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New York Governor Andrew Cuomo Signs 2015-2016 New York State Executive Budget Bill

Synopsis

The New York State Legislature passed the 2015-2016 New York Executive Budget Bill (“Budget Bill”) which contains several significant tax measures.

Issue

On April 13, 2015, Governor Cuomo signed several bills related to the 2015-2016 state budget into law. The Budget Bill contains numerous technical corrections to the 2014 New York State corporate tax reform legislation, several changes to New York’s sales and use tax statutes, and amendments to reform New York City’s General Corporation Tax.

Some notable provisions of the Budget Bill include the following:

Urban Youth Jobs Program. A tax incentive is available in the form of a credit to employers who hire unemployed, at-risk youth. The former Youth Tax Credit has been renamed the Urban Youth Jobs Program Tax Credit.

Employee Training Incentive Program (ETIP) Tax Credit.  A taxpayer must be approved by the Commissioner of Economic Development to participate in the Employee Training Incentive Program, and  be issued a certificate of tax credit. The amount of the credit will equal 50% of a taxpayer’s eligible training costs. An employer in a strategic industry must be creating at least 10 new jobs or make a significant capital investment. Training programs must be approved by the State Department of Labor.

Excelsior Tax Credit Program. The eligibility for the Excelsior Jobs Program was expanded to include entertainment companies that create at least 100 net new jobs among other criteria.

New York State Corporate Income Tax. Several technical corrections to the 2014 corporate tax reform provisions were enacted which include: an amendment to the definition of “investment capital; a cap on investment income; an amendment to the definition of “qualified financial instrument”; a specific provision for the apportionment of marked-to-market gains and for receipts from the operation of vessels; and the imposition of a new tax on the sale of mobile telecommunication services at the rate of 2.9%.

New York City Corporate Tax Conformity. New York City corporate tax changes were adopted which significantly, but not completely, conform the City’s general corporation tax structure to those adopted by New York State last year. The major changes include: merger of the bank tax into the general corporation tax; market-based sourcing; modification of the classifications of income; a reduction in the corporate tax rate for small businesses that operate in the City; and elimination of the tax on subsidiary capital. The modifications apply to all corporations and banks that are not S corporations. S corporations continue to be subject to the existing general corporation tax or banking corporation tax. In addition, the City’s unincorporated business taxes are not impacted by these reforms.

What Does CohnReznick Think?

There are number of significant tax changes included in the signed budget bill. Given the number and complexity of the changes, New York taxpayers, including taxpayers based outside New York, should review the new rules to see how changes impact their specific tax position.

Contact

For more information, please contact Corey L. Rosenthal, a CohnReznick principal, at corey.rosenthal@cohnreznick.com or 646-625-57293.

Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.