State Codes and Statutes

Statutes > New-york > Tax > Article-27 > 1085

§  1085.  Additions  to  tax and civil penalties.---(a) (1) Failure to  file return.---(A) In case of failure to file  a  return  under  article  nine,  nine-a,  nine-b  or  nine-c  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 and not due to  willful neglect, there shall be added to the amount required to be shown  as tax on such return five percent of the amount  of  such  tax  if  the  failure  is for not more than one month, with an additional five percent  for each additional month or fraction thereof during which such  failure  continues, not exceeding twenty-five percent in the aggregate.    (B) In the case of a failure to file a return of tax within sixty 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 (A) of this paragraph shall not be  less than the lesser of one hundred dollars or one  hundred  percent  of  the amount required to be shown as tax on such return.    (C)  For  purposes of this paragraph, the amount of 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  upon the return.    (2) Failure to pay tax shown on return.--In case of failure to pay the  amounts shown as tax on any return required to be  filed  under  article  nine,  nine-a,  nine-b  or  nine-c  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  and  not  due  to  willful neglect, there shall be added to the amount shown as tax on such  return one-half of one per cent of the amount of such tax if the failure  is  not  for more than one month, with an additional one-half of one per  cent for each additional month or fraction  thereof  during  which  such  failure  continues, not exceeding twenty-five per cent 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 upon 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 under article nine or nine-a which is  not  so  shown  (including  an  assessment made pursuant to subsection (a) of  section one thousand  eighty-two  of  this  article)  within  twenty-one  calendar  days of the date of a notice and demand therefor (ten business  days if the amount for which such notice and demand is  made  equals  or  exceeds  one  hundred  thousand  dollars),  unless it is shown that such  failure is due to reasonable cause 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 of such tax if the failure is not for more than  one  month,  with  an  additional  one-half  of  one  percent  for  each  additional   month   or  fraction  thereof  during  which  such  failure  continues, not exceeding twenty-five percent 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.--(A)  With  respect  to  any  return,  the amount of the addition under  paragraph one of this subsection shall be reduced by the amount  of  the  addition  under  paragraph two of this subsection for any month to which  an addition applies under both paragraphs  one  and  two.  In  any  case  described  in  subparagraph (B) of paragraph one of this subsection, the  amount of the addition under such paragraph one  shall  not  be  reduced  below the amount provided in such subparagraph.    (B)  With  respect  to  any return, the maximum amount of the addition  permitted under paragraph three of this subsection shall be  reduced  by  the  amount  of  the  addition  under  paragraph  one of this subsection  (determined without regard to subparagraph (B) of  such  paragraph  one)  which is attributable to the tax for which the notice and demand is made  and which is not paid within ten days of such notice and demand.    (b) Deficiency due to negligence.---(1) If any part of a deficiency is  due  to  negligence  or intentional disregard of this article or article  nine, nine-a, nine-b or nine-c, or rules or regulations thereunder  (but  without  intent  to  defraud), there shall be added to the tax an amount  equal to five percent of the deficiency.    (2) There shall be added  to  the  tax  (in  addition  to  the  amount  determined  under  paragraph  one of this subsection) an amount equal to  fifty percent  of  the  interest  payable  under  section  one  thousand  eighty-four with respect to the portion of the underpayment described in  such   paragraph   one  which  is  attributable  to  the  negligence  or  intentional disregard referred to in such paragraph one, 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).    (3) If any payment is shown on a return made by a payor  with  respect  to  dividends,  patronage dividends and interest under subsection (a) of  section six thousand forty-two, subsection (a) of section  six  thousand  forty-four  or  subsection (a) of section six thousand forty-nine of the  internal revenue code of nineteen hundred fifty-four, respectively,  and  the  payee fails to include any portion of such payment in gross income,  as that term is defined in paragraph one of subsection  (d)  of  section  one  thousand  eighty-three, any portion of an underpayment attributable  to such failure shall be treated, for purposes of  this  subsection,  as  due to negligence in the absence of clear and convincing evidence to the  contrary.  If  any penalty is imposed under this subsection by reason of  the preceding sentence, the amount of the penalty imposed  by  paragraph  one  of  this  subsection  shall  be  five percent of the portion of the  underpayment which is attributable  to  the  failure  described  in  the  preceding sentence.    (c)  Failure  to  file declaration or underpayment of estimated tax.--  (1) If any taxpayer fails to file a declaration of estimated  tax  under  article  nine-A  of  this chapter, or fails to pay all or any part of an  amount which is applied as an installment against such estimated tax, it  shall be deemed to have made an underpayment  of  estimated  tax.  There  shall  be  added  to  the  tax  for  the  taxable  year an amount at the  underpayment rate set  by  the  commissioner  pursuant  to  section  one  thousand  ninety-six  of this article, or if no rate is set, at the rate  of seven  and  one-half  percent  per  annum  upon  the  amount  of  the  underpayment  for  the  period  of  the  underpayment but not beyond the  fifteenth day of the third month following  the  close  of  the  taxable  year.  The  amount  of  the  underpayment  shall be, with respect to any  installment of estimated tax computed on  the  basis  of  the  preceding  year's  tax,  the  excess  of  the  amount  required to be paid over the  amount, if any, paid on or before  the  last  day  prescribed  for  suchpayment  or, with respect to any other installment of estimated tax, the  excess of the amount of the installment which would be  required  to  be  paid  if  the  estimated tax were equal to ninety-one percent of the tax  shown  on  the  return  for the taxable year (or if no return was filed,  ninety-one percent of the tax for such year) over the amount, if any, of  the installment paid on or before  the  last  day  prescribed  for  such  payment.  In any case in which there would be no underpayment if "eighty  percent" were substituted for "ninety-one percent" each place it appears  in  this  subsection,  the  addition  to  the  tax  shall  be  equal  to  seventy-five percent of the amount otherwise determined. No underpayment  shall  be  deemed  to exist with respect to a declaration or installment  otherwise due on or after the termination of existence of the taxpayer.    (2) For purposes of applying the addition to tax for  an  underpayment  of  any  installment  of  estimated  tax  by  a  taxpayer subject to tax  pursuant to article thirty-three of this  chapter,  the  amount  of  tax  shall  be  determined  by  using the lesser of the differential earnings  rate (as described in subsection (c) of section eight  hundred  nine  of  the  internal revenue code) of the second tax year preceding the taxable  year for which the installment is made,  or  the  differential  earnings  rate  for  the  taxable  year  for  which  the installment is made. Such  addition to tax shall be applied to any taxable year without  regard  to  any adjustments to the differential earnings amount under subsection (f)  of  section  eight  hundred  nine  of the internal revenue code for such  year.    (3) The provisions of this subsection and subsections (d) and  (e)  of  this  section  shall  apply  to  the  failure  of  a  taxpayer to file a  declaration of estimated tax surcharge or the failure to pay all or  any  part  of  an  amount  which  is  applied  as an installment against such  estimated tax surcharge pursuant to sections one hundred ninety-seven-a,  one  hundred  ninety-seven-b,  two  hundred  thirteen-a,   two   hundred  thirteen-b,  fourteen hundred sixty, fourteen hundred sixty-one, fifteen  hundred thirteen and fifteen  hundred  fourteen  of  this  chapter.  For  purposes  of  applying  this section and subsections (d) and (e) of this  section to the estimated tax surcharge, where appropriate the term "tax"  shall be read to mean "tax surcharge," and the terms "amount required to  be paid," "amount which would be required to be paid," and "amount which  would have been required to be paid" shall be computed as the product of  (1) such amount computed without regard to the  tax  surcharges  imposed  under  sections one hundred eighty-four-a, one hundred eighty-six-c, one  hundred eighty-eight, two hundred nine-A, two hundred  nine-B,  fourteen  hundred  fifty-five-A,  fourteen  hundred  fifty-five-B, fifteen hundred  five-a, and fifteen hundred twenty of this  chapter,  and  (2)  the  MTA  percentage.  The term "MTA percentage" shall mean the product of (A) the  tax rate applicable under such sections imposing such surcharges and (B)  the percentage utilized in determining the  portion  of  the  taxpayer's  business   activity   carried   on   within  the  metropolitan  commuter  transportation district under such sections.    (d) Exception to addition  for  underpayment  of  estimated  tax.--The  addition to tax under subsection (c) with respect to any underpayment of  any  amount  which  is  applied  as an installment against estimated tax  under article nine-a, nine-b or nine-c shall not be imposed if the total  amount of all payments of estimated tax made on or before the last  date  prescribed  for  the  payment  of  any such amount equals or exceeds the  amount which would have been required to be paid on or before such  date  if the estimated tax were whichever of the following is the least--    (1)  The  tax  shown  on  the return of the taxpayer for the preceding  taxable year, if a return showing a liability for tax was filed  by  thetaxpayer  for  the  preceding taxable year and such preceding year was a  taxable year of twelve months, or    (2) An amount equal to the tax computed at the rates applicable to the  taxable  year,  but  otherwise  on  the  basis of the facts shown on the  return of the taxpayer for, and the law  applicable  to,  the  preceding  taxable year, or    (3)  Annualized  income  installment.  (A) General. An amount equal to  ninety-one percent of the tax for the taxable year computed on all items  entering into the computation of the tax or taxes of  the  taxpayer  for  the  taxable year under article nine, nine-A, thirty-two or thirty-three  of this chapter. For  purposes  of  computing  the  tax,  all  items  of  receipts, income and expenses shall be placed on an annualized basis--    (i) for the first three months of the taxable year, in the case of the  installment required to be paid in the sixth month,    (ii)  for the first six months of the taxable year, in the case of the  installment required to be paid in the ninth month, and    (iii) for the first nine months of the taxable year, in  the  case  of  the installment required to be paid in the twelfth month.    (B)  Special  rules.  For  purposes  of  subparagraph  (A),  items  of  receipts, income and expenses shall be placed  on  an  annualized  basis  by--    (i)  multiplying  such  items  by twelve (or, in the case of a taxable  year of less than twelve months, the number of  months  in  the  taxable  year), and    (ii)  dividing  the resulting amounts by the number of months referred  to in subparagraph (A) (or in subparagraph (C), if an  election  applies  to the taxable year under such subparagraph).    (C)  Election for different annualization periods. (i) If the taxpayer  makes an election under this clause--    (I) Clause (i) of subparagraph (A) of this paragraph shall be  applied  by substituting "four months" for "three months",    (II)  Clause  (ii)  of  subparagraph  (A)  of  this paragraph shall be  applied by substituting "seven months" for "six months",    (III) Clause (iii) of subparagraph (A)  of  this  paragraph  shall  be  applied by substituting "ten months" for "nine months".    (ii) If the taxpayer makes an election under this clause--    (I)  Clause (i) of subparagraph (A) of this paragraph shall be applied  by substituting "five months" for "three months",    (II) Clause (ii) of  subparagraph  (A)  of  this  paragraph  shall  be  applied by substituting "eight months" for "six months",    (III)  Clause  (iii)  of  subparagraph  (A) of this paragraph shall be  applied by substituting "eleven months" for "nine months".    (iii) An election under clause (i) or (ii) of this subparagraph  shall  apply  to  the taxable year for which made and such an election shall be  effective only if made on or before the date  required  for  filing  the  declaration of estimated tax for such taxable year, or    (4)  (A)  If the base period percentage for any six consecutive months  of the taxable year equals or exceeds seventy percent, an  amount  equal  to ninety-one percent of the tax determined in the following manner--    (i)  take  the items entering into the computation of the tax or taxes  of the taxpayer  for  the  taxable  year  under  article  nine,  nine-A,  thirty-two  or  thirty-three  of this chapter, for all months during the  taxable year preceding the filing month,    (ii) divide such amounts by the base period percentage for all  months  during the taxable year preceding the filing month,    (iii)  determine  the tax on the amounts determined under clause (ii),  and(iv) multiply the tax determined under clause (iii) by the base period  percentage for the filing month and all months during the  taxable  year  preceding the filing month.    (B) For purposes of subparagraph (A)--    (i)  the  base period percentage for any period of months shall be the  average percent which the taxable income for the corresponding months in  each of the three preceding taxable years bears to  the  taxable  income  for  the  three  preceding  taxable  years.  The  tax  commission may by  regulations provide for the determination of the base period  percentage  in  the  case  of  reorganizations,  new corporations, and other similar  circumstances, and    (ii) the term "filing month" means the month in which the  installment  is required to be paid.    (5)  In the case of any declaration installment, any reduction in such  installment resulting from the application of paragraph three or four of  this subsection shall be recaptured by increasing the amount of the next  installment determined under paragraph one or two of this subsection  or  paragraph  one  of  subsection (c) of this section by the amount of such  reduction (and by increasing subsequent installments to the extent  that  the  reduction has not previously been recaptured under this paragraph).  For purposes of the preceding sentence, a declaration installment  means  any  installment  of  estimated  tax  other  than  the  mandatory  first  installment required under paragraph (a) of subdivision one  of  section  one  hundred  ninety-seven-b,  subdivision  (a)  of  section two hundred  thirteen-b, subsection (a) of  section  fourteen  hundred  sixty-one  or  subdivision (a) of section fifteen hundred fourteen of this chapter.    For   the  purposes  of  this  subsection  the  amounts  specified  in  paragraphs (2), (3) and (4) shall be  computed  without  regard  to  any  increase  in  the  rates  applicable  to the taxable year which may have  become effective after the first day of the seventh month of such year.    (e) (1) Paragraphs (1) and (2) of subsection (d) of this section shall  not  apply  in  the  case  of  any  corporation  (or   any   predecessor  corporation)  which  had  entire  net  income,  or  the  portion thereof  allocated within the state, of one  million  dollars  or  more  for  any  taxable  year  during  the three taxable years immediately preceding the  taxable year  involved;  provided,  however,  that  in  the  case  of  a  corporation  subject  to tax under section fifteen hundred two-a of this  chapter, paragraphs (1) and (2) of subsection (d) of this section  shall  not  apply  if  such  corporation  had entire net income, or the portion  thereof allocated within the state, of one million dollars or  more  for  any  of  the  three taxable years immediately preceding the taxable year  involved, or if the direct premiums subject to tax under section fifteen  hundred two-a of this chapter of the corporation for any of  such  three  preceding  taxable  years  beginning  on  or  after  January  first, two  thousand three equals or  exceeds  three  million  seven  hundred  fifty  thousand dollars.    (2)  In  the  case  of  taxpayers  described  in paragraph one of this  subsection,  paragraph  one  of  subsection  (c),  subparagraph  (A)  of  paragraph  three  of  subsection  (d), and subparagraph (A) of paragraph  four of subsection (d) of this section shall be applied by  substituting  "one hundred percent" for "ninety-one percent" each place it appears.    (f)  Deficiency due to fraud.---(1) If any part of a deficiency is due  to fraud, there shall be added to the tax an amount equal to  two  times  the deficiency.    (2)  The addition to tax under this subsection shall be in lieu of any  other addition to tax imposed by subsection (a) or (b).    (g) Additional penalty.---Any person who with fraudulent intent  shall  fail to pay under article nine, nine-a, nine-b or nine-c, any tax, or tomake,  render,  sign  or  certify any return or declaration of estimated  tax, or to supply any information within the time required by  or  under  such  article,  shall be liable to penalty of not more than one thousand  dollars,  in  addition to any other amounts required under this article,  to be imposed, assessed and collected by the  tax  commission.  The  tax  commission  shall have the power, in its discretion, to waive, reduce or  compromise any penalty under this subsection.    (h) Additions treated as tax.---The additions  to  tax  and  penalties  provided  by this section shall be paid upon notice and demand and shall  be assessed, collected and paid in the same manner  as  taxes,  and  any  reference in this article to tax imposed by article nine, nine-a, nine-b  or  nine-c  shall  be  deemed  also to refer to the additions to tax and  penalties provided by this section. For purposes of section one thousand  eighty-one, this subsection shall not apply to---    (1) any addition to tax under subsection (a) except as to that portion  attributable to a deficiency;    (2) any addition to tax under subsection (c) or (o); and    (3) any additional penalties under subsections (g) and (l).    (i) Determination of deficiency.---For purposes of subsections (b) and  (f), the amount shown as the tax by the taxpayer upon its  return  shall  be  taken  into account in determining the amount of the deficiency only  if such return was filed on or before the last day  prescribed  for  the  filing  of  such return, determined with regard to any extension of time  for such filing.    (j) Person defined.---For purposes of subsections  (g)  and  (l),  the  term  person includes an individual, corporation, partnership or limited  liability  company  or  an  officer  or  employee  of  any   corporation  (including  a  dissolved  corporation),  or  a member or employee of any  partnership, or a member, employee or manager  of  a  limited  liability  company,  who  as  such  officer, employee, manager or member is under a  duty to perform the act in respect of which the violation occurs.    * (k) Substantial understatement of liability.-- (1)  If  there  is  a  substantial  understatement  of tax for any taxable year, there shall be  added to the tax an amount equal to ten percent of  the  amount  of  any  underpayment  attributable  to such understatement. For purposes of this  subsection, there is a substantial understatement of tax for any taxable  year if the amount of the understatement for the  taxable  year  exceeds  the greater of ten percent of the tax required to be shown on the return  for  the  taxable  year  or  five  thousand dollars. For purposes of the  preceding sentence, the term "understatement" means the  excess  of  the  amount  of  the  tax  required to be shown on the return for the taxable  year, over the amount of the tax imposed which is shown  on  the  return  reduced  by  any rebate (within the meaning of subsection (h) of section  one thousand eighty-one of this article). The excess under the preceding  sentence shall be determined without regard to items to which subsection  (k-1) of this section applies. The commissioner may  waive  all  or  any  part of the addition to tax provided by this section on a showing by the  taxpayer that there was reasonable cause for the understatement (or part  thereof) and that the taxpayer acted in good faith.    (2)  The  amount  of  the  understatement  under paragraph one of this  subsection shall be reduced by that portion of the understatement  which  is  attributable to (A) the tax treatment of any item by the taxpayer if  there is or was substantial authority for such  treatment,  or  (B)  any  item  if  the  relevant  facts  affecting  the  item's tax treatment are  adequately disclosed in the return or in a  statement  attached  to  the  return.    (3)(A)  Subparagraph (B) of paragraph two of this subsection shall not  apply to any item attributable to a tax shelter.(B) For purposes of this paragraph, the term "tax shelter" means    (i) a partnership or other entity,    (ii) any investment plan or arrangement, or    (iii) any other plan or arrangement,  if   a  significant  purpose  of  such  partnership,  entity,  plan,  or  arrangement is the avoidance or evasion of tax.    * NB Effective until July 1, 2011    * (k)  Substantial  understatement  of  liability.--If  there   is   a  substantial  understatement  of tax for any taxable year, there shall be  added to the tax an amount equal to ten percent of  the  amount  of  any  underpayment  attributable  to such understatement. For purposes of this  subsection, there is a substantial understatement of tax for any taxable  year if the amount of the understatement for the  taxable  year  exceeds  the greater of ten percent of the tax required to be shown on the return  for  the  taxable  year  or  five  thousand dollars. For purposes of the  preceding sentence, the term "understatement" means the  excess  of  the  amount  of  the  tax  required to be shown on the return for the taxable  year, over the amount of the tax imposed which is shown  on  the  return  reduced  by  any rebate (within the meaning of subsection (h) of section  one thousand eighty-one). The amount of  such  understatement  shall  be  reduced  by  that portion of the understatement which is attributable to  the tax treatment of any item  by  the  taxpayer  if  there  is  or  was  substantial  authority  for  such treatment, or any item with respect to  which  the  relevant  facts  affecting  the  item's  tax  treatment  are  adequately  disclosed  in  the  return or in a statement attached to the  return. The tax commission may waive all or any part of the addition  to  tax provided by this section on a showing by the taxpayer that there was  reasonable  cause  for the understatement (or part thereof) and that the  taxpayer acted in good faith.    * NB Effective July 1, 2011    * (k-1) Reportable transaction understatement.-- (1) If a taxpayer has  a reportable transaction understatement  for  any  taxable  year,  there  shall  be  added  to  the  tax  an amount equal to twenty percent of the  amount of such understatement.    (2) For purposes of this section,  the  term  "reportable  transaction  understatement" means the sum of    (A) the product of--    (i)  the  amount  of  the increase (if any) in the applicable tax base  which results from a difference between the proper tax treatment  of  an  item  to which this section applies and the taxpayer's treatment of such  item (as shown on the taxpayer's return of tax), and    (ii) the highest rate of tax imposed under the article of this chapter  that applies to the taxpayer, and    (B) the amount of the decrease (if any) in  the  aggregate  amount  of  credits determined under the article of this chapter that applies to the  taxpayer   which  results  from  a  difference  between  the  taxpayer's  treatment of an item to which this section  applies  (as  shown  on  the  taxpayer's return of tax) and the proper tax treatment of such item.    For  purposes  of subparagraph (A) of this paragraph, any reduction of  the excess of deductions allowed for the taxable year over gross  income  for  such  year, and any reduction in the amount of capital losses which  would (without regard to section one thousand two hundred eleven of  the  internal  revenue code) be allowed for such year, shall be treated as an  increase in the applicable tax base.    (3) This subsection shall apply to any item which is attributable to--    (A) any listed transaction, and(B) any reportable transaction (other than a listed transaction) if  a  significant  purpose  of such transaction is the avoidance or evasion of  tax.    (4)  Paragraph one of this subsection shall be applied by substituting  "thirty percent" for "twenty percent" with respect to the portion of any  reportable  transaction  understatement  with  respect  to   which   the  requirement  of  clause (i) of subparagraph (B) of paragraph ten of this  subsection is not met.    (5)  For  purposes  of  this   subsection,   the   terms   "reportable  transaction"  and  "listed  transaction" have the meanings given to such  terms by section twenty-five  of  this  chapter,  the  term  "reportable  transaction"  shall  include  a  "New  York  reportable  transaction" as  defined in such section twenty-five, and the term  "listed  transaction"  shall  include any transaction designated as a tax avoidance transaction  pursuant to such section twenty-five.    (6) In the case of an understatement (as defined in subsection (k)  of  this section)    (A)  the  amount  of such understatement (determined without regard to  this paragraph) shall be increased by the aggregate amount of reportable  transaction understatements for purposes  of  determining  whether  such  understatement  is  a substantial understatement under subsection (k) of  this section, and (B) the addition to tax under subsection (k)  of  this  section  shall apply only to the excess of the amount of the substantial  understatement (if any) after the application  of  subparagraph  (A)  of  this  paragraph  over  the  aggregate  amount  of reportable transaction  understatements.    (7) References to an understatement (or a  deficiency)  in  subsection  (f)  of  this  section  shall  be  treated  as including references to a  reportable transaction understatement.    (8)  This  subsection  shall  not  apply  to  any   portion   of   any  understatement  on  which  a  penalty is imposed under subsection (f) of  this section.    (9) Except as provided in regulations prescribed by the  commissioner,  in  no  event  shall  any  tax  treatment  included with an amendment or  supplement to a return of tax be taken into account in  determining  the  amount  of any reportable transaction understatement if the amendment or  supplement is filed after the earlier of the date the taxpayer is  first  contacted by the commissioner regarding the examination of the return or  such other date as is specified by the commissioner.    (10)(A) No penalty shall be imposed under this subsection with respect  to any portion of a reportable transaction understatement if it is shown  that there was a reasonable cause for such portion and that the taxpayer  acted in good faith with respect to such portion.    (B)  Subparagraph  (A)  of  this  paragraph  shall  not  apply  to any  reportable transaction understatement unless:    (i) the relevant facts affecting the tax treatment  of  the  item  are  adequately  disclosed  in  accordance  with  section twenty-five of this  chapter,    (ii) there is or was substantial authority for such treatment, and    (iii) the taxpayer reasonably believed that such  treatment  was  more  likely than not the proper treatment.  A  taxpayer  failing  to  adequately disclose in accordance with section  twenty-five of this chapter shall be treated as meeting the requirements  of clause (i) of this subparagraph if the penalty for such  failure  was  rescinded under subsection (p) of this section.    (11)(A) A taxpayer shall be treated as having a reasonable belief with  respect to the tax treatment of an item only if such belief(i) is based on the facts and law that exist at the time the return of  tax which includes such tax treatment is filed, and    (ii) relates solely to the taxpayer's chances of success on the merits  of  such treatment and does not take into account the possibility that a  return will not be audited, such treatment will not be raised on  audit,  or such treatment will be resolved through settlement if it is raised.    (B)(i) An opinion of a tax advisor may not be relied upon to establish  the reasonable belief of a taxpayer if    (I)  the tax advisor is described in clause (ii) of this subparagraph,  or    (II) the opinion is described in clause (iii) of this subparagraph.    (ii) A tax advisor is described in this clause if the tax advisor:    (I) is a material advisor (within the meaning of section six  thousand  one  hundred  eleven of the internal revenue code or within such meaning  as it also applies to a New York reportable transaction  as  defined  in  section   twenty-five   of   this   chapter)  and  participates  in  the  organization, management, promotion, or sale of the  transaction  or  is  related  (within  the  meaning  of subsection (b) of section two hundred  sixty-seven of the internal revenue code or subsection  (b)  of  section  seven  hundred  seven of the internal revenue code) to any person who so  participates,    (II) is compensated directly or indirectly by a material advisor  with  respect to the transaction,    (III)  has  a fee arrangement with respect to the transaction which is  contingent on all  or  part  of  the  intended  tax  benefits  from  the  transaction being sustained, or    (IV)  has  a  disqualifying  financial  interest  with  respect to the  transaction.    (iii) For purposes of clause (i) of this subparagraph, an  opinion  is  disqualified if the opinion    (I)  is  based on unreasonable factual or legal assumptions (including  assumptions as to future events),    (II) unreasonably relies on representations, statements, findings,  or  agreements of the taxpayer or any other person,    (III) does not identify and consider all relevant facts, or    (IV)  fails  to  meet  any  other  requirement as the commissioner may  prescribe.    * NB Repealed July 1, 2011    (k-2) No penalty will be imposed pursuant to subsection (c) or (k)  of  this section for a taxable year beginning on or after January first, two  thousand  eight  and  before  January first, two thousand nine resulting  from the denial of an empire zone tax credit  claimed  by  the  taxpayer  because  an empire zone retention certificate was not issued pursuant to  subdivision (w) of  section  nine  hundred  fifty-nine  of  the  general  municipal  law  to the empire zone enterprise which is the basis for the  tax credit or credits claimed on the return or report.    (l) Aiding or assisting in the giving of fraudulent returns,  reports,  statements or other documents.--(1) Any person who, with the intent that  tax  be evaded, shall, for a fee or other compensation or as an incident  to the performance of other services  for  which  such  person  receives  compensation,  aid  or  assist  in,  or  procure, counsel, or advise the  preparation or presentation under, or  in  connection  with  any  matter  arising  under article nine, nine-A, nine-B or nine-C of this chapter of  any return, report, declaration, statement or other  document  which  is  fraudulent  or  false  as to any material matter, or supply any false or  fraudulent information, whether or not such falsity or fraud is with the  knowledge or consent of the person authorized  or  required  to  presentsuch  return, report, declaration, statement or other document shall pay  a penalty not exceeding ten thousand dollars.    (2)  For  purposes  of  paragraph  one  of  this  subsection, the term  "procures" includes ordering (or otherwise causing) a subordinate to  do  an  act, and knowing of, and not attempting to prevent, participation by  a subordinate in an act. The term "subordinate" means any  other  person  (whether  or not a director, officer, employee, or agent of the taxpayer  involved) over whose activities the person has  direction,  supervision,  or control.    (3)  For  purposes  of  paragraph  one  of  this  subsection, a person  furnishing typing, reproducing,  or  other  mechanical  assistance  with  respect  to  a document shall not be treated as having aided or assisted  in the preparation of such document by reason of such assistance.    (4) The penalty imposed by this subsection shall be in addition to any  other penalty provided by law.    (m) Unwarranted reduction in utility  costs  in  an  empire  zone.  If  during  a  taxable  year a taxpayer has received a reduction in the rate  charged for gas, electric, steam or water sold, or gas, electric,  steam  or  water service rendered, pursuant to subdivision eight of section one  hundred eighty-six-a of this chapter, based upon a certification  as  to  the  claiming  of  a  credit  under  subsection  nineteen of section two  hundred ten, subsection (e) of section  fourteen  hundred  fifty-six  or  subdivision  (g)  of section fifteen hundred eleven of this chapter, and  it is finally determined that such taxpayer  is  not  entitled  to  such  credit  in  any  part,  such taxpayer shall be liable to a penalty in an  amount equal to such reduction in cost, with interest from the last  day  of such year, at the rate applicable to underpayments of tax pursuant to  this article. The tax commission shall have the power, in its discretion  to waive, reduce or compromise such penalty.    (n) Failure to file report of information relating to certain interest  payments.--In case of failure to file the report of information required  under  subdivision  two-a  of  section  two hundred eleven, unless it is  shown that such failure is due  to  reasonable  cause  and  not  due  to  willful  neglect,  there  shall  be  added  to the tax a penalty of five  hundred dollars.    (o) Failure to include on  return  information  relating  to  issuer's  allocation  percentage. Where a return is filed but does not contain (1)  the information necessary to compute the taxpayer's issuer's  allocation  percentage,   as  defined  in  subparagraph  one  of  paragraph  (b)  of  subdivision three of section two hundred ten of this chapter, where  the  same  is  called  for  on  the  return,  or, (2) the taxpayer's issuer's  allocation percentage, where the same is called for on  the  return  but  where  all  of  the  information  necessary  for the computation of such  percentage is not called for on the return, then unless it is shown that  such failure is due to reasonable cause and not due to  willful  neglect  there shall be added to the tax a penalty of five hundred dollars.    * (p)   Failure   to   disclose   or  provide  reportable  transaction  information.  -- (1) Any person who fails to file, disclose  or  provide  any  statement,  return  or  other  document  which  is  required  under  subdivision (a) of section twenty-five  of  this  chapter  shall  pay  a  penalty in the amount determined under paragraph two of this subsection.    (2)(A)  Except  as provided in subparagraph (B) of this paragraph, the  amount of the penalty under paragraph one of this  subsection  shall  be  twenty thousand dollars.    (B)  The  amount of the penalty under paragraph one of this subsection  with respect to a listed transaction shall be fifty thousand dollars.    (3)  For  purposes  of  this   subsection,   the   terms   "reportable  transaction"  and  "listed  transaction" shall have the same meanings asused in section  twenty-five  of  this  chapter,  the  term  "reportable  transaction"  shall  include  a  "New  York  reportable  transaction" as  defined in such section twenty-five, and the term  "listed  transaction"  shall  include any transaction designated as a tax avoidance transaction  pursuant to such section twenty-five.    (4) The commissioner may rescind all or any  portion  of  any  penalty  imposed by this subsection with respect to any violation if    (A)  the  violation  is with respect to a reportable transaction other  than a listed transaction, and    (B)  rescinding  the  penalty  would  promote  compliance   with   the  requirements of this chapter and effective tax administration.    (5)  The  penalty  imposed by this section shall be in addition to any  other penalty imposed by this chapter.    * NB Repealed July 1, 2011    * (q) Failure to disclose or provide reportable transaction  return.--  (1)  Any  person  who  fails to file, disclose or provide any statement,  return or other document which is  required  under  subdivision  (b)  of  section  twenty-five  of  this chapter shall pay a penalty in the amount  determined under paragraph two of this subsection.    (2)(A) Except as provided in subparagraph (B) of this  paragraph,  the  amount  of  the  penalty under paragraph one of this subsection shall be  twenty thousand dollars.    (B) The amount of the penalty under paragraph one of  this  subsection  with respect to a listed transaction shall be the greater of    (i) fifty thousand dollars or,    (ii)  fifty percent of the gross income that the organizer or material  advisor derived with respect to activities that were the basis  for  the  requirement to file, disclose or provide information pursuant to section  six  thousand  eleven  of  the internal revenue code, to the extent such  gross income is attributable to the avoidance of any tax  imposed  under  article nine, nine-A, thirty-two, or thirty-three of this chapter.    (C) Clause (ii) of subparagraph (B) of this paragraph shall be applied  by  substituting  "seventy-five percent" for "fifty percent" in the case  of an intentional failure or act described  in  paragraph  one  of  this  subsection.    (3)   For   purposes   of   this  subsection,  the  terms  "reportable  transaction" and "listed transaction" shall have the  same  meanings  as  used  in  section  twenty-five  of  this  chapter,  the term "reportable  transaction" shall  include  a  "New  York  reportable  transaction"  as  defined  in  such section twenty-five, and the term "listed transaction"  shall include any transaction designated as a tax avoidance  transaction  pursuant to such section twenty-five.    (4)  The  commissioner  may  rescind all or any portion of any penalty  imposed by this subsection with respect to any violation if    (A) the violation is with respect to a  reportable  transaction  other  than a listed transaction, and    (B)   rescinding   the  penalty  would  promote  compliance  with  the  requirements of this chapter and effective tax administration.    (5) The penalty imposed by this subsection shall be in addition to any  other penalty imposed by this chapter, except that no penalty  shall  be  imposed  under  subparagraph  (A)  or  clause (i) of subparagraph (B) of  paragraph two of subsection (y) of section six  hundred  eighty-five  of  this  chapter for the same failure that is the basis for a penalty under  this subsection. Nothing in this paragraph shall preclude the imposition  of a penalty under clause (ii) of subparagraph (B) of paragraph  two  of  subsection  (y)  of  section six hundred eighty-five of this chapter for  the same failure that is the basis for a penalty under  clause  (ii)  of  subparagraph (B) of paragraph two of this subsection.* NB Repealed July 1, 2011    * (r) Failure to maintain list of advisees.-- (1) If any person who is  required to maintain a list under subdivision (c) of section twenty-five  of  this  chapter  fails to make a duplicate of such list available upon  written request by the commissioner in accordance with such  subdivision  within  twenty business days after the date of such request, such person  shall pay a penalty of ten thousand dollars for each day of such failure  after such twentieth day.    (2) No penalty shall be imposed by paragraph one  of  this  subsection  with  respect  to  the  failure  on  any  day  if such failure is due to  reasonable cause.    * NB Repealed July 1, 2011    * (s) Tax preparer penalty.-- (1) If:    (A) any part of any understatement of liability with  respect  to  any  return  or claim for refund is due to a position for which there was not  a reasonable belief that the tax treatment in  that  position  was  more  likely than not the proper treatment,    (B)  any  person  who  is  a  tax return preparer with respect to such  return or claim knew (or reasonably should have known) of such position,  and    (C) such position was not disclosed as provided in subsection  (k)  of  this  section  or there was no reasonable basis for the tax treatment of  that position, such person shall pay a penalty of  up  to  one  thousand  dollars  with  respect  to  such return or claim unless it is shown that  there is reasonable cause for the understatement and such  person  acted  in good faith.    (2) If any part of any understatement of liability with respect to any  return or claim for refund is due    (A) to a willful attempt in any manner to understate the liability for  tax by a person who is a tax return preparer with respect to such return  or claim, or    (B)  to  any reckless or intentional disregard of rules or regulations  by any such person, such person shall  pay  a  penalty  of  up  to  five  thousand  dollars  with respect to such return or claim. With respect to  any return or claim, the amount of the penalty payable by any person  by  reason  of  this paragraph shall be reduced by the amount of the penalty  paid by such person by reason of paragraph one of this subsection.    (3) For purposes of  this  subsection,  the  term  "understatement  of  liability"  means  any  understatement  of  the  net amount payable with  respect to any tax imposed under article nine,  nine-A,  thirty-two,  or  thirty-three  of  this  chapter  or  any overstatement of the net amount  creditable or refundable with respect to any such tax.    (4) This subsection shall not apply if the  penalty  under  subsection  (l)  of  this section is imposed on the tax return preparer with respect  to such understatement.    * NB Repealed July 1, 2011    * (t) Promoting abusive tax shelters.-- (1) Any person who    (A)(i) organizes (or assists in the organization of)    (I) a partnership or other entity,    (II) any investment plan or arrangement, or    (III) any other plan or arrangement, or    (ii) participates (directly or indirectly) in the sale of any interest  in an entity or plan or arrangement referred to in clause  (i)  of  this  subparagraph, and    (B) makes or furnishes or causes another person to make or furnish (in  connection with such organization or sale)    (i)  a  statement with respect to the allowability of any deduction or  credit, the excludability of any income, or the securing  of  any  othertax  benefit  by  reason  of  holding  an  interest  in  the  entity  or  participating in the plan or arrangement which the person knows  or  has  reason to know is false or fraudulent as to any material matter, or    (ii) a gross valuation overstatement as to any material matter, and    (C) satisfies any of the following conditions    (i) the person is organized in this state,    (ii) the person is doing business in this state,    (iii) the person is deriving income in this state, or    (iv)   the   person  conducts  any  of  the  activities  described  in  subparagraph (A) or (B) of this paragraph within the state of New York,  shall pay, with respect to each activity described in  subparagraph  (A)  of  this  paragraph,  a penalty equal to one thousand dollars or, if the  person establishes that it is lesser, one hundred percent of  the  gross  income  derived  (or to be derived) by such person from such activity to  the extent such gross income is attributed to the avoidance of  any  tax  imposed  under articles nine, nine-A, thirty-two or thirty-three of this  chapter; provided, however, that if an activity with respect to which  a  penalty  imposed under this subsection involves a statement described in  clause (i) of subparagraph (B) of paragraph one of this subsection,  the  penalty  shall be equal to fifty percent of the gross income derived (or  to be derived) from that activity within the  state  by  the  person  on  which  the  penalty  is imposed. For purposes of the preceding sentence,  activities described in clause (i) of subparagraph (A) of this paragraph  with respect to each  entity  or  arrangement  shall  be  treated  as  a  separate  activity  and  participation  in each sale described in clause  (ii) of subparagraph (A) of this paragraph shall be so treated.    (2)(A) For purposes of this  subsection,  the  term  "gross  valuation  overstatement"  means  any  statement as to the value of any property or  services if--    (i) the value so stated exceeds two  hundred  percent  of  the  amount  determined to be the correct valuation, and    (ii) the value of such property or services is directly related to the  amount  of  any  deduction or credit allowable under this chapter to any  participant.    (B) The commissioner may waive all or any part of the penalty provided  by paragraph one of this subsection with respect to any gross  valuation  overstatement  on  a  showing  that there was a reasonable basis for the  valuation and that such valuation was made in good faith.    (3) The penalty imposed by this subsection shall be in addition to any  other penalty provided by law.    * NB Repealed July 1, 2011    (u) False or fraudulent document penalty. Any taxpayer that submits  a  false  or  fraudulent  document  to  the department will be subject to a  penalty of one hundred dollars per document submitted, or  five  hundred  dollars  per  tax  return submitted. This penalty will be in addition to  any other penalty or addition provided by law.

State Codes and Statutes

Statutes > New-york > Tax > Article-27 > 1085

§  1085.  Additions  to  tax and civil penalties.---(a) (1) Failure to  file return.---(A) In case of failure to file  a  return  under  article  nine,  nine-a,  nine-b  or  nine-c  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 and not due to  willful neglect, there shall be added to the amount required to be shown  as tax on such return five percent of the amount  of  such  tax  if  the  failure  is for not more than one month, with an additional five percent  for each additional month or fraction thereof during which such  failure  continues, not exceeding twenty-five percent in the aggregate.    (B) In the case of a failure to file a return of tax within sixty 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 (A) of this paragraph shall not be  less than the lesser of one hundred dollars or one  hundred  percent  of  the amount required to be shown as tax on such return.    (C)  For  purposes of this paragraph, the amount of 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  upon the return.    (2) Failure to pay tax shown on return.--In case of failure to pay the  amounts shown as tax on any return required to be  filed  under  article  nine,  nine-a,  nine-b  or  nine-c  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  and  not  due  to  willful neglect, there shall be added to the amount shown as tax on such  return one-half of one per cent of the amount of such tax if the failure  is  not  for more than one month, with an additional one-half of one per  cent for each additional month or fraction  thereof  during  which  such  failure  continues, not exceeding twenty-five per cent 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 upon 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 under article nine or nine-a which is  not  so  shown  (including  an  assessment made pursuant to subsection (a) of  section one thousand  eighty-two  of  this  article)  within  twenty-one  calendar  days of the date of a notice and demand therefor (ten business  days if the amount for which such notice and demand is  made  equals  or  exceeds  one  hundred  thousand  dollars),  unless it is shown that such  failure is due to reasonable cause 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 of such tax if the failure is not for more than  one  month,  with  an  additional  one-half  of  one  percent  for  each  additional   month   or  fraction  thereof  during  which  such  failure  continues, not exceeding twenty-five percent 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.--(A)  With  respect  to  any  return,  the amount of the addition under  paragraph one of this subsection shall be reduced by the amount  of  the  addition  under  paragraph two of this subsection for any month to which  an addition applies under both paragraphs  one  and  two.  In  any  case  described  in  subparagraph (B) of paragraph one of this subsection, the  amount of the addition under such paragraph one  shall  not  be  reduced  below the amount provided in such subparagraph.    (B)  With  respect  to  any return, the maximum amount of the addition  permitted under paragraph three of this subsection shall be  reduced  by  the  amount  of  the  addition  under  paragraph  one of this subsection  (determined without regard to subparagraph (B) of  such  paragraph  one)  which is attributable to the tax for which the notice and demand is made  and which is not paid within ten days of such notice and demand.    (b) Deficiency due to negligence.---(1) If any part of a deficiency is  due  to  negligence  or intentional disregard of this article or article  nine, nine-a, nine-b or nine-c, or rules or regulations thereunder  (but  without  intent  to  defraud), there shall be added to the tax an amount  equal to five percent of the deficiency.    (2) There shall be added  to  the  tax  (in  addition  to  the  amount  determined  under  paragraph  one of this subsection) an amount equal to  fifty percent  of  the  interest  payable  under  section  one  thousand  eighty-four with respect to the portion of the underpayment described in  such   paragraph   one  which  is  attributable  to  the  negligence  or  intentional disregard referred to in such paragraph one, 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).    (3) If any payment is shown on a return made by a payor  with  respect  to  dividends,  patronage dividends and interest under subsection (a) of  section six thousand forty-two, subsection (a) of section  six  thousand  forty-four  or  subsection (a) of section six thousand forty-nine of the  internal revenue code of nineteen hundred fifty-four, respectively,  and  the  payee fails to include any portion of such payment in gross income,  as that term is defined in paragraph one of subsection  (d)  of  section  one  thousand  eighty-three, any portion of an underpayment attributable  to such failure shall be treated, for purposes of  this  subsection,  as  due to negligence in the absence of clear and convincing evidence to the  contrary.  If  any penalty is imposed under this subsection by reason of  the preceding sentence, the amount of the penalty imposed  by  paragraph  one  of  this  subsection  shall  be  five percent of the portion of the  underpayment which is attributable  to  the  failure  described  in  the  preceding sentence.    (c)  Failure  to  file declaration or underpayment of estimated tax.--  (1) If any taxpayer fails to file a declaration of estimated  tax  under  article  nine-A  of  this chapter, or fails to pay all or any part of an  amount which is applied as an installment against such estimated tax, it  shall be deemed to have made an underpayment  of  estimated  tax.  There  shall  be  added  to  the  tax  for  the  taxable  year an amount at the  underpayment rate set  by  the  commissioner  pursuant  to  section  one  thousand  ninety-six  of this article, or if no rate is set, at the rate  of seven  and  one-half  percent  per  annum  upon  the  amount  of  the  underpayment  for  the  period  of  the  underpayment but not beyond the  fifteenth day of the third month following  the  close  of  the  taxable  year.  The  amount  of  the  underpayment  shall be, with respect to any  installment of estimated tax computed on  the  basis  of  the  preceding  year's  tax,  the  excess  of  the  amount  required to be paid over the  amount, if any, paid on or before  the  last  day  prescribed  for  suchpayment  or, with respect to any other installment of estimated tax, the  excess of the amount of the installment which would be  required  to  be  paid  if  the  estimated tax were equal to ninety-one percent of the tax  shown  on  the  return  for the taxable year (or if no return was filed,  ninety-one percent of the tax for such year) over the amount, if any, of  the installment paid on or before  the  last  day  prescribed  for  such  payment.  In any case in which there would be no underpayment if "eighty  percent" were substituted for "ninety-one percent" each place it appears  in  this  subsection,  the  addition  to  the  tax  shall  be  equal  to  seventy-five percent of the amount otherwise determined. No underpayment  shall  be  deemed  to exist with respect to a declaration or installment  otherwise due on or after the termination of existence of the taxpayer.    (2) For purposes of applying the addition to tax for  an  underpayment  of  any  installment  of  estimated  tax  by  a  taxpayer subject to tax  pursuant to article thirty-three of this  chapter,  the  amount  of  tax  shall  be  determined  by  using the lesser of the differential earnings  rate (as described in subsection (c) of section eight  hundred  nine  of  the  internal revenue code) of the second tax year preceding the taxable  year for which the installment is made,  or  the  differential  earnings  rate  for  the  taxable  year  for  which  the installment is made. Such  addition to tax shall be applied to any taxable year without  regard  to  any adjustments to the differential earnings amount under subsection (f)  of  section  eight  hundred  nine  of the internal revenue code for such  year.    (3) The provisions of this subsection and subsections (d) and  (e)  of  this  section  shall  apply  to  the  failure  of  a  taxpayer to file a  declaration of estimated tax surcharge or the failure to pay all or  any  part  of  an  amount  which  is  applied  as an installment against such  estimated tax surcharge pursuant to sections one hundred ninety-seven-a,  one  hundred  ninety-seven-b,  two  hundred  thirteen-a,   two   hundred  thirteen-b,  fourteen hundred sixty, fourteen hundred sixty-one, fifteen  hundred thirteen and fifteen  hundred  fourteen  of  this  chapter.  For  purposes  of  applying  this section and subsections (d) and (e) of this  section to the estimated tax surcharge, where appropriate the term "tax"  shall be read to mean "tax surcharge," and the terms "amount required to  be paid," "amount which would be required to be paid," and "amount which  would have been required to be paid" shall be computed as the product of  (1) such amount computed without regard to the  tax  surcharges  imposed  under  sections one hundred eighty-four-a, one hundred eighty-six-c, one  hundred eighty-eight, two hundred nine-A, two hundred  nine-B,  fourteen  hundred  fifty-five-A,  fourteen  hundred  fifty-five-B, fifteen hundred  five-a, and fifteen hundred twenty of this  chapter,  and  (2)  the  MTA  percentage.  The term "MTA percentage" shall mean the product of (A) the  tax rate applicable under such sections imposing such surcharges and (B)  the percentage utilized in determining the  portion  of  the  taxpayer's  business   activity   carried   on   within  the  metropolitan  commuter  transportation district under such sections.    (d) Exception to addition  for  underpayment  of  estimated  tax.--The  addition to tax under subsection (c) with respect to any underpayment of  any  amount  which  is  applied  as an installment against estimated tax  under article nine-a, nine-b or nine-c shall not be imposed if the total  amount of all payments of estimated tax made on or before the last  date  prescribed  for  the  payment  of  any such amount equals or exceeds the  amount which would have been required to be paid on or before such  date  if the estimated tax were whichever of the following is the least--    (1)  The  tax  shown  on  the return of the taxpayer for the preceding  taxable year, if a return showing a liability for tax was filed  by  thetaxpayer  for  the  preceding taxable year and such preceding year was a  taxable year of twelve months, or    (2) An amount equal to the tax computed at the rates applicable to the  taxable  year,  but  otherwise  on  the  basis of the facts shown on the  return of the taxpayer for, and the law  applicable  to,  the  preceding  taxable year, or    (3)  Annualized  income  installment.  (A) General. An amount equal to  ninety-one percent of the tax for the taxable year computed on all items  entering into the computation of the tax or taxes of  the  taxpayer  for  the  taxable year under article nine, nine-A, thirty-two or thirty-three  of this chapter. For  purposes  of  computing  the  tax,  all  items  of  receipts, income and expenses shall be placed on an annualized basis--    (i) for the first three months of the taxable year, in the case of the  installment required to be paid in the sixth month,    (ii)  for the first six months of the taxable year, in the case of the  installment required to be paid in the ninth month, and    (iii) for the first nine months of the taxable year, in  the  case  of  the installment required to be paid in the twelfth month.    (B)  Special  rules.  For  purposes  of  subparagraph  (A),  items  of  receipts, income and expenses shall be placed  on  an  annualized  basis  by--    (i)  multiplying  such  items  by twelve (or, in the case of a taxable  year of less than twelve months, the number of  months  in  the  taxable  year), and    (ii)  dividing  the resulting amounts by the number of months referred  to in subparagraph (A) (or in subparagraph (C), if an  election  applies  to the taxable year under such subparagraph).    (C)  Election for different annualization periods. (i) If the taxpayer  makes an election under this clause--    (I) Clause (i) of subparagraph (A) of this paragraph shall be  applied  by substituting "four months" for "three months",    (II)  Clause  (ii)  of  subparagraph  (A)  of  this paragraph shall be  applied by substituting "seven months" for "six months",    (III) Clause (iii) of subparagraph (A)  of  this  paragraph  shall  be  applied by substituting "ten months" for "nine months".    (ii) If the taxpayer makes an election under this clause--    (I)  Clause (i) of subparagraph (A) of this paragraph shall be applied  by substituting "five months" for "three months",    (II) Clause (ii) of  subparagraph  (A)  of  this  paragraph  shall  be  applied by substituting "eight months" for "six months",    (III)  Clause  (iii)  of  subparagraph  (A) of this paragraph shall be  applied by substituting "eleven months" for "nine months".    (iii) An election under clause (i) or (ii) of this subparagraph  shall  apply  to  the taxable year for which made and such an election shall be  effective only if made on or before the date  required  for  filing  the  declaration of estimated tax for such taxable year, or    (4)  (A)  If the base period percentage for any six consecutive months  of the taxable year equals or exceeds seventy percent, an  amount  equal  to ninety-one percent of the tax determined in the following manner--    (i)  take  the items entering into the computation of the tax or taxes  of the taxpayer  for  the  taxable  year  under  article  nine,  nine-A,  thirty-two  or  thirty-three  of this chapter, for all months during the  taxable year preceding the filing month,    (ii) divide such amounts by the base period percentage for all  months  during the taxable year preceding the filing month,    (iii)  determine  the tax on the amounts determined under clause (ii),  and(iv) multiply the tax determined under clause (iii) by the base period  percentage for the filing month and all months during the  taxable  year  preceding the filing month.    (B) For purposes of subparagraph (A)--    (i)  the  base period percentage for any period of months shall be the  average percent which the taxable income for the corresponding months in  each of the three preceding taxable years bears to  the  taxable  income  for  the  three  preceding  taxable  years.  The  tax  commission may by  regulations provide for the determination of the base period  percentage  in  the  case  of  reorganizations,  new corporations, and other similar  circumstances, and    (ii) the term "filing month" means the month in which the  installment  is required to be paid.    (5)  In the case of any declaration installment, any reduction in such  installment resulting from the application of paragraph three or four of  this subsection shall be recaptured by increasing the amount of the next  installment determined under paragraph one or two of this subsection  or  paragraph  one  of  subsection (c) of this section by the amount of such  reduction (and by increasing subsequent installments to the extent  that  the  reduction has not previously been recaptured under this paragraph).  For purposes of the preceding sentence, a declaration installment  means  any  installment  of  estimated  tax  other  than  the  mandatory  first  installment required under paragraph (a) of subdivision one  of  section  one  hundred  ninety-seven-b,  subdivision  (a)  of  section two hundred  thirteen-b, subsection (a) of  section  fourteen  hundred  sixty-one  or  subdivision (a) of section fifteen hundred fourteen of this chapter.    For   the  purposes  of  this  subsection  the  amounts  specified  in  paragraphs (2), (3) and (4) shall be  computed  without  regard  to  any  increase  in  the  rates  applicable  to the taxable year which may have  become effective after the first day of the seventh month of such year.    (e) (1) Paragraphs (1) and (2) of subsection (d) of this section shall  not  apply  in  the  case  of  any  corporation  (or   any   predecessor  corporation)  which  had  entire  net  income,  or  the  portion thereof  allocated within the state, of one  million  dollars  or  more  for  any  taxable  year  during  the three taxable years immediately preceding the  taxable year  involved;  provided,  however,  that  in  the  case  of  a  corporation  subject  to tax under section fifteen hundred two-a of this  chapter, paragraphs (1) and (2) of subsection (d) of this section  shall  not  apply  if  such  corporation  had entire net income, or the portion  thereof allocated within the state, of one million dollars or  more  for  any  of  the  three taxable years immediately preceding the taxable year  involved, or if the direct premiums subject to tax under section fifteen  hundred two-a of this chapter of the corporation for any of  such  three  preceding  taxable  years  beginning  on  or  after  January  first, two  thousand three equals or  exceeds  three  million  seven  hundred  fifty  thousand dollars.    (2)  In  the  case  of  taxpayers  described  in paragraph one of this  subsection,  paragraph  one  of  subsection  (c),  subparagraph  (A)  of  paragraph  three  of  subsection  (d), and subparagraph (A) of paragraph  four of subsection (d) of this section shall be applied by  substituting  "one hundred percent" for "ninety-one percent" each place it appears.    (f)  Deficiency due to fraud.---(1) If any part of a deficiency is due  to fraud, there shall be added to the tax an amount equal to  two  times  the deficiency.    (2)  The addition to tax under this subsection shall be in lieu of any  other addition to tax imposed by subsection (a) or (b).    (g) Additional penalty.---Any person who with fraudulent intent  shall  fail to pay under article nine, nine-a, nine-b or nine-c, any tax, or tomake,  render,  sign  or  certify any return or declaration of estimated  tax, or to supply any information within the time required by  or  under  such  article,  shall be liable to penalty of not more than one thousand  dollars,  in  addition to any other amounts required under this article,  to be imposed, assessed and collected by the  tax  commission.  The  tax  commission  shall have the power, in its discretion, to waive, reduce or  compromise any penalty under this subsection.    (h) Additions treated as tax.---The additions  to  tax  and  penalties  provided  by this section shall be paid upon notice and demand and shall  be assessed, collected and paid in the same manner  as  taxes,  and  any  reference in this article to tax imposed by article nine, nine-a, nine-b  or  nine-c  shall  be  deemed  also to refer to the additions to tax and  penalties provided by this section. For purposes of section one thousand  eighty-one, this subsection shall not apply to---    (1) any addition to tax under subsection (a) except as to that portion  attributable to a deficiency;    (2) any addition to tax under subsection (c) or (o); and    (3) any additional penalties under subsections (g) and (l).    (i) Determination of deficiency.---For purposes of subsections (b) and  (f), the amount shown as the tax by the taxpayer upon its  return  shall  be  taken  into account in determining the amount of the deficiency only  if such return was filed on or before the last day  prescribed  for  the  filing  of  such return, determined with regard to any extension of time  for such filing.    (j) Person defined.---For purposes of subsections  (g)  and  (l),  the  term  person includes an individual, corporation, partnership or limited  liability  company  or  an  officer  or  employee  of  any   corporation  (including  a  dissolved  corporation),  or  a member or employee of any  partnership, or a member, employee or manager  of  a  limited  liability  company,  who  as  such  officer, employee, manager or member is under a  duty to perform the act in respect of which the violation occurs.    * (k) Substantial understatement of liability.-- (1)  If  there  is  a  substantial  understatement  of tax for any taxable year, there shall be  added to the tax an amount equal to ten percent of  the  amount  of  any  underpayment  attributable  to such understatement. For purposes of this  subsection, there is a substantial understatement of tax for any taxable  year if the amount of the understatement for the  taxable  year  exceeds  the greater of ten percent of the tax required to be shown on the return  for  the  taxable  year  or  five  thousand dollars. For purposes of the  preceding sentence, the term "understatement" means the  excess  of  the  amount  of  the  tax  required to be shown on the return for the taxable  year, over the amount of the tax imposed which is shown  on  the  return  reduced  by  any rebate (within the meaning of subsection (h) of section  one thousand eighty-one of this article). The excess under the preceding  sentence shall be determined without regard to items to which subsection  (k-1) of this section applies. The commissioner may  waive  all  or  any  part of the addition to tax provided by this section on a showing by the  taxpayer that there was reasonable cause for the understatement (or part  thereof) and that the taxpayer acted in good faith.    (2)  The  amount  of  the  understatement  under paragraph one of this  subsection shall be reduced by that portion of the understatement  which  is  attributable to (A) the tax treatment of any item by the taxpayer if  there is or was substantial authority for such  treatment,  or  (B)  any  item  if  the  relevant  facts  affecting  the  item's tax treatment are  adequately disclosed in the return or in a  statement  attached  to  the  return.    (3)(A)  Subparagraph (B) of paragraph two of this subsection shall not  apply to any item attributable to a tax shelter.(B) For purposes of this paragraph, the term "tax shelter" means    (i) a partnership or other entity,    (ii) any investment plan or arrangement, or    (iii) any other plan or arrangement,  if   a  significant  purpose  of  such  partnership,  entity,  plan,  or  arrangement is the avoidance or evasion of tax.    * NB Effective until July 1, 2011    * (k)  Substantial  understatement  of  liability.--If  there   is   a  substantial  understatement  of tax for any taxable year, there shall be  added to the tax an amount equal to ten percent of  the  amount  of  any  underpayment  attributable  to such understatement. For purposes of this  subsection, there is a substantial understatement of tax for any taxable  year if the amount of the understatement for the  taxable  year  exceeds  the greater of ten percent of the tax required to be shown on the return  for  the  taxable  year  or  five  thousand dollars. For purposes of the  preceding sentence, the term "understatement" means the  excess  of  the  amount  of  the  tax  required to be shown on the return for the taxable  year, over the amount of the tax imposed which is shown  on  the  return  reduced  by  any rebate (within the meaning of subsection (h) of section  one thousand eighty-one). The amount of  such  understatement  shall  be  reduced  by  that portion of the understatement which is attributable to  the tax treatment of any item  by  the  taxpayer  if  there  is  or  was  substantial  authority  for  such treatment, or any item with respect to  which  the  relevant  facts  affecting  the  item's  tax  treatment  are  adequately  disclosed  in  the  return or in a statement attached to the  return. The tax commission may waive all or any part of the addition  to  tax provided by this section on a showing by the taxpayer that there was  reasonable  cause  for the understatement (or part thereof) and that the  taxpayer acted in good faith.    * NB Effective July 1, 2011    * (k-1) Reportable transaction understatement.-- (1) If a taxpayer has  a reportable transaction understatement  for  any  taxable  year,  there  shall  be  added  to  the  tax  an amount equal to twenty percent of the  amount of such understatement.    (2) For purposes of this section,  the  term  "reportable  transaction  understatement" means the sum of    (A) the product of--    (i)  the  amount  of  the increase (if any) in the applicable tax base  which results from a difference between the proper tax treatment  of  an  item  to which this section applies and the taxpayer's treatment of such  item (as shown on the taxpayer's return of tax), and    (ii) the highest rate of tax imposed under the article of this chapter  that applies to the taxpayer, and    (B) the amount of the decrease (if any) in  the  aggregate  amount  of  credits determined under the article of this chapter that applies to the  taxpayer   which  results  from  a  difference  between  the  taxpayer's  treatment of an item to which this section  applies  (as  shown  on  the  taxpayer's return of tax) and the proper tax treatment of such item.    For  purposes  of subparagraph (A) of this paragraph, any reduction of  the excess of deductions allowed for the taxable year over gross  income  for  such  year, and any reduction in the amount of capital losses which  would (without regard to section one thousand two hundred eleven of  the  internal  revenue code) be allowed for such year, shall be treated as an  increase in the applicable tax base.    (3) This subsection shall apply to any item which is attributable to--    (A) any listed transaction, and(B) any reportable transaction (other than a listed transaction) if  a  significant  purpose  of such transaction is the avoidance or evasion of  tax.    (4)  Paragraph one of this subsection shall be applied by substituting  "thirty percent" for "twenty percent" with respect to the portion of any  reportable  transaction  understatement  with  respect  to   which   the  requirement  of  clause (i) of subparagraph (B) of paragraph ten of this  subsection is not met.    (5)  For  purposes  of  this   subsection,   the   terms   "reportable  transaction"  and  "listed  transaction" have the meanings given to such  terms by section twenty-five  of  this  chapter,  the  term  "reportable  transaction"  shall  include  a  "New  York  reportable  transaction" as  defined in such section twenty-five, and the term  "listed  transaction"  shall  include any transaction designated as a tax avoidance transaction  pursuant to such section twenty-five.    (6) In the case of an understatement (as defined in subsection (k)  of  this section)    (A)  the  amount  of such understatement (determined without regard to  this paragraph) shall be increased by the aggregate amount of reportable  transaction understatements for purposes  of  determining  whether  such  understatement  is  a substantial understatement under subsection (k) of  this section, and (B) the addition to tax under subsection (k)  of  this  section  shall apply only to the excess of the amount of the substantial  understatement (if any) after the application  of  subparagraph  (A)  of  this  paragraph  over  the  aggregate  amount  of reportable transaction  understatements.    (7) References to an understatement (or a  deficiency)  in  subsection  (f)  of  this  section  shall  be  treated  as including references to a  reportable transaction understatement.    (8)  This  subsection  shall  not  apply  to  any   portion   of   any  understatement  on  which  a  penalty is imposed under subsection (f) of  this section.    (9) Except as provided in regulations prescribed by the  commissioner,  in  no  event  shall  any  tax  treatment  included with an amendment or  supplement to a return of tax be taken into account in  determining  the  amount  of any reportable transaction understatement if the amendment or  supplement is filed after the earlier of the date the taxpayer is  first  contacted by the commissioner regarding the examination of the return or  such other date as is specified by the commissioner.    (10)(A) No penalty shall be imposed under this subsection with respect  to any portion of a reportable transaction understatement if it is shown  that there was a reasonable cause for such portion and that the taxpayer  acted in good faith with respect to such portion.    (B)  Subparagraph  (A)  of  this  paragraph  shall  not  apply  to any  reportable transaction understatement unless:    (i) the relevant facts affecting the tax treatment  of  the  item  are  adequately  disclosed  in  accordance  with  section twenty-five of this  chapter,    (ii) there is or was substantial authority for such treatment, and    (iii) the taxpayer reasonably believed that such  treatment  was  more  likely than not the proper treatment.  A  taxpayer  failing  to  adequately disclose in accordance with section  twenty-five of this chapter shall be treated as meeting the requirements  of clause (i) of this subparagraph if the penalty for such  failure  was  rescinded under subsection (p) of this section.    (11)(A) A taxpayer shall be treated as having a reasonable belief with  respect to the tax treatment of an item only if such belief(i) is based on the facts and law that exist at the time the return of  tax which includes such tax treatment is filed, and    (ii) relates solely to the taxpayer's chances of success on the merits  of  such treatment and does not take into account the possibility that a  return will not be audited, such treatment will not be raised on  audit,  or such treatment will be resolved through settlement if it is raised.    (B)(i) An opinion of a tax advisor may not be relied upon to establish  the reasonable belief of a taxpayer if    (I)  the tax advisor is described in clause (ii) of this subparagraph,  or    (II) the opinion is described in clause (iii) of this subparagraph.    (ii) A tax advisor is described in this clause if the tax advisor:    (I) is a material advisor (within the meaning of section six  thousand  one  hundred  eleven of the internal revenue code or within such meaning  as it also applies to a New York reportable transaction  as  defined  in  section   twenty-five   of   this   chapter)  and  participates  in  the  organization, management, promotion, or sale of the  transaction  or  is  related  (within  the  meaning  of subsection (b) of section two hundred  sixty-seven of the internal revenue code or subsection  (b)  of  section  seven  hundred  seven of the internal revenue code) to any person who so  participates,    (II) is compensated directly or indirectly by a material advisor  with  respect to the transaction,    (III)  has  a fee arrangement with respect to the transaction which is  contingent on all  or  part  of  the  intended  tax  benefits  from  the  transaction being sustained, or    (IV)  has  a  disqualifying  financial  interest  with  respect to the  transaction.    (iii) For purposes of clause (i) of this subparagraph, an  opinion  is  disqualified if the opinion    (I)  is  based on unreasonable factual or legal assumptions (including  assumptions as to future events),    (II) unreasonably relies on representations, statements, findings,  or  agreements of the taxpayer or any other person,    (III) does not identify and consider all relevant facts, or    (IV)  fails  to  meet  any  other  requirement as the commissioner may  prescribe.    * NB Repealed July 1, 2011    (k-2) No penalty will be imposed pursuant to subsection (c) or (k)  of  this section for a taxable year beginning on or after January first, two  thousand  eight  and  before  January first, two thousand nine resulting  from the denial of an empire zone tax credit  claimed  by  the  taxpayer  because  an empire zone retention certificate was not issued pursuant to  subdivision (w) of  section  nine  hundred  fifty-nine  of  the  general  municipal  law  to the empire zone enterprise which is the basis for the  tax credit or credits claimed on the return or report.    (l) Aiding or assisting in the giving of fraudulent returns,  reports,  statements or other documents.--(1) Any person who, with the intent that  tax  be evaded, shall, for a fee or other compensation or as an incident  to the performance of other services  for  which  such  person  receives  compensation,  aid  or  assist  in,  or  procure, counsel, or advise the  preparation or presentation under, or  in  connection  with  any  matter  arising  under article nine, nine-A, nine-B or nine-C of this chapter of  any return, report, declaration, statement or other  document  which  is  fraudulent  or  false  as to any material matter, or supply any false or  fraudulent information, whether or not such falsity or fraud is with the  knowledge or consent of the person authorized  or  required  to  presentsuch  return, report, declaration, statement or other document shall pay  a penalty not exceeding ten thousand dollars.    (2)  For  purposes  of  paragraph  one  of  this  subsection, the term  "procures" includes ordering (or otherwise causing) a subordinate to  do  an  act, and knowing of, and not attempting to prevent, participation by  a subordinate in an act. The term "subordinate" means any  other  person  (whether  or not a director, officer, employee, or agent of the taxpayer  involved) over whose activities the person has  direction,  supervision,  or control.    (3)  For  purposes  of  paragraph  one  of  this  subsection, a person  furnishing typing, reproducing,  or  other  mechanical  assistance  with  respect  to  a document shall not be treated as having aided or assisted  in the preparation of such document by reason of such assistance.    (4) The penalty imposed by this subsection shall be in addition to any  other penalty provided by law.    (m) Unwarranted reduction in utility  costs  in  an  empire  zone.  If  during  a  taxable  year a taxpayer has received a reduction in the rate  charged for gas, electric, steam or water sold, or gas, electric,  steam  or  water service rendered, pursuant to subdivision eight of section one  hundred eighty-six-a of this chapter, based upon a certification  as  to  the  claiming  of  a  credit  under  subsection  nineteen of section two  hundred ten, subsection (e) of section  fourteen  hundred  fifty-six  or  subdivision  (g)  of section fifteen hundred eleven of this chapter, and  it is finally determined that such taxpayer  is  not  entitled  to  such  credit  in  any  part,  such taxpayer shall be liable to a penalty in an  amount equal to such reduction in cost, with interest from the last  day  of such year, at the rate applicable to underpayments of tax pursuant to  this article. The tax commission shall have the power, in its discretion  to waive, reduce or compromise such penalty.    (n) Failure to file report of information relating to certain interest  payments.--In case of failure to file the report of information required  under  subdivision  two-a  of  section  two hundred eleven, unless it is  shown that such failure is due  to  reasonable  cause  and  not  due  to  willful  neglect,  there  shall  be  added  to the tax a penalty of five  hundred dollars.    (o) Failure to include on  return  information  relating  to  issuer's  allocation  percentage. Where a return is filed but does not contain (1)  the information necessary to compute the taxpayer's issuer's  allocation  percentage,   as  defined  in  subparagraph  one  of  paragraph  (b)  of  subdivision three of section two hundred ten of this chapter, where  the  same  is  called  for  on  the  return,  or, (2) the taxpayer's issuer's  allocation percentage, where the same is called for on  the  return  but  where  all  of  the  information  necessary  for the computation of such  percentage is not called for on the return, then unless it is shown that  such failure is due to reasonable cause and not due to  willful  neglect  there shall be added to the tax a penalty of five hundred dollars.    * (p)   Failure   to   disclose   or  provide  reportable  transaction  information.  -- (1) Any person who fails to file, disclose  or  provide  any  statement,  return  or  other  document  which  is  required  under  subdivision (a) of section twenty-five  of  this  chapter  shall  pay  a  penalty in the amount determined under paragraph two of this subsection.    (2)(A)  Except  as provided in subparagraph (B) of this paragraph, the  amount of the penalty under paragraph one of this  subsection  shall  be  twenty thousand dollars.    (B)  The  amount of the penalty under paragraph one of this subsection  with respect to a listed transaction shall be fifty thousand dollars.    (3)  For  purposes  of  this   subsection,   the   terms   "reportable  transaction"  and  "listed  transaction" shall have the same meanings asused in section  twenty-five  of  this  chapter,  the  term  "reportable  transaction"  shall  include  a  "New  York  reportable  transaction" as  defined in such section twenty-five, and the term  "listed  transaction"  shall  include any transaction designated as a tax avoidance transaction  pursuant to such section twenty-five.    (4) The commissioner may rescind all or any  portion  of  any  penalty  imposed by this subsection with respect to any violation if    (A)  the  violation  is with respect to a reportable transaction other  than a listed transaction, and    (B)  rescinding  the  penalty  would  promote  compliance   with   the  requirements of this chapter and effective tax administration.    (5)  The  penalty  imposed by this section shall be in addition to any  other penalty imposed by this chapter.    * NB Repealed July 1, 2011    * (q) Failure to disclose or provide reportable transaction  return.--  (1)  Any  person  who  fails to file, disclose or provide any statement,  return or other document which is  required  under  subdivision  (b)  of  section  twenty-five  of  this chapter shall pay a penalty in the amount  determined under paragraph two of this subsection.    (2)(A) Except as provided in subparagraph (B) of this  paragraph,  the  amount  of  the  penalty under paragraph one of this subsection shall be  twenty thousand dollars.    (B) The amount of the penalty under paragraph one of  this  subsection  with respect to a listed transaction shall be the greater of    (i) fifty thousand dollars or,    (ii)  fifty percent of the gross income that the organizer or material  advisor derived with respect to activities that were the basis  for  the  requirement to file, disclose or provide information pursuant to section  six  thousand  eleven  of  the internal revenue code, to the extent such  gross income is attributable to the avoidance of any tax  imposed  under  article nine, nine-A, thirty-two, or thirty-three of this chapter.    (C) Clause (ii) of subparagraph (B) of this paragraph shall be applied  by  substituting  "seventy-five percent" for "fifty percent" in the case  of an intentional failure or act described  in  paragraph  one  of  this  subsection.    (3)   For   purposes   of   this  subsection,  the  terms  "reportable  transaction" and "listed transaction" shall have the  same  meanings  as  used  in  section  twenty-five  of  this  chapter,  the term "reportable  transaction" shall  include  a  "New  York  reportable  transaction"  as  defined  in  such section twenty-five, and the term "listed transaction"  shall include any transaction designated as a tax avoidance  transaction  pursuant to such section twenty-five.    (4)  The  commissioner  may  rescind all or any portion of any penalty  imposed by this subsection with respect to any violation if    (A) the violation is with respect to a  reportable  transaction  other  than a listed transaction, and    (B)   rescinding   the  penalty  would  promote  compliance  with  the  requirements of this chapter and effective tax administration.    (5) The penalty imposed by this subsection shall be in addition to any  other penalty imposed by this chapter, except that no penalty  shall  be  imposed  under  subparagraph  (A)  or  clause (i) of subparagraph (B) of  paragraph two of subsection (y) of section six  hundred  eighty-five  of  this  chapter for the same failure that is the basis for a penalty under  this subsection. Nothing in this paragraph shall preclude the imposition  of a penalty under clause (ii) of subparagraph (B) of paragraph  two  of  subsection  (y)  of  section six hundred eighty-five of this chapter for  the same failure that is the basis for a penalty under  clause  (ii)  of  subparagraph (B) of paragraph two of this subsection.* NB Repealed July 1, 2011    * (r) Failure to maintain list of advisees.-- (1) If any person who is  required to maintain a list under subdivision (c) of section twenty-five  of  this  chapter  fails to make a duplicate of such list available upon  written request by the commissioner in accordance with such  subdivision  within  twenty business days after the date of such request, such person  shall pay a penalty of ten thousand dollars for each day of such failure  after such twentieth day.    (2) No penalty shall be imposed by paragraph one  of  this  subsection  with  respect  to  the  failure  on  any  day  if such failure is due to  reasonable cause.    * NB Repealed July 1, 2011    * (s) Tax preparer penalty.-- (1) If:    (A) any part of any understatement of liability with  respect  to  any  return  or claim for refund is due to a position for which there was not  a reasonable belief that the tax treatment in  that  position  was  more  likely than not the proper treatment,    (B)  any  person  who  is  a  tax return preparer with respect to such  return or claim knew (or reasonably should have known) of such position,  and    (C) such position was not disclosed as provided in subsection  (k)  of  this  section  or there was no reasonable basis for the tax treatment of  that position, such person shall pay a penalty of  up  to  one  thousand  dollars  with  respect  to  such return or claim unless it is shown that  there is reasonable cause for the understatement and such  person  acted  in good faith.    (2) If any part of any understatement of liability with respect to any  return or claim for refund is due    (A) to a willful attempt in any manner to understate the liability for  tax by a person who is a tax return preparer with respect to such return  or claim, or    (B)  to  any reckless or intentional disregard of rules or regulations  by any such person, such person shall  pay  a  penalty  of  up  to  five  thousand  dollars  with respect to such return or claim. With respect to  any return or claim, the amount of the penalty payable by any person  by  reason  of  this paragraph shall be reduced by the amount of the penalty  paid by such person by reason of paragraph one of this subsection.    (3) For purposes of  this  subsection,  the  term  "understatement  of  liability"  means  any  understatement  of  the  net amount payable with  respect to any tax imposed under article nine,  nine-A,  thirty-two,  or  thirty-three  of  this  chapter  or  any overstatement of the net amount  creditable or refundable with respect to any such tax.    (4) This subsection shall not apply if the  penalty  under  subsection  (l)  of  this section is imposed on the tax return preparer with respect  to such understatement.    * NB Repealed July 1, 2011    * (t) Promoting abusive tax shelters.-- (1) Any person who    (A)(i) organizes (or assists in the organization of)    (I) a partnership or other entity,    (II) any investment plan or arrangement, or    (III) any other plan or arrangement, or    (ii) participates (directly or indirectly) in the sale of any interest  in an entity or plan or arrangement referred to in clause  (i)  of  this  subparagraph, and    (B) makes or furnishes or causes another person to make or furnish (in  connection with such organization or sale)    (i)  a  statement with respect to the allowability of any deduction or  credit, the excludability of any income, or the securing  of  any  othertax  benefit  by  reason  of  holding  an  interest  in  the  entity  or  participating in the plan or arrangement which the person knows  or  has  reason to know is false or fraudulent as to any material matter, or    (ii) a gross valuation overstatement as to any material matter, and    (C) satisfies any of the following conditions    (i) the person is organized in this state,    (ii) the person is doing business in this state,    (iii) the person is deriving income in this state, or    (iv)   the   person  conducts  any  of  the  activities  described  in  subparagraph (A) or (B) of this paragraph within the state of New York,  shall pay, with respect to each activity described in  subparagraph  (A)  of  this  paragraph,  a penalty equal to one thousand dollars or, if the  person establishes that it is lesser, one hundred percent of  the  gross  income  derived  (or to be derived) by such person from such activity to  the extent such gross income is attributed to the avoidance of  any  tax  imposed  under articles nine, nine-A, thirty-two or thirty-three of this  chapter; provided, however, that if an activity with respect to which  a  penalty  imposed under this subsection involves a statement described in  clause (i) of subparagraph (B) of paragraph one of this subsection,  the  penalty  shall be equal to fifty percent of the gross income derived (or  to be derived) from that activity within the  state  by  the  person  on  which  the  penalty  is imposed. For purposes of the preceding sentence,  activities described in clause (i) of subparagraph (A) of this paragraph  with respect to each  entity  or  arrangement  shall  be  treated  as  a  separate  activity  and  participation  in each sale described in clause  (ii) of subparagraph (A) of this paragraph shall be so treated.    (2)(A) For purposes of this  subsection,  the  term  "gross  valuation  overstatement"  means  any  statement as to the value of any property or  services if--    (i) the value so stated exceeds two  hundred  percent  of  the  amount  determined to be the correct valuation, and    (ii) the value of such property or services is directly related to the  amount  of  any  deduction or credit allowable under this chapter to any  participant.    (B) The commissioner may waive all or any part of the penalty provided  by paragraph one of this subsection with respect to any gross  valuation  overstatement  on  a  showing  that there was a reasonable basis for the  valuation and that such valuation was made in good faith.    (3) The penalty imposed by this subsection shall be in addition to any  other penalty provided by law.    * NB Repealed July 1, 2011    (u) False or fraudulent document penalty. Any taxpayer that submits  a  false  or  fraudulent  document  to  the department will be subject to a  penalty of one hundred dollars per document submitted, or  five  hundred  dollars  per  tax  return submitted. This penalty will be in addition to  any other penalty or addition provided by law.

State Codes and Statutes

State Codes and Statutes

Statutes > New-york > Tax > Article-27 > 1085

§  1085.  Additions  to  tax and civil penalties.---(a) (1) Failure to  file return.---(A) In case of failure to file  a  return  under  article  nine,  nine-a,  nine-b  or  nine-c  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 and not due to  willful neglect, there shall be added to the amount required to be shown  as tax on such return five percent of the amount  of  such  tax  if  the  failure  is for not more than one month, with an additional five percent  for each additional month or fraction thereof during which such  failure  continues, not exceeding twenty-five percent in the aggregate.    (B) In the case of a failure to file a return of tax within sixty 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 (A) of this paragraph shall not be  less than the lesser of one hundred dollars or one  hundred  percent  of  the amount required to be shown as tax on such return.    (C)  For  purposes of this paragraph, the amount of 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  upon the return.    (2) Failure to pay tax shown on return.--In case of failure to pay the  amounts shown as tax on any return required to be  filed  under  article  nine,  nine-a,  nine-b  or  nine-c  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  and  not  due  to  willful neglect, there shall be added to the amount shown as tax on such  return one-half of one per cent of the amount of such tax if the failure  is  not  for more than one month, with an additional one-half of one per  cent for each additional month or fraction  thereof  during  which  such  failure  continues, not exceeding twenty-five per cent 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 upon 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 under article nine or nine-a which is  not  so  shown  (including  an  assessment made pursuant to subsection (a) of  section one thousand  eighty-two  of  this  article)  within  twenty-one  calendar  days of the date of a notice and demand therefor (ten business  days if the amount for which such notice and demand is  made  equals  or  exceeds  one  hundred  thousand  dollars),  unless it is shown that such  failure is due to reasonable cause 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 of such tax if the failure is not for more than  one  month,  with  an  additional  one-half  of  one  percent  for  each  additional   month   or  fraction  thereof  during  which  such  failure  continues, not exceeding twenty-five percent 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.--(A)  With  respect  to  any  return,  the amount of the addition under  paragraph one of this subsection shall be reduced by the amount  of  the  addition  under  paragraph two of this subsection for any month to which  an addition applies under both paragraphs  one  and  two.  In  any  case  described  in  subparagraph (B) of paragraph one of this subsection, the  amount of the addition under such paragraph one  shall  not  be  reduced  below the amount provided in such subparagraph.    (B)  With  respect  to  any return, the maximum amount of the addition  permitted under paragraph three of this subsection shall be  reduced  by  the  amount  of  the  addition  under  paragraph  one of this subsection  (determined without regard to subparagraph (B) of  such  paragraph  one)  which is attributable to the tax for which the notice and demand is made  and which is not paid within ten days of such notice and demand.    (b) Deficiency due to negligence.---(1) If any part of a deficiency is  due  to  negligence  or intentional disregard of this article or article  nine, nine-a, nine-b or nine-c, or rules or regulations thereunder  (but  without  intent  to  defraud), there shall be added to the tax an amount  equal to five percent of the deficiency.    (2) There shall be added  to  the  tax  (in  addition  to  the  amount  determined  under  paragraph  one of this subsection) an amount equal to  fifty percent  of  the  interest  payable  under  section  one  thousand  eighty-four with respect to the portion of the underpayment described in  such   paragraph   one  which  is  attributable  to  the  negligence  or  intentional disregard referred to in such paragraph one, 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).    (3) If any payment is shown on a return made by a payor  with  respect  to  dividends,  patronage dividends and interest under subsection (a) of  section six thousand forty-two, subsection (a) of section  six  thousand  forty-four  or  subsection (a) of section six thousand forty-nine of the  internal revenue code of nineteen hundred fifty-four, respectively,  and  the  payee fails to include any portion of such payment in gross income,  as that term is defined in paragraph one of subsection  (d)  of  section  one  thousand  eighty-three, any portion of an underpayment attributable  to such failure shall be treated, for purposes of  this  subsection,  as  due to negligence in the absence of clear and convincing evidence to the  contrary.  If  any penalty is imposed under this subsection by reason of  the preceding sentence, the amount of the penalty imposed  by  paragraph  one  of  this  subsection  shall  be  five percent of the portion of the  underpayment which is attributable  to  the  failure  described  in  the  preceding sentence.    (c)  Failure  to  file declaration or underpayment of estimated tax.--  (1) If any taxpayer fails to file a declaration of estimated  tax  under  article  nine-A  of  this chapter, or fails to pay all or any part of an  amount which is applied as an installment against such estimated tax, it  shall be deemed to have made an underpayment  of  estimated  tax.  There  shall  be  added  to  the  tax  for  the  taxable  year an amount at the  underpayment rate set  by  the  commissioner  pursuant  to  section  one  thousand  ninety-six  of this article, or if no rate is set, at the rate  of seven  and  one-half  percent  per  annum  upon  the  amount  of  the  underpayment  for  the  period  of  the  underpayment but not beyond the  fifteenth day of the third month following  the  close  of  the  taxable  year.  The  amount  of  the  underpayment  shall be, with respect to any  installment of estimated tax computed on  the  basis  of  the  preceding  year's  tax,  the  excess  of  the  amount  required to be paid over the  amount, if any, paid on or before  the  last  day  prescribed  for  suchpayment  or, with respect to any other installment of estimated tax, the  excess of the amount of the installment which would be  required  to  be  paid  if  the  estimated tax were equal to ninety-one percent of the tax  shown  on  the  return  for the taxable year (or if no return was filed,  ninety-one percent of the tax for such year) over the amount, if any, of  the installment paid on or before  the  last  day  prescribed  for  such  payment.  In any case in which there would be no underpayment if "eighty  percent" were substituted for "ninety-one percent" each place it appears  in  this  subsection,  the  addition  to  the  tax  shall  be  equal  to  seventy-five percent of the amount otherwise determined. No underpayment  shall  be  deemed  to exist with respect to a declaration or installment  otherwise due on or after the termination of existence of the taxpayer.    (2) For purposes of applying the addition to tax for  an  underpayment  of  any  installment  of  estimated  tax  by  a  taxpayer subject to tax  pursuant to article thirty-three of this  chapter,  the  amount  of  tax  shall  be  determined  by  using the lesser of the differential earnings  rate (as described in subsection (c) of section eight  hundred  nine  of  the  internal revenue code) of the second tax year preceding the taxable  year for which the installment is made,  or  the  differential  earnings  rate  for  the  taxable  year  for  which  the installment is made. Such  addition to tax shall be applied to any taxable year without  regard  to  any adjustments to the differential earnings amount under subsection (f)  of  section  eight  hundred  nine  of the internal revenue code for such  year.    (3) The provisions of this subsection and subsections (d) and  (e)  of  this  section  shall  apply  to  the  failure  of  a  taxpayer to file a  declaration of estimated tax surcharge or the failure to pay all or  any  part  of  an  amount  which  is  applied  as an installment against such  estimated tax surcharge pursuant to sections one hundred ninety-seven-a,  one  hundred  ninety-seven-b,  two  hundred  thirteen-a,   two   hundred  thirteen-b,  fourteen hundred sixty, fourteen hundred sixty-one, fifteen  hundred thirteen and fifteen  hundred  fourteen  of  this  chapter.  For  purposes  of  applying  this section and subsections (d) and (e) of this  section to the estimated tax surcharge, where appropriate the term "tax"  shall be read to mean "tax surcharge," and the terms "amount required to  be paid," "amount which would be required to be paid," and "amount which  would have been required to be paid" shall be computed as the product of  (1) such amount computed without regard to the  tax  surcharges  imposed  under  sections one hundred eighty-four-a, one hundred eighty-six-c, one  hundred eighty-eight, two hundred nine-A, two hundred  nine-B,  fourteen  hundred  fifty-five-A,  fourteen  hundred  fifty-five-B, fifteen hundred  five-a, and fifteen hundred twenty of this  chapter,  and  (2)  the  MTA  percentage.  The term "MTA percentage" shall mean the product of (A) the  tax rate applicable under such sections imposing such surcharges and (B)  the percentage utilized in determining the  portion  of  the  taxpayer's  business   activity   carried   on   within  the  metropolitan  commuter  transportation district under such sections.    (d) Exception to addition  for  underpayment  of  estimated  tax.--The  addition to tax under subsection (c) with respect to any underpayment of  any  amount  which  is  applied  as an installment against estimated tax  under article nine-a, nine-b or nine-c shall not be imposed if the total  amount of all payments of estimated tax made on or before the last  date  prescribed  for  the  payment  of  any such amount equals or exceeds the  amount which would have been required to be paid on or before such  date  if the estimated tax were whichever of the following is the least--    (1)  The  tax  shown  on  the return of the taxpayer for the preceding  taxable year, if a return showing a liability for tax was filed  by  thetaxpayer  for  the  preceding taxable year and such preceding year was a  taxable year of twelve months, or    (2) An amount equal to the tax computed at the rates applicable to the  taxable  year,  but  otherwise  on  the  basis of the facts shown on the  return of the taxpayer for, and the law  applicable  to,  the  preceding  taxable year, or    (3)  Annualized  income  installment.  (A) General. An amount equal to  ninety-one percent of the tax for the taxable year computed on all items  entering into the computation of the tax or taxes of  the  taxpayer  for  the  taxable year under article nine, nine-A, thirty-two or thirty-three  of this chapter. For  purposes  of  computing  the  tax,  all  items  of  receipts, income and expenses shall be placed on an annualized basis--    (i) for the first three months of the taxable year, in the case of the  installment required to be paid in the sixth month,    (ii)  for the first six months of the taxable year, in the case of the  installment required to be paid in the ninth month, and    (iii) for the first nine months of the taxable year, in  the  case  of  the installment required to be paid in the twelfth month.    (B)  Special  rules.  For  purposes  of  subparagraph  (A),  items  of  receipts, income and expenses shall be placed  on  an  annualized  basis  by--    (i)  multiplying  such  items  by twelve (or, in the case of a taxable  year of less than twelve months, the number of  months  in  the  taxable  year), and    (ii)  dividing  the resulting amounts by the number of months referred  to in subparagraph (A) (or in subparagraph (C), if an  election  applies  to the taxable year under such subparagraph).    (C)  Election for different annualization periods. (i) If the taxpayer  makes an election under this clause--    (I) Clause (i) of subparagraph (A) of this paragraph shall be  applied  by substituting "four months" for "three months",    (II)  Clause  (ii)  of  subparagraph  (A)  of  this paragraph shall be  applied by substituting "seven months" for "six months",    (III) Clause (iii) of subparagraph (A)  of  this  paragraph  shall  be  applied by substituting "ten months" for "nine months".    (ii) If the taxpayer makes an election under this clause--    (I)  Clause (i) of subparagraph (A) of this paragraph shall be applied  by substituting "five months" for "three months",    (II) Clause (ii) of  subparagraph  (A)  of  this  paragraph  shall  be  applied by substituting "eight months" for "six months",    (III)  Clause  (iii)  of  subparagraph  (A) of this paragraph shall be  applied by substituting "eleven months" for "nine months".    (iii) An election under clause (i) or (ii) of this subparagraph  shall  apply  to  the taxable year for which made and such an election shall be  effective only if made on or before the date  required  for  filing  the  declaration of estimated tax for such taxable year, or    (4)  (A)  If the base period percentage for any six consecutive months  of the taxable year equals or exceeds seventy percent, an  amount  equal  to ninety-one percent of the tax determined in the following manner--    (i)  take  the items entering into the computation of the tax or taxes  of the taxpayer  for  the  taxable  year  under  article  nine,  nine-A,  thirty-two  or  thirty-three  of this chapter, for all months during the  taxable year preceding the filing month,    (ii) divide such amounts by the base period percentage for all  months  during the taxable year preceding the filing month,    (iii)  determine  the tax on the amounts determined under clause (ii),  and(iv) multiply the tax determined under clause (iii) by the base period  percentage for the filing month and all months during the  taxable  year  preceding the filing month.    (B) For purposes of subparagraph (A)--    (i)  the  base period percentage for any period of months shall be the  average percent which the taxable income for the corresponding months in  each of the three preceding taxable years bears to  the  taxable  income  for  the  three  preceding  taxable  years.  The  tax  commission may by  regulations provide for the determination of the base period  percentage  in  the  case  of  reorganizations,  new corporations, and other similar  circumstances, and    (ii) the term "filing month" means the month in which the  installment  is required to be paid.    (5)  In the case of any declaration installment, any reduction in such  installment resulting from the application of paragraph three or four of  this subsection shall be recaptured by increasing the amount of the next  installment determined under paragraph one or two of this subsection  or  paragraph  one  of  subsection (c) of this section by the amount of such  reduction (and by increasing subsequent installments to the extent  that  the  reduction has not previously been recaptured under this paragraph).  For purposes of the preceding sentence, a declaration installment  means  any  installment  of  estimated  tax  other  than  the  mandatory  first  installment required under paragraph (a) of subdivision one  of  section  one  hundred  ninety-seven-b,  subdivision  (a)  of  section two hundred  thirteen-b, subsection (a) of  section  fourteen  hundred  sixty-one  or  subdivision (a) of section fifteen hundred fourteen of this chapter.    For   the  purposes  of  this  subsection  the  amounts  specified  in  paragraphs (2), (3) and (4) shall be  computed  without  regard  to  any  increase  in  the  rates  applicable  to the taxable year which may have  become effective after the first day of the seventh month of such year.    (e) (1) Paragraphs (1) and (2) of subsection (d) of this section shall  not  apply  in  the  case  of  any  corporation  (or   any   predecessor  corporation)  which  had  entire  net  income,  or  the  portion thereof  allocated within the state, of one  million  dollars  or  more  for  any  taxable  year  during  the three taxable years immediately preceding the  taxable year  involved;  provided,  however,  that  in  the  case  of  a  corporation  subject  to tax under section fifteen hundred two-a of this  chapter, paragraphs (1) and (2) of subsection (d) of this section  shall  not  apply  if  such  corporation  had entire net income, or the portion  thereof allocated within the state, of one million dollars or  more  for  any  of  the  three taxable years immediately preceding the taxable year  involved, or if the direct premiums subject to tax under section fifteen  hundred two-a of this chapter of the corporation for any of  such  three  preceding  taxable  years  beginning  on  or  after  January  first, two  thousand three equals or  exceeds  three  million  seven  hundred  fifty  thousand dollars.    (2)  In  the  case  of  taxpayers  described  in paragraph one of this  subsection,  paragraph  one  of  subsection  (c),  subparagraph  (A)  of  paragraph  three  of  subsection  (d), and subparagraph (A) of paragraph  four of subsection (d) of this section shall be applied by  substituting  "one hundred percent" for "ninety-one percent" each place it appears.    (f)  Deficiency due to fraud.---(1) If any part of a deficiency is due  to fraud, there shall be added to the tax an amount equal to  two  times  the deficiency.    (2)  The addition to tax under this subsection shall be in lieu of any  other addition to tax imposed by subsection (a) or (b).    (g) Additional penalty.---Any person who with fraudulent intent  shall  fail to pay under article nine, nine-a, nine-b or nine-c, any tax, or tomake,  render,  sign  or  certify any return or declaration of estimated  tax, or to supply any information within the time required by  or  under  such  article,  shall be liable to penalty of not more than one thousand  dollars,  in  addition to any other amounts required under this article,  to be imposed, assessed and collected by the  tax  commission.  The  tax  commission  shall have the power, in its discretion, to waive, reduce or  compromise any penalty under this subsection.    (h) Additions treated as tax.---The additions  to  tax  and  penalties  provided  by this section shall be paid upon notice and demand and shall  be assessed, collected and paid in the same manner  as  taxes,  and  any  reference in this article to tax imposed by article nine, nine-a, nine-b  or  nine-c  shall  be  deemed  also to refer to the additions to tax and  penalties provided by this section. For purposes of section one thousand  eighty-one, this subsection shall not apply to---    (1) any addition to tax under subsection (a) except as to that portion  attributable to a deficiency;    (2) any addition to tax under subsection (c) or (o); and    (3) any additional penalties under subsections (g) and (l).    (i) Determination of deficiency.---For purposes of subsections (b) and  (f), the amount shown as the tax by the taxpayer upon its  return  shall  be  taken  into account in determining the amount of the deficiency only  if such return was filed on or before the last day  prescribed  for  the  filing  of  such return, determined with regard to any extension of time  for such filing.    (j) Person defined.---For purposes of subsections  (g)  and  (l),  the  term  person includes an individual, corporation, partnership or limited  liability  company  or  an  officer  or  employee  of  any   corporation  (including  a  dissolved  corporation),  or  a member or employee of any  partnership, or a member, employee or manager  of  a  limited  liability  company,  who  as  such  officer, employee, manager or member is under a  duty to perform the act in respect of which the violation occurs.    * (k) Substantial understatement of liability.-- (1)  If  there  is  a  substantial  understatement  of tax for any taxable year, there shall be  added to the tax an amount equal to ten percent of  the  amount  of  any  underpayment  attributable  to such understatement. For purposes of this  subsection, there is a substantial understatement of tax for any taxable  year if the amount of the understatement for the  taxable  year  exceeds  the greater of ten percent of the tax required to be shown on the return  for  the  taxable  year  or  five  thousand dollars. For purposes of the  preceding sentence, the term "understatement" means the  excess  of  the  amount  of  the  tax  required to be shown on the return for the taxable  year, over the amount of the tax imposed which is shown  on  the  return  reduced  by  any rebate (within the meaning of subsection (h) of section  one thousand eighty-one of this article). The excess under the preceding  sentence shall be determined without regard to items to which subsection  (k-1) of this section applies. The commissioner may  waive  all  or  any  part of the addition to tax provided by this section on a showing by the  taxpayer that there was reasonable cause for the understatement (or part  thereof) and that the taxpayer acted in good faith.    (2)  The  amount  of  the  understatement  under paragraph one of this  subsection shall be reduced by that portion of the understatement  which  is  attributable to (A) the tax treatment of any item by the taxpayer if  there is or was substantial authority for such  treatment,  or  (B)  any  item  if  the  relevant  facts  affecting  the  item's tax treatment are  adequately disclosed in the return or in a  statement  attached  to  the  return.    (3)(A)  Subparagraph (B) of paragraph two of this subsection shall not  apply to any item attributable to a tax shelter.(B) For purposes of this paragraph, the term "tax shelter" means    (i) a partnership or other entity,    (ii) any investment plan or arrangement, or    (iii) any other plan or arrangement,  if   a  significant  purpose  of  such  partnership,  entity,  plan,  or  arrangement is the avoidance or evasion of tax.    * NB Effective until July 1, 2011    * (k)  Substantial  understatement  of  liability.--If  there   is   a  substantial  understatement  of tax for any taxable year, there shall be  added to the tax an amount equal to ten percent of  the  amount  of  any  underpayment  attributable  to such understatement. For purposes of this  subsection, there is a substantial understatement of tax for any taxable  year if the amount of the understatement for the  taxable  year  exceeds  the greater of ten percent of the tax required to be shown on the return  for  the  taxable  year  or  five  thousand dollars. For purposes of the  preceding sentence, the term "understatement" means the  excess  of  the  amount  of  the  tax  required to be shown on the return for the taxable  year, over the amount of the tax imposed which is shown  on  the  return  reduced  by  any rebate (within the meaning of subsection (h) of section  one thousand eighty-one). The amount of  such  understatement  shall  be  reduced  by  that portion of the understatement which is attributable to  the tax treatment of any item  by  the  taxpayer  if  there  is  or  was  substantial  authority  for  such treatment, or any item with respect to  which  the  relevant  facts  affecting  the  item's  tax  treatment  are  adequately  disclosed  in  the  return or in a statement attached to the  return. The tax commission may waive all or any part of the addition  to  tax provided by this section on a showing by the taxpayer that there was  reasonable  cause  for the understatement (or part thereof) and that the  taxpayer acted in good faith.    * NB Effective July 1, 2011    * (k-1) Reportable transaction understatement.-- (1) If a taxpayer has  a reportable transaction understatement  for  any  taxable  year,  there  shall  be  added  to  the  tax  an amount equal to twenty percent of the  amount of such understatement.    (2) For purposes of this section,  the  term  "reportable  transaction  understatement" means the sum of    (A) the product of--    (i)  the  amount  of  the increase (if any) in the applicable tax base  which results from a difference between the proper tax treatment  of  an  item  to which this section applies and the taxpayer's treatment of such  item (as shown on the taxpayer's return of tax), and    (ii) the highest rate of tax imposed under the article of this chapter  that applies to the taxpayer, and    (B) the amount of the decrease (if any) in  the  aggregate  amount  of  credits determined under the article of this chapter that applies to the  taxpayer   which  results  from  a  difference  between  the  taxpayer's  treatment of an item to which this section  applies  (as  shown  on  the  taxpayer's return of tax) and the proper tax treatment of such item.    For  purposes  of subparagraph (A) of this paragraph, any reduction of  the excess of deductions allowed for the taxable year over gross  income  for  such  year, and any reduction in the amount of capital losses which  would (without regard to section one thousand two hundred eleven of  the  internal  revenue code) be allowed for such year, shall be treated as an  increase in the applicable tax base.    (3) This subsection shall apply to any item which is attributable to--    (A) any listed transaction, and(B) any reportable transaction (other than a listed transaction) if  a  significant  purpose  of such transaction is the avoidance or evasion of  tax.    (4)  Paragraph one of this subsection shall be applied by substituting  "thirty percent" for "twenty percent" with respect to the portion of any  reportable  transaction  understatement  with  respect  to   which   the  requirement  of  clause (i) of subparagraph (B) of paragraph ten of this  subsection is not met.    (5)  For  purposes  of  this   subsection,   the   terms   "reportable  transaction"  and  "listed  transaction" have the meanings given to such  terms by section twenty-five  of  this  chapter,  the  term  "reportable  transaction"  shall  include  a  "New  York  reportable  transaction" as  defined in such section twenty-five, and the term  "listed  transaction"  shall  include any transaction designated as a tax avoidance transaction  pursuant to such section twenty-five.    (6) In the case of an understatement (as defined in subsection (k)  of  this section)    (A)  the  amount  of such understatement (determined without regard to  this paragraph) shall be increased by the aggregate amount of reportable  transaction understatements for purposes  of  determining  whether  such  understatement  is  a substantial understatement under subsection (k) of  this section, and (B) the addition to tax under subsection (k)  of  this  section  shall apply only to the excess of the amount of the substantial  understatement (if any) after the application  of  subparagraph  (A)  of  this  paragraph  over  the  aggregate  amount  of reportable transaction  understatements.    (7) References to an understatement (or a  deficiency)  in  subsection  (f)  of  this  section  shall  be  treated  as including references to a  reportable transaction understatement.    (8)  This  subsection  shall  not  apply  to  any   portion   of   any  understatement  on  which  a  penalty is imposed under subsection (f) of  this section.    (9) Except as provided in regulations prescribed by the  commissioner,  in  no  event  shall  any  tax  treatment  included with an amendment or  supplement to a return of tax be taken into account in  determining  the  amount  of any reportable transaction understatement if the amendment or  supplement is filed after the earlier of the date the taxpayer is  first  contacted by the commissioner regarding the examination of the return or  such other date as is specified by the commissioner.    (10)(A) No penalty shall be imposed under this subsection with respect  to any portion of a reportable transaction understatement if it is shown  that there was a reasonable cause for such portion and that the taxpayer  acted in good faith with respect to such portion.    (B)  Subparagraph  (A)  of  this  paragraph  shall  not  apply  to any  reportable transaction understatement unless:    (i) the relevant facts affecting the tax treatment  of  the  item  are  adequately  disclosed  in  accordance  with  section twenty-five of this  chapter,    (ii) there is or was substantial authority for such treatment, and    (iii) the taxpayer reasonably believed that such  treatment  was  more  likely than not the proper treatment.  A  taxpayer  failing  to  adequately disclose in accordance with section  twenty-five of this chapter shall be treated as meeting the requirements  of clause (i) of this subparagraph if the penalty for such  failure  was  rescinded under subsection (p) of this section.    (11)(A) A taxpayer shall be treated as having a reasonable belief with  respect to the tax treatment of an item only if such belief(i) is based on the facts and law that exist at the time the return of  tax which includes such tax treatment is filed, and    (ii) relates solely to the taxpayer's chances of success on the merits  of  such treatment and does not take into account the possibility that a  return will not be audited, such treatment will not be raised on  audit,  or such treatment will be resolved through settlement if it is raised.    (B)(i) An opinion of a tax advisor may not be relied upon to establish  the reasonable belief of a taxpayer if    (I)  the tax advisor is described in clause (ii) of this subparagraph,  or    (II) the opinion is described in clause (iii) of this subparagraph.    (ii) A tax advisor is described in this clause if the tax advisor:    (I) is a material advisor (within the meaning of section six  thousand  one  hundred  eleven of the internal revenue code or within such meaning  as it also applies to a New York reportable transaction  as  defined  in  section   twenty-five   of   this   chapter)  and  participates  in  the  organization, management, promotion, or sale of the  transaction  or  is  related  (within  the  meaning  of subsection (b) of section two hundred  sixty-seven of the internal revenue code or subsection  (b)  of  section  seven  hundred  seven of the internal revenue code) to any person who so  participates,    (II) is compensated directly or indirectly by a material advisor  with  respect to the transaction,    (III)  has  a fee arrangement with respect to the transaction which is  contingent on all  or  part  of  the  intended  tax  benefits  from  the  transaction being sustained, or    (IV)  has  a  disqualifying  financial  interest  with  respect to the  transaction.    (iii) For purposes of clause (i) of this subparagraph, an  opinion  is  disqualified if the opinion    (I)  is  based on unreasonable factual or legal assumptions (including  assumptions as to future events),    (II) unreasonably relies on representations, statements, findings,  or  agreements of the taxpayer or any other person,    (III) does not identify and consider all relevant facts, or    (IV)  fails  to  meet  any  other  requirement as the commissioner may  prescribe.    * NB Repealed July 1, 2011    (k-2) No penalty will be imposed pursuant to subsection (c) or (k)  of  this section for a taxable year beginning on or after January first, two  thousand  eight  and  before  January first, two thousand nine resulting  from the denial of an empire zone tax credit  claimed  by  the  taxpayer  because  an empire zone retention certificate was not issued pursuant to  subdivision (w) of  section  nine  hundred  fifty-nine  of  the  general  municipal  law  to the empire zone enterprise which is the basis for the  tax credit or credits claimed on the return or report.    (l) Aiding or assisting in the giving of fraudulent returns,  reports,  statements or other documents.--(1) Any person who, with the intent that  tax  be evaded, shall, for a fee or other compensation or as an incident  to the performance of other services  for  which  such  person  receives  compensation,  aid  or  assist  in,  or  procure, counsel, or advise the  preparation or presentation under, or  in  connection  with  any  matter  arising  under article nine, nine-A, nine-B or nine-C of this chapter of  any return, report, declaration, statement or other  document  which  is  fraudulent  or  false  as to any material matter, or supply any false or  fraudulent information, whether or not such falsity or fraud is with the  knowledge or consent of the person authorized  or  required  to  presentsuch  return, report, declaration, statement or other document shall pay  a penalty not exceeding ten thousand dollars.    (2)  For  purposes  of  paragraph  one  of  this  subsection, the term  "procures" includes ordering (or otherwise causing) a subordinate to  do  an  act, and knowing of, and not attempting to prevent, participation by  a subordinate in an act. The term "subordinate" means any  other  person  (whether  or not a director, officer, employee, or agent of the taxpayer  involved) over whose activities the person has  direction,  supervision,  or control.    (3)  For  purposes  of  paragraph  one  of  this  subsection, a person  furnishing typing, reproducing,  or  other  mechanical  assistance  with  respect  to  a document shall not be treated as having aided or assisted  in the preparation of such document by reason of such assistance.    (4) The penalty imposed by this subsection shall be in addition to any  other penalty provided by law.    (m) Unwarranted reduction in utility  costs  in  an  empire  zone.  If  during  a  taxable  year a taxpayer has received a reduction in the rate  charged for gas, electric, steam or water sold, or gas, electric,  steam  or  water service rendered, pursuant to subdivision eight of section one  hundred eighty-six-a of this chapter, based upon a certification  as  to  the  claiming  of  a  credit  under  subsection  nineteen of section two  hundred ten, subsection (e) of section  fourteen  hundred  fifty-six  or  subdivision  (g)  of section fifteen hundred eleven of this chapter, and  it is finally determined that such taxpayer  is  not  entitled  to  such  credit  in  any  part,  such taxpayer shall be liable to a penalty in an  amount equal to such reduction in cost, with interest from the last  day  of such year, at the rate applicable to underpayments of tax pursuant to  this article. The tax commission shall have the power, in its discretion  to waive, reduce or compromise such penalty.    (n) Failure to file report of information relating to certain interest  payments.--In case of failure to file the report of information required  under  subdivision  two-a  of  section  two hundred eleven, unless it is  shown that such failure is due  to  reasonable  cause  and  not  due  to  willful  neglect,  there  shall  be  added  to the tax a penalty of five  hundred dollars.    (o) Failure to include on  return  information  relating  to  issuer's  allocation  percentage. Where a return is filed but does not contain (1)  the information necessary to compute the taxpayer's issuer's  allocation  percentage,   as  defined  in  subparagraph  one  of  paragraph  (b)  of  subdivision three of section two hundred ten of this chapter, where  the  same  is  called  for  on  the  return,  or, (2) the taxpayer's issuer's  allocation percentage, where the same is called for on  the  return  but  where  all  of  the  information  necessary  for the computation of such  percentage is not called for on the return, then unless it is shown that  such failure is due to reasonable cause and not due to  willful  neglect  there shall be added to the tax a penalty of five hundred dollars.    * (p)   Failure   to   disclose   or  provide  reportable  transaction  information.  -- (1) Any person who fails to file, disclose  or  provide  any  statement,  return  or  other  document  which  is  required  under  subdivision (a) of section twenty-five  of  this  chapter  shall  pay  a  penalty in the amount determined under paragraph two of this subsection.    (2)(A)  Except  as provided in subparagraph (B) of this paragraph, the  amount of the penalty under paragraph one of this  subsection  shall  be  twenty thousand dollars.    (B)  The  amount of the penalty under paragraph one of this subsection  with respect to a listed transaction shall be fifty thousand dollars.    (3)  For  purposes  of  this   subsection,   the   terms   "reportable  transaction"  and  "listed  transaction" shall have the same meanings asused in section  twenty-five  of  this  chapter,  the  term  "reportable  transaction"  shall  include  a  "New  York  reportable  transaction" as  defined in such section twenty-five, and the term  "listed  transaction"  shall  include any transaction designated as a tax avoidance transaction  pursuant to such section twenty-five.    (4) The commissioner may rescind all or any  portion  of  any  penalty  imposed by this subsection with respect to any violation if    (A)  the  violation  is with respect to a reportable transaction other  than a listed transaction, and    (B)  rescinding  the  penalty  would  promote  compliance   with   the  requirements of this chapter and effective tax administration.    (5)  The  penalty  imposed by this section shall be in addition to any  other penalty imposed by this chapter.    * NB Repealed July 1, 2011    * (q) Failure to disclose or provide reportable transaction  return.--  (1)  Any  person  who  fails to file, disclose or provide any statement,  return or other document which is  required  under  subdivision  (b)  of  section  twenty-five  of  this chapter shall pay a penalty in the amount  determined under paragraph two of this subsection.    (2)(A) Except as provided in subparagraph (B) of this  paragraph,  the  amount  of  the  penalty under paragraph one of this subsection shall be  twenty thousand dollars.    (B) The amount of the penalty under paragraph one of  this  subsection  with respect to a listed transaction shall be the greater of    (i) fifty thousand dollars or,    (ii)  fifty percent of the gross income that the organizer or material  advisor derived with respect to activities that were the basis  for  the  requirement to file, disclose or provide information pursuant to section  six  thousand  eleven  of  the internal revenue code, to the extent such  gross income is attributable to the avoidance of any tax  imposed  under  article nine, nine-A, thirty-two, or thirty-three of this chapter.    (C) Clause (ii) of subparagraph (B) of this paragraph shall be applied  by  substituting  "seventy-five percent" for "fifty percent" in the case  of an intentional failure or act described  in  paragraph  one  of  this  subsection.    (3)   For   purposes   of   this  subsection,  the  terms  "reportable  transaction" and "listed transaction" shall have the  same  meanings  as  used  in  section  twenty-five  of  this  chapter,  the term "reportable  transaction" shall  include  a  "New  York  reportable  transaction"  as  defined  in  such section twenty-five, and the term "listed transaction"  shall include any transaction designated as a tax avoidance  transaction  pursuant to such section twenty-five.    (4)  The  commissioner  may  rescind all or any portion of any penalty  imposed by this subsection with respect to any violation if    (A) the violation is with respect to a  reportable  transaction  other  than a listed transaction, and    (B)   rescinding   the  penalty  would  promote  compliance  with  the  requirements of this chapter and effective tax administration.    (5) The penalty imposed by this subsection shall be in addition to any  other penalty imposed by this chapter, except that no penalty  shall  be  imposed  under  subparagraph  (A)  or  clause (i) of subparagraph (B) of  paragraph two of subsection (y) of section six  hundred  eighty-five  of  this  chapter for the same failure that is the basis for a penalty under  this subsection. Nothing in this paragraph shall preclude the imposition  of a penalty under clause (ii) of subparagraph (B) of paragraph  two  of  subsection  (y)  of  section six hundred eighty-five of this chapter for  the same failure that is the basis for a penalty under  clause  (ii)  of  subparagraph (B) of paragraph two of this subsection.* NB Repealed July 1, 2011    * (r) Failure to maintain list of advisees.-- (1) If any person who is  required to maintain a list under subdivision (c) of section twenty-five  of  this  chapter  fails to make a duplicate of such list available upon  written request by the commissioner in accordance with such  subdivision  within  twenty business days after the date of such request, such person  shall pay a penalty of ten thousand dollars for each day of such failure  after such twentieth day.    (2) No penalty shall be imposed by paragraph one  of  this  subsection  with  respect  to  the  failure  on  any  day  if such failure is due to  reasonable cause.    * NB Repealed July 1, 2011    * (s) Tax preparer penalty.-- (1) If:    (A) any part of any understatement of liability with  respect  to  any  return  or claim for refund is due to a position for which there was not  a reasonable belief that the tax treatment in  that  position  was  more  likely than not the proper treatment,    (B)  any  person  who  is  a  tax return preparer with respect to such  return or claim knew (or reasonably should have known) of such position,  and    (C) such position was not disclosed as provided in subsection  (k)  of  this  section  or there was no reasonable basis for the tax treatment of  that position, such person shall pay a penalty of  up  to  one  thousand  dollars  with  respect  to  such return or claim unless it is shown that  there is reasonable cause for the understatement and such  person  acted  in good faith.    (2) If any part of any understatement of liability with respect to any  return or claim for refund is due    (A) to a willful attempt in any manner to understate the liability for  tax by a person who is a tax return preparer with respect to such return  or claim, or    (B)  to  any reckless or intentional disregard of rules or regulations  by any such person, such person shall  pay  a  penalty  of  up  to  five  thousand  dollars  with respect to such return or claim. With respect to  any return or claim, the amount of the penalty payable by any person  by  reason  of  this paragraph shall be reduced by the amount of the penalty  paid by such person by reason of paragraph one of this subsection.    (3) For purposes of  this  subsection,  the  term  "understatement  of  liability"  means  any  understatement  of  the  net amount payable with  respect to any tax imposed under article nine,  nine-A,  thirty-two,  or  thirty-three  of  this  chapter  or  any overstatement of the net amount  creditable or refundable with respect to any such tax.    (4) This subsection shall not apply if the  penalty  under  subsection  (l)  of  this section is imposed on the tax return preparer with respect  to such understatement.    * NB Repealed July 1, 2011    * (t) Promoting abusive tax shelters.-- (1) Any person who    (A)(i) organizes (or assists in the organization of)    (I) a partnership or other entity,    (II) any investment plan or arrangement, or    (III) any other plan or arrangement, or    (ii) participates (directly or indirectly) in the sale of any interest  in an entity or plan or arrangement referred to in clause  (i)  of  this  subparagraph, and    (B) makes or furnishes or causes another person to make or furnish (in  connection with such organization or sale)    (i)  a  statement with respect to the allowability of any deduction or  credit, the excludability of any income, or the securing  of  any  othertax  benefit  by  reason  of  holding  an  interest  in  the  entity  or  participating in the plan or arrangement which the person knows  or  has  reason to know is false or fraudulent as to any material matter, or    (ii) a gross valuation overstatement as to any material matter, and    (C) satisfies any of the following conditions    (i) the person is organized in this state,    (ii) the person is doing business in this state,    (iii) the person is deriving income in this state, or    (iv)   the   person  conducts  any  of  the  activities  described  in  subparagraph (A) or (B) of this paragraph within the state of New York,  shall pay, with respect to each activity described in  subparagraph  (A)  of  this  paragraph,  a penalty equal to one thousand dollars or, if the  person establishes that it is lesser, one hundred percent of  the  gross  income  derived  (or to be derived) by such person from such activity to  the extent such gross income is attributed to the avoidance of  any  tax  imposed  under articles nine, nine-A, thirty-two or thirty-three of this  chapter; provided, however, that if an activity with respect to which  a  penalty  imposed under this subsection involves a statement described in  clause (i) of subparagraph (B) of paragraph one of this subsection,  the  penalty  shall be equal to fifty percent of the gross income derived (or  to be derived) from that activity within the  state  by  the  person  on  which  the  penalty  is imposed. For purposes of the preceding sentence,  activities described in clause (i) of subparagraph (A) of this paragraph  with respect to each  entity  or  arrangement  shall  be  treated  as  a  separate  activity  and  participation  in each sale described in clause  (ii) of subparagraph (A) of this paragraph shall be so treated.    (2)(A) For purposes of this  subsection,  the  term  "gross  valuation  overstatement"  means  any  statement as to the value of any property or  services if--    (i) the value so stated exceeds two  hundred  percent  of  the  amount  determined to be the correct valuation, and    (ii) the value of such property or services is directly related to the  amount  of  any  deduction or credit allowable under this chapter to any  participant.    (B) The commissioner may waive all or any part of the penalty provided  by paragraph one of this subsection with respect to any gross  valuation  overstatement  on  a  showing  that there was a reasonable basis for the  valuation and that such valuation was made in good faith.    (3) The penalty imposed by this subsection shall be in addition to any  other penalty provided by law.    * NB Repealed July 1, 2011    (u) False or fraudulent document penalty. Any taxpayer that submits  a  false  or  fraudulent  document  to  the department will be subject to a  penalty of one hundred dollars per document submitted, or  five  hundred  dollars  per  tax  return submitted. This penalty will be in addition to  any other penalty or addition provided by law.