senate Bill S4990A

Relates to an investment advisory services tax credit

download pdf

Sponsor

Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
view actions

actions

  • 02 / May / 2011
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 24 / May / 2011
    • AMEND (T) AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 24 / May / 2011
    • PRINT NUMBER 4990A
  • 04 / Jan / 2012
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 02 / May / 2012
    • REPORTED AND COMMITTED TO FINANCE
  • 22 / May / 2012
    • 1ST REPORT CAL.888
  • 23 / May / 2012
    • 2ND REPORT CAL.
  • 30 / May / 2012
    • ADVANCED TO THIRD READING
  • 21 / Jun / 2012
    • COMMITTED TO RULES

Summary

Expands the state investment tax credits to include tangible property used for providing investment advisory services or management of investment portfolios with investment objectives of over one million dollars.

do you support this bill?

Bill Details

Versions:
S4990
S4990A
Legislative Cycle:
2011-2012
Current Committee:
Senate Rules
Law Section:
Tax Law
Laws Affected:
Amd ยงยง210, 606 & 1456, Tax L

Votes

4
2
4
Aye
2
Nay
2
aye with reservations
0
absent
0
excused
0
abstained
show Investigations and Government Operations committee vote details
nay (2)
aye wr (2)

Sponsor Memo

BILL NUMBER:S4990A

TITLE OF BILL:
An act
to amend the tax law, in relation to an investment tax credit

PURPOSE OR GENERAL IDEA OF BILL:
To provide technical corrections to
Part YY-1 of the 2008-2009 Education, Labor and Family Assistance
Article VII Budget Bill, in order for the Investment Tax Credit to
continue to retain and grow the financial services industry in New
York and to make it competitive with other states.

SUMMARY OF SPECIFIC PROVISIONS:
Sections 1-3: Expands the investment tax credit (ITC) definition of
investment advisory activity so that investment advisory services
beyond those provided to Regulated Investment Companies (i.e., mutual
funds) will qualify for the ITC. The expanded definition reflects
changes in the business model that have occurred since the ITC was
originally enacted in 1998.

Section 4: Effective Date

JUSTIFICATION:
In 2008 the Legislature extended the ITC and made
two technical changes to the law. The first allowed a financial
services taxpayer to aggregate its broker/dealer and investment
advisory activities in determining whether property qualifies for the
ITC (in order to achieve more than 50% of use requirement). The
second revised eligibility requirements pertaining to the location of
employees.

However, in order for the ITC to have its intended economic impact,
the definition of "investment advisory activity" must be updated to
reflect current business activities. In 1998 when the ITC was first
enacted, investment advisory services were primarily provided to
Regulated Investment Companies (i,e, mutual funds). The business has
grown since then to advising pension funds and endowments among others.

By enacting this legislation into law, the financial services
industry will be prepared to expand and grow in New York. Facilities
planning that are currently taking place can consider New York State
as competitive with other states that have more favorable tax
treatment.

PRIOR LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

This bill will
ultimately result in increased revenue to the state and city of New
York as high paying jobs are created and maintained in New York.

EFFECTIVE DATE:
This act shall take effect immediately.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4990--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               May 2, 2011
                               ___________

Introduced  by  Sen.  HANNON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment  Operations  --  committee  discharged,  bill  amended,   ordered
  reprinted as amended and recommitted to said committee

AN ACT to amend the tax law, in relation to an investment tax credit

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subparagraph (i) of paragraph  (b)  of  subdivision  12  of
section  210  of  the  tax law, as amended by chapter 637 of the laws of
2008, is amended to read as follows:
  (i) A credit shall be allowed under this subdivision with  respect  to
tangible personal property and other tangible property, including build-
ings  and  structural  components  of  buildings, which are: depreciable
pursuant to section one hundred sixty-seven  of  the  [internal  revenue
code]  INTERNAL  REVENUE CODE, have a useful life of four years or more,
are acquired by purchase as defined in section one hundred  seventy-nine
(d)  of  the [internal revenue code] INTERNAL REVENUE CODE, have a situs
in this state and are (A)  principally  used  by  the  taxpayer  in  the
production  of goods by manufacturing, processing, assembling, refining,
mining, extracting, farming,  agriculture,  horticulture,  floriculture,
viticulture or commercial fishing, (B) industrial waste treatment facil-
ities  or air pollution control facilities, used in the taxpayer's trade
or business, (C) research and development property, (D) principally used
in the ordinary course of the taxpayer's trade or business as  a  broker
or  dealer  in connection with the purchase or sale (which shall include
but not be limited to the issuance, entering into,  assumption,  offset,
assignment,  termination, or transfer) of stocks, bonds or other securi-
ties as defined in section  four  hundred  seventy-five  (c)(2)  of  the
Internal  Revenue  Code,  or  of  commodities as defined in section four
hundred seventy-five (e) of the Internal Revenue Code,  (E)  principally
used  in  the  ordinary  course  of  the taxpayer's trade or business of

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11236-02-1

S. 4990--A                          2

providing investment advisory services for a regulated investment compa-
ny as defined in section eight hundred fifty-one of the Internal Revenue
Code, or lending, loan  arrangement  or  loan  origination  services  to
customers  in  connection with the purchase or sale (which shall include
but not be limited to the issuance, entering into,  assumption,  offset,
assignment,  termination,  or  transfer)  of  securities  as  defined in
section four hundred seventy-five (c)(2) of the Internal  Revenue  Code,
(E-1) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE TAXPAYER'S TRADE OR
BUSINESS  OF  PROVIDING  INVESTMENT ADVISORY SERVICES, OR THE SERVICE OF
MANAGING INVESTMENT PORTFOLIOS TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES
FOR ACCOUNTS OVER ONE MILLION DOLLARS OF ACCREDITED INVESTORS  (AS  THAT
TERM  IS DEFINED IN RULE FIVE HUNDRED ONE OF REGULATION D OF THE SECURI-
TIES ACT OF 1933), IF THE TAXPAYER SATISFIES THE FOLLOWING CRITERIA: (I)
THE TAXPAYER IS A REGULATED BROKER OR DEALER OR AN AFFILIATE OF A  REGU-
LATED BROKER OR DEALER, (II) THE TAXPAYER IS REGISTERED AS AN INVESTMENT
ADVISER UNDER SECTION TWO HUNDRED THREE OF THE INVESTMENT ADVISER ACT OF
1940,  AS  AMENDED,  AND  (III) AT LEAST ONE CLIENT OF THE TAXPAYER IS A
REGULATED INVESTMENT COMPANY AS DEFINED IN SECTION EIGHT HUNDRED  FIFTY-
ONE  OF  THE  INTERNAL  REVENUE  CODE  THAT  HAS ASSETS IN EXCESS OF ONE
HUNDRED MILLION DOLLARS, (F) principally used in the ordinary course  of
the  taxpayer's business as an exchange registered as a national securi-
ties exchange within the meaning of sections 3(a)(1)  and  6(a)  of  the
Securities  Exchange  Act  of  1934  or  a  board of trade as defined in
section 1410(a)(1) of the New York Not-for-Profit Corporation Law or  as
an  entity  that is wholly owned by one or more such national securities
exchanges or boards of trade and that provides automation  or  technical
services thereto, or (G) principally used as a qualified film production
facility  including  qualified film production facilities having a situs
in an empire zone designated as such pursuant to article  eighteen-B  of
the general municipal law, where the taxpayer is providing three or more
services  to  any  qualified film production company using the facility,
including such services as a studio lighting  grid,  lighting  and  grip
equipment,  multi-line  phone  service, broadband information technology
access, industrial scale electrical capacity,  food  services,  security
services, and heating, ventilation and air conditioning. For purposes of
clauses (D), (E), (E-1) and (F) of this subparagraph, property purchased
by  a  taxpayer  affiliated  with a regulated broker, dealer, registered
investment adviser, national securities exchange or board of  trade,  is
allowed  a  credit under this subdivision if the property is used by its
affiliated regulated  broker,  dealer,  registered  investment  adviser,
national  securities  exchange or board of trade in accordance with this
subdivision. For purposes of determining if the property is  principally
used  in  qualifying uses, the uses by the taxpayer described in clauses
(D) [and], (E), AND (E-1) of this subparagraph  may  be  aggregated.  In
addition,  the  uses  by  the taxpayer, its affiliated regulated broker,
dealer, and registered investment adviser under [either or both] ANY  of
those  clauses  may be aggregated.   Provided, however, a taxpayer shall
not be allowed the credit provided by clauses (D), (E), (E-1) and (F) of
this subparagraph unless (I) eighty percent or  more  of  the  employees
performing  the  administrative  and support functions resulting from or
related to the qualifying uses of such equipment  are  located  in  this
state  or (II) the average number of employees that perform the adminis-
trative and support functions resulting from or related to the  qualify-
ing  uses  of  such  equipment  and are located in this state during the
taxable year for which the credit is claimed is equal to or greater than
ninety-five percent of the average  number  of  employees  that  perform

S. 4990--A                          3

these  functions  and  are  located  in this state during the thirty-six
months immediately preceding the year for which the credit  is  claimed,
or  (III) the number of employees located in this state during the taxa-
ble  year  for  which  the credit is claimed is equal to or greater than
ninety percent of the number of  employees  located  in  this  state  on
December thirty-first, nineteen hundred ninety-eight or, if the taxpayer
was  not  a calendar year taxpayer in nineteen hundred ninety-eight, the
last day of its first taxable year ending after  December  thirty-first,
nineteen hundred ninety-eight. If the taxpayer becomes subject to tax in
this  state after the taxable year beginning in nineteen hundred ninety-
eight, then the taxpayer is not required to satisfy the employment  test
provided  in  the  preceding sentence of this subparagraph for its first
taxable year. For purposes of clause  (III)  of  this  subparagraph  the
employment test will be based on the number of employees located in this
state  on the last day of the first taxable year the taxpayer is subject
to tax in this state. If the uses of the property must be aggregated  to
determine  whether  the property is principally used in qualifying uses,
then either each affiliate using the property must satisfy this  employ-
ment  test  or this employment test must be satisfied through the aggre-
gation of the  employees  of  the  taxpayer,  its  affiliated  regulated
broker,  dealer,  and  registered investment adviser using the property.
For purposes of this subdivision, the term  "goods"  shall  not  include
electricity.
  S  2. Subparagraph (A) of paragraph 2 of subsection (a) of section 606
of the tax law, as amended by chapter  637  of  the  laws  of  2008,  is
amended to read as follows:
  (A)  A  credit  shall be allowed under this subsection with respect to
tangible personal property and other tangible property, including build-
ings and structural components  of  buildings,  which  are:  depreciable
pursuant  to  section  one  hundred sixty-seven of the [internal revenue
code] INTERNAL REVENUE CODE, have a useful life of four years  or  more,
are  acquired by purchase as defined in section one hundred seventy-nine
(d) of the [internal revenue code] INTERNAL REVENUE CODE, have  a  situs
in  this  state  and  are  (i)  principally  used by the taxpayer in the
production of goods by manufacturing, processing, assembling,  refining,
mining,  extracting,  farming,  agriculture, horticulture, floriculture,
viticulture or  commercial  fishing,  (ii)  industrial  waste  treatment
facilities  or  air pollution control facilities, used in the taxpayer's
trade or business, (iii) research and development property, (iv) princi-
pally used in the ordinary course of the taxpayer's trade or business as
a broker or dealer in connection with the purchase or sale (which  shall
include  but  not be limited to the issuance, entering into, assumption,
offset, assignment, termination, or transfer) of stocks, bonds or  other
securities as defined in section four hundred seventy-five (c)(2) of the
Internal Revenue Code, or of commodities as defined in section 475(e) of
the  Internal  Revenue Code, (v) principally used in the ordinary course
of the taxpayer's trade or business  of  providing  investment  advisory
services  for a regulated investment company as defined in section eight
hundred fifty-one  of  the  Internal  Revenue  Code,  or  lending,  loan
arrangement or loan origination services to customers in connection with
the  purchase  or  sale  (which  shall include but not be limited to the
issuance, entering into, assumption, offset, assignment, termination, or
transfer) of securities as defined in section four hundred  seventy-five
(c)(2)  of  the Internal Revenue Code, [or] (vi) PRINCIPALLY USED IN THE
ORDINARY COURSE OF THE TAXPAYER'S TRADE OR BUSINESS OF PROVIDING INVEST-
MENT ADVISORY SERVICES, OR THE SERVICE OF MANAGING INVESTMENT PORTFOLIOS

S. 4990--A                          4

TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES FOR ACCOUNTS OVER ONE  MILLION
DOLLARS  OF  ACCREDITED  INVESTORS (AS THAT TERM IS DEFINED IN RULE FIVE
HUNDRED ONE OF REGULATION D OF THE  SECURITIES  ACT  OF  1933),  IF  THE
TAXPAYER  SATISFIES  THE FOLLOWING CRITERIA: (I) THE TAXPAYER IS A REGU-
LATED BROKER OR DEALER OR AN AFFILIATE OF A REGULATED BROKER OR  DEALER,
(II)  THE  TAXPAYER IS REGISTERED AS AN INVESTMENT ADVISOR UNDER SECTION
TWO HUNDRED THREE OF THE INVESTMENT ADVISER ACT OF 1940, AS AMENDED, AND
(III) AT LEAST ONE CLIENT OF THE  TAXPAYER  IS  A  REGULATED  INVESTMENT
COMPANY  AS  DEFINED  IN SECTION EIGHT HUNDRED FIFTY-ONE OF THE INTERNAL
REVENUE CODE THAT HAS ASSETS IN EXCESS OF ONE HUNDRED  MILLION  DOLLARS,
OR  (VII)  principally  used  as  a  qualified  film production facility
including qualified film production facilities  having  a  situs  in  an
empire  zone  designated  as  such pursuant to article eighteen-B of the
general municipal law, where the taxpayer is  providing  three  or  more
services  to  any  qualified film production company using the facility,
including such services as a studio lighting  grid,  lighting  and  grip
equipment,  multi-line  phone  service, broadband information technology
access, industrial scale electrical capacity,  food  services,  security
services, and heating, ventilation and air conditioning. For purposes of
clauses  (iv)  [and],  (v)  AND  (VI)  of  this  subparagraph,  property
purchased by a taxpayer affiliated with a regulated broker,  dealer,  or
registered  investment adviser is allowed a credit under this subsection
if the property is used by its affiliated regulated  broker,  dealer  or
registered  investment  adviser  in accordance with this subsection. For
purposes of determining if the property is principally used in  qualify-
ing  uses, the uses by the taxpayer described in clauses (iv) and (v) of
this subparagraph may be  aggregated.  In  addition,  the  uses  by  the
taxpayer, its affiliated regulated broker, dealer and registered invest-
ment  adviser  under  either or both of those clauses may be aggregated.
Provided, however, a taxpayer shall not be allowed the  credit  provided
by  clauses  (iv)  [and],  (v)  AND (VI) of this subparagraph unless (I)
eighty percent or more of the employees  performing  the  administrative
and  support  functions resulting from or related to the qualifying uses
of such equipment are located in this state, or (II) the average  number
of  employees  that  perform  the  administrative  and support functions
resulting from or related to the qualifying uses of such  equipment  and
are  located  in this state during the taxable year for which the credit
is claimed is equal to or greater than ninety-five percent of the  aver-
age  number of employees that perform these functions and are located in
this state during the thirty-six months immediately preceding  the  year
for  which  the  credit  is  claimed,  or  (III) the number of employees
located in this state during the taxable year for which  the  credit  is
claimed  is  equal  to  or  greater than ninety percent of the number of
employees located in  this  state  on  December  thirty-first,  nineteen
hundred ninety-eight or, if the taxpayer was not a calendar year taxpay-
er  in  nineteen hundred ninety-eight, the last day of its first taxable
year ending after December thirty-first, nineteen hundred  ninety-eight.
If  the  taxpayer becomes subject to tax in this state after the taxable
year beginning in nineteen hundred ninety-eight, then  the  taxpayer  is
not  required  to  satisfy the employment test provided in the preceding
sentence of this subparagraph  for  its  first  taxable  year.  For  the
purposes  of  clause (III) of this subparagraph the employment test will
be based on the number of employees located in this state  on  the  last
day  of  the  first  taxable year the taxpayer is subject to tax in this
state. If the uses of the  property  must  be  aggregated  to  determine
whether the property is principally used in qualifying uses, then either

S. 4990--A                          5

each  affiliate  using the property must satisfy this employment test or
this employment test must be satisfied through the  aggregation  of  the
employees  of the taxpayer, its affiliated regulated broker, dealer, and
registered  investment  adviser using the property. For purposes of this
subsection, the term "goods" shall not include electricity.
  S 3. Paragraph 2 of subsection (i) of section 1456 of the tax law,  as
amended  by  chapter  637  of  the  laws  of 2008, is amended to read as
follows:
  (2) A credit shall be allowed under this subsection  with  respect  to
tangible personal property and other tangible property, including build-
ings  and  structural  components  of  buildings, which are: depreciable
pursuant to section one hundred  sixty-seven  of  the  Internal  Revenue
Code, have a useful life of four years or more, are acquired by purchase
as  defined  in  section  one  hundred  seventy-nine (d) of the Internal
Revenue Code, have a situs in this state and are (A) principally used in
the ordinary course of the taxpayer's trade or business as a  broker  or
dealer  in connection with the purchase or sale (which shall include but
not be limited to  the  issuance,  entering  into,  assumption,  offset,
assignment,  termination, or transfer) of stocks, bonds or other securi-
ties as defined in section four hundred  seventy-five  (c)  (2)  of  the
Internal  Revenue  Code,  or  of  commodities as defined in section four
hundred seventy-five (e) of the Internal Revenue Code, [or] (B)  princi-
pally used in the ordinary course of the taxpayer's trade or business of
providing investment advisory services for a regulated investment compa-
ny as defined in section eight hundred fifty-one of the Internal Revenue
Code,  or  lending,  loan  arrangement  or  loan origination services to
customers in connection with the purchase or sale (which  shall  include
but  not  be limited to the issuance, entering into, assumption, offset,
assignment, termination,  or  transfer)  of  securities  as  defined  in
section  four  hundred seventy-five (c) (2) of the Internal Revenue Code
OR (C) PRINCIPALLY USED IN THE ORDINARY COURSE OF THE  TAXPAYER'S  TRADE
OR BUSINESS OF PROVIDING INVESTMENT ADVISORY SERVICES, OR THE SERVICE OF
MANAGING INVESTMENT PORTFOLIOS TO ACHIEVE SPECIFIC INVESTMENT OBJECTIVES
FOR  ACCOUNTS  OVER ONE MILLION DOLLARS OF ACCREDITED INVESTORS (AS THAT
TERM IS DEFINED IN RULE FIVE HUNDRED ONE OF REGULATION D OF THE  SECURI-
TIES  ACT OF OF 1933), IF THE TAXPAYER SATISFIES THE FOLLOWING CRITERIA:
(I) THE TAXPAYER IS A REGULATED BROKER OR DEALER OR AN  AFFILIATE  OF  A
REGULATED  BROKER  OR  DEALER,  (II)  THE  TAXPAYER  IS REGISTERED AS AN
INVESTMENT ADVISER UNDER SECTION TWO HUNDRED  THREE  OF  THE  INVESTMENT
ADVISER  ACT  OF  1940, AS AMENDED, AND (III) AT LEAST ONE CLIENT OF THE
TAXPAYER IS A REGULATED INVESTMENT COMPANY AS DEFINED IN  SECTION  EIGHT
HUNDRED FIFTY-ONE OF THE INTERNAL REVENUE CODE THAT HAS ASSETS IN EXCESS
OF ONE HUNDRED MILLION DOLLARS. For purposes of subparagraphs (A) [and],
(B)  AND  (C) of this paragraph, property purchased by a taxpayer affil-
iated with a regulated broker, dealer, or registered investment  adviser
is allowed a credit under this subsection if the property is used by its
affiliated regulated broker, dealer, or registered investment adviser in
accordance  with  this  subsection.  For  purposes of determining if the
property is principally used in qualifying uses, the uses by the taxpay-
er described in subparagraphs (A) [and], (B) AND (C) of  this  paragraph
may be aggregated. In addition, the uses by the taxpayer, its affiliated
regulated  broker, dealer and registered investment adviser under either
or both of such subparagraphs may be aggregated.
  S 4. This act shall take effect immediately.

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.