On March 31, 2014, New York Governor Andrew Cuomo signed into law the budget for fiscal year 2014-2015 (S 6359D/A 8559D). The Final Bill features comprehensive tax reform that affects both individual and business taxpayers. The following summarizes some of the significant changes impacting corporate tax, property tax, and estate tax.
Call Girls Near Golden Tulip Essential Hotel, New Delhi 9873777170
New York Enacts Significant Tax Reform
1. 1 | P a g e
April 16, 2014
New York Enacts Significant Tax Reform
On March 31, 2014, New York Governor Andrew Cuomo signed into law the budget for fiscal year 2014-2015 (S
6359D/A 8559D). The Final Bill features comprehensive tax reform that affects both individual and business taxpayers.
The following summarizes some of the significant changes impacting corporate tax, property tax, and estate tax.
Corporate Tax Reform
Some of the corporate tax reform highlights include:
• The repeal of the bank franchise tax and its merger into the corporate franchise tax;
• The reduction in the corporate franchise tax rate from 7.1 percent to 6.5 percent for taxable years beginning on
or after January 1, 2016. The tax rate for manufacturers will be reduced to zero percent in 2014 and thereafter;
• The adoption of economic nexus which will generally impose corporate franchise tax filing obligations on
businesses having receipts within New York of $1 million or more in a taxable year;
• The adoption of mandatory combined reporting for unitary groups;
• The elimination of the minimum taxable income base;
• The elimination of tax on subsidiary capital;
• The implementation of caps on the capital base tax and a gradual phase out over six years beginning in 2016;
• The permanent adoption of the MTA surcharge coupled with a rate increase from 17 percent to 25.6 percent for
taxable years beginning after 2014 and before 2016. For subsequent years, the rate is to be adjusted by the
commissioner;
• The adoption of customer-based receipt sourcing rules for apportionment purposes with specific rules for
receipts from digital products and financial instruments/transactions;
• The creation of a refundable income tax credit for qualified manufacturers equal to 20 percent of real property
tax paid;
• The creation of the prior net operating loss (“PNOL”) conversion subtraction to complement the existing net
operating loss deduction; and
• The adoption of 'effectively connected' income as the starting point for the corporate tax base calculation for
non-U.S. corporations.
The legislation also implements several other corporate tax changes. Unless otherwise stated, most of the provisions
will become effective on January 1, 2015, which should give businesses sufficient time to grasp the significant overhaul
of the corporate tax system.
The reforms appear to achieve the Governor’s goals of simplifying and modernizing the corporate tax system in New
York. For example, the elimination of the minimum taxable income base and the tax on subsidiary capital should
simplify the computation of the franchise tax. However, other provisions such as the customer-based sourcing rules
and the NOL provisions are rather complex and will require careful analysis by taxpayers and tax practitioners.
New York-based taxpayers will clearly benefit from the corporate tax rate reductions. However, the plan may place a
higher tax burden on out-of-state taxpayers. The adoption of economic nexus will force taxpayers who otherwise do not
have physical presence to begin filing if they derive more than $1 million in receipts from the state. Further, the
adoption of customer-based sourcing will also increase the tax base of out-of-state taxpayers since the apportionment
rules will focus on the location of the customers rather than on the location of the taxpayer’s property and payroll.
3. 3 | P a g e
in fact it cannot be used, to avoid penalties under the Internal Revenue Code, or to promote, market, or recommend to
another person any tax related matter. This publication is distributed with the understanding that CBIZ is not rendering
legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any
action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information
and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the
information contained herein.
CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial
advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and
privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).