Multistate Tax Alert: Sweeping New York State Tax Reforms Enacted
On March 31, 2014, the Governor of New York State, Andrew Cuomo, signed the 2014-2015 Budget Act (S6359-D/A8559-D) into law. On April 1, 2014, the Governor presided over a ceremonial signing of the Budget Act; however, March 31, 2014 is the official date when the law was enacted.1
As expected, the Budget Act substantially modifies and reforms various aspects of the New York Tax Law. In this Tax Alert we summarize the more salient New York State tax provisions contained in the Legislation. New York City corporate tax law is generally not impacted by the Budget Act. However, certain New York City tax credits, financial incentives and non-corporate taxes are impacted.
The Budget Act reduces the corporate franchise tax rate on entire net income from 7.1 percent to 6.5 percent, effective for taxable years beginning on or after January 1, 2016. In addition, the tax on entire net income is eliminated for “qualified New York manufacturers”2 effective for taxable years beginning on or after January 1, 2014.
The Budget Act makes numerous changes to the corporate franchise tax. Highlighted in the attached Tax Alert are the more significant corporate tax reforms. Unless otherwise noted, these changes generally will be effective for taxable years beginning on or after January 1, 2015.
Also, the Governor’s Budget Briefing Book, issued when the New York legislation was proposed, calls for the Department to streamline its corporate audit procedures. We understand that this may result in the Department developing a Compliance Assurance Process (“CAP”) similar to that used by the Internal Revenue Service. Under this program, participating corporate taxpayers would work collaboratively with the Department’s audit division to identify and resolve potential tax issues before the tax return is filed.
As noted above, the New York State corporate tax reforms generally do not apply to New York City’s corporate tax regime. However, the bill extends the Gramm-Leach-Bliley New York City bank tax transitional rules for two additional years.
The Budget Act includes several changes to New York State’s tax credit regimes, estate and gift tax reform, trust tax reform, property tax relief and other tax simplifications and reforms which are all discussed in the attached Tax Alert.
To read more details about the New York changes, please download the full Tax Alert
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As used in this document, "Deloitte" means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
1 See, http://assembly.state.ny.us/leg/?default_fld=bn=S06359term=Summary=YActions=Y. This Tax Alert is revised solely to provide the correct formal signing date of March 31, 2014.
2 A “qualified New York manufacturer”, in general, is a taxpayer principally engaged in the production of goods by manufacturing (or through certain other activities) which has property in New York eligible for the investment tax credit meeting certain dollar value thresholds.