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New York State Tax Settlment Program: Penalty and Interest Reduction

To Our Clients and Friends January 22, 2010 New York State Tax Settlement Program: Penalty and Interest Reduction The New York State Department of Taxation and Finance is authorized to waive certain interest and penalties that have accrued on outstanding tax liabilities that are at least three years old under a new Penalty and Interest Discount Program (the "PAID Program"). The taxpayer must make full payment of the tax together with the reduced interest and penalty on or before March 15, 2010. Eligible taxpayers will soon receive a letter from the Department inviting them to participate in the PAID Program. Taxpayers that do not receive a letter may also apply, if the following criteria are satisfied: (1) the tax liability is fixed and final -- an assessment or final determination was issued on or before December 31, 2006; and (2) the taxpayer has not been convicted of a crime (and subject to a court order to remit taxes) under the tax law or the penal law. Certain penalties are not eligible for the PAID Program, including fraud penalties, substantial understatement of tax penalties, responsible person penalties relating to withholding tax, and certain reportable transaction penalties. For liabilities assessed on or before December 31, 2003, the taxpayer will be eligible for an 80% reduction in accrued interest and penalties. For liabilities assessed on or after January 1, 2004 but before December 31, 2006, the taxpayer will be eligible for a 50% reduction in accrued interest and penalties. If you have any questions relating to the PAID Program, please contact Debra Herman (212) 903-8736 or Joseph Lipari (212) 903-8765.