Tax News

CCH (cch.taxgroup.com) reports:

  Passed by the New York Assembly as part of the 2009-10 budget package, A.B. 157 would make a number of property, personal income, corporate income, sales and use, and other tax changes. At press time, the bill had not yet been passed by the Senate. Among other things, the bill would do the following:

  -- eliminate the middle class STAR property tax rebate program;

  -- temporarily increase the personal income tax rate to 8.97% for all filers with taxable incomes above $500,000 and to 7.85% for filers with taxable incomes above a certain threshold ($300,000 for joint filers, $250,000 for head of household filers, and $200,000 for single filers);

  -- temporarily provide for additional levels of supplemental tax under the tax table benefit recapture provisions;

  -- redefine "resident individual" with respect to certain taxpayers present in a foreign country so that the taxpayer will be subject to tax as a resident if his or her spouse and minor children are present in New York for more than 90 days;

  -- include gain from the sale of interests in certain partnerships and other entities in nonresidents' New York source income, to the extent attributable to ownership of New York real property;

  -- increase from 30% to 40% the first estimated tax installment payment for franchise taxes and the Metropolitan Commuter Transportation District surcharge in cases where the preceding year's tax exceeded $100,000;

  -- extend the annual filing fee currently imposed on limited liability companies and limited liability partnerships to certain general partnerships, based upon their New York source gross income;

  -- limit the use of itemized deductions by individuals having New York State or New York City adjusted gross income exceeding $1 million;

  -- reduce the New York City school tax credit for taxable years beginning in 2009 and after;

  -- reclassify for-profit health maintenance organizations (HMOs) as Article 33 insurance corporations (previously, Article 9-A);

  -- eliminate two credits related to qualified fuel cell electric generating equipment expenditures;

  -- require overcapitalized captive insurance companies with 50% or less of their gross receipts for the taxable year consisting of premiums to file a combined report with their affiliates;

  -- increase the statewide aggregate dollar amount of credit that the Commissioner may allocate to eligible low-income housing buildings from $20 million to $24 million;

  -- implement reform measures to the Empire Zone program and the Empire Zone income tax credits by decertifying businesses that have received more benefit from the program than they have provided and by increasing the cost-benefit ratio test for entry into the program from 15 to 1 to 20 to 1 (10 to 1 for manufacturers) and move up the program's sunset date from June 30, 2011 to June 30, 2010;

  -- allocate another $350 million to the aggregate amount of credits allowed for the Empire State film production credit and institute new requirements for the paying out of credits;

  -- increase the sales tax imposed on tobacco products other than snuff from 37% to 46% of the wholesale price;

  -- increase the prepaid sales tax rate from 7% to 8% of the base retail price for a pack of cigarettes;

  -- restrict the sales tax exemption for commercial aircraft and the use tax exemption for motor vehicles, vessels, and aircraft to curb sales and use tax avoidance schemes;

  -- expand the definition of "vendor," for sales and use tax purposes, to include an affiliate nexus provision;

  -- increase the rate of the sales tax imposed on car rentals from 5% to 6%;

  -- increase the highway use tax renewal fees;

  -- impose sales tax on limousines and other transportation services;

  -- increase the excise tax on beer from 3 cents to 14 cents per gallon and on wine from 11 cents to 30 cents per gallon;

  -- strengthen tax compliance measures, including establishing new tax fraud penalties; and

  -- provide additional authority to the Department of Taxation and Finance to enter into certain offset agreements with the federal government and other states.

  Subscribers can view the text of the bill and the New York Senate's report on the budget

 
A.B. 157, as passed by the New York Assembly on March 31, 2009; Report on 2009-10 Budget, New York Senate, March 31, 2009