New York – Multiple Taxes: Enacted Budget Legislation
Enacted as part of New York’s 2015-16 budget package, Ch. 59 (A.B. 3009) includes a variety of corporate franchise, personal income, sales and use, property, and other tax provisions, as detailed below.
New York City personal income tax: The bill eliminates the New York City STAR personal income tax rate reduction benefit for taxpayers having income above $500,000, applicable to taxable years beginning after 2014.
Charitable contributions: The bill extends for two years (through 2017) the provision reducing the amount of charitable contributions allowed as a New York itemized deduction from 50% to 25% for taxpayers with New York adjusted gross income above $10 million.
Enhanced real property tax circuit breaker credit: With respect to the enhanced real property tax circuit breaker credit, the bill clarifies that a taxpayer’s residence must be in New York City in order to qualify for the credit.
MCTMT: The bill clarifies that all self-employed taxpayers subject to the metropolitan commuter transportation mobility tax (MCTMT), and not just New York state residents, may be required to report their MCTMT liabilities on their personal income tax returns.
Manufacturer’s real property tax credit: Personal income tax provisions regarding the manufacturer’s real property tax credit are amended to clarify that the credit is limited to real property taxes not deducted from the taxpayer’s New York adjusted gross income. In addition, an erroneous reference to combined groups has been eliminated. The bill also adds language making the credit available to certain farming businesses that lease real property from related or unrelated parties.
START-UP NY telecommunication services excise tax credit: Personal income tax provisions regarding the START-UP NY telecommunication services excise tax credit are amended to clarify that the credit is limited to taxes not deducted from the taxpayer’s New York adjusted gross income.
Excelsior Jobs Program: The bill expands eligibility under the Excelsior Jobs Program to include certain business entities operating in music production or as an entertainment company.
“Entertainment company” is defined to include entities principally engaged in the production or post-production of motion pictures, instructional videos, televised commercial advertisements, animated films or cartoons, music videos, television programs, or programs primarily intended for radio broadcast. Certain types of companies are specifically excluded (e.g., those principally engaged in the live performance of events). “Music production” means the process of creating sound recordings of at least eight minutes, recorded in professional sound studios, and intended for commercial release; the term does not include live concert recordings, recordings that are primarily spoken word or wildlife or nature sounds, or recordings produced for instructional use or advertising or promotional purposes.
The definition of “net new jobs” is expanded to include jobs obtained by an entertainment company in New York (1) as a result of the termination of a licensing agreement with another entertainment company, (2) that are at risk of leaving the state as a direct result of the termination, (3) that are either full-time wage-paying jobs or equivalent to full-time wage-paying jobs requiring at least 35 hours per week, and (4) that are filled for more than six months.
New provisions are added specifying that a business entity operating predominately in music production must create at least five net new jobs, and a business entity operating predominantly as an entertainment company must create or obtain at least 100 net new jobs.
The definition of “regionally significant project” is expanded to include an entertainment company creating or obtaining at least 200 net new jobs in New York and making a significant capital investment in the state.
The bill also amends the definition of “software development” to include the production or post-production of certain video games.
Employee training credit: The bill creates a new tax credit for employers that procure certain training for employees. The credit equals 50% of a taxpayer’s eligible training costs, up to a credit of $10,000 per employee completing eligible training, and 50% of the stipend paid to an intern, up to a credit of $3,000 per intern completing eligible training. The credit applies to taxable years beginning on or after January 1, 2015, and to eligible training costs incurred on or after April 13, 2015.
Corporate tax reform statute technical changes: The bill caps the amount of investment income that may be deducted at 8% of the taxpayer’s entire net income in cases where the taxpayer’s investment income is determined without regard to the interest deductions allowed and makes numerous other technical changes to the corporate tax reform statute. For example, the bill clarifies that net operating losses (NOLs) are required to be carried back to the earliest of the three years. Additionally, taxpayers are entitled to make an irrevocable election to relinquish the entire carryback period. The bill adds apportionment rules for mark-to-market gains as well as for receipts from the operation of vessels. The bill also amends the definitions of “investment income” and “financial instrument.” These technical changes are retroactive to the effective date of the 2014-15 Budget Bill.
Alternative fuel vehicle refueling and electric vehicle recharging credit: Technical changes are made to the tax credit for alternative fuels and electric vehicle recharging property. The credit is available against the corporate and personal income tax.
Biennial information statement: The bill combines the Department of State biennial information statement and tax return filings and also repeals the $9 Department of State filing fee.
Libraries exemption: The bill also amends the law in relation to the exemption of libraries from the imposition of the metropolitan commuter transportation mobility tax. This change applies to taxable periods on or after January 1, 2016.
General aviation aircraft: A sales and use tax exemption is provided for general aviation aircraft, and machinery or equipment to be installed on such aircraft, effective September 1, 2015. For purposes of the exemption, “general aviation aircraft” means an aircraft that is used in civil aviation and that is not a commercial aircraft, military aircraft, unmanned aerial vehicle or drone. Also, leases of noncommercial aircraft having a seating capacity of less than 20 passengers and a maximum payload capacity of less than 6,000 pounds will not be subject to accelerated sales or use tax provisions, effective September 1, 2015.
Wine tastings: The wine tasting sales and use tax exemption is extended to other alcoholic beverages (i.e., liquor, beer or cider) and items used to package such beverages (i.e., bottles, corks, caps, and labels), effective June 1, 2015. Also, the bill makes technical corrections to clarify that the exemption applies to tastings held off of a winery’s premise.
Vessels: A sales and use tax exemption is provided for sales, leases or uses of vessels in excess of $230,000, effective June 1, 2015. In addition, a use tax exemption is provided for the use of a vessel within New York until (1) the boat is registered, or is first required to be registered, under New York’s vehicle and traffic laws, or (2) the boat is used in New York for more than 90 days.
Prepaid mobile calling services: The bill clarifies that sales tax applies to prepaid mobile calling services under the same rules that apply to prepaid telephone calling services (tax generally imposed based on retail location). For purposes of the exemption, “prepaid mobile calling service” means the right to use a commercial mobile radio service, whether or not sold with other property or services, that must be paid for in advance and is sold for use over a specified period of time or in predetermined units or dollars that decline with use in a known amount, whether or not that right is represented by or includes the transfer to the purchaser of an item of tangible personal property.
Solar energy system equipment: The existing sales tax exemptions for solar energy system equipment are expanded to include electricity generated by such equipment that is sold under a power purchase agreement, effective December 1, 2015. Specifically, the bill expands the existing exemptions from state and local sales tax for residential and commercial solar equipment to include electricity purchased from a person primarily engaged in the sale of solar energy systems equipment and/or electricity generated by such equipment if the electricity is sold under a written agreement and generated by equipment that is: (1) owned by a person other than the purchaser of the electricity; (2) installed at the purchaser’s residence or nonresidential premises; and (3) used to provide heating, cooling, hot water or electricity. The bill also amends existing local option provisions to include the expanded exemptions.
Sales to certain related persons: A sales and use tax exemption is provided for certain related persons’ tangible personal property or service transactions related to requirements pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, effective September 1, 2015. The exemption sunsets on June 30, 2019.
STAR property tax exemption provisions: Effective April 13, 2015, the Department of Taxation and Finance is authorized to use data collected through the registration process to recoup improperly granted STAR property tax exemptions on one or more of the three preceding assessment rolls, along with interest. The law establishes notice and grievance procedures associated with any such recoupment. Neither assessors nor boards of assessment review have authority to consider objections to recoupment of an exemption; rather, such actions may only be challenged before the department.
Also effective April 13, 2015, the enacted law authorizes homeowners who registered for the STAR property tax exemption, but failed to file timely exemption applications with their local assessors, to receive the benefit for the 2014 exemption. If the Commissioner of Taxation and Finance is informed on or before October 1, 2015, that an owner of property is an unenrolled registrant, and if the unenrolled registrant’s property would have qualified for the STAR exemption on the 2014 assessment roll if a completed application had been filed in a timely manner, then the Commissioner may remit directly to the property owner the tax savings that the STAR exemption would have yielded if the exemption had been granted on the 2014 assessment roll.
Tax on mobile telecommunications businesses: On and after May 1, 2015, the surcharge on the gross receipts from telecommunication services imposed on utilities doing business in the metropolitan commuter transportation district is also imposed on the gross receipts from mobile telecommunication services relating to the metropolitan commuter transportation district, at the rate of 0.721%. Additionally, an excise tax is imposed on the sale of mobile telecommunications services at the rate of 2.9% of gross receipts from any mobile telecommunications service provided by a home service provider where the mobile telecommunications customer’s place of primary use is within New York State.
Petroleum business tax refund: Effective April 13, 2015, a reimbursement of the petroleum business tax is allowed for highway diesel fuel used in farm production. The enacted law extends the farming reimbursement for motor fuel to include highway diesel motor fuel for no more than 4,500 gallons purchased in-state in a 30-day period, or a greater amount that has been given prior clearance by the Commissioner, by a consumer for use or consumption directly and exclusively in the production for sale of tangible personal property by farming, but only if all of such highway diesel motor fuel is delivered on the farm site and is consumed other than on the public highways of New York.
Extension of income executions on tax debtors without warrant: Provisions allowing service of income executions with respect to individual tax debtors without filing a warrant are extended to April 1, 2017 (formerly, April 1, 2015).
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