Governor Cuomo's Fiscal Year 2018 New York State Executive Budget

On January 17, 2017, New York State Governor Andrew Cuomo released his 2017-2018 New York State Executive Budget and accompanying legislation. It contains proposed amendments to New York State's personal income tax, corporate franchise tax, sales and use tax, and real estate transfer tax. Reed Smith will be monitoring this proposal as it moves quickly through the legislative process. Amended legislation will be released by February 16, 2017?. We encourage you to contact us prior to then to discuss how the changes may effect your New York tax liability.

On January 17, 2017, New York State Governor Andrew Cuomo (D-N.Y.) released his fiscal year 2018 New York State Executive Budget and accompanying legislation (hereinafter jointly referred to as the "FY 2018 Budget Bill").

The FY 2018 Budget Bill includes numerous proposed changes to the New York State Tax Law.1 This alert highlights some of the proposed amendments to the Tax Law's personal income tax, corporate franchise tax, sales and use tax, and real estate transfer tax provisions, as well as provisions related to the authority of the New York State Department of Taxation and Finance to collect delinquent tax debts. A complete version of the FY 2018 Budget Bill can be seen here.

The Reed Smith State Tax team will continue to monitor the FY 2018 Budget Bill as it advances through the legislative process. For a deeper discussion of how these changes might affect your New York tax obligations, please contact any member of our New York State Tax team, or the Reed Smith attorney with whom you work.

Corporation Franchise Tax

Reform the Investment Tax Credit. The FY 2018 Budget Bill proposes to amend Tax Law §§ 210-B(1)(b)(i) and 606(a)(2)(A) to state that the investment tax credit (the "ITC") does not apply to tangible personal property used (1) in the production or distribution of electricity, natural gas, steam or water delivered through pipes and mains; or (2) in the creation, production or reproduction of a film, visual or audio recording, or commercial, where the costs are incurred outside of New York. The amendments would apply to tax years beginning on or after January 1, 2018.

Reed Smith Insights. The amendments related to electricity, natural gas, steam and water seek to codify the Department's position that property used in the production and distribution of electricity, natural gas, and steam, and other similar property, are not eligible for the ITC. The amendments related to film production would clarify the Department's goal of using the ITC to promote activities in the State, as opposed to outside the State.

Treat Disregarded Entities as a Single Taxpayer for Tax Credit Purposes. The FY 2018 Budget Bill proposes to add a new Tax Law § 43 to explicitly state that a single member limited liability company (a "SMLLC") that is disregarded for federal income tax purposes is also treated as a disregarded entity when determining whether its owner is eligible to claim any state tax credit under Articles 9, 9-A, 22, 32 (prior to its repeal) and 33 of the Tax Law. The amendment would take effect immediately, and apply not only...