Typically, a New York State personal income tax refund must be claimed within three years of the date the return was filed, or within two years of when the tax was paid, whichever period expires the latest.

Last month, New York State Governor Andrew Cuomo signed into law bill number A05959-2013, which amends section 687 of the New York State tax law to provide for the suspension of the statute of limitations for claiming an income tax refund in certain cases. New York borrowed this new provision from federal law, as it closely mirrors section 6511(h) of the Internal Revenue Code.

In the case of individual taxpayers, the running of the statute of limitations will be suspended while the taxpayer is unable to manage financial affairs due to a disability. A taxpayer will be considered financially disabled if such taxpayer is “unable to manage his or her financial affairs by reason of a medically determinable physical or mental impairment.” The physical or mental impairment should expect to result in death or last for a continuous period of at least one year. However, a taxpayer will not be considered financially disabled if another person is authorized to conduct the taxpayer’s financial affairs.

The form and manner of proof of the impairment is to be determined by the Commissioner of the New York State Department of Taxation and Finance. The provision took effect immediately, and applies to “periods of financial disability commencing before, on, or after the date of enactment,” but is not applicable to claims for which the statute of limitations has already expired.

It is unclear at this time whether taxpayers looking to utilize this new provision will have to file any forms in addition to filing an income tax return. It appears that income tax year 2010, for taxpayers on extension, will be the first year for which the new law may be applicable. For taxpayers not on extension, the first applicable year appears to be income tax year 2011. Further guidance should be made available as taxpayers and tax professionals begin making use of the new law.

Submitted by Peter J. Graziano on Thu, 09/18/2014 – 17:41