Back to Home

Government Affairs Albany Update

May 17, 2002

Legislature Passes and Governor to Sign Securities ITC Extension

A top priority of The Business Council's 2002 Tax Program was deletion of the October 1, 2003 scheduled expiration of the Investment Tax Credit for equipment and property used to conduct the business of sales, purchases, and exchanges of stocks, bonds, and other securities and equipment and property used in the business of providing investment advisory services for a regulated investment company or lending, loan arrangement or loan origination services to customers in connection with the purchase or sale of securities.

That priority was accomplished as the Legislature passed (for the Governor's signature) A.9762-B (BUDGET); A.9762-B deleted the October 1, 2003 expiration date for the securities ITC in Articles 9-A (Corporation Franchise Tax), 22 (Personal Income Tax), 32 (Bank Tax), and 33 (Insurance Tax) and extended the credit for an additional five years through October 1, 2008.

The Business Council stressed that action was imperative at the 2002 Legislative Session because investment decisions occurring now are for investments being placed in service after the October 1, 2003 date.

Significant Tax Provisions of Final Budget A.9762-B (S.6260-B)

[Part B]: Retroactive to 1/1/0 clarifies that the charge for Transportation, Transmission, and Delivery (TTD) of energy by a vendor (not subject to the PSC) -- which is made wholly within a service area that the PSC has designated as a single retailer model for the regulated utility serving that area -- receives the benefit of the reduced Sales and Use Tax (SUT) rates on TTD of energy sales made concomitantly with sales of the energy commodity itself.

[Part H]: Lowers to $100,000 (from $400,000) the Personal Income Tax withholding threshold for required participation in the Electronic Funds Transfer Program.

[Part I]: Lowers to $500,000 (from $1,000,000) the annual SUT collection threshold and lowers to $250,000 (from $500,000) the semi-annual SUT collection threshold for required participation in the Electronic Funds Transfer Program.

[Part J]: Clarifies that the ordering of credits is the way that the taxpayer wants it and the Department and Legislature intended it when the energy tax overall was enacted in 2000. Primarily, Minimum Income Tax-based taxpayers will now get full refundability of the Industrial Manufacturing Business (IMB) credit retroactive to 1/1/0 for Gross Receipts Tax (GRT)/Gas Importation Privilege Tax (GIPT) paid at the statutory rates -- rather than having to apply the IMB credit before the taxpayers' Investment Tax Credit (ITC). {Application of the IMB credit ere the ITC credit results in no refund check for the IMB credit and a larger (by the amount of the IMB credit) carryforward amount of ITC.}

[Part L]: Increases the March 15 required payment for Article 9, 9-A, 32, and 33 taxpayers -- whose prior year's tax liability was greater than $100K -- from 25% to 30% of the prior year's tax liability.

[Part Q]: Establishes a PIT exclusion and NY Estate Tax conformity to Federal Estate Tax for deceased victims of terrorist attacks.

[Part R]: Establishes an Amnesty Program for virtually any New York tax owed by a taxpayer.

[Part S]: Conforms to the Federal MuTSA (Mobile Telecommunications Sourcing Act) with respect to all taxes on mobile telecommunications service and clarifies the application of local taxes to prepaid telephone calling service.

[Part T]: Increases the rate of taxes on tobacco products from 20% to 37% of the wholesale price effective 7/2/2.

[Part U]: Amends the NY and NYC bad debt deduction laws for thrift institutions (savings banks and savings & loan associations).

[Part V]: Sets up special treatment for the recapture of ITC on property destroyed/rendered unusable by 9/11 terrorist attacks and for new ITC credits on property replacing property destroyed/rendered unusable by 9/11 terrorist attacks. Extends for an additional five years from October 1, 2003 to October 1, 2008 the ITC for securities and securities-based investment advisory equipment and property of Article 9-A, 22, 32, and 33 taxpayers.

[PartW]: Sets the authorized credit for State Fiscal Year 2003 of the Power Authority "contribution" to the fourth phase of the Power for Jobs Program's additional 300 megawatts equal to the total amount of credit available in 2001 and 2002 under Tax Law Section 186-a, subdivision 9.

[Part Y]: Establishes New York SUT and authorizes NYC SUT exemptions for three periods in 2002 (6/9-6/11, 7/9-7/11, 8/20-8/22) for sales occurring in the Liberty and Resurgence Zones.

Empire Zone Program Amendments
Staff Contact: Ken Pokalsky

Most of the "reform" amendments proposed by Governor Pataki were adopted as part of this year's budget agreement (See Part CC of S.6260-B/A.9762-B). These include:

Other key provisions included the following:

New Empire Zones Authorized, New Restrictions Imposed
Staff Contact: Ken Pokalsky

The final budget agreement (S.6259-B/A.9761-B) authorized the designation of four additional Empire Zones of up to two square miles each, and two additional zones of up to one square mile each. The new zones will be named through an application and review process; no specific zone locations are specified in the legislation.

These newly designated zones will be subject to restrictions that will require at least 75 percent of the total zone acreage to no more than three separate, noncontiguous areas. The intent of this new criteria is to focus zone designation on economically distressed areas, rather than on specific parcels or places of business.

Proposals to amend the boundaries of currently existing Empire Zones will also be subject to similar new restrictions:

Rail Tax and Truck Permits Not in Budget

Two items of concern to The Business Council's Transportation committee were NOT enacted in the budget passed by both houses of the Legislature on May 16th. The final budget did not include the railroad tax reform piece that the Governor submitted in his 30-day amendments. The state's unfair rail taxation system was outlined by the Public Policy Institute in a study On the Wrong Track earlier this year. The rail tax piece would have provided the state's railroad with meaningful tax reform correcting the inherent unfairness in the way rails are assessed and taxed in New York State. Currently, the state's class one railroads are pursuing litigation in federal court to have the situation corrected. The enactment of legislation would have greatly aided in the avoidance of costly litigation. Also, the inclusion of language that would have added more divisible load or "R" permits was left out of the final budget. The additional permits are needed by the trucking and shipping industries. The permits are required in the hauling of several commodities including lumber, cement, dairy products and fuel. Currently the state has exhausted the number of permits and trucker/shippers are waiting for existing permits as the become available. These important issues will be discussed at the June 17th meeting of The Business Council's Transportation Committee.

Transportation Meeting to Discuss ISTEA Funding

The Business Council's Transportation Committee will meet on June 17th to discuss the federal re-authorization of the most recent Intermodal Surface Transportation Efficiency Act -- The Transportation Equity Act for the 21st Century or TEA-21. The committee will be addressed by Nancy Ross of the New York State Department of Transportation and Leslie Maeby from the Governor's Office of Intergovernmental Relations who is coordinating the reauthorization efforts and the "ISTEA Works in New York Coalition." The Business Council is active in the ISTEA coalition. The presentation will outline the act itself, funding levels, the timetable for renewal and opportunities for members companies to become involved.

Little Action on Superfund/Brownfields
Staff Contact: Ken Pokalsky

The legislature approved additional funding for superfund program staff expenses, but again failed to act on a permanent refunding mechanism for state-financed cleanups, on superfund program reforms, or on proposals to create a formal program for the remediation and redevelopment of brownfield sites. A total of $28 million was appropriated to support staff at the Departments of Environmental Conservation, Health and Law. However, no additional funds were authorized to spend on new state-financed site investigations or cleanups. In rejecting the Governor's refinancing proposal, the Legislature turned down the request for $18 million in surcharges on existing hazardous waste program fees.