N.Y.
Tax Law Section 1701
Financial institution data match system for state tax collection purposes
1.
Definitions. As used in this section: * (a) “Debt” means past-due tax liabilities, including unpaid tax, interest, and penalty, that the commissioner is required by law to collect and that have become fixed and final such that the taxpayer no longer has any right to administrative or judicial review. * NB Effective until April 1, 2025 * (a) “Debt” means all liabilities, including unpaid tax, interest, and penalty, that the commissioner is required by law to collect and that have been reduced to judgment by the docketing of a New York state tax warrant in the office of a county clerk located in the state of New York or by the filing of a copy of the warrant in the office of the department of state. * NB Effective April 1, 2025 (b) “Tax debtor” means a natural person or any entity other than a natural person named on a New York state tax warrant and identified thereon as a judgment debtor.(c)
“Financial institution” means (i) any financial institution authorized or required to participate in a financial institution data match system or program for child support enforcement purposes under federal or state law, and(ii)
any virtual currency business licensed by the superintendent of financial services.2.
Financial institution data match system for state tax collection purposes. * (a) To assist the commissioner in the collection of debts, the department must develop and operate a financial institution data match system for the purpose of identifying and seizing the non-exempt assets of tax debtors as identified by the commissioner. The commissioner is authorized to designate a third party to develop and operate this system. Notwithstanding any other provisions of this chapter, the commissioner is authorized to disclose the debt and the debtor information to such third party and to financial institutions for purposes of this system. Any third party designated by the commissioner to develop and operate a financial data match system must keep all information it obtains from both the department and the financial institution confidential, and any employee, agent or representative of that third party is prohibited from disclosing that information to anyone other than the department or the financial institution. * NB Effective until April 1, 2025 * (a) To assist the commissioner in the collection of debts, the department must develop and operate a financial institution data match system for the purpose of identifying and seizing the non-exempt assets of tax debtors as identified by the commissioner. The commissioner is authorized to designate a third party to develop and operate this system. Any third party designated by the commissioner to develop and operate a financial data match system must keep all information it obtains from both the department and the financial institution confidential, and any employee, agent or representative of that third party is prohibited from disclosing that information to anyone other than the department or the financial institution. * NB Effective April 1, 2025 (b) Each financial institution doing business in the state must, in conjunction with the commissioner or the commissioner’s authorized designee, develop and operate a data match system to facilitate the identification and seizure of non-exempt financial assets of tax debtors identified by the commissioner or the commissioner’s authorized designee. If a financial institution has a data match system developed or used to administer the child support enforcement programs of this state, and if that system is approved by the commissioner or the commissioner’s authorized designee, the financial institution may use that system to comply with the provisions of this section.3.
Each financial institution must provide identifying information each calendar quarter to the department for each tax debtor identified by the department who or that maintains an account at the institution. The identifying information must include the tax debtor’s name, address, and social security number or other taxpayer identification number, and all account numbers and balances in each account.4.
A financial institution that complies with this section will not be liable under state law to any person for the disclosure of information to the commissioner or the commissioner’s authorized designee, or any other action taken in good faith to comply with this section.5.
Both the financial institution furnishing a report to the commissioner under this section and the commissioner’s authorized designee are prohibited from disclosing to the tax debtor that the name of the tax debtor has been received from or furnished to the commissioner, unless authorized in writing by the commissioner to do so. A violation of this subdivision will result in the imposition of a civil penalty equal to the greater of one thousand dollars or the amount in the account of the person to whom the disclosure was made for each instance of unauthorized disclosure by the financial institution. That civil penalty can be assessed and collected under this chapter as if that penalty were tax.6.
A financial institution may disclose to its depositors or account holders that the department has the authority to request certain identifying information on certain depositors or account holders under the financial institution data match system for state tax collection purposes.
Source:
Section 1701 — Financial institution data match system for state tax collection purposes, https://www.nysenate.gov/legislation/laws/TAX/1701 (updated Apr. 29, 2022; accessed Oct. 26, 2024).
