August 4, 2010
Staff Contact: Ken Pokalsky
A summary of major business-related revenue and tax credit changes included in S.6610-C/A.9710-D is provided below. To search for Bill text click here.
The State Senate gave final approval to the proposed revenue bill yesterday (S.6610-C/A.9710-D), the last major bill necessary to complete legislative work on New York's Fiscal 2011 budget. Through a combination of new and increased taxes, fees and tax credit deferrals, the revenue bill will provide more than $1 billion in increased state revenues for Fiscal 2011; even higher net revenues in subsequent years; and $160 million in increased tax revenues for New York City.
This legislation includes a deferral of major business tax credits for tax years 2010 through 2012. Details of the tax credit deferral provisions are included below the following table.
Please feel free to contact me regarding this final legislation.
SUMMARY OF BUSINESS-RELATED PROVISIONS OF S.6610-C/A.9710-D
| PART | PAGE | SUMMARY | REVENUE |
|---|---|---|---|
| A | 4 | Modifies “qualified emerging technology company” and biofuel production tax credit for LLCs and partnerships. | $2 million |
| B | 5 | Makes compensation for past services taxable for non-residents who had NYS nexus at time of payment. | $5 million |
| C | 5 | Treats certain S corporation income as NY source income by nonresident shareholders. | $30 million |
| E | 7 | Requires “settlement entities” subject to information returns under IRC Section 6050-W to file duplicate reports with NYS DT&F. | $35 million in FY 2013; $85 million in later years |
| Q | 16 | Increases the cap on the film production tax credit by $420 million per year for 2010 thru 2014; allows up to $7 million per year in post-production tax credits. | NA |
| R | 22 | Provides that Empire Zone de-certifications imposed in 2009 were applicable to tax years beginning on or after 1/1/08. | NA |
| Clarifies that businesses certified as QEZEs or qualified investment projects prior to 6/30/2010 retain eligibility for Empire Zone investment and employment incentive tax credits | NA | ||
| S Sub-B |
33 | Extends the exclusion for sales tax exemptions for business aircraft and vehicles included in transactions between affiliated entities. | NA |
| W | 43 | Repeals provisions allowing private label credit card lenders to take sales tax credit or refund on uncollectable accounts. | $17 million |
| X | 43 | Repeals the sales tax vendor credit for monthly filers (receipts of $300,000 or more.) | $23 million |
| Y | 43 | Defers most business tax credits over $2 million for tax years 2010, 2011 and 2012 until tax year 2013 or later. | $200 million in 2010; $1 billion in both 2011 and 2012 |
| Z | 48 | Conforms NY Bank Tax deductions for bad debts to IRC calculations. | $15 million |
| AA | 54 | Requires hotel room remarketers to collect NYS sales tax. | $13 million |
| EE | 59 | Increased the New York City personal income tax to 3.4% for taxable income over $500,000 | $166 million in revenues to NYC |
| GG | 76 | Re-instates for one year the state and local sales tax on clothing and footwear priced at $110 and less. | $330 million |
| II | 85 | Reduces the dormancy period for unclaimed property for unused gift certificates and money orders, and for services not rendered and/or goods not delivered. | $100 million |
| KK | 87 | Subjects “carried interest” earned by partners performing investment management services to the personal income tax. NOTE: PART KK IS REPEALED BY CHAPTER AMENDMENT ADOPTED IN S.8465/A.11678, PART A. |
NA |
| MM | 90 | Makes permanent 2008 amendments related to closely held REITS. | NA |
| NN | 90 | Clarifies that certainly publicly traded REITS are not subject to above provisions for closely held REITs. | NA |
| YY | 114 | Modifies the definition of “little cigar” for purposes of state tobacco tax. | NA |
SUMMARY OF BUSINESS TAX CREDIT PROVISIONS OF S.6610-C/A.9710-D
The final revenue bill contains provisions that will defer most major business tax credits over a three year period. Under this provision (S-6610-C/A.9710-D, Part Y):
- taxpayers would be allowed to use up to $2 million in credits in tax years 2010, 2011 and 2012;
- amounts over $2 million for those tax years would be deferred until tax years 2013 and later;
- this deferral applies to both newly earned tax credits, and credits that have been carried forward from prior years;
- it applies to 29 specific credits set forth in Article 9-A (corporate franchise tax) and their counterpart provisions in the corporation, personal income, bank and insurance tax (Articles 9, 22, 32 and 33, respectively); as well as to four additional business credits not found in Article 9-A. The complete listing of affected credits is provided below. It includes investment tax credits, Empire Zone credits, brownfield credits, and others. The only major business tax credit not affected by this deferral is the film production credit;
- for non-refundable credits, taxpayers can begin claiming deferred credits in tax year 2013, with credits subject to alternative minimum taxes but no limits on carry-forwards, and can claim these deferred credits until they are exhausted;
- for refundable credits, taxpayers claim 50 percent of deferred refundable credits in tax year 2013, 75 percent of remaining deferred credits in tax year 2014, and the remainder of deferred refundable tax credits in tax year 2015;
- no interest would be paid by the state on the value of the deferred credits.
- This section shall apply to the credits allowed under the following provisions in Article 9-A of the Tax Law and applicable counterpart provisions in articles 9, 22, 32 and 33 of this chapter:
§ 210(12) investment tax credit
§ 210(12-B) empire zone investment tax credit
§ 210(12-C) empire zone employment incentive credit
§ 210(12-D) employment incentive credit
§ 210(12-E) QETC employment credit
§ 210(12-F) QETC capital tax credit
§ 210(12-G) QETC facilities, operations, and training credit
§ 210(17) special additional mortgage recording tax credit
§ 210(19) empire zone wage tax credit
§ 210(20) empire zone capital tax credit
§ 210(21-a) credit for servicing certain mortgages
§ 210(23) credit for employment of persons with disabilities
§ 210(24) alternative fuels credit
§ 210(25) credit for purchase of an automated external defibrillator
§ 210(27) QEZE credit for real property taxes
§ 210(28) QEZE tax reduction credit
§ 210(30) low income housing credit
§ 210(31) green building credit
§ 210(33) brownfield redevelopment tax credit
§ 210(34) remediated brownfield credit for real property taxes for qualified sites
§ 210(35) environmental remediation insurance credit
§ 210(37) security training tax credit
§ 210(37) credit for fuel cell electric generating equipment expenditures
§ 210(38) conservation easement tax credit
§ 210(38) empire state commercial production credit
§ 210(38) biofuel production credit
§ 210(39) clean heating fuel credit
§ 210(40) credit for rehabilitation of historic properties
§ 210(40) credit for companies who provide transportation to individuals with disabilities
This deferral also applies to the credits allowed by the following sections:
§ 186-a(9) power for jobs credit
§ 606(g-1) solar energy system equipment credit
§ 606(pp) historic homeownership rehabilitation credit
§ 1511(k) credit for certain investments in certified capital companies