On January 21, 2014, New York Governor Andrew Cuomo released his FY14-15 executive budget. The proposed legislation would overhaul the state’s corporate tax regime as well as make other significant tax changes. Some of the more important changes include the merging of the bank franchise tax with the corporate franchise tax, establishing economic nexus, replacing the state’s existing combined reporting provisions with a unitary combined reporting system along with an effectively connected income approach, adopting a single receipts factor apportionment formula with customer sourcing provisions, and providing tax breaks to manufacturers. Based on a series of proposals suggested by several commissions over the years, the release of the budget is a signal that tax reform in New York is likely imminent.
Although the impact on financial institutions might seem to be the most pronounced, all existing New York taxpayers and businesses that sell into the state should monitor the proposals as they are considered by the legislature and understand the potential benefits and detriments these changes pose.
The summary below highlights only some of significant corporate tax proposed changes. [2014 New York State Executive Budget, Revenue Article VII Legislation, issued 1/21/14]