finance has
received notice of the existence of a fiduciary relationship with
respect to the taxpayer.

(b) Notice of deficiency as assessment.--After ninety days from the
mailing of a notice of deficiency, such notice shall be an assessment of
the amount of tax specified in such notice, together with the interest,
additions to tax and penalties stated in such notice, except only for
any such tax or other amounts as to which the taxpayer has within such
ninety day period filed with the director of finance a petition under
section one hundred thirty-seven. If the notice of deficiency is
addressed to a person outside of the United States, such period shall be
one hundred fifty days instead of ninety days.

(c) Restrictions on assessment and levy.--No assessment of a
deficiency in tax and no levy or proceeding in court for its collection
shall be made, begun or prosecuted, except as otherwise provided in
section one hundred forty-two, until a notice of deficiency has been
mailed to the taxpayer, nor until the expiration of the time for filing
a petition contesting such notice, nor, if a petition with respect to
the taxable year has been filed with the director of finance, until the
decision of the director of finance has become final. For exception in
the case of judicial review of the decision of the director of finance,
see subdivision (c) of section one hundred thirty-eight.

(d) Exceptions for mathematical errors.--If a mathematical error
appears on a return (including an overstatement of the amount paid as
estimated income tax), the director of finance shall notify the taxpayer
that an amount of tax in excess of that shown upon the return is due,
and that such excess has been assessed.

Such notice shall not be considered as a notice of deficiency for the
purposes of this section, subdivision (f) of section one hundred
thirty-five (limiting credits or refunds after petition to the director
of finance), or subdivision (b) of section one hundred thirty-seven
(authorizing the filing of a petition with the director of finance based
on a notice of deficiency) nor shall such assessment or collection be
prohibited by the provisions of subdivision (c).

(e) Exception where change in federal taxable income is not
reported.--(1) If the taxpayer fails to comply with section one hundred
twenty-seven in not reporting a change or correction increasing or
decreasing his federal taxable income as reported on his federal income
tax return or in not reporting a change or correction which is treated
in the same manner as if it were a deficiency for federal income tax
purposes or in not filing an amended return or in not reporting the
execution of a notice of waiver described in such section, instead of
the mode and time of assessment provided for in subdivision (b) of this
section, the commissioner of finance may assess a deficiency based upon
such changed or corrected federal taxable income by mailing to the
taxpayer a notice of additional tax due specifying the amount of the
deficiency, and such deficiency, together with the interest, additions
to tax and penalties stated in such notice, shall be deemed assessed on
the date such notice is mailed unless within thirty days after the
mailing of such notice a report of the federal change or correction or
an amended return, where such return was required by section one hundred
twenty-seven, is filed accompanied by a statement showing wherein such
federal determination and such notice of additional tax due are
erroneous.

(2) Such notice shall not be considered as a notice of deficiency for
the purposes of this section, subdivision (f) of section one hundred
thirty-five (limiting credits or refunds after petition to the director
of finance), or subdivision (b) of section one hundred thirty-seven
(authorizing the filing of a petition with the director of finance based
on a notice of deficiency), nor shall such assessment or the collection
thereof be prohibited by the provisions of subdivision (c).

(3) If the taxpayer is deceased or under a legal disability, a notice
of additional tax due may be mailed to his last known address in or out
of the city, unless the director of finance has received notice of the
existence of a fiduciary relationship with respect to the taxpayer.

(f) Waiver of restrictions.--The taxpayer shall at any time (whether
or not a notice of deficiency has been issued) have the right to waive
the restrictions on assessment and collection of the whole or any part
of the deficiency by a signed notice in writing filed with the director
of finance.

(g) Deficiency defined.-- For purposes of this title, a deficiency
means the amount of the tax imposed by this title, less (i) the amount
shown as the tax upon the taxpayer's return (whether the return was made
or the tax computed by him or by the director of finance), and less,
(ii) the amounts previously assessed (or collected without assessment)
as a deficiency and plus (iii) the amount of any rebates. For the
purpose of this definition, the tax imposed by this title and the tax
shown on the return shall both be determined without regard to payments
on account of estimated tax; and a rebate means so much of an abatement,
credit, refund or other repayment (whether or not erroneous) made on the
ground that the amounts entering into the definition of a deficiency
showed a balance in favor of the taxpayer.

(h) Exception where change or correction of sales and compensating use
tax liability is not reported.--(1) If a taxpayer fails to comply with
section one hundred twenty-seven-A in not reporting a change or
correction of his sales and compensating use tax liability or in not
filing a copy of an amended return or report relating to his sales and
compensating use tax liability, instead of the mode and time of
assessment provided for in subdivision (b) of this section, the
commissioner of finance may assess a deficiency based upon such changed
or corrected sales and compensating use tax liability, as same relates
to credits claimed under section one hundred one, by mailing to the
taxpayer a notice of additional tax due specifying the amount of the
deficiency, and such deficiency, together with the interest, additions
to tax and penalties stated in such notice, shall be deemed assessed on
the date such notice is mailed unless within thirty days after the
mailing of such notice a report of the state change or correction or a
copy of an amended return or report, where such copy was required by
section one hundred twenty-seven-A, is filed accompanied by a statement
showing wherein such state determination and such notice of additional
tax due are erroneous.

(2) Such notice shall not be considered as a notice of deficiency for
the purposes of this section, subdivision (f) of section one hundred
thirty-five (limiting credits or refunds after petition to the
commissioner of finance), or subdivision (b) of section one hundred
thirty-seven (authorizing the filing of a petition with the commissioner
of finance based on a notice of deficiency), nor shall such assessment
or the collection thereof be prohibited by the provisions of subdivision
(c) of this section.

(3) If the taxpayer is deceased or under a legal disability, a notice
of additional tax due may be mailed to his last known address in or out
of the city, and such notice shall be sufficient for purposes of this
title. If the commissioner of finance has received notice that a person
is acting for the taxpayer in a fiduciary capacity, a copy of such
notice shall also be mailed to the fiduciary named in such notice.