Assembly Bill A8633

                                BILL NUMBER:A8633

TITLE OF BILL:  An act to amend part R-1 of chapter 57 of the laws of
2009 amending the tax law relating to a special tax on passenger car
rentals, in relation to the effectiveness thereof; and to amend part F
of chapter 25 of the laws of 2009 amending the tax law relating to a
supplemental tax on passenger car rentals, in relation to the effective-
ness thereof

PURPOSE OR GENERAL IDEA OF THE BILL:
To provide that the rental car tax increases set forth in the FY
2009-2010 budget and the MTA funding law apply to all rental agreements
entered into on or after June 1, 2009.

SUMMARY OF SPECIFIC PROVISIONS:
Amends the effective dates for the implementation of the increases in
the rental car tax contained in the FY 2009-2010 Education, Labor and
Family Assistance budget document (Chapter 57) and the MTA funding bill
(Chapter 25) to apply to all rental agreements entered into on or after
June 1, 2009.

JUSTIFICATION:
The FY 2009-2010 budget amended § 1160 of the Tax Law to increase the
vehicle rental tax from 5% to 6%. The MTA funding law (Chapter 25) added
a new §1166-a to the Tax Law to increase the statewide vehicle rental
tax from 5% to 11% in the 12-county MTA region. In both cases, the
              

increases were to take effect on June 1st and apply to "sales made and
uses occurring on and after such date." This implementation provision
has placed the rental car industry in a difficult position where, in
certain situations, the companies will be expected to pay a tax that
they cannot get reimbursed. The national car rental companies simply
cannot reprogram their computers to collect the increased tax on these
"wrap-around" rentals (i.e., those that commence before June 1st, but
extend beyond that date). Yet this is how the Tax Department has inter-
preted the existing language (see TSB-M-09(1)S).

The implementation language should apply only to those contracts
commencing on or after June 1st. If this current implementation date
remains unchanged, the car rental industry would be forced to pay the
tax on these wrap-around rentals without the possibility to be compen-
sated from the person responsible for payment of the tax. This was an
unintended consequence that can easily be remedied by passage of this
legislation.

PRIOR LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
Negligible impact on tax collections.

EFFECTIVE DATE:
Immediately.