Corporate Close-Up: New York 2015 Budget Adds New Tax Credits, Clarifies 2014 Reforms

For the second time in two years, New York has enacted budget legislation in AB 3009/SB 2009 that includes corporate tax reform. Governor Andrew Cuomo signed the Budget Bill into law on April 13, 2015. The act includes new tax credits for qualifying employers and clarifies elements of the 2014 corporate tax reforms.

The New York State Legislature passed the budget on April 1, rejecting several of Governor Cuomo’s tax related proposals, as reported upon previously in the Daily Tax Report by Gerald B. Silverman.

There were several notable inclusions in the reforms passed in the Budget Bill. First, there are new provisions involving tax credits. The Excelsior Jobs Program, offering tax credits to employers, will now allow qualifying entertainment companies to participate. Additionally, the act creates the Employee Training Incentive Program (ETIP). ETIP provides a tax credit for employers who procure training for their employees. The credit is 50 percent of eligible training costs up to ten thousand dollars per employee being trained, and is available to employers operating in a strategic industry creating at least 10 new jobs or investing at least $1 million in capital in connection with the eligible training.

Further, the reforms included phasing out the need for biennial information reports by corporations. Under the new rules, corporations, LLCs and LLPs will no longer be required to file biennial statements and the $9 fee associated with those statements has been removed. Annual filings will now be accepted by the state tax department that will include the same information.

The state will also now impose the metropolitan transportation business tax on gross receipts from mobile telecommunication services. Additionally, prepaid mobile calling services are now charged sales tax based on their retail location for sales in which they do not have the customer’s address associated with the mobile phone.

The legislation also narrows the definition of investment capital, saying that investments must be in stocks that satisfy the definition of a capital asset under I.R.C. § 1221. The act also clarifies the economic nexus test for corporate groups, replacing “combined reporting” group with “unitary” group. Additionally, the corporate tax code has been amended to show that all member corporations of a combined group must be qualified emerging technology companies to qualify for reduced rates. Also included were clarifications regarding the state’s rules for prior net operating loss conversion, which can be carried forward no longer than 20 taxable years. Many of the reforms included in the legislation are intended to clarify changes made in last year’s 2014 overhaul of the corporate tax code.

The full text of the legislation can be found here:

Full text of Governor Cuomo’s 2015-16 Executive Budget Opportunity Agenda can be found here:

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: How will the 2015 New York Budget Bill affect corporate taxpayers?

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