When the ball drops in Times Square on New Year’s Eve, New Yorkers won’t just be celebrating a change in the calendar – they’ll also be figuring out how to address a slew of tax changes under New York state law. On March 31, 2014, New York State Governor Andrew Cuomo signed into law the 2014-2015 New York State Budget (Budget), which results in the most significant overhaul of New York’s franchise tax in decades. The Budget brings about monumental change for corporate taxation in New York by eliminating the Bank Franchise Tax (Article 32), subjecting financial institutions to the Corporate Franchise Tax (Article 9A), and making significant changes to the Corporate Franchise Tax, including:
1. Implementing unitary combined reporting;
2. Expanding the state’s use of economic presence nexus;
3. Modifying the income tax base;
4. Changing the receipts sourcing for apportionment purposes;
5. Creating a new Prior Net Operating Loss (PNOL) deduction; and
6. Reducing the income tax rate from 7.1% to 6.5% and other miscellaneous revisions
Most of the Budget provisions are effective for tax years beginning on or after January 1, 2015, so the new year will bring lots of changes. However several amendments are effective earlier (January 1, 2014) or later (January 1, 2016).
For a comprehensive overview of those changes, read our New York Budget Legislation article.
More information about the New York changes can be found at Bloomberg BNA.
Read more state and local tax news at the Sutherland SALT Shaker.