Reed Smith Client Alerts

On January 16, 2017, New York State Governor Andrew Cuomo released his 2018–2019 New York State Executive Budget and accompanying legislation containing proposed amendments to New York’s corporate franchise tax, sales and use tax, personal income tax, and tax procedure. In conjunction with the Governor’s Executive Budget, the Department of Taxation and Finance (the “Department”) released its Preliminary Report on the Federal Tax Cuts and Jobs Act to address the impact of the Act on New York. Reed Smith will be monitoring these proposals as they move through the legislative process.

Here is a synopsis of a number of the proposed changes in the FY 2019 Budget Bill (the “Budget Bill”). We encourage you to consider the impact of these proposals on your business, and to reach out with any additional questions.

(i) Extending the statute of limitations for amended returns

The Budget Bill would extend the statute of limitations for the Department to assess additional taxes on New York taxpayers reporting changes on amended returns. Currently, the Department typically has three years from the original filing date of a tax return to audit and assess additional tax. Filing an amended return does not extend the statute of limitations for the Department to audit and assess additional tax. The proposed change would extend the Department’s statute of limitation to audit and assess taxpayers within three years of filing the amended return. This provision would take effect immediately and apply to all amended returns filed on or after the effective date the bill becomes law.

Reed Smith insight: The Governor noted that the proposal was in response to the filing of questionable amended tax returns requesting a refund that take place at or near the statutory deadline. This proposed change would restart the three-year statute of limitations clock when an amended return is filed with the Department. This proposal is intended to disincentivize taxpayers from filing amended returns as late as possible in order to avoid an audit. If this proposal is enacted, taxpayers will no longer obtain any advantage from waiting to file amended returns and, as a consequence, they should seek any refunds by filing amended returns as soon as possible.