§ 12-12 — Penalties

§ 12-12 Penalties.

(a) Civil penalties. Any person failing to file a return or to pay any tax due prior to February 24, 1983 within the time required by law shall be subject to a penalty of five percent of the amount due. If the Commissioner of Finance is satisfied that the delay was excusable he may remit all or any part of such penalty. With respect to returns or payments which become due on or after February 24, 1983, the following penalties apply: (1) Failure to file return. (i) In case of failure to file a return on or before the prescribed date (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause (see paragraph (5) of this subdivision) and not due to willful neglect, this is to be added to the amount required to be shown as tax on such return five percent (5%) of the amount of such tax for each month or fraction thereof during which such failure continues, not exceeding twenty-five percent (25%) in the aggregate. (ii) With respect to returns required to be filed on or after July 16, 1985, in the case of a failure to file a tax return within 60 days of the date prescribed for filing of such return (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, the addition to tax under subparagraph (i) of this paragraph (1) shall not be less than the lesser of one hundred dollars ($100) or one hundred percent (100%) of the amount required to be shown as tax on such return. (iii) For purposes of subparagraphs (i) and (ii), the amount of the tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed on the return. (2) Failure to pay tax shown on return. In case of failure to pay the amount shown as tax on a return to be filed on or before the prescribed date (determined with regard to any extension of time for payment), unless it is shown that such failure is due to reasonable cause (see: paragraph (5) of this subdivision (a)) and not due to willful neglect, there shall be added to the amount shown as tax on such return one-half of one percent (1/2%) of the amount of such tax for each month or fraction thereof during which such failure continues, not exceeding twenty-five percent (25%) in the aggregate. For the purpose of computing the addition for any month the amount of tax shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the beginning of such month and by the amount of any credit against the tax which may be claimed on the return. If the amount of tax required to be shown on a return is less than the amount shown as tax on such return, this paragraph shall be applied by substituting such lower amount. (3) Failure to pay tax required to be shown on return. In case of failure to pay any amount in respect of any tax required to be shown on a return required to be filed which is not so shown (including a determination made pursuant to 19 RCNY § 12-15), within ten (10) days of the date of notice and demand, unless it is shown that such failure is due to reasonable cause (see: paragraph (5) of this subdivision (a)) and not due to willful neglect, there shall be added to the amount of tax stated in such notice and demand one-half of one percent (1/2%) of such tax for each month or fraction thereof during which such failure continues, not exceeding twenty-five percent (25%) in the aggregate. For the purpose of computing the addition for any month, the amount of tax stated in the notice and demand shall be reduced by the amount of any part of the tax which is paid before the beginning of such month. (4) Limitations on additions: (i) With respect to any return the amount of the addition to tax is limited to the following: (A) At no time will the addition for one (1) month be more than five percent (5%). (B) If paragraphs (1) and (2) of this subdivision (a) are both applicable, the addition under paragraph (1) is reduced by the addition under paragraph (2). Thus, the addition to the charge will be four and one-half percent (4 1/2%) under paragraph (1) and one-half of one percent (1/2%) under paragraph (2) for each month up to and including the first five (5) months. After the first five (5) months, the addition of one-half of one percent (1/2%) per month pursuant to paragraph (2) will apply for the next forty-five (45) months for a maximum aggregate of forty-seven and one-half percent (47 1/2%) addition to tax. However, in any case described in subparagraph (ii) of paragraph (1) of this subdivision (relating to returns filed after 60 days of the due date) the amount of the addition to tax under such paragraph (1) shall not be reduced below the amount provided in such subparagraph (i.e. the lesser of $100 or 100% of tax due). (C) If paragraphs (1) and (3) of this subdivision (a) are both applicable, the maximum amount of the addition to tax may not exceed twenty-five percent (25%) in the aggregate. The maximum amount of the addition to tax pursuant to paragraph (3) of this subdivision shall be reduced by the amount of the addition to tax pursuant to paragraph (1) of this subdivision (a) (determined without regard to subparagraph (ii) of such paragraph (1), which is attributable to the tax for which the notice and demand is made and which is not paid within ten (10) days of such notice and demand. (ii) The provisions of this paragraph may be illustrated by the following examples: Example A: (a) Assume the taxpayer filed his tax return for the quarter ending February, 1983 (due March 20, 1983) on June 25, 1983, and the failure to file on or before the prescribed date is not due to reasonable cause. The tax shown on the return is $800 and a deficiency of $200 is subsequently assessed, making the tax required to be shown on the return, $1,000. The amount shown due on the return of $800 is paid on July 26, 1983. The failure to pay on or before the prescribed date is not due to reasonable cause. There will be imposed, in addition to interest, an additional amount under paragraph (2), of $20.00, which is 2.5 percent (2% for the 4 months from March 21 through July 20, and 0.5% for the fractional part of the month from July 21 through July 26) of the amount shown due on the return of $800. There will also be imposed an additional amount under paragraph (1) of $184, determined as follows: 20 percent (5% per month for the 3 months from March 21 through June 20 and 5% for the fractional part of the month from June 20 through June 25) of the amount due of $1,000 required to be shown on the return $200 Reduced by the amount of the addition imposed under paragraph (2) for those months $16 Addition to tax under paragraph (1) $184 Example A: (b) A notice and demand for the $200 deficiency is issued on January 8, 1984, but the taxpayer does not pay the deficiency until December 23, 1984. In addition to interest there will be imposed an additional amount under paragraph (3) of $10, determined as follows: Addition computed without regard to limitation: 6 percent (5 1/2% for the 11 months from January 19, 1984, through December 18, 1984, and 0.5% for the fractional part of the month from December 19 through December 23) of the amount stated in the notice and demand ($200) $12 Limitation on addition: 25 percent of the amount stated in the notice and demand ($200) $50 Reduced by the part of the addition under paragraph (1) for failure to file attributable to the $200 deficiency (20% of $200) $40 Maximum amount of the addition under paragraph (3) $10 Example B: (a) A taxpayer files his tax return for the quarter ending February, 1983 on November 7, 1983, and such delinquency is not due to reasonable cause. The balance due, as shown on the return, of $500 is paid when the return is filed on November 7, 1983. In addition to interest and the addition for failure to pay under paragraph (2) of $20 (8 months at 0.5% per month, 4%), there will also be imposed an additional amount under paragraph (1) of $112.50, determined as follows: Penalty at 5% for maximum of 5 months, 25% of $500 $125.00 Less reduction for the amount of the addition under paragraph (2): Amount imposed under paragraph (2) for failure to pay for the months in which there is also an addition for failure to file – 2 1/2 percent for the 5 months March 16 through August 20 of the net amount due ($500) $12.50 Additional to tax under paragraph (1) $112.50 (5) Reasonable cause as used in paragraphs (1), (2) and (3) of this subdivision (a) must be affirmatively shown in a written statement. The taxpayer's previous compliance record may be taken into account. Grounds for reasonable cause, where clearly established, may include the following: (i) death or serious illness of the responsible officer or employee of the taxpayer, or his unavoidable absence from his usual place of business; (ii) destruction of the taxpayer's place of business or business records by fire or other casualty; (iii) timely prepared reports misplaced by a responsible employee discovered after the due date; (iv) inability to obtain and assemble essential information required for the preparation of a complete return despite reasonable efforts; (v) any other cause for delinquency which appears to a person of ordinary prudence and intelligence as a reasonable cause for delay in filing a return and which clearly indicates an absence of gross negligence or willful intent to disobey the taxing statutes. Past performance should be taken into account. Ignorance of the law, however, will not be considered reasonable cause. (6) Underpayment due to negligence. (i) If any part of an underpayment is due to negligence or intentional disregard of the law, or rules or regulations thereunder (but without intent to defraud), there shall be added to the tax a penalty in an amount equal to five percent (5%) of the underpayment. (ii) With respect to taxes required to be paid on or after July 16, 1985, there shall be added to the tax (in addition to the amount determined under subparagraph (i) of this paragraph) an amount equal to fifty percent (50%) of the interest payable under 19 RCNY § 12-11 with respect to the portion of the underpayment described in such subparagraph (i) which is attributable to the negligence or intentional disregard referred to in such subparagraph (i), for the period beginning on the last date prescribed by law for payment of such underpayment (determined without regard to any extension) and ending on the date of the assessment of the tax (or, if earlier, the date of the payment of the tax). (7) Underpayment due to fraud. (i) If any part of an underpayment is due to fraud, there shall be added to the tax a penalty in an amount equal to fifty percent (50%) of the underpayment. (ii) With respect to taxes required to be paid on or after July 16, 1985, there shall be added to the tax (in addition to the penalty determined under subparagraph (i) of this paragraph) an amount equal to fifty percent (50%) of the interest payable under 19 RCNY § 12-11 with respect to the portion of the underpayment described in such subparagraph (i) which is attributable to fraud, for the period beginning on the last day prescribed by law for payment of such underpayment (determined without regard to any extension) and ending on the date of the assessment of the tax (or, if earlier, the date of the payment of the tax). (iii) The penalty under this paragraph (paragraph (7)) shall be in lieu of the maximum twenty-five percent (25%) penalty due to willful neglect for failure to file a return, five percent (5%) penalty due to negligence and the additional one-half of one percent (1/2%) per month penalty pursuant to paragraphs (2) and (3) of this subdivision (a). (8) Any person who fails to pay tax, or to make, render, sign or certify any return, or to supply any information within the required time, with fraudulent intent, shall be liable for a penalty of not more than one thousand dollars ($1,000), in addition to any other amounts required under the law to be imposed, assessed and collected by the Commissioner of Finance. The Commissioner of Finance has the power, in his discretion, to waive, reduce or compromise any penalty under this paragraph. (9) The additions to tax and penalties provided by this subdivision (a) shall be paid and enforced in the same manner as taxes. (10) Whenever a penalty is assessed for failure to pay the tax when due, an application for the remission thereof may be made to the Commissioner of Finance. Such application must be made by the person against whom the penalty is assessed, and must set forth the grounds upon which the remission is requested. (b) Criminal penalties. (1) Any person who willfully fails to file a registration certificate as required by the law and such data in connection therewith as the Commissioner of Finance by regulation or otherwise may require, or willfully fails to display or surrender a certificate of authority as required by the law, or willfully assigns or transfers such certificate of authority, shall be guilty of a misdemeanor, provided, however, that the provisions of this paragraph shall not apply to a failure to surrender a certificate of authority which is required to be surrendered where business never commenced. (2) Any person who willfully fails to charge separately the tax imposed under the law or willfully fails to state such tax separately on any bill, statement, memorandum or receipt issued or employed by such person upon which the tax is required to be stated separately as provided in the law, or who shall refer or cause reference to be made to this tax in a form or manner other than required by the law, shall be guilty of a mis- demeanor. (3) Failure to collect tax. Any person who willfully fails to collect any tax required to be collected under the law shall be guilty of a misdemeanor. (4) Failure to file bond. Any person willfully failing to file a bond where such filing is required under the law shall be guilty of a misdemeanor. (5) Failure to obey subpoena; false testimony. (i) Any person who, being duly subpoenaed in connection with a matter arising under the law, to attend as a witness or to produce books, accounts, records, memoranda, documents or other papers, (A) fails or refuses to attend without lawful excuse, (B) refuses to be sworn, (C) refuses to answer any material and proper question, or (D) refuses, after reasonable notice, to produce books, papers and documents in his possession or under his control which constitute material and proper evidence shall be guilty of a misdemeanor. (ii) Any person who shall testify falsely in any material matter pending before the Commissioner of Finance shall be guilty of and punishable for perjury. (6) Willful failure to file a return or report or pay the tax. Any person required to pay any tax or make any return or report, who willfully fails to pay such tax or make such return or report, at the time or times so required, shall be guilty of a misdemeanor. (7) Fraudulent returns, reports, statements or other documents. (i) Any person who willfully makes and subscribes any return, report, statement or other document which is required to be filed with or furnished to the Commissioner of Finance or to any person, pursuant to the provisions of the law, which he does not believe to be true and correct as to every material matter shall be guilty of a misdemeanor. (ii) Any person who willfully delivers or discloses to the Commissioner of Finance or to any person, pursuant to the provisions of the law, any list, return, report, account, statement or other document known by him to be fraudulent or to be false as to any material matter shall be guilty of a misdemeanor. (iii) For purposes of this paragraph, the omission by any person of any material matter with intent to deceive shall constitute the delivery or disclosure of a document known by him to be fraudulent or to be false as to any material matter. (8) The penalties provided for in this subdivision (b) shall not preclude prosecution pursuant to the penal law with respect to the willful failure of any person to pay over to the City any hotel room occupancy tax imposed by law, whenever such person has been required to collect and has collected any such tax. In any such prosecution under the penal law, a person who has been required to collect and has collected any such tax shall be deemed to have acted in a fiduciary character with respect to the City, and the tax collected shall be deemed to have been entrusted to such person by the City. (c) Liability of officers or partners and effect of Certificate of Commissioner. (1) Officers of a corporate operator and partners in a partnership which is an operator are personally liable for the tax collected or required to be collected by such corporation or partnership, and are subject to the penalties and interest imposed by law. (2) The certificate of the Commissioner of Finance to the effect that a tax has not been paid, that a return, bond or registration certificate has not been filed, or that information has not been supplied pursuant to the provisions of the law shall be presumptive evidence thereof.