Tax Committee Update
November 10, 2009

Corporate Tax Reform

The Department of Taxation and Finance has issued a revised and expanded outline of their proposal to integrate Articles 9A and 32 of the Tax Law.  Their proposal is available on our web site.

Importantly, this proposal leaves us with two significant questions, on which your input would  be greatly appreciated:

The Department says that it is moving forward with the drafting of legislative language based on this outline, with the objective on including a proposal in the Executive Budget to be issued in January, adding that while additional changes may not be included in their initial draft legislation, they remain open to additional changes.

The Department also says that while they did not propose a tax rate for this new, integrated business tax structure, they believe that this outline provides sufficient detail for business to calculate their tax liabilities at “any given hypothetical rate.”

The Department has said that this revised draft is intended to reflect the most significant concerns raised by New York business taxpayers.  Their new outline was intended to limit the expansion of the taxable income base, from that included in the Department's initial outline, changes that the Department has said will limit their ultimate proposal for a reduction in the current business tax rates.

In reviewing this proposal, I would especially appreciate input on these issues:

Feel free to contact me at your convenience to discuss and provide input.  My contact information is provided at the end of this email.

Regulatory Reform Initiative

Last August, Governor Paterson issued Executive Order 25, which creates a Governor's regulatory review committee, and a review process to evaluate existing state regulation in order to “reduce unnecessary burdens, costs and inefficiencies” and to help improve the state's economic climate.  This effort will initially focus on six state agencies, including the Department of Taxation and Finance. 

In response, the Department has issued a formal call for input requesting taxpayers to identify burdensome regulations, some quantification of their impact, and propose appropriate reforms (see  www.tax.state.ny.us/pdf/rulemaking/eo25/public_notice_eo25.pdf).

The Department has requested input by January 4, 2010.

The Business Council is developing comments in response to Executive Order 25, and is seeking input from members on Departmental regulations of concern.  I welcome your input. 

Issues that have been raised to date by Business Council members include:

Note that the Department's key contact for this initiative is John Bartlett, the Department's Director of Regulation; and they have requested that proposals be submitted to tax_regulations@tax.state.ny.us.

NYS Budget/Tax Receipt Update

The NYS Division of Budget has just issued its mid year report on Fiscal 2010, available here www.budget.ny.gov/pubs/press/2009/press_release09_midYearUpdate.html

Despite a significant influx of federal stimulus funds into the state budget, the state is projecting that a significant decline in tax revenues will result in $3.1 billion all funds shortfall for the fiscal year ending March 31, 2010. 

Among recent trends in state tax revenues, the Division of Budget reports that, compared to the first six months of Fiscal 2009,

To date, neither the Governor, nor either house of the legislature, have proposed new taxes or fees as part of deficit reduction plan.  The Governor has proposed a package including $1.3 billion in cuts to local assistance payments, about $545 million in additional agency spending reductions, and $426 million in inter-fund transfers.

The Governor has also proposed a tax amnesty program that would bring in an estimated $250 million per year.  The text of this proposal is not yet available.  It would authorize the waiver of interest and penalties related to final determinations of tax liability that were issued prior to December 31, 2006.  We will forward additional details to Tax Committee members as soon as they are available.

If you have any questions or would like additional information, please contact Ken Pokalsky.