Government Affairs Albany Update
May 29, 2009
- Key Administration Changes
- NYC Tax Conformance
- Bottle Bill Implementation Halted
- Life Settlement Bill Advances
Governor Paterson announced changes in two key Administration positions this week.
- Eric Dinallo, New York State Insurance Department Superintendent Eric R. Dinallo, has announced his resignation. Dinallo will become the Henry Kaufman Visiting Professor of Finance at New York University's Stern School of Business. Superintendent Dinallo's resignation will become effective on July 3, 2009. His replacement has not yet been named.
- Tax Commissioner Robert Megna was named as Director of the Division of Budget, replacing Laura Anglin, who had previously accepted a position with the Conference of Independent Colleges and Universities. His appointment is effective June 15, 2009. Jamie Woodward was named Acting Commissioner of Tax and Finance; she will also continue to serve as Executive Deputy Commissioner of the Department.
- Paul Decotis, Deputy Secretary to the Governor for Energy, is leaving the Administration for a position with the Long Island Power Authority. His replacement was not named.
Draft legislation has been circulated that would bring a number of provisions of New York City's business taxes into conformance with recent changes in the state's corporate franchise and bank taxes. The bill draft, which has yet to be introduced in either house of the state legislature, is available here.
New York State and New York City currently have major divergences in the treatment of the sourcing, allocation, and apportionment of income, combining income of related entities to determine taxable income, the treatment of Real Estate Investment Trusts (REIT's) and Regulated Investment Companies (RIC's), and the way banks are handled under their corresponding bank tax articles.
Among the key changes:
- a ten year conversion to single sale factor apportionment of income for the same sectors subject to single sales factor apportionment under Article 9-A taxation at the state level;
- provides for customer sourcing for certain financial services firms;
- adopts New York State's nexus provisions for mandatory combined reporting for credit card companies;
- imposes mandatory combined reporting for all entities subject to this requirement under Article 9-A of the state corporate franchise tax. This applies to related corporations with “substantial inter-corporate transactions,” and to captive real estate investment trusts and regulated investment companies.
The call for conformity has come from small businesses, for whom the administrative costs of conforming to two systems is a serious burden, and a coalition of financial and high-value global companies that strongly urged the State to move to customer sourcing and a single sales factor allocation method. The result of conformance would be a New York City business tax that piggybacks off the State reporting and filing process.
It is expected that a conformity bill would provide the City additional revenues for a couple of years, with substantial taxpayer relief in the longer term, as combination provisions would be immediate and the allocation and sourcing rules would be phased-in over a number of years.
We would appreciate input on this proposal from affected businesses.
Staff contact: firstname.lastname@example.org
Businesses subject to expanded bottle bill requirements were granted an injunction by the U.S. District Court for the Southern District of New York. The court enjoined the state from enforcing any provision of the bottle bill amendments adopted in the FY 2010 budget - including the state-exclusive UPC and the extension of the bottle deposit law to bottled water - until April 1, 2010, to allow affected parties adequate time to comply. In the meantime, the Administration and legislature continue to consider several proposals to modify these recently adopted changes to address objections raised by bottlers and retailers.
S.3655 (Breslin)/A.7131 (Morelle), which regulates the life settlement business is quickly advancing thorough the Legislature. The bill provides a comprehensive regulatory framework for the life settlement business including: licensure, disclosure reports, clear compensation guidelines, educational requirements, examinations, defines comprehensive consumer protections and prohibits STOLI transactions for a person with no insurable interest. The Business Council supports the legislation.