N.Y. Tax Law § 283 – Registration of distributors

1. The department of taxation and finance, upon the application of a person, shall register such person as a distributor under this article except as provided in subdivisions two and five of this section. The application shall be in a form and contain such data as the department of taxation and finance shall prescribe. No person, unless so registered, shall import or cause any motor fuel to be imported into the state, for use, distribution, storage or sale within the state or shall produce, refine, manufacture or compound motor fuel within the state. No distributor, unless so registered, shall make any sale, transfer, use or other disposition of motor fuel within the state, except a sale, transfer, use or other disposition, if any, as to which the state cannot impose such condition by reason of the United States constitution and of laws of the United States enacted pursuant thereto.
2. Where a person files an application for registration under this section and in considering such application the commissioner ascertains that (a) any tax imposed under this chapter or any related statute as defined in section eighteen hundred of this chapter has been finally determined to be due from such applicant or from any officer, director or partner of such applicant, shareholder directly or indirectly owning more than ten percent of the number of shares of stock of such applicant (where such applicant is a corporation) entitling the holder thereof to vote for the election of directors or trustees, or any shareholder or employee of such applicant under a duty to file a return under or pursuant to the authority of this article or pay the taxes imposed by or pursuant to the authority of this article on behalf of such applicant, and has not been paid in full, (b) a liability for the penalty provided for under subdivision two of section two hundred eighty-nine-b of this chapter has been finally determined to be due from an officer, director, shareholder directly or indirectly owning more than ten percent of the number of shares of stock of such applicant (where such applicant is a corporation) entitling the holder thereof to vote for the election of directors or trustees, employee or partner of such applicant or a shareholder of such applicant under a duty to file a return under or pursuant to the authority of this article or pay the taxes imposed by or pursuant to the authority of this article on behalf of such applicant, and has not been paid in full, (c) such applicant has been convicted of a crime provided for in this chapter or has been convicted under the tax laws or penal laws of any other state, or a political subdivision of this state or such other state, or of the United States of a criminal offense which, if committed and prosecuted in this state, would constitute a similar crime under this chapter, within the preceding five years, (d) an officer, director or partner of such applicant, a shareholder directly or indirectly owning more than ten percent of the number of shares of stock of such applicant (where such applicant is a corporation) entitling the holder thereof to vote for the election of directors or trustees, or an employee or shareholder of such applicant who, as such employee or shareholder, is under a duty to file a return under or pursuant to the authority of this article or pay the taxes imposed by or pursuant to the authority of this article on behalf of such applicant, has been convicted of a crime provided for in this chapter or has been convicted under the tax laws or penal laws of any other state, or a political subdivision of this state or such other state, or of the United States of a criminal offense which, if committed and prosecuted in this state, would constitute a similar crime under this chapter, within the preceding five years, or an employee of such applicant was, in his capacity as a person under a duty to file a return under or pursuant to the authority of this article or pay the taxes imposed by or pursuant to the authority of this article on behalf of any person, convicted of a crime provided for in this chapter or has been convicted under the tax laws or penal laws of any other state, or a political subdivision of this state or such other state, or of the United States of a criminal offense which, if committed and prosecuted in this state, would constitute a similar crime under this chapter, within the preceding five years, (e) such applicant, or an officer, director or partner of such applicant, shareholder directly or indirectly owning more than ten percent of the number of shares of stock of such applicant (where such applicant is a corporation) entitling the holder thereof to vote for the election of directors or trustees, or employee or shareholder of such applicant under a duty to file a return under or pursuant to the authority of this article or to pay the taxes imposed by or pursuant to the authority of this article on behalf of such applicant, who was an officer, director or partner of another person, or who directly or indirectly owned more than ten percent of the number of shares of stock of another person (where such other person is a corporation) entitling the holder thereof to vote for the election of directors or trustees, or who was an employee or shareholder of another person under a duty to file a return under or pursuant to the authority of this article or pay the taxes imposed by or pursuant to the authority of this article on behalf of such other person at the time any tax imposed under this chapter or any related statute as defined in section eighteen hundred of this chapter was finally determined to be due, from such other person and where such tax has not been paid in full, or at the time such other person was convicted of a crime provided for in this chapter or has been convicted under the tax laws or penal laws of any other state, or a political subdivision of this state or such other state, or of the United States of a criminal offense which, if committed and prosecuted in this state, would constitute a similar crime under this chapter, within the preceding five years, or at the time the registration of such other person was cancelled or suspended pursuant to subdivision four of this section within the preceding five years, or at the time such other person committed any of the acts or omissions which are, or was convicted as, specified in subdivision four of this section within the preceding five years, provided, however, where an applicant or such officer, director, partner, shareholder or employee of such applicant was only an employee of another person, the applicable examination of tax payment history of such other person shall be limited to the taxes imposed by this article or by or pursuant to article twenty-eight or twenty-nine of this chapter with respect to motor fuel and the applicable examination of prior criminal convictions shall be limited to those which relate to motor fuel, (f) the registration of such applicant or of an officer, director or partner of such applicant, shareholder directly or indirectly owning more than ten percent of the number of shares of stock of such applicant (where such applicant is a corporation) entitling the holder thereof to vote for the election of directors or trustees, or employee or shareholder of such applicant under a duty to file a return under or pursuant to the authority of this article or to pay the taxes imposed by or pursuant to the authority of this article on behalf of such applicant has been cancelled or suspended pursuant to subdivision four of this section within the preceding five years, or (g) the applicant, an officer, director or partner of the applicant, a shareholder directly or indirectly owning more than ten percent of the number of shares of stock of such applicant (where such applicant is a corporation) entitling the holder thereof to vote for the election of directors or trustees, or an employee or shareholder of such applicant under a duty to file a return under or pursuant to the authority of this article or to pay the taxes imposed by or pursuant to the authority of this article on behalf of the applicant, has committed any of the acts or omissions which are, or was convicted as, specified in subdivision four of this section within the preceding five years, the commissioner may refuse to register such applicant.
3. The tax commission shall require a distributor to file with the department of taxation and finance a bond issued by a surety company approved by the superintendent of financial services as to solvency and responsibility and authorized to transact business in this state or other security acceptable to the tax commission, in such amount as the tax commission may fix, in an amount determined in accordance with rules and regulations prescribed by it, to secure the payment of any sums due from such distributor (i) pursuant to this article and (ii) pursuant to articles twenty-eight and twenty-nine of this chapter with respect to sales and uses of motor fuel. The tax commission shall require that such a bond or other security be filed before a distributor is registered, and the amount thereof may be increased at any time when in its judgment the same is necessary as a protection to the revenues under this article and articles twenty-eight and twenty-nine of this chapter. If securities are deposited as security under this subdivision, such securities shall be kept in the joint custody of the comptroller and the commissioner of taxation and finance and may be sold by the tax commission if it becomes necessary so to do in order to recover any sums due from such distributor (i) pursuant to this article and (ii) pursuant to articles twenty-eight and twenty-nine of this chapter with respect to sales and uses of motor fuel, but no such sale shall be had until after such distributor shall have had opportunity to litigate the validity of any tax if it elects so to do. Upon any such sale the surplus, if any, above the sums due (i) under this article and (ii) pursuant to articles twenty-eight and twenty-nine of this chapter with respect to sales and uses of motor fuel shall be returned to such distributor. The department, when authorized by the distributor, shall furnish information regarding the distributor's registration and any other information which the distributor authorizes it to disclose.
4. The registration of any distributor may be cancelled or suspended by the commissioner where a registrant, or an officer, director, shareholder, employee or partner of the registrant who as such officer, director, shareholder, employee or partner is under a duty to act for such registrant or any shareholder directly or indirectly owning more than ten percent of the number of shares of stock of the registrant (where such registrant is a corporation) entitling the holder thereof to vote for the election of directors or trustees of such registrant, fails to file a bond or other security when required or when the amount thereof is increased, or fails to continue to maintain in full force and effect at all times the required bond or other security filed with the commissioner, or fails to comply with any of the provisions of this article or article twenty-eight of this chapter with respect to motor fuel or any rule or regulation adopted pursuant to this article or article twenty-eight of this chapter with respect to motor fuel by the department of taxation and finance or by the commissioner, or knowingly aids and abets another person in violating any of the provisions of such articles or of any such rule or regulation with respect to motor fuel, or transfers its registration as a distributor without the prior written approval of the commissioner. A registration may also be cancelled or suspended if the commissioner determines that a registrant or an officer, director, shareholder, employee or partner of the registrant who as such officer, director, shareholder, employee or partner is under a duty to act for such registrant or any shareholder directly or indirectly owning more than ten percent of the number of shares of stock of the registrant (where such registrant is a corporation) entitling the holder thereof to vote for the election of directors or trustees of such registrant:
1. (i) commits fraud or deceit in his operations as a distributor or has committed fraud or deceit in procuring his registration;
2. (ii) has been convicted in a court of competent jurisdiction, either within or without the state, of a felony, within the meaning of subdivision eight of this section, bearing on such distributor's duties and obligations under this chapter;
3. (iii) has knowingly aided and abetted a person who is not registered as a distributor in the importation, production, refining, manufacture or compounding of motor fuel;
4. (iv) has impersonated any person represented to be a distributor under this article but not in fact registered under this section; or
5. (v) has knowingly aided and abetted the distribution of motor fuel imported, caused to be imported, produced, refined, manufactured or compounded by a distributor who is not registered by the department of taxation and finance. A registration may also be cancelled or suspended if the commissioner determines that a registrant or an officer, director, shareholder, employee or partner of the registrant who as such officer, director, shareholder, employee or partner is under a duty to act for such registrant or any shareholder directly or indirectly owning more than ten percent of the number of shares of stock of the registrant (where such registrant is a corporation) entitling the holder thereof to vote for the election of directors or trustees of such registrant, was an officer, director, shareholder, employee or partner of another person who as such officer, director, shareholder, employee or partner was under a duty to act for such other person or was a shareholder directly or indirectly owning more than ten percent of the number of shares of stock of such other person (where such other person is a corporation) entitling the holder thereof to vote for the election of directors or trustees of such other person at the time such other person committed any of the acts or omissions which are, or was convicted as, specified in this subdivision within the preceding five years.
5. A registration shall not be cancelled or suspended nor shall an application for registration be refused unless the registrant or applicant has had an opportunity for a hearing, provided, however, that an application for registration may be denied without a prior hearing. Provided, further, a registration may be cancelled or suspended without a prior hearing, for failure to file a return within ten days of the date prescribed for filing a return under this article or article twenty-eight of this chapter with respect to sales and uses of motor fuel, or for nonpayment of any taxes due pursuant to this article or article twenty-eight or twenty-nine of this chapter with respect to sales and uses of motor fuel if the registrant shall have failed to file such return or pay such taxes within ten days after the date the demand therefor is sent by registered or certified mail to the address of the distributor given in his application for registration, or an address substituted therefor as provided in this subdivision. A registration may be cancelled or suspended prior to a hearing for the failure to continue to maintain in full force and effect at all times the required bond or other security filed with the tax commission. Provided, however, if a surety bond is cancelled prior to expiration, the tax commission, after considering all the relevant circumstances, may make such other arrangements and require the filing of such other bond or other security as it deems appropriate. Provided, further, a registration may be cancelled or suspended prior to a hearing for the transfer of such registration without the prior written approval of the state tax commission. A distributor shall immediately inform the department, in writing, of any change in its address and, if the distributor is a corporation or partnership, the distributor shall immediately inform the department, in writing, of any change in its officers, directors or partners or their residence addresses as shown in its application for registration.
6.
1. (a) A notice of proposed cancellation or suspension of registration or refusal to register shall be given to the person registered pursuant to this article or to a person applying for such registration in the manner prescribed for a notice of determination of tax and all the provisions of this article applicable to a notice of determination under section two hundred eighty-eight of this chapter, including, but not limited to, those provisions authorizing the commissioner to make a redetermination on the commissioner's own motion, shall apply to a notice issued pursuant to this subdivision, insofar as such provisions can be made applicable to the notice authorized by this subdivision, with such modifications as may be necessary in order to adapt the language of such provisions to the notice authorized by this subdivision. In the case of a person applying to register, a notice of proposed refusal to register shall be issued promptly after application for registration is received by the commissioner. Upon timely application therefor, a hearing shall be scheduled in the division of tax appeals, and within three months from such application for hearing (determined with regard to any postponements of any scheduled hearing or conference or other delay made at the request of the applicant) the administrative law judge shall render a determination either upholding the commissioner's refusal to register or ordering the commissioner to register the applicant. Within fifteen days after the giving of notice of the administrative law judge's determination, the applicant or the commissioner may take exception to the determination. If an exception is taken, the tax appeals tribunal, within seventy-five days from the date of notice to the tribunal that exception is being taken to an administrative law judge's determination, shall issue a decision either affirming or reversing such determination. If the administrative law judge renders a determination ordering the commissioner to register the applicant and the commissioner takes exception to such determination, the commissioner shall not be required to register such applicant unless and until the tax appeals tribunal issues a decision affirming such determination. The applicant shall not be registered until there has been filed a bond or other security in the required amount. Such notice of proposed cancellation or suspension or of proposed refusal to register must be given to such person within five years from the date of the act or omission referred to in subdivision two or four of this section, except that in the case of acts involving falsity or fraud, such notice may be issued at any time. All of such notices of proposed cancellation or suspension or of proposed refusal to register shall contain a statement advising the person to whom it is issued that the cancellation, suspension or refusal to register may be challenged through a hearing process and that the petition for such challenge must be filed with the division of tax appeals within ninety days after the giving of such notice. Where a registration is cancelled or suspended prior to a hearing, the cancellation or suspension may be challenged through the hearing process provided the petition for such challenge is filed within ninety days after the giving of notice of such cancellation or suspension.
2. (b) Notwithstanding any other provision to the contrary:
  1. (i) In the event that the commissioner determines that an increase in the amount of the bond or other security filed by a registrant is required to secure the liability of such registrant, such bond increase or other security increase must be filed by such registrant within thirty days from the day the notice and demand therefor has been given by the commissioner. If the registrant fails to (A) file such increase in the amount of bond or other security within such period or (B) make timely application for a hearing with particular respect to the amount of the increase of such bond or other security, the commissioner shall cancel or suspend the registration of such registrant.
  2. (ii) The registrant may apply to the division of tax appeals for a hearing to review an increase in the amount of the bond or other security required to be filed by making application therefor within seven days of the day that the notice and demand for an increase is given by the commissioner, provided, the division of tax appeals may, by regulation, for the causes stated therein, extend such period to a period not exceeding fifteen days from the day such notice and demand is given. If the registrant timely applies for a hearing to review the increase, such hearing shall be held, unless extended by the division of tax appeals for good cause, no less than seven days and no more than ten days after the application for a hearing is received by the division of tax appeals. Within fifteen days of the receipt of the application for a hearing, unless extended by the division of tax appeals, the administrative law judge shall render a determination with respect to the increase in the amount of the bond or other security and, if the amount of such bond or other security is determined to be due, such increase shall be filed within seven days from the day the administrative law judge gives notice of the determination, or, if later, thirty days from the day the notice and demand for the increase had been given by the commissioner. Notwithstanding that the registrant takes exception to the administrative law judge's determination that an increased bond or other security is due, if the increased bond or other security is not filed within such time, the commissioner shall cancel or suspend the registration of the registrant. Where the administrative law judge determines that an increased bond or other security is not due but such determination is reversed by the tax appeals tribunal, if the increased bond or other security is not filed within seven days from the day the tax appeals tribunal gives notice of its decision notwithstanding any judicial review of such decision of the tax appeals tribunal, the commissioner shall cancel or suspend the registration of the registrant.
7. Temporary restraining order and permanent injunction against unlawful importation and forfeiture of unlawfully imported or produced motor fuel or diesel motor fuel. (a) Whenever evidence is furnished by the commissioner to any justice of the supreme court, in court or at chambers, showing that any person not registered as a distributor as required by this article has imported motor fuel or diesel motor fuel into this state or caused motor fuel or diesel motor fuel to be imported into this state or has produced, refined, manufactured or compounded motor fuel or diesel motor fuel, such justice may make a temporary order without notice prohibiting such person and his agents from selling, transferring or otherwise disposing of any such fuel or any fuel and also prohibiting all other persons in possession of or having control over the same from selling, releasing, transferring or otherwise disposing of any motor fuel or diesel motor fuel imported, produced, refined, manufactured, compounded, sold or transferred by such person not so registered pending a hearing for a preliminary injunction.
(b) Upon granting a temporary order, the court shall direct that a hearing be held at the earliest possible time upon such notice and service as the court shall direct and at the same time, if such action has not yet been commenced, the commissioner shall commence an action in supreme court for a permanent injunction and forfeiture of motor fuel or diesel motor fuel pursuant to paragraph (c) of this subdivision. Where, after such opportunity for a hearing, the court determines that there is a substantial probability that the commissioner will prevail in such action, the court shall grant a preliminary injunction restraining the sale, release, transfer or other disposition of fuel subject to the temporary order.
(c)
1. (1) If it is established by clear and convincing evidence that motor fuel or diesel motor fuel was imported, caused to be imported, produced, refined, manufactured or compounded by any person not registered as a distributor as required by this article, the court shall grant a judgment (i) permanently enjoining such person and his agents from selling, transferring or otherwise disposing of any such fuel or any fuel within this state and (ii) declaring the forfeiture of any fuel that was so imported, caused to be imported, produced, refined, manufactured, or compounded by such person.
2. (2) With respect to motor fuel or diesel motor fuel that was imported, caused to be imported, produced, refined, manufactured or compounded, by a person not registered as a distributor as required by this article or that was unlawfully sold or transferred by such person, if it is established by clear and convincing evidence that any other person in possession of or having control over such fuel was not a purchaser or transferee in good faith of such fuel with respect to the fact that such fuel was so imported, caused to be imported, produced, refined, manufactured, or compounded by a person not registered as a distributor as required by this article or that such fuel was so unlawfully sold or transferred by such person, the court shall grant a judgment (i) permanently enjoining such other person and his or her agents from selling, releasing, transferring or otherwise disposing of any such fuel and (ii) declaring the forfeiture of such fuel in the possession or under the control of such other person.
(d) The commissioner may, at any time subsequent to the granting of the temporary order pursuant to paragraph (a) of this subdivision, in his or her sole discretion consent to a sale of motor fuel or diesel motor fuel subject to such temporary order which is in the possession or under the control of a person other than the person or the agent of the person who imported, caused to be imported, produced, refined, manufactured, compounded or unlawfully sold or transferred such fuel. As a condition of granting permission to a sale of motor fuel or diesel motor fuel pursuant to this subdivision, the commissioner shall require the payment of all taxes, penalties and interest imposed by and pursuant to the authority of this chapter with respect to such fuel.
(e)
1. (1) At any time during the pendency of an action under this section, the motor fuel or diesel motor fuel subject to a temporary, preliminary or permanent order hereunder may be released from the scope of such order if there is given an undertaking, in an amount equal to the market value of such fuel plus state excise and sales taxes and federal excise taxes, to the effect that there will be paid to the commissioner the amount of the market value of such fuel and such taxes in the event that such fuel is adjudged forfeited.
2. (2) Any person enjoined by a temporary order or a preliminary injunction issued pursuant to this subdivision may move at any time, on notice, to vacate or modify it.
(f) The procedures of the civil practice law and rules applicable to temporary restraining orders, preliminary injunctions and permanent injunctions not inconsistent with this subdivision shall apply to temporary orders, preliminary injunctions and permanent injunctions issued under this subdivision and any provision of this subdivision which is not in accord with the constitutional mandate of such procedures of the civil practice law and rules shall be deemed to be modified as necessary to accord with such a mandate. The procedural provisions set forth in paragraph three of subdivision (d) and in subdivision (j) of section eighteen hundred forty-eight of this chapter shall apply to the forfeiture proceedings under this subdivision and, in respect to a declaration of forfeiture under this subdivision, the court shall direct the commissioner to sell or otherwise dispose of such forfeited motor fuel or diesel motor fuel on such conditions the commissioner deems most advantageous and just under the circumstances. The commissioner shall not be required to file any undertaking in connection with an action pursuant to this subdivision.
8.
1. (a) For the purposes of this section, in determining whether any person has been convicted of a felony, the provisions of this subdivision shall apply; provided, however if any such conviction be subsequently set aside or reversed upon appeal and the accused acquitted or discharged, the registration which has been cancelled or suspended as a result of such conviction shall be restored.
2. (b) A conviction of a felony shall include the conviction of a felony by any court in this state or by any court of the United States or by any court of any other state of the United States; provided, however, that if a crime of which a person is convicted by any court of the United States or any other state is a felony in the jurisdiction in which the conviction is had but is not a felony in the state of New York, then the conviction shall not be deemed a conviction of a felony for the purpose of this article. In the event that a crime of which a person is convicted by any court of the United States or by any court of any other state is not a felony in the jurisdiction in which the conviction is had but is a felony in the state of New York, then the conviction shall be deemed a conviction of a felony for the purposes of this article.
3. (c) If a person convicted of a felony or crime deemed hereby to be a felony is subsequently pardoned by the governor of the state where such conviction was had, or by the president of the United States, or shall receive a certificate of relief from disabilities or a certificate of good conduct pursuant to article twenty-three of the correction law for the purpose of removing the disability under this section because of such conviction, the tax commission may, in its discretion, on application of such person and compliance with subdivision two of this section, and on the submission to it of satisfactory evidence of good moral character and suitability, again register such person as a distributor under this article.
9.
1. (a) The registration granted to a distributor by the state tax commission shall be personal to the person to whom it is granted. The transfer of such registration without the prior written approval of the state tax commission is invalid and such transfer without approval shall be grounds for the immediate cancellation or suspension of the registration of the registrant. The tax commission shall establish by rule or regulation a specific procedure for the review of an application for registration in these instances where there has been a proposed transfer of registration, and the tax commission in making its determination with respect to such approval shall review such application in such instance as any other application for registration under this section and shall make its determination in accordance with the criteria set forth in this section. Provided further, the state tax commission shall issue a determination with respect to such application where there has been a proposed transfer of registration within seventy-five days after the day of the receipt of a properly completed application containing such information as the said tax commission may require. If the tax commission fails to issue a determination within such time, the tax commission shall be required to register such proposed transferee.
2. (b) For the purposes of this subdivision, a registration shall be considered to be transferred where, among other things, there is any addition or substitution of a partner of the registrant or the acquisition by any person of such shares of stock of the registrant (where such registrant is a corporation) so that such person becomes the owner of more than ten percent of the number of shares of stock of such registrant entitling the holder thereof to vote for the election of directors or trustees. Provided, however, where stock of the registrant or a partnership interest in the registrant or, where the registrant is a sole proprietorship, the interest of the decedent therein along with the registration, is transferred pursuant to bequest or inheritance to (A) an ancestor of the decedent, (B) the spouse of the decedent, (C) a lineal descendent of the decedent, of the descendent's spouse, or of a parent of the decedent, or (D) the spouse of any lineal descendent described in (C) hereof, such transfer shall not, in and of itself, be grounds for cancellation or suspension. Provided, however, within ninety days of the death of the decedent in such instance, the registrant, the personal representative of the decedent's estate or such person described in subparagraphs (A), (B), (C) or (D) of this paragraph must submit a revised application for registration as a distributor. The state tax commission may then cancel or suspend the registration because of the existence of grounds to do so specified in this section for refusal or denial of an application for registration or for cancellation or suspension of a registration. The failure to submit a revised application for registration within such ninety day period shall be grounds for immediate cancellation or suspension of the registration.
10. For purposes of this section, where reference is made to ownership, directly or indirectly, of more than ten percent of the shares of stock of the applicant or another person entitling the holder thereof to vote for the election of directors or trustees, in the case of an applicant or another person which at the relevant time has four or fewer shareholders holding shares entitling the holders thereof to vote for the election of directors or trustees, twenty-five percent or more shall be substituted as the applicable percentage in such references to ownership, directly or indirectly, of voting stock.