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Certificate

of

Residence

Comptroller on or before March 15th of the following year. The individual may avoid this deduction at the source by filing with the withholding agent a certificate in form prescribed by the Comptroller to the effect that he is a resident of the State of New York. This certi. ficate must be filed with the withholding agent prior to the payment to the Comptroller of the tax withheld but not later than March 15th following the calendar year for which the tax was deducted. New certificates are required for each succeeding calendar year.

It will be noted that where the compensation paid during the calendar year for personal services equals or exceeds $1,000 the tax withheld is based upon the entire amount of the compensation and not only upon that portion in excess of $1,000. Where the compensation is less than $1,000 no tax is required to be withheld, to illustrate:

From a non-resident employee receiving $1,200 compensation $12.00 should be withheld; from a non-resident employee receiving $950 compensation no deduction need be made.

No deduction need be made where the salary, commissions, wages, etc, are paid to a non-resident, as compensation for services rendered entirely without the State, even though the employee comes into the State to report, to receive instructions, salary, etc.

Where a like payment is made as compensation for services rendered, partly within and partly without the State, deductions from the entire amount so paid may be avoided by the withholding agent filing with the comptroller a certificate stating the name and address of the non-resident and in addition (1) that only

Services rendered outside the State

Services rendered within and without the State

part of the payments made were for services performed within the State (2) the amount of such part. The amount required to be withheld would then be based upon the proportionate part of the compensation paid as a result of services performed within the state.

Should the decision of the Supreme Court of the United States in the case now pending sustain the decision of the District Court with respect to non-residents, it seems probable that future withholding will be required only as to the amount of the total payment made during the taxable year in excess of $1,000 or $2,000 as the case may be.

Information at the Source The State Law provides for a system of information not unlike that prescribed by the Federal Income Tax Law. Every withholding agent is required to inform the Comptroller of all payments made to any taxpayer amounting to $1,000 or more, during the taxable year, whether paid in the form of interest, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments or other fixed or determinable gains, profits and income, except interest coupons payable to bearer.

New York State corporations and outside corporations registered in the State are required to make returns of information with respect to payments made to a resident, of interest on registered bonds or other obligations, when the amount paid during the calendar year either in itself or in connection with other payments to the same taxpayer equals or exceeds $1,000. A corporation may make returns through its fiscal or paying agency. When it is known that the recipient of the

Information concerning Dividends

interest is a non-resident of the State it is understood that no information return need be made.

At the request of the State Comptroller, corporations —that is, either New York State corporations or outside corporations registered in the State-shall supply information concerning their dividends and other distributions to stockholders who are residents of the State, in cases where the amount distributed in a calendar year equals or exceeds $1,000.

Return of
Income of
Resident

General The Legislature appears to have followed the plan of the Federal Income Tax Law as closely as possible changing it where the provisions of the Federal Act would not apply. Apparently this was done in order that the material used by the taxpayer in computing his Federal Income Tax would also be useful in the preparation of his State return.

Returns of income for taxpayers who are residents of the State must be made on net incomes of $1,000 or more in the case of a single person, or "head of a family," or married person not living with husband or wife, and $2,000 or more in the case of a married person living with husband or wife. In computing the tax, the "head of a family” is allowed, however, $2,000 personal exemption plus $200 for each dependent who comes within the requirements.

Returns of income of non-resident individuals must be made when the net income from sources which are taxable to a non-resident is $1,000 or more in the case of a single person or "head of a family” or married person not living with husband or wife, and $2,000 or

Return of
Income
of Non-
Resident

Accounting

more in the case of a married person living with husband or wife. A non-resident, however, is not entitled to take credit for the amount of personal exemption in computing the tax to be paid unless some change occurs in the present situation as for example, as the result of a decision in the case now pending in the United States Supreme Court or by later amendment to the law.

The report of income may be made on the basis of Method of income received or income accrued, depending upon the the system followed by the taxpayer in recording income. The former method is most commonly used as it is clear, concise and much simpler; computation of income on the accrual basis necessitates considerably more bookkeeping and is very apt to become involved. A husband or wife may make separate returns of their

Separate income and may divide the personal exemption between Returns them in any way desired, but in no case may the combined exemption exceed $2,000 plus $200 for each dependent.

Where the aggregate taxable income of both husband Advantage and wife exceeds $10,000, it is of value to them to file of filing separate returns. In this way a saving in the amount of Returns tax to be paid is accomplished. To illustrate, a husband with $10,000 net income and a wife with $5,000 net income would, if they made one return, be subject to a tax of $160, whereas if they filed separate returns the combined tax to be paid would be $130. The amount of this saving in tax becomes greater as higher levels of income and tax are reached.

Taxpayers may make returns for the calendar or fiscal ca year, on whichever basis their books are kept. The Fiscal Year former is considered to end December 31st whereas the

Separate

Calendar or

SUMMARY OF INCOME TAX L AW

M: 121

Returns to be made on or before March 15th

Where
Filed

Extension of Time

fiscal year may end the last day of any month other than December. Provisions similar to the requirements of the Federal Act are made with respect to changing from a calendar to a fiscal year, or vice versa.

Returns of income must be made on or before March 15th of the year next following the taxable year except where an extension of time is granted. Returns shall be sent to any one, presumably the nearest, of the District Offices of the Income Tax Bureau. A complete list of the offices and their directors is shown on page 41. Fiduciary returns showing the distribution of income, partnership returns and returns of information should be sent to the office of the New York State Income Tax Bureau, Albany, N. Y. The Comptroller has the power to grant a reasonable extension of time wherever good cause exists, not exceeding six months, except in the case of a taxpayer who is abroad where apparently the intent of the law is to permit ex tensions of greater length when in the opinion of the Comptroller it is justifiable. Wherever an extension is granted, however, interest is charged at the rate of 6% per annum, from the time the return was originally required to be filed to the time of payment.

Payment of the tax must be made in full at the time of filing the return. No provision is made for install ment payments such as are allowed by the Federal Act. The partial payment plan undoubtedly was considered unnecessary inasmuch as the amount of tax levied is small compared with the Federal tax.

As soon as practicable after receipt of the return the Comptroller will examine it and compute the tax. If the amount of tax is found to be greater than the amount

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Audit of
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