The Governor of New York signed A.157B and S.57B (ch. 57) on April 7, 2009. The bills make numerous changes to New York's tax laws, including tax increases.
Here is a brief summary of some of the changes. See the bills for all of the changes or contact me at leveragesalt@earthlink.net.
1. Sales and Use Tax Changes
New York adopts an affiliate nexus standard applying to sales made, or uses occurring on or after June 1, 2009.
The term "vendor" was amended to include a seller of tangible personal property or services if either (1) an affiliated person that is a vendor uses in New York, trademarks, service marks, or trade names that are the same as those used by the seller; or (2) an affiliated person engages in activities in New York that inure to the benefit of the seller in its development or maintenance of a market for its goods or services in New York, to the extent the affiliate's activities establish nexus.
Being "affiliated" is defined as having an ownership interest of 5% or more. The 5% can be obtained directly or through another person or group of persons.
2. Partnership Annual Fee
The annual filing fee currently imposed on LLCs and limited liability partnerships, is now imposed on all partnerships. However, partnerships, other than LLPs, with less than $1 million in New York source income, are exempt from the fee.
3. Corporate Franchise Tax
For tax years beginning after January 1, 2010, the required first quarter estimated franchise tax payment will be 40% instead of 30% of the estimated tax liability for general business corporations, banking corporations, and insurance companies. This increase also applies to the Metropolitan Commuter District Surcharge estimated payments.
4. Pass-Through Entities
The sale or exchange of an interest in a partnership, S corporation or LLC that owns real property located in New York when such property has a fair market value representing 50% or more of the total assets held by such pass-through entity on the date of sale, will result in treating the gain or loss as New York source income.
To calculate total assets, only those assets owned by the entity for at least two years before the date of sale or exchange are factored into the calculation.
The gain or loss equals the federal gain or loss multiplied by the ratio of the fair market value of New York assets over the fair market value of total assets.
This change is effective immediately and applies to sales or exchanges occurring 30 or more days after April 7, 2009.
