Home

Legislative Action Center

NYAHSA Home  »  LAC Home  »  State Budget Key Legislation

Legacy DocID# 24606705

Dear Majority Leader Bruno:

I am writing to ask for your support to authorize in law a cash receipts assessment tax “amnesty” opportunity for nursing homes that have fallen behind in their payments due to cash flow problems.

As you know, nursing homes must pay a 6 percent assessment tax on most of their cash receipts.  These tax payments are due on a monthly basis.  Facilities that are delinquent in their payments for any reason are subject to penalties of up to 25 percent of the total assessment amounts owed, plus monthly interest charges at an annual rate of 12 percent.  These interest and penalty charges can add up quickly, and eventually even exceed the amount of the original tax liability.

Many nursing homes are experiencing severe cash flow problems, leading to difficulties in staying current on assessment tax payments.  At the end of 2006, there were approximately 270 nursing homes delinquent in their payments.  According to recent analyses of nursing home finances: (1) current liabilities exceeded current assets for over one-third of all facilities; and (2) over half of the facilities had less than 20 days of cash on hand.  Adding to recent cash flow difficulties is the fact that several positive Medicaid rate adjustments owed to facilities have been delayed for various reasons.  These circumstances highlight the dire financial condition of New York’s nursing homes, and underscore why facilities have fallen behind in their assessment payments in spite of significant penalties and interest that can only make matters worse. 

Under the proposal, an amnesty provision would be created for nursing homes that have fallen behind in paying any cash receipts assessment taxes that were owed for the period March 1, 2006 through March 31, 2007.  Under the program, all interest and penalties incurred would be waived for nursing homes that pay the unpaid assessment taxes for this period by November 1, 2007.  Several facilities have indicated that they would take advantage of such a program, since it is anticipated that retroactive, positive Medicaid rate adjustments will be issued to facilities over the next several months.

There is no dispute that these nursing homes owe the assessment taxes, however, we believe that imposition of penalty and interest sanctions will only add to their financial woes and threaten their continued viability. By authorizing a cash receipts assessment tax amnesty program that waives the enormous interest and penalty charges levied on these facilities, this proposal would enable struggling nursing homes to become current on their assessment taxes. As with previous assessment amnesty programs that have been enacted as part of the state budget, the foregone interest and penalty amounts owed to the state would be offset by more timely collection of unpaid assessments.  

Thank you for your consideration of this proposal.

Sincerely,

[Name of Legislator]