TAF-07-09-00010-P Communications of the Division of Taxation of the Department of Taxation and Finance

2/18/09 N.Y. St. Reg. TAF-07-09-00010-P

NEW YORK STATE REGISTER

VOLUME XXXI, ISSUE 7

February 18, 2009

RULE MAKING ACTIVITIES

DEPARTMENT OF TAXATION AND FINANCE

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. TAF-07-09-00010-P

Communications of the Division of Taxation of the Department of Taxation and Finance

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Amendment of Parts 2375, 2376 and section 536.2 of Title 20 NYCRR.

Statutory authority:

Tax Law, sections 171, subds. First and Twenty-fourth; 1142(1); and 1250 (not subdivided)

Subject:

Communications of the Division of Taxation of the Department of Taxation and Finance.

Purpose:

To update the regulations in conjunction with the implementation of recent changes in policy concerning communications.

Substance of proposed rule (Full text is posted at the following State website:www.nystax.gov):

The rule amends the Communications of the Division of Taxation of the Department of Taxation and Finance Regulations, as published in Chapter VI, and the Sales and Use Taxes Regulations, as published in Subchapter A of Chapter IV of Title 20 NYCRR, in conjunction with the implementation of recent changes in policy concerning communications of the Division of Taxation of the Department of Taxation and Finance (“department”). It recognizes alternative methods of disseminating communications of the division, repeals outdated information, provides new rules relating to advisory opinions, and makes other clarifying and technical amendments.

Section 1 makes technical updates to the sales and use taxes regulations, regarding department communications.

Sections 2 and 3 amend section 2375.1 to reference the department's Web site as a method of communicating tax policy and delete obsolete statutory references.

Sections 4 and 5 amend section 2375.3. Section 4 deletes a reference to opinions of counsel. Section 5 clarifies that the conclusions of a declaratory ruling could be affected by the Tax Appeals Tribunal but not by a nonprecedential determination by an Administrative Law Judge in the Division of Tax Appeals.

Section 6 repeals section 2375.4, Opinions of counsel. The Division of Taxation provides numerous forms of advice. Opinions of counsel are discretionary and intended to interpret and apply the Tax Law to situations of wide applicability. They are similar in many respects to technical memoranda (TSB-Ms), and have ordinarily been issued as TSB-Ms. Discontinuing formal Opinions of Counsel will avoid unnecessary duplication.

Section 7 amends section 2375.5 to clarify that advisory opinions are based on the law and regulations as they apply to specific sets of facts as of the date the opinion is issued or for the specific time period at issue in the opinion.

Sections 8, 10, 11, 12, and 13 amend sections 2375.6, 2375.8, 2375.9, 2375.10 and 2375.11, respectively, to eliminate references to the division disseminating technical memoranda, forms and instructions, and publications and notices by mail. The division may disseminate the documents by alternative methods, such as the Internet and electronic mail. In addition, section 8 deletes reference to opinions of counsel and clarifies the force and effect of technical memoranda. Section 11 provides for online tax information and section 13 adds reference to communication by electronic mail. These sections also make other clarifying and technical amendments.

Section 9 repeals section 2375.7, Tribunal and judicial decision reprints (TSB-D's), because the department no longer reprints the full text of Tax Appeals Tribunal decisions and significant court decisions. However, these decisions are available on the New York State Division of Tax Appeals Web site. Section 9 also adds a new section 2375.7 to provide for a new document the division is publishing, New York tax guidances (NYT-G's). Tax guidances consist of redacted versions of selected letters and memoranda and responses to withdrawn petitions for advisory opinion.

Section 14 amends section 2376.1 regarding advisory opinions. It provides that advisory opinions will not be issued to anyone on behalf of an unidentified or hypothetical person or entity. In addition, advisory opinions will not be issued if a statutory notice has been issued about the matter. An advisory opinion may be issued when the question relates to a matter pending before the Bureau of Conciliation and Mediation Services, but only when all parties to the conciliation conference consent. This section deletes an obsolete reference to the Director of the Taxpayer Services Division and provides that advisory opinions are issued by a person to whom such authority is delegated by the commissioner. It deletes reference to an opinion of counsel, eliminates reference to obsolete taxes, and adds reference to new programs administered by the commissioner. Section 2376.1 is amended regarding the publication of certain petitions that have been withdrawn. Finally, a new paragraph is added to allow a petitioner to reserve the right to apply for the department's Voluntary Disclosure and Compliance program when submitting a petition, with respect to the subject of the advisory opinion.

Sections 15, 16 and 17 amend section 2376.2. Section 15 allows the petition for advisory opinion to be submitted electronically. Sections 15 and 17 delete references to an opinion of counsel. Section 16 broadens who may file a petition on behalf of another and also deletes an obsolete address.

Section 18 amends section 2376.3 to provide a definitive time frame for a petitioner to provide requested information. It also clarifies that Audit Division's initial review of the petitioner's request for advisory opinion relates only to the facts contained in the request, which reflects current policy. The time frame has been extended for a petitioner's response to a notice from the Audit Division stating its disagreement to any facts specified in the petition.

Section 19 amends section 2376.4 to clarify that an advisory opinion is limited to the precedential material in effect as of the date the opinion is issued and may be affected by subsequent changes. It also deletes an obsolete reference.

Section 20 amends section 2376.5. Section 20 eliminates mailing requirements, and allows the department to use alternative methods to issue advisory opinions and/or contact the petitioner. It provides that all identifying information will be redacted when an advisory opinion is published and that published advisory opinions are available from the department upon request. They are also posted on the department's Web site.

Finally, section 21 repeals subdivision (d) of section 2376.5, as these documents are available to the public and do not need to be requested through the records access officer.

Text of proposed rule and any required statements and analyses may be obtained from:

John W. Bartlett, Tax Regulations Specialist 4, Department of Taxation and Finance, Taxpayer Guidance Division, Building 9, W. A. Harriman Campus, Albany, NY 12227, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. Statutory authority: Tax Law, sections 171, subdivisions First and Twenty-fourth; 1142(1); and 1250 (not subdivided). Section 171, subdivision First of the Tax Law provides for the Commissioner of Taxation and Finance to make reasonable rules and regulations, which are consistent with the law, that may be necessary for the exercise of the Commissioner's powers and the performance of the Commissioner's duties under the Tax Law, including regulations which shall advise the public of (i) the various methods by which the department communicates tax policy and interpretations to taxpayers, tax practitioners, personnel of the department and the general public and (ii) the legal force and effect, precedential value and binding nature of each such method of communication. Section 171, subdivision Twenty- Fourth of the Tax Law provides that the Commissioner of Taxation and Finance may promulgate rules and regulations with respect to the procedures for submitting a petition for an advisory opinion. Subdivision (1) of section 1142 of Article 28 and section 1250 of Article 29 of the Tax Law provide for the adoption of rules and regulations that are appropriate to carry out and jointly administer the New York State and local sales and compensating use taxes imposed by and pursuant to the authority of such Articles.

2. Legislative objectives: This rule is being proposed pursuant to the above authority to update the regulations advising the public of (i) the various methods by which the Division of Taxation of the Department of Taxation and Finance ("department") communicates tax policy and interpretations and (ii) the legal force and effect, precedential value and binding nature of each method of communication.

3. Needs and benefits: This rule updates Parts 2375 and 2376 in conjunction with the implementation of recent changes in policy concerning communications of the department. It recognizes alternative methods of disseminating communications of the department, including use of the department's Web site and online tax information, as well as electronic mail. In addition, the procedures for review and issuance of advisory opinions have been streamlined to improve timeliness. The new procedures help protect taxpayer confidentiality. Opinions of Counsel, which were discretionary and similar in many respects to technical memoranda (TSB-Ms), are being discontinued to avoid unnecessary duplication.

4. Costs:

(a) Costs to regulated persons: There is no cost to regulated parties for the implementation of and continuing compliance with the rule. The rule merely serves to inform regulated persons as to the nature of the department's communications.

(b) Costs to the State and its local governments including this agency: This rule will not impose any costs on New York State or its local governments. The implementation and continued administration of this rule will not impose costs on the Department of Taxation and Finance. The rule also eliminates references to the department disseminating documents by mail; the department is moving toward disseminating more documents by alternative methods, such as the Internet and electronic mail, resulting in cost savings.

(c) Information and methodology: The conclusions reached above were based on an analysis of the rule, which merely updates the department's rules on communications and their force and effect, from the department's Taxpayer Guidance Division, Office of Tax Policy Analysis, Office of Counsel, Audit Division, Office of Budget and Management Analysis, and Management Analysis and Project Services Bureau.

5. Local government mandates: This rule imposes no mandates upon any county, city, town, village, school district, fire district or other special district.

6. Paperwork: This rule does not impose any reporting requirement upon regulated parties nor does it require any forms or other paperwork.

7. Duplication: There are no relevant rules or other legal requirements of the Federal or State governments that duplicate, overlap, or conflict with this rule.

8. Alternatives: This rule is being proposed in conjunction with recent changes in policy concerning communications of the department in order to improve efficiency in this area. The alternative would be to continue with the former policy and forego projected improvement in communications.

9. Federal standards: The amendments do not exceed any minimum standards of the Federal government for the same or similar subject area.

10. Compliance schedule: The rule will take effect on the date that the Notice of Adoption is published in the State Register. Regulated parties and the department will not require any period of time to achieve compliance with the rule.

Regulatory Flexibility Analysis

A Regulatory Flexibility Analysis for Small Businesses and Local Governments is not being submitted with this rule because this rule will not impose any adverse economic impact or reporting, recordkeeping, or other compliance requirements on small businesses or local governments.

The purpose of this rule is to update Parts 2375 and 2376 of the regulations in conjunction with the implementation of recent changes in policy concerning communications of the Division of Taxation of the Department of Taxation and Finance (department). It recognizes alternative methods of disseminating communications of the department including use of the department’s Web site and electronic mail. The rule also repeals section 2375.4 regarding Opinions of Counsel as this form of communication is being discontinued. In addition, the rule makes other clarifying and technical amendments and provides new rules relating to advisory opinions.

Rural Area Flexibility Analysis

A Rural Area Flexibility Analysis is not being submitted with this rule because it will not impose any adverse impact on rural areas or any reporting, recordkeeping, or other compliance requirements on public or private entities in rural areas.

The purpose of this rule is to update Parts 2375 and 2376 of the regulations in conjunction with the implementation of recent changes in policy concerning communications of the Division of Taxation of the Department of Taxation and Finance (department). It recognizes alternative methods of disseminating communications of the department including use of the department’s Web site and electronic mail. The rule also repeals section 2375.4 regarding Opinions of Counsel as this form of communication is being discontinued. In addition, the rule makes other clarifying and technical amendments and provides new rules relating to advisory opinions.

Job Impact Statement

A Job Impact Statement is not being submitted with this rule because it is evident from the subject matter of the rule that it would have no adverse impact on jobs or employment opportunities. The purpose of this rule is to update Parts 2375 and 2376 of the regulations in conjunction with the implementation of recent changes in policy concerning communications of the Division of Taxation of the Department of Taxation and Finance (department). It recognizes alternative methods of disseminating communications of the department including use of the department’s Web site and electronic mail. The rule also repeals section 2375.4 regarding Opinions of Counsel as this form of communication is being discontinued. In addition, the rule makes other clarifying and technical amendments and provides new rules relating to advisory opinions.