§ 9. Electronic funds transfer by certain taxpayers remitting
withholding taxes. (a) Definitions. For the purposes of this section:

(1) The term "commissioner" means the commissioner of taxation and
finance.

(2) The term "educational organization" means a higher educational
institution which

(A) is authorized by the New York state board of regents to confer
degrees, or

(B) offers a range of registered undergraduate and graduate curricula
in the liberal arts and sciences, degrees in two or more professional
fields and doctoral programs in at least three academic fields, or

(C) is authorized by the New York state board of regents to offer
undergraduate curricula below the baccalaureate level which normally
lead to the associate degree,
as such higher educational institutions are described in subdivisions
(k), (l) and (m) of section 50.1 of eight New York codes, rules and
regulations.

(3) The term "electronic funds transfer" means any transfer of funds,
other than a transaction originated by check, draft, or similar paper
instrument, which is initiated through an electronic terminal,
telephonic instrument or computer or magnetic tape so as to order,
instruct or authorize a financial institution to debit or credit an
account.

(4) The term "health care provider" means any organization described
in article twenty-eight or thirty-six of the public health law, or in
article thirty-one of the mental hygiene law.

(5) The term "payment of tax" means the amount of tax that is actually
remitted upon the filing of a withholding tax return, or is actually
remitted for the purposes of obtaining an extension to file such a
return.

(6) The term "reconciliation of withholding" means the quarterly
combined withholding, wage reporting and unemployment insurance return
required to be filed for the last calendar quarter of each year, as
prescribed by paragraph four of subsection (a) of section six hundred
seventy-four of this chapter.

(b) General rules. (1) Subject to the requirements contained in
subdivisions (c) and (d) of this section, the commissioner shall require
by regulation that any payment of tax made by a taxpayer who is
required, for either of the semi-annual periods ending June thirtieth or
December thirty-first, to deduct and withhold an aggregate of
thirty-five thousand dollars or more of withholding taxes pursuant to
part V of article twenty-two of this chapter, or pursuant to an
equivalent provision enacted under the authority of article thirty,
thirty-A or thirty-B of this chapter, or article two-E of the general
city law, shall be made, on or before the date prescribed by law, by
electronic funds transfer to a bank, banking house or trust company
designated by the commissioner. The commissioner shall designate only
such banks, banking houses or trust companies as are or shall be
designated by the comptroller as depositories pursuant to section one
hundred seventy-one-a of this chapter, as added by chapter sixty-nine of
the laws of nineteen hundred seventy-eight. Notwithstanding any
provision of law to the contrary, any such payment shall be deemed to be
made on the date the payment is received by the designated depository of
the department; provided, however, that at the election of a taxpayer
subject to the provisions of this subdivision, mailing by the taxpayer
of the applicable withholding tax return and a certified check for the
amount of the tax liability on or before the second business day prior
to the applicable due date otherwise prescribed by law shall fulfill the
requirements of this section and shall be deemed to be timely payment of
such tax liability and timely filing of such return.

(2) (A) On or before the thirtieth calendar day following the date
regulations implementing the provisions of this section become
effective, the commissioner shall, by certified mail, notify taxpayers
required to participate in the electronic funds transfer program of
their responsibilities under such program. The notice shall also specify
that the first payment of tax by electronic funds transfer shall be made
on an applicable due date occurring on or after thirty calendar days
following receipt by the taxpayer of the notice; provided, however, that
the taxpayer may select an optional applicable due date occurring no
later than sixty calendar days following receipt by the taxpayer of the
notice.

(B) (i) By September first, two thousand two, the commissioner shall,
by certified mail, notify taxpayers newly required to participate in the
electronic funds transfer program during the July first, two thousand
two through June thirtieth, two thousand three program period. Such
notice shall contain language advising the taxpayer of the enrollment
procedure and of the consequences of failure to enroll in such program,
as well as of the taxpayer's obligation to enroll in the program within
forty-five calendar days of the mailing of the notice unless such
taxpayer challenges such determination of required participation by
requesting a hearing within forty-five calendar days of the mailing of
such notice. In addition, such notice shall specify that such a taxpayer
shall make its first payment of tax by electronic funds transfer by an
applicable due date in January, two thousand three.

(ii) By June first, two thousand three and by each succeeding June
first, the commissioner shall, by certified mail, notify taxpayers newly
required to participate in the electronic funds transfer program. Such
notice shall contain language advising the taxpayer of the enrollment
procedure and of the consequences of failure to enroll in such program,
as well as of the taxpayer's right to challenge such determination of
required participation provided a hearing is requested within twenty
calendar days of the mailing of such notice. In addition, such notice
shall specify that such a taxpayer shall make its first payment of tax
by electronic funds transfer by an applicable due date occurring on or
after thirty calendar days following receipt by the taxpayer of the
notice but no later than sixty calendar days following receipt by the
taxpayer of the notice.

(iii) If a taxpayer does not enroll within forty-five or twenty
calendar days (as the case may be) of the mailing of the notice provided
for in clause (i) or (ii) of this subparagraph or where a taxpayer's
challenge to mandatory participation is not sustained and the taxpayer
has not enrolled within ten calendar days of notification thereof, the
commissioner shall mail another notice, in addition to making other
reasonable attempts, to inform the taxpayer of the civil penalty that
has been assessed pursuant to subdivision (h) of this section, of the
opportunity for abatement of such penalty, and of the future penalties
that may result from continued failure to enroll.

(3) Subject to the provisions of subdivision (f) of this section, an
electronic funds transfer shall serve as a substitute for the filing of
a withholding tax return.

(c) Special rules with respect to health care providers and
educational organizations.

(1) The provisions of subdivision (b) of this section shall not apply
to health care providers.

(2) All of the provisions of this section shall apply to educational
organizations; provided, however, that any payment of tax which is made
by an educational organization shall be made by electronic funds
transfer on or before the third business day following the date
otherwise prescribed by law; and, provided further, that at the election
of a taxpayer subject to the provisions of this subdivision, mailing by
the taxpayer of the applicable withholding tax return and a certified
check for the amount of the tax liability on or before the first
business day following the applicable due date otherwise prescribed by
law shall fulfill the requirements of this section and shall be deemed
to be timely payment of such tax liability and timely filing of such
return.

(d) Exemptions. A taxpayer shall be exempt from the requirements
contained in subdivision (b) of this section if such taxpayer proves to
the satisfaction of the commissioner that aggregate tax withheld,
pursuant to the most recent reconciliation of withholding, is less than
one hundred thousand dollars.

(e) Voluntary participation. A taxpayer may file a request with the
commissioner to pay any tax administered by such commissioner by
electronic funds transfer in accordance with the provisions of this
section. Such request shall be in such form as the commissioner shall
require and shall be granted under such conditions as the commissioner,
by regulation, deems necessary.

* (f) Return substitution. An electronic funds transfer shall not
serve as a substitute for the filing of a withholding tax return if the
commissioner determines that such substitution will not ensure the
proper receipt and crediting of a payment of tax.

* NB Expired December 31, 1992

(g) Confidentiality. The department shall assure the confidentiality
of information supplied by taxpayers in effecting electronic funds
transfers in accordance with the provisions of section six hundred
ninety-seven of this chapter or other applicable provisions of this
chapter. The provisions of article six of the public officers law shall
not apply to any such information supplied by taxpayers subject to the
requirements of this section.

(h) Civil penalty for failure to enroll. If a taxpayer required to
participate in the electronic funds transfer program prescribed by this
section fails to enroll in such program in accordance with the terms of
subparagraph (B) of paragraph two of subdivision (b) of this section,
such taxpayer shall pay a penalty equal to five thousand dollars;
provided, however, that if such taxpayer enrolls in the program within
twenty calendar days after notification of assessment of such penalty is
sent by the department by certified mail for program periods beginning
on or after July first, two thousand two, then such penalty shall be
abated. If such taxpayer continues to fail to enroll in the program
after such twenty calendar day period, the taxpayer shall pay an
additional penalty of five hundred dollars if the failure is for not
more than one month with an additional five hundred dollars for each
additional month or fraction thereof during which such failure
continues. The penalty provided by this section shall be paid upon
notice and demand and shall be assessed, collected and paid in the same
manner as the withholding taxes referred to in paragraph one of
subdivision (b) of this section; and any reference in the provisions of
part VI of article twenty-two of this chapter, which apply to the
administration of and procedures with respect to the provisions of this
section, shall be deemed also to refer to the penalty provided by this
section.

(i) Regulations. The commissioner shall promulgate regulations
necessary to implement this section, which regulations shall include,
but shall not be limited to, the following:

(1) the different methods of effecting electronic funds transfer
messages available to taxpayers. Such methods shall include at least two
methods in which the transfer can be effected without any charge to the
taxpayer for the electronic funds transfer itself, and one of such
methods shall not require the taxpayer to disclose financial institution
account information to the department;

(2) the contents of an electronic funds transfer message necessary to
ensure the proper receipt and crediting of a tax payment;

(3) the means by which taxpayers will be provided acknowledgements of
payments by electronic funds transfer; and

(4) delineation of what shall constitute reasonable cause and absence
of willful neglect for purposes of compliance with the provisions of
this section, including the inability of a taxpayer, for reasons beyond
the taxpayer's control, to utilize any system of electronic funds
transfer required pursuant to this section.