1. (1) The New York State income tax return and any schedules required to be filed with such return of an individual or of a trust for the period prior to a change of status from resident to nonresident may be filed without the special accruals referred to in this Part if such individual or trust files with the Division of Taxation a surety bond or other security acceptable to the division. Except with regard to withholding from New York State lottery winnings (see paragraph [d][4] of this section), such surety bond or other security must be in an amount not less than the amount of additional New York State income tax (including the amount of additional New York State minimum income tax) which would be payable if no such surety bond or other security were filed. The filing of such surety bond or other security is conditioned upon the inclusion in future New York State nonresident personal or fiduciary income tax returns of amounts accruable (under section 154.10 of this Part) in New York taxable income, New York personal service taxable income and New York State minimum taxable income for one or more subsequent taxable years as if such individual or trust had not changed resident status. The additional New York State income tax (including the amount of additional New York State minimum income tax) which is considered in determining the amount of the surety bond or other security (except in the case of withholding from New York State lottery winnings) which the individual or the trust will be required to furnish, is computed at the rates which the individual or trust would have been obliged to pay if no bond or other security had been filed, taking into account all accrued items of income, gain, loss, deduction and any of the modifications permitted or required under Parts 112, 115 and 118 of this Title (as well as any accrued New York items of tax preference), and resolving against such individual or trust all matters in dispute affecting the amount of New York State income tax (including the amount of New York State minimum income tax).

2. (2) If an individual or trust elects to defer New York State income tax (including New York State minimum income tax) in accordance with the provisions of this section, such taxpayer must forward, with the New York State income tax return(s) and any schedules required to be filed with such return(s) for the taxable year in which the change of residence occurred, separate statements for New York State income tax and New York State minimum income tax purposes showing the following information:

   1. (i) the nature and amount of each item of accrued income, gain, loss or deduction as of the date of the change of residence, together with a computation of the additional New York State income tax which would be due if the election provided by this section had not been made, and if the accrued items were properly included in the New York taxable income and New York personal service taxable income on the final New York State income tax return filed as a resident; and

   2. (ii) the nature and amount of each accrued New York item of tax preference as of the date of the change of residence, together with a computation of the additional New York State minimum income tax which would be due if the election provided by this section had not been made, and if the accrued New York items of tax preference were properly included in the New York State minimum taxable income on the final New York State Minimum Income Tax Computation Schedule filed as a resident.

      (b) Surety bond.

      If an individual or a trust makes the election provided by subdivision (a) of this section and files a surety bond with the Department of Taxation and Finance, the surety bond to be submitted must be:

3. (1) executed by a surety company which is registered with, and under the supervision of, the Insurance Department of New York State;
4. (2) approved by the Department of Taxation and Finance;
5. (3) in an amount not less than the amount of deferred New York State income tax (including the amount of deferred New York State minimum income tax) determined under subdivision (a) of this section;
6. (4) filed with the New York State income tax return for the period prior to the change of residence;
7. (5) accompanied by properly executed form IT-260 in triplicate; and

8. (6) accompanied by the statement(s) referred to in paragraph (a)(2) of this section.

   (c) Security.

9. (1) If an individual or a trust makes the election provided by subdivision (a) of this section and offers security to the Department of Taxation and Finance as collateral in lieu of a surety bond, the following kinds of security will be accepted:

   1. (i) certificated United States treasury bonds;
   2. (ii) certificated bonds of New York State;
   3. (iii) certificated bonds of any political subdivision of New York State having general governmental powers in connection with which the credit of the political subdivision is pledged for the payment of the interest and principal due on such bonds;
   4. (iv) bank passbooks and certificates of deposit;
   5. (v) irrevocable standby letters of credit made payable to the New York State Department of Taxation and Finance;
   6. (vi) withholding of New York State personal income tax from payments of lottery winnings by the New York State Division of the Lottery (see section 171.11 of this Title); and
   7. (vii) other forms of security acceptable to the Department of Taxation and Finance.

10. (2) The security offered as collateral by the taxpayer must be forwarded, by registered mail, addressed to the Income Tax Audit Administrator, Central Office Audit Bureau, W.A. Harriman Campus, Albany, NY 12227, together with the following items attributable to the year the change of residence occurred:

    1. (i) the New York State income tax return(s);
    2. (ii) any schedules required to be filed with the New York State income tax return(s);
    3. (iii) the statement(s) referred to in paragraph (a)(2) of this section; and

    4. (iv) properly executed form IT-260.1 in triplicate.

       (d)

11. (1) Bonds.

    1. (i) Bonds offered as collateral under this section must be certificated and may be either bearer or registered bonds, having maturity dates at least five years subsequent to the date of filing with the Department of Taxation and Finance. If such bonds are of the coupon type, the interest coupons must be attached. The amount of bonds required to be filed will generally be based on a fair market value, determined as of the date of filing of the bonds with the Department of Taxation and Finance, of at least 1 1/2 times the amount of the deferred New York State income tax (including the amount of deferred New York State minimum income tax). Fair market value greater than par on maturity will not be recognized for this purpose. Certificated registered bonds offered as collateral must be in the name of the taxpayer making the election under subdivision (a) of this section and must be accompanied by a properly executed assignment or power of attorney with respect to such bonds in such form as the Department of Taxation and Finance may require.
    2. (ii) Any interest accruing on bonds offered as collateral under this section shall belong to the taxpayer.

12. (2) Bank passbooks and certificates of deposit offered as collateral under this section must be in an amount not less than the amount of deferred New York State income tax (including the amount of deferred New York minimum income tax) determined under subdivision (a) of this section. Such bank passbooks and certificates of deposit must represent money on deposit with a financial institution approved by the Department of Taxation and Finance. Certificates of deposit must have maturity dates at least one year subsequent to the date of filing with the Department of Taxation and Finance. Additionally, bank passbooks and certificates of deposit offered under this section must be:

    1. (i) prepared in the name of the taxpayer making the election under subdivision (a) of this section;
    2. (ii) accompanied by a signed undated withdrawal slip;

    3. (iii) accompanied by a letter prepared on the letterhead of the bank and signed by an officer of the bank:

       1. (a) identifying the passbooks or certificates of deposit by account number and confirming that withdrawal of principal from the passbook or certificate of deposit offered as collateral will not be permitted without written consent from the New York State Department of Taxation and Finance; and
       2. (b) stating that any right of setoff which the bank may possess against the taxpayer resulting from a defaulted obligation of such taxpayer shall be subservient to the interest of the Department of Taxation and Finance in the passbook or certificate of deposit offered as collateral;
    4. (iv) accompanied by a properly completed letter of transmittal in such form as the Department of Taxation and Finance may require, advising that the proceeds of such passbook accounts or certificates of deposit may be withdrawn by the department and applied against the taxes due; provided, however, that any interest accruing on such accounts or certificates shall belong to the taxpayer.

13. (3) Standby letters of credit offered as collateral under this section must:

    1. (i) be irrevocable for such period of time as the Department of Taxation and Finance shall determine;
    2. (ii) be made payable to the New York State Department of Taxation and Finance;
    3. (iii) be for the amount of the deferred New York State income tax (including the amount of deferred New York State minimum income tax) rounded up to the next higher thousand dollars;
    4. (iv) be issued or confirmed by a bank approved by the Department of Taxation and Finance; and

    5. (v) contain such other payment terms as are acceptable to the Department of Taxation and Finance.

       (4)

    6. (i) Where a payee submits verifiable information (e.g., form IT-2102G) from the New York State Division of the Lottery which shows the proper amount of income tax withholding to the Division of Taxation, in addition to form IT-260.1 and the information as required in paragraph (a)(2) of this section, such withholding shall serve as collateral in lieu of the special accrual generated only by those same payments of lottery winnings by the New York State Division of the Lottery.
    7. (ii) In order to protect its collateral, where the Division of Taxation has notified the New York State Division of the Lottery to honor a payee's statement requesting that the deducting and withholding of New York State personal income tax from payments of lottery winnings by the New York State Division of the Lottery cease (see section 171.11[f] of this Title) and it later determines that such withholding was offered as collateral pursuant to this section or that the payee did not properly comply with the special accrual requirements of section 154.10 of this Part, the Division of Taxation may notify the New York State Division of the Lottery to resume the deducting and withholding of New York State personal income tax and the New York State Division of the Lottery shall resume deducting and withholding New York State personal income tax from each lottery winnings payment it makes.
14. (e) The posting of a surety bond or of other security under this section is governed by detailed instructions issued by the Tax Commission, which may be obtained upon application to: Income Tax Audit Administrator, Central Office Audit Bureau, W.A. Harriman Campus, Albany, NY 12227.
15. (f) If all of the amounts ordinarily accruable, as provided in section 154.10 of this Part, are received by an individual or a trust during the portion of the year subsequent to the change of resident status, such taxpayer may, instead of accruing such amounts in the New York State income tax return and any schedules required to be filed with such return for the earlier portion of the year, include such amounts in New York taxable income, New York personal service taxable income and New York State minimum taxable income for the portion of the year subsequent to the change of resident status, as if the taxpayer had not changed resident status. If such individual or trust does this, no surety bond or other security will be required.

(a)