S.3473 (O'Mara) / A.5944 (Morelle)


Vice President of Government Affairs
518.465.7517 x205


S.3473 (O'Mara) / A.5944 (Morelle)


Tax Nexus for Partnerships



The Business Council supports this legislation that would give equal tax treatment to out-of-state partnerships whose sole business connection to New York State is their use of in-state fulfillment houses. This bill will help preserve New York State jobs by eliminating an existing tax disincentive to use of these in-state businesses.

Partnerships are pass-thru entities for tax purposes, with the partnership income being primarily taxed under the state's personal income tax as each partner files their own respective income tax return.

The issue addressed here is when an out of state business (one with no physical presence in New York State) is considered to have "nexus" to New York for purposes, resulting in their income being subject to state taxation.

This bill specifies that if an out of state partnership is doing business with an in-state fulfillment house, i.e., a business that stores merchandise, receives orders, and packages and ships orders on behalf of a third party, and that is their only business involvement in New York State, it (and its partners) would not be considered as having nexus in New York for personal income tax purposes.

Importantly, this legislation does not affect the tax status of the in-state fulfillment service. However, it has a significant impact on the in-state' business' competitiveness, but eliminating the adverse cost impact of subjecting these out of state business to New York State taxation.

This legislation makes Article 22 of the state's Tax Law (the personal income tax) consistent with provisions of Article 9-A (the corporate franchise tax, see  § 209.2)  which states that a foreign (out of state) business is not considered to be doing business in New York State solely because it does business with a non-affiliated in-state fulfillment services.

The Business Council supports approval of S.3473)/A.5944, as this legislation will result in equal tax treatment among business, and will help preserve jobs and economic activity in New York State.