§ 63. Subparagraph (D) of paragraph 3 of subsection (b) of section 671 of the tax law, as added by chapter 61 of the laws of 1989, is amended to read as follows:

in

(D) Taxes withheld at maximum rate. The tax withheld on any payment subject to withholding under subparagraph (D) or (E) of paragraph two of this subsection shall be withheld at the highest rate of tax on New York taxable income, without any allowance for deductions or exemptions, effect under this article [(applying the provisions of section six hundred ninety-nine for taxable years beginning before nineteen hundred ninety-one) for the taxable year in which the payment is made.

§ 64. Subdivision (a) of section 801 of the tax law, as added by chapter 190 of the laws of 1990, is amended to read as follows:

(a) "Lubricating oil". Any petroleum based or synthetic lubricant suitable for use as a lubricant in the engine of a motor vehicle. This term shall not include transmission fluids (other than automotive transmission fluids), gear oils, grease or kerosene.

§ 65. Subdivision (c) of section 1087 of the tax law, as amended by chapter 61 of the laws of 1989, is amended to read as follows:

were

(c) Notice of change or correction of federal income. -If a taxpayer is required by subdivision three of section two hundred eleven, subsection (e) of section fourteen hundred sixty-two or paragraph one of subdivision (e) of section fifteen hundred fifteen, to file a report or amended return in respect of (i) a decrease or increase in federal taxable income or federal alternative minimum taxable income or federal tax, or (ii) a federal change or correction or renegotiation, or computation or recomputation of tax, which is treated in the same manner as if it an overpayment for federal income tax purposes, claim for credit or refund of any resulting overpayment of tax shall be filed by the taxpayer within two years from the time such report or amended return was required to be filed with the commissioner of taxation and finance. If the report or amended return required by any such provision of law[,] is not filed within the ninety day period therein specified, no interest shall be payable on any claim for credit or refund of the overpayment attributable to the federal change or correction. The amount of such credit or refund

(1) shall be computed without change of the allocation of income or capital upon which the taxpayer's return (or any additional assessment) was based, and

(2) shall not exceed the amount of the reduction in tax attributable to such decrease or increase in federal taxable income, federal alternative minimum taxable income, or federal tax or to such federal change or correction or renegotiation, or computation or recomputation of tax. This subsection shall not affect the time within which or the amount for which a claim for credit or refund may be filed apart from this subsection.

§ 66. Subdivision (c) of section 1119 of the tax law, as amended by chapter 190 of the laws of 1990, is amended to read as follows:

(c) A refund or credit equal to the amount of sales or compensating use tax imposed by this article and pursuant to the authority of article twenty-nine, and paid on the sale or use of tangible personal property, shall be allowed the purchaser where such property is later used by the purchaser in performing a service subject to tax under [paragraphs] paragraph (1), (2), (3), (5), (7) or (8) of subdivision (c) of section eleven hundred five or under section eleven hundred ten and such property has become a physical component part of the property upon which the service is performed or has been transferred to the purchaser of the service in conjunction with the performance of the service subject to tax or if a contractor, subcontractor or repairman purchases tangible personal property and later makes a retail sale of such tangible personal property, the acquisition of which would not have been a sale at retail to him but for the second to last sentence of subparagraph (i) of paragraph (4) of subdivision (b) of section eleven hundred one. An application for the refund or credit provided for herein must be filed with the commissioner of taxation and finance within the time provided by subdivision (a) of section eleven hundred thirty-nine. Such application shall be in such form as the commissioner may prescribe. Where an application for credit has been filed, the applicant may immediately take such credit on the return which is due coincident with or immediately subsequent to the time that he files his application for credit. However, the taking of the credit on the return shall be deemed to be part of the application for credit. The procedure for granting or denying such applications for refund or credit and review of such determina

tions shall be as provided in subdivision (e) of section eleven thirty-nine.

hundred

§ 67. Subdivision (c) of section 1132 of the tax law, as amended by chapter 411 of the laws of 1986, is amended to read as follows:

or

(c) For the purpose of the proper administration of this article and to prevent evasion of the tax hereby imposed, it shall be presumed that all receipts for property or services of any type mentioned in subdivisions (a), (b), (c) and (d) of section eleven hundred five, all rents for occupancy of the type mentioned in subdivision (e) of said section, and all amusement charges of any type mentioned in subdivision (f) of said section, are subject to tax until the contrary is established, and the burden of proving that any receipt, amusement charge or rent is not taxable hereunder shall be upon the person required to collect tax or the customer. Except as provided in subdivision (h) of this section, unless (1) a vendor, not later than ninety days after delivery of the property or the rendition of the service, shall have taken from the purchaser a resale or exemption certificate in such form as the [tax commission] commissioner may prescribe, signed by the purchaser and setting forth his name and address and, except as otherwise provided by regulation of the [tax commission] commissioner, the number of his [registration] certificate of authority, together with such other information as said [commission] commissioner may require, to the effect that the property or service was purchased for resale or for some use by reason of which the sale is exempt from tax under the provisions of section eleven hundred fifteen, and, where [the] such resale or exemption certificate requires the inclusion of the purchaser's [registration] certificate of authority number or other identification number required by regulations of the [tax commission] commissioner, that the purchaser's certificate of authority has not been suspended or revoked and has not expired as provided in section eleven hundred thirty-four (2) the purchaser, not later than ninety days after delivery of the property or the rendition of the service, furnishes to the vendor: any affidavit, statement or_additional evidence, documentary or otherwise, which the [tax commission] commissioner may require demonstrating that the purchaser is an exempt organization described in section eleven hundred sixteen, the sale shall be deemed a taxable sale at retail. Where a resale or exemption certificate or [document] an affidavit, statement or additional evidence referred to in the previous sentence is received within the time limit set forth therein, but is deficient in some material manner, and where such deficiency is thereafter removed, the receipt of such resale or exemption certificate or [document] such affidavit, statement or additional evidence shall be deemed to have satisfied all of the requirements of the preceding sentence. Where such a resale or exemption certificate or such an affidavit, statement or additional evidence has been furnished to the vendor, the burden of proving that the receipt, amusement charge or rent is not taxable hereunder shall be solely upon the customer. The vendor shall not be required to collect tax from purchasers who furnish_a [certificate of] resale or exemption certificate, or such an [exempt organization] affidavit, statement [or other exemption certificate] or additional evidence in proper form, unless, in the case of a resale or exemption certificate described in clause one of the second sentence of this subdivision whereon the purchaser's [registration] certificate of authority number, or other identification number required by regulation of the [tax commission] commissioner, is required to be included, such purchaser's certificate of authority is invalid because it has been been suspended or revoked as provided in section eleven hundred thirty-four, and the [tax commission] commissioner has furnished registered vendors with information identifying those persons whose certificates of authority have been suspended or revoked, or unless such purchaser's certificate of authority is invalid because it has expired, and the [tax commission] commissioner has provided registered vendors with a means of determining whether such expiration has occurred. Where the vendor accepts such a resale or exemption certificate from a person identified by the [tax commission] commissioner as one whose certificate of authority has been suspended or revoked or from a person whose certificate of authority has been identified as having expired, the receipt, amusement charge or rent from such transaction shall be deemed to be a taxable sale at retail. Provided, however, the [tax commission] commissioner may authorize a EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

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purchaser, who acquires tangible personal property or services under circumstances which make it impossible at the time of acquisition to determine the manner in which the tangible personal property or services will be used, to pay the tax directly to the [tax commission] commissioner and waive the collection of the tax by the vendor. Subject to such reasonable conditions as the [tax commission] commissioner may require, the [tax commission] commissioner shall authorize an omnibus carrier described in subdivision (b) of section eleven hundred nineteen to pay the tax on the purchase or use of an omnibus directly to the [tax commission] commissioner and waive the collection of the tax by the vendor. No such authority shall be granted or exercised except upon plication to the [tax commission] commissioner, and the issuance by the [tax commission] commissioner, in [its] his discretion, of a direct payment permit. If a direct payment permit is granted, its use shall be subject to conditions specified by the [tax commission] commissioner, and the payment of tax on all acquisitions pursuant to the permit shall be made directly to the [tax commission] commissioner by the permit holder. The [tax commission] commissioner may suspend or revoke a direct payment permit where the permit holder fails to comply with any of the provisions of this article or any rule promulgated by the [tax commission] commissioner with respect to this article. The notice and hearing provisions applicable to the revocation and suspension of certificates of authority under section eleven hundred thirty-four shall apply to the suspension and revocation of direct payment permits. A vendor shall not be required to collect tax from a purchaser who furnishes a direct payment permit in proper form, unless such purchaser's direct payment permit has been suspended or revoked by the [tax commission] commissioner and the [tax commission] commissioner has provided registered vendors with information identifying those persons whose direct payment permits have been suspended or revoked. Where a vendor accepts a direct payment permit from a person whose direct payment permit has been suspended or revoked, and the [tax commission] commissioner has provided registered vendors with information identifying those persons whose direct payment permits have been suspended or revoked, the receipt, amusement charge or rent from such transaction shall be deemed to be subject to tax.

§ 68. Section 1223 of the tax law, as amended by chapter 769 of the laws of 1990, is amended to read as follows: § 1223. Limitations on rates. No transaction taxable under sections twelve hundred two through twelve hundred four shall be taxed pursuant to this article by any county or by any city located therein, or by both, at an aggregate rate in excess of the highest rate set forth in the applicable subdivision of section twelve hundred one [of this act] or, in the case of any taxes imposed pursuant to the authority of section twelve hundred ten or twelve hundred eleven (other than taxes imposed by a city having a population of one million or more for the limited period provided in section twelve hundred ten or pursuant to subdivision (h) of section twelve hundred ten or by the [counties] county of Nassau, Erie, Cattaraugus or Allegany as provided in section twelve hundred ten) at a rate in excess of three percent, except that in the city of Yonkers and in the city of Mount Vernon, the rate may not be in excess of four percent and in the city of Rome, the rate may not be in excess of three and one-quarter percent and except that in the city of Poughkeepsie in the county of Dutchess, if such county withdraws from the metropolitan commuter transportation district pursuant to section twelve hundred seventy-nine-b of the public authorities law and if the revenues from a one-quarter percent rate of such tax imposed by such county, pursuant to the authority of section twelve hundred ten of this article, are required by local laws, ordinances or resolutions to be set aside for mass transportation purposes, the rate may not be in excess of three and one-quarter percent. If a transaction is taxed by both a county and a city, the rate of tax on such transaction imposed by the county or city, not having prior right thereto pursuant to section twelve hundred twenty-four, shall be deemed to be reduced (or the entire tax eliminated, if necessary) to the extent necessary to comply with the foregoing requirement. A tax imposed by a county upon any transaction, to the extent that it would require a reduction in any tax rate imposed thereon by a city, shall not become effective in respect to any transaction taxed by such city (or in respect of other similar transactions outside of the city which, if occurring in such city, would be subject to such city tax) before the commencement of the city's next succeeding fiscal year and then only if the county shall have given notice to such

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city of its imposition of a tax on such transaction at least six months prior to the commencement of such fiscal year, provided however that the local legislative body body of such city may waive the requirement of such notice and the postponement of the effective date of such tax. A city tax upon any transaction, to the extent that it would require a reduction in any tax rate imposed by a county thereon, shall not become effective in respect of any transaction taxed by such county before the commencement of the county's next succeeding fiscal year and then only if the city shall have given notice to such county of its imposition of a tax on such transaction at least six months prior to the commencement of such fiscal year, provided, however, that the local legislative body of such county may waive the requirement of such notice and postponement of the effective date of such tax. However, whether or not the six months' notice requirement provided in this section has been waived, a tax imposed pursuant to the authority of section twelve hundred ten or twelve hundred eleven shall still be subject to the requirements provided for in the first three sentences of subdivision (d) of such sections and in subdivision (e) of such sections.

§ 69. Subsection (f) of section 1301-B of the tax law, as amended by chapter 333 of the laws of 1987, is amended to read as follows:

(f) Definitions and special rules. For purposes of this section, the following [definitions and special rules] provisions shall apply, to the extent applicable to the taxpayer's federal tax on lump sum distributions [shall apply]: (1) the definitions and special rules as specified in paragraph four of subsection (e) of section four hundred two of the internal revenue code; and (2) the special rules relating to (A) individuals who have attained the age of fifty before January first, nineteen hundred eighty-six and (B) capital gains, as specified in paragraphs three, four, five and six of subsection (h) of section eleven hundred twenty-two of the tax reform act of nineteen hundred eighty-six enacted by public law 99-514, but (i) in the event that paragraph three of such subsection is applicable, clause (ii) of subparagraph (B) of such paragraph shall be applied using a rate of one and seventy-two [hundreths] hundredths percent, and (ii) in the event that paragraph five of such subsection is applicable, the words "five" and "one-fifth" in subsection (b) of this section shall be read as "ten" and "onetenth" respectively, and subsection (b) of this section shall be applied by using the rate of tax specified in subsection (a) of section thirteen hundred four as such subsection was in effect for taxable years beginning in nineteen hundred eighty-six.

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§ 70. Subdivision (e) of section 1401 of the tax law, as added by chapter 61 of the laws of 1989, is amended to read as follows:

(e) "Conveyance" means the transfer or transfers of any interest in real property by any method, including but not limited to sale, exchange, assignment, surrender, mortgage foreclosure, transfer in lieu of foreclosure, option, trust indenture, taking by eminent domain, conveyance upon liquidation or by a receiver, or transfer or acquisition of a controlling interest in any entity with an interest in real property. Transfer of an interest in real property shall include the creation of a leasehold or sublease only where (i) the sum of the term of the lease or sublease and any options for renewal exceeds forty-nine years, (ii) substantial capital improvements are or may be made by or for the benefit of the lessee or sublessee, and (iii) the lease or sublease is for substantially all of the premises constituting the real property. Notwithstanding the foregoing, conveyance of real property shall not include a conveyance pursuant to devise, bequest or inheritance; the creation, modification, extension, spreading, severance, consolidation, assignment, transfer, release or satisfaction of a mortgage; a mortgage subordination agreement, a mortgage severance agreement, an instrument given to perfect or correct a recorded mortgage; or a release of lien of tax pursuant to this chapter or the internal revenue code.

§ 71. Subdivision (g) of section 1401 of the tax law, as amended by chapter 61 of the laws of 1989, is amended to read as follows:

(g) "Grantor" means the person making the conveyance of real property or interest therein. Where the conveyance consists of a transfer or an acquisition of a controlling interest in an entity with an interest in real property, "grantor" means the entity with an interest in real property or a shareholder or partner transferring stock or partnership EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

interest, respectively[, to a person or persons acquiring a interest in such entity].

controlling

§ 72. The tax law is amended by adding a new section 1436 to read as follows:

§ 1436. Returns to be secret. (a) Except in accordance with proper judicial order or as otherwise provided by law, it shall be unlawful for the treasurer or any officer or employee of Erie County or any person engaged or retained by such county on an independent contract basis to divulge or make known in any manner the particulars set forth or disclosed in any return required under a local law enacted pursuant to this article. Provided, however, that nothing in this section shall prohibit the recording officer from making a notation on an instrument effecting a conveyance indicating the amount of tax paid. No recorded instrument effecting a conveyance shall be considered a return for purposes of this section.

(b) The officers charged with the custody of such returns shall not be required to produce any of them or evidence of anything contained in them in any action or proceeding in any court, except on behalf of the county in any action or proceeding involving the collection of a tax due under a local law enacted pursuant to this article to which such county or an officer or employee of such county is a party or a claimant, or on behalf of any party to any action or proceeding under the provisions of a local law enacted pursuant to this article when the returns or facts shown thereby are directly involved in such action or proceeding, in any of which events the court may require the production of, and may admit in evidence, so much of said returns or of the facts shown thereby, as are pertinent to the action or proceeding and no more.

(c) Nothing herein shall be construed to prohibit the delivery to a grantor or grantee of an instrument effecting a conveyance or the duly authorized representative of a grantor or grantee of a certified copy of any return filed in connection with such instrument or to prohibit the publication of statistics so classified as to prevent the identification of particular returns and the items thereof, or the inspection by the legal representatives of such county of the return of any taxpayer who shall bring action to set aside or review the tax based thereon.

(d) Any officer or employee of such county who willfully violates the provisions of this section shall be dismissed from office and be incapable of holding any public office in this state for a period of five years thereafter.

§ 73. Paragraph (b) of subdivision 1 of section 1440 of the tax law, as amended by chapter 900 of the laws of 1984, is amended to read as follows:

(b) In the case of (i) the granting of an option with use and occupancy of real property or (ii) the creation of a leasehold or sublease that is a transfer of real property, as defined in subdivision seven of this section, consideration shall also include the value of the rental and other payments attributable to the use and occupancy of the real property or interest therein [and], the value of any option to purchase or renew included in such transfer and the value of rental or other payments attributable to the exercise of any option to renew.

§ 73-a. Subdivision 6 of section 1440 of the tax law, as added by chapter 15 of the laws of 1983, is amended to read as follows:

6. "Real property" means every estate or right, legal or equitable, present or future, vested or contingent, in lands, tenements or hereditaments, including buildings, structures and other improvements thereon and leaseholds, which are located in whole or in part within the state. It shall not include rights to sepulture. For purposes of this article, there shall be apportionments of consideration and original purchase price in connection with the transfer of real property located partly within the state and partly without the state.

§ 74. Subparagraph 2 of paragraph (f) of subdivision 1 of section 1447 of the tax law is repealed.

§ 75. Paragraph 3 of subdivision (d) of section 1456 of the tax law, as added by chapter 686 of the laws of 1986, is amended to read as follows:

or

(3) Where stock the purchase of which is the basis for the credit provided for herein is disposed of, the taxpayer's entire net income[, the portion thereof allocated within the state,] shall be computed, pursuant to regulations promulgated by the [state tax commission] commissioner, SO as to properly reflect the reduced cost of such stock arising from the application of the credit provided for herein.