New York Advisory Opinion TSB-A-88 (9)I: Issue raised is whether New York State will waive interest and penalties for a 10 year period, on net rental income from a New York building, where the illness and death of a taxpayer's parent caused personal income taxes thereon to be paid inadvertently to the state of the taxpayer's residence.

Plain-English summary

John P. Rooney asked the Department, on behalf of a hypothetical taxpayer, whether New York would waive 10 years' worth of interest and penalties on unpaid New York personal income tax attributable to net rental income from a New York building. The hypothetical taxpayer had moved out of New York more than 20 years earlier, then took over managing his mother's New York rental building when she became terminally ill in 1979 (he does not intend to sell it, and the building generates about $35,000 a year in net rental income). Grief and disruption from his mother's illness and death allegedly caused him to mistakenly pay the tax on that rental income to his own state of residence instead of New York, for roughly 10 years, and he only recently discovered the error - by which point he could no longer recover the money wrongly paid to the other state. He also said he had trouble getting New York tax forms because he rarely visited the state.

The Department's answer draws a sharp line between two very different things that are often lumped together as "penalties and interest." Interest, under Tax Law § 684(a), accrues automatically on any personal income tax not paid by its due date, and the statute contains no provision letting the Department waive that interest for any reason - it doesn't matter whether the taxpayer had a sympathetic excuse for paying late. Penalties, by contrast, are governed by Tax Law § 685(a)(1)-(3), which does allow the Department to excuse a failure to file or pay if the taxpayer shows the failure was due to "reasonable cause and not... willful neglect."

Personal Income Tax Regs § 102.7(d) spells out what counts as reasonable cause, including the death or serious illness of the taxpayer or a family member - but only if the taxpayer then files and pays "within a justifiable period of time" after the illness or death. Regs § 102.7(e) separately provides that difficulty obtaining tax forms or assembling information is not reasonable cause unless the taxpayer requested a filing extension and made a good-faith estimated payment at the time. And Regs § 102.7(d)(4) explicitly rules out "ignorance of the law" as a valid excuse.

Applying these rules, the Department found that 10 years is not a "justifiable period of time" following a 1979 death and illness - that ground for reasonable cause is meant to excuse a short delay right after the triggering event, not a decade-long ongoing failure to file and pay. Difficulty obtaining New York tax forms and not realizing tax was owed at all didn't help either, since both are explicitly excluded as grounds for reasonable cause. So the penalties under § 685(a) stood, uncancelled - and the interest under § 684(a) was never waivable in the first place, regardless of the underlying story.

What this means for you

You've discovered years-old unpaid New York tax on rental or investment property

If you own New York rental property (or other New York-source income) and later discover you've been paying tax on it to the wrong state for years, don't expect New York to waive the interest that has accrued - it can't, by statute, no matter how understandable the mistake. You may have a shot at getting penalties waived, but only if you act quickly once you discover the problem and can show the original delay itself had a specific, time-limited excuse recognized under Regs § 102.7(d) - not simply "I didn't realize I owed New York tax."

You're dealing with a family death or serious illness that disrupted your tax filings

A death or serious illness in the family can excuse a short period of late filing or late payment, but only the period reasonably tied to that event - not an open-ended delay that continues for years afterward. If you or your preparer are dealing with a death, illness, or unavoidable absence, file and pay as soon as reasonably possible once the disruption passes; the longer the gap between the triggering event and your compliance, the weaker the reasonable-cause argument becomes.

You're an accountant explaining why "I paid the wrong state by mistake" doesn't help

Clients sometimes assume a good-faith, if inadvertent, error - like sending New York-source tax dollars to their home state instead - should excuse both the interest and any penalties. This opinion shows that isn't how it works: interest is essentially mechanical and mandatory once a payment is late, with no discretionary waiver available under any circumstances, while penalties depend on a fact-specific reasonable-cause showing that must be tied to a genuinely short, justifiable delay. Trouble getting New York forms, and simply not knowing New York tax was due, are both explicitly disqualified as excuses under the regulations.

Common questions

Q: Can New York ever waive interest on late-paid personal income tax?
A: No. Tax Law § 684(a) imposes interest on any personal income tax not paid by its due date, and the statute has no mechanism for waiving that interest for any reason. It applies regardless of whether the taxpayer might otherwise have "reasonable cause" for paying late - reasonable cause is a concept that applies only to penalties under § 685(a), not to interest.

Q: Does grief over a parent's death excuse a decade of not filing or paying New York tax?
A: No. Regs § 102.7(d)(1) does recognize the death or serious illness of a family member as a potential basis for reasonable cause, but only if the taxpayer files and pays "within a justifiable period of time" after the death, illness, or absence ends. The Department found that 10 years following a 1979 death is far too long to be a "justifiable period" - that ground is meant to excuse a short compliance gap immediately after the triggering event, not an ongoing decade-long failure.

Q: Does having trouble getting New York tax forms count as reasonable cause?
A: No. Regs § 102.7(e) provides that an inability to timely obtain and assemble the information or forms needed to file is not reasonable cause, unless the taxpayer made a timely request for a filing extension and paid a good-faith estimate of the tax due at that time. Simply living out of state and rarely visiting New York doesn't satisfy that exception.

Q: Does not knowing that New York tax was owed at all excuse the failure to pay?
A: No. Regs § 102.7(d)(4) explicitly states that "ignorance of the law" will not be considered a basis for reasonable cause, even though the same subdivision otherwise allows the Department to recognize other, unlisted causes that an ordinarily prudent person would view as reasonable.

Q: What's the practical difference between how interest and penalties are treated here?
A: Interest is essentially automatic and non-negotiable - Tax Law § 684(a) has no waiver provision at all, so it accrues regardless of the taxpayer's excuse. Penalties under § 685(a) are different: they can be avoided, but only through a specific factual showing of reasonable cause under Regs § 102.7, and that showing has to tie a short, defined delay to a recognized triggering event - not simply explain away years of noncompliance.

Citations and references

• Tax Law § 684(a) - imposes interest on any personal income tax not paid by its due date, with no statutory provision allowing that interest to be waived for any reason
• Tax Law § 685(a)(1)-(3) - imposes penalties for failure to file a personal income tax return or pay the tax shown as due, unless the failure is due to reasonable cause and not willful neglect
• Personal Income Tax Regs § 102.7(d)(1) - death or serious illness of the taxpayer or a family member may constitute reasonable cause, but only if the return is filed and tax paid within a justifiable period of time after the event
• Personal Income Tax Regs § 102.7(d)(4) - any other cause an ordinarily prudent person would view as reasonable may constitute reasonable cause, but ignorance of the law is explicitly excluded
• Personal Income Tax Regs § 102.7(e) - inability to timely obtain and assemble information or forms is not reasonable cause, absent a timely extension request accompanied by a good-faith estimated payment
• Personal Income Tax Regs § 151.1 - governs extensions of time to file a New York State income tax return
• Personal Income Tax Regs § 151.2 - governs the good-faith estimate of tax due that must accompany a timely extension request

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1988.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a88_9i.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-88 (9) I
Income Tax
July 19, 1988

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I880412A

On April 12, 1988, a Petition for Advisory Opinion was received from John P. Rooney, 45
Fifth Avenue, New York, New York 10003.
The issue raised is whether New York State will waive interest and penalties for a 10 year
period, on net rental income from a New York building, where the illness and death of a taxpayer's
parent caused personal income taxes thereon to be paid inadvertently to the state of the taxpayer's
residence.
Petitioner presents the following hypothetical situation. The hypothetical taxpayer is retired
and discontinued his New York residence more than 20 years ago. The taxpayer's mother owned and
rented a building in New York. In 1979, she suffered a terminal illness. At that time, the taxpayer
took control of the building and he does not intend to sell the premises. Since the death of his
mother, the taxpayer has had minimal contact with the building. The net rental income averages
$35,000 annually.
Petitioner states that because of the sadness and disturbance caused by the taxpayer's mother's
illness and death in 1979, the taxpayer inadvertently began paying taxes on the net rental income to
the state where he resided. This mistake has only recently been discovered and the taxpayer is
unable to recover several years' taxes paid to such state. Petitioner states that the sadness and
disturbance caused by the taxpayer's mother's illness and death made it impossible for the taxpayer
to assemble accurate tax information and records. Also, since he had little cause to visit New York,
the taxpayer had difficulty in obtaining New York tax forms.
Petitioner contends that based on the taxpayer's circumstances described herein, the
taxpayer's non-payment of New York taxes was a good faith error and the interest and penalties on
such payment of owed taxes should be waived.
Section 684(a) of the Tax Law provides for payment of interest on any amount of personal
income tax that is not paid on or before the last date prescribed for payment under Article 22 of the
Tax Law. There is no provision for waiver of said interest for any reason. Accordingly, interest
charged on a taxpayer's tax deficiency cannot be waived regardless of whether there might be
reasonable cause for late filing and payment.
Paragraphs (1) through (3) of section 685(a) of the Tax Law levy penalties for failure to file
personal income tax returns and to pay the amounts shown or required to be shown thereon in a
timely manner, unless "such failure is due to reasonable cause and not due to willful neglect."
Section 102.7 of the Personal Income Tax Regulations provides that grounds for reasonable
cause must be clearly established as stated in subdivision (d) and may include the following:

-2­
TSB-88 (9) I
Income Tax
July 19, 1988
(1) The death or serious illness of the taxpayer, employer or other person against whom the
additions to tax or penalties have been assessed or are assessable, a member of such party's family,
such party's personal representative or employer, or the unavoidable absence of the taxpayer,
employer, or other person or personal representative from the usual place of business, which
precluded timely compliance, may constitute reasonable cause provided that:
(i) in the case of the failure to file any New York State income tax return, the
applicable New York State income tax return is filed; or
(ii) in the case of the failure to pay or deposit any tax, such amount is paid or
deposited;
within a justifiable period of time after the death, illness or absence. A justifiable period of time is
that period which is substantiated by or on behalf of the taxpayer, employer or other person as a
reasonable period of time for filing the return and/or for paying any tax based on the facts and
circumstances in each case.
(2) The destruction of the place of business or business records of the taxpayer, employer or
other person against whom the additions to tax or penalties have been assessed or are assessable, the
place of business or business records of such party's personal representative or employer, or the
taxpayer's residence or income records, including wage and tax statements and returns of
information, by a fire or other documented casualty, which precluded timely compliance, may
constitute reasonable cause provided that:
(i) in the case of the failure to file any New York State income tax return, the
applicable New York State income tax return is filed; or
(ii) in the case of the failure to pay or deposit any tax, such amount is paid or
deposited;
within a justifiable period of time after the casualty takes place. A justifiable period of time is that
period which is substantiated by or on behalf of the taxpayer, employer or other person as a
reasonable period of time for filing the return and/or for paying any tax based on the facts and
circumstances in each case.
(3) A pending petition to the Commissioner of Taxation and Finance for an advisory opinion
or a declaratory ruling, a pending conciliation conference proceeding in the Bureau of Conciliation
and Mediation Services of the Division of Taxation, a pending petition to the Division of Tax
Appeals or a pending action or proceeding for judicial determination may constitute reasonable
cause, until the time in which the taxpayer has exhausted its administrative or judicial remedies, as
applicable, for a taxable period or periods the return or returns for which are due subsequent to the
filing of the petition with the Commissioner of Taxation and Finance,

-3­
TSB-88 (9) I
Income Tax
July 19, 1988
the commencement of the conciliation conference proceeding, the filing of the petition with the
Division of Tax Appeals or the commencement of the judicial action or proceeding provided that:
(i) the petition, action or proceeding involves a question or issue affecting whether
or not the individual or entity is subject to tax and/or required to file a New York State
income tax return;
(ii) the petition, action or proceeding is not based on a position which is frivolous nor
is it intended to delay or impede the administration of article 22 of the Tax Law; and
(iii) the facts and circumstances for such taxable period or periods are identical or
virtually identical to those of the taxable period or periods covered by the petition, action or
proceeding.
(4) Any other cause for delinquency which would appear to a person of ordinary prudence
and intelligence as a reasonable cause for delay and which clearly indicates an absence of willful
neglect may be determined to be reasonable cause. Ignorance of the law, however, will not be
considered as a basis for reasonable cause.
Subdivision (e) of section 102.7 of the Personal Income Tax Regulations provides that:
(e)(1) Except as provided for in subparagraph (2)(ii) of this subdivision, an inability to timely obtain
and assemble essential information (including wage and tax statements or returns of information
from an employer or payor) required for the preparation of a complete New York State income tax
return, shall not be a basis for reasonable cause.
(2)(i) Where an inability to timely obtain and assemble essential information required for the
preparation of a complete New York State income tax return exists and extensions of time for filing
such return are available pursuant to section 151.1 of this Title, such extensions of time for filing
must be obtained, a return which reflects the known tax liability must be filed on or before the
extended due date for filing and any balance of tax must be paid with the return on that portion of
the tax liability which can be ascertained and shown on such return. The relevant facts affecting that
portion of the tax liability which cannot be ascertained must be fully disclosed with the timely filed
New York State income tax return. When such liability is ascertained, an amended New York State
income tax return must be immediately filed together with any additional tax due.
(ii) However, where a taxpayer:
(a) makes a timely application for an extension of time to file the New York
State income tax return;

-4­
TSB-88 (9) I
Income Tax
July 19, 1988
(b) makes a good faith effort to properly estimate the tax due in accordance
with section 151.2 of this Title; and
(c) pays with the application for extension of time for filing any unpaid
balance of the tax as estimated;
an inability for reasons beyond the taxpayer's control to obtain and assemble essential
information may constitute reasonable cause for failure to file a New York State income tax
return and for failure to pay the amount shown as tax on such return, where such inability
precluded the taxpayer from properly estimating the tax as finally determined (see section
151.2[a][3][i] of this Title) thereby invalidating the extensions of time for filing the New
York State income tax return. In support of this ground as a basis for reasonable cause, the
taxpayer or the taxpayer's representative must indicate what information was unavailable and
explain the reason or reasons why such information was unavailable, despite reasonable
efforts by or on behalf of the taxpayer to obtain the missing information. It must further be
explained how the original estimation of tax was derived and what, if any, allowances were
included in the estimation to provide for the unknown tax liability.
Based on the hypothetical circumstances described herein and the grounds for reasonable
cause contained in section 102.7(d)(1) of the Personal Income Tax Regulations, it has not been
substantiated that 10 years is a reasonable period of time for filing a tax return and paying the tax
due. In addition, the taxpayer's inability to timely obtain and assemble essential information or tax
forms is not a basis for reasonable cause. Moreover, the taxpayer's ignorance of the law will not be
considered as a basis for reasonable cause.
The hypothetical taxpayer's failure to file New York State personal income tax returns and
failure to pay the taxes due for 10 years following the death of the taxpayer's mother is not due to
"reasonable cause" as such term is described in section 102.7 of the Personal Income Tax
Regulations. Accordingly, any additions to tax levied pursuant to paragraphs (1) through (3) of
section 685(a) of the Tax Law would not be waived.

DATED: July 19, 1988

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.