(d) “Annual return.” (1) Every person required to register with the Department of Taxation and Finance (see section 533.1 of this Part and Parts 539 and 540 of this Title) only because such person is purchasing or selling tangible personal property for resale[,] and who is not required to collect any tax or pay any tax directly to the [Department of Taxation and Finance,] department must file a return annually in accordance with the provisions [schedule provided in paragraph (4)] of this subdivision.

(2) Any person required to file quarterly returns whose total tax due for the four most recent quarterly periods for which data is available for such person within the most recent six quarters for which data is available did not exceed $3,000[,] may [be notified by the department or may elect to] file [returns] a return annually in lieu of filing quarterly.

(3)(i) Each year, the department will review its records in order to identify persons who may have become eligible to file annual returns. The department will notify such persons [required to file returns, by regular mail,] of the change in their filing status to annual filing. Such a notice [shall] will include:

“(a)” the effective date and period for which the person's first annual return will be required to be filed; and

“(b)” instructions [for filing] as to when the person's last quarterly return is required to be filed.

(ii) Where a person [required to file returns] so notified wishes to continue its current filing status or is, in fact, not eligible to file on an annual basis, such person[: “(a)”] must [return the department's notice to] contact the department[, within 30 days of receipt, properly completed, at the address indicated on such notification;] and [“(b)” must] indicate [on the notice] that the person does not wish to file annually, but wishes to continue its current filing status, or that the person is not eligible to file annual returns. The department should be contacted within 30 days of the date of the notice.

(iii) Those persons eligible to file annual returns under paragraph (2) of this subdivision who are, for any reason, not notified by the department to file returns annually may contact the department to elect to file returns annually in lieu of filing quarterly [returns,] provided [the] such a person's total tax due for the succeeding 12-month period can reasonably be expected not to exceed $3,000 [and the election is made on a form furnished by the Processing Division, Registration and Returns Processing Bureau, Sales Tax Section, which must be filed on or before the 20th day of the annual period described in paragraph (4) of this subdivision for which the election is made]. Upon confirmation that such a person is eligible to file annually, the department will reclassify the person as an annual filer.

(4) [An annual return is to be filed in accordance with the following schedule.] (i) Annual filers [for years commencing on or after June 1, 1998, including those persons who are not required to collect any tax or pay any tax directly to the department, shall] must file their returns[: “(a)” For the short annual period of nine months beginning June 1, 1998, and ending on February 28, 1999, on or before March 20, 1999. “(b)” For] for annual periods beginning on [or after March 1, 1999, which annual periods shall begin on] March 1st and [end] ending with the last day of February in the subsequent year[,]. The returns must be filed with the department on or before March 20th of each such subsequent year.

(ii) [Quarterly filers who are notified by the department that they shall file annually must file annual returns (unless they timely notify the department in accordance with subparagraph (3)(ii) of this subdivision that they wish to continue filing quarterly returns) as follows: “(a)” For the short annual period of nine months beginning June 1, 1998, and ending on February 28, 1999, on or before March 20, 1999. “(b)” For annual periods beginning on or after March 1, 1999, the annual period shall begin on March 1st and end with the last day of February in the subsequent year, with the annual return being due on or before March 20th of each such subsequent year. “(c)”] Quarterly filers who become annual filers [shall] pursuant to the department's yearly reclassification must file their last quarterly [return] returns for the quarterly period [which] that ends immediately prior to the date on which the next annual period begins [and] (“i.e.,” December – February) in accordance with instructions provided in the notification issued pursuant to paragraph (3) of this subdivision and in accordance with such other applicable instructions. Annual returns must then be filed for the next and subsequent annual periods succeeding this last quarterly period.

(iii) Quarterly filers electing to file annually who are reclassified to annual filers after the date on which an annual period has begun must report their sales and use tax activities for that entire annual period and may claim a credit for taxes paid with any quarterly returns previously filed during such annual period.

(5) A properly completed annual return is to be prepared in accordance with the instructions provided by the [Department of Taxation and Finance] department. [It] The return must include completed schedules, if required, and must show, for example, the following information:

(i) the name, address, and identification number of the vendor, recipient of amusement charges, or operator of [a] the hotel;

(ii) the gross amount, to the nearest whole dollar, of sales of tangible personal property and services, food and drink, amusement charges, and rents;

(iii) the amount, to the nearest whole dollar, of taxable sales of tangible personal property and services, food and drink, amusement charges, and rents for each jurisdiction, and the totals of all jurisdictions;

(iv) the amount, to the nearest whole dollar, of purchases subject to [use] tax[,] for each jurisdiction, and the totals of all jurisdictions;

(v) the amount of sales and use taxes for each jurisdiction, and the totals of all jurisdictions;

(vi) credits claimed and prepayments, if any;

(vii) the sales and use taxes due;

(viii) late filing [charge] charges, penalties, and interest, if any, and the total amount due;

(ix) the signature of the vendor, recipient of amusement charges, or hotel operator (or of the officer, partner, or employee [of the vendor] signing the return on the entity's behalf) and the individual's title;

(x) the signature and address of [a] the preparer[,] —if other than the vendor, recipient of amusement charges, or hotel operator; and

(xi) the date [prepared] signed by (or on behalf of) the vendor, recipient of amusement charges, or hotel operator.

(6) If [, at any time during the course of the annual periods described in paragraph (4) of this subdivision,] the total tax due from a person required to file [returns] a return is in excess of $3,000 at any time during the course of the annual period, such person must commence filing [a] quarterly or monthly [return] returns as required by section 1136 of the Tax Law and the preceding provisions of this section. On the first [quarterly] return so required, such person must report and pay any tax due for the period commencing with the beginning of the abridged annual period. Failure to do so may result in penalty and interest being charged from the date a quarterly or monthly return should have been filed.

Section 2. Paragraph (1) of subdivision (g) of section 533.3 of the regulations is amended to read as follows:

(1) [Holders of a certificate of authority for show vendors are] A show vendor is required to file a New York State and local sales and use tax return whether or not the vendor participated in a show or made any sales in the period covered by the return. [Returns must be mailed to the address listed on the New York State and local sales and use tax return.]

The Department of Taxation and Finance submitted for publication in the Rule Review section of the January 3, 2007, State Register summaries of rules that were adopted by the Commissioner of Taxation and Finance in 1997 and 2002, and a notice of the Department's intent to review such rules pursuant to section 207 of the State Administrative Procedure Act. This information was also posted to the Departments Web site (http://www.tax.state.ny.us/rulemaker/regulations/fiveyearrev.htm) on January 2, 2007. Comments from the public concerning the continuation or modification of these rules were invited until February 20, 2007.

No public comments were received by the Department concerning the 1997 amendments to section 533.3(d), “Annual return,” (or to the other technical amendments made at sections 533.3[g] and 561.13[b][1]) of the Sales and Use Taxes Regulations, as published in Subchapter A of Chapter IV of Title 20 NYCRR. These regulations were amended in substance to extend the benefits of annual filing and to change the annual filing period from June-May to March-February. Such amendments were adopted by the Commissioner on June 25, 1997, and published in the State Register on July 16, 1997, (I.D. # TAF-18-97-00008-A).

This notwithstanding, the Department determined as a result of its 2007 review that many of the supporting amendments that were adopted in 1997 were dated and could not be continued without modification. This rule updates section 533.3(d) of the regulations to delete obsolete information – such as references to a discontinued form, an operating division of the Department that no longer exists, and transitional rules applicable to 1998 and 1999. The rule also better reflects the existing policies of the Department, which have evolved over the past ten years with the administration of the very popular and successful annual-filing program. It is noted that approximately 280,000 of the 585,000 taxpayers that file sales and use tax returns file annually, substantially reducing the number of returns required to be filed by taxpayers and, in turn, processed by this Department. Noncontroversial editorial, clarifying, and technical changes have also been made in this rule. For example, section 533.3(g)(1) is being amended not only to balance the sentence structure, but also to delete a dated and redundant reference to mailing a return, which may now be filed electronically in certain circumstances.

Not every amendment that was made in 1997 is being amended by this rule; for example, the rule does not affect the filing benefits or filing period codified in the regulations. Therefore, such 1997 amendments remain valid and are continued without modification.

The Department of Taxation and Finance has determined that no person is likely to object to the adoption of this rule as written because these amendments merely repeal regulatory provisions that are no longer applicable to any person and clarify section 533.3(d) of the sales and use tax regulations by bringing it into conformity with existing annual filing policies and procedures. The editorial, clarifying, and technical changes are not controversial in nature.

A Job Impact Statement is not being submitted with this rule because it is evident from the subject matter that the rule will have no impact on jobs or employment opportunities beyond that required by statute. The primary purpose of the rule is simply to update section 533.3(d) of the sales and use tax regulations concerning annual returns. Editorial, clarifying, and technical changes have also been made.