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Department of Taxation and Finance

Corporate tax reform draft regulations

The Department of Taxation and Finance intends to amend the Article 9-A Business Corporation Franchise Tax Regulations to incorporate the changes made by the corporate tax reform legislation contained in the 2014–2015 and 2015–2016 enacted New York State Budgets. As they are developed, drafts of various regulatory amendments will be posted to this website for public comment prior to the State Administrative Procedure process to formally propose and adopt these regulations. These draft regulatory amendments are not final and should not be relied upon. Due dates for providing comments are posted to facilitate the drafting process. However, comments submitted after the due date may still be considered. Submit your comments to Kathleen D. Chase, Office of Counsel, Department of Taxation and Finance, W.A. Harriman Campus, Building 9, Room 200, Albany, NY 12227 or email us.

Corporations Subject to Tax

These are draft amendments to the New York State Business Corporation Franchise Tax Regulations, Subpart 1-3, Corporations Subject to Tax, comprising sections 1-3.1 through 1-3.5. For tax years beginning on or after January 1, 2015, the activities that will subject a foreign corporation or members of a unitary group to tax under Article 9-A have been expanded to include issuing credit cards in New York State and deriving receipts from activity in New York State when certain designated thresholds are met. 

Text of Draft Rule related to Nexus  
Note: Amended 1/22/16, 6/3/16, 2/10/17, 6/13/18, 11/8/19

Please provide comments by February 7, 2020.

Business Apportionment Factor

  • These are proposed new sections 4-2.3 (Receipts from the Sale of, License to Use, and Granting of Remote Access to Digital Products) and 4-2.18 (Receipts from Other Services and Other Business Activities) of the New York State Business Corporation Franchise Tax Regulations. These draft regulations describe how to source the receipts under the hierarchies described in Tax Law sections 210-A(4) for digital products and 210-A(10) for other services and other business activities and include numerous examples. These draft rules replace previously posted draft regulations.

    Text of Draft Rule related to Digital Products

    Note: Amended 10/19/16, 7/3/19

    Text of Draft Rule related to Other Services and Other Business Receipts

    Note: Amended 10/19/16, 7/3/19
     
    Please provide comments by October 9, 2019.

  • These are draft amendments to the remaining sections of Part 4 (except Subpart 4-6.5) of the New York State Business Corporation Franchise Tax Regulations. These draft amendments clarify and interpret the general rules contained in section 210-A of the Tax Law that are used to determine the business apportionment fraction.

    Text of Draft Rule related to Apportionment
    Note:  Amended 8/31/17, 7/18/19, 11/8/19

    Please provide comments by February 7, 2020.

Combined Reports

These are draft amendments to the New York State Business Corporation Franchise Tax Regulations Subpart 6-2, Combined Reports, comprising sections 6-2.1 through 6-2.7. These draft regulations describe the requirements for filing a combined report, including detailed descriptions of the capital stock and unitary business requirements. The draft regulations also describe the requirements for the commonly owned group election.

This substance of this draft regulation has been included in the draft Part 6 Reports regulation.

Discretionary Adjustments

Draft amendments to Subpart 4-6 (other than section 4-6.5) of the New York State Business Corporation Franchise Tax Regulations relating to discretionary adjustments to the apportionment fraction and short period apportionment fraction are now included in the draft Part 4 regulations posted above in the Business Apportionment Factor section.
 
Note: Amended 7/18/19

Metropolitan Transportation Business Tax Surcharge

These are draft regulations related to the Metropolitan Transportation Business Tax Surcharge, under section 209-B of the Tax Law. These regulations would repeal Part 9 of Subchapter A of Title 20 of the Codes, Rules and Regulations of the State of New York, adding in its place a new Part 9. The new regulations provide, more comprehensively than the current Part 9, the rules for imposing the tax surcharge on the surcharge base apportioned to the Metropolitan Commuter Transportation District (MCTD) and based on business activity carried on within the MCTD. The draft regulations include the method by which the applicable rate of the tax surcharge will be determined. 

Text of Draft Rule related to Metropolitan Transportation Business Tax Surcharge
Note: Amended 6/13/18, 12/31/19 

Please provide comments by March 30, 2020.

Prior Net Operating Loss Conversion (PNOLC) Subtraction

These are draft amendments to the New York State Business Corporation Franchise Tax Regulations, Subpart 3-9, Computation of the Prior Net Operating Loss Conversion (PNOLC) Subtraction, comprising sections 3-9.1 through 3-9.11.  Unused net operating losses (NOLs) generated before the taxable year 2015 will be converted to a subtraction deduction, the PNOLC subtraction, to be applied against the taxpayer’s apportioned business income and subject to limitations described in the draft regulations. The draft regulations detail the computation of PNOLC subtraction amounts, address how the new combined reporting rules (see text of draft regulations for combined reporting) affect the PNOLC subtraction, and include other rules specific to the PNOLC subtraction as well as examples. This draft replaces the draft dated December 28, 2017. Changes were made throughout the draft in response to comments received.

Text of Draft Rule related to Prior Net Operating Loss Conversion (PNOLC) Subtraction
Note:  Amended 10/2/19

Please provide comments by January 2, 2020.

Payment of tax, declaration and payment of estimated tax, and collection 

These are draft amendments to the New York State Business Corporation Franchise Tax Regulations Part 7: Subpart 7-1, Payment of Tax; Subpart 7-2, Declaration of Estimated Tax; Subpart 7-3, Payments of Estimated Tax; and Subpart 7-4, Collection.  These draft regulations describe the requirements for paying the tax imposed by Article 9-A of the Tax Law, including paying and declaring estimated tax, and include the rules related to the collection of tax.  The draft regulations also describe the requirements for making the mandatory first installment (MFI) that must be paid by certain taxpayers, and include the rules for determining the amount of MFI based on the tax imposed in preceding taxable years as well as the procedures for making an amended declaration of estimated tax.

Text of Draft Rule related to Payment of Tax, Declaration and Payment of Estimated Tax, and Collection

Please provide comments by January 4, 2019.

Income and capital

These are proposed amendments to Part 3 of the New York State Business Corporation Franchise Tax regulations.   These amendments describe the computation of tax, define the various types of income and capital, and provide examples regarding the types of investment capital and the limitations on investment income. 

Text of Draft Rule related to Income and Capital

Please provide comments by March 5, 2019.

Domestic International Sales Corporation (DISC)

These are proposed revisions to the regulations for Domestic International Sales Corporations, currently New York State Corporation Tax Regulations Subpart 3-9. The revisions repeal Subpart 3-9 and add a new Subpart 3-10, Domestic International Sales Corporation (DISC), comprising sections 3-10.1 through 3-10.7. The revisions reflect changes to state and federal law since the regulations were last amended, including New York State corporate tax reform (signed into law as Part A of Chapter 59 of the Laws of 2014) and the federal Tax Cuts and Jobs Act of 2017 (Public Law 115-97).

This substance of this draft regulation has been included in the draft special entities draft regulation.

Real Estate Investment Trusts (REITs) and Regulated Investment Companies (RICs)

These are proposed revisions to the regulations for Real Estate Investment Trusts and Regulated Investment Companies, currently New York State Corporation Tax Regulations Subparts 3-11 and 3-12. The revisions repeal Subparts 3-11 and 3-12 and add a new Subpart 3-11, Real Estate Investment Trusts (REITs) and Regulated Investment Companies (RICs), comprising sections 3-11.1 through 3-11.5. The revisions reflect changes to state and federal law since the regulations were last amended, including New York State corporate tax reform (signed into law as Part A of Chapter 59 of the Laws of 2014) and the federal Tax Cuts and Jobs Act of 2017 (Public Law 115-97). The regulations for REITs and RICs are included in one subpart for the sake of convenience and to avoid duplication.

This substance of this draft regulation has been included in the draft special entities draft regulation.

Capital Loss

These are draft amendments to the Capital Loss Regulation in Subpart 3-7 outlining treatment of New York investment capital losses and New York business capital losses sustained in taxable years beginning on or after January 1, 2015, and capital losses sustained in taxable years beginning before January 1, 2015. Taxpayers generally determine their entire net income starting with federal taxable income that includes capital gains in excess of capital losses without differentiation between New York investment capital gains and losses and New York business capital gains and losses. For capital losses and gains sustained in taxable years beginning on or after January 1, 2015, however, taxpayers must ensure that New York investment capital losses offset only New York investment capital gains and that New York business capital losses offset only New York business capital gains.

Text of Draft Rule related to Capital Loss

Please provide comments by September 16, 2019.

Corporate Partners

These are draft amendments to the New York State Corporation Regulations Subparts 3-13 and section 4-6.5. These draft amendments clarify how a corporate partner computes its tax under the aggregate and entity theories.

This substance of this draft regulation has been included in the draft special entities draft regulation.

Assessment, Revision, Refund and Review

These are draft amendments to the New York State Corporation Regulations Part 8: Subpart 8-1, Assessment; Subpart 8-2, Limitation of Time on Credit or Refund; and Subpart 8-3, Review of Determinations and Decisions. These draft regulations provide for the rules related to the assessment of tax, including the time limitations on assessments, and the rules related to the claim for credit or refund of an overpayment of tax, including the time limitations on such claims, and describe the effect of actions taken by the Department and/or taxpayers on the claim for credit or refund of an overpayment of tax. The draft regulations also outline the procedures for the review of determinations and decisions, including decisions of the Tax Appeals Tribunal, and the effect of such determinations and decisions on the credit or refund of an overpayment of tax.

Text of Assessment, Revision, Refund and Review

Please provide comments by February 25, 2020.

Definitions

These are draft amendments to New York State Business Corporation Franchise Tax Regulations, Subpart 1-1. This Subpart contains definitions of terms used throughout Subchapter A.

Text of Draft Rule related to Definitions

Please provide comments by May 14, 2020.

Tax Credits

These are draft amendments to New York State Business Corporation Franchise Tax Regulations, Part 5. This Part deals with tax credits.

Text of Draft Rule related to Tax Credits

Please provide comments by June 2, 2020.

Special Entities

These are draft amendments to the New York State Corporation Regulations that add a new Part 10. New Part 10 contains the draft regulations concerning qualified New York manufacturers, corporate partners, New York S corporations, REITS, RICS, and DISCS. The text of Subpart 10-1, concerning qualified New York manufacturers, is all new. The remaining subparts contain updates of drafts previously posted.

Text of Draft Rule related to Special Entities

Please provide comments by August 7, 2020.

Reports

These are draft amendments to Part 6 of the New York State Business Corporation Franchise tax regulations. It combines updates to the previously posted combined reporting draft regulations (Subpart 6-2) as well as updates to the remainder of Part 6.

Text of Draft Rule related to Reports

Please provide comments by September 18, 2020.

Net Operating Loss (NOL)

These draft amendments repeal existing Subpart 3-8 of the Business Corporation Tax Regulations regarding net operating losses and add a new subpart 3-10, entitled Net Operating Loss and Net Operating Loss Deductions for Taxable Years Beginning on or after January 1, 2015.

Note that, even though existing Subpart 3-8 would be repealed, its provisions would remain applicable after repeal to taxable years beginning before January 1, 2015.

Text of Draft Rule related to NOL

Please provide comments by October 5, 2020.

For more information see:

Corporate Tax Reform 2015

Updated: