N.Y. Comp. Codes R. & Regs. tit. 20 § 2396.11

Current through Register Vol. 46, No. 45, November 2, 2024

Section 2396.11 - When return and payment deemed made; failure to enroll penalty; reasonable cause

(a) General filing and payment rules.

(1) ACH debit, ACH credit and fedwire taxpayers. The mailing rules specified in section 691 of the Tax Law and in regulations promulgated thereunder shall not be applicable to returns filed and payments made by taxpayers participating in the program and electing the ACH debit, ACH credit or fedwire payment option. Instead, such taxpayers (including educational organizations and health care providers voluntarily participating) shall be deemed to have timely filed their return when they comply with the applicable filing requirements described in section 2396.3, 2396.7 or 2396.9 of this Part. Such taxpayers shall be deemed to have timely paid the tax when the department's depository bank receives the payment of tax on or before applicable due date.

(2) Certified check taxpayers. The mailing rules specified in section 691 of the Tax Law and in regulations promulgated thereunder shall be applicable to returns filed and payments made by taxpayers participating in the program and electing the certified check payment option, subject to the following:

(i) taxpayers (other than educational organizations and health care providers voluntarily participating) utilizing the certified check option shall be deemed to have timely filed their return and paid the tax if they mail or deliver their return and a certified check for their tax liability on or before the second business day prior to the otherwise applicable due date;

(ii) educational organizations and health care providers voluntarily participating and utilizing the certified check payment option shall be deemed to have timely filed their return and paid the tax if they mail or deliver their return and a certified check for their tax liability on or before the first business day following the otherwise applicable due date.

(b) Penalty for failure to enroll. When a taxpayer required to participate in the program fails to enroll in the program in accordance with the provisions of section 2396.4(b) of this Part, such taxpayer shall pay a penalty equal to $5,000; provided, however, that if such taxpayer enrolls in the program within 20 calendar days after notification of the assessment of such penalty is sent by the department by certified mail, then such penalty shall be abated. Where the taxpayer continues to fail to enroll in the program after such 20-day period, the taxpayer shall pay an additional $500 if such failure is for not more than one month, with an additional $500 for each additional month or part thereof during which such failure continues.

(c) Reasonable cause.

(1) General rules.

(i) Where a taxpayer participating in the program nonwillfully fails to file a withholding tax return or to pay withholding tax at the time and in the manner required by this Part (see section 685[f] of the Tax Law for the addition to tax), or where a taxpayer required to participate in the program fails to enroll at the time and in the manner required by this Part, the following penalty, addition or additions to tax set forth in section 9 or 685 of the Tax Law must be imposed, as applicable, unless it is shown that such failure was due to reasonable cause and not due to willful neglect:

(a) failure to enroll in the Electronic Funds Program in accordance with the provisions of section 2396.4(b) of this Part (see section 9[h] of the Tax Law for the penalty);

(b) failure to file a withholding tax return on or before the last date prescribed for filing by this Part (see section 685[a][1] of the Tax Law for the addition to tax);

(c) failure to pay withholding tax shown on the return on or before the last day prescribed for paying by this Part (see section 685[a][2] of the Tax Law for the addition to tax); or

(d) failure to pay withholding tax required to be shown on a withholding tax return within 10 days of the date of notice and demand therefor (see section 685[a][3] of the Tax Law for the addition to tax).

In the event that this penalty or these additions to tax have been imposed and it is later determined that any such failure was due to reasonable cause and not due to willful neglect, all or part of such penalty or additions to tax will be cancelled. The absence of willful neglect alone is not sufficient grounds for not imposing the penalty or additions to tax or for cancelling the penalty or additions to tax.

(ii) All of the facts alleged as a basis for reasonable cause and absence of willful neglect may be required to be affirmatively shown in a written statement made by the taxpayer against whom the additions to tax have been assessed or are assessable. Where such taxpayer is unable to provide such statement or does not have a personal knowledge of such facts, a showing of reasonable cause and absence of willful neglect may be made on behalf of the taxpayer by an individual with a personal knowledge of such facts. In determining whether reasonable cause and absence of willful neglect exists, in addition to an evaluation of such facts, the taxpayer's previous compliance record with respect to all of the taxes imposed pursuant to the Tax Law may be taken into account.

(2) Reasonable cause grounds. The following exemplify grounds for reasonable cause and absence of willful neglect, where clearly established by or on behalf of the taxpayer:

(i) taxpayer inability to access the electronic payment reporting system on the required due date because of a systems failure beyond the taxpayer's control (i.e., a failure in the electronic payment reporting system);

(ii) department or department depository bank systems failure preventing proper receipt of a payment of tax, or preventing proper reconciliation of a payment of tax with a return;

(iii) taxpayer inability to timely complete a program transaction, due to any other circumstances beyond its control, but only if all possible remedial action is immediately initiated; or

(iv) the circumstances set forth in section 2392.1 of this Title, to the extent applicable.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 2396.11