Tax Committee Update
June 29, 2010

Staff Contact: Ken Pokalsky

This weekend, both Governor Paterson and the legislature issued new revenue bills to support the FY 2010-11 state budget. The legislative revenue bill (S.6610-B/A.9710-C) is available on our web site here, as is a comparison to the Administration bill. (Note, the bill has been slightly amended, to S.6610-C/A.9710-D, with the only change the elimination of Part M, which would have allowed for joint tax return filings by persons in any “state recognized marriage, i.e., same sex marriages under other the law of another state.)

This legislation is currently scheduled for passage by both houses this Thursday.

Included in both bills is a modified version of the Governor's proposal to defer most business tax credits. The new proposal, included in Part Y of both bills, excludes $2 million in credits per taxpayer, and then defers all credits above that limit, for tax years 2010, 2011 and 2012.

The bill converts these deferred credits into a new vehicle, called “temporary deferral payout credits,” with separate schedules for use of refundable and non-refundable credits, beginning with the 2013 tax year. In part, this provision was intended to address the issue of tax credits having varying carry-forward periods, and to assure that no carry-forward periods would expire during the three year deferral period. It also creates a somewhat more certain schedule for using deferred credits, compared with the Governor's initial proposal that left the schedule to Department of Tax and Finance rulemaking.

The Business Council has renewed our opposition to these tax credit deferrals, and has reached out again to the Governor and legislative leaders and staff. We urge affected members to reach out to their state legislators to express opposition to this tax credit deferral legislation.

Please feel free to contact me for additional information on this issue, or on other provisions of this revenue legislation.