On March 31, 2014, Gov. Andrew Cuomo signed into the law the most significant New York state corporation franchise tax reforms in nearly four generations, Russell Banigan, Kenneth Jewell and Mary Jo Brady, of Deloitte Tax LLP, write in this week’s issue of the Bloomberg BNA Weekly State Tax Report.
The overall effect was to eliminate some of the more arcane elements of the corporation franchise tax and institute rules that are more in line with those of other major states, Banigan, Brady and Jewell write.
One of the major elements of the New York state corporation tax reforms is nexus. Under current law, New York generally applies a physical nexus standard, rather than bright-line statutory nexus thresholds, Banigan, Brady and Jewell write. The one exception is a statutory provision enacted in 2008 under Article 32 that subjects out-of-state banking corporations that issue credit cards to New York residents or have merchant customer contracts with New York merchants to Article 32 taxation without such banks having a physical presence in New York, Banigan, Brady and Jewell state.
Effective for taxable years beginning on or after Jan. 1, 2015, New York will be applying a broad-based, bright-line statutory nexus threshold in determining whether corporations are subject to Article 9-A taxation, Banigan, Brady and Jewell write. There will be two such statutory nexus thresholds for determining whether a corporation is doing business in New York (thereby being subject to New York taxation) and an additional two statutory nexus thresholds for determining whether members of an Article 9-A combined return group are New York taxpayers. Taxpayer members of a combined return group, other than the “designated parent,” are each subject to the “fixed” minimum tax and are jointly and severally liable for Article 9-A taxes imposed upon the combined return group, Banigan, Brady and Jewell explain.
Nexus is just one of the major changes discussed in the article by Banigan, Brady and Jewell, which can be read here . Among others are the unification of Article 32 (Franchise Tax on Banking Corporations) into Article 9-A (Franchise Tax on Business Corporations) and the modifications to the net income tax base, and apportionment and combined reporting reforms.
Continue the discussion on Bloomberg BNA’s State Tax group on LinkedIn : Which of the major reforms do you think will have the biggest impact?
For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.
In other developments…
How Will Missouri's 2014 Tax Cut Impact the State , by the Tax Foundation
MTC Executive Committee Advances Significant Part of UDITPA Rewrite , by Sutherland SALT
Compiled by Priya D. Nair
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