Bill Text: NY A06404 | 2019-2020 | General Assembly | Introduced


Bill Title: Clarifies the recordkeeping requirements for the earned income tax credit and the enhanced earned income tax credit.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2019-03-07 - referred to ways and means [A06404 Detail]

Download: New_York-2019-A06404-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                          6404
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                      March 7, 2019
                                       ___________
        Introduced by M. of A. CRESPO -- read once and referred to the Committee
          on Ways and Means
        AN ACT to amend the tax law, in relation to clarifying the recordkeeping
          requirements  for the earned income tax credit and the enhanced earned
          income tax credit
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1. Subsection (d) of section 606 of the tax law is amended by
     2  adding a new paragraph 8 to read as follows:
     3    (8) Income documentation. Any taxpayer who receives  more  than  fifty
     4  percent  of  his  or her income in cash who is claiming the credit under
     5  this subsection may follow the income documentation standards set  forth
     6  in section six hundred fifty-eight-a of this article when applicable.
     7    §  2.  Subsection  (d-1)  of  section 606 of the tax law is amended by
     8  adding a new paragraph 9 to read as follows:
     9    (9) Any taxpayer who receives more than fifty percent of  his  or  her
    10  income  in  cash  who  is  claiming the credit under this subsection may
    11  prove his or her income by following the income documentation  standards
    12  set  forth  in  section  six  hundred fifty-eight-a of this article when
    13  applicable.
    14    § 3. The tax law is amended by adding a new section 658-a to  read  as
    15  follows:
    16    §  658-a. Income documentation concerning the earned income credit. In
    17  conjunction with  the  requirements  set  forth  in  this  chapter,  the
    18  provisions  of  this  section  shall  apply to any taxpayer claiming the
    19  earned income credit as set forth  in  subsection  (d)  of  section  six
    20  hundred six of this article.
    21    (a)  Income  documentation standards for cash earners. If the taxpayer
    22  is employed in one or more occupations where such taxpayer receives more
    23  than fifty percent of his or her income in cash, such taxpayer may prove
    24  his or her income by producing one of the following verifications:
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10287-01-9

        A. 6404                             2
     1    (1) Permanent books, accounts or records kept in a  manner  consistent
     2  with  the  recordkeeping practices of the industry in which the taxpayer
     3  works. For the purposes of this section, "permanent books,  accounts  or
     4  records"  shall  mean  paper  or  electronic  documents that reflect the
     5  amount and source of all income earned from paid employment.
     6    (A)  Examples  of  permanent books, accounts or records shall include,
     7  but shall not be limited to (i) bank statements  from  financial  insti-
     8  tutions,  (ii) electronic ledgers or spreadsheets that document the date
     9  of each entry, or (iii)  handwritten  accounts  maintained  in  a  bound
    10  ledger.
    11    (B)  A  different  ledger shall be maintained for each tax year's cash
    12  earnings records, and each record shall be maintained for at least three
    13  years after the tax year for which it was submitted.
    14    (C) Entry requirements for  handwritten  ledgers.  (i)  A  handwritten
    15  ledger  documenting  the  taxpayer's income shall list, in chronological
    16  order, an entry for each transaction for which such taxpayer earns money
    17  with information that includes, but is not limited to:
    18    (I) the amount of money earned;
    19    (II) the approximate time and date on which the money was earned; and
    20    (III) a brief description or list of the task or tasks  performed  for
    21  the money earned.
    22    (ii)  Such  record  may  include entries for work-related expenses and
    23  each such entry shall include, but is not limited to:
    24    (I) the amount of the work-related expense;
    25    (II) the approximate  time  and  date  the  work-related  expense  was
    26  incurred;
    27    (III) the nature of the work-related expense; and
    28    (IV) the date on which the entry was made.
    29    (iii)  An  entry for any transaction shall be made as soon as possible
    30  after the transaction occurred.
    31    (2)  Additional  acceptable  income  verification  documents.  In  the
    32  absence  of permanent books, accounts or records, a tax filer may verify
    33  income by producing two or more of the following:
    34    (A) A signed letter from the taxpayer's employer stating wages paid;
    35    (B) Statements from a financial institution that  demonstrate  regular
    36  deposits of earnings;
    37    (C) Receipts from work supplies, including but not limited to uniforms
    38  and materials needed to complete a specific job;
    39    (D) Receipts from licensing or certification fees, membership dues, or
    40  other professional dues;
    41    (E)  Receipts from work-related expenses, including but not limited to
    42  transportation costs and child care;
    43    (F) A sworn affidavit, signed by the taxpayer, stating such taxpayer's
    44  position or title, the number of  weeks  worked,  the  number  of  hours
    45  worked  per  week, the wages earned, and a brief description of the work
    46  performed. A separate notarized affidavit shall be  completed  for  each
    47  job;
    48    (G)  An  income  and expenses worksheet completed with a certified tax
    49  professional.
    50    (b) Errors or omissions. Omissions  or  failures  to  correct  entries
    51  shall  not  be  sufficient  in  and of themselves to render a taxpayer's
    52  records as inadequate to validate such taxpayer's income for  the  rele-
    53  vant tax year.
    54    (c)  Presumption  of  accuracy and completeness. (1) Provided that the
    55  minimum standards set forth in this section  are  met,  and  unless  the
    56  department  has  affirmative evidence to directly contradict the taxpay-

        A. 6404                             3
     1  er's return, the department shall presume the accuracy and  completeness
     2  of the record and the good faith of the taxpayer.
     3    (2)  The particular format of the record shall not be used as evidence
     4  of insufficient recordkeeping or bad faith on the part of the taxpayer.
     5    (3) A mid-year change in the format of recordkeeping within  a  single
     6  ledger  shall  not be considered evidence of incomplete recordkeeping or
     7  bad faith if such change indicates an attempt to  improve  upon  record-
     8  keeping.
     9    (d)  Report.  (1) On or before June thirtieth next succeeding the date
    10  on which this section shall have become a law, and annually  thereafter,
    11  the  commissioner  shall submit a written report regarding taxpayers who
    12  claim the earned income credit as set forth in subsection (d) of section
    13  six hundred six of this article and who are paid principally in cash.
    14    (2) The report must contain the following information about the earned
    15  income credit claimed under this article during  the  previous  calendar
    16  year:
    17    (A) the number of cash earners claiming the credit;
    18    (B)  the  number of cash earners claiming the credit who are sent desk
    19  audit inquiry letters;
    20    (C) the number of responses to the  audit  inquiry  letters  that  the
    21  department receives;
    22    (D) the number of cash earners claiming the credit who are audited and
    23  receive the credit as a result; and
    24    (E) the number of cash earners claiming the credit who are audited and
    25  are denied the credit as a result.
    26    (3)  The credit report may also contain any other information that the
    27  commissioner deems to be useful in evaluating the use of the  credit  by
    28  cash  earners.  The  information  included  in the credit report will be
    29  based on the information filed with the department during  the  previous
    30  calendar year, to the extent that it is practicable to use that informa-
    31  tion.
    32    § 4. This act shall take effect on the one hundred twentieth day after
    33  it  shall  have become a law. Effective immediately, the commissioner of
    34  taxation and finance is  authorized  to  make  any  addition,  amendment
    35  and/or repeal of any rule or regulation necessary for the implementation
    36  of this act on its effective date on or before such date.
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