Section 681. Notice of deficiency

--(a) General.--If upon examination of a
  taxpayer's return under this article the tax commission determines  that
  there  is a deficiency of income tax, it may mail a notice of deficiency
  to the taxpayer. If a taxpayer  fails  to  file  an  income  tax  return
  required  under  this  article,  the  tax  commission  is  authorized to
  estimate the taxpayer's New York taxable income and  tax  thereon,  from
  any information in its possession, and to mail a notice of deficiency to
  the  taxpayer.  A  notice  of deficiency shall be mailed by certified or
  registered mail to the taxpayer at his last known address in or  out  of
  this  state.  If a husband and wife are jointly liable for tax, a notice
  of deficiency may be a single joint  notice,  except  that  if  the  tax
  commission  has  been notified by either spouse that separate residences
  have been established, then, in lieu  of  the  single  joint  notice,  a
  duplicate original of the joint notice shall be mailed to each spouse at
  his  or  her last known address in or out of this state. If the taxpayer
  is deceased or under a legal disability, a notice of deficiency  may  be
  mailed to his last known address in or out of this state, unless the tax
  commission   has  received  notice  of  the  existence  of  a  fiduciary
  relationship with respect to the taxpayer.
    (b) Notice of deficiency as assessment.--After ninety  days  from  the
  mailing of a notice of deficiency, such notice shall be an assessment of
  the  amount of tax specified in such notice, together with the interest,
  additions to tax and penalties stated in such notice,  except  only  for
  any  such  tax or other amounts as to which the taxpayer has within such
  ninety day period filed with the tax commission a petition under section
  six hundred eighty-nine. If the notice of deficiency is addressed  to  a
  person  outside  of  the United States, such period shall be one hundred
  fifty days instead of ninety days.
    (c)  Restrictions  on  assessment  and  levy.--No  assessment   of   a
  deficiency  in tax and no levy or proceeding in court for its collection
  shall be made, begun or prosecuted,  except  as  otherwise  provided  in
  section  six  hundred ninety-four, until a notice of deficiency has been
  mailed to the taxpayer, nor until the expiration of the time for  filing
  a  petition  contesting  such notice, nor, if a petition with respect to
  the taxable year has been filed  with  the  tax  commission,  until  the
  decision  of  the  tax commission has become final. For exception in the
  case of judicial review of the  decision  of  the  tax  commission,  see
  subsection (c) of section six hundred ninety.
    (d) Exceptions for mathematical or clerical errors.--If a mathematical
  or clerical error appears on a return (including an overstatement of the
  credit  for  income tax withheld at the source, or of the amount paid as
  estimated income tax), the commissioner shall notify the  taxpayer  that
  an  amount  of  tax  in excess of that shown upon the return is due, and
  that such excess has been assessed. Such notice shall not be  considered
  as  a  notice of deficiency for the purposes of this section, subsection
  (f) of section six hundred eighty-seven  (limiting  credits  or  refunds
  after  petition  to  the  division  of  tax  appeals), subsection (b) of
  section six hundred eighty-nine (authorizing the filing  of  a  petition
  with  the  division  of tax appeals based on a notice of deficiency), or
  article forty of this chapter, nor shall such assessment  or  collection
  be prohibited by the provisions of subsection (c).
    (e) Exceptions where federal changes, corrections or disallowances are
  not reported.---
    (1)  If  the  taxpayer  or  employer  fails to comply with section six
  hundred fifty-nine, instead of the mode and time of assessment  provided
  for  in  subsection (b) of this section, the tax commission may assess a
  deficiency based upon such federal change, correction or disallowance by
  mailing to the taxpayer a notice of additional tax  due  specifying  the

  amount  of  the  deficiency,  and  such  deficiency,  together  with the
  interest, additions to tax and penalties stated in such notice, shall be
  deemed assessed on the date such notice is mailed unless  within  thirty
  days  after  the  mailing of such notice a report of the federal change,
  correction or disallowance or an amended return, where such  return  was
  required  by  section  six hundred fifty-nine, is filed accompanied by a
  statement showing wherein such federal determination and such notice  of
  additional tax due are erroneous.
    (2)  Such notice shall not be considered as a notice of deficiency for
  the purposes of this section, subsection  (f)  of  section  six  hundred
  eighty-seven  (limiting  credits  or  refunds  after petition to the tax
  commission), or  subsection  (b)  of  section  six  hundred  eighty-nine
  (authorizing the filing of a petition with the tax commission based on a
  notice  of  deficiency),  nor  shall  such  assessment or the collection
  thereof be prohibited by the provisions of subsection (c).
    (3) If a husband and wife are jointly liable  for  tax,  a  notice  of
  additional  tax due may be a single joint notice, except that if the tax
  commission has been notified by either spouse that  separate  residences
  have  been  established,  then, in lieu of the joint notice, a duplicate
  original of the joint notice shall be mailed to each spouse  at  his  or
  her  last  known  address  in  or  out of this state. If the taxpayer is
  deceased or under a legal disability, a notice of additional tax due may
  be mailed to his last known address in or out of this state, unless  the
  tax  commission  has  received  notice  of  the existence of a fiduciary
  relationship with respect to the taxpayer.
    (f) Waiver of restrictions.--The taxpayer shall at any  time  (whether
  or  not  a notice of deficiency has been issued) have the right to waive
  the restrictions on assessment and collection of the whole or  any  part
  of  the  deficiency  by  a  signed  notice in writing filed with the tax
  commission.
    (g) Deficiency defined.--For purposes of this  article,  a  deficiency
  means the amount of the tax imposed by this article, less (i) the amount
  shown as the tax upon the taxpayer's return (whether the return was made
  or  the tax computed by him or by the tax commission), and less (ii) the
  amounts previously assessed  (or  collected  without  assessment)  as  a
  deficiency  and plus (iii) the amount of any rebates. For the purpose of
  this definition, the tax imposed by this article and the  tax  shown  on
  the  return  shall  both  be  determined  without  regard to payments on
  account of estimated tax or the credit for withholding tax; and a rebate
  means so much  of  an  abatement,  credit,  refund  or  other  repayment
  (whether  or not erroneous) made on the ground that the amounts entering
  into the definition of a deficiency showed a balance  in  favor  of  the
  taxpayer.