SB 1012

This bill modifies the interest rates applicable to various late, nondelinquent taxes and fees owed to the Department of Revenue and to overpayments for those taxes and fees that are refunded by DOR. Under current law, generally, late, nondelinquent taxes or fees administered by DOR are subject to an interest rate of 12 percent per year, and DOR must pay interest at the rate of 3 percent per year on refunds of overpayments of those taxes or fees. Beginning in 2026, the bill requires DOR to annually determine an interest rate to be used in calculating interest for late, nondelinquent taxes or fees administered by DOR and for refunds of overpayments paid by DOR. The interest rate is based on the effective federal funds rate published by the Federal Reserve Bank of New York for January 2 of the applicable year.

The bill applies to the following taxes and fees: 1) the individual income and corporate income and franchise tax; 2) the withholding tax; 3) the sales and use tax; 4) taxes paid by utilities and insurers; 5) excises taxes on motor vehicle fuel, alcohol beverages, and cigarettes, tobacco, and vapor products; 6) the economic development surcharge; 7) the petroleum inspection fee; 8) the metalliferous mining tax; and 9) the charge imposed by DOR on a city, village, town, or county for the expenses incurred by DOR in examining city, village, town, or county records regarding the assessment of property upon a failure to return information requested by DOR.

Also, current law requires that an interest rate of 12 percent per year apply to delinquent individual income and corporate income and franchise taxes in instances in which the secretary of revenue determines that reduction from an interest rate of 1.5 percent per month for such delinquent taxes is fair and equitable. The bill requires that the interest rate described above that is determined annually by DOR based on the effective federal funds rate apply to such delinquent taxes in instances in which the secretary determines that the reduction is fair and equitable.