(1) The term "commissioner" means the commissioner of taxation and finance.

(2) The term "educational organization" means a higher educational institution which

(A) is authorized by the New York state board of regents to confer degrees, or

(B) offers a range of registered undergraduate and graduate curricula in the liberal arts and sciences, degrees in two or more professional fields and doctoral programs in at least three academic fields, or

(C) is authorized by the New York state board of regents to offer undergraduate curricula below the baccalaureate level which normally lead to the associate degree, as such higher educational institutions are described in subdivisions (k), (l) and (m) of section 50.1 of eight New York codes, rules and regulations.

(3) The term "electronic funds transfer" means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument or computer or magnetic tape so as to order, instruct or authorize a financial institution to debit or credit an account.

(4) The term "health care provider" means any organization described in article twenty-eight or thirty-six of the public health law, or in article thirty-one of the mental hygiene law.

(5) The term "payment of tax" means the amount of tax that is actually remitted upon the filing of a withholding tax return, or is actually remitted for the purposes of obtaining an extension to file such a return.

(6) The term "reconciliation of withholding" means the quarterly combined withholding, wage reporting and unemployment insurance return required to be filed for the last calendar quarter of each year, as prescribed by paragraph four of subsection (a) of section six hundred seventy-four of this chapter.

(b) General rules. (1) Subject to the requirements contained in subdivisions (c) and (d) of this section, the commissioner shall require by regulation that any payment of tax made by a taxpayer who is required, for either of the semi-annual periods ending June thirtieth or December thirty-first, to deduct and withhold an aggregate of thirty-five thousand dollars or more of withholding taxes pursuant to part V of article twenty-two of this chapter, or pursuant to an equivalent provision enacted under the authority of article thirty, thirty-A or thirty-B of this chapter, or article two-E of the general city law, shall be made, on or before the date prescribed by law, by electronic funds transfer to a bank, banking house or trust company designated by the commissioner. The commissioner shall designate only such banks, banking houses or trust companies as are or shall be designated by the comptroller as depositories pursuant to section one hundred seventy-one-a of this chapter, as added by chapter sixty-nine of the laws of nineteen hundred seventy-eight. Notwithstanding any provision of law to the contrary, any such payment shall be deemed to be made on the date the payment is received by the designated depository of the department; provided, however, that at the election of a taxpayer subject to the provisions of this subdivision, mailing by the taxpayer of the applicable withholding tax return and a certified check for the amount of the tax liability on or before the second business day prior to the applicable due date otherwise prescribed by law shall fulfill the requirements of this section and shall be deemed to be timely payment of such tax liability and timely filing of such return.

(2) (A) On or before the thirtieth calendar day following the date regulations implementing the provisions of this section become effective, the commissioner shall, by certified mail, notify taxpayers required to participate in the electronic funds transfer program of their responsibilities under such program. The notice shall also specify that the first payment of tax by electronic funds transfer shall be made on an applicable due date occurring on or after thirty calendar days following receipt by the taxpayer of the notice; provided, however, that the taxpayer may select an optional applicable due date occurring no later than sixty calendar days following receipt by the taxpayer of the notice.

(B) (i) By September first, two thousand two, the commissioner shall, by certified mail, notify taxpayers newly required to participate in the electronic funds transfer program during the July first, two thousand two through June thirtieth, two thousand three program period. Such notice shall contain language advising the taxpayer of the enrollment procedure and of the consequences of failure to enroll in such program, as well as of the taxpayer's obligation to enroll in the program within forty-five calendar days of the mailing of the notice unless such taxpayer challenges such determination of required participation by requesting a hearing within forty-five calendar days of the mailing of such notice. In addition, such notice shall specify that such a taxpayer shall make its first payment of tax by electronic funds transfer by an applicable due date in January, two thousand three.

(ii) By June first, two thousand three and by each succeeding June first, the commissioner shall, by certified mail, notify taxpayers newly required to participate in the electronic funds transfer program. Such notice shall contain language advising the taxpayer of the enrollment procedure and of the consequences of failure to enroll in such program, as well as of the taxpayer's right to challenge such determination of required participation provided a hearing is requested within twenty calendar days of the mailing of such notice. In addition, such notice shall specify that such a taxpayer shall make its first payment of tax by electronic funds transfer by an applicable due date occurring on or after thirty calendar days following receipt by the taxpayer of the notice but no later than sixty calendar days following receipt by the taxpayer of the notice.

(iii) If a taxpayer does not enroll within forty-five or twenty calendar days (as the case may be) of the mailing of the notice provided for in clause (i) or (ii) of this subparagraph or where a taxpayer's challenge to mandatory participation is not sustained and the taxpayer has not enrolled within ten calendar days of notification thereof, the commissioner shall mail another notice, in addition to making other reasonable attempts, to inform the taxpayer of the civil penalty that has been assessed pursuant to subdivision (h) of this section, of the opportunity for abatement of such penalty, and of the future penalties that may result from continued failure to enroll.

(3) Subject to the provisions of subdivision (f) of this section, an electronic funds transfer shall serve as a substitute for the filing of a withholding tax return.

(c) Special rules with respect to health care providers and educational organizations.

(1) The provisions of subdivision (b) of this section shall not apply to health care providers.

(2) All of the provisions of this section shall apply to educational organizations; provided, however, that any payment of tax which is made by an educational organization shall be made by electronic funds transfer on or before the third business day following the date otherwise prescribed by law; and, provided further, that at the election of a taxpayer subject to the provisions of this subdivision, mailing by the taxpayer of the applicable withholding tax return and a certified check for the amount of the tax liability on or before the first business day following the applicable due date otherwise prescribed by law shall fulfill the requirements of this section and shall be deemed to be timely payment of such tax liability and timely filing of such return.

(d) Exemptions. A taxpayer shall be exempt from the requirements contained in subdivision (b) of this section if such taxpayer proves to the satisfaction of the commissioner that aggregate tax withheld, pursuant to the most recent reconciliation of withholding, is less than one hundred thousand dollars.

(e) Voluntary participation. A taxpayer may file a request with the commissioner to pay any tax administered by such commissioner by electronic funds transfer in accordance with the provisions of this section. Such request shall be in such form as the commissioner shall require and shall be granted under such conditions as the commissioner, by regulation, deems necessary. * (f) Return substitution. An electronic funds transfer shall not serve as a substitute for the filing of a withholding tax return if the commissioner determines that such substitution will not ensure the proper receipt and crediting of a payment of tax. * NB Expired December 31, 1992

(g) Confidentiality. The department shall assure the confidentiality of information supplied by taxpayers in effecting electronic funds transfers in accordance with the provisions of section six hundred ninety-seven of this chapter or other applicable provisions of this chapter. The provisions of article six of the public officers law shall not apply to any such information supplied by taxpayers subject to the requirements of this section.

(h) Civil penalty for failure to enroll. If a taxpayer required to participate in the electronic funds transfer program prescribed by this section fails to enroll in such program in accordance with the terms of subparagraph (B) of paragraph two of subdivision (b) of this section, such taxpayer shall pay a penalty equal to five thousand dollars; provided, however, that if such taxpayer enrolls in the program within twenty calendar days after notification of assessment of such penalty is sent by the department by certified mail for program periods beginning on or after July first, two thousand two, then such penalty shall be abated. If such taxpayer continues to fail to enroll in the program after such twenty calendar day period, the taxpayer shall pay an additional penalty of five hundred dollars if the failure is for not more than one month with an additional five hundred dollars for each additional month or fraction thereof during which such failure continues. The penalty provided by this section shall be paid upon notice and demand and shall be assessed, collected and paid in the same manner as the withholding taxes referred to in paragraph one of subdivision (b) of this section; and any reference in the provisions of part VI of article twenty-two of this chapter, which apply to the administration of and procedures with respect to the provisions of this section, shall be deemed also to refer to the penalty provided by this section.

(i) Regulations. The commissioner shall promulgate regulations necessary to implement this section, which regulations shall include, but shall not be limited to, the following:

(1) the different methods of effecting electronic funds transfer messages available to taxpayers. Such methods shall include at least two methods in which the transfer can be effected without any charge to the taxpayer for the electronic funds transfer itself, and one of such methods shall not require the taxpayer to disclose financial institution account information to the department;

(2) the contents of an electronic funds transfer message necessary to ensure the proper receipt and crediting of a tax payment;

(3) the means by which taxpayers will be provided acknowledgements of payments by electronic funds transfer; and

(4) delineation of what shall constitute reasonable cause and absence of willful neglect for purposes of compliance with the provisions of this section, including the inability of a taxpayer, for reasons beyond the taxpayer's control, to utilize any system of electronic funds transfer required pursuant to this section.