Tax Committee Update
July 7, 2011
Staff Contact: Ken Pokalsky
The State legislature completed their regular 2011 session June 24th, with approval of a real property tax cap as one of their final actions. While the legislature is likely to return to Albany later this year to address several additional issues, it is unlikely that any significant tax legislation will be on their agenda.
The legislature also passed a flurry of local tax bills, including extensions of local sales tax authority for no fewer than fifty-three municipalities (mostly counties), as well as extensions of various municipal mortgage recording, hotel/motel, real estate transfer and personal income tax extensions.
Moreover, the legislature took final action on a handful of more significant tax measures during May and June. A summary of these bills is provided below. The Business Council's comprehensive summary of the legislative session is available online here.
Complete text of all legislation is available on the Assembly's public web site. Please feel free to contact me for more information, or if you would like to discuss any of these issues.
- Real property tax cap, S.5856 (Skelos)/A.8518 (Lopez), Part A, Chapter 97. This legislation, supported by the Council, imposes a cap on increases in real property tax levies imposed by all local governments (except New York City), and all school districts (except “big five” cities); cap is set at 2 percent or inflation, whichever is lower; applies to all classes of real property; exclusions are provided for some pension related costs, costs related to major tort cases and – for school districts only – voter approved capital expenses. The bill also includes some local government mandate relief, and creates a permanent Mandate Relief Commission.
- Electronic Newspapers and Periodicals, S.5637 (DeFrancisco)/A.8223-A (Farrell). This legislation would exempt electronic news sources and electronic periodicals from sales and compensating use taxes. The Business Council supported this legislation.
- Technology Tax Credit, S.5633-B (Alesi)/A.7705-B (Lupardo). Extends the “qualified emerging technology company” tax credit for capital, development and job training investments until 12/31/2016. The Business Council supported this legislation.
- Taxpayer Advocate, S.1072 (DeFrancisco)/A.6429 (Kavanagh). While the office of Taxpayer Advocate was created administratively by Governor Paterson in 2009, this bill codifies the office in statute; provides that the Taxpayer Advocate is to be appointed by the Governor, subject to Senate approval; and provides that the Advocate will report to the Tax Commissioner but will operate independently of the Commissioner. The Advocate is charged with assisting taxpayers in resolving problems with the tax department; identifying areas in which taxpayers have problems dealing with the department; preparing an annual report identifying significant compliance problems and actions taken to address them, and recommending legislative and administrative reforms. Note that similar legislation was vetoed in 2008. The Business Council has not taken a position on this legislation.
- Statute of Limitations, S.3946 DeFrancisco/A.7238 (Farrell) @ request of Department of Taxation and Finance. Established a fixed 20-year statute of limitations on the time to collect tax liabilities from first date that a warrant could be filed by the Commissioner; applies to all taxes administered by the Commissioner of Taxation and Finance. The Business Council supported this legislation.
- Offer in Compromise Program, S.3945-A (DeFrancisco)/A.8180 (Farrell) @ request of Department of Taxation and Finance. This bill amends the current offer in compromise program to: allow taxpayers to participate if full payment would cause undue economic hardship; and to increase the threshold for requiring an Opinion of Counsel to $50,000 or more. The Business Council has not taken a position on this legislation.
- RPT Abatement for Multifamily Housing, S.5856 (Skelos)/A.8518 (Lopez), Part B, Section 42. This bill, passed as part of the omnibus real property tax credit/rent control extender bill, creates a new optional local real property tax abatement program for new and substantially rehabilitated multifamily housing (3 units and more); and provides 20 year reductions in real property taxes. The Business Council has not taken a position on this legislation.
- New York City Taxes, S.5527 (Rules)/A.7763 (Silver). Extends through 2014 New York City current personal income and corporate tax rates, minimum income tax, sales tax on credit rating and credit reporting services and on beauty and barbering services, and cigarette tax, preserving about $2.1 billion in annual revenues. The Business Council took no position on this bill.
- CAPCOs, S.5587-C (Alesi)/A.7985-B (Silver). This legislation creates a sixth set of “certified capital companies” to raise $150 million in private venture capital from insurance companies, for investment in targeted businesses in exchange for an insurance premium tax credit (claimable in 2015). The Business Council supports this bill.
- Overpayments, S.3944 (DeFrancisco)/A.7239 (Farrell) @ request of Department of Taxation and Finance. This bill allows the election by a taxpayer to credit a personal income tax or corporate franchise tax overpayment to estimated tax for the succeeding taxable year to be reversed upon good cause shown by the taxpayer. The Business Council took no position on this bill.
- Real Estate Investment Trusts, S.4732 (DeFrancisco)/A.6274 (Farrell). This bill amends state Tax Law and the NYC Administrative code to extend until September 1, 2014 the reduced real estate transfer tax rate for conveyances of real property to existing real estate investment funds. The Business Council took no position on this bill.
The Business Council is working with the Council on State Taxation to support H.R. 1864, the “Mobile Workforce State Income Tax Simplification Act of 2011,” now pending before Congress. Basically, this legislation exempts employee income from state taxation, tax withholding, and tax reporting unless the employee is performing work duties in that state for more than thirty days in a calendar year. In past years, we have heard concerns from member companies that the Department of Taxation and Finance's approach to temporary in-state employees has caused administrative burdens, and in some instances, has discouraged business activity in New York.
The Business Council and COST will be meeting with state budget and tax officials later this month to discuss this legislation.
I would appreciate hearing from members that have had concerns about this issue, and that support the approach proposed in H.R.1864, so that we can engage you in our advocacy efforts at the state and federal issues. Please contact me at your convenience to discuss this legislation.
Several members of the Council's Tax Committee members met with Department staff last week to discuss options for improving its criteria and process for issuing Advisory Opinions. This meeting was a followup to prior discussions with Commissioner Mattox, who raised concerns about the value of the existing AO process. Tax Committee members made several specific recommendations, including making draft advisory opinions available for public review and comment prior to their adoption, especially in instances where an AO is addressing a new issue or where an AO addresses an issue of industry-wide interest, and publishing notices of topics on which advisory opinions have been requested. The Business Council work group agreed to provide the Department with suggested amendments to the Department's AO rule, 20 NYCRR Part 2376. The Council will also be making recommendations on areas of industry-specific concerns, such as tax issues related to emerging technologies, on which additional Departmental guidance would be useful. I would appreciate hearing from additional Tax Committee members on this issue, and we welcome additional Committee input into this AO procedural reform effort.