Tax Professional Newsletter 01/15/21
Tax Department response to novel coronavirus
New York State tax implications of the federal CARES Act
The federal Coronavirus Aid, Relief and Economic Security (CARES) Act, and the Consolidated Appropriations Act contained a number of tax provisions that impact the computation of taxable income, modify eligibility for certain tax credits, and provide assistance to taxpayers and businesses affected by COVID-19. Visit New York State tax implications of federal COVID relief for tax years beginning before January 1, 2022 to learn more about the impact on New York State tax returns.
Additional sales tax relief
Sales tax returns and payments for the period September 1 through November 30 were due December 21, 2020. However, penalty and interest may be waived if your client was unable to file and pay on time and is principally engaged in business:
- as a restaurant or other food service establishment in New York City that had to suspend indoor dining due to Executive Order 202.81, or
- as a restaurant or other food service establishment that had to suspend indoor dining due to the Governor’s
Executive order 202.68 because you are located in an area that was a designated Orange Zone on December 18, 2020.
Your client's return must be filed and the total amount due must be paid by March 22, 2021, for this relief to apply. This relief does not apply to vendors enrolled in PrompTax for sales and use tax.
Visit Tax relief for quarterly and part-quarterly (monthly) sales tax vendors affected by COVID-19 to request relief from penalty and interest.
Reminder to verify paid preparer signature
Verify the Paid preparer signature section of your tax professional software. You must enter a New York Tax Preparer Registration Identification Number (NYTPRIN) or an exclusion code for all returns you prepare. (For a list of exclusion codes, view Form IT-201-I, Instructions for Form IT-201 Full-Year Resident Income Tax Return, or Form IT-203-I, Instructions for Form IT-203 Nonresident and Part-Year Resident Income Tax Return.) Do not report an expired NYTPRIN or exclusion code.
Visit Tax preparer registration to learn whether you must register as a tax preparer.
Most 2020 forms have been posted to our website, including the following new forms:
- Form IT-558, New York State Adjustments due to Decoupling from the IRC
- Forms IT-651 and CT-651, Recovery Tax Credit
- Forms IT-652 and CT-652, Employer-Provided Childcare Credit
Visit Numerical list by form number for income tax to view the 2020 forms and instructions.
Changes to long-term care insurance credit
For tax years beginning on or after January 1, 2020, Form IT-249, Long-term Care Insurance Credit, has been amended to allow a taxpayer (including nonresident and part-year resident taxpayers) to claim the credit only if the taxpayer’s New York adjusted gross income is less than $250,000. In addition, the credit amount cannot exceed $1,500.
For more information on this credit, visit Long-term care insurance credit.
Notification of underpayment of estimated tax penalty
Your client may receive a Notice and Demand, with rights, if they did not prepay income tax as they earned or received income during the tax year. Your client may be charged a penalty on the amount of estimated tax that was not paid or was paid late during the year (either through estimated tax payments, withholding tax, or a combination of the two).
The underpayment penalty applies if your client’s 2020 withholding and estimated tax payments are not at least the smaller of:
- 90% of the tax shown on their 2020 return, or
- 100% of the tax shown on their 2019 return (110% of that amount if your client is not a farmer or a fisherman and the New York adjusted gross income [NYAGI] [or net earnings from self-employment allocated to the MCTD] shown on that return is more than $150,000 [$75,000 if married filing separately for 2020]). Your client must have filed a return for 2019 and it must have been for a full 12-month year.
If your client agrees with the assessment, simply pay online or pay using the payment coupon included with the bill. If your client disagrees, respond with all applicable documentation by the date stated on the first page of the bill. Submit the response online, by mail, or by fax.
For more information about this penalty, visit Penalty for underpaying your estimated tax.
Notification of missing retirement contribution information
Your client may receive a Statement of Proposed Audit Changes (SOPAC) if your client:
- is a member of a public employee retirement system (such as the New York State and Local Retirement System), and]
- made 414(h) retirement contributions to their retirement plan but did not report the contributions as a New York addition to federal adjusted gross income on their New York State income tax return; or
- participates in a New York City Flexible Benefits program (IRC 125), and
- did not report the amount deducted or deferred from their salary under the program as a New York addition to federal adjusted gross income on their New York State income tax return.
For more information about these adjustments, visit Public employee 414(h) retirement contributions and New York City flexible benefits program (IRC 125).
If your client agrees with the SOPAC, simply pay online or pay using the payment coupon included with the notice. If your client disagrees, respond with any applicable documentation by the date stated on the first page of the bill. Submit the response online, by mail, or by fax.
School Tax Relief (STAR) credit reporting
If your client received a STAR credit in 2020 and will be itemizing deductions, they may be required to report the STAR credit amount on their 2020 income tax return.
To learn more, visit How to report your property tax credit. Your clients can also use our Property Tax Credit Lookup to verify they received a check for 2020.
Launch of Alcoholic Beverages Tax (ABT) Web File
Beginning with returns due January 20, 2021, if you're a registered distributor, you can electronically file your alcoholic beverages tax returns and accompanying attachments using our Alcoholic Beverages Tax (ABT) Web File.
For general information about ABT, visit our updated page: Alcoholic beverages tax.
If you’re a tax preparer, you are required by law to e-file all New York State personal income tax returns you prepare. For information about New York State’s e-file mandate, visit Tax preparer e-file mandate.
Keep up with tax changes
The Tax Professional Newsletter is a monthly summary of recent changes and new information. To receive updates as we announce them, subscribe to new tax topics as we add them to our Subscription Service. We’ll share links to new resources and tax tips as they become available.
Recently added topics include:
- Tax tips for property owners
- Online Services for taxpayers
- Información en Español
Upcoming due dates
- personal income tax (and MCTMT, if applicable) estimated tax payments for 4th quarter of 2020
- partnership and LLC estimated tax payments for 4th quarter of 2020 (New York State and MCTMT, if applicable) (for payments required to be made on behalf of nonresident partners and members and C corporations)
- S corporation estimated tax payments for 4th quarter of 2020 (for payments required to be made on behalf of nonresident shareholders)
- personal income tax estimated tax payment corrections for shareholders of corporations subject to mandatory S corporation filing
Sales tax returns for monthly filers
- employers' quarterly MCTMT returns
- employers' quarterly combined withholding, wage reporting, and unemployment insurance returns