§ 1-04 — Taxpayer Eligibility

§ 1-04 Taxpayer Eligibility.

(a) General. (1) Amnesty shall not be granted to any taxpayer who is the subject of any criminal investigation being conducted by any agency of the City of New York or of the State or any political subdivision thereof, who is a party to any civil or criminal litigation which is pending on the date of the taxpayer's application in any court of this State or the United States for nonpayment, delinquency or fraud in relation to the taxes (plus interest thereon) with respect to which amnesty is sought, or employs more than 500 employees in the United States on the date of taxpayer application. A civil litigation shall not be deemed to be pending if the taxpayer withdraws from such litigation prior to the granting of amnesty. (Chapter 765 of the Laws of 1985, § 84(c)) (2) A taxpayer's eligibility is determined separately in relation to each designated tax. Thus, a taxpayer may be ineligible for amnesty for one designated tax, but may be eligible for amnesty for another designated tax. Example: A taxpayer is under criminal investigation relating only to his 1982 unincorporated business tax liability. Although he is not eligible for that designated tax (1982 Unincorporated Business Tax), he may be eligible for amnesty for his 1983 Unincorporated Business Tax liability. (3) A taxpayer's eligibility is determined as of the date of application. (b) Eligibility for amnesty for penalties relating to taxes imposed under Chapters 5 and 6 of Title 11 of the Administrative Code (hereinafter "restricted tax types") is restricted to taxpayers that have 500 or fewer employees in the United States on the date of their application. (Chapter 765 of the Laws of 1985, § 84(g)) (1) A taxpayer applying for amnesty from penalties imposed under Chapters 5 and 6 of Title 11 of the Administrative Code must certify on its application that it has in its employ 500 or fewer persons in the United States on the date of its application. (2) If it is determined that a taxpayer had more than 500 employees in the United States on the date of its application, amnesty will be denied or revoked. (3) For purposes of determining the number of employees: (i) the term employee shall have the same meaning as for Federal withholding tax purposes (Treas. Reg. § 31.3401(c)-1), and (ii) in the case of a taxpayer filing for amnesty for a designated tax which involves a tax reported on a combined basis, the number of employees includes all employees of all of the corporations included in the combined group on the date of the taxpayer's application. (c) Criminal investigation. (1) The Commissioner of Finance in cooperation with investigating agencies, shall prepare a confidential list of those taxpayers who are ineligible because they are the subject of an active criminal investigation relating directly to any covered taxes. (2) Every application for amnesty shall be compared with the list and any application for a designated tax subject to an active criminal investigation shall be denied. (3) (i) Upon the denial of an application under paragraph (2) of this subdivision, all material submitted (application, returns and payment) must be returned to the applicant, and no identifiable information submitted in connection with the application shall be kept by the Commissioner. (ii) The Commissioner shall indicate on the denial letter sent to the applicant (see: subdivision (c) of 19 RCNY § 1-09) that such application was timely received, but is denied due to an ongoing criminal investigation. The denial letter is the only evidence that a timely application was made for the designated tax, and must be produced by the taxpayer to substantiate any subsequent claims for amnesty for such designated tax. (4) (i) An applicant denied amnesty under paragraph (2) of this subdivision shall have 30 days in which to protest the denial (see subdivision (c) of 19 RCNY § 1-09). (ii) The Commissioner of Finance shall not be required to disclose the particulars of a pending criminal investigation upon which an amnesty denial was based. He shall, however, upon a protest under subparagraph (i) of this paragraph, confirm that the taxpayer is on the confidential list described in paragraph (1) of this subdivision and that amnesty was properly denied, and so certify to the taxpayer. (iii) Upon a subsequent finding of no criminal liability, whether through a prosecution not resulting in a conviction or by the investigating agency otherwise terminating the investigation, the applicant has 30 days to apply for amnesty for the amount, tax and tax period previously denied. The applicant must re-submit its application, returns and payment along with the denial letter. (5) The return under paragraph (3) of this subdivision of any application, payment or returns submitted under the amnesty program shall not be considered a rejection or refusal of payment or returns for any other purpose. (d) Criminal litigation. (1) A taxpayer is ineligible for amnesty for any designated tax which directly relates to any crime for which the taxpayer is being prosecuted or has been convicted. (2) A prosecution (i) begins once an indictment, complaint or information has been filed against the taxpayer and the defendant has been arrested or served a summons, or an arrest warrant has been issued and the defendant has been notified of such fact, whichever is earlier in regard to such accusatory instrument and (ii) continues until the time to appeal has expired or the appellate process has been exhausted. (3) A taxpayer who is ineligible pursuant to paragraph (1) of this subdivision shall not make an application for amnesty for the tax and tax periods involved. If such ineligible taxpayer nevertheless makes an ineligible application, the application, returns and payment will not be returned. They will be treated as if they were received apart from an amnesty application. Penalties will not be waived and there will not be a bar to any civil, administrative or criminal action proceeding relating thereto. (e) Civil litigation. (1) A taxpayer is ineligible for amnesty for any designated tax which directly relates to a pending civil litigation. (2) Civil litigation includes only those court proceedings instituted by the taxpayer. Generally, this includes a proceeding under Article 78 of the Civil Practice Laws and Rules, an order to show cause or a declaratory judgment action. (3) Civil litigation does not include: (i) a proceeding that the Commissioner instituted or joined as a plaintiff, or (ii) an administrative proceeding filed by the taxpayer with the Commissioner of Finance. (4) A civil litigation shall not be deemed to be pending if the taxpayer withdraws from such litigation. (Chapter 765 of the Laws of 1985, § 84(c).) (i) The taxpayer must submit proof of withdrawal from the litigation along with the amnesty application, returns and payment. (ii) "Proof of withdrawal" includes a stipulation to discontinue the lawsuit. (5) Any application, returns or payment received will not be returned to a taxpayer who is denied amnesty based on paragraph (1) of this subdivision. (f) If because of an applicant's failure to supply complete and accurate information, amnesty is erroneously granted to an ineligible applicant, as defined in subdivisions (b), (c), (d) and (e) of this section, amnesty will be revoked and materials submitted will be kept by the Commissioner of Finance. All materials will be treated as if they were received apart from an amnesty application. Penalties will not be waived and there will not be a bar to any civil, administrative or criminal action or proceeding relating thereto.