senate Bill S2609D

Signed By Governor
2013-2014 Legislative Session

Enacts into law major components of legislation necessary to implement the state fiscal plan for the 2013-2014 state fiscal year

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Archive: Last Bill Status - Signed by Governor


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Mar 28, 2013 signed chap.59
delivered to governor
returned to senate
passed assembly
ruling of chair on point of order
ruling of chair on point of order
motion to amend lost
motion to amend lost
motion to amend lost
ordered to third reading rules cal.48
substituted for a3009d
Mar 27, 2013 referred to ways and means
delivered to assembly
passed senate
Mar 26, 2013 ordered to third reading cal.278
Mar 24, 2013 print number 2609d
amend (t) and recommit to finance
Mar 11, 2013 print number 2609c
amend (t) and recommit to finance
Feb 22, 2013 print number 2609b
amend (t) and recommit to finance
Feb 13, 2013 print number 2609a
amend (t) and recommit to finance
Jan 22, 2013 referred to finance

Votes

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Bill Amendments

Original
A
B
C
D (Active)
Original
A
B
C
D (Active)

S2609 - Bill Details

See Assembly Version of this Bill:
A3009D
Law Section:
Budget Bills
Laws Affected:
Amd Various Laws, generally

S2609 - Bill Texts

view summary

Enacts into law major components of legislation necessary to implement the state fiscal plan for the 2013-2014 state fiscal year; relates to the temporary metropolitan transportation business tax surcharge; relates to the empire state film production credit and to the empire state film post production credit; relates to reports; establishes the New York business incubator and innovation hot spot support act; relates to extending for three years the charitable contributions deduction limitation; relates to the exclusion of certain royalty payments from the entire net income or other taxable basis of corporations, banking corporations, and insurance corporations, from the unrelated business income of corporations, and from the adjusted gross income of individual taxpayers; relates to the historic preservation tax credit; provides a tax credit for electric vehicle recharging property; relates to extending provisions relating to mandatory electronic filing of tax documents and improving sales tax compliance; relates to restrictions on funds of the industrial development agency and relates to industrial development agencies and authorities; relates to expanding the exemption of CNG in the sales tax to include natural gas purchased and used to produce CNG for use exclusively and directly in the engine of a motor vehicle; relates to allowing voluntary ambulance services, fire companies, fire departments and rescue squads to claim reimbursement of the petroleum business tax for fuel used in their vehicles; relates to increasing the penalty for the possession of unstamped and unlawfully stamped cigarettes; relates to the suspension of drivers' licenses of persons who are delinquent in the payment of past-due tax liabilities; relates to serving an income execution with respect to individual tax debtors without filing a warrant; relates to vendor fees paid to vendor tracks; relates to licenses for simulcasting facilities, sums relating to track simulcast, simulcast of out-of-state thoroughbred races, simulcasting of races run by out-of-state harness tracks and distributions of wagers; extends certain provisions of law; relates to the credit for the rehabilitation of historic homes; relates to allowing certain tax-free interdistributor sales of highway diesel motor fuel; relates to updating the farming exemption in the highway use tax to reflect current industry practice; relates to providing a subtraction from income for small businesses and small farms; relates to providing tax cuts to manufacturers; relates to adding a hire a vet credit; relates to extending the temporary state energy and utility conservation assessment; relates to a credit for middle income taxpayers with children; relates to the New York youth works tax credit program; relates to adding a minimum wage reimbursement credit; relates to personal income tax rates; relates to the gift for New York state teen health education fund; relates to establishing the New York state teen health education fund; relates to eligible businesses participating in the excelsior linked deposit program; relates to small business loan funds for business enterprises that are minority- and women-owned; and relates to establishing a New York state innovation capital fund.

view sponsor memo
BILL NUMBER:S2609

TITLE OF BILL:
An act
to amend the tax law, in relation to the temporary metropolitan
transportation business tax surcharge
(Part A);
to amend the tax law, in relation to the empire state film production
credit and the empire state film post production credit;
and to amend part Y-1 of chapter 57 of the laws of 2009 amending
the tax law relating to the empire state film production credit,
in relation to reports
(Part B);
to amend the economic development law, the tax law and the
administrative code of the city of New York, in relation to establishing
the New York innovation hot spot program
(Part C);
to amend the tax law and the administrative code of the city of New
York, in relation to extending for three years the charitable
contributions deduction limitation
(Part D);
to amend the tax law and the administrative code of the city of New
York, in relation to the exclusion of certain royalty payments from the
entire net income or other taxable basis of corporations, banking
corporations, and insurance corporations, from the unrelated business
income of corporations, and from the adjusted gross income of individual
taxpayers; and to repeal certain provisions of the tax law
relating thereto
(Part E);
to amend the tax law, in relation to the historic preservation tax
credit
(Part F);
to amend the tax law, in relation to providing a tax credit for electric
vehicle recharging property
(Part G);
to amend chapter 61 of the laws of 2011 amending the real property tax
law and other laws relating to establishing standards for electronic
real property tax administration, in relation to making permanent,
provisions relating to mandatory electronic filing of tax documents and
improving sales tax compliance and to repeal certain provisions of the
tax law and the administrative code of the city of New York relating
thereto
(Part H);
to amend the tax law, in relation to exempting sales made at a Taste-NY
facility from sales and compensating use taxes; and to amend
the alcoholic
beverage control law, in relation to allowing sales of all types of
alcoholic beverages at a Taste-NY facility
(Part I);
to amend the general municipal law and the public authorities law, in
relation to industrial development agencies and authorities
(Part J);
to amend the tax law, in relation to expanding the exemption of CNG in
the sales tax to include natural gas purchased and used to produce CNG
for use exclusively and directly in the engine of a motor vehicle
(Part K);
to amend the tax law, in relation to allowing voluntary ambulance


services, fire companies, fire departments
and rescue squads to claim
reimbursement of the petroleum business tax for fuel used in their
vehicles
(Part L);
to amend the tax law, in relation to the power of the
commissioner of taxation and finance to
refuse to issue a certificate of authority to collect the sales and use
taxes and the power of the commissioner of taxation and finance
to revoke such a certificate
once granted and penalties related to the operation of a business
without such certificate
(Part M);
to amend the tax law, in relation to allowing the department of taxation
and finance to refuse a certificate of registration to retail dealers of
cigarettes and tobacco products if such dealers have certain tax
liabilities or have been convicted of a tax crime within one year of
applying for or renewing a certificate of registration
(Part N);
to amend the tax law, in relation to increasing the penalty for the
possession of unstamped and unlawfully stamped cigarettes
(Part O);
to amend the tax law, the vehicle and traffic law and the
insurance law, in
relation to
the suspension of drivers' licenses of persons
who are delinquent in the payment of past-due tax
liabilities
(Part P);
to amend the tax law, in relation to serving an income execution with
respect to individual tax debtors without filing a warrant
(Part Q);
to amend the tax law, in relation to the authority of counties to impose
sales and compensating use taxes pursuant to the authority of article 29
of such law; and to repeal certain provisions of sections 1210 and 1224
and section 1210-E of such law relating thereto
(Part R);
to amend the tax law, in relation to a keno style lottery game
(Part S);
to amend the tax law, in relation to vendor fees paid to vendor tracks
(Part T); and
to amend the racing, pari-mutuel wagering and breeding law, in
relation
to licenses for simulcast facilities, sums relating to track
simulcast,
simulcast of out-of-state thoroughbred races, simulcasting of races
run by
out-of-state harness tracks and distributions of wagers; to amend
chapter
281 of the laws of 1994, amending the racing, pari-mutuel wagering and
breeding
law and other laws relating to simulcasting and chapter 346 of
the laws
of 1990, amending the racing, pari-mutuel wagering and breeding law
and other
laws relating to simulcasting and the imposition of certain taxes, in
relation


to making permanent
certain provisions thereof; to amend the racing,
pari-mutuel
wagering and breeding law, in relation to making permanent
certain
provisions thereof; and to repeal subdivision 5 of section 1012
of the racing, pari-mutuel wagering and breeding law
relating to telephone accounts
and telephone wagering
and section 1014 of the racing, pari-mutuel wagering and breeding law
relating to simulcasting of out-of-state thoroughbred races
(Part U)

PURPOSE:

This bill contains provisions needed to implement the Revenue portion
of the 2013-14 Executive Budget.

This memorandum describes Parts A through U of the 2013-14 Article VII
Revenue bill which are described wholly within the parts listed below.

Part A - Extend the RATA business tax surcharge for five years.

Purpose:

This bill would provide a five year extension of the temporary
metropolitan transportation business tax surcharge.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

This bill would provide a five year extension of the temporary
metropolitan transportation business tax surcharge under Tax Law
sections 183-a,184-a, 186-c, 209B, 1455-B and 1505-a. Under current
law the temporary metropolitan transportation business tax surcharges
are set to expire for taxable years ending before December 31, 2013.
This provision has been repeatedly extended since the 1980's and this
bill would extend the surcharges for an additional five years to
taxable years ending before December 31, 2018.

Budget Implications:

Enactment of this bill is necessary to implement the 2013-2014
Executive Budget because it would preserve revenue dedicated to
support the operations of the Metropolitan Transportation Authority.

Effective Date:

This bill would take effect immediately upon enactment.

Part B - New York Film Production tax credit-extend for five years,
enhance, and improve transparency.

Purpose:


This bill would extend funding through 2019 for the empire state film
production credit and empire state film post production credit, make
changes to the definition of a qualified film and make changes to the
post production tax credit. The empire state film production tax
credit was initially enacted in 2004, and it has been amended
numerous times since then. The proposed changes will provide
certainty to the industry that is necessary to support long term
investments in the state, increase the opportunity for additional
activity in the state in the area of post production, and increase
the reporting requirements, disclosure requirements, and oversight of
the film credit programs.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

This bill would provide an additional $420 million in funds for the
film tax credit and post production credit through calendar year 2019
and increase the amount allocated from the total funds available to
the post production credit from $7 million to $25 million per
calendar year beginning in 2015. The extension through 2019 Will
allow the state to attract more long-term investments, and the
increase in allocation to post production is necessary to accommodate
the rise in spending on post production, visual effects and animation
as a portion of overall budgets.

The amendments would allow a taxpayer to claim a post production
credit for visual effects or animation: 1) where the taxpayer's post
production costs relating to visual effects or animation at a New
York post production facility equal or exceed the lesser of $3
million or 20 percent or more of a taxpayer's post production costs
related to visual effects or animation at post production facilities
within and without New York; or 2) where the taxpayer's post
production costs excluding visual effects and animation at a New York
post production facility equal or exceed 75 percent or more of a
taxpayer's post production costs excluding visual effects and
animation at post production facilities
everywhere. This will help proactively expand New York's presence in
visual effects and animation.

The approaching sunset date of the film tax credit program and minimal
funding for post production are out of line with the needs of the
industry. Under the film production credit, a taxpayer is able to
claim a credit for the qualified production costs paid or incurred in
the production of a qualified film. Currently, qualified production
costs do not include post production costs unless the portion of the
post production costs attributable to the production of a qualified
film in New York equal or exceed 75 percent of the total post
production costs incurred in the production of such qualified film.
This threshold has proved prohibitively high for productions that
make use of extensive special effects. The combination of visual
effects, animation and other post production activities makes it
impossible for many companies to qualify for the credit, given New
York's limited capacity in visual effects. This change would reward
companies for bringing their visual effects, animation and post
production work to New York.


The bill would also allow a "relocated television production" to
qualify as a qualified film, making it eligible for the tax credit. A
relocated television production is defined as a television production
that filmed at least five seasons prior to its first relocated season
in New York, has a studio audience of 200 or more people, incurs at
least $30 million in annual production costs in the State and incurs
at least $10 million in qualified capital expenditures at a qualified
facility

Finally, the bill would also increase the State's return on
investment, protect the film credit program's integrity, and reduce
program costs by adding new third party reporting and oversight
provisions,

Budget Implications:

Enactment of this bill is necessary to implement the 2013-2014
Executive Budget. The revenue foregone with enactment of this
legislation is $173 million in 2016-17, $316 million in 2017-18 $420
million in each of 2018-19 and 2019-20, $417 million in 202021, $248
million in 2021-22 and $106 million in 2022-23.

Effective Date:

This bill would take effect immediately, provided, however, that
sections four and five of the bill would apply to taxpayers
submitting initial applications to the governor's office of motion
picture and television development on or after this bill becomes law
and to taxpayers who filed an initial application before the bill
becomes a law but who have not yet submitted a final application to
the governor's office of motion picture and television development on
or before the date this bill becomes a law and section six of the
bill, other than the addition by section 6 of this bill of new
subdivision (b) to section 3 of part Y-1 of chapter 57 of the laws of
2009, which would take effect immediately, would only apply to
taxpayers submitting initial applications to the governor's office of
motion picture and television development on or after the date this
bill becomes a law.

Part C Establish the New York Innovation Hot Spots Program.

Purpose:

This bill would provide for the establishment of an Innovation Hot
Spots Program affiliated with private or public universities and
colleges and non-profit organizations associated with universities
and colleges and provide tax benefits for new businesses located in
the "innovation hot spots".

Statement in Support, Summary of Provisions, Existing Law, and
Prior Legislative History:

This bill would create a new program to promote economic growth in New
York State by creating "innovation hot spots" - tax free zones
affiliated with higher education incubators or non-profit incubators
associated with universities or colleges. These incubators will help
to foster innovation by offering inventors and entrepreneurs a


low-cost and supportive environment in which to establish themselves
and grow. Winning hot spots will provide start-ups with growth
support and assistance by providing a one-stop shop for services,
office space, networking and other technical assistance. The
companies locating in the incubators will be able to grow without
paying taxes in New York for their first five years.

The bill amends the Economic Development Law by adding a new section
361 to create innovation hot spots that will be tax-free zones in New
York college, university and nonprofit incubators. Five "innovation
hot spots" will be designated by the Department of Economic
Development with the recommendations of the Regional Economic
Development Councils in fiscal year 2013-2014, and five more will be
designated the next fiscal year. The applicants that are approved as
"innovation hot spots" are expected to foster innovation, house
entrepreneurial businesses on their campuses, and offer growth support.

The bill also amends the Tax Law to provide tax benefits to qualified
entities that operate a business in an "innovation hot spot".
Qualified entities must be business enterprises that are in the
formative stage of development and located in New York State.
Corporate qualified entities that are taxpayers under Article 9-A and
located in an "innovation hot spot" would pay only the fixed dollar
minimum tax for five taxable years. Individuals receiving income from
qualified entities that are sole proprietorships, partnerships,
limited liability companies or New York Subchapter S corporations
would be allowed a deduction for five taxable years for the amount of
income included in their federal adjusted income to the extent that
the income was attributable to income earned from the operations of a
qualified entity that is also a tenant in an "innovation hot spot".
Qualified entities would also be entitled to a sales and use tax
credit or refund for their purchases for 60 months, beginning with
the first full month during which the qualified entity becomes a
tenant in an "innovation hot spot". A taxpayer who claims tax
benefits under section 38 of the Tax Law would no longer be eligible
for any other New York State exemptions, deductions,
or credits or refunds under the Tax Law, and the election to claim
the tax benefits under this section is not revocable. The personal
income tax benefit would also be applicable to the New York City
personal income tax.

Budget Implications:

This bill would have no fiscal impact in 2013-14, result in minimal
sales tax receipts reductions in every year of the Financial Plan,
and result in a $5 million All Funds total revenue loss in the
corporate franchise tax in 2017-18.

Effective Date:

This bill would take effect immediately upon enactment.

Part D - Extend the high income charitable contribution deduction
limitation for three years.

Purpose:


This bill would extend for three years the limitation on
charitable contributions deductions for New York State and New York
City taxpayers.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

This bill would amend section 615(g) of the Tax Law to retain for
three additional years the current New York limitation on the
itemized charitable contributions deduction for individuals whose New
York adjusted gross income is over $10 million in the amount of 25
percent of any charitable contributions deduction allowed under the
Internal Revenue Code. Without an amendment to the Tax Law, the
deduction for individuals whose New York adjusted gross income is
over ten million dollars would rise for taxable years beginning on or
after January 1, 2013 to 50 percent of any charitable contributions
deduction allowed under the Internal Revenue Code. The bill would also
make conforming amendments to the New York City Administrative Code.

Budget Implications:

Enactment of this bill is necessary to implement the 2013-2014
Executive Budget because it would increase All Funds tax receipts by
$70 million in SFY 2013-14, $140 million in each of SFYs 2014-15 and
2015-16, and $70 million in SFY 2016-17.

Effective Date:

This bill would take effect immediately upon enactment.

Part E - Close the royalty income loophole.

Purpose:

This bill would amend the royalty expense add-back requirements in the
Tax Law by eliminating the income exclusion provisions in these
requirements, thereby closing
a loophole that allowed taxpayers to avoid any significant expense
add-back yet qualify for a substantial income exclusion.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

The current add-back and exclusion system under the Tax Law and the
NYC Administrative Code has been subject to exploitation by
taxpayers. Under the current system, the recipient of royalty
payments can exclude these payments as long as the payer is also a
New York taxpayer. This creates an incentive for taxpayers to take
advantage of the income exclusion provision by allowing the income
exclusion for a payment received from a related member with a small
New York presence (i.e. a very low business allocation percentage
BAP), even if the recipient has a large BAP and large royalty
income, resulting in significant tax savings.

The provisions of the current statute have also been interpreted by
some taxpayers in ways that are inconsistent with the intent of the
statute and the Department's interpretation. For example, issues have


been raised regarding eligibility for the income exclusion provision,
as well as the scope of the "related members" definition.

The bill would eliminate those inconsistent readings with clear
language on the applicability of the required add-back, and the
exceptions thereto, in order to prevent tax avoidance while allowing
for fair and equitable administration. The bill, which is based upon
a Multistate Tax Commission model statute, would modify the royalty
income add-back and exclusion provisions of the Tax Law, and in
corresponding sections of the NYC Administrative Code, by eliminating
the exclusion of royalty income received if the
related member who made the royalty payment was required to add back
the payment to its income. instead, the bill would create several new
exceptions to the add-back requirement. One exception would allow
taxpayers to demonstrate that the expense add-back should not apply
if the taxpayer's related member paid significant taxes on the
royalty payment in other jurisdictions. Another would apply if the
related member paid all or part of the royalty payment it received to
a third party for a valid business purpose. There would be an
additional exception when the related member is organized under the
laws of a foreign country that has a tax treaty with the United
States. Finally, the bill would allow the commissioner to exempt any
taxpayer from the add-back requirement if adding back the expense
would not properly reflect the taxpayer's income.

In addition, the bill would amend the definition of 'related member"
to be consistent with the term as used elsewhere in the Tax Law, and
provide clarification as to which transactions are not subject to the
add-back requirements.

Budget Implications:

Enactment of this bill will increase All Funds revenue by $28 million
annually beginning in 2014-15.

Effective Date:

This bill takes effect immediately and applies to taxable years
beginning on or after January 1, 2013.

Part F - Extend and enhance the historic commercial properties
rehabilitation tax credit.

Purpose:

Extend the enhanced tax credit available for rehabilitation
of historic properties through tax years beginning before January 1,
2020, and to make necessary technical corrections to the method of
determining eligible census tracts.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

The tax credit for rehabilitation of historic properties is now
available for general business corporations subject to tax under
Article 9-A of the Tax Law and personal income taxpayers subject to
tax under Article 22, as well as to banking corporations subject to


tax under Article 32 and insurance corporations subject to tax under
Article 33.

The New York State credit is based on the federal credit allowed for
the qualified rehabilitation expenditures, as defined by section
47(c)(2) of the Internal Revenue Code (IRC), related to the
rehabilitation of the same certified historic structure. The tax credit
is allowed in the tax year that the qualified rehabilitation is placed
in service under section 167 (relating to depreciation) of the IRC.

While the credit is not currently refundable, the bill would make the
credit refundable commencing in tax year 2015. Currently, for tax
years beginning on or after January 1, 2010 and before January 1,
2015, the amount of the credit is equal to 100% of the federal credit
allowed under section 47 of the IRC for the same tax year for the
same certified historic structure located in New York State. However,
the total amount of New York State credit allowed cannot exceed $5
million per structure.

This bill would amend each of the Tax Law articles allowing the
historic rehabilitation tax credit, to allow the enhanced tax credit
of $5,000,000 per structure through tax years 2019 and allow it to
revert to the pre-2010 value of $100,000 for subsequent taxable years.

This extension would provide greater certainty to developers who want
to commit to historic rehabilitation projects, and the refundability
would improve developer financing opportunities.

Sections one through four of the bill would also make needed technical
corrections by substituting the 2006-2011 American Community Survey
data for the decennial federal census data in calculating the state
median family income and removing obsolete references to federal
targeted area residences under Section 143(j) of the Internal Revenue
Code.

Budget Implications:

Enactment of this bill, while reducing tax revenues by $20 million in
SFY 2016-2017 and $30 million annually in each of the next four
fiscal years, is a necessary adjunct to economic development and
developing a robust economy in New York.

Effective Date:

This bill would take effect immediately and applies to taxable years
beginning on and after January 1, 2013.

Part G Establish the Charge NY electric vehicle recharging equipment
tax credit.

Purpose:

This bill would provide a tax credit for electric vehicle recharging
property.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:


This bill would create a nonrefundable tax credit under the
corporation tax, corporate franchise tax and the personal income tax
for the purchase of electric vehicle recharging property, which
consists of all the equipment needed to convey electric power from
the electric grid or another power source to an onboard vehicle
charger. The credit equals, for each installation, the lesser of five
thousand dollars or fifty percent of the cost of such property,
Recharging property that has been funded with grants, including
grants from the New York State Energy and Research Development
Authority or the New York Power Authority, will not qualify for the
credit.

This bill would continue to stimulate the developing market for
electric vehicles by offering tax credits for the installation of
property to be used for recharging electric vehicles until December
31, 2017. The bill offers a comprehensive effort to encourage
investment in energy efficient transportation technologies that
displace petroleum consumption and reduce emissions of harmful
pollutants.

Budget Implications:

Enactment of this bill would have no fiscal impact in 2013-14 and
result in All Funds revenue losses of $1 million in each of FY
2014-15 and 2015-16 and $3 million in each of FY 2016-17, 2017-18,
and 2018-19.

Effective Date:

This bill would take effect immediately and apply to taxable years
beginning on or after January 1, 2013 for property placed in service
on or after that date.

Part H - Make tax modernization provisions permanent.

Purpose:

To make permanent tax modernization provisions related to improving
electronic filing and payment mandates and sales tax segregated
accounts program.

Statement in Support, Summary of Provisions, Existing Law,
Prior Legislative History:

a. Electronic Filing Mandates

Part U of Chapter 61, Laws of 2011 improved the administration of the
Tax Department's electronic filing and payment mandates by
consolidating all preparer and self-filer requirements into one
section of the Tax Law (§ 29), extending the e-filing requirements to
PIT self-filers who use tax software to prepare their PIT returns,
and repealing unnecessary provisions of the Tax Law and the
Administrative Code of the
City of New York. These beneficial provisions are set to expire on
December 31, 2013, at which time, the law would revert to disparate
sections setting forth e-file mandate requirements at different


threshold requirements than those which would be in place during the
2013 tax filing season.

This bill would make permanent the very important e-file improvement
provisions enacted in 2011. The 2011 amendments consolidating the
e-file and e-pay requirements into one section of the Tax Law made
the requirements more readily understandable and eliminated confusion
among self-filers and practitioners that existed when there were two
different sets of requirements. To produce further efficiencies and
cost savings to the State, the threshold trigger for the preparer
e-file requirement was reduced from preparation of 100 tax documents
to preparation of 5 tax documents. In 2012, these requirements were
changed for those who first become subject to the e-filing
requirements after January 1, 2012 and before January 1, 2014 to a
tax preparer that prepares authorized tax documents for more than ten
different taxpayers. This bill would also keep consistent the
terminology used in connection with these requirements.

Extending these provisions will prevent the State from reverting back
to the previous thresholds of 100, which would result in a decline of
e-filed returns in the 2014 tax filing season and would also maintain
the requirement for tax filing seasons beyond tax year 2013 that PIT
self-filers using tax software to prepare their returns must e-file
them.

Overall, this bill would maintain for future years the cost savings
realized by the State by increasing e-filing. E-file and e-pay of
taxes create cost and tax administration efficiencies beneficial to
both the State and taxpayers. A taxpayer's use of e-file and e-pay
reduces the number of errors that may be associated with the filing
of a paper return, because an error can be immediately detected and
the taxpayer prompted to correct and resubmit the return. The
taxpayer also gets an official acknowledgement when the return has
been received. E-filed tax returns are processed more quickly than
paper, potentially resulting in faster issuance of refunds. Moreover,
increased use of e-file and e-pay would increase cost savings to the
State, because administrative cost savings accrue with each and every
tax document e-filed with the Department. This bill would make
permanent these very important provisions, which would otherwise
expire on December 31, 2013.

b. Improving Sales Tax Compliance

Part U of Chapter 61, Laws of 2011 amended § 1137 of the Tax Law to
authorize the Commissioner to require vendors that failed to collect,
truthfully account for, or pay over sales tax monies, or to file
returns as required by law, to take actions the Commissioner deems
necessary to ensure that sales tax monies are paid, including giving
notice to such vendor requiring more frequent payment of tax. Vendors
were also required to set up separate bank account into which only
sales tax moneys are deposited at least weekly, and the Department
was authorized to debit that account.

The Department implemented this program on a limited basis beginning
in July 2011. Initial results showed improved vendor compliance.


The bill would continue an effective tool to ensure that trust tax
moneys paid by consumers to vendors are paid promptly to the
Department and not diverted for other purposes. The segregated
account provisions are currently set to expire December 31, 2013.
This bill would make permanent these very important provisions of the
Tax Law.

Budget Implications:

Enactment of this bill is necessary to implement the 2013-2014
Executive Budget because it would increase AU Funds receipts by $6
million in SFY 2013-14, and $22 million annually thereafter.

Effective Date:

This bill would take effect immediately upon enactment.

Part I - Establish Tax-Free Sales and the Sale of Alcoholic Beverages
at Taste-NY Facilities,

Purpose:

To support the promotion of New Yorks' local-grown and produced
products, this bill would exempt from sales and use taxes receipts
from sales of tangible personal property and food and drink where the
sale is made at a Taste-NY facility and make changes to the Alcoholic
Beverage Control Law to allow the sale of alcoholic beverages at
these facilities.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

This bill would implement a component of a comprehensive strategy
including the expansion of markets for our growers and producers, and
improving rural economies, by creating a sales tax exemption for
sales made at Taste-NY facilities and allow the sale of all types of
alcoholic beverages at these facilities. Tangible goods and food and
beverages sold at these facilities would be predominantly New
York-made products.

Section 1 states the Legislative intent of the bill to encourage
economic development and job creation by the establishment of
Taste-NY facilities. These facilities would showcase New York-made
products, but would also sell products made outside the State.

Section 2 of the bill would define a Taste-NY facility for sales tax
purposes as a facility operated by a person designated by and
pursuant to an agreement with a state agency
(such OGS), public authority (such as the Thruway Authority or the
MTA) or an interstate agency or public corporation created by a
compact or agreement with another state or Canada (such as the Port
Authority), from which sales are made of tangible personal property
or food and drink, whether or not for on premises consumption.

Section 3 of the bill would exempt from sales and use taxes sales made
at a Taste-NY facility of tangible personal property.


Section 4 of the bill would exempt from sales and use tax sales made
at a Taste-NY facility of food and drink for on-premises consumption
and other types of prepared food that would otherwise be subject to
sales tax (e.g., food sold in a heated state, sandwiches, food not
commonly sold in grocery stores).

Section 5 of the bill would amend the Alcoholic Beverage Control Law
by adding a new section 63-b that creates the "special license to
sell alcoholic beverages at retail for consumption off the licenses
premises." This license will be available only to persons who have
been designated to operate a Taste-NY facility pursuant to an
agreement with a state agency, public authority, or an interstate
agency or public corporation created pursuant to an agreement or
compact with another state or the Dominion of Canada. Unlike other
retail off-premises licenses, establishments licensed under section
63-b will be able to sell all alcoholic beverages. The new statute
also provides that licenses issued under section 63-b would not be
subject to certain provisions that govern establishments with
off-premises liquor and wine licenses. Specifically, the
establishments would not be subject to the "200-Foot Law" (regarding
proximity to schools and places of worship) and restrictions on the
store's location with respect to public thoroughfares and the number
of entrances to the store. The licensees would also be exempt from
the "tied house laws" that prohibit retail licensees from having an
interest in an entity that manufactures or wholesales alcoholic
beverages. Businesses operating under section 63-b would also be
able to conduct tastings of the alcoholic beverages that they sell.

Section 6 of the bill would amend section 66 of the Alcoholic Beverage
Control Law to provide a $500 annual license fee for a license issued
under section 63-b.

Section 7 of the bill would amend section 67 of the Alcoholic Beverage
Control Law, which states the duration of licenses to sell liquor, to
provide a three-year term for a license issued under section 63-b.

Section 8 of the bill would amend section 56-a of the Alcoholic
Beverage Control Law, which sets the fees for filing applications for
licenses, to provide for a $200 initial license application fee and a
$90 renewal application fee for a license issued under section 63- b.

Section 9 of the bill would amend paragraph a of subdivision 1 of
section 101 of the Alcoholic Beverage Control Law to allow
manufacturers and wholesalers to have an interest in a business
licensed under section 63-b. This provision, together with the
exemption contained in section 63-b, will allow a person holding a
manufacturing or wholesale license to obtain a retail license under
section 63-b.

Section 10 of the bill would provide that if any provision of the bill
is finally adjudged by a court of competent jurisdiction to be
invalid or unconstitutional, such judgment will not affect, impair or
invalidate the remainder of the bill, and the provisions of State law
in effect prior to the date on which the bill becomes a law would not
be affected by any such judgment.


Section 11 of the bill would provide that it would take effect
immediately, provided that the sales tax exemptions created by
sections 3 and 4 of the bill would take effect on the first day of a
sales tax quarter beginning at least 30 days after the bill becomes a
law.

Under existing law, sales of tangible personal property, food or drink
for on-premises consumption, and certain other types of prepared
foods are subject to sales tax. This is true whether or not the
seller is acting under an agreement with the State or one of its
agencies or instrumentalities. This bill would exempt these items
when sold at a Taste-NY facility operated by a person designated by
and pursuant to a written agreement with a state agency, public
authority, interstate agency or compact entity. These facilities
would also provide a venue to showcase New York-made goods.

Under existing law, the Alcoholic Beverage Control Law provides for
four types of retail off-premises licenses: (1) beer only; (2) beer
and wine products; (3) liquor and wine; and (4) wine. Each type of
license also carries with it the right to sell cider. Currently, the
only licensed establishments where liquor, wine, beer and cider can
all be purchased at retail for off-premises consumption are farm
wineries, farm distilleries and farm breweries. Those licensees can
only sell "New York state labeled" alcoholic beverages. The Alcoholic
Beverage Control Law also limits the ability of off-premises
retailers to conduct tastings. The "tied house laws" prohibit
licensed retailers from having any interest in a business that
manufactures or wholesales alcoholic beverages, and licensed
manufacturers and wholesalers of alcoholic beverages from having any
interest in a retail business. This bill would allow Taste-NY
facilities to sell all types of alcoholic beverages and conduct
limited tastings.

Budget Implications:

Enactment of this bill is necessary to implement the Taste-NY
initiative. It has a minimal impact on sales and use tax receipts and
alcohol beverage license fee receipts in SFY 2013-14 and annually
thereafter.

Effective Date:

This bill would take effect immediately, provided that the sales tax
exemptions created by sections 3 and 4 of the bill would take effect
on the first day of a sales tax quarter next commencing at least 30
days after it becomes a law and would apply in
accordance with the applicable transitional provisions in sections
1106 and 1217 of the Tax Law.

Part J - IDA reform for State sales tax exemption benefits.

Purpose:

This bill would reform current Industrial Development Authority (IDA)
practices of providing financial assistance with respect to State
sales and use tax benefits by requiring State approval of such
benefits, providing greater oversight of the use of such benefits,


and promoting consistency with State and regional economic
development goals.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

The bill would make needed changes to the IDA provisions to reform how
IDAs provide State sales and use tax benefits to projects and how
those projects claim those benefits. The bill would provide that an
IDA cannot grant State sales and use tax exemption benefits for any
project or to any agent or project operator unless the agent or
project operator has been certified as a participant in the Excelsior
Jobs Program, or is a business that would be eligible to participate
in such Program. Before an IDA could award state sales and use tax
benefits to an IDA project, the Commissioner of Economic Development
would need to determine, in consultation with the Regional Economic
Development Council, that the benefit plan for that project is
consistent with regional economic development strategies. An IDA
could not provide State tax benefits greater than those approved by
the Commissioner of Economic Development for the project. If the IDA
does so, those benefits would be void from the inception, and an
agent, project operator, or other person or entity that obtained such
benefits would be required to pay such tax benefits to the Tax
Commissioner. Currently, IDAs can provide State sales and use tax
benefits to projects without State approval.

The bill would also provide that State sales tax benefits could not be
taken as up-front exemptions on the purchase of property or services.
Rather, the agent or project operator would need to submit a claim
for credit or refund to obtain those benefits. The bill would also
provide that if an IDA sets up a payment in lieu of taxes (PILOT)
agreement for State sales and use taxes, the IDA must remit those
payments to the State. If an IDA recaptures State sales and use tax
monies from its agent or project operator, it would be required to
turn such monies over to the Tax Commissioner as State sales or use
taxes. Currently, IDAs are not required to turn over to the State
payments in lieu of State sales or use taxes, and an IDA that
recovers State tax monies may retain them for itself.

The bill would require an IDA to send a notice to the Tax Department
when the IDA's appointment of an agent/project operator has expired
or been revoked. Currently, the
IDA must send a statement to the Tax Department that it has appointed
the agent/project operator but is not required to give notice that
the appointment has expired or was revoked before the original
appointment said it would terminate. This provision would help to
ensure that IDA agents/project operators cannot make purchases exempt
from State or local sales and use taxes after their authority is
revoked or expired.

Budget Implications:

Enactment of this bill would increase All Funds sales and use tax
receipts by $7 million in SFY 2013-14 and $13 million annually
thereafter.

Effective Date:


This bill would take effect immediately and apply to (a) any IDA
project established, agent or project operator appointed, financial
assistance provided, and agreement regarding payments in lieu of
taxes entered into, on or after the bill's effective date, (b) any
amendment or revision made on or after the bill's effective date to
any project established, agent or project operator appointed,
financial assistance provided, or payment in lieu of taxes entered
into, prior to that date, (c) any State sales and compensating use
tax exemption benefits recovered, recaptured, received, or otherwise
obtained by an IDA on or after the bill's effective date, and (d) any
payments in lieu of State sales and compensating use taxes that an
IDA receives on or after the bill's effective date.

Part K - Make technical amendments to the tax classification of
uncompressed natural gas.

Purpose:

This bill would create a sales and use tax exemption, under Article 28
of the Tax Law, for natural gas that is purchased and converted into
compressed natural gas (CNG) for use or consumption in the engine of
a motor vehicle.

Statement in Support, Summary of Provisions, Existing Law
and Prior Legislative History:

Presently, CNG is exempt from motor fuel excise, petroleum business,
and State and local sales taxes when sold for consumption or use
exclusively in the engine of a motor vehicle. However, under current
law, when natural gas is purchased from a supplier in an uncompressed
state, the purchaser must pay applicable State and local sales taxes
on the purchase of the natural gas from its commodity supplier, even
if the purchaser will subsequently convert the natural gas to CNG for
use in the engine of a motor vehicle. The legislative intent of the
CNG fuel tax exemption is to encourage the development of a
non-petroleum fuel market in the state. This bill would remove the
unintended sales tax imposition on purchases of uncompressed natural
gas intended for conversion into CNG for subsequent self use in the
engine of a motor vehicle or sale for use in the engines of motor
vehicles.

Section 1 would amend Tax Law § 1115(a)(42) to exempt the purchase
from sales and use tax of natural gas to be converted into CNG for
use or for sale for use in the engine of a motor vehicle.

Budget Implications:

This bill would decrease All Funds tax receipts by a minimal amount.

Effective Date:

This bill would take effect on the first day of a sales tax quarterly
period first beginning after the bill becomes a law.

Part L - Equalize fuel tax treatment for volunteer ambulance services,
fire companies, fire departments and rescue squads,


Purpose:

This bill would allow volunteer ambulance services, volunteer fire
companies, volunteer fire departments and volunteer rescue squads to
claim a reimbursement of the Article 13-A petroleum business tax for
fuel used in their vehicles.

Statement in Support, Summary of Provisions, Existing Law
and Prior Legislative History:

Presently, volunteer ambulance services, volunteer fire companies,
volunteer fire departments, and volunteer rescue squads are allowed
to claim a reimbursement of the Article 12-A excise tax and the
Article 28 and 29 sales and compensating use taxes for fuel used in
their vehicles. This bill would extend the reimbursement to cover the
Article 13-A petroleum business tax.

Section 1 would provide the new reimbursement in a new subdivision (p)
of Tax Law section 301-c. To qualify, the entity must be the
purchaser, user or consumer of the motor fuel or diesel motor fuel
and use it in a vehicle owned and operated by it exclusively for its
purposes.

Budget Implications:

This would decrease All Fund tax receipts by a minimal amount and have
no significant impact on the fiscal plan.

Effective Date:

This bill would take effect on the first day of the first month next
occurring 60 days after this bill is enacted.

Part M - Update Criteria for Refusal and Revocation of a Sales Tax
Certificate of Authority.

Purpose:

This proposal would amend the Tax Law to create consistency between
the grounds for refusal and revocation of a sales tax Certificate of
Authority (COA) and clarify the consequences for operating without a
valid COA.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

Under current law, the grounds for refusal of a COA and the grounds
for revoking an existing COA are inconsistent. Certain vendors with
large tax liabilities have learned to exploit these loopholes to
avoid paying these liabilities and complying with the Tax Law.

Additionally, the Tax Law currently allows the Department to refuse to
issue a COA if the business entity (or a sole proprietor) has an
unpaid fixed and final liability for any type of tax. However, for
"responsible persons" (including officers, directors, partners,
members of LLCs, and others responsible for the operation of the
business) the Department can only consider unpaid fixed and final


sales and use tax liabilities. This allows a business to apply for a
COA without naming a responsible person with other tax debts, but add
later that person to the business' tax account.

Existing law also makes it difficult to stop abuses by some of the
most egregious repeat tax offenders. A COA can be revoked or denied
if the applicant committed a crime under the Tax Law, but not for
convictions for tax-related crimes under the Penal Law, federal tax
crimes, or tax crimes in other states, and only within 1 year of the
conviction. The civil penalties for operating a business without a
valid COA have not been increased since they were first enacted in
1985, which greatly reduces their deterrent effect. Moreover, the
civil and criminal penalties for operating without a COA make no
distinction between willful and negligent violations of this
requirement.

To prevent these abuses, the bill would amend Tax Law § 1134(a)(4)(A)
and (B) to make grounds for revoking a COA consistent with the
grounds denying a COA application. This bill would also allow the
Department to refuse to issue a COA for any unpaid tax finally
determined to be due from a responsible person, not just for that
person's unpaid sales and use taxes as under current law.

The bill would also authorize the Commissioner to refuse or revoke a
COA within 5 years of the date the applicant was convicted of a crime
under New York Tax or Penal Laws, or the tax or penal laws of.the
United States or any other state, where the crime of which the
applicant was convicted would be a crime under the Tax Law if it were
committed in New York.

The bill would update Tax Law section 1145(a)(3)(i) so that persons
who willfully operate a business without a COA would be subject to
stiffer penalties than those who do so for reasons other than willful
failure. A business that willfully continues to operate after its
application for a COA was denied or revoked would face civil
financial penalties of up to $50,000.00. Moreover, Tax Law § 1817
would be amended so that the willful operation of a business required
to collect tax where the COA was revoked, suspended, or refused, or
where the applicant was notified of the deemed expiration of the COA
would be increased from a misdemeanor to a criminal tax fraud act in
the fourth degree.

Budget Implications:

Enactment of this bill would increase All Funds receipts by $1 million
in SFY 2013-14 and annually thereafter.

Effective Date:

This bill takes effect immediately upon enactment.

Part N - Expand the cigarette and tobacco retailer registration
clearance process.

Purpose:


This bill would amend the Tax Law to allow the Department of Taxation
and Finance to refuse a Certificate of Registration to retail dealers
of cigarettes and tobacco products if they have certain tax
liabilities or have been convicted of a tax crime within one year of
applying for or renewing a Certificate of Registration.

Statement in Support, Summary of Provisions, Existing Law
and Prior Legislative History:

Retail dealers of cigarettes and tobacco products are required to
obtain and annually renew a Certificate of Registration under Article
20 of the Tax Law, and are also required to obtain a sales tax
Certificate of Authority. However, current law does hot allow the
Department to refuse to issue a Certificate of Registration, as it
does for a sales tax Certificate of Authority, if any tax finally
determined to be due from the applicant (i.e., the business entity)
under the Tax Law has not been paid in full; or sales or use taxes
due from persons required to collect tax on behalf of this entity, or
another entity for which the person was also required to collect tax,
has not been paid in full; or
the applicant or persons required to collect tax 6n behalf of this
entity have been convicted of a crime under the Tax Law within a year
of submitting their application. This bill would allow the Department
to refuse to issue a Certificate of Registration in these instances.
Making the grounds for refusal of a Certificate of Registration
consistent with the grounds for refusing to issue a sales tax
Certificate_of Authority would prevent persons recently convicted of
tax crimes from obtaining a Certificate of Registration, enable the
Department to efficiently collect on additional past due tax
liabilities, and would allow integration of the registration
clearance processes.

Section 1 would integrate Tax Law section 1134
(a)(4)(B)(i),(ii),(iii),(iv), and (v) to provide the Department with
the discretion to refuse to issue a Certificate of Registration if
tax liabilities that are finally determined to be due are unpaid, or
if or the applicant or persons required to collect tax on behalf of
this entity have been convicted of a crime under the Tax Law within a
year of submitting their application. It would also allow the
Department to let the applicant know, if the request is provided in
writing, the name of the person whose tax liabilities are at issue.

Section 2 would conform the language to allow for the integration of
Tax Law section 1134 (a)(4)(B)(i),(ii),(iii),(iv), and (v).

Budget Implications:

Enactment of this bill is necessary to implement the 2013-2014
Executive Budget because it would increase All Funds receipts by $1
million in SFY 2013-14 and annually thereafter.

Effective Date:

This bill would take effect immediately and apply to Certificate of
Registration applications filed for calendar year 2014 and thereafter.


Part O - Increase the civil penalty for possessing unstamped
cigarettes.

Purpose:

This bill would increase the penalty for possessing or controlling
unstamped or unlawfully stamped cigarettes from a maximum of $150 to
$600.

Statement in Support, Summary of Provisions, Existing Law
and Prior Legislative History:

The maximum penalty for possessing or controlling unstamped or
unlawfully stamped cigarettes under Tax Law section 481(1)(b)(i) has
been $150 per carton in excess of five cartoons (or fraction thereof)
since 2000. This penalty has not been increased since that time, even
though the current cigarette excise tax is almost four times the rate
that was imposed in 2000. With the cost of cigarettes reaching $100
per carton in New York, the market for unstamped and, thus, untaxed
cigarettes continues to draw people willing to make these sales, even
though they are risking civil and criminal penalties for the
possibility of making quick, easy money. This bill would increase the
penalty to
reflect the increase in the excise tax on cigarettes and to strengthen
its deterrent effect in the current environment.

Section 1 would increase the maximum penalty for possessing or
controlling unstamped or unlawfully stamped cigarettes under Tax Law
section 481(1)(b)(i) from $150 per carton in excess of five cartoons
(or fraction thereof) to $600.

Budget Implications:

Enactment of this bill is necessary to implement the 2013-14 Executive
Budget because it would increase All Funds tax receipts by $9 million
in SFY 2013-14 and $12 million annually thereafter.

Effective Date:

This bill would take effect on June 1, 2013.

Part P - Suspend delinquent taxpayers' driver's licenses.

Purpose:

This bill would create a new program to aid in the enforcement of
past-due tax liabilities by suspending the New York State driver's
licenses of taxpayers who owe certain past-due tax liabilities.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

This bill would authorize the Commissioner of Taxation and Finance and
the Commissioner of Motor Vehicles to establish a new program to aid
in the enforcement of delinquent tax liabilities by suspending a
taxpayer's driver's license when that taxpayer owes more than $10,000
in tax liabilities.


This bill is not intended to deny taxpayers the ability to work,
pursue educational opportunities or seek medical treatment for
themselves or the members of their household. For this reason, a
person whose license is suspended as a part of this program may apply
for a restricted use license pursuant to the provisions of the
Vehicle and Traffic Law. If the only issue leading to the suspension
is the taxpayer's unpaid tax liabilities, the Department of Motor
Vehicles will be required to issue a restricted use license.
Moreover, the license suspension would be lifted once the taxpayer
pays their past-due tax liabilities or enters into an installment
payment agreement or otherwise makes payment arrangements
satisfactory to the Commissioner of Taxation and
Finance. Due to certain federal preemption issues, a restricted
license is not available to drive a commercial motor vehicle. To
protect the ability of taxpayers holding such licenses to earn a
living, it is necessary to exclude commercial driving licenses from
the scope of the bill.

Protections are added to the Insurance Law to prohibit insurers from
using the fact that a taxpayer's license is suspended pursuant to
this program from either (a) increasing policy premiums, or (b) using
such suspension as a ground to cancel, decline or refuse to issue a
motor vehicle insurance policy.

The provisions of this bill are largely based upon a successful motor
vehicle license suspension program created by Chapter 81 of the Laws
of 1995 to assist in the collection of delinquent child support
obligations.

Budget Implications:

Enactment of this bill would increase All Funds tax receipts by $26
million in SFY 201314 and $6 million annually thereafter.

Effective Date:

This bill takes effect immediately upon enactment.

Part Q - Amend wage garnishment.

Purpose:

This bill would authorize the Commissioner of Taxation and Finance to
serve income executions (wage garnishments) on individual tax debtors
and, if necessary, on their employers without the necessity of filing
a warrant.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

This bill would authorize the Commissioner of Taxation and Finance to
serve income executions (wage garnishments) on individual tax debtors
and, if necessary, on their employers, without having to publicly
file a warrant in the appropriate county clerk's office and in the
Department of State as is required now. The IRS and the New York
State Higher Education Services Corporation have authority to issue
wage garnishments without public filing. The Department of Taxation


and Finance (the Department) would continue to publicly file warrants
if it chooses to pursue other collection methods permitted for the
enforcement of money judgments under the Civil Practice Law and Rules
(CPLR).

Historically, a negative credit report only compromised an
individual's ability to secure credit. In a current trend, however,
credit reports may also be relied upon by insurance carriers to
establish premium rates and by employers to assess if a job applicant
is worthy of employment. Consequently, a publicly filed tax warrant,
which is required by law in order for the Department to undertake any
collection method, may be unnecessarily harsh on a taxpayer from whom
collection may be made by wage garnishment.

Providing the Department with the authority to garnish wages without
filing a warrant will enable the Department to act more quickly to
collect taxpayers' debts. The Department would continue to follow the
two-step process for income executions spelled out in the CPLR.
Service would first be made solely on the taxpayer and the employer
would only be served if the taxpayer does not voluntarily pay over
the required percentage (not to exceed ten percent) of his or her
wages.

Budget Implications:

Enactment of this bill is necessary to implement the 2013-2014
Executive Budget by increasing tax revenues by $10 million annually
beginning in SFY 2013-14

Effective Date:

This bill takes effect immediately upon enactment.

Part R - Allow local governments to extend existing sales tax rates
without State legislative approval.

Purpose:

This bill would amend the Tax Law to make permanent the authority for
counties to impose their current additional rates of sale and
compensating use taxes for two-year periods and require counties to
adopt those additional rates by a majority vote of the county
legislative body. The bill would also conform numerous related Tax
Law provisions.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

This bill would amend Article 29 of the Tax Law to make permanent the
authority for counties to impose their existing additional rates of
sales and use taxes and would obviate the need for counties to obtain
approval through the State legislative process every two years.
Nonetheless, a county would still have to adopt a local enactment by
a majority vote of its governing body every two years to impose its
additional rate above 3%, just as it must now.


Currently, nearly all counties have authority to impose an additional
rate of sales and use taxes, for a two-year period that expires
November 30, 2013. Most of these additional county rates are 1%,
though some are lower and five, are higher. The bill would not extend
or change the additional rate authority of cities, though it
recodifies the provisions relating to the five cities that are
authorized to impose an additional rate. Additionally, this bill
would not change current laws that require counties to adopt home a
rule message and obtain approval through the State legislative
process before they may increase sales and compensating use taxes
above their current additional tax rate.

The bill also amends and recodifies other related provisions of
Article 29 of the Tax Law to conform them to the above described
provisions.

Budget Implications:

Enactment of this bill is necessary to implement the 2013-2014
Executive Budget. Local sales tax rates should be considered in the
context of statewide tax policy, which is part of the State Budget
process.

Effective Date:

This bill takes effect immediately upon enactment.

Part S - Eliminate remaining Quick Draw restriction.

Purpose:

This bill would eliminate the restrictions on the sale of Quick Draw
tickets in order to increase revenue earned for aid to education in
the State.

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

This bill would increase Quick Draw earnings by eliminating
limitations on the locations where Quick Draw may be offered. The
restrictions imposed on Quick Draw by the 1995 authorizing
legislation were experimental. In practice, the restrictions have
proved cumbersome and unnecessary, and have substantially reduced the
amount of earnings that would otherwise be generated by the game. New
York is the only State with these limitations on Quick Draw
style-games.

Revenue from Quick Draw ticket sales increased after the 25% food
sales requirement was removed as part of the 2012-13 Enacted Budget.
As with the food sales restriction, the 2,500 square foot limitation
has the effect of arbitrarily limiting Quick Draw sales.
Additionally, the age that a person may play. Quick Draw in any
establishment that serves alcoholic beverages should conform to the
age restriction for all other Lottery
games. Eliminating these restrictions will strengthen the game's
ability to produce additional sales and earnings.


The Quick Draw restrictions were intended to protect against the
possibility that Quick Draw would be abused by players. However,
after more than 15 years' experience, Quick Draw has proved to be no
more likely to be abused than other Lottery games. Following the
authorization of Quick Draw in 1995, the State authorized video
lottery gaming, which offers a much faster paced form of gaming. In
this environment, the limitations on Quick Draw are an unnecessary
impediment to the further expansion of the game.

Section 1 of the bill would amend Section 1612(a)(1) of the Tax Law to
eliminate: (i) the restriction limiting sales of Quick Draw tickets
to premises larger than 2,500 square feet, (ii) the restriction
requiring that a person must be 21 years of age to play Quick Draw on
premises where alcoholic beverages are served, and (iii) an obsolete
authorization of
emergency rulemaking power.

Budget Implications:

Enactment of this bill is necessary to implement the 2013-14 Executive
Budget because it would increase All Funds revenue by $12 million in
SFY 2013-14 and $24 million annually thereafter.

Effective Date:

This bill would take effect immediately upon enactment.

Part T - Extend Monticello Casino and Raceway video lottery terminal
venue distribution rates.

Purpose:

This bill would extend for one year the current distribution of video
lottery gaming revenue at Monticello Casino and Raceway (Monticello).

Statement in Support, Summary of Provisions, Existing Law,
and Prior Legislative History:

This bill would extend for one year the current commission rate paid
to Monticello as a video lottery agent. In 2008, Monticello was given
a higher commission rate for a five-year period in exchange for
opting out of participation in the vendor's capital award program:
thus, the five-year rate sunset was applied to coincide with the five
year period other facilities were provided for approval of capital
expenditures eligible for reimbursement through the program. Chapter
454 of the Laws of 2012 extended the approval period for the vendor's
capital award program by one year, and did not
anticipate inclusion of Monticello in the program. Since the
expiration of Monticello's rate would result in loss of the enhanced
commission, but would not provide for participation in the capital
award program, this bill would extend Monticello's rate for an
additional year to maintain the original framework of Monticello's
rate structure.

Budget Implications:


Enactment of this bill is necessary to implement the 2013-14 Executive
Budget because it would decrease All Funds revenue by $3 million in
SFY 2013-14.

Effective Date:

This bill would take effect April 1, 2013.

Part U - Make certain tax rates and authorization for account wagering
permanent.

Purpose:

This bill would make permanent various provisions of the Racing,
Pari-Mutuel Wagering and Breeding (Racing) Law which expire during
the 2013-14 fiscal year.

Summary of Provisions, Existing Law, Prior Legislative History,
and Statement in Support:

Section 1 would amend Racing Law § 1003(a) to remove the June 30, 2013
expiration date for in-home simulcasting.

Section 2 would amend Racing Law § 1007(3)(d) to make permanent the
current percentage of total pools allocated to purses that a track
located in Westchester County receives from a franchised corporation,
which currently are scheduled to expire on June 30, 2013.

Section 3 would repeal Racing Law § 1014, which is rendered
superfluous by the making of Racing Law § 1018 permanent.

Section 4 would amend Racing Law § 1015(1) to make permanent the
provisions governing the simulcasting of races conducted at
out-of-state harness tracks, which currently are scheduled to expire
on June 30, 2013.

Section 5 would amend the opening paragraph of Racing. Law § 1016(1) to
make permanent the provisions governing the simulcasting of
out-of-state thoroughbred races on any day the Saratoga thoroughbred
track is closed, which currently are scheduled to expire on June 30
2013.

Section 6 would amend the opening paragraph of section 1018 of the
racing, pari-mutuel wagering and breeding law to make permanent the
current distribution of revenue from out-of-state simulcasting during
the Saratoga meet, which expired on September 8, 2012.

Section 7 would amend § 32 of chapter 281 of the Laws of 1994 to make
permanent the current amount of off-track betting wagers on New York
Racing Association, Inc. (NYRA) pools dedicated to purse enhancement,
which currently expire on June 30, 2013.

Section 8 would amend § 54 of chapter 346 of the Laws of 1990 to make
permanent binding arbitration for disagreements. These provisions
currently expire on June 30, 2013.


Section 9 would amend Racing Law § 238(1)(a) to make permanent the
current distribution of revenue from on-track wagering on NYRA races,
which currently is scheduled to expire on December 31, 2013.

Section 10 would repeal Racing Law § 1012(5) to make permanent the
authorization for account wagering, which is currently scheduled to
expire on June 30, 2013.

Making these provisions permanent would maintain the pari-mutuel
betting and simulcasting structure that is currently in place in New
York State. The provisions made permanent by sections one through six
of this bill were first enacted in 1994 and section seven was enacted
in 1990. These provisions were extended numerous times since their
original enactment, and most recently in 2012.

Budget Implications:

Enactment of this bill is necessary to implement the 2013-2014
Executive Budget because it maintains the current pari-mutuel betting
structure in New York State.

Effective Date:

This bill would take-effect immediately upon enactment.

The provisions of this act shall take effect immediately, provided,
however, that the applicable effective date of each part of this act
shall be as specifically set forth in the last section of such part.

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

    S. 2609                                                  A. 3009

                      S E N A T E - A S S E M B L Y

                            January 22, 2013
                               ___________

IN  SENATE -- A BUDGET BILL, submitted by the Governor pursuant to arti-
  cle seven of the Constitution -- read twice and ordered  printed,  and
  when printed to be committed to the Committee on Finance

IN  ASSEMBLY  --  A  BUDGET  BILL, submitted by the Governor pursuant to
  article seven of the Constitution -- read once  and  referred  to  the
  Committee on Ways and Means

AN  ACT  to amend the tax law, in relation to the temporary metropolitan
  transportation business tax surcharge (Part A); to amend the tax  law,
  in  relation to the empire state film production credit and the empire
  state film post production credit; and to amend part Y-1 of chapter 57
  of the laws of 2009 amending the tax law relating to the empire  state
  film  production credit, in relation to reports (Part B); to amend the
  economic development law, the tax law and the administrative  code  of
  the  city  of New York, in relation to establishing the New York inno-
  vation hot spot program (Part C); to amend the tax law and the  admin-
  istrative  code  of the city of New York, in relation to extending for
  three years the charitable contributions  deduction  limitation  (Part
  D);  to  amend  the tax law and the administrative code of the city of
  New York, in relation to the exclusion  of  certain  royalty  payments
  from  the  entire  net  income or other taxable basis of corporations,
  banking corporations, and insurance corporations, from  the  unrelated
  business income of corporations, and from the adjusted gross income of
  individual  taxpayers; and to repeal certain provisions of the tax law
  relating thereto (Part E); to amend the tax law, in  relation  to  the
  historic  preservation  tax  credit (Part F); to amend the tax law, in
  relation to providing a tax credit  for  electric  vehicle  recharging
  property  (Part  G);  to amend chapter 61 of the laws of 2011 amending
  the real property tax law and  other  laws  relating  to  establishing
  standards for electronic real property tax administration, in relation
  to  making  permanent,  provisions  relating  to  mandatory electronic
  filing of tax documents and improving  sales  tax  compliance  and  to
  repeal  certain  provisions of the tax law and the administrative code
  of the city of New York relating thereto (Part H); to  amend  the  tax
  law,  in  relation to exempting sales made at a Taste-NY facility from
  sales and compensating use taxes; and to amend the alcoholic  beverage
  control  law,  in relation to allowing sales of all types of alcoholic

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD12574-01-3

S. 2609                             2                            A. 3009

  beverages at a Taste-NY facility (Part I); to amend the general munic-
  ipal law and the public authorities law,  in  relation  to  industrial
  development  agencies  and authorities (Part J); to amend the tax law,
  in  relation  to  expanding  the  exemption of CNG in the sales tax to
  include natural gas purchased and used to produce CNG for  use  exclu-
  sively  and  directly  in  the  engine of a motor vehicle (Part K); to
  amend the  tax  law,  in  relation  to  allowing  voluntary  ambulance
  services,  fire companies, fire departments and rescue squads to claim
  reimbursement of the petroleum business tax for  fuel  used  in  their
  vehicles  (Part  L); to amend the tax law, in relation to the power of
  the commissioner of taxation and finance to refuse to issue a  certif-
  icate of authority to collect the sales and use taxes and the power of
  the  commissioner of taxation and finance to revoke such a certificate
  once granted and penalties related to  the  operation  of  a  business
  without  such  certificate (Part M); to amend the tax law, in relation
  to allowing the department of taxation and finance to refuse a certif-
  icate of registration to retail  dealers  of  cigarettes  and  tobacco
  products  if  such  dealers  have certain tax liabilities or have been
  convicted of a tax crime within one year of applying for or renewing a
  certificate of registration  (Part  N);  to  amend  the  tax  law,  in
  relation to increasing the penalty for the possession of unstamped and
  unlawfully  stamped  cigarettes  (Part  O);  to amend the tax law, the
  vehicle and traffic law and the insurance  law,  in  relation  to  the
  suspension  of  drivers' licenses of persons who are delinquent in the
  payment of past-due tax liabilities (Part P); to amend the tax law, in
  relation to serving an income execution with respect to individual tax
  debtors without filing a warrant (Part Q); to amend the  tax  law,  in
  relation to the authority of counties to impose sales and compensating
  use  taxes pursuant to the authority of article 29 of such law; and to
  repeal certain provisions of sections 1210 and 1224 and section 1210-E
  of such law relating thereto (Part  R);  to  amend  the  tax  law,  in
  relation  to a keno style lottery game (Part S); to amend the tax law,
  in relation to vendor fees paid to vendor  tracks  (Part  T);  and  to
  amend  the  racing, pari-mutuel wagering and breeding law, in relation
  to licenses for simulcast facilities, sums relating  to  track  simul-
  cast,  simulcast  of  out-of-state thoroughbred races, simulcasting of
  races run by out-of-state harness tracks and distributions of  wagers;
  to  amend  chapter 281 of the laws of 1994, amending the racing, pari-
  mutuel wagering and breeding law and other laws relating to simulcast-
  ing and chapter 346 of the laws of 1990, amending the racing, pari-mu-
  tuel wagering and breeding law and other laws relating to simulcasting
  and the imposition of certain taxes, in relation to  making  permanent
  certain  provisions thereof; to amend the racing, pari-mutuel wagering
  and breeding law, in relation to making permanent  certain  provisions
  thereof;  and  to  repeal subdivision 5 of section 1012 of the racing,
  pari-mutuel wagering and breeding law relating to  telephone  accounts
  and  telephone  wagering  and  section 1014 of the racing, pari-mutuel
  wagering and breeding law relating  to  simulcasting  of  out-of-state
  thoroughbred races (Part U)

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

  Section 1. This act enacts into law major  components  of  legislation
which are necessary to implement the state fiscal plan for the 2013-2014

S. 2609                             3                            A. 3009

state  fiscal  year.  Each  component  is wholly contained within a Part
identified as Parts A through U. The effective date for each  particular
provision contained within such Part is set forth in the last section of
such Part. Any provision in any section contained within a Part, includ-
ing the effective date of the Part, which makes a reference to a section
"of  this  act", when used in connection with that particular component,
shall be deemed to mean and refer to the corresponding  section  of  the
Part  in  which  it  is  found. Section three of this act sets forth the
general effective date of this act.

                                 PART A

  Section 1. Subdivision 1 of section 183-a of the tax law,  as  amended
by  section 1 of part II-1 of chapter 57 of the laws of 2008, is amended
to read as follows:
  1. The term "corporation" as used in this  section  shall  include  an
association,  within the meaning of paragraph three of subsection (a) of
section seventy-seven hundred one of the internal revenue code  (includ-
ing  a limited liability company), a publicly traded partnership treated
as a corporation for purposes of the internal revenue code  pursuant  to
section seventy-seven hundred four thereof and any business conducted by
a  trustee  or  trustees  wherein  interest or ownership is evidenced by
certificates or other written  instruments.  Every  corporation,  joint-
stock  company  or  association formed for or principally engaged in the
conduct of canal, steamboat, ferry (except  a  ferry  company  operating
between any of the boroughs of the city of New York under a lease grant-
ed  by  the  city),  express,  navigation,  pipe line, transfer, baggage
express, omnibus, taxicab, telegraph, or telephone business,  or  formed
for  or  principally  engaged  in  the conduct of two or more such busi-
nesses, and every corporation, joint-stock company or association formed
for or principally engaged in the conduct of  a  railroad,  palace  car,
sleeping  car  or trucking business or formed for or principally engaged
in the conduct of two or more of such businesses and which has  made  an
election pursuant to subdivision ten of section one hundred eighty-three
of  this  article,  and  every other corporation, joint-stock company or
association principally engaged in the conduct of  a  transportation  or
transmission  business,  except  a  corporation,  joint-stock company or
association formed for or principally engaged in the conduct of a  rail-
road,  palace  car,  sleeping  car or trucking business or formed for or
principally engaged in the conduct of two or more of such businesses and
which has not made the election  provided  for  in  subdivision  ten  of
section  one  hundred  eighty-three of this article, and except a corpo-
ration, joint-stock company or association principally  engaged  in  the
conduct  of aviation (including air freight forwarders acting as princi-
pal and like indirect air carriers) and except a corporation principally
engaged in providing telecommunication  services  between  aircraft  and
dispatcher,  aircraft  and  air  traffic  control  or ground station and
ground station (or any combination of the foregoing),  at  least  ninety
percent  of  the voting stock of which corporation is owned, directly or
indirectly, by air carriers and which corporation's  principal  function
is  to  fulfill  the  requirements  of (i) the federal aviation adminis-
tration (or the successor  thereto)  or  (ii)  the  international  civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and  air  traffic  control  or ground station and ground station (or any
combination of the foregoing) for the purposes of air safety and naviga-

S. 2609                             4                            A. 3009

tion and except a corporation, joint-stock company or association  which
is  liable  to  taxation under article thirty-two of this chapter, shall
pay for the privilege of exercising its corporate franchise, or of doing
business,  or  of employing capital, or of owning or leasing property in
the metropolitan commuter transportation district in such  corporate  or
organized  capacity, or of maintaining an office in such district, a tax
surcharge for all or any part of its years commencing on or after  Janu-
ary  first, nineteen hundred eighty-two but ending before December thir-
ty-first, two thousand [thirteen]  EIGHTEEN,  which  tax  surcharge,  in
addition  to the tax imposed by section one hundred eighty-three of this
article, shall be computed at the rate of eighteen percent  of  the  tax
imposed  under  such  section one hundred eighty-three for such years or
any part of such years ending  before  December  thirty-first,  nineteen
hundred eighty-three after the deduction of any credits otherwise allow-
able under this article, and at the rate of seventeen percent of the tax
imposed  under  such  section  for  such years or any part of such years
ending on or after December thirty-first, nineteen hundred  eighty-three
after  the deduction of any credits otherwise allowable under this arti-
cle; provided, however, that  such  rates  of  tax  surcharge  shall  be
applied  only  to  that  portion  of  the  tax imposed under section one
hundred eighty-three of this article after the deduction of any  credits
otherwise  allowable  under  this  article  which is attributable to the
taxpayer's business activity carried on within the metropolitan commuter
transportation district as so determined in the manner prescribed by the
rules and regulations promulgated by  the  commissioner;  and  provided,
further,  that  the  tax  surcharge imposed by this section shall not be
imposed upon any taxpayer for more than [three] FOUR  hundred  [seventy-
two] THIRTY-TWO months.
  S  2.  The  opening paragraph of subdivision 1 of section 184-a of the
tax law, as amended by section 2 of part II-1 of chapter 57 of the  laws
of 2008, is amended to read as follows:
  The  term "corporation" as used in this section shall include an asso-
ciation, within the meaning of paragraph  three  of  subsection  (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company),  and  a  publicly  traded  partnership
treated  as  a  corporation  for  purposes  of the internal revenue code
pursuant to section seventy-seven hundred four thereof.    Every  corpo-
ration,  joint-stock  company  or  association formed for or principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease granted by the city), express, navigation,  pipe  line,  transfer,
baggage  express,  omnibus,  taxicab, telegraph or local telephone busi-
ness, or formed for or principally engaged in the conduct of two or more
such businesses, and every corporation, joint-stock company  or  associ-
ation  formed  for  or  principally  engaged in the conduct of a surface
railroad, whether or not operated by steam,  subway  railroad,  elevated
railroad,  palace  car, sleeping car or trucking business or principally
engaged in the conduct of two or more such businesses and which has made
an election pursuant to subdivision ten of section one  hundred  eighty-
three  of this article, and every other corporation, joint-stock company
or association formed for or principally engaged in  the  conduct  of  a
transportation  or  transmission  business (other than a telephone busi-
ness) except a corporation, joint-stock company  or  association  formed
for or principally engaged in the conduct of a surface railroad, whether
or  not  operated  by  steam, subway railroad, elevated railroad, palace
car, sleeping car or trucking business or  principally  engaged  in  the

S. 2609                             5                            A. 3009

conduct  of  two  or  more  such  businesses  and which has not made the
election provided for in subdivision ten of section one hundred  eighty-
three  of this article, and except a corporation, joint-stock company or
association  principally  engaged  in the conduct of aviation (including
air freight forwarders acting as principal and like indirect air  carri-
ers)  and except a corporation principally engaged in providing telecom-
munication services between aircraft and dispatcher,  aircraft  and  air
traffic control or ground station and ground station (or any combination
of  the foregoing), at least ninety percent of the voting stock of which
corporation is owned, directly or indirectly, by air carriers and  which
corporation's  principal  function is to fulfill the requirements of (i)
the federal aviation administration (or the successor thereto)  or  (ii)
the  international  civil aviation organization (or the successor there-
to), relating  to  the  existence  of  a  communication  system  between
aircraft  and  dispatcher,  aircraft  and  air traffic control or ground
station and ground station (or any combination of the foregoing) for the
purposes of air safety and navigation and except a  corporation,  joint-
stock  company  or association which is liable to taxation under article
thirty-two of this chapter, shall pay for the  privilege  of  exercising
its  corporate franchise, or of doing business, or of employing capital,
or of owning or leasing property in the metropolitan commuter  transpor-
tation district in such corporate or organized capacity, or of maintain-
ing  an  office in such district, a tax surcharge for all or any part of
its taxable years commencing on or after January first, nineteen hundred
eighty-two, but ending before December thirty-first, two thousand [thir-
teen] EIGHTEEN, which tax surcharge, in addition to the tax  imposed  by
section  one  hundred  eighty-four of this article, shall be computed at
the rate of eighteen percent of the tax imposed under such  section  one
hundred  eighty-four  for such taxable years or any part of such taxable
years ending before December thirty-first, nineteen hundred eighty-three
after the deduction of any credits otherwise allowable under this  arti-
cle,  and at the rate of seventeen percent of the tax imposed under such
section for such taxable years or any part of such taxable years  ending
on  or  after December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise  allowable  under  this  article;
provided,  however,  that  such  rates of tax surcharge shall be applied
only to that portion of the tax imposed under section one hundred eight-
y-four of this article after the  deduction  of  any  credits  otherwise
allowable  under  this  article  which is attributable to the taxpayer's
business activity carried on within the metropolitan commuter  transpor-
tation  district;  and provided, further, that the tax surcharge imposed
by this section on corporations, joint-stock companies and  associations
formed  for  or principally engaged in the conduct of telephone or tele-
graph business shall be computed in accordance with this subdivision and
paragraph (c) of subdivision two of this section as if  the  three-quar-
ters  of  one  percent  rate  of  tax provided for in subdivision one of
section one hundred eighty-four of this article were applicable to  such
telephone  and  telegraph  businesses for taxable years commencing on or
after January first, nineteen  hundred  eighty-five  and  ending  on  or
before   December   thirty-first,   nineteen  hundred  eighty-nine;  and
provided, further, that the tax surcharge imposed by this section  shall
not  be  imposed  upon  any  taxpayer for more than [three] FOUR hundred
[seventy-two] THIRTY-TWO months. Provided,  however,  that  for  taxable
years  beginning  in  two  thousand and thereafter, for purposes of this
subdivision the tax imposed under section  one  hundred  eighty-four  of
this  article shall be deemed to have been imposed at the rate of three-

S. 2609                             6                            A. 3009

quarters of one percent, except that  in  the  case  of  a  corporation,
joint-stock  company  or association which has made an election pursuant
to subdivision ten of section one hundred eighty-three of this  article,
for  purposes  of  this  subdivision  the  tax imposed under section one
hundred eighty-four of this article shall be deemed to have been imposed
at the rate of six-tenths of one percent.
  S 3. Subparagraph 1 of paragraph (a) of subdivision 1 of section 186-c
of the tax law, as amended by section 3 of part II-1 of  chapter  57  of
the laws of 2008, is amended to read as follows:
  (1)  Every  utility doing business in the metropolitan commuter trans-
portation district shall pay a tax surcharge, in  addition  to  the  tax
imposed  by section one hundred eighty-six-a of this article, for all or
any parts of its taxable years commencing on  or  after  January  first,
nineteen hundred eighty-two but ending before December thirty-first, two
thousand  [thirteen]  EIGHTEEN,  to  be computed at the rate of eighteen
percent of the tax imposed under section  one  hundred  eighty-six-a  of
this  article  for  such taxable years or any part of such taxable years
ending before December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise allowable under this article, and
at the rate of seventeen percent of the tax imposed under  such  section
for  such  taxable  years or any part of such taxable years ending on or
after December thirty-first, nineteen  hundred  eighty-three  after  the
deduction  of  credits otherwise allowable under this article except any
utility credit provided for  by  article  thirteen-A  of  this  chapter;
provided,  however,  that  such  rates of tax surcharge shall be applied
only to that portion of the tax imposed under section one hundred eight-
y-six-a of this article after the deduction of credits otherwise  allow-
able under this article, except any utility credit provided for by arti-
cle  thirteen-A of this chapter, which is attributable to the taxpayer's
gross income or gross operating income from business activity carried on
within the metropolitan commuter transportation district; and  provided,
further,  that  the  tax  surcharge imposed by this section shall not be
imposed upon any taxpayer for more than [three] FOUR  hundred  [seventy-
two] THIRTY-TWO months.
  S  4.  Subdivision  1  of  section 209-B of the tax law, as amended by
section 4 of part II-1 of chapter 57 of the laws of 2008, is amended  to
read as follows:
  1.  For  the  privilege  of  exercising its corporate franchise, or of
doing business, or of employing capital, or of owning or leasing proper-
ty in a corporate or organized capacity, or of maintaining an office  in
the  metropolitan  commuter transportation district, for all or any part
of its taxable year, there is hereby imposed on every corporation, other
than a New York S corporation, subject to tax under section two  hundred
nine  of  this  article,  or any receiver, referee, trustee, assignee or
other fiduciary, or any officer or agent appointed  by  any  court,  who
conducts  the  business  of  any such corporation, for the taxable years
commencing on or after January first, nineteen  hundred  eighty-two  but
ending before December thirty-first, two thousand [thirteen] EIGHTEEN, a
tax  surcharge, in addition to the tax imposed under section two hundred
nine of this article, to be computed at the rate of eighteen percent  of
the  tax  imposed  under  such section two hundred nine for such taxable
years or any part of such taxable years ending before  December  thirty-
first,  nineteen hundred eighty-three after the deduction of any credits
otherwise allowable under this article, and at  the  rate  of  seventeen
percent  of the tax imposed under such section for such taxable years or
any part of such taxable years ending on or after December thirty-first,

S. 2609                             7                            A. 3009

nineteen hundred eighty-three after the deduction of any credits  other-
wise allowable under this article; provided, however, that such rates of
tax  surcharge  shall be applied only to that portion of the tax imposed
under  section  two  hundred nine of this article after the deduction of
any credits otherwise allowable under this article which is attributable
to the taxpayer's business activity carried on within  the  metropolitan
commuter  transportation  district;  and provided, further, that the tax
surcharge imposed by this section shall not be imposed upon any taxpayer
for more than [three]  FOUR  hundred  [seventy-two]  THIRTY-TWO  months.
Provided  however,  that  for  taxable years commencing on or after July
first, nineteen hundred ninety-eight, such surcharge shall be calculated
as if the tax imposed under section two hundred ten of this article were
imposed under the law in effect for taxable years commencing on or after
July first, nineteen hundred ninety-seven and before July  first,  nine-
teen  hundred  ninety-eight.  Provided  however,  that for taxable years
commencing on or after January first, two thousand seven, such surcharge
shall be calculated using the highest of the tax bases imposed  pursuant
to  paragraphs  (a),  (b),  (c) or (d) of subdivision one of section two
hundred ten of this article and the amount imposed under  paragraph  (e)
of  subdivision  one  of  such  section two hundred ten, for the taxable
year; and, provided further that, if such highest amount is the tax base
imposed under paragraph (a), (b) or (c) of such  subdivision,  then  the
surcharge  shall  be  computed as if the tax rates and limitations under
such paragraph were the tax rates and limitations under  such  paragraph
in  effect for taxable years commencing on or after July first, nineteen
hundred ninety-seven and before July  first,  nineteen  hundred  ninety-
eight.
  S  5.  Subsection  1  of  section 1455-B of the tax law, as amended by
section 5 of part II-1 of chapter 57 of the laws of 2008, is amended  to
read as follows:
  1.  For the privilege of exercising its franchise or doing business in
the metropolitan commuter transportation  district  in  a  corporate  or
organized capacity, there is hereby imposed on every taxpayer subject to
tax  under  this  article,  other than a New York S corporation, for the
taxable years commencing on or after  January  first,  nineteen  hundred
eighty-two  but ending before December thirty-first, two thousand [thir-
teen] EIGHTEEN, a tax surcharge, in addition to the  tax  imposed  under
section fourteen hundred fifty-one of this article, at the rate of eigh-
teen  percent  of  the  tax  imposed under such section fourteen hundred
fifty-one of this article, for such taxable years or any  part  of  such
taxable  years  ending  before  December  thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article,  and  at  the rate of seventeen percent of the tax
imposed under such section for such taxable years or any  part  of  such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three  after  the  deduction  of  any credits otherwise allowable
under this article; provided however, that such rates of  tax  surcharge
shall  be  applied only to that portion of the tax imposed under section
fourteen hundred fifty-one of this article after the  deduction  of  any
credits  otherwise allowable under this article which is attributable to
the taxpayer's business activity  carried  on  within  the  metropolitan
commuter  transportation  district;  and provided, further, that the tax
surcharge imposed by this section shall not be imposed upon any taxpayer
for more than [three]  FOUR  hundred  [seventy-two]  THIRTY-TWO  months.
Provided  however,  that  for  taxable years commencing on or after July
first, two thousand, such surcharge shall be calculated as if  the  rate

S. 2609                             8                            A. 3009

of  the  basic  tax  computed  under  subsection (a) of section fourteen
hundred fifty-five of this article was nine percent.
  S  6.  Paragraphs  1 and 3 of subdivision (a) of section 1505-a of the
tax law, as amended by section 6 of part II-1 of chapter 57 of the  laws
of 2008, are amended to read as follows:
  (1)  Every  domestic  insurance corporation and every foreign or alien
insurance corporation, and every life insurance corporation described in
subdivision (b) of section fifteen hundred one of this article, for  the
privilege  of  exercising its corporate franchise, or of doing business,
or of employing capital, or of owning or leasing property in the  metro-
politan  commuter  transportation  district  in a corporate or organized
capacity, or of maintaining  an  office  in  the  metropolitan  commuter
transportation  district,  for  all  or  any  part  of its taxable years
commencing on or after January first, nineteen hundred  eighty-two,  but
ending  before  December thirty-first, two thousand [thirteen] EIGHTEEN,
except corporations specified in  subdivision  (c)  of  section  fifteen
hundred  twelve  of this article, shall annually pay, in addition to the
taxes otherwise imposed by this article, a tax surcharge  on  the  taxes
imposed  under this article after the deduction of any credits otherwise
allowable under this article as allocated to such district.  Such  taxes
shall  be  allocated to such district for purposes of computing such tax
surcharge upon taxpayers subject to tax under subdivision (b) of section
fifteen hundred ten of this article by applying the methodology,  proce-
dures  and computations set forth in subdivisions (a) and (b) of section
fifteen hundred four of this article, except that  references  to  terms
denoting  New York premiums, and total wages, salaries, personal service
compensation and commissions within New York shall be read  as  denoting
within  the  metropolitan  commuter  transportation  district  and terms
denoting total premiums and  total  wages,  salaries,  personal  service
compensation and commissions shall be read as denoting within the state.
If it shall appear to the commissioner that the application of the meth-
odology,  procedures and computations set forth in such subdivisions (a)
and (b) does not properly reflect the activity, business or income of  a
taxpayer  within the metropolitan commuter transportation district, then
the commissioner shall be authorized, in the commissioner's  discretion,
to  adjust such methodology, procedures and computations for the purpose
of allocating such taxes by:
  (A) excluding one or more factors therein;
  (B) including one or more other factors  therein,  such  as  expenses,
purchases,  receipts  other  than  premiums,  real  property or tangible
personal property; or
  (C) any other similar or different method which allocates  such  taxes
by  attributing a fair and proper portion of such taxes to the metropol-
itan commuter transportation district. The  commissioner  from  time  to
time  shall  publish all rulings of general public interest with respect
to any application of the provisions  of  the  preceding  sentence.  The
commissioner  may  promulgate rules and regulations to further implement
the provisions of this section.
  (3) Such tax surcharge shall be  computed  at  the  rate  of  eighteen
percent  of  the  taxes  imposed  under sections fifteen hundred one and
fifteen hundred ten of  this  article  as  limited  by  section  fifteen
hundred  five  of  this article, as allocated to such district, for such
taxable years or any part of such taxable years ending  before  December
thirty-first,  nineteen  hundred eighty-three after the deduction of any
credits otherwise allowable under this article, at the rate of seventeen
percent of the taxes imposed under such sections as limited  by  section

S. 2609                             9                            A. 3009

fifteen hundred five of this article, as allocated to such district, for
such  taxable years or any part of such taxable years ending on or after
December thirty-first, nineteen hundred eighty-three and before  January
first,  two  thousand three after the deduction of any credits otherwise
allowable under this article, and at the rate of  seventeen  percent  of
the  taxes  imposed  under sections fifteen hundred one, fifteen hundred
two-a, and fifteen hundred ten of this article, as limited or  otherwise
determined  by subdivision (a) or (b) of section fifteen hundred five of
this article, as allocated to such district, for such taxable  years  or
any  part  of such taxable years ending after December thirty-first, two
thousand two after the deduction  of  any  credits  otherwise  allowable
under this article; provided, however, that the tax surcharge imposed by
this  section  shall  not  be  imposed  upon  any taxpayer for more than
[three] FOUR hundred [seventy-two] THIRTY-TWO months. Provided  however,
that  for taxable years commencing on or after July first, two thousand,
and in the case of  taxpayers  subject  to  tax  under  section  fifteen
hundred  two-a  of  this  article,  for  taxable years of such taxpayers
beginning on or after July first, two thousand and before January first,
two thousand three, such surcharge shall be calculated  as  if  (i)  the
rate  of  the  tax  computed  under  paragraph one of subdivision (a) of
section fifteen hundred two of this article was nine  percent  and  (ii)
the  rate  of the limitation on tax set forth in section fifteen hundred
five of this article for domestic, foreign and  alien  insurance  corpo-
rations  except  life  insurance  corporations  was  two  and six-tenths
percent.
  S 7. This act shall take effect immediately.

                                 PART B

  Section 1.  Paragraph 3 of subdivision (b) of section 24  of  the  tax
law,  as added by section 1 of part P of chapter 60 of the laws of 2004,
is amended to read as follows:
  (3) "Qualified film" means a  feature-length  film,  television  film,
RELOCATED TELEVISION PRODUCTION, television pilot and/or each episode of
a  television  series,  regardless  of  the medium by means of which the
film, pilot or episode is created or conveyed.  "Qualified  film"  shall
not  include  (i)  a  documentary film, news or current affairs program,
interview or  talk  program,  "how-to"  (i.e.,  instructional)  film  or
program, film or program consisting primarily of stock footage, sporting
event  or  sporting  program, game show, award ceremony, film or program
intended primarily for industrial, corporate or institutional end-users,
fundraising film or program, daytime drama (i.e., daytime "soap opera"),
commercials, music videos or "reality" program, or (ii) a production for
which records are required under section 2257 of title 18, United States
code, to be maintained with respect to any performer in such  production
(reporting  of  books,  films,  etc.  with  respect to sexually explicit
conduct).
  S 2. Subdivision (b) of section 24 of the tax law is amended by adding
a new paragraph 8 to read as follows:
  (8) "RELOCATED TELEVISION PRODUCTION" SHALL MEAN, NOTWITHSTANDING  THE
LIMITATIONS  IN SUBPARAGRAPH (I) OF PARAGRAPH THREE OF THIS SUBDIVISION,
A TELEVISION PRODUCTION THAT IS A TALK OR VARIETY PROGRAM THAT FILMED AT
LEAST FIVE SEASONS OUTSIDE THE STATE PRIOR TO ITS FIRST RELOCATED SEASON
IN NEW YORK, THE EPISODES ARE FILMED BEFORE A  STUDIO  AUDIENCE  OF  TWO
HUNDRED  OR  MORE, AND THE RELOCATED TELEVISION PRODUCTION INCURS (I) AT
LEAST THIRTY MILLION DOLLARS IN ANNUAL PRODUCTION COSTS IN THE STATE, OR

S. 2609                            10                            A. 3009

(II) AT LEAST TEN MILLION DOLLARS IN CAPITAL EXPENDITURES AT A QUALIFIED
PRODUCTION FACILITY IN THE STATE.
  S  3.  Paragraph 4 of subdivision (e) of section 24 of the tax law, as
added by chapter 268 of the laws of 2012, is amended to read as follows:
  (4) Additional pool 2 - The aggregate amount of tax credits allowed in
subdivision (a) of this section shall  be  increased  by  an  [addition]
ADDITIONAL  four hundred twenty million dollars in EACH YEAR STARTING IN
two thousand ten[, four hundred twenty million dollars in  two  thousand
eleven, four hundred twenty million dollars in two thousand twelve, four
hundred twenty million dollars in two thousand thirteen and four hundred
twenty  million  dollars  in two thousand fourteen] THROUGH TWO THOUSAND
NINETEEN provided however, seven million dollars  of  the  annual  allo-
cation  shall  be  available  for  the empire state film post production
credit pursuant to section thirty-one of this [chapter] ARTICLE  IN  TWO
THOUSAND  THIRTEEN  AND  TWO  THOUSAND  FOURTEEN AND TWENTY-FIVE MILLION
DOLLARS OF THE ANNUAL ALLOCATION SHALL BE AVAILABLE FOR THE EMPIRE STATE
FILM POST PRODUCTION CREDIT PURSUANT TO SECTION THIRTY-ONE OF THIS ARTI-
CLE IN EACH YEAR STARTING IN TWO THOUSAND FIFTEEN THROUGH  TWO  THOUSAND
NINETEEN.    This amount shall be allocated by the governor's office for
motion picture and television development among taxpayers in  accordance
with subdivision (a) of this section. If the [director of the governor's
office  for  motion  picture and television development] COMMISSIONER OF
ECONOMIC DEVELOPMENT determines that the aggregate amount of tax credits
available from additional pool 2 for the empire  state  film  production
tax credit have been previously allocated, and determines that the pend-
ing applications from eligible applicants for the EMPIRE STATE FILM post
production  tax  credit pursuant to section thirty-one of this [chapter]
ARTICLE is insufficient to utilize the  balance  of  unallocated  EMPIRE
STATE  FILM  post  production tax credits from such pool, the remainder,
after such pending applications are considered, shall be made  available
for  allocation  in  the  empire  state film tax credit pursuant to this
section,  subdivision  thirty-six  of  section  two  hundred   ten   and
subsection  (gg)  of  section six hundred six of this chapter.  ALSO, IF
THE COMMISSIONER OF ECONOMIC DEVELOPMENT DETERMINES THAT  THE  AGGREGATE
AMOUNT  OF  TAX  CREDITS AVAILABLE FROM ADDITIONAL POOL 2 FOR THE EMPIRE
STATE FILM POST PRODUCTION TAX CREDIT HAVE  BEEN  PREVIOUSLY  ALLOCATED,
AND  DETERMINES  THAT  THE PENDING APPLICATIONS FROM ELIGIBLE APPLICANTS
FOR THE EMPIRE STATE FILM PRODUCTION TAX CREDIT PURSUANT TO THIS SECTION
IS INSUFFICIENT TO UTILIZE THE BALANCE OF  UNALLOCATED  FILM  PRODUCTION
TAX  CREDITS  FROM  SUCH  POOL, THEN ALL OR PART OF THE REMAINDER, AFTER
SUCH PENDING APPLICATIONS ARE CONSIDERED, SHALL BE  MADE  AVAILABLE  FOR
ALLOCATION  FOR THE EMPIRE STATE FILM POST PRODUCTION CREDIT PURSUANT TO
THIS SECTION, SUBDIVISION FORTY-ONE  OF  SECTION  TWO  HUNDRED  TEN  AND
SUBSECTION  (GG)  OF SECTION SIX HUNDRED SIX OF THIS CHAPTER. The gover-
nor's office for motion picture and television development  must  notify
taxpayers  of  their  allocation year and include the allocation year on
the certificate of tax credit.   Taxpayers eligible to  claim  a  credit
must  report  the  allocation  year  directly on their empire state film
production credit tax form for each year a credit is claimed and include
a copy of the certificate with their tax return. In the case of a quali-
fied film that receives funds from additional pool 2,  no  empire  state
film  production credit shall be claimed before the later of the taxable
year the production of the qualified film is complete,  or  the  taxable
year  immediately  following  the allocation year for which the film has
been allocated credit by the governor's office for  motion  picture  and
television development.

S. 2609                            11                            A. 3009

  S  4.  Paragraph 1 of subdivision (b) of section 24 of the tax law, as
amended by section 6 of part Q of chapter 57 of the  laws  of  2010,  is
amended to read as follows:
  (1)  "Qualified  production  costs" means production costs only to the
extent such costs are attributable to the use of  tangible  property  or
the  performance of services within the state directly and predominantly
in the production (including pre-production and post  production)  of  a
qualified  film[,  provided,  however,  that  qualified production costs
shall not include post production costs unless the portion of  the  post
production  costs  paid  or  incurred that is attributable to the use of
tangible property or the performance of services  in  New  York  in  the
production of such qualified film equals or exceeds seventy-five percent
of  the total post production costs spent within and without New York in
the production of such qualified film].
  S 5. Paragraph 3 of subdivision (a) of section 31 of the tax  law,  as
added  by  section  12  of  part Q of chapter 57 of the laws of 2010, is
amended to read as follows:
  (3) (I) A taxpayer shall not be eligible for the credit established by
this section FOR QUALIFIED POST PRODUCTION COSTS,  EXCLUDING  THE  COSTS
FOR  VISUAL  EFFECTS AND ANIMATION, unless the qualified post production
costs, EXCLUDING THE COSTS FOR VISUAL EFFECTS AND ANIMATION, at a quali-
fied post production facility meet or exceed seventy-five percent of the
total post production costs, EXCLUDING THE COSTS FOR VISUAL EFFECTS  AND
ANIMATION, paid or incurred in the post production of the qualified film
at  any post production facility.  (II) A TAXPAYER SHALL NOT BE ELIGIBLE
FOR THE CREDIT ESTABLISHED BY THIS SECTION FOR QUALIFIED POST PRODUCTION
COSTS WHICH ARE COSTS FOR VISUAL EFFECTS OR ANIMATION UNLESS THE  QUALI-
FIED  POST  PRODUCTION COSTS FOR VISUAL EFFECTS OR ANIMATION AT A QUALI-
FIED POST PRODUCTION FACILITY MEET OR EXCEED THREE  MILLION  DOLLARS  OR
TWENTY  PERCENT OF THE TOTAL POST PRODUCTION COSTS FOR VISUAL EFFECTS OR
ANIMATION PAID OR INCURRED IN THE POST PRODUCTION OF A QUALIFIED FILM AT
ANY POST PRODUCTION FACILITY, WHICHEVER IS LESS. (III)  A  TAXPAYER  MAY
CLAIM  A  CREDIT FOR QUALIFIED POST PRODUCTION COSTS EXCLUDING THE COSTS
FOR VISUAL EFFECTS AND ANIMATION,  AND  FOR  QUALIFIED  POST  PRODUCTION
COSTS  OF  VISUAL  EFFECTS  AND ANIMATION, PROVIDED THAT THE CRITERIA IN
SUBPARAGRAPHS (I) AND (II) OF THIS PARAGRAPH  ARE  BOTH  SATISFIED.  The
credit  shall be allowed for the taxable year in which the production of
such qualified film is completed.
  S 6. Section 3 of part Y-1 of chapter 57 of the laws of 2009, amending
the tax law relating to the empire  state  film  production  credit,  is
amended to read as follows:
  S  3. A. The governor's office of motion picture and television devel-
opment shall file a report on a quarterly basis with the director of the
division of the budget and the chairmen of the assembly ways  and  means
committee and senate finance committee. The report shall be filed within
fifteen  days  after the close of the calendar quarter. The first report
shall cover the calendar quarter that begins April 1, 2009.  The  report
must contain the following information for the calendar quarter:
  (1)  the total dollar amount of credits allocated during each month of
the calendar quarter, broken down by month;
  (2) the number of film projects which have been allocated tax  credits
of less than $1 million per project and the total dollar amount of cred-
its allocated to those projects;
  (3)  the number of film projects which have been allocated tax credits
of $1 million or more but less than $5 million per project and the total
dollar amount of credits allocated to those projects;

S. 2609                            12                            A. 3009

  (4) the number of film projects which have been allocated tax  credits
of $5 million or more per project and the total dollar amount of credits
allocated to those projects; [and]
  (5)  a list of each film project which has been allocated a tax credit
and  for  each  of  those projects (a) the estimated number of employees
associated with the project, (b) the estimated qualified costs  for  the
project, [and] (c) the estimated total costs of the project, AND (D) THE
CREDIT-ELIGIBLE MAN HOURS FOR EACH PROJECT; AND
  (6)(A)  THE  NAME  OF  EACH  TAXPAYER  ALLOCATED A TAX CREDIT FOR EACH
PROJECT; PROVIDED HOWEVER, IF THE TAXPAYER CLAIMS A TAX  CREDIT  BECAUSE
THE  TAXPAYER IS A MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER IN A
PARTNERSHIP OR A SHAREHOLDER IN A SUBCHAPTER S CORPORATION, THE NAME  OF
EACH  LIMITED LIABILITY COMPANY, PARTNERSHIP OR SUBCHAPTER S CORPORATION
EARNING ANY OF THOSE TAX CREDITS MUST BE INCLUDED IN THE REPORT  INSTEAD
OF  INFORMATION  ABOUT  THE  TAXPAYER  CLAIMING  THE TAX CREDIT, (B) THE
AMOUNT OF TAX CREDIT ALLOCATED TO EACH TAXPAYER;  PROVIDED  HOWEVER,  IF
THE  TAXPAYER  CLAIMS A TAX CREDIT BECAUSE THE TAXPAYER IS A MEMBER OF A
LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP OR  A  SHAREHOLDER
IN  A  SUBCHAPTER S CORPORATION, THE AMOUNT OF TAX CREDIT EARNED BY EACH
ENTITY MUST BE INCLUDED IN THE REPORT INSTEAD OF INFORMATION  ABOUT  THE
TAXPAYER  CLAIMING  THE  TAX CREDIT, AND (C) INFORMATION IDENTIFYING THE
PROJECT ASSOCIATED WITH EACH TAXPAYER FOR WHICH A TAX CREDIT WAS CLAIMED
UNDER SECTION 24 OR SECTION 31, AS ADDED BY CHAPTER 57 OF  THE  LAWS  OF
2010, OF THE TAX LAW, INCLUDING THE NAME OF THE FILM AND COUNTY IN WHICH
THE PROJECT IS LOCATED; AND
  B.  THE GOVERNOR'S OFFICE OF MOTION PICTURE AND TELEVISION DEVELOPMENT
SHALL FILE A REPORT ON A BIENNIAL BASIS WITH THE DIRECTOR OF  THE  DIVI-
SION OF THE BUDGET AND THE CHAIRS OF THE ASSEMBLY WAYS AND MEANS COMMIT-
TEE  AND  SENATE  FINANCE  COMMITTEE.  THE  REPORT SHALL BE FILED WITHIN
FIFTEEN DAYS AFTER THE CLOSE OF THE  CALENDAR  YEAR.  THE  FIRST  REPORT
SHALL COVER A TWO YEAR PERIOD THAT BEGINS ON JANUARY FIRST, TWO THOUSAND
THIRTEEN.  THE  REPORT  MUST  BE  PREPARED BY AN INDEPENDENT THIRD PARTY
AUDITOR AND INCLUDE: (1) INFORMATION REGARDING  THE  EMPIRE  STATE  FILM
PRODUCTION  CREDIT  AND  POST  PRODUCTION  CREDIT PROGRAMS INCLUDING THE
EFFICIENCY OF OPERATIONS, RELIABILITY OF FINANCIAL REPORTING, COMPLIANCE
WITH LAWS AND REGULATIONS AND DISTRIBUTION OF ASSETS AND FUNDS;  (2)  AN
ECONOMIC IMPACT STUDY PREPARED BY AN INDEPENDENT THIRD PARTY OF THE FILM
CREDIT  PROGRAMS; AND (3) ANY OTHER INFORMATION AND/OR OTHER STATISTICAL
INFORMATION THAT THE COMMISSIONER OF ECONOMIC DEVELOPMENT  DEEMS  TO  BE
USEFUL IN ANALYZING THE EFFECTS OF THE PROGRAM.
  S  7.  This act shall take effect immediately, provided, however, that
sections four and five of this act shall apply to  taxpayers  submitting
initial  applications  to  the  governor's  office of motion picture and
television development on or after the date this act shall have become a
law, and to taxpayers who filed an initial application before  this  act
shall  have become a law but who have not yet submitted a final applica-
tion to the governor's office of motion picture and television  develop-
ment  on  or  before  the date this act shall have become a law; and the
amendments made to section 3 of part Y-1 of chapter 57 of  the  laws  of
2009,  amending the tax law relating to the empire state film production
credit, with the exception of subdivision b of such section, shall  only
apply  to  taxpayers  submitting  initial applications to the governor's
office of motion picture and television development on or after the date
this act shall become a law.

                                 PART C

S. 2609                            13                            A. 3009

  Section 1. Legislative intent. This act is intended to create a state-
wide network of university affiliated or college affiliated and  private
sector  affiliated  innovation  hot  spots  in New York state to support
start-up companies and those in the  early  stage  of  development.  The
mission  of  the  innovation hot spots shall be to promote job creation,
entrepreneurship and technology transfer, as well as to provide  support
services  to  hot  spot tenants, including, but not limited to, business
planning,  management  assistance,  financial-packaging,   linkages   to
financing  and  technology services, and coordination with other sources
of assistance.
  S 2. The economic development law is amended by adding a  new  section
361 to read as follows:
  S  361. NEW YORK INNOVATION HOT SPOT PROGRAM.  1. DEFINITIONS. AS USED
IN THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
  (A) "INNOVATION HOT SPOT" SHALL MEAN A FACILITY OR  FACILITIES  DESIG-
NATED AS SUCH BY THE COMMISSIONER.
  (B) "QUALIFIED ENTITY" SHALL MEAN A BUSINESS ENTERPRISE THAT IS:
  (I) IN THE FORMATIVE STAGE OF DEVELOPMENT;
  (II) LOCATED IN NEW YORK STATE;
  (III) EITHER: (A) ANY CORPORATION, EXCEPT A CORPORATION WHICH:
  (1)  OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING THE
HOLDERS THEREOF TO VOTE FOR THE ELECTION OF  DIRECTORS  OR  TRUSTEES  IS
OWNED  OR  CONTROLLED,  EITHER  DIRECTLY  OR  INDIRECTLY,  BY A TAXPAYER
SUBJECT TO TAX UNDER THE FOLLOWING PROVISIONS OF THE TAX LAW:    ARTICLE
NINE-A; SECTION ONE HUNDRED EIGHTY-THREE, ONE HUNDRED EIGHTY-FOUR OR ONE
HUNDRED EIGHTY-FIVE OF ARTICLE NINE; ARTICLE THIRTY-TWO OR ARTICLE THIR-
TY-THREE; OR
  (2)  IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A BUSI-
NESS ENTITY (OR  ENTITIES)  TAXABLE  OR  PREVIOUSLY  TAXABLE  UNDER  THE
FOLLOWING PROVISIONS OF THE TAX LAW: ARTICLE NINE-A; SECTION ONE HUNDRED
EIGHTY-THREE, ONE HUNDRED EIGHTY-FOUR, ONE HUNDRED EIGHTY-FIVE OR FORMER
SECTION  ONE  HUNDRED  EIGHTY-SIX  OF  ARTICLE NINE; ARTICLE THIRTY-TWO;
ARTICLE THIRTY-THREE; ARTICLE TWENTY-THREE, OR WOULD HAVE  BEEN  SUBJECT
TO TAX UNDER SUCH ARTICLE TWENTY-THREE (AS SUCH ARTICLE WAS IN EFFECT ON
JANUARY  FIRST,  NINETEEN  HUNDRED  EIGHTY) OR THE INCOME (OR LOSSES) OF
WHICH IS (OR WAS) INCLUDABLE UNDER ARTICLE TWENTY-TWO; OR
  (B) A SOLE PROPRIETORSHIP, PARTNERSHIP, LIMITED LIABILITY COMPANY,  OR
NEW  YORK  SUBCHAPTER S CORPORATION THAT IS NOT SUBSTANTIALLY SIMILAR IN
OPERATION AND IN OWNERSHIP TO A BUSINESS ENTITY (OR  ENTITIES)  TAXABLE,
OR  PREVIOUSLY TAXABLE, UNDER ARTICLE NINE-A OF THE TAX LAW, SECTION ONE
HUNDRED EIGHTY-THREE, ONE HUNDRED EIGHTY-FOUR, ONE  HUNDRED  EIGHTY-FIVE
OR FORMER SECTION ONE HUNDRED EIGHTY-SIX OF ARTICLE NINE OF THE TAX LAW,
ARTICLE  THIRTY-TWO OR THIRTY-THREE OF THE TAX LAW, ARTICLE TWENTY-THREE
OF THE TAX LAW OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH  ARTI-
CLE  TWENTY-THREE (AS SUCH ARTICLE WAS IN EFFECT ON JANUARY FIRST, NINE-
TEEN HUNDRED EIGHTY) OR THE INCOME (OR LOSSES)  OF  WHICH  IS  (OR  WAS)
INCLUDABLE UNDER ARTICLE TWENTY-TWO OF THE TAX LAW; AND
  (IV)  IS  APPROVED TO LOCATE IN AN INNOVATION HOT SPOT BY THE OPERATOR
OF SUCH INNOVATION HOT SPOT.
  (C) "OPERATOR OF AN INNOVATION HOT SPOT" SHALL MEAN:
  (I) AN ACCREDITED POST-SECONDARY EDUCATIONAL INSTITUTION,  COLLEGE  OR
UNIVERSITY;  NOT-FOR-PROFIT  ENTITY AFFILIATED WITH A HIGHER EDUCATIONAL
INSTITUTION; OR, COLLABORATIVE ENTERPRISE BETWEEN ONE OR MORE ACCREDITED
POST-SECONDARY  EDUCATIONAL  INSTITUTION,  COLLEGE  OR  UNIVERSITY   AND
NOT-FOR-PROFIT ENTITY AFFILIATED WITH A HIGHER EDUCATIONAL INSTITUTION;
  (II) LOCATED IN NEW YORK STATE; AND

S. 2609                            14                            A. 3009

  (III)  DESIGNATED  BY  THE  COMMISSIONER  TO  OPERATE  A FACILITY THAT
PROVIDES:  LOW-COST  SPACE;  TECHNICAL  ASSISTANCE;  SUPPORT   SERVICES,
INCLUDING, BUT NOT LIMITED TO, CENTRAL SERVICES; AND, EDUCATIONAL OPPOR-
TUNITIES, TO A "QUALIFIED ENTITY."
  2. THE COMMISSIONER SHALL:
  (A) SOLICIT APPLICATIONS FROM POST-SECONDARY EDUCATIONAL INSTITUTIONS,
COLLEGES,  UNIVERSITIES,  OR  NOT-FOR-PROFIT  ENTITIES AFFILIATED WITH A
HIGHER EDUCATION INSTITUTION OR COLLABORATIVE ENTERPRISES BETWEEN ONE OR
MORE ACCREDITED POST-SECONDARY EDUCATIONAL  INSTITUTIONS,  COLLEGES,  OR
UNIVERSITIES  AND  NOT-FOR-PROFIT ENTITIES FOR APPROVAL TO OPERATE INNO-
VATION HOT SPOTS IN PROPERTY OWNED OR LEASED BY SUCH ENTITIES TO ATTRACT
INDUSTRIES WITH SIGNIFICANT POTENTIAL FOR ECONOMIC GROWTH  AND  DEVELOP-
MENT  IN  NEW  YORK  STATE,  AND  IDENTIFY  TECHNOLOGICAL AREAS THAT CAN
CONTRIBUTE TO THE GROWTH OF VARIOUS INDUSTRIES  LOCATED  THROUGHOUT  NEW
YORK STATE;
  (B)  RECEIVE  RECOMMENDATIONS  FROM  THE REGIONAL ECONOMIC DEVELOPMENT
COUNCILS REGARDING THE APPROVAL OR REJECTION OF THE APPLICANTS AS OPERA-
TORS OF INNOVATION HOT SPOTS.
  3. THE COMMISSIONER SHALL ESTABLISH CRITERIA CONCERNING THE INNOVATION
HOT SPOT PROGRAM.  (A) THE CRITERIA THAT APPLICANTS MUST SATISFY  TO  BE
DESIGNATED AS AN OPERATOR OF AN INNOVATION HOT SPOT INCLUDE, BUT ARE NOT
LIMITED TO, THE FOLLOWING:
  (I)  A RECORD OF, OR PLAN TO CONFORM TO, BEST PRACTICES INCLUDING, BUT
NOT LIMITED TO, CLEAR POLICIES FOR THE RESIDENT  BUSINESS  ENTITIES  AND
GRADUATION FROM THE SPACE;
  (II)  A  COMPREHENSIVE  SUITE  OF  ENTREPRENEURIAL MENTORING PRACTICES
INCLUDING, BUT NOT LIMITED TO, ADVISING, COACHING, PLANNING AND CONNECT-
ING TO FUNDING AND TECHNOLOGY SOURCES;
  (III) THE CAPACITY TO SECURE SUBSTANTIAL PRIVATE AND  OTHER  NON-STATE
GOVERNMENTAL  FUNDING  FOR THE PROPOSED INNOVATION HOT SPOT, IN ADDITION
TO DIRECT SUPPORT FROM THE SPONSORING ACADEMIC  INSTITUTION  OR  RELATED
FOUNDATION;
  (IV)  THE  ABILITY  AND  WILLINGNESS  TO  COOPERATE  WITH OTHER LOCAL,
REGIONAL AND  STATEWIDE  ECONOMIC  DEVELOPMENT  ORGANIZATIONS,  BUSINESS
SUPPORT  NETWORKS,  VENTURE AND ANGEL CAPITAL FUNDING SOURCES, AND WORK-
FORCE DEVELOPMENT ADVOCATES;
  (V) THE CAPACITY TO COLLABORATE WITH OTHER BUSINESSES  AND  INDUSTRIES
INDIVIDUALLY; AND
  (VI)  SUCH  OTHER REQUIREMENTS AS THE DEPARTMENT DEEMS APPROPRIATE FOR
THE FORMAT, CONTENT AND FILING OF APPLICATIONS FOR DESIGNATION AS  INNO-
VATION HOT SPOTS.
  (B) THE COMMISSIONER SHALL ALSO ESTABLISH CRITERIA FOR THE DESIGNATION
OF INNOVATION HOT SPOTS.
  (C)  AFTER  ESTABLISHING SUCH CRITERIA, THE COMMISSIONER SHALL APPROVE
AND DESIGNATE FIVE INNOVATION HOT SPOTS AND THEIR  OPERATORS  IN  FISCAL
YEAR  TWO  THOUSAND  THIRTEEN--TWO THOUSAND FOURTEEN AND FIVE ADDITIONAL
INNOVATION HOT SPOTS AND THEIR OPERATORS IN  FISCAL  YEAR  TWO  THOUSAND
FOURTEEN--TWO THOUSAND FIFTEEN.
  (D)  THE  COMMISSIONER  SHALL ISSUE A CERTIFICATE OF APPROVAL FOR EACH
DESIGNATED INNOVATION HOT SPOT AND EACH APPROVED OPERATOR  OF  AN  INNO-
VATION HOT SPOT.
  (E)  THE OPERATOR OF AN APPROVED INNOVATION HOT SPOT MAY ACCEPT APPLI-
CATIONS FOR TENANCIES FROM QUALIFIED ENTITIES FOR A PERIOD OF FIVE YEARS
AFTER THE RECEIPT BY SUCH INNOVATION HOT  SPOT  OF  ITS  CERTIFICATE  OF
APPROVAL  FROM  THE  COMMISSIONER.  QUALIFIED ENTITIES THAT LOCATE THEIR
BUSINESSES IN AN INNOVATION HOT SPOT ARE ELIGIBLE TO RECEIVE  TAX  BENE-

S. 2609                            15                            A. 3009

FITS  UNDER  SECTION THIRTY-EIGHT OF THE TAX LAW FOR FIVE TAXABLE YEARS,
BEGINNING WITH THE FIRST TAXABLE YEAR DURING WHICH SUCH QUALIFIED  ENTI-
TIES BECOME TENANTS IN AN INNOVATION HOT SPOT.
  4.  EACH  OPERATOR OF AN INNOVATION HOT SPOT SHALL REPORT ON AN ANNUAL
BASIS ON ITS ACTIVITIES TO THE COMMISSIONER IN A MANNER AND ACCORDING TO
THE SCHEDULE ESTABLISHED BY THE DEPARTMENT, AND SHALL PROVIDE SUCH ADDI-
TIONAL INFORMATION AS THE COMMISSIONER  MAY  REQUIRE.  THE  COMMISSIONER
SHALL  EVALUATE THE OPERATIONS OF THE INNOVATION HOT SPOTS USING METHODS
INCLUDING BUT NOT LIMITED TO SITE VISITS, REPORTS PURSUANT TO  SPECIFIED
INFORMATION,  AND REVIEW EVALUATIONS. IF THE COMMISSIONER IS UNSATISFIED
WITH THE PROGRESS OF AN OPERATOR OF AN INNOVATION HOT SPOT, THE  COMMIS-
SIONER  SHALL NOTIFY SUCH OPERATOR OF THE RESULTS OF ITS EVALUATIONS AND
THE FINDINGS OF DEFICIENCIES IN THE OPERATION OF SUCH HOT SPOT AND SHALL
ALLOW AND COOPERATE WITH SUCH OPERATOR TO  REMEDY  SUCH  FINDINGS  IN  A
TIMELY MANNER.
  5.  NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER, EMPLOYEES AND OFFI-
CERS OF THE DEPARTMENT AND THE DEPARTMENT OF TAXATION AND FINANCE  SHALL
BE ALLOWED AND ARE DIRECTED TO SHARE AND EXCHANGE:
  (I)  INFORMATION  DERIVED FROM TAX RETURNS OR REPORTS THAT IS RELEVANT
TO A QUALIFIED ENTITY'S ELIGIBILITY TO PARTICIPATE IN THE INNOVATION HOT
SPOTS PROGRAM, AND
  (II) INFORMATION REGARDING THE TAX BENEFITS APPLIED FOR,  ALLOWED,  OR
CLAIMED  PURSUANT TO SECTION THIRTY-EIGHT OF THE TAX LAW AND THE TAXPAY-
ERS WHO ARE APPLYING FOR OR ARE CLAIMING THE TAX BENEFITS.
  ALL INFORMATION EXCHANGED BETWEEN THE DEPARTMENT AND THE DEPARTMENT OF
TAXATION AND FINANCE SHALL  NOT BE SUBJECT TO DISCLOSURE  OR  INSPECTION
PURSUANT  TO  THE  STATE'S  FREEDOM OF INFORMATION LAW.   THE DEPARTMENT
SHALL NOT DISCLOSE ANY INFORMATION OBTAINED FROM THE DEPARTMENT OF TAXA-
TION AND FINANCE THAT CONCERNS SPECIFIC TAXPAYERS.
  S 3. The tax law is amended by adding a new  section  38  to  read  as
follows:
  S  38.  NEW YORK INNOVATION HOT SPOT PROGRAM TAX BENEFITS. (A) AS USED
IN THIS CHAPTER, THE TERMS "INNOVATION HOT SPOT" AND "QUALIFIED  ENTITY"
SHALL  HAVE THE SAME MEANING AS UNDER SECTION THREE HUNDRED SIXTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW.
  (B) A TAXPAYER UNDER ARTICLE NINE-A OF THIS CHAPTER THAT IS  A  QUALI-
FIED ENTITY AND ALSO A TENANT IN AN INNOVATION HOT SPOT SHALL BE SUBJECT
ONLY  TO  THE  FIXED  DOLLAR MINIMUM TAX, IMPOSED UNDER PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  CHAPTER,  FOR  FIVE
TAXABLE  YEARS,  BEGINNING  WITH THE FIRST TAXABLE YEAR DURING WHICH THE
QUALIFIED ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT. A  TAXPAYER
UNDER  ARTICLE  NINE-A  OF THIS CHAPTER THAT IS A CORPORATE PARTNER IN A
QUALIFIED ENTITY, OR IS A QUALIFIED ENTITY THAT IS LOCATED  BOTH  WITHIN
AND  WITHOUT  AN  INNOVATION HOT SPOT, SHALL BE ALLOWED ONLY A DEDUCTION
FOR THE AMOUNT OF INCOME OR GAIN INCLUDED IN ITS FEDERAL ADJUSTED  GROSS
INCOME  TO  THE  EXTENT  THAT  THE INCOME OR GAIN IS ATTRIBUTABLE TO THE
OPERATIONS AT THE INNOVATION HOT SPOT. THE DEDUCTION IS ALLOWED FOR FIVE
TAXABLE YEARS, BEGINNING WITH THE FIRST TAXABLE YEAR  DURING  WHICH  THE
QUALIFIED ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT.
  (C)  AN INDIVIDUAL WHO IS THE SOLE PROPRIETOR OF A QUALIFIED ENTITY OR
A MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP OR A
SHAREHOLDER IN A NEW YORK SUBCHAPTER S  CORPORATION  WHERE  THE  LIMITED
LIABILITY  COMPANY, PARTNERSHIP, OR S CORPORATION IS A QUALIFIED ENTITY,
THAT IS TAXABLE UNDER  ARTICLE  TWENTY-TWO  OF  THIS  CHAPTER  SHALL  BE
ALLOWED  A  DEDUCTION  FOR  THE AMOUNT OF INCOME OR GAIN INCLUDED IN ITS
FEDERAL ADJUSTED GROSS INCOME TO THE EXTENT THAT THE INCOME OR  GAIN  IS

S. 2609                            16                            A. 3009

ATTRIBUTABLE  TO  THE OPERATIONS OF A QUALIFIED ENTITY WHICH IS A TENANT
IN AN INNOVATION HOT SPOT. THE DEDUCTION IS  ALLOWED  FOR  FIVE  TAXABLE
YEARS,  BEGINNING WITH THE FIRST TAXABLE YEAR DURING WHICH THE QUALIFIED
ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT.
  (D)  A  QUALIFIED  ENTITY  THAT  IS A TENANT IN AN INNOVATION HOT SPOT
SHALL BE ELIGIBLE FOR A CREDIT OR REFUND FOR SALES AND USE TAXES IMPOSED
ON THE RETAIL SALE OF  TANGIBLE  PERSONAL  PROPERTY  OR  SERVICES  UNDER
SUBDIVISIONS  (A),  (B),  AND  (C)  OF  SECTION  ELEVEN HUNDRED FIVE AND
SECTION ELEVEN HUNDRED TEN OF THIS CHAPTER. THE CREDIT OR  REFUND  SHALL
BE  ALLOWED  FOR  SIXTY MONTHS BEGINNING WITH THE FIRST FULL MONTH AFTER
THE QUALIFIED ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT.
  (E) A TAXPAYER WHO CLAIMS ANY OF THE TAX BENEFITS  DESCRIBED  IN  THIS
SECTION  IS  NO LONGER ELIGIBLE FOR ANY OTHER NEW YORK STATE EXEMPTIONS,
DEDUCTIONS, OR CREDIT OR REFUNDS UNDER THIS CHAPTER TO THE  EXTENT  THAT
ANY  SUCH  EXEMPTION, DEDUCTION, CREDIT OR REFUND IS ATTRIBUTABLE TO THE
BUSINESS OPERATIONS OF A TENANT IN AN INNOVATION HOT SPOT. THE  ELECTION
TO CLAIM THE TAX BENEFITS DESCRIBED IN THIS SECTION IS NOT REVOCABLE.
  (F) CROSS-REFERENCES. FOR APPLICATION OF THE TAX BENEFITS PROVIDED FOR
IN THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (I) ARTICLE 9-A, SECTION 208, SUBDIVISION (9), PARAGRAPH (A), SUBPARA-
GRAPH (18).
  (II) ARTICLE 9-A, SECTION 209, SUBDIVISION 11.
  (III) ARTICLE 22, SECTION 612, SUBSECTION (C), PARAGRAPH (39).
  (IV) ARTICLE 28, SECTION 1119, SUBDIVISION (D).
  S  4.  Paragraph (a) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 18 to read as follows:
  (18) THE AMOUNT OF INCOME OR GAIN INCLUDED IN FEDERAL  ADJUSTED  GROSS
INCOME  OF  A  TAXPAYER  THAT IS A PARTNER IN A QUALIFIED ENTITY OR IS A
QUALIFIED ENTITY THAT IS LOCATED BOTH WITHIN AND WITHOUT  AN  INNOVATION
HOT  SPOT,  TO THE EXTENT THAT THE INCOME OR GAIN IS ATTRIBUTABLE TO THE
OPERATIONS OF A QUALIFIED ENTITY AT THE INNOVATION HOT SPOT AS  PROVIDED
IN SECTION THIRTY-EIGHT OF THIS CHAPTER.
  S 5. Section 209 of the tax law is amended by adding a new subdivision
11 to read as follows:
  11.  EXCEPT  AS  PROVIDED IN SUBPARAGRAPH EIGHTEEN OF PARAGRAPH (A) OF
SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE, A  CORPO-
RATION THAT IS A QUALIFIED ENTITY AND ALSO A TENANT IN AN INNOVATION HOT
SPOT  SHALL  BE SUBJECT ONLY TO THE FIXED DOLLAR MINIMUM TAX UNDER PARA-
GRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE,
AS PROVIDED IN SECTION THIRTY-EIGHT OF THIS CHAPTER.
  S 6. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 39 to read as follows:
  (39) ANY INCOME OR GAIN, TO THE  EXTENT  IT  IS  INCLUDED  IN  FEDERAL
ADJUSTED  GROSS  INCOME OF AN INDIVIDUAL WHO IS THE SOLE PROPRIETOR OF A
QUALIFIED ENTITY OR A MEMBER OF A LIMITED LIABILITY COMPANY,  A  PARTNER
IN A PARTNERSHIP OR A SHAREHOLDER IN A NEW YORK SUBCHAPTER S CORPORATION
THAT  IS  A QUALIFIED ENTITY, ATTRIBUTABLE TO THE OPERATIONS OF A QUALI-
FIED ENTITY AT ITS LOCATION IN AN INNOVATION HOT SPOT,  AS  PROVIDED  IN
SECTION THIRTY-EIGHT OF THIS CHAPTER.
  S 7. Paragraph 1 of subdivision (d) of section 1119 of the tax law, as
added  by  section  31 of part S-1 of chapter 57 of the laws of 2009, is
amended to read as follows:
  (1) Subject to the conditions and limitations  provided  for  in  this
section,  a  refund  or  credit will be allowed for taxes imposed on the
retail sale of tangible personal property described in  subdivision  (a)
of  section  eleven  hundred  five of this article, and on every sale of

S. 2609                            17                            A. 3009

services described in subdivisions (b) and  (c)  of  such  section,  and
consideration  given  or  contracted to be given for, or for the use of,
such  tangible  personal  property  or  services,  where  such  tangible
personal property or services are sold to a qualified empire zone enter-
prise  OR  TO  A QUALIFIED ENTITY THAT IS ALSO A TENANT IN AN INNOVATION
HOT SPOT AS PROVIDED IN SECTION THIRTY-EIGHT OF THIS  CHAPTER,  provided
that  (A)  such tangible personal property or tangible personal property
upon which such a service has been performed or such service (other than
a service described in subdivision (b) of section eleven hundred five of
this article) is directly and predominantly, or such a service described
in clause (A) or (D) of paragraph one of such subdivision (b) of section
eleven hundred five of this article is directly and exclusively, used or
consumed by (I) such QUALIFIED EMPIRE ZONE enterprise in an area  desig-
nated  as  an  empire zone pursuant to article eighteen-B of the general
municipal law with respect to which such enterprise is certified  pursu-
ant  to  such  article  eighteen-B,  OR (II) SUCH QUALIFIED ENTITY IN AN
INNOVATION HOT SPOT or (B) such a service described in clause (B) or (C)
of paragraph one of subdivision (b) of section eleven  hundred  five  of
this  article  is  delivered  and  billed  to  (I) such enterprise at an
address in such empire zone OR (II) SUCH QUALIFIED ENTITY AT THE ADDRESS
OF THE INNOVATION HOT SPOT WHERE IT IS A TENANT, or (C) the enterprise's
place of primary use of the service described in paragraph two  of  such
subdivision  (b) of section eleven hundred five is at an address in such
empire zone OR AT AN INNOVATION HOT SPOT; provided,  further,  that,  in
order  for  a  motor  vehicle,  as defined in subdivision (c) of section
eleven hundred seventeen of this article, or tangible personal  property
related  to such a motor vehicle to be found to be used predominantly in
such a zone, at least fifty percent of such motor vehicle's use shall be
exclusively within such zone or at least fifty  percent  of  such  motor
vehicle's  use shall be in activities originating or terminating in such
zone, or both; and either or both such usages shall be  computed  either
on  the  basis  of  mileage  or  hours of use, at the discretion of such
enterprise. For purposes of this subdivision, tangible personal property
related to such a motor vehicle shall include a  battery,  diesel  motor
fuel,  an  engine,  engine  components, motor fuel, a muffler, tires and
similar tangible personal property used in or on such a motor vehicle.
  S 8. Subdivision (c) of section 11-1712 of the administrative code  of
the  city of New York is amended by adding a new paragraph 35 to read as
follows:
  (35) AS PROVIDED IN SECTION THIRTY-EIGHT OF THE TAX LAW, ANY INCOME OR
GAIN, TO THE EXTENT IT IS INCLUDED IN FEDERAL ADJUSTED GROSS  INCOME  OF
AN  INDIVIDUAL  WHO  IS  THE  SOLE PROPRIETOR OF A QUALIFIED ENTITY OR A
MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP  OR  A
SHAREHOLDER  IN  A NEW YORK SUBCHAPTER S CORPORATION THAT IS A QUALIFIED
ENTITY AS DEFINED IN PARAGRAPH (B) OF SUBDIVISION ONE OF  SECTION  THREE
HUNDRED  SIXTY-ONE  OF THE ECONOMIC DEVELOPMENT LAW, ATTRIBUTABLE TO THE
OPERATIONS OF SUCH QUALIFIED ENTITY AT ITS LOCATION IN AN INNOVATION HOT
SPOT, AS DEFINED IN PARAGRAPH (A) OF SUBDIVISION ONE  OF  SECTION  THREE
HUNDRED SIXTY-ONE OF THE ECONOMIC DEVELOPMENT LAW.
  S 9. This act shall take effect immediately.

                                 PART D

  Section  1.  Subsection (g) of section 615 of the tax law, as added by
section 3 of part HH of chapter 57 of the laws of 2010,  is  amended  to
read as follows:

S. 2609                            18                            A. 3009

  (g)(1)  With  respect  to  an individual whose New York adjusted gross
income is over one million dollars and no more than ten million dollars,
the New York itemized deduction  shall  be  an  amount  equal  to  fifty
percent  of  any charitable contribution deduction allowed under section
one  hundred  seventy  of  the  internal  revenue code for taxable years
beginning after two thousand nine and  before  two  thousand  [thirteen]
SIXTEEN.  With  respect  to  an individual whose New York adjusted gross
income is over one million dollars,  the  New  York  itemized  deduction
shall be an amount equal to fifty percent of any charitable contribution
deduction  allowed  under  section  one  hundred seventy of the internal
revenue code for taxable years beginning in two thousand nine  or  after
two thousand [twelve] FIFTEEN.
  (2) With respect to an individual whose New York adjusted gross income
is over ten million dollars, the New York itemized deduction shall be an
amount  equal  to  twenty-five  percent  of  any charitable contribution
deduction allowed under section one  hundred  seventy  of  the  internal
revenue  code  for  taxable  years beginning after two thousand nine and
ending before two thousand [thirteen] SIXTEEN.
  S 2. Subdivision (g) of section 11-1715 of the administrative code  of
the  city of New York, as added by section 7 of part HH of chapter 57 of
the laws of 2010, is amended to read as follows:
  (g) (1) With respect to an individual whose New  York  adjusted  gross
income is over one million dollars but no more than ten million dollars,
the  New  York  itemized  deduction  shall  be  an amount equal to fifty
percent of any charitable contribution deduction allowed  under  section
one  hundred  seventy  of  the  internal  revenue code for taxable years
beginning after two thousand nine and  before  two  thousand  [thirteen]
SIXTEEN.  With  respect  to  an individual whose New York adjusted gross
income is over one million dollars,  the  New  York  itemized  deduction
shall be an amount equal to fifty percent of any charitable contribution
deduction  allowed  under  section  one  hundred seventy of the internal
revenue code for taxable years beginning in two thousand nine  or  after
two thousand [twelve] FIFTEEN.
  (2) With respect to an individual whose New York adjusted gross income
is over ten million dollars, the New York itemized deduction shall be an
amount  equal  to  twenty-five  percent  of  any charitable contribution
deduction allowed under section one  hundred  seventy  of  the  internal
revenue  code  for  taxable  years beginning after two thousand nine AND
ENDING BEFORE TWO THOUSAND SIXTEEN.
  S 3. This act shall take effect immediately.

                                 PART E

  Section 1. Subparagraph 17  of  paragraph  (a)  of  subdivision  9  of
section 208 of the tax law is REPEALED.
  S  2. Paragraph (o) of subdivision 9 of section 208 of the tax law, as
amended by section 1 of part M of chapter  686  of  the  laws  of  2003,
clause  (A) of subparagraph 2 as amended by section 4 of part J of chap-
ter 60 of the laws of 2007, is amended to read as follows:
  (o) Related members expense add back [and income exclusion]. (1) Defi-
nitions. (A) Related member [or members. For purposes of this paragraph,
the term related member or members means a person, corporation, or other
entity, including an entity that is treated as a  partnership  or  other
pass-through  vehicle  for  purposes  of  federal taxation, whether such
person, corporation or entity is a  taxpayer  or  not,  where  one  such
person,  corporation, or entity, or set of related persons, corporations

S. 2609                            19                            A. 3009

or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all
taxpayers under articles nine, nine-A, thirteen, twenty-two, thirty-two,
thirty-three  or thirty-three-A of this chapter]. "RELATED MEMBER" MEANS
A RELATED PERSON AS DEFINED IN SUBPARAGRAPH (C) OF  PARAGRAPH  THREE  OF
SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVEN-
UE  CODE,  EXCEPT  THAT  "FIFTY  PERCENT"  SHALL BE SUBSTITUTED FOR "TEN
PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX"  MEANS,  AS TO ANY STATE OR U.S.  POSSESSION, THE MAXIMUM STATUTORY
RATE OF TAX IMPOSED BY THE STATE OR  POSSESSION  ON  OR  MEASURED  BY  A
RELATED  MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT PERCENTAGE,
IF ANY, APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF  SAID  JURIS-
DICTION.  FOR  PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF TAX AS
TO ANY STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED  MEMBER'S  NET
INCOME  TAX  LIABILITY IN SAID JURISDICTION IS REPORTED ON A COMBINED OR
CONSOLIDATED RETURN INCLUDING BOTH THE TAXPAYER AND THE  RELATED  MEMBER
WHERE  THE  REPORTED  TRANSACTIONS  BETWEEN THE TAXPAYER AND THE RELATED
MEMBER ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS  DEFINITION,
WHEN  COMPUTING  THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN WHICH A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR ADJUSTMENT THAT IS DEPENDENT UPON THE RELATED  MEMBER  EITHER  MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT  JURISDICTION,  THE  MAXIMUM  STATUTORY RATE OF TAX IMPOSED BY SAID
JURISDICTION SHALL BE DECREASED TO REFLECT THE  STATUTORY  RATE  OF  TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by  the commissioner, and [includes] INCLUDE amounts allowable as inter-
est deductions under section one hundred  sixty-three  of  the  internal
revenue  code to the extent such amounts are directly or indirectly for,
related to or in connection with the acquisition,  use,  maintenance  or
management,  ownership, sale, exchange or disposition of such intangible
assets.
  (D) Valid Business Purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in  a combined report with a related member pursuant to subdivision four
of section two hundred eleven  of  this  article,  for  the  purpose  of

S. 2609                            20                            A. 3009

computing entire net income or other applicable taxable basis, a taxpay-
er  must  add  back royalty payments [to a] DIRECTLY OR INDIRECTLY PAID,
ACCRUED, OR INCURRED IN CONNECTION WITH ONE OR MORE DIRECT  OR  INDIRECT
TRANSACTIONS  WITH ONE OR MORE related [member] MEMBERS during the taxa-
ble year to the extent deductible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and  such  transaction  was  done for a valid business
purpose and the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income or other taxable basis, a taxpayer shall  be  allowed  to  deduct
royalty  payments  directly or indirectly received from a related member
during the taxable year to the extent included in the taxpayer's federal
taxable income unless such royalty payments would not be required to  be
added  back  under  subparagraph  two of this paragraph or other similar
provision in this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT  REQUIRED  IN
THIS  PARAGRAPH  SHALL  NOT  APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE
TYPE  AND  IN  THE  FORM SPECIFIED BY THE COMMISSIONER, MEETS ALL OF THE
FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS  SUBJECT  TO  TAX  IN
THIS  STATE  OR  ANOTHER  STATE  OR POSSESSION OF THE UNITED STATES OR A
FOREIGN NATION OR SOME COMBINATION THEREOF ON A TAX BASE  THAT  INCLUDED
THE  ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER; (II) THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED OR INCURRED SUCH PORTION TO A  PERSON  THAT  IS  NOT  A  RELATED
MEMBER;  AND  (III)  THE  TRANSACTION GIVING RISE TO THE ROYALTY PAYMENT
BETWEEN THE TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR  A  VALID
BUSINESS PURPOSE.
  (II)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION TWO HUNDRED TEN  OF  THIS  ARTICLE
FOR THE TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE ROYALTY PAYMENT
WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER  ORGANIZED  UNDER  THE
LAWS  OF  A  COUNTRY  OTHER  THAN  THE  UNITED  STATES; (II) THE RELATED
MEMBER'S INCOME FROM THE TRANSACTION  WAS  SUBJECT  TO  A  COMPREHENSIVE
INCOME  TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III) THE
RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX BASE THAT
INCLUDED THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE  TAXPAYER;
(IV)  THE RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS TAXED IN SUCH

S. 2609                            21                            A. 3009

COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO  THAT  IMPOSED  BY
THIS  STATE;  AND  (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED
PURSUANT TO A TRANSACTION THAT  WAS  UNDERTAKEN  FOR  A  VALID  BUSINESS
PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 3. Paragraph 6 of subdivision (a) of section 292 of the tax law,  as
amended  by  section 15 of part M of chapter 686 of the laws of 2003, is
amended to read as follows:
  (6) Related members expense add back  [and  income  exclusion].    (A)
Definitions.  (i) Related member [or members. For purposes of this para-
graph, the term related member or members means a  person,  corporation,
or other entity, including an entity that is treated as a partnership or
other  pass-through  vehicle  for  purposes of federal taxation, whether
such person, corporation or entity is a taxpayer or not, where one  such
person,  corporation, or entity, or set of related persons, corporations
or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all
taxpayers under article nine, nine-A, thirteen, twenty-two,  thirty-two,
thirty-three or thirty-three-A of this chapter].  "RELATED MEMBER" MEANS
A  RELATED  PERSON  AS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVEN-
UE CODE, EXCEPT THAT "FIFTY  PERCENT"  SHALL  BE  SUBSTITUTED  FOR  "TEN
PERCENT".
  (ii)  [Controlling  interest. A controlling interest shall mean (I) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (II) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY STATE OR U.S. POSSESSION,  THE  MAXIMUM  STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-
DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET
INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER
WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER ARE ELIMINATED OR OFFSET.  ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN  COMPUTING  THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN WHICH A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR ADJUSTMENT THAT IS DEPENDENT UPON THE RELATED  MEMBER  EITHER  MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT  JURISDICTION,  THE  MAXIMUM  STATUTORY RATE OF TAX IMPOSED BY SAID
JURISDICTION SHALL BE DECREASED TO REFLECT THE  STATUTORY  RATE  OF  TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.

S. 2609                            22                            A. 3009

  (iii)   Royalty  payments.  Royalty  payments  are  payments  directly
connected to the acquisition, use, maintenance or management, ownership,
sale, exchange, or any other disposition of licenses, trademarks,  copy-
rights,  trade  names,  trade  dress,  service  marks, mask works, trade
secrets,  patents  and  any  other similar types of intangible assets as
determined by the commissioner, and [includes] INCLUDE amounts allowable
as interest deductions under section  one  hundred  sixty-three  of  the
internal  revenue  code to the extent such amounts are directly or indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance or management, ownership, sale, exchange or disposition of  such
intangible assets.
  (iv)  Valid  business purpose. A valid business purpose is one or more
business purposes other than the  avoidance  or  reduction  of  taxation
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the  economic  position  of
the taxpayer. The economic position of the taxpayer includes an increase
in  the  market share of the taxpayer, or the entry by the taxpayer into
new business markets.
  (B) Royalty expense add backs. (i) For the purpose  of  computing  New
York unrelated business taxable income, a taxpayer must add back royalty
payments  [to  a]  DIRECTLY  OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN
CONNECTION WITH ONE OR MORE DIRECT OR INDIRECT TRANSACTIONS WITH ONE  OR
MORE  related  [member]  MEMBERS  during  the taxable year to the extent
deductible in calculating federal unrelated business taxable income;
  (ii) [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (I) the related member during the same taxable year directly or  indi-
rectly  paid  or incurred the amount to a person or entity that is not a
related member, and such transaction was done for a valid  business  and
the payments are made at arm's length;
  (II)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (C)  Royalty  income exclusions. For the purpose of computing New York
unrelated business taxable income, a taxpayer shall be allowed to deduct
royalty payments directly or indirectly received from a  related  member
during the taxable year to the extent included in the taxpayer's federal
taxable  income unless such royalty payments would not be required to be
added back under subparagraph (B) of this  paragraph  or  other  similar
provision  in  this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT REQUIRED IN
THIS PARAGRAPH SHALL NOT APPLY TO THE PORTION  OF  THE  ROYALTY  PAYMENT
THAT  THE  TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER,  MEETS  ALL  OF  THE
FOLLOWING  REQUIREMENTS:  (A)  THE  RELATED MEMBER WAS SUBJECT TO TAX IN
THIS STATE OR ANOTHER STATE OR POSSESSION OF  THE  UNITED  STATES  OR  A
FOREIGN  NATION  OR SOME COMBINATION THEREOF ON A TAX BASE THAT INCLUDED
THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER;  (B)  THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED  OR  INCURRED  SUCH  PORTION  TO  A PERSON THAT IS NOT A RELATED
MEMBER; AND (C) THE TRANSACTION  GIVING  RISE  TO  THE  ROYALTY  PAYMENT
BETWEEN  THE  TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR A VALID
BUSINESS PURPOSE.

S. 2609                            23                            A. 3009

  (II) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF  THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE RELATED  MEMBER
WAS  SUBJECT  TO  TAX  ON OR MEASURED BY ITS NET INCOME IN THIS STATE OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (B) THE TAX BASE FOR SAID  TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED OR INCURRED BY THE TAXPAYER; AND (C) THE AGGREGATE EFFEC-
TIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDICTIONS IS
NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT APPLIED TO
THE TAXPAYER UNDER SECTION TWO HUNDRED NINETY OF THIS  ARTICLE  FOR  THE
TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE ROYALTY PAYMENT
WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER  ORGANIZED  UNDER  THE
LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (B) THE RELATED MEMBER'S
INCOME  FROM  THE  TRANSACTION WAS SUBJECT TO A COMPREHENSIVE INCOME TAX
TREATY BETWEEN SUCH COUNTRY AND  THE  UNITED  STATES;  (C)  THE  RELATED
MEMBER  WAS  SUBJECT  TO  TAX  IN  A  FOREIGN  NATION ON A TAX BASE THAT
INCLUDED THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE  TAXPAYER;
(D)  THE  RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS TAXED IN SUCH
COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO  THAT  IMPOSED  BY
THIS  STATE;  AND  (E) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED
PURSUANT TO A TRANSACTION THAT  WAS  UNDERTAKEN  FOR  A  VALID  BUSINESS
PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 4. Paragraph 19 of subsection (c) of section 612 of the tax  law  is
REPEALED.
  S  5.  Subsection  (r)  of  section  612 of the tax law, as amended by
section 3 of part M of chapter 686 of the laws of 2003,  is  amended  to
read as follows:
  (r)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related  member  [or  members.  For  purposes  of  this
subsection,  the  term  related member or members means a person, corpo-
ration, or other entity, including an entity that is treated as a  part-
nership  or other pass-through vehicle for purposes of federal taxation,
whether such person, corporation or entity is a taxpayer or  not,  where
one  such  person,  corporation,  or  entity, or set of related persons,
corporations or entities, directly or  indirectly  owns  or  controls  a
controlling  interest  in  another  entity.  Such entity or entities may
include all taxpayers under article nine, nine-A, thirteen,  twenty-two,
thirty-two,  thirty-three  or thirty-three-A of this chapter].  "RELATED
MEMBER" MEANS A RELATED PERSON AS DEFINED IN SUBPARAGRAPH (C)  OF  PARA-
GRAPH  THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE
INTERNAL REVENUE CODE, EXCEPT THAT "FIFTY PERCENT" SHALL BE  SUBSTITUTED
FOR "TEN PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in

S. 2609                            24                            A. 3009

such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation,  trust  or other entity.] EFFECTIVE RATE OF TAX.  "EFFECTIVE RATE
OF TAX" MEANS, AS TO ANY STATE OR U.S. POSSESSION, THE MAXIMUM STATUTORY
RATE OF TAX IMPOSED BY THE STATE OR  POSSESSION  ON  OR  MEASURED  BY  A
RELATED  MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT PERCENTAGE,
IF ANY, APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF  SAID  JURIS-
DICTION.  FOR  PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF TAX AS
TO ANY STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED  MEMBER'S  NET
INCOME  TAX  LIABILITY IN SAID JURISDICTION IS REPORTED ON A COMBINED OR
CONSOLIDATED RETURN INCLUDING BOTH THE TAXPAYER AND THE  RELATED  MEMBER
WHERE  THE  REPORTED  TRANSACTIONS  BETWEEN THE TAXPAYER AND THE RELATED
MEMBER ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS  DEFINITION,
WHEN  COMPUTING  THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN WHICH A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR ADJUSTMENT THAT IS DEPENDENT UPON THE RELATED  MEMBER  EITHER  MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT  JURISDICTION,  THE  MAXIMUM  STATUTORY RATE OF TAX IMPOSED BY SAID
JURISDICTION SHALL BE DECREASED TO REFLECT THE  STATUTORY  RATE  OF  TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by  the commissioner, and [includes] INCLUDE amounts allowable as inter-
est deductions under section one hundred  sixty-three  of  the  internal
revenue  code to the extent such amounts are directly or indirectly for,
related to or in connection with the acquisition,  use,  maintenance  or
management,  ownership, sale, exchange or disposition of such intangible
assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2)  Royalty  expense  add backs. (A) For the purpose of computing New
York adjusted gross income, a taxpayer must add  back  royalty  payments
[to  a]  DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN CONNECTION
WITH ONE OR MORE DIRECT  OR  INDIRECT  TRANSACTIONS  WITH  ONE  OR  MORE
related  [member]  MEMBERS during the taxable year to the extent deduct-
ible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and

S. 2609                            25                            A. 3009

the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3)  Royalty  income exclusions. For the purpose of computing New York
adjusted gross income, a taxpayer shall be  allowed  to  deduct  royalty
payments  directly  or  indirectly received from a related member during
the taxable year to the extent included in the taxpayer's federal  taxa-
ble  income  unless  such  royalty  payments would not be required to be
added back under paragraph two  of  this  subsection  or  other  similar
provision  in  this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT REQUIRED IN
THIS SUBSECTION SHALL NOT APPLY TO THE PORTION OF  THE  ROYALTY  PAYMENT
THAT  THE  TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER,  MEETS  ALL  OF  THE
FOLLOWING  REQUIREMENTS:  (I)  THE  RELATED MEMBER WAS SUBJECT TO TAX IN
THIS STATE OR ANOTHER STATE OR POSSESSION OF  THE  UNITED  STATES  OR  A
FOREIGN  NATION  OR SOME COMBINATION THEREOF ON A TAX BASE THAT INCLUDED
THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER; (II)  THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED  OR  INCURRED  SUCH  PORTION  TO  A PERSON THAT IS NOT A RELATED
MEMBER; AND (III) THE TRANSACTION GIVING RISE  TO  THE  ROYALTY  PAYMENT
BETWEEN  THE  TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR A VALID
BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX   INCLUDED THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION SIX HUNDRED ONE  OF  THIS  ARTICLE
FOR THE TAXABLE YEAR.
  (III)  THE  ADJUSTMENT  REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN  THE  FORM  SPECIFIED BY THE COMMISSIONER, THAT: (I) THE ROYALTY
PAYMENT WAS PAID, ACCRUED OR INCURRED  TO  A  RELATED  MEMBER  ORGANIZED
UNDER  THE  LAWS  OF  A  COUNTRY  OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED  IN  SUCH  COUNTRY AT AN EFFECTIVE TAX RATE AT LEAST EQUAL TO THAT
IMPOSED BY THIS STATE; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED  OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF  ALTERNATIVE  ADJUSTMENTS OR COMPUTATIONS.   THE COMMISSIONER MAY, IN
HIS OR HER DISCRETION, AGREE TO THE APPLICATION OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 6. Paragraph 17 of subsection (e) of section 1453 of the tax law  is
REPEALED.

S. 2609                            26                            A. 3009

  S  7.  Subsection  (r)  of  section 1453 of the tax law, as amended by
section 5 of part M of chapter 686 of the laws of 2003, subparagraph (A)
of paragraph 2 as amended by section 5 of part J of chapter  60  of  the
laws of 2007, is amended to read as follows:
  (r)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related  member  [or  members.  For  purposes  of  this
subsection,  the  term  related member or members means a person, corpo-
ration, or other entity, including an entity that is treated as a  part-
nership  or other pass-through vehicle for purposes of federal taxation,
whether such person, corporation or entity is a taxpayer or  not,  where
one  such  person,  corporation,  or  entity, or set of related persons,
corporations or entities, directly or  indirectly  owns  or  controls  a
controlling  interest  in  another  entity.  Such entity or entities may
include all taxpayers under article nine, nine-A, thirteen,  twenty-two,
thirty-two,  thirty-three  or thirty-three-A of this chapter].  "RELATED
MEMBER" MEANS A RELATED PERSON AS DEFINED IN SUBPARAGRAPH (C)  OF  PARA-
GRAPH  THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE
INTERNAL REVENUE CODE, EXCEPT THAT "FIFTY PERCENT" SHALL BE  SUBSTITUTED
FOR "TEN PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY STATE OR U.S.  POSSESSION, THE  MAXIMUM  STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-
DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET
INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER
WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER  ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF  TAX  IMPOSED  BY  SAID
JURISDICTION  SHALL  BE  DECREASED  TO REFLECT THE STATUTORY RATE OF TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by the commissioner, and [includes] INCLUDE amounts allowable as  inter-
est  deductions  under  section  one hundred sixty-three of the internal
revenue code to the extent such amounts are directly or indirectly  for,
related  to  or  in connection with the acquisition, use, maintenance or
management, ownership, sale, exchange or disposition of such  intangible
assets.

S. 2609                            27                            A. 3009

  (D)  Valid  business  purpose. A valid business purpose is one or more
business purposes, other than the avoidance or  reduction  of  taxation,
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in a combined return with a related member pursuant to subsection (f) of
section  fourteen  hundred sixty-two of this article, for the purpose of
computing entire net income, a taxpayer must add back  royalty  payments
[to  a]  DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN CONNECTION
WITH ONE OR MORE DIRECT  OR  INDIRECT  TRANSACTIONS  WITH  ONE  OR  MORE
related  [member]  MEMBERS during the taxable year to the extent deduct-
ible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income, a taxpayer shall be allowed to deduct royalty payments  directly
or  indirectly received from a related member during the taxable year to
the extent included in the taxpayer's federal taxable income unless such
royalty payments would not be required to be added back under  paragraph
two  of  this  subsection  or  other similar provision in this chapter.]
EXCEPTIONS. (I) THE ADJUSTMENT REQUIRED IN  THIS  SUBSECTION  SHALL  NOT
APPLY  TO  THE  PORTION  OF THE ROYALTY PAYMENT THAT THE TAXPAYER ESTAB-
LISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE  AND  IN  THE  FORM
SPECIFIED  BY THE COMMISSIONER, MEETS ALL OF THE FOLLOWING REQUIREMENTS:
(I) THE RELATED MEMBER WAS SUBJECT TO TAX IN THIS STATE OR ANOTHER STATE
OR POSSESSION OF THE UNITED STATES OR A FOREIGN NATION OR SOME  COMBINA-
TION  THEREOF  ON  A  TAX  BASE  THAT INCLUDED THE ROYALTY PAYMENT PAID,
ACCRUED OR INCURRED BY THE TAXPAYER; (II) THE RELATED MEMBER DURING  THE
SAME  TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID, ACCRUED OR INCURRED SUCH
PORTION TO A PERSON THAT IS NOT A RELATED MEMBER; AND (III)  THE  TRANS-
ACTION  GIVING  RISE TO THE ROYALTY PAYMENT BETWEEN THE TAXPAYER AND THE
RELATED MEMBER WAS UNDERTAKEN FOR A VALID BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION  FOURTEEN  HUNDRED  FIFTY-FIVE  OF
THIS ARTICLE FOR THE TAXABLE YEAR.

S. 2609                            28                            A. 3009

  (III)  THE  ADJUSTMENT  REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN  THE  FORM  SPECIFIED BY THE COMMISSIONER, THAT: (I) THE ROYALTY
PAYMENT WAS PAID, ACCRUED OR INCURRED  TO  A  RELATED  MEMBER  ORGANIZED
UNDER  THE  LAWS  OF  A  COUNTRY  OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY THIS STATE; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 8. Paragraph 14 of subdivision (b) of section 1503 of the  tax  law,
as  amended  by  section 7 of part M of chapter 686 of the laws of 2003,
clause (i) of subparagraph (B) as amended by section  6  of  part  J  of
chapter 60 of the laws of 2007, is amended to read as follows:
  (14)  Related  members  expense  add back [and income exclusion].  (A)
Definitions. (i) Related member [or members. For purposes of this  para-
graph,  the  term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers  under article nine, nine-A, thirteen, twenty-two, thirty-two,
thirty-three or thirty-three-A of this chapter]. "RELATED MEMBER"  MEANS
A  RELATED  PERSON  AS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVEN-
UE CODE, EXCEPT THAT "FIFTY  PERCENT"  SHALL  BE  SUBSTITUTED  FOR  "TEN
PERCENT".
  (ii)  [Controlling  interest. A controlling interest shall mean (I) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (II) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY STATE OR U.S. POSSESSION,  THE  MAXIMUM  STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-
DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET
INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER

S. 2609                            29                            A. 3009

WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER  ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING  INTANGIBLE PROPERTY OR COLLECTING  INTEREST  INCOME
IN  THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
JURISDICTION SHALL BE DECREASED TO REFLECT THE  STATUTORY  RATE  OF  TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (iii)   Royalty  payments.  Royalty  payments  are  payments  directly
connected to the acquisition, use, maintenance or management, ownership,
sale, exchange, or any other disposition of licenses, trademarks,  copy-
rights,  trade  names,  trade  dress,  service  marks, mask works, trade
secrets, patents and any other similar types  of  intangible  assets  as
determined by the commissioner, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (iv) Valid business purpose. A valid business purpose is one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (B) Royalty expense add backs. (i) Except where a taxpayer is included
in  a  combined return with a related member pursuant to subdivision (f)
of section fifteen hundred fifteen of this article, for the  purpose  of
computing  entire  net income, a taxpayer must add back royalty payments
[to a] DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED  IN  CONNECTION
WITH  ONE  OR  MORE  DIRECT  OR  INDIRECT  TRANSACTIONS WITH ONE OR MORE
related [member] MEMBERS during the taxable year to the  extent  deduct-
ible in calculating federal taxable income.
  (ii) [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (I)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (II) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (C) Royalty income exclusions. For the purpose of computing entire net
income, a taxpayer shall be allowed to deduct royalty payments  directly
or  indirectly received from a related member during the taxable year to
the extent included in the taxpayer's federal taxable income unless such
royalty payments would not be required to be added back  under  subpara-
graph (B) of this paragraph or other similar provision in this chapter.]
EXCEPTIONS.    (I)  THE  ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT
APPLY TO THE PORTION OF THE ROYALTY PAYMENT  THAT  THE  TAXPAYER  ESTAB-

S. 2609                            30                            A. 3009

LISHES,  BY  CLEAR  AND  CONVINCING EVIDENCE OF THE TYPE AND IN THE FORM
SPECIFIED BY THE COMMISSIONER, MEETS ALL OF THE FOLLOWING  REQUIREMENTS:
(A) THE RELATED MEMBER WAS SUBJECT TO TAX IN THIS STATE OR ANOTHER STATE
OR  POSSESSION OF THE UNITED STATES OR A FOREIGN NATION OR SOME COMBINA-
TION THEREOF ON A TAX BASE  THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,
ACCRUED  OR  INCURRED BY THE TAXPAYER; (B) THE RELATED MEMBER DURING THE
SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID, ACCRUED OR INCURRED  SUCH
PORTION  TO  A  PERSON  THAT IS NOT A RELATED MEMBER; AND (C) THE TRANS-
ACTION GIVING RISE TO THE ROYALTY PAYMENT BETWEEN THE TAXPAYER  AND  THE
RELATED MEMBER WAS UNDERTAKEN FOR A VALID BUSINESS PURPOSE.
  (II)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (B) THE TAX BASE FOR SAID  TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED OR INCURRED BY THE TAXPAYER; AND (C) THE AGGREGATE EFFEC-
TIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDICTIONS IS
NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT APPLIED TO
THE TAXPAYER UNDER SECTION FIFTEEN HUNDRED TWO, FIFTEEN  HUNDRED  TWO-A,
OR FIFTEEN HUNDRED TWO-B OF THIS ARTICLE FOR THE TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE ROYALTY PAYMENT
WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER  ORGANIZED  UNDER  THE
LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (B) THE RELATED MEMBER'S
INCOME  FROM  THE  TRANSACTION WAS SUBJECT TO A COMPREHENSIVE INCOME TAX
TREATY BETWEEN SUCH COUNTRY AND  THE  UNITED  STATES;  (C)  THE  RELATED
MEMBER  WAS  SUBJECT  TO  TAX  IN  A  FOREIGN  NATION ON A TAX BASE THAT
INCLUDED THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE  TAXPAYER;
(D)  THE  RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS TAXED IN SUCH
COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO  THAT  IMPOSED  BY
THIS  STATE;  AND  (E) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED
PURSUANT TO A TRANSACTION THAT  WAS  UNDERTAKEN  FOR  A  VALID  BUSINESS
PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 9. Subdivision (e) of section 11-506 of the administrative  code  of
the city of New York, as added by section 17 of part M of chapter 686 of
the  laws  of 2003 and as relettered by chapter 633 of the laws of 2005,
is amended to read as follows:
  (e) Related members expense add back  [and  income  exclusion].    (1)
Definitions. (A) Related member [or members. For purposes of this subdi-
vision,  the term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers  under this title]. "RELATED MEMBER" MEANS A RELATED PERSON AS

S. 2609                            31                            A. 3009

DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY
THE CITY ON OR MEASURED BY A RELATED MEMBER'S NET INCOME  MULTIPLIED  BY
THE  APPORTIONMENT  PERCENTAGE, IF ANY, APPLICABLE TO THE RELATED MEMBER
UNDER THE LAWS OF SAID JURISDICTION. FOR PURPOSES  OF  THIS  DEFINITION,
THE  EFFECTIVE  RATE  OF  TAX  AS  TO ANY CITY IS ZERO WHERE THE RELATED
MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A COMBINED
OR CONSOLIDATED RETURN INCLUDING  BOTH  THE  TAXPAYER  AND  THE  RELATED
MEMBER  WHERE  THE  REPORTED  TRANSACTIONS  BETWEEN THE TAXPAYER AND THE
RELATED MEMBER ARE ELIMINATED OR OFFSET.  ALSO,  FOR  PURPOSES  OF  THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A  RELATED  MEMBER'S  NET  INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR
SIMILAR ADJUSTMENT THAT IS DEPENDENT  UPON  THE  RELATED  MEMBER  EITHER
MAINTAINING  OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING INTEREST
INCOME IN THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED  BY  SAID
CITY  SHALL  BE  DECREASED  TO  REFLECT  THE  STATUTORY RATE OF TAX THAT
APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH  CREDIT  OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by the commissioner of finance, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2)  Royalty expense add backs. (A) For the purpose of computing unin-
corporated business entire net income, a taxpayer must add back  royalty
payments  [to  a]  DIRECTLY  OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN
CONNECTION WITH ONE OR MORE DIRECT OR INDIRECT TRANSACTIONS WITH ONE  OR
MORE  related  [member]  MEMBERS  during  the taxable year to the extent
deductible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:

S. 2609                            32                            A. 3009

  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing unincorpo-
rated  business entire net income, a taxpayer shall be allowed to deduct
royalty payments directly or indirectly received from a  related  member
during the taxable year to the extent included in the taxpayer's federal
taxable  income unless such royalty payments would not be required to be
added back under paragraph two of  this  subdivision  or  other  similar
provision  in  this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT REQUIRED IN
THIS SUBDIVISION SHALL NOT APPLY TO THE PORTION OF THE  ROYALTY  PAYMENT
THAT  THE  TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS ALL
OF THE FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX
IN THIS CITY OR ANOTHER CITY WITHIN  THE  UNITED  STATES  OR  A  FOREIGN
NATION  OR  SOME  COMBINATION  THEREOF  ON  A TAX BASE THAT INCLUDED THE
ROYALTY PAYMENT PAID, ACCRUED OR INCURRED  BY  THE  TAXPAYER;  (II)  THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED  OR  INCURRED  SUCH  PORTION  TO  A PERSON THAT IS NOT A RELATED
MEMBER; AND (III) THE TRANSACTION GIVING RISE  TO  THE  ROYALTY  PAYMENT
BETWEEN  THE  TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR A VALID
BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL  NOT  APPLY  IF
THE  TAXPAYER  ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE
AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I)  THE
RELATED  MEMBER  WAS  SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME IN
THIS CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME  COMBINATION
THEREOF;  (II)  THE  TAX  BASE FOR SAID TAX INCLUDED THE ROYALTY PAYMENT
PAID, ACCRUED OR INCURRED BY  THE  TAXPAYER;  AND  (III)  THE  AGGREGATE
EFFECTIVE  RATE  OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDIC-
TIONS IS NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF  TAX  THAT
APPLIED  TO  THE  TAXPAYER  UNDER SECTION 11-503 OF THIS CHAPTER FOR THE
TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT  APPLY  IF
THE  TAXPAYER  ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE
AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I)  THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED  UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY  THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL  NOT  APPLY  IF
THE  TAXPAYER  AND  THE  COMMISSIONER OF FINANCE AGREE IN WRITING TO THE
APPLICATION OR USE  OF  ALTERNATIVE  ADJUSTMENTS  OR  COMPUTATIONS.  THE

S. 2609                            33                            A. 3009

COMMISSIONER  OF  FINANCE  MAY,  IN  HIS OR HER DISCRETION, AGREE TO THE
APPLICATION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR
SHE CONCLUDES THAT IN THE ABSENCE OF SUCH AGREEMENT THE  INCOME  OF  THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S 10. Paragraph (n) of subdivision 8 of section 11-602 of the adminis-
trative code of the city of New York, as amended by section 19 of part M
of chapter 686 of the laws of 2003, is amended to read as follows:
  (n)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related member [or members. For purposes of this  para-
graph,  the  term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers  under this title]. "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY
THE  CITY  ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED BY
THE APPORTIONMENT PERCENTAGE, IF ANY, APPLICABLE TO THE  RELATED  MEMBER
UNDER  THE  LAWS  OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFINITION,
THE EFFECTIVE RATE OF TAX AS TO ANY  CITY  IS  ZERO  WHERE  THE  RELATED
MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A COMBINED
OR  CONSOLIDATED  RETURN  INCLUDING  BOTH  THE  TAXPAYER AND THE RELATED
MEMBER WHERE THE REPORTED TRANSACTIONS  BETWEEN  THE  TAXPAYER  AND  THE
RELATED  MEMBER  ARE  ELIMINATED  OR  OFFSET. ALSO, FOR PURPOSES OF THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET  BY  A  CREDIT  OR
SIMILAR  ADJUSTMENT  THAT  IS  DEPENDENT  UPON THE RELATED MEMBER EITHER
MAINTAINING OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING  INTEREST
INCOME  IN  THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
CITY SHALL BE DECREASED TO  REFLECT  THE  STATUTORY  RATE  OF  TAX  THAT
APPLIES  TO  THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by the commissioner of finance, and [includes] INCLUDE amounts allowable
as interest deductions under section  one  hundred  sixty-three  of  the
internal  revenue  code to the extent such amounts are directly or indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance or management, ownership, sale, exchange or disposition of  such
intangible assets.

S. 2609                            34                            A. 3009

  (D)  Valid  business  purpose. A valid business purpose is one or more
business purposes, other than the avoidance or  reduction  of  taxation,
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) For the purpose of computing entire
net  income  or other applicable taxable basis, a taxpayer must add back
royalty payments  [to  a]  DIRECTLY  OR  INDIRECTLY  PAID,  ACCRUED,  OR
INCURRED  IN CONNECTION WITH ONE OR MORE DIRECT OR INDIRECT TRANSACTIONS
WITH ONE OR MORE related [member] MEMBERS during the taxable year to the
extent deductible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and  such  transaction  was  done for a valid business
purpose and the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income or other taxable basis, a taxpayer shall  be  allowed  to  deduct
royalty  payments  directly or indirectly received from a related member
during the taxable year to the extent included in the taxpayer's federal
taxable income unless such royalty payments would not be required to  be
added  back  under  subparagraph  two of this paragraph or other similar
provision in this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT  REQUIRED  IN
THIS  PARAGRAPH  SHALL  NOT  APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS ALL
OF THE FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX
IN  THIS  CITY  OR  ANOTHER  CITY  WITHIN THE UNITED STATES OR A FOREIGN
NATION OR SOME COMBINATION THEREOF ON  A  TAX  BASE  THAT  INCLUDED  THE
ROYALTY  PAYMENT  PAID,  ACCRUED  OR  INCURRED BY THE TAXPAYER; (II) THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED OR INCURRED SUCH PORTION TO A  PERSON  THAT  IS  NOT  A  RELATED
MEMBER;  AND  (III)  THE  TRANSACTION GIVING RISE TO THE ROYALTY PAYMENT
BETWEEN THE TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR  A  VALID
BUSINESS PURPOSE.
  (II)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE  FORM  SPECIFIED  BY  THE COMMISSIONER OF FINANCE, THAT: (I) THE
RELATED MEMBER WAS SUBJECT TO TAX ON OR MEASURED BY ITS  NET  INCOME  IN
THIS  CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION 11-604 OF THIS SUBCHAPTER FOR  THE
TAXABLE YEAR.

S. 2609                            35                            A. 3009

  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER  OF  FINANCE,  THAT:  (I)  THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED  UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY  THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF  THE
TAXPAYER  AND THE COMMISSIONER OF FINANCE AGREE IN WRITING TO THE APPLI-
CATION OR USE OF ALTERNATIVE ADJUSTMENTS OR  COMPUTATIONS.  THE  COMMIS-
SIONER  OF  FINANCE MAY, IN HIS OR HER DISCRETION, AGREE TO THE APPLICA-
TION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN  HE  OR  SHE
CONCLUDES  THAT  IN  THE  ABSENCE  OF  SUCH  AGREEMENT THE INCOME OF THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S 11. Subdivision (q) of section 11-641 of the administrative code  of
the city of New York, as added by section 21 of part M of chapter 686 of
the laws of 2003, is amended to read as follows:
  (q)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related member [or members. For purposes of this subdi-
vision, the term related member or members means a person,  corporation,
or other entity, including an entity that is treated as a partnership or
other  pass-through  vehicle  for  purposes of federal taxation, whether
such person, corporation or entity is a taxpayer or not, where one  such
person,  corporation, or entity, or set of related persons, corporations
or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all
taxpayers under this title].  "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation,  trust  or other entity.] EFFECTIVE RATE OF TAX.  "EFFECTIVE RATE
OF TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED
BY THE CITY ON OR MEASURED BY A RELATED MEMBER'S NET  INCOME  MULTIPLIED
BY  THE  APPORTIONMENT  PERCENTAGE,  IF  ANY,  APPLICABLE TO THE RELATED
MEMBER UNDER THE LAWS OF SAID JURISDICTION. FOR PURPOSES OF  THIS  DEFI-
NITION,  THE  EFFECTIVE  RATE  OF  TAX  AS TO ANY CITY IS ZERO WHERE THE
RELATED MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON  A
COMBINED  OR  CONSOLIDATED  RETURN  INCLUDING  BOTH THE TAXPAYER AND THE
RELATED MEMBER WHERE THE REPORTED TRANSACTIONS BETWEEN THE TAXPAYER  AND
THE  RELATED MEMBER ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET  BY  A  CREDIT  OR

S. 2609                            36                            A. 3009

SIMILAR  ADJUSTMENT  THAT  IS  DEPENDENT  UPON THE RELATED MEMBER EITHER
MAINTAINING OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING  INTEREST
INCOME  IN  THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
CITY  SHALL  BE  DECREASED  TO  REFLECT  THE  STATUTORY RATE OF TAX THAT
APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH  CREDIT  OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by the commissioner of finance, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) For the purpose of computing entire
net income, a taxpayer must add back royalty payments [to a] DIRECTLY OR
INDIRECTLY  PAID,  ACCRUED,  OR  INCURRED IN CONNECTION WITH ONE OR MORE
DIRECT OR INDIRECT  TRANSACTIONS  WITH  ONE  OR  MORE  related  [member]
MEMBERS  during the taxable year to the extent deductible in calculating
federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income, a taxpayer shall be allowed to deduct royalty payments  directly
or  indirectly received from a related member during the taxable year to
the extent included in the taxpayer's federal taxable income unless such
royalty payments would not be required to be added back under  paragraph
two  of  this  subdivision  or other similar provision in this chapter.]
EXCEPTIONS. (I) THE ADJUSTMENT REQUIRED IN THIS  SUBDIVISION  SHALL  NOT
APPLY  TO  THE  PORTION  OF THE ROYALTY PAYMENT THAT THE TAXPAYER ESTAB-
LISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE  AND  IN  THE  FORM
SPECIFIED  BY  THE  COMMISSIONER  OF FINANCE, MEETS ALL OF THE FOLLOWING
REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX IN THIS CITY  OR
ANOTHER CITY WITHIN THE UNITED STATES OR A FOREIGN NATION OR SOME COMBI-
NATION  THEREOF  ON  A  TAX BASE THAT INCLUDED THE ROYALTY PAYMENT PAID,
ACCRUED OR INCURRED BY THE TAXPAYER; (II) THE RELATED MEMBER DURING  THE

S. 2609                            37                            A. 3009

SAME  TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID, ACCRUED OR INCURRED SUCH
PORTION TO A PERSON THAT IS NOT A RELATED MEMBER; AND (III)  THE  TRANS-
ACTION  GIVING  RISE TO THE ROYALTY PAYMENT BETWEEN THE TAXPAYER AND THE
RELATED MEMBER WAS UNDERTAKEN FOR A VALID BUSINESS PURPOSE.
  (II)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE
RELATED MEMBER WAS SUBJECT TO TAX ON OR MEASURED BY ITS  NET  INCOME  IN
THIS  CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION 11-643.5  OF  THIS  PART  FOR  THE
TAXABLE YEAR.
  (III)  THE  ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II)  THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE  RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX BASE
THAT INCLUDED THE ROYALTY PAYMENT  PAID,  ACCRUED  OR  INCURRED  BY  THE
TAXPAYER;  (IV)  THE  RELATED  MEMBER'S  INCOME FROM THE TRANSACTION WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED BY THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID,  ACCRUED  OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER AND THE COMMISSIONER OF FINANCE AGREE  IN  WRITING  TO  THE
APPLICATION  OR  USE  OF  ALTERNATIVE  ADJUSTMENTS  OR COMPUTATIONS. THE
COMMISSIONER OF FINANCE MAY, IN HIS OR  HER  DISCRETION,  AGREE  TO  THE
APPLICATION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR
SHE  CONCLUDES  THAT  IN THE ABSENCE OF SUCH AGREEMENT THE INCOME OF THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S 12. Subdivision (t) of section 11-1712 of the administrative code of
the city of New York, as added by section 26 of part M of chapter 686 of
the laws of 2003, is amended to read as follows:
  (t) Related members expense add back  [and  income  exclusion].    (1)
Definitions. (A) Related member [or members. For purposes of this subdi-
vision,  the term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation or entity, or set of related  persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers under this title].  "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED  IN  SUBPARAGRAPH  (C)  OF  PARAGRAPH THREE OF SUBSECTION (B) OF
SECTION FOUR HUNDRED SIXTY-FIVE OF THE  INTERNAL  REVENUE  CODE,  EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in

S. 2609                            38                            A. 3009

such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY
THE  CITY  ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED BY
THE APPORTIONMENT PERCENTAGE, IF ANY, APPLICABLE TO THE  RELATED  MEMBER
UNDER  THE  LAWS  OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFINITION,
THE EFFECTIVE RATE OF TAX AS TO ANY  CITY  IS  ZERO  WHERE  THE  RELATED
MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A COMBINED
OR  CONSOLIDATED  RETURN  INCLUDING  BOTH  THE  TAXPAYER AND THE RELATED
MEMBER WHERE THE REPORTED TRANSACTIONS  BETWEEN  THE  TAXPAYER  AND  THE
RELATED  MEMBER  ARE  ELIMINATED  OR  OFFSET. ALSO, FOR PURPOSES OF THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET  BY  A  CREDIT  OR
SIMILAR  ADJUSTMENT  THAT  IS  DEPENDENT  UPON THE RELATED MEMBER EITHER
MAINTAINING OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING  INTEREST
INCOME  IN  THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
CITY SHALL BE DECREASED TO  REFLECT  THE  STATUTORY  RATE  OF  TAX  THAT
APPLIES  TO  THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by the state  commissioner  of  taxation  and  finance,  and  [includes]
INCLUDE  amounts  allowable  as  interest  deductions  under section one
hundred sixty-three of the internal revenue  code  to  the  extent  such
amounts are directly or indirectly for, related to or in connection with
the  acquisition,  use,  maintenance  or  management,  ownership,  sale,
exchange or disposition of such intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2)  Royalty  expense add backs. (A) For the purpose of computing city
adjusted gross income, a taxpayer must add back royalty payments [to  a]
DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN CONNECTION WITH ONE
OR  MORE  DIRECT  OR  INDIRECT  TRANSACTIONS  WITH  ONE  OR MORE related
[member] MEMBERS during the taxable year to  the  extent  deductible  in
calculating federal taxable income.
  (B)  [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (i) the related member during the same taxable year directly or  indi-
rectly  paid  or incurred the amount to a person or entity that is not a
related member, and such transaction was done for a valid  business  and
the payments are made at arm's length;
  (ii)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and

S. 2609                            39                            A. 3009

the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (3)  Royalty  income exclusions. (A) For the purpose of computing city
adjusted gross income, a taxpayer shall be  allowed  to  deduct  royalty
payments  directly  or  indirectly received from a related member during
the taxable year to the extent included in the taxpayer's federal  taxa-
ble  income  unless  such  royalty  payments would not be required to be
added back under paragraph two of  this  subdivision  or  other  similar
provision  in  this title.] EXCEPTIONS.   (I) THE ADJUSTMENT REQUIRED IN
THIS SUBDIVISION SHALL NOT APPLY TO THE PORTION OF THE  ROYALTY  PAYMENT
THAT  THE  TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS ALL
OF THE FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX
IN THIS CITY OR ANOTHER CITY WITHIN  THE  UNITED  STATES  OR  A  FOREIGN
NATION  OR  SOME  COMBINATION  THEREOF  ON  A TAX BASE THAT INCLUDED THE
ROYALTY PAYMENT PAID, ACCRUED OR INCURRED  BY  THE  TAXPAYER;  (II)  THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED  OR  INCURRED  SUCH  PORTION  TO  A PERSON THAT IS NOT A RELATED
MEMBER; AND (III) THE TRANSACTION GIVING RISE  TO  THE  ROYALTY  PAYMENT
BETWEEN  THE  TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR A VALID
BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL  NOT  APPLY  IF
THE  TAXPAYER  ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE
AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I)  THE
RELATED  MEMBER  WAS  SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME IN
THIS CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME  COMBINATION
THEREOF;  (II)  THE  TAX BASE FOR SAID TAX  INCLUDED THE ROYALTY PAYMENT
PAID, ACCRUED OR INCURRED BY  THE  TAXPAYER;  AND  (III)  THE  AGGREGATE
EFFECTIVE  RATE  OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDIC-
TIONS IS NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF  TAX  THAT
APPLIED  TO  THE  TAXPAYER UNDER SECTION 11-1701 OF THIS CHAPTER FOR THE
TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT  APPLY  IF
THE  TAXPAYER  ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE
AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I)  THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED  UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY  THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL  NOT  APPLY  IF
THE  TAXPAYER  AND  THE  COMMISSIONER OF FINANCE AGREE IN WRITING TO THE
APPLICATION OR USE  OF  ALTERNATIVE  ADJUSTMENTS  OR  COMPUTATIONS.  THE
COMMISSIONER  OF  FINANCE  MAY,  IN  HIS OR HER DISCRETION, AGREE TO THE
APPLICATION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR
SHE CONCLUDES THAT IN THE ABSENCE OF SUCH AGREEMENT THE  INCOME  OF  THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S  13. This act shall take effect immediately and shall apply to taxa-
ble years beginning on or after January 1, 2013.

S. 2609                            40                            A. 3009

                                 PART F

  Section 1. Subparagraph (A) of paragraph 1,  and paragraphs 4 and 5 of
subsection (oo) of section 606 of the tax law, subparagraph (A) of para-
graph 1 as amended by chapter 472 of the laws of 2010 and paragraph 4 as
amended and paragraph 5 as added by chapter 239 of the laws of 2009, are
amended to read as follows:
  (A)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first,  two  thousand  [fifteen]  TWENTY,  a
taxpayer  shall be allowed a credit as hereinafter provided, against the
tax imposed by this article, in an amount equal to one  hundred  percent
of the amount of credit allowed the taxpayer with respect to a certified
historic structure under subsection (a) (2) of section 47 of the federal
internal  revenue  code  with  respect to a certified historic structure
located within the state. Provided, however, the credit shall not exceed
five million dollars. For taxable years beginning on  or  after  January
first,  two  thousand  [fifteen]  TWENTY,  a taxpayer shall be allowed a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2) of section 47 of the federal internal revenue code  with  respect
to  a  certified  historic structure located within the state; provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4) If the amount of the credit [allowable under this  subsection  for
any  taxable  year  shall  exceed  the taxpayer's tax for such year, the
excess may be carried over to the following year or years,  and  may  be
applied against the taxpayer's tax for such year or years] ALLOWED UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR
SUCH  YEAR,  THE  EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS  OF  SECTION  SIX
HUNDRED  EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST
SHALL BE PAID THEREON.
  (5) To be eligible for the credit allowable under this subsection  the
rehabilitation  project  shall  be  in whole or in part [a targeted area
residence within the meaning of section 143(j) of the  internal  revenue
code  or]  located within a census tract which is identified as being at
or below one hundred percent of the state median family income  [in  the
most  recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE FROM
THE AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND  SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 2. Subparagraph (A) of paragraph 1, and paragraphs 4 and 5 of subdi-
vision 40 of section 210 of the tax law, subparagraph (A) of paragraph 1
and  paragraph  4  as amended and paragraph 5 as added by chapter 472 of
the laws of 2010, are amended to read as follows:
  (A) For taxable years beginning on or after January first,  two  thou-
sand  ten  and  before  January  first, two thousand [fifteen] TWENTY, a
taxpayer shall be allowed a credit as hereinafter provided, against  the
tax  imposed  by this article, in an amount equal to one hundred percent
of the amount of credit allowed the taxpayer with respect to a certified
historic structure under subsection (a) (2) of section 47 of the federal
internal revenue code with respect to  a  certified  historic  structure
located within the state. Provided, however, the credit shall not exceed
five  million  dollars.  For taxable years beginning on or after January
first, two thousand [fifteen] TWENTY, a  taxpayer  shall  be  allowed  a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the

S. 2609                            41                            A. 3009

taxpayer with respect to a certified historic structure under subsection
(a)(2)  of  section 47 of the federal internal revenue code with respect
to a certified historic structure located within  the  state.  Provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4)  The  credit  allowed  under this subdivision for any taxable year
shall not reduce the tax due for such year to less than  the  higher  of
the  amounts  prescribed in paragraphs (c) and (d) of subdivision one of
this section. However, if the amount of the credit [allowable under this
subdivision for any taxable year shall exceed  the  taxpayer's  tax  for
such  year,  the  excess  may  be  carried over to the following year or
years, and may be deducted from the taxpayer's  tax  for  such  year  or
years]  ALLOWED  UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCTIBLE  IN  SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX OF THIS  CHAPTER.    PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (5) To be eligible for the credit allowable  under  this  subdivision,
the rehabilitation project shall be in whole or in part [a targeted area
residence  within  the meaning of section 143(j) of the internal revenue
code or] located within a census tract which is identified as  being  at
or  below  one hundred percent of the state median family income [in the
most recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE  FROM
THE  AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 3. Subparagraph (A) of paragraph  1,  and  paragraphs  4  and  5  of
subsection  (u)  of section 1456 of the tax law, as added by chapter 472
of the laws of 2010, are amended to read as follows:
  (A) For taxable years beginning on or after January first,  two  thou-
sand  ten  and  before  January  first, two thousand [fifteen] TWENTY, a
taxpayer shall be allowed a credit as hereinafter provided, against  the
tax  imposed  by this article, in an amount equal to one hundred percent
of the amount of credit allowed the taxpayer with respect to a certified
historic structure under subsection (a)(2) of section 47 of the  federal
internal  revenue  code  with  respect to a certified historic structure
located within the state. Provided, however, the credit shall not exceed
five million dollars. For taxable years beginning on  or  after  January
first,  two  thousand  [fifteen]  TWENTY,  a taxpayer shall be allowed a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2) of section 47 of the federal internal revenue code  with  respect
to  a  certified  historic structure located within the state. Provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4) The credit allowed under this  subsection  for  any  taxable  year
shall not reduce the tax to less than the dollar amount fixed as a mini-
mum tax by subsection (b) of section fourteen hundred fifty-five of this
article.  [If  the  amount of credit allowable under this subsection for
any taxable year reduces the tax to  such  amount,  the  excess  may  be
carried  over  to  the following year or years, and may be deducted from
the taxpayer's tax for such year or years.] HOWEVER, IF  THE  AMOUNT  OF
CREDIT  ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCTIBLE  IN  SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND

S. 2609                            42                            A. 3009

EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (5)  To be eligible for the credit allowable under this subsection the
rehabilitation project shall be in whole or in  part  [a  targeted  area
residence  within  the meaning of section 143(j) of the internal revenue
code or] located within a census tract which is identified as  being  at
or  below  one hundred percent of the state median family income [in the
most recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE  FROM
THE  AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 4. Subparagraph (A) of paragraph 1, and paragraphs 4 and 5 of subdi-
vision (y) of section 1511 of the tax law, as added by  chapter  472  of
the laws of 2010, are amended to read as follows:
  (A)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first,  two  thousand  [fifteen]  TWENTY,  a
taxpayer  shall be allowed a credit as hereinafter provided, against the
tax imposed by this article, in an amount equal to one  hundred  percent
of the amount of credit allowed the taxpayer with respect to a certified
historic  structure under subsection (a)(2) of section 47 of the federal
internal revenue code with respect to  a  certified  historic  structure
located within the state. Provided, however, the credit shall not exceed
five  million  dollars.  For taxable years beginning on or after January
first, two thousand [fifteen] TWENTY, a  taxpayer  shall  be  allowed  a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2)  of  section 47 of the federal internal revenue code with respect
to a certified historic structure located within  the  state.  Provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4)  The  credit  allowed  under this subdivision for any taxable year
shall not reduce the tax due for such year  to  less  than  the  minimum
fixed  by  paragraph  four of subdivision (a) of section fifteen hundred
two or section fifteen hundred  two-a  of  this  article,  whichever  is
applicable.   [If the amount of the credit allowable under this subdivi-
sion for any taxable year reduces the tax to such amount, the excess may
be carried over to the following year or years, and may be deducted from
the taxpayer's tax for such year or years.] HOWEVER, IF  THE  AMOUNT  OF
CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCTIBLE  IN  SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (5) To be eligible for the credit allowable  under  this  subdivision,
the rehabilitation project shall be in whole or in part [a targeted area
residence  within  the meaning of section 143(j) of the internal revenue
code or] located within a census tract which is identified as  being  at
or  below  one hundred percent of the state median family income [in the
most recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE  FROM
THE  AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 5. This act shall take effect immediately and shall apply to taxable
years beginning on and after  January  1,  2013;  provided  however  the
amendments  to  paragraph 4 of subsection (oo) of section 606 of the tax

S. 2609                            43                            A. 3009

law made by section one of this act, the amendments to  paragraph  4  of
subdivision 40 of section 210 of the tax law made by section two of this
act,  the  amendments to paragraph 4 of section 1456 of the tax law made
by  section  three  of  this  act  and  the amendments to paragraph 4 of
section 1511 of the tax law made by section four of this act shall  take
effect January 1, 2015 and shall apply to taxable years beginning on and
after January 1, 2015.

                                 PART G

  Section  1.  Section 187-b of the tax law, as amended by section 14 of
part W-1 of chapter 109 of the laws of  2006,  is  amended  to  read  as
follows:
  S  187-b. [Alternative fuels credit] ELECTRIC VEHICLE RECHARGING PROP-
ERTY CREDIT. 1. General. A taxpayer shall be allowed  a  credit,  to  be
credited  against  the  taxes imposed under sections one hundred eighty-
three, one hundred eighty-four, and  one  hundred  eighty-five  of  this
article.  Such  credit, to be computed as hereinafter provided, shall be
allowed  for  [alternative  fuel  vehicle  refueling]  ELECTRIC  VEHICLE
RECHARGING property placed in service during the taxable year. Provided,
however,  that  the  amount  of  such  credit  allowable against the tax
imposed by section one hundred eighty-four of this article shall be  the
excess  of  the  credit  allowed by this section over the amount of such
credit allowable against the tax imposed by section one hundred  eighty-
three of this article.
  2.  [Alternative  fuel  vehicle  refueling  property] ELECTRIC VEHICLE
RECHARGING PROPERTY.   The credit under this  section  for  [alternative
fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING property shall equal
FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOUSAND DOLLARS OR
fifty percent of the cost of any such property:
  (a) which is located in this state; [and]
  (b)  [for  which  a  credit  is  allowed under section thirty C of the
internal revenue code but not including alternative fuel vehicle refuel-
ing property relating to a qualified hybrid vehicle as such  vehicle  is
defined  in  subparagraph  (B)  of  paragraph three of subsection (p) of
section six hundred six of  this  chapter]  WHICH  CONSTITUTES  ELECTRIC
VEHICLE RECHARGING PROPERTY; AND
  (C)  FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM THE PROCEEDS OF
GRANTS, INCLUDING GRANTS FROM THE NEW YORK  STATE  ENERGY  RESEARCH  AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  3.  Definitions.  [(a)]  The term ["alternative fuel vehicle refueling
property"] "ELECTRIC VEHICLE RECHARGING PROPERTY" means [any such  prop-
erty  which  is  qualified within the meaning of section thirty C of the
internal revenue code, but shall not include  alternative  fuel  vehicle
refueling  property relating to a qualified hybrid vehicle as such vehi-
cle is defined in subparagraph (B) of paragraph three of subsection  (p)
of  section six hundred six of this chapter] ALL THE EQUIPMENT NEEDED TO
CONVEY ELECTRIC POWER FROM THE ELECTRIC GRID OR ANOTHER POWER SOURCE  TO
AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  [(b)  The  term "qualified hybrid vehicle" shall have the same meaning
as provided for under subparagraph (B) of paragraph three of  subsection
(p) of section six hundred six of this chapter.]
  4.  Carryovers.  In  no  event  shall the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable  minimum tax fixed by section one hundred eighty-three or one
hundred eighty-five of this article. If, however, the amount  of  credit

S. 2609                            44                            A. 3009

allowable  under  this  section  for any taxable year reduces the tax to
such amount, any amount of credit not deductible in  such  taxable  year
may  be  carried over to the following year or years and may be deducted
from the taxpayer's tax for such year or years.
  5.  Credit  recapture[;  Alternative fuel vehicle refueling property].
If, at any time before the end of its recovery period, [alternative fuel
vehicle refueling] ELECTRIC VEHICLE RECHARGING  property  ceases  to  be
qualified,  a  recapture  amount must be added back in the year in which
such cessation occurs.
  (i) Cessation of qualification. [Alternative  fuel  vehicle  refueling
property]  ELECTRIC  VEHICLE  RECHARGING PROPERTY ceases to be qualified
if:
  (I) the property no longer qualifies as [property described in section
thirty C of the internal revenue code] ELECTRIC VEHICLE RECHARGING PROP-
ERTY; or
  (II) fifty percent or more of the use of the  property  in  a  taxable
year is other than a trade or business in this state; or
  (III)  the  taxpayer  receiving the credit under this section sells or
disposes of the property and knows or has reason to know that the  prop-
erty will be used in a manner described in this subparagraph.
  (ii)  Recapture  amount.  The  recapture amount is equal to the credit
allowable under this section multiplied by a fraction, the numerator  of
which  is the total recovery period for the property minus the number of
recovery years prior to, but not including, the recapture year, and  the
denominator of which is the total recovery period.
  6.  Termination. The credit allowed by subdivision two of this section
shall not apply in taxable years beginning after December  thirty-first,
two thousand [ten] SEVENTEEN.
  S  2.  Subdivision  24  of  section  210 of the tax law, as amended by
section 15 of part W-1 of chapter 109 of the laws of 2006, is amended to
read as follows:
  24. [Alternative fuels] ELECTRIC VEHICLE RECHARGING  PROPERTY  credit.
(a)  General.  A  taxpayer  shall be allowed a credit, to be computed as
hereinafter provided, against  the  tax  imposed  by  this  article  for
[alternative fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING proper-
ty placed in service during the taxable year.
  (b)  [Alternative  fuel  vehicle  refueling property] ELECTRIC VEHICLE
RECHARGING PROPERTY.  The credit under this subdivision for [alternative
fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING property shall equal
FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOUSAND DOLLARS OR
fifty percent of the cost of any such property:
  (i) which is located in this state; [and]
  (ii) [for which a credit is allowed under  section  thirty  C  of  the
internal revenue code but not including alternative fuel refueling prop-
erty  relating  to a qualified hybrid vehicle as such vehicle is defined
in subparagraph (B) of paragraph three of subsection (p) of section  six
hundred  six of this chapter] WHICH IS ELECTRIC VEHICLE RECHARGING PROP-
ERTY; AND
  (III) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM  THE  PROCEEDS
OF  GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (c) Definitions. The term ["alternative fuel vehicle refueling proper-
ty"] "ELECTRIC VEHICLE RECHARGING PROPERTY"  means  [any  such  property
which  is qualified within the meaning of section thirty C of the inter-
nal revenue code but shall not include alternative fuel vehicle  refuel-
ing  property  relating to a qualified hybrid vehicle as such vehicle is

S. 2609                            45                            A. 3009

defined in subparagraph (B) of paragraph  three  of  subsection  (p)  of
section  six hundred six of this chapter] ALL OF THE EQUIPMENT NEEDED TO
CONVEY ELECTRIC POWER FROM THE ELECTRIC GRID OR ANOTHER POWER SOURCE  TO
AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  (d) Carryovers. In no event shall the credit under this subdivision be
allowed  in an amount which will reduce the tax payable to less than the
higher of the amounts prescribed in paragraphs (c) and (d)  of  subdivi-
sion one of this section. Provided, however, that if the amount of cred-
it allowable under this subdivision for any taxable year reduces the tax
to such amount, any amount of credit not deductible in such taxable year
may  be  carried over to the following year or years and may be deducted
from the taxpayer's tax for such year or years.
  (e) Credit recapture. [(i) Alternative fuel vehicle refueling  proper-
ty.] If, at any time before the end of its recovery period, [alternative
fuel  vehicle  refueling] ELECTRIC VEHICLE RECHARGING property ceases to
be qualified, a recapture amount must be added back in the year in which
such cessation occurs.
  (A) [Alternative fuel vehicle refueling] ELECTRIC  VEHICLE  RECHARGING
property ceases to be qualified if:
  (1) the property no longer qualifies as [property described in section
thirty C of the internal revenue code] ELECTRIC VEHICLE RECHARGING PROP-
ERTY; or
  (2) fifty percent or more of the use of the property in a taxable year
is other than in a trade or business in this state; or
  (3)  the taxpayer receiving the credit under this subdivision sells or
disposes of the property and knows or has reason to know that the  prop-
erty  will  be used in a manner described in clauses one and two of this
subparagraph.
  (B) Recapture amount. The recapture amount  is  equal  to  the  credit
allowable under this subdivision multiplied by a fraction, the numerator
of  which is the total recovery period for the property minus the number
of recovery years prior to, but not including, the recapture  year,  and
the denominator of which is the total recovery period.
  [(f)  Affiliates. (i) If a credit under this subdivision is allowed to
a taxpayer with respect to a taxable year,  the  action  taken  by  such
taxpayer which resulted in such credit being allowed thereto may, at the
election  of  the taxpayer and an affiliate thereof, be ascribed to such
affiliate. Where such affiliate, based on such  ascription,  is  allowed
such  credit  and  deducts from the tax otherwise due the amount of such
credit, such credit shall be deemed in all respects to have been allowed
to such affiliate, provided that any action or inaction by the  taxpayer
which  constitutes  an  event of recapture described in paragraph (e) of
this subdivision shall be ascribed to the affiliate and shall constitute
an event of recapture with respect to the credit allowed to  the  affil-
iate pursuant to this subdivision.
  (ii)  Notwithstanding  any  other provision of law to the contrary, in
the case of the credit provided for under this subdivision being allowed
to, or asserted to be allowed to, an affiliate, pursuant to subparagraph
(i) of this paragraph, the commissioner shall have the same powers  with
respect  to  examining  the  books and records of the taxpayer, and have
such other powers of investigation with respect to the taxpayer, as  are
afforded  under  this  chapter  with  respect  to  a  taxpayer which has
deducted the credit allowed under this section from tax  otherwise  due,
as  if  it  were  the  taxpayer  which had deducted such credit from tax
otherwise due.

S. 2609                            46                            A. 3009

  (iii) The term "affiliate" shall mean a corporation substantially  all
the  capital  stock  of  which is owned or controlled either directly or
indirectly by the taxpayer, or which owns or controls either directly or
indirectly substantially all the  capital  stock  of  the  taxpayer,  or
substantially  all  the  capital  stock  of which is owned or controlled
either directly or indirectly by interests which own or  control  either
directly  or  indirectly  substantially  all  the  capital  stock of the
taxpayer.]
  [(g)] (F) Termination. The credit allowed by  paragraph  (b)  of  this
subdivision  shall  not  apply in taxable years beginning after December
thirty-first, two thousand [ten] SEVENTEEN.
  S 3. Subsection (p) of section 606 of  the  tax  law,  as  amended  by
section 16 of part W-1 of chapter 109 of the laws of 2006, is amended to
read as follows:
  (p)  [Alternative  fuels] ELECTRIC VEHICLE RECHARGING PROPERTY credit.
(1) General. A taxpayer shall be allowed a credit,  to  be  computed  as
hereinafter  provided,  against  the  tax  imposed  by this article, for
[alternative fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING proper-
ty placed in service during the taxable year.
  (2) [Alternative fuel vehicle  refueling  property]  ELECTRIC  VEHICLE
RECHARGING  PROPERTY.   The credit under this subsection for [clean-fuel
vehicle refueling] ELECTRIC VEHICLE RECHARGING property shall equal  FOR
EACH  INSTALLATION  OF  PROPERTY  THE LESSER OF FIVE THOUSAND DOLLARS OR
fifty percent of the cost of any such property
  (A) which is located in this state [and];
  (B) [for which a credit is allowed  under  section  thirty  C  of  the
internal revenue code but not including alternative fuel vehicle refuel-
ing  property  relating to a qualified hybrid vehicle as such vehicle is
defined in subparagraph (B) of paragraph three of this subsection] WHICH
IS ELECTRIC VEHICLE RECHARGING PROPERTY; AND
  (C) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM THE PROCEEDS  OF
GRANTS,  INCLUDING  GRANTS  FROM  THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (3) Definitions. [(A)] The term ["alternative fuel  vehicle  refueling
property"]  "ELECTRIC VEHICLE RECHARGING PROPERTY" means [any such prop-
erty which is qualified within the meaning of section thirty  C  of  the
internal  revenue code, but such term shall not include alternative fuel
vehicle refueling property relating to a  qualified  hybrid  vehicle  as
such  vehicle  is defined in subparagraph (B) of this paragraph] ALL THE
EQUIPMENT NEEDED TO CONVEY ELECTRIC POWER  FROM  THE  ELECTRIC  GRID  OR
ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  [(B)  The  term  "qualified  hybrid vehicle" means a motor vehicle, as
defined in section one hundred twenty-five of the  vehicle  and  traffic
law,, that:
  (i) draws propulsion energy from both
  (a)  an internal combustion engine (or heat engine that uses combusti-
ble fuel); and
  (b) an energy storage device; and
  (ii) employs a regenerative vehicle braking system that recovers waste
energy to charge such energy storage device.]
  (4)  Carryovers.  If  the  amount  of  credit  allowable  under   this
subsection shall exceed the taxpayer's tax for such year, the excess may
be  carried over to the following year or years and may be deducted from
the taxpayer's tax for such year or years.
  (5) Credit recapture. (A) [Vehicles.

S. 2609                            47                            A. 3009

  (i) If, within three full years from the date a qualified hybrid vehi-
cle or a vehicle of which alternative fuel vehicle property is a part is
placed in service, such qualified hybrid vehicle  or  vehicle  of  which
alternative  fuel vehicle property is a part] IF, AT ANY TIME BEFORE THE
END  OF ITS RECOVERY PERIOD, ELECTRIC VEHICLE RECHARGING PROPERTY ceases
to be qualified, a recapture amount must be added back in the  tax  year
in which such cessation occurs.
  [(ii)] (B) Cessation of qualification. [(I) A qualified hybrid vehicle
ceases to be qualified if
  (a)  it  is  modified  by  the taxpayer so that it no longer meets the
requirements of a qualified hybrid vehicle as  defined  in  subparagraph
(B) of paragraph three of this subsection.
  (b)  the  taxpayer receiving the credit under this subsection sells or
disposes of the vehicle and knows or has reason to know that the vehicle
will be so modified.
  (B) Alternative fuel vehicle refueling property. (i) If, at  any  time
before  the end of its recovery period, alternative fuel vehicle refuel-
ing property ceases to be qualified, a recapture amount  must  be  added
back in the year in which such cessation occurs.
  (ii)  Cessation  of qualification. Clean-fuel vehicle refueling] ELEC-
TRIC VEHICLE RECHARGING property ceases to be qualified if:
  [(I)] (I) the property no longer qualifies as [property  described  in
section thirty C of the internal revenue code] ELECTRIC VEHICLE RECHARG-
ING PROPERTY, or
  [(II)]  (II)  fifty  percent  or  more of the use of the property in a
taxable year is other than in a trade or business in this state, or
  [(III)] (III) the taxpayer receiving the credit under this  subsection
sells  or  disposes of the property and knows or has reason to know that
the property will be used in a manner described in [item (I)] CLAUSE (I)
or [(II)] (II) of this [clause] SUBPARAGRAPH.
  [(iii)] (C) Recapture amount. The recapture amount  is  equal  to  the
credit  allowable  under  this  subsection multiplied by a fraction, the
numerator of which is the total recovery period for the  property  minus
the  number of recovery years prior to, but not including, the recapture
year, and the denominator of which is the total recovery period.
  (6) Termination.  The  credit  allowed  by  [paragraph  two  of]  this
subsection  shall  not  apply  in taxable years beginning after December
thirty-first, two thousand [ten] SEVENTEEN.
  S 4. Clause (ix) of subparagraph (B) of paragraph 1 of subsection  (i)
of  section  606  of the tax law, as amended by section 7 of part C-1 of
chapter 57 of the laws of 2009, is amended to read as follows:

(ix) [Alternative fuels]             [Cost] AMOUNT OF CREDIT
ELECTRIC VEHICLE                     under subdivision twenty-four
RECHARGING PROPERTY                  of section two hundred ten
credit under subsection (p)

  S 5. This act shall take effect immediately and shall apply to taxable
years beginning on or after January  1,  2013  for  property  placed  in
service on or after such date.

                                 PART H

  Section  1.  Paragraph  10 of subsection (g) of section 658 of the tax
law is REPEALED.

S. 2609                            48                            A. 3009

  S 2. Paragraph 10 of subdivision (g) of section 11-1758 of the  admin-
istrative code of the city of New York is REPEALED.
  S  3.  Paragraph  5 of subsection (u) of section 685 of the tax law is
REPEALED.
  S 4. Paragraph 5 of subdivision (t) of section 11-1785 of the adminis-
trative code of the city of New York is REPEALED.
  S 5. Section 23 of part U of chapter  61  of  the  laws  of  2011,  as
amended  by  section  1  of part G of chapter 59 of the laws of 2012, is
amended to read as follows:
  S 23. This act shall take effect immediately; provided, however, that:
  (a) the amendments to section 29 of the tax law made by section  thir-
teen  of  this  act shall apply to tax documents filed or required to be
filed on or after the sixtieth day  after  which  this  act  shall  have
become  a  law  [and  shall  expire  and be deemed repealed December 31,
2013], provided however that the amendments to paragraph 4  of  subdivi-
sion (a) of section 29 of the tax law and paragraph 2 of subdivision (e)
of  section  29 of the tax law made by section thirteen of this act with
regard to individual taxpayers shall take effect September 15, 2011  but
only  if  the  commissioner  of taxation and finance has reported in the
report required by section seventeen-b of this act that  the  percentage
of  individual  taxpayers  electronically  filing  their 2010 income tax
returns is less than eighty-five percent; provided that the commissioner
of taxation and finance  shall  notify  the  legislative  bill  drafting
commission  of the date of the issuance of such report in order that the
commission may maintain an accurate and timely effective  data  base  of
the official text of the laws of the state of New York in furtherance of
effectuating  the  provisions  of  section 44 of the legislative law and
section 70-b of the public officers law;
  (b) sections fourteen, fifteen, sixteen  and  seventeen  of  this  act
shall  take  effect  September  15, 2011 but only if the commissioner of
taxation and finance has reported in  the  report  required  by  section
seventeen-b  of  this  act  that  the percentage of individual taxpayers
electronically filing their 2010 income tax returns is less than  eight-
y-five percent;
  (c)  sections  fourteen-a  and fifteen-a of this act shall take effect
September 15, 2011 and expire and be deemed repealed December  31,  2012
but  shall  take effect only if the commissioner of taxation and finance
has reported in the report required by section seventeen-b of  this  act
that  the percentage of individual taxpayers electronically filing their
2010 income tax returns is eighty-five percent or greater; AND
  (d) sections fourteen-b, fifteen-b, sixteen-a and seventeen-a of  this
act  shall  take  effect January 1, 2014 but only if the commissioner of
taxation and finance has reported in  the  report  required  by  section
seventeen-b  of  this  act  that  the percentage of individual taxpayers
electronically filing their 2010 income tax returns is less than  eight-
y-five percent[; and
  (e)  sections twenty-one and twenty-one-a of this act shall expire and
be deemed repealed December 31, 2013].
  S 6. This act shall take effect immediately.

                                 PART I

  Section 1. Legislative intent. The legislature  seeks  to  demonstrate
that  the  state of New York is open for business by promoting, attract-
ing, and encouraging the development of business  in  the  state.    The
legislature  intends  to encourage businesses to locate in the state and

S. 2609                            49                            A. 3009

produce goods and services within  the  state,  thereby  increasing  job
creation  and economic growth. The legislature further intends to foster
economic development by showcasing various goods that  are  produced  in
New  York.  In  order  to  accomplish  these objectives, the legislature
intends that there shall be  established  "Taste-NY  facilities,"  which
will  sell  a variety of products, including but not limited to products
produced within the state, and prominently  feature  New  York  produced
goods, including alcoholic beverages.
  S  2.  Subdivision  (b)  of  section 1101 of the tax law is amended by
adding a new paragraph 39 to read as follows:
  (39) TASTE-NY FACILITY. "TASTE-NY  FACILITY"  SHALL  MEAN  A  FACILITY
OPERATED  BY  A PERSON DESIGNATED BY AND PURSUANT TO A WRITTEN AGREEMENT
WITH A STATE AGENCY, PUBLIC AUTHORITY, OR AN INTERSTATE AGENCY OR PUBLIC
CORPORATION CREATED PURSUANT TO AN AGREEMENT  OR  COMPACT  WITH  ANOTHER
STATE  OR  THE DOMINION OF CANADA, FROM WHICH SALES ARE MADE OF TANGIBLE
PERSONAL PROPERTY OR FOOD AND DRINK (WHETHER OR NOT FOR  CONSUMPTION  ON
THE  PREMISES  OF SUCH FACILITY), AND THAT PROMINENTLY FEATURES PRODUCTS
PRODUCED WITHIN THE STATE.
  S 3. Subdivision (a) of section 1115 of the  tax  law  is  amended  by
adding a new paragraph 44 to read as follows:
  (44)  TANGIBLE  PERSONAL  PROPERTY  SOLD  AT  A  TASTE-NY FACILITY, AS
DEFINED IN PARAGRAPH THIRTY-NINE OF SECTION ELEVEN HUNDRED ONE  OF  THIS
ARTICLE,  FOR  WHICH THE RECEIPT OR CONSIDERATION GIVEN OR CONTRACTED TO
BE GIVEN IS LESS THAN TWO HUNDRED DOLLARS PER ITEM.
  S 4. Section 1115 of the tax law is amended by adding a  new  subdivi-
sion (ii) to read as follows:
  (II) RECEIPTS FROM SALES OF THE FOLLOWING AT A TASTE-NY FACILITY SHALL
BE  EXEMPT  FROM THE SALES TAX IMPOSED UNDER SECTION ELEVEN HUNDRED FIVE
AND THE COMPENSATING USE TAX IMPOSED UNDER SECTION ELEVEN HUNDRED TEN OF
THIS ARTICLE: (1) FOOD OR DRINK FOR CONSUMPTION ON THE PREMISES OF  SUCH
FACILITY;  (2)  FOOD  OR  DRINK SOLD FOR CONSUMPTION OFF THE PREMISES OF
SUCH FACILITY THAT IS SOLD IN A HEATED STATE; (3)  SANDWICHES  SOLD  FOR
CONSUMPTION  OFF THE PREMISES OF SUCH FACILITY, WHETHER OR NOT SOLD IN A
HEATED STATE; (4) FOOD OR DRINK SOLD THROUGH VENDING MACHINES;  AND  (5)
FOOD  OR DRINK SOLD IN AN UNHEATED STATE THAT IS OF A TYPE COMMONLY SOLD
FOR OFF-PREMISES CONSUMPTION AND IS NOT IN  THE  SAME  FORM,  CONDITION,
QUANTITIES AND PACKAGING AS IN ESTABLISHMENTS THAT ARE FOOD STORES OTHER
THAN THOSE PRINCIPALLY ENGAGED IN SELLING FOODS PREPARED AND READY TO BE
EATEN.
  S  5.  The  alcoholic  beverage control law is amended by adding a new
section 63-b to read as follows:
  S 63-B. SPECIAL LICENSE TO SELL  ALCOHOLIC  BEVERAGES  AT  RETAIL  FOR
CONSUMPTION  OFF  THE  PREMISES.  1.  ANY PERSON AUTHORIZED TO OPERATE A
TASTE-NY FACILITY DESIGNATED BY AND PURSUANT TO A WRITTEN AGREEMENT WITH
A STATE AGENCY, PUBLIC AUTHORITY, OR  AN  INTERSTATE  AGENCY  OR  PUBLIC
CORPORATION  CREATED  PURSUANT  TO  AN AGREEMENT OR COMPACT WITH ANOTHER
STATE OR THE DOMINION OF CANADA MAY MAKE APPLICATION  TO  THE  AUTHORITY
FOR A SPECIAL LICENSE TO SELL ALCOHOLIC BEVERAGES AT RETAIL FOR CONSUMP-
TION OFF THE LICENSED PREMISES.
  2.  AN  APPLICATION  FOR A LICENSE UNDER THIS SECTION SHALL BE IN SUCH
FORM AND SHALL CONTAIN SUCH INFORMATION AS  SHALL  BE  REQUIRED  BY  THE
AUTHORITY  AND  SHALL  BE  ACCOMPANIED BY A CHECK OR DRAFT IN THE AMOUNT
REQUIRED BY THIS ARTICLE.
  3. SECTION FIFTY-FOUR OF THIS CHAPTER  SHALL  CONTROL  SO  FAR  AS  IS
APPLICABLE THE PROCEDURE IN CONNECTION WITH SUCH APPLICATION.

S. 2609                            50                            A. 3009

  4. A LICENSE UNDER THIS SECTION SHALL BE ISSUED TO ALL ELIGIBLE APPLI-
CANTS EXCEPT FOR GOOD CAUSE SHOWN.
  5. A LICENSE UNDER THIS CHAPTER SHALL NOT BE SUBJECT TO THE PROVISIONS
OF  SUBDIVISIONS TWO, THREE, SIX AND SIXTEEN OF SECTION ONE HUNDRED FIVE
OF THIS CHAPTER.
  6. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION FOURTEEN  OF  SECTION
ONE  HUNDRED  FIVE  OF  THIS CHAPTER, THE HOURS OF OPERATION AND SALE OF
ALCOHOLIC BEVERAGES SHALL BE GOVERNED BY THE LICENSEE'S  WRITTEN  AGREE-
MENT  WITH  THE  STATE  AGENCY,  PUBLIC  AUTHORITY, INTERSTATE AGENCY OR
COMPACT ENTITY.
  7. SUBJECT TO ANY RESTRICTION CONTAINED IN THE WRITTEN AGREEMENT  WITH
THE STATE AGENCY, PUBLIC AUTHORITY, INTERSTATE AGENCY OR COMPACT ENTITY,
THE  HOLDER  OF A LICENSE ISSUED UNDER THIS SECTION MAY OFFER SAMPLES OF
ALCOHOLIC BEVERAGES TO CUSTOMERS TO BE CONSUMED ON THE LICENSED PREMISES
UPON THE FOLLOWING CONDITIONS:
  (A) NO FEE SHALL BE CHARGED FOR ANY SAMPLE;
  (B) EACH SAMPLE SHALL BE LIMITED:
  (I) IN THE CASE OF BEER, WINE PRODUCTS AND CIDER, TO THREE  OUNCES  OR
LESS;
  (II) IN THE CASE OF WINE, TO TWO OUNCES;
  (III) IN THE CASE OF LIQUOR, TO ONE-QUARTER OUNCE;
  (C) NO SAMPLE SHALL BE PROVIDED TO A CUSTOMER DURING THE HOURS PROHIB-
ITED BY THE PROVISIONS OF SUBDIVISION FIVE OF SECTION ONE HUNDRED SIX OF
THIS CHAPTER; AND
  (D)  NO  CUSTOMER  MAY BE PROVIDED WITH MORE THAN THREE SAMPLES IN ONE
CALENDAR DAY.
  S 6. Section 66 of the alcoholic beverage control law  is  amended  by
adding a new subdivision 11 to read as follows:
  11.  THE  ANNUAL FEE FOR A SPECIAL LICENSE TO SELL ALCOHOLIC BEVERAGES
AT RETAIL FOR CONSUMPTION  OFF  THE  LICENSED  PREMISES  SHALL  BE  FIVE
HUNDRED DOLLARS.
  S  7.  Section 67 of the alcoholic beverage control law, as amended by
section 4 of part Z of chapter 85 of the laws of  2002,  is  amended  to
read as follows:
  S 67. License  fees,  duration  of  licenses;  fee  for  part of year.
[Effective April first,  nineteen  hundred  eighty-three,  licenses]  1.
LICENSES  issued pursuant to sections sixty-one, sixty-two, sixty-three,
[sixty-four, sixty-four-a and sixty-four-b] AND  SIXTY-THREE-B  of  this
article  shall  be  effective for three years at three times that annual
fee, except that, in implementing the  purposes  of  this  section,  the
liquor  authority  shall  schedule  the commencement dates, duration and
expiration dates thereof to  provide  for  an  equal  cycle  of  license
renewals issued under each such section through the course of the fiscal
year.     [Effective  December  first,  nineteen  hundred  ninety-eight,
licenses]
  2. LICENSES issued pursuant to sections sixty-four,  sixty-four-a  and
sixty-four-b  of  this  article  shall be effective for two years at two
times that annual fee, except that, in implementing the purposes of this
section, the liquor authority shall  schedule  the  commencement  dates,
duration  and  expiration dates thereof to provide for an equal cycle of
license renewals issued under each such section through  the  course  of
the  fiscal year. [Notwithstanding the foregoing, commencing on December
first, nineteen hundred ninety-eight  and  concluding  on  July  thirty-
first, two thousand two, a licensee issued a license pursuant to section
sixty-four,  sixty-four-a  or  sixty-four-b of this article may elect to
remit the fee for  such  license  in  equal  annual  installments.  Such

S. 2609                            51                            A. 3009

installments  shall  be due on dates established by the liquor authority
and the failure of a licensee to have remitted such annual  installments
after  a  due  date  shall  be a violation of this chapter. For licenses
issued  for  less  than the three-year licensing period, the license fee
shall be levied on a pro-rated basis.]
  3. The entire license fee shall be due and  payable  at  the  time  of
application. The liquor authority may make such rules as shall be appro-
priate to carry out the purpose of this section.
  S  8.  Subdivisions  1 and 2 of section 56-a of the alcoholic beverage
control law, as amended by chapter 108 of the laws of 2012, are  amended
to read as follows:
  1.  In addition to the annual fees provided for in this chapter, there
shall be paid to the authority  with  each  initial  application  for  a
license  filed  pursuant to section fifty-one, fifty-one-a, fifty-three,
fifty-eight, sixty-one, sixty-two, seventy-six or seventy-eight of  this
chapter,  a filing fee of four hundred dollars; with each initial appli-
cation  for  a  license   filed   pursuant   to   section   sixty-three,
SIXTY-THREE-B, sixty-four, sixty-four-a or sixty-four-b of this chapter,
a filing fee of two hundred dollars; with each initial application for a
license filed pursuant to section fifty-three-a, fifty-four, fifty-five,
fifty-five-a,  seventy-nine, eighty-one or eighty-one-a of this chapter,
a filing fee of one hundred dollars; with each initial application for a
permit filed pursuant to section ninety-one,  ninety-one-a,  ninety-two,
ninety-two-a,  ninety-three,  ninety-three-a,  if  such  permit is to be
issued on a calendar year basis, ninety-four, ninety-five, ninety-six or
ninety-six-a, or pursuant to paragraph b, c, e or j of  subdivision  one
of  section ninety-nine-b of this chapter if such permit is to be issued
on a calendar year basis, or for an additional bar pursuant to  subdivi-
sion four of section one hundred of this chapter, a filing fee of twenty
dollars;  and  with  each application for a permit under section ninety-
three-a of this chapter, other than a permit to be issued on a  calendar
year  basis, section ninety-seven, ninety-eight, ninety-nine, or ninety-
nine-b of this chapter, other than a permit to  be  issued  pursuant  to
paragraph  b,  c,  e or j of subdivision one of section ninety-nine-b of
this chapter on a calendar year basis, a filing fee of ten dollars.
  2. In addition to the annual fees provided for in this chapter,  there
shall  be  paid  to  the  authority  with each renewal application for a
license filed pursuant to section fifty-one,  fifty-one-a,  fifty-three,
fifty-eight,  sixty-one, sixty-two, seventy-six or seventy-eight of this
chapter, a filing fee of one hundred dollars; with each renewal applica-
tion for a license filed pursuant to section sixty-three, SIXTY-THREE-B,
sixty-four, sixty-four-a or sixty-four-b of this chapter, a  filing  fee
of  ninety  dollars;  with  each renewal application for a license filed
pursuant to section seventy-nine, eighty-one  or  eighty-one-a  of  this
chapter,  a  filing  fee  of  twenty-five dollars; and with each renewal
application for a license or permit filed  pursuant  to  section  fifty-
three-a, fifty-four, fifty-five, fifty-five-a, ninety-one, ninety-one-a,
ninety-two,  ninety-two-a,  ninety-three, ninety-three-a, if such permit
is issued on a calendar year basis, ninety-four, ninety-five, ninety-six
or ninety-six-a of this chapter or pursuant to subdivisions b, c, e or j
of section ninety-nine-b, if such permit is issued on  a  calendar  year
basis,  or  with each renewal application for an additional bar pursuant
to subdivision four of section one hundred of this chapter, a filing fee
of thirty dollars.

S. 2609                            52                            A. 3009

  S 9. Paragraph (a) of subdivision 1 of section 101  of  the  alcoholic
beverage  control  law, as amended by chapter 22 of the laws of 2011, is
amended to read as follows:
  (a)  Be  interested  directly  or indirectly in any premises where any
alcoholic beverage is sold at retail; or in any business devoted  wholly
or  partially  to  the sale of any alcoholic beverage at retail by stock
ownership, interlocking directors, mortgage or lien or any  personal  or
real  property,  or by any other means. The provisions of this paragraph
shall not apply to:
  (i) any such premises or business constituting the  overnight  lodging
and  resort facility located wholly within the boundaries of the town of
North Elba, county of Essex, township eleven,  Richard's  survey,  great
lot  numbers  two  hundred  seventy-eight, two hundred seventy-nine, two
hundred eighty, two hundred ninety-eight, two hundred ninety-nine, three
hundred, three hundred eighteen, three hundred nineteen,  three  hundred
twenty,  three  hundred  thirty-five  and  three hundred thirty-six, and
township twelve, Thorn's survey, great lot numbers one hundred  six  and
one  hundred  thirteen,  as shown on the Adirondack map, compiled by the
conservation department of the state of  New  York  -  nineteen  hundred
sixty-four  edition,  in  the Essex county atlas at page twenty-seven in
the Essex county clerk's office, Elizabethtown, New York, provided  that
such facility maintains not less than two hundred fifty rooms and suites
for overnight lodging[,];
  (ii)  any such premises or business constituting the overnight lodging
and resort facility located wholly within the boundaries of  that  tract
or parcel of land situate in the city of Canandaigua, county of Ontario,
beginning  at a point in the northerly line of village lot nine where it
meets with South Main Street, thence south sixty-nine degrees fifty-four
minutes west  a  distance  of  nine  hundred  sixteen  and  twenty-three
hundredths  feet to an iron pin; thence in the same course a distance of
fourteen feet to an iron pin; thence in the same course  a  distance  of
fourteen  and  four-tenths feet to a point; thence south fifteen degrees
thirty-eight minutes and forty seconds east a distance of  four  hundred
forty-six  and  eighty-seven  hundredths  feet  to a point; thence south
twenty-eight degrees thirty-seven  minutes  and  fifty  seconds  east  a
distance  of  one  hundred thirteen and eighty-four hundredths feet to a
point; thence south eighty-five degrees and forty-seven minutes  east  a
distance  of  forty-seven  and sixty-one hundredths feet to an iron pin;
thence on the same course a distance of  three  hundred  and  sixty-five
feet  to  an iron pin; thence north seventeen degrees twenty-one minutes
and ten seconds east a distance of four hundred fifty-seven and  thirty-
two  hundredths  feet  to an iron pin; thence north nineteen degrees and
thirty minutes west a distance of two hundred and forty-eight feet to  a
point;  thence  north  sixty-nine  degrees and fifty-four minutes east a
distance of two hundred eighty-four and twenty-six hundredths feet to  a
point;  thence north nineteen degrees and thirty minutes west a distance
of sixty feet to the point and place of beginning,  provided  that  such
facility maintains not less than one hundred twenty rooms and suites for
overnight lodging[,];
  (iii) any such premises or business constituting the overnight lodging
facility located wholly within the boundaries of that tract or parcel of
land  situated in the borough of Manhattan, city and county of New York,
beginning at a point on the northerly side of west  fifty-fourth  street
at  a  point one hundred feet easterly from the intersection of the said
northerly side of west fifty-fourth street  and  the  easterly  side  of
seventh  avenue; running thence northerly and parallel with the easterly

S. 2609                            53                            A. 3009

side of seventh avenue one hundred feet five inches to the  center  line
of  the  block;  running thence easterly and parallel with the northerly
side of west fifty-fourth street and along the center line of the  block
fifty  feet  to  a point; running thence northerly and parallel with the
easterly side of seventh avenue one hundred  feet  five  inches  to  the
southerly side of west fifty-fifth street at a point distant one hundred
fifty  feet easterly from the intersection of the said southerly side of
west fifty-fifth street and the easterly side of seventh avenue; running
thence easterly along the southerly  side  of  west  fifty-fifth  street
thirty-one  feet  three  inches to a point; running thence southerly and
parallel with the easterly side of the seventh avenue one  hundred  feet
five  inches  to  the  center line of the block; running thence easterly
along the center line of the block and parallel with the southerly  side
of  west  fifty-fifth street, one hundred feet; running thence northerly
and parallel with the easterly side of seventh avenue one  hundred  feet
five  inches  to  the southerly side of west fifty-fifth street; running
thence easterly along the southerly  side  of  west  fifty-fifth  street
twenty-one  feet  ten  and  one-half  inches  to a point; running thence
southerly and parallel with the easterly  side  of  seventh  avenue  one
hundred feet five inches to the center line of the block; running thence
westerly along the center line of the block and parallel with the north-
erly  side of west fifty-fourth street three feet one and one-half inch-
es; running thence southerly and parallel  with  the  easterly  side  of
seventh  avenue  one  hundred  feet five inches to the northerly side of
west fifty-fourth street at a point distant three hundred feet  easterly
from  the  intersection  of the said northerly side of west fifty-fourth
street and the easterly side of seventh avenue; running thence  westerly
and  along  the  northerly  side of west fifty-fourth street two hundred
feet to the point or place of beginning,  provided  that  such  facility
maintains  not  less  than four hundred guest rooms and suites for over-
night lodging[,];
  (iv) any such premises or business located on that tract or parcel  of
land, or any subdivision thereof, situate in the Village of Lake Placid,
Town  of North Elba, Essex County, New York; it being also a part of Lot
No.  279, Township No. 11, Old  Military  Tract,  Richard's  Survey;  it
being  also all of Lot No. 23 and part of Lot No. 22 as shown and desig-
nated on a certain map entitled "Map of Building Sites for Sale by  B.R.
Brewster"  made by G.T. Chellis C.E. in 1892; also being PARCEL No. 1 on
a certain map of lands of Robert  J.  Mahoney  and  wife  made  by  G.C.
Sylvester, P.E.  & L.S.  # 21300, dated August 4, 1964, and filed in the
Essex  County  Clerk's  Office on August 27, 1964, and more particularly
bounded and described as follows; BEGINNING at the intersection  of  the
northerly  bounds  of  Shore  Drive  (formerly  Mirror  Street) with the
westerly bounds of Park Place (formerly Rider  Street)  which  point  is
also  the  northeast corner of Lot No. 23, from thence South 21°50' East
in the westerly bounds of Park Place a distance of  119  feet,  more  or
less,  to  a lead plug in the edge of the sidewalk marking the southeast
corner of Lot No. 23 and the northeast corner of Lot No. 24; from thence
South 68°00'50" West a distance of 50.05 feet to an  iron  pipe  set  in
concrete  at  the  corner of Lots 23 and 22; from thence South 65°10'50"
West a distance of 7.94 feet along the south line of Lot No.  22  to  an
iron  pipe  for  a corner; from thence North 23°21'40" West and at 17.84
feet along said line passing over a drill hole in a  concrete  sidewalk,
and  at  68.04 feet further along said line passing over an iron pipe at
the southerly edge of another sidewalk, and at 1.22 feet  further  along
said  line  passing  over  another  drill  hole  in  a sidewalk, a total

S. 2609                            54                            A. 3009

distance of 119 feet, more or less, to the northerly line  of  Lot.  No.
22;  from  thence easterly in the northerly line of Lot 22 and 23 to the
northeast corner of Lot No. 23 and the point of beginning. Also  includ-
ing the lands to the center of Shore Drive included between the norther-
ly  straight  line continuation of the side lines of the above described
parcel, and to the center of Park  Place,  where  they  abut  the  above
described premises SUBJECT to the use thereof for street purposes. Being
the  same  premises  conveyed  by Morestuff, Inc. to Madeline Sellers by
deed dated June 30, 1992, recorded in the Essex County Clerk's Office on
July 10, 1992 in Book 1017 of Deeds at Page 318;
  (v) any such premises or business located on  that  certain  piece  or
parcel  of land, or any subdivision thereof, situate, lying and being in
the Town of Plattsburgh, County of Clinton, State of New York and  being
more  particularly bounded and described as follows: Starting at an iron
pipe found in the easterly bounds of the highway known as the Old  Mili-
tary  Turnpike,  said iron pipe being located 910.39 feet southeasterly,
as measured along the easterly bounds of said highway, from the souther-
ly bounds of the  roadway  known  as  Industrial  Parkway  West,  THENCE
running  S 31 ° 54' 33" E along the easterly bounds of said Old Military
Turnpike Extension, 239.88 feet to a point marking the  beginning  of  a
curve  concave  to the west; thence southerly along said curve, having a
radius of 987.99 feet, 248.12 feet to an iron  pipe  found  marking  the
point  of  beginning  for  the parcel herein being described, said point
also marked the southerly corner of lands of Larry  Garrow,  et  al,  as
described  in Book 938 of Deeds at page 224; thence N 07° 45' 4" E along
the easterly bounds of said Garrow, 748.16  feet  to  a  3"x4"  concrete
monument  marking the northeasterly corner of said Garrow, the northwes-
terly corner of the parcel herein being described and said monument also
marking the southerly bounds  of  lands  of  Salerno  Plastic  Corp.  as
described in Book 926 of Deeds at Page 186; thence S 81° 45' 28" E along
a  portion of the southerly bounds of said Salerno Plastic Corp., 441.32
feet to an iron pin found marking the northeasterly corner of the parcel
herein being described and also marking  the  northwest  corner  of  the
remaining lands now or formerly owned by said Marx and Delaura; thence S
07° 45' 40" W along the Westerly bounds of lands now of formerly of said
Marx  and  DeLaura  and  along  the easterly bounds of the parcel herein
being described, 560.49 feet to an iron pin; thence  N  83°  43'  21"  W
along  a  portion of the remaining lands of said Marx and DeLaura, 41.51
feet to an iron pin; thence S 08° 31' 30" W,  along  a  portion  of  the
remaining  lands  of  said  Marx  and Delaura, 75.01 feet to an iron pin
marking northeasterly corner of lands currently owned by the Joint Coun-
cil for Economic Opportunity of Plattsburgh and Clinton County, Inc.  as
described in Book 963 of Deeds at Page 313; thence N 82° 20' 32" W along
a  portion  of  the northerly bounds of said J.C.E.O., 173.50 feet to an
iron pin; thence 61° 21' 12" W, continuing along a portion of the north-
erly bounds of said J.C.E.O., 134.14 feet to an iron pin; thence  S  07°
45' 42" W along the westerly bounds of said J.C.E.O., 50 feet to an iron
pin;  thence  S 66° 48' 56" W along a portion of the northerly bounds of
remaining lands of said Marx and DeLaura, 100.00 feet to  an  iron  pipe
found  on  the  easterly bounds of the aforesaid highway, said from pipe
also being located on a curve concave to the west;  thence  running  and
running northerly along the easterly bounds of the aforesaid highway and
being  along  said curve, with the curve having a radius of 987.93 feet,
60.00 feet to the point of beginning and containing 6.905 acres of land.
Being the same premises as conveyed to Ronald Marx  and  Alice  Marx  by
deed of CIT Small Business Lending Corp., as agent of the administrator,

S. 2609                            55                            A. 3009

U.S.  Small  Business  Administration,  an  agency  of the United States
Government dated September 10, 2001 and recorded in the  office  of  the
Clinton County Clerk on September 21, 2001 as Instrument #135020; [or]
  (vi)  any  such  premises  or business located on the west side of New
York state route 414 in military lots 64 and 75  located  wholly  within
the  boundaries  of that tract or parcel of land situated in the town of
Lodi, county of Seneca beginning at an iron pin on the assumed west line
of New York State Route 414 on the apparent north line of lands reputed-
ly of White (lib. 420, page 155); said iron pin also being  northerly  a
distance  of  1200 feet more or less from the centerline of South Miller
Road; Thence leaving the point of beginning north 85-17'-44" west  along
said  lands  of  White  a distance of 2915.90 feet to an iron pin Thence
north 03-52'-48" east along said lands of White, passing through an iron
pin 338.36 feet distant, and continuing further along that same course a
distance of 13.64 feet farther, the total distance being 352.00 feet  to
a point in the assumed centerline of Nellie Neal Creek; Thence in gener-
ally  a  north  westerly  direction  the following courses and distances
along the assumed centerline of Nellie Neal Creek; north 69-25'-11" west
a distance of 189.56 feet to a point; north 63-40'-00" west  a  distance
of  156.00  feet  to  a point; north 49-25'-00" west a distance of 80.00
feet to a point; south 80-21'-00" west a distance of  90.00  feet  to  a
point; north 72-03'-00" west a distance of 566.00 feet to a point; north
68-15'-00"  west  a distance of 506.00 feet to a point; north 55-16'-00"
west a distance of 135.00 feet to  a  point;  south  69-18'-00"  west  a
distance  of 200.00 feet to a point; south 88-00'-00" west a distance of
170.00 feet to a point on a tie line at or near the high water  line  of
Seneca Lake; Thence north 25-17'-00" east along said tie line a distance
of 238.00 feet to an iron pipe; Thence south 82-04'-15" east along lands
reputedly of M. Wagner (lib. 464, page 133) a distance of 100.00 feet to
an  iron pin; Thence north 06-56'-47" east along said lands of M. Wagner
a distance of 100.00 feet to an iron pipe; Thence north 09-34'-28"  east
along  lands  reputedly  of  Schneider (lib. 429, page 37) a distance of
50.10 feet to an iron pipe; Thence north  07-49'-11"  east  along  lands
reputedly  of  Oney  (lib.  484, page 24) a distance of 50.00 feet to an
iron pipe; Thence north 82-29'-40" west  along  said  lands  of  Oney  a
distance  of  95.30  feet  to  an iron pipe on a tie line at or near the
highwater line of Seneca Lake; Thence north 08-15'-22" east  along  said
tie  line  a  distance  of  25.00  feet  to  an  iron  pin; Thence south
82-28'-00" east along lands reputedly of  Yu  (lib.  405,  page  420)  a
distance  of  96.53  feet  to an iron pipe; Thence north 34-36'-59" east
along said lands of Yu a distance of  95.00  feet  to  a  point  in  the
assumed  centerline  of  Van Liew Creek; Thence in generally an easterly
direction the following courses and distances along the assumed  center-
line  of Van Liew Creek; north 72-46'-37" east a distance of 159.98 feet
to a point; north 87-53'-00" east a distance of 94.00 feet to  a  point;
south  71-12'-00"  east  a  distance  of  52.00  feet  to a point; south
84-10'-00" east a distance of 158.00 feet to a point;  south  59-51'-00"
east  a  distance  of  160.00  feet  to a point; south 83-29'-00" east a
distance of 187.00 feet to a point; Thence north 01-33'-40"  east  along
lands  reputedly  of Hansen (lib. 515, page 205) passing through an iron
pipe 32.62 feet distant, and continuing further along that  same  course
passing  through  an  iron pin 205.38 feet farther, and continuing still
further along that same course a distance of  21.45  feet  farther,  the
total  distance  being 259.45 feet to the assumed remains of a White Oak
stump; Thence north 69-16'-11" east along lands  reputedly  of  Schwartz
(lib.  374, page 733) being tie lines along the top of the south bank of

S. 2609                            56                            A. 3009

Campbell Creek a distance of  338.00  feet  to  a  point;  Thence  south
57-17'32" east along said tie line a distance of 136.60 feet to a point;
Thence  south  74-45'-00"  east along said tie line a distance of 100.00
feet  to  an  iron pin; Thence north 04-46'-00" east along said lands of
Schwartz a distance of 100.00 feet to a point in the assumed  centerline
of Campbell Creek; Thence in generally an easterly direction the follow-
ing  courses  and  distances  along  the  assumed centerline of Campbell
Creek; south 71-34'-00" east a distance of 330.00 feet to a point; north
76-53'-00" east a distance of 180.00 feet to a  point;  north  83-05'00"
east  a  distance  of  230.00  feet  to a point; south 66-44'-00" east a
distance of 90.00 feet to a point; south 81-10'-00" east a  distance  of
240.00  feet  to a point; south 45-29'-15" east a distance of 73.18 feet
to a point; Thence south 05-25'-50" west along lands reputedly of  Stan-
ley  Wagner (lib. 450, page 276) a distance of 135.00 feet to a point on
the assumed north line of Military Lot 75; Thence south 84-34'-10"  east
along said lands of Wagner and the assumed north line of Military Lot 75
a  distance  of 1195.06 feet to an iron pin; Thence south O6-57'52" west
along said lands of M. Wagner (lib. 414, page 267)  passing  through  an
iron  pin  215.58  feet  distant, and continuing further along that same
course a distance of 20.59 feet farther, the total distance being 236.17
feet to a point in the assumed centerline of Campbell Creek;  Thence  in
generally  a south easterly direction the following course and distances
along the assumed centerline of Campbell Creek; north 78-23'-09" east  a
distance  of  29.99 feet to a point; south 46-09'-15" east a distance of
65.24 feet to a point; north 85-55'-09" east a distance of 60.10 feet to
a point; south 61-59'-50" east a distance of 206.91  feet  to  a  point;
north  63-58'-27"  east  a  distance  of  43.12  feet  to a point; south
28-51'-21" east a distance of 47.72 feet to a  point;  south  15-14'-08"
west  a  distance  of  33.42  feet  to  a point; south 79-16'-32" east a
distance of 255.15 feet to a point; south 62-19'-46" east a distance  of
75.82 feet to a point; north 76-10'-42" east a distance of 99.60 feet to
a point; north 82-12'55" east a distance of 86.00 feet to a point; south
44-13'53"  east  a  distance  of 64.08 feet to a point; north 67-52'-46"
east a distance of 73.98 feet  to  a  point;  north  88-13'-13"  east  a
distance  of  34.64 feet to a point on the assumed west line of New York
State Route 414; Thence south 20-13'-30" east  along  the  assumed  west
line of New York State Route 414 a distance of 248.04 feet to a concrete
monument;  Thence  south 02-10'-30" west along said road line a distance
of 322.90 feet to an iron pin; Thence 13-14'-50" west  along  said  road
line  a  distance of 487.41 feet to an iron pin, said iron pin being the
point and place of beginning; Comprising an area  of  126.807  acres  of
land  according  to  a  survey  completed by Michael D. Karlsen entitled
"Plan Owned by Stanley A.   Wagner" known as  Parcel  A  of  Job  number
98-505.    This survey is subject to all utility easements and easements
and right-of-ways of record which may affect the parcel of land.    This
survey is also subject to the rights of the public in and to lands here-
in  referred  to  as  New York State Route 414.   This survey intends to
describe a portion of the premises as conveyed  by  Ruth  V.  Wagner  to
Stanley  A.  Wagner  by  deed recorded February 10, 1989 in Liber 450 of
deeds, at Page 286.  This survey also intends to describe a  portion  of
the  premises as conveyed by Stanley W. VanVleet to Stanley A. Wagner by
deed recorded April 30, 1980 in Liber 385 of Deeds, at Page 203.
 ALSO ALL THAT OTHER TRACT OR PARCEL OF LAND SITUATE on the east side of
New York State Route 414 in Military Lot 75 in the Town of Lodi,  County
of  Seneca,  State of New York bounded and described as follows:  Begin-
ning at an iron pin on the assumed east line of  New  York  State  Route

S. 2609                            57                            A. 3009

414, said iron pin being north 50-44'-57" east a distance of 274.92 feet
from the south east corner of the parcel of land herein above described;
Thence leaving the point of beginning north 00-26'01" east along a math-
ematical tie line a distance of 504.91 feet to an iron pin; Thence south
37-00'-20" east along lands reputedly of Tomberelli (lib. 419, page 243)
passing  through an iron pin 176.00 feet distant, and continuing further
along that same course a  distance  of  2.01  feet  farther,  the  total
distance  being  178.01  feet  to  a point; Thence south 09-03'-55" west
along lands reputedly of M. Wagner (lib. 491, page 181)  a  distance  of
68.19  feet  to  an  iron  pipe; Thence south 15-36'-04" west along said
lands of M. Wagner a distance of 300.15 feet to  an  iron  pipe;  Thence
south  72-04'-59" west along said lands of M. Wagner a distance of 20.49
feet to an iron pin, said iron pin being the point and place  of  begin-
ning.    Comprising an area of 0.727 acre of lands according to a survey
completed by Michael D. Karlsen entitled "Plan of Land Owned by  Stanley
A.  Wagner"  known  as  Parcel  B of job number 98-505.   This survey is
subject to all utility easements  and  easements  and  right-of-ways  of
record  which  may  affect  this  parcel  of land.   This survey is also
subject to the rights of the public in and to lands herein  referred  to
as  New  York State Route 414.  This survey intends to describe the same
premises as conveyed by Henry W. Eighmey as executor of  the  Last  Will
and  Testament  of Mary C. Eighmey to Stanley A. Wagner by deed recorded
July 2, 1996 in liber 542,  page  92.    This  survey  also  intends  to
describe  a  portion  of  the  premises as conveyed by Ruth V. Wagner to
Stanley A. Wagner by deed recorded February 10, 1989  in  Liber  450  of
deeds, at Page 286[.];
  [The  provisions of this paragraph shall not apply to] (VII) any prem-
ises or business located wholly within the following  described  parcel:
ALL  THAT TRACT OR PARCEL OF LAND situate in the City of Corning, County
of Steuben and State of New  York  bounded  and  described  as  follows:
Beginning at an iron pin situate at the terminus of the westerly line of
Townley  Avenue  at  its intersection with the southwesterly line of New
York State Route 17; thence S 00° 45' 18" E along the westerly  line  of
Townley  Avenue,  a distance of 256.09 feet to a point; thence S 89° 02'
07" W through an iron pin placed at a distance of 200.00 feet,  a  total
distance  of  300.00  feet  to  an  iron  pin;  thence N 00° 59' 17" W a
distance of 47.13 feet to an iron pin; thence S 89° 02' 07" W a distance
of 114.56 feet to a point situate in the southeast corner of Parcel  A-2
as set forth on a survey map hereinafter described; thence N 14° 18' 49"
E  a  distance  of  124.40  feet to an iron pin situate at the southeast
corner of lands now or formerly of Cicci (Liber 923, Page 771); thence N
14° 18' 49" E a distance of 76.46 feet to an iron pin; thence N 00°  57'
53"  W  a  distance  of  26.25 feet to an iron pin marking the southeast
corner of parcel A-1 as set forth on the  hereinafter  described  survey
map;  thence N 00° 58' 01" W a distance of 166.00 to an iron pin situate
at the northeast corner of said Parcel A-1, which  pin  also  marks  the
southeast  corner  of lands now or formerly of Becraft (Liber 1048, Page
1086); thence N 00° 57' 53" W a distance of 106.00 feet to an  iron  pin
situate  in  the  southerly  line of lands now or formerly of the United
States Postal Service; thence N 89° 02' 07" E along the  southerly  line
of  said  United  States  Postal  Service  a distance of 81.47 feet to a
point; thence N 14° 18' 49" E along the easterly  line  of  said  United
States  Postal  Service a distance of 114.29 feet to an iron pin situate
in the southwesterly line of New York State Route 17; thence S  32°  00'
31"  E  along  the  southwesterly  line  of  New  York State Route 17, a
distance of 358.93 feet to an iron  pin;  thence  continuing  along  the

S. 2609                            58                            A. 3009

southwesterly  line  of  New  York  state  Route  17,  S 38° 30' 04" E a
distance of 108.18 feet to the iron pin marking the place of  beginning.
Said  premises  are  set forth and shown as approximately 4.026 acres of
land  designated as Parcel A (excluding Parcels A-1 and A-2) on a survey
map entitled "As-Built Survey of Lands of New York  Inn,  LLC,  City  of
Corning,  Steuben County, New York" by Weiler Associates, dated December
27, 2001, designated Job No. 12462; [or (vii)]
  (VIII) any such premises or businesses located on that  certain  plot,
piece  or parcel of land, situate, lying and being in the Second Ward of
the City of Schenectady, on the Northerly side of Union Street,  bounded
and  described as follows: to wit; Beginning at the Southeasterly corner
of the lands lately owned by Elisha L. Freeman and now by Albert  Shear;
and running from thence Easterly along the line of Union Street, 44 feet
to  the  lands  now owned by or in the possession of James G. Van Vorst;
thence Northerly in a straight line along the last mentioned  lands  and
the lands of the late John Lake, 102 feet to the lands of one Miss Rodg-
ers;  thence Westerly along the line of the last mentioned lands of said
Rodgers to the lands of the said Shear; and thence Southerly  along  the
lands  of  said  Shear  101 feet, 6 inches to Union Street, the place of
beginning.
  Also all that tract or parcel of land,  with  the  buildings  thereon,
situate  in the City of Schenectady, County of Schenectady, and State of
New York, situate in the First, formerly the Second  Ward  of  the  said
City,  on  the  Northerly  side  of  Union Street, which was conveyed by
William Meeker and wife to Elisha L. Freeman by deed  dated  the  second
day  of December 1843, and recorded in the Clerk's Office of Schenectady
County on December 5, 1843, in Book V of Deeds at page 392, which lot in
said deed is bounded and described as follows: Beginning at a  point  in
the  Northerly line of Union Street where it is intersected by the East-
erly line of  property  numbered  235  Union  Street,  which  is  hereby
conveyed,  and  running thence Northerly along the Easterly line of said
property, One Hundred Forty and Five-tenths  (140.5)  feet  to  a  point
sixteen  (16)  feet  Southerly from the Southerly line of the new garage
built upon land adjoining on the North; thence  Westerly  parallel  with
said  garage,  Forty-six  and Seven-tenths (46.7) feet; thence Southerly
One Hundred Forty and Eight-tenths (140.8) feet to the Northerly  margin
of  Union  Street;  thence  Easterly along the Northerly margin of Union
Street, about Forty-eight and three-tenths (48.3) feet to the  point  or
place of beginning.  The two above parcels are together more particular-
ly  described  as follows:  All that parcel of land in the City of Sche-
nectady beginning at a point in the northerly margin of Union Street  at
the southwesterly corner of lands now or formerly of Friedman (Deed Book
636  at  page 423) which point is about 60 feet westerly of the westerly
line of North College Street and runs thence N. 86 deg. 42' 20" W. 92.30
feet to the southeasterly corner of  other  lands  now  or  formerly  of
Friedman  (Deed  Book  798  at  page  498); thence N. 04 deg. 06' 48" E.
140.50 feet to the southwesterly corner of  lands  now  or  formerly  of
Stockade  Associates (Deed Book 1038 at page 521); thence S. 87 deg. 05'
27" E. 46.70 feet to lands now or formerly of McCarthy (Deed  Book  1129
at  page  281); thence along McCarthy S. 00 deg. 52' 02" E. 3.69 feet to
the northwesterly corner of lands now or formerly of SONYMA  (Deed  Book
1502  at  page  621);  thence  along  lands  of SONYMA S. 02 deg 24' 56"
W.34.75 feet to a corner; thence still along lands of SONYMA  and  lands
now  or formerly of Magee (Deed Book 399 at page 165) S. 86 deg. 11' 52"
E. 42.57 feet to a corner; thence still along lands of Magee  and  Lands
of  Friedman  first above mentioned S. 03 deg. 10' 08" W. 102.00 feet to

S. 2609                            59                            A. 3009

the point of beginning.  Excepting and reserving all that portion of the
above parcel lying easterly of a line described as follows:    All  that
tract  or parcel of land, situated in the City of Schenectady and County
of  Schenectady  and  State  of New York, on the Northerly side of Union
Street bounded and described as follows:  Beginning at a  point  in  the
northerly  line  of  Union Street, said point being in the division line
between lands now or formerly of Electric Brew Pubs, Inc. (1506 of Deeds
at page 763) on the West and lands now or formerly  of  Margaret  Wexler
and  Donna Lee Wexler Pavlovic, as trustees under Will of Ruth F. Wexler
(Street number 241 Union Street) on the East; thence North 03  deg.  04'
10"  East,  along  the  building known as Street No. 241 Union Street, a
distance of 30.50 feet to a point; thence North 88 deg.  45'  45"  West,
along  said  building  and  building  eve,  a distance of 5.62 feet to a
point; thence North 03 deg. 03' 30" East, along  said  building  eve  of
Street  No.  241 Union Street, a distance of 32.74 feet; thence South 88
deg. 45' 45" East, along said building eve, a distance of 1.2 feet to an
intersection of building corner of Street No. 241  Union  Street  and  a
brick  wall; thence north 03 deg. 37' 30" East, along said brick wall, a
distance of 14.47 feet to a point in  the  corner  of  the  brick  wall,
thence  South  86  deg. 46' 45" East along said brick wall a distance of
4.42 feet to the intersection of  brick  wall  with  the  boundary  line
between  the  Electric Brew Pubs, Inc. (aforesaid) on the West and lands
of Margaret Wexler and Donna Lee Wexler  Pavlovic,  (aforesaid)  on  the
East;  thence  North  03 deg 10' 08" East a distance of 0.62 feet to the
Northeast corner of lands belonging to Margaret  Wexler  and  Donna  Lee
Wexler  Pavlovic.   Also all that tract or parcel of land commonly known
as the Union Street School, located on the Northeasterly corner of Union
and North College Streets in the First Ward of the City  and  County  of
Schenectady  and  State  of  New  York,  more  particularly  bounded and
described as follows:  Beginning at a point in the Northerly street line
of Union Street where it is intersected by the Easterly street  line  of
North  College  Street,  and  runs  thence  Northerly along the Easterly
street line of North College Street, one hundred seven  and  five-tenths
(107.5)  feet  to  a  point,  thence easterly at an angle of ninety (90)
degrees, one hundred ninety-one  and  seventy-five  hundredths  (191.75)
feet  to  a  point  in  the  Northwesterly street line of Erie Boulevard
thence southwesterly along the Northwesterly street line of Erie  Boule-
vard,  one  hundred  twenty-three  and  eight-tenths (123.8) feet to its
intersection with the Northerly street  line  of  Union  Street;  thence
Westerly  along  the  Northerly street line of Union Street, one hundred
twenty-four and fifty-five hundredths (124.55)  feet  to  the  point  or
place of beginning.
  The  above  described parcel of property includes the Blue Line parcel
of land, which is a portion of the abandoned Erie Canal  Lands,  located
in  the  First Ward of the City of Schenectady, New York, and which Blue
Line parcel lies between the Northwesterly line of Erie Boulevard as set
forth in the above described premises and the Northeasterly lot line  of
the  old  Union Street School as it runs parallel with the Northwesterly
line of Erie Boulevard as aforesaid.
  The two above parcels are  together  more  particularly  described  as
follows: All that parcel of land in the City of Schenectady beginning at
a  point  in  the northerly margin of Union Street and the northwesterly
margin of Erie Boulevard and runs thence along Union Street N.  86  deg.
42'  20"  W. 124.55 feet to the easterly margin of North College Street;
thence along North College Street N. 05 deg 04' 40" E.  107.50  feet  to
the southeasterly corner of lands now or formerly of McCarthy (Deed Book

S. 2609                            60                            A. 3009

1129 at page 279); thence along McCarthy, Cottage Alley and lands now or
formerly  of  McGregor (Deed Book 912 at page 624) S. 84 deg. 55' 20" E.
191.75 feet to the northwesterly margin of Erie Boulevard; thence  along
Erie  Boulevard S. 38 deg. 03' 53" W. 123.54 feet to the point of begin-
ning; [or (viii)]
  (IX) any such premises or businesses located on that tract  or  parcel
of  land  situate  in the Town of Hopewell, Ontario County, State of New
York, bounded and described as follows: Commencing at a 5/8" rebar found
on the division line between lands now or formerly of Ontario  County  -
Finger  Lakes  Community  College  (Liber 698 of Deeds, Page 466) on the
north and lands now or formerly of James W. Baird (Liber 768  of  Deeds,
Page  1109)  on the south; thence, North 43°-33'-40" West, on said divi-
sion line, a distance of 77.32 feet to the Point of  Beginning.  Thence,
North  43°-33'-40"  West,  continuing  on said division line and through
said lands of Ontario County, a distance of 520.45 feet to  a  point  on
the  southeasterly  edge  of  an  existing  concrete  pad; thence, South
74°-19'-53" West, along said edge of concrete and the projection  there-
of,  a  distance of 198.78 feet to a point on the easterly edge of pave-
ment of an existing campus drive; thence, the following two (2)  courses
and  distances  along said edge of pavement: Northeasterly on a curve to
the left having a radius of 2221.65  feet,  a  chord  bearing  of  North
30°-16'-39"  East,  a  chord  distance  of  280.79,  a  central angle of
07°-14'-47", a length of 280.98 feet to a point  of  reverse  curvature;
thence,  Northeasterly on a curve to the right having a radius of 843.42
feet, a chord bearing of North 45°-25'-09" East,  a  chord  distance  of
534.08,  a  central  angle  of 36°-55'-01", a length of 543.43 feet to a
point; thence, South 30°-04'-59" East, a distance of 18.28 feet  to  the
corner  of  the property acquired by Ontario County (Liber 766 of Deeds,
Page 1112), as shown on a map recorded in  the  Ontario  County  Clerk's
Office  as  Map  No.  6313;  thence,  the following four (4) courses and
distances along said property line: South 30°-04'-59" East,  a  distance
of 177.17 feet to a point; thence, South 02°-20'-33" East, a distance of
147.53  feet  to  a point; thence, South 41°-31'-35" East, a distance of
200.93 feet to a point; thence, South 23°-48'-53" West, along said prop-
erty line, and the projection thereof, through the first said  lands  of
Ontario  County  -  Finger  Lakes Community College (Liber 698 of Deeds,
Page 466), a distance of 517.96 feet to Point of Beginning. Said  parcel
containing  7.834  acres,  more  or  less,  as  shown  on a map entitled
"Proposed Lease Area - Friends  of  the  Finger  Lakes  Performing  Arts
Center,  Hopewell,  NY", prepared by Bergmann Associates, drawing LM-01,
dated June 10, 2005, last revised August 17, 2005. The related PAC Prop-
erties are shown on the Map denominated  "FLCC  Campus  Property,  FLPAC
Ground  Lease,  Parking, Vehicular & Pedestrian Access", recorded in the
Ontario County Clerk's Office on December 10, 2009 in Book 1237 of Deeds
at page 9 and are comprised of the areas separately labeled  as  Parking
Lot  'A', Parking Lot 'G', the Ticket Booth area, the Sidewalks, and the
Entry Roads[.];
  (X) ANY PREMISES LICENSED PURSUANT TO SECTION  SIXTY-THREE-B  OF  THIS
CHAPTER.
  [The  provisions  of this paragraph shall not apply to] (XI) any prem-
ises licensed under section  sixty-four  of  this  chapter  in  which  a
manufacturer or wholesaler holds a direct or indirect interest, provided
that:  [(I)]  (1)  said premises consist of an interactive entertainment
facility which  predominantly  offers  interactive  computer  and  video
entertainment  attractions,  and  other  games  and  also  offers themed
merchandise and food and beverages, [(II)] (2)  the  sale  of  alcoholic

S. 2609                            61                            A. 3009

beverages  within the premises shall be restricted to an area consisting
of not more than twenty-five percent of the total interior floor area of
the premises, [(III)] (3) the retail licenses shall derive not less than
sixty-five  percent  of the total revenue generated by the facility from
interactive video entertainment activities and  other  games,  including
related  attractions  and sales of merchandise other than food and alco-
holic beverages, [(IV)] (4) the interested manufacturer  or  wholesaler,
or its parent company, shall be listed on a national securities exchange
and  its direct or indirect equity interest in the retail licensee shall
not exceed twenty-five percent, [(V)] (5) no more than  fifteen  percent
of  said  licensee's  purchases  of  alcoholic beverages for sale in the
premises shall be products produced or distributed by  the  manufacturer
or wholesaler, [(VI)] (6) neither the name of the manufacturer or whole-
saler  nor  the  name  of  any  brand  of alcoholic beverage produced or
distributed by said manufacturer or wholesaler shall be part of the name
of the premises, [(VII)] (7) the name of the manufacturer or  wholesaler
or  the  name  of  products  sold or distributed by such manufacturer or
wholesaler shall not be identified on  signage  affixed  to  either  the
interior  or  the  exterior of the premises in any fashion, [(VIII)] (8)
promotions involving alcoholic beverages produced or distributed by  the
manufacturer  or  wholesaler  are not held in such premises and further,
retail and consumer advertising specialties  bearing  the  name  of  the
manufacturer  or  wholesaler or the name of alcoholic beverages produced
or distributed by the manufacturer or wholesaler are not utilized in any
fashion, given away or sold in said premises, and [(IX)] (9)  except  to
the  extent  provided  in this paragraph, the licensing of each premises
covered by this exception  is  subject  to  all  provisions  of  section
sixty-four of this chapter, including but not limited to liquor authori-
ty approval of the specific location thereof.
  The provisions of this paragraph shall not prohibit (1) a manufacturer
or  wholesaler, if an individual, or a partner, of a partnership, or, if
a corporation, an officer or director thereof, from being an officer  or
director  of a duly licensed charitable organization which is the holder
of a license for on-premises consumption under this chapter, nor  (2)  a
manufacturer  from  acquiring  any such premises if the liquor authority
first consents thereto after determining, upon such proofs as  it  shall
deem  sufficient, that such premises is contiguous to the licensed prem-
ises of such manufacturer, and is reasonably necessary for the expansion
of the facilities of such manufacturer. After any such  acquisition,  it
shall  be illegal for a manufacturer acquiring any such premises to sell
or deliver alcoholic beverages manufactured by him to any licensee occu-
pying such premises.
  S 10. If any provision of this act or the  application  thereof  shall
for  any reason be finally adjudged by a court of competent jurisdiction
to be invalid or  unconstitutional,  such  judgment  shall  not  affect,
impair, or invalidate the remainder of this act but shall be confined in
its  operation  to  the provision or provisions directly involved in the
controversy in which such judgment shall have been rendered. It is here-
by declared to be the intent of the legislature that this act would have
been enacted even if such invalid provision or provisions had  not  been
included.    In the event that any provision of the laws of New York, as
amended by this act, shall be finally adjudged by a court  of  competent
jurisdiction  to  be invalid or unconstitutional, the provisions of such
laws in effect prior to the date this act shall have  become  law  shall
not be affected by such judgment.

S. 2609                            62                            A. 3009

  S  11. This act shall take effect immediately; provided, however, that
the sales tax exemptions created by sections three and four of this  act
shall  take  effect on the first day of a sales tax quarterly period, as
described in subdivision (b) of  section  1136  of  the  tax  law,  next
commencing  at  least 30 days after this act shall have become a law and
shall apply in accordance with the applicable transitional provisions in
sections 1106 and 1217 of the tax law; and  provided  further  that  the
amendments  to  subdivisions  1  and  2 of section 56-a of the alcoholic
beverage control law made by section eight of this act shall take effect
on the same date and in the same manner as sections 7 and 8, respective-
ly, of chapter 108 of the laws of 2012, as amended, take effect.

                                 PART J

  Section 1. The general municipal  law  is  amended  by  adding  a  new
section 875 to read as follows:
  S  875.  SPECIAL PROVISIONS APPLICABLE TO STATE SALES AND COMPENSATING
USE TAXES AND CERTAIN TYPES OF  FACILITIES.  1.  FOR  PURPOSES  OF  THIS
SECTION:  "STATE  SALES  AND USE TAXES" MEANS SALES AND COMPENSATING USE
TAXES AND FEES IMPOSED BY ARTICLE TWENTY-EIGHT OR TWENTY-EIGHT-A OF  THE
TAX  LAW  BUT  EXCLUDING  SUCH TAXES IMPOSED IN A CITY BY SECTION ELEVEN
HUNDRED SEVEN OR ELEVEN HUNDRED  EIGHT  OF  SUCH  ARTICLE  TWENTY-EIGHT.
"IDA" MEANS AN INDUSTRIAL DEVELOPMENT AGENCY ESTABLISHED BY THIS ARTICLE
OR AN INDUSTRIAL DEVELOPMENT AUTHORITY CREATED BY THE PUBLIC AUTHORITIES
LAW. "COMMISSIONER" MEANS THE COMMISSIONER OF TAXATION AND FINANCE.
  2.  (A)  AN  IDA  SHALL  NOT PROVIDE STATE SALES AND USE TAX EXEMPTION
BENEFITS WITH RESPECT TO ANY PROJECT UNLESS AND UNTIL THE  PREREQUISITES
SET  FORTH  IN  PARAGRAPHS (B), (C), (D) AND (E) OF THIS SUBDIVISION ARE
MET.
  (B) EITHER (I) THE AGENT OR PROJECT OPERATOR OF SUCH PROJECT MUST HAVE
BEEN CERTIFIED AS A PARTICIPANT IN THE EXCELSIOR JOBS PROGRAM,  AS  SUCH
TERM  "PARTICIPANT" IS DEFINED IN SECTION THREE HUNDRED FIFTY-TWO OF THE
ECONOMIC DEVELOPMENT LAW, AND PROVIDES TO THE IDA VALID PROOF OF PARTIC-
IPATION IN SUCH PROGRAM, OR (II) IF SUCH AGENT OR  PROJECT  OPERATOR  IS
NOT A PARTICIPANT IN SUCH PROGRAM, THE IDA, AFTER REVIEWING THE FACTS ON
THE  RECORD,  MUST FIND THAT THE AGENT OR PROJECT OPERATOR IS A BUSINESS
ENTITY OF THE TYPE DESCRIBED IN SUBDIVISION ONE OF SECTION THREE HUNDRED
FIFTY-THREE OF THE ECONOMIC  DEVELOPMENT  LAW  AND  REGULATIONS  ADOPTED
PURSUANT TO SUCH SECTION.
  (C)  IF  THE  PREREQUISITE IN EITHER SUBPARAGRAPH (I) OR (II) OF PARA-
GRAPH (B) OF THIS SUBDIVISION HAS BEEN MET,  THE  IDA  SHALL  SUBMIT  IN
WRITING ITS PLAN TO PROVIDE SUCH STATE SALES AND USE TAX EXEMPTION BENE-
FITS  FOR  SUCH  PROJECT,  TOGETHER WITH THE FINDINGS IT MADE UNDER SUCH
SUBPARAGRAPH (II) OF PARAGRAPH  (B)  TO  THE  COMMISSIONER  OF  ECONOMIC
DEVELOPMENT.
  (D)  THE  COMMISSIONER  OF  ECONOMIC  DEVELOPMENT  SHALL  REVIEW  SUCH
PROPOSED STATE SALES AND USE TAX EXEMPTION BENEFIT PLAN FOR SUCH PROJECT
AND DETERMINE, IN CONSULTATION WITH THE  REGIONAL  ECONOMIC  DEVELOPMENT
COUNCIL  ESTABLISHED  BY  THE GOVERNOR THAT ENCOMPASSES THE JURISDICTION
FOR WHOSE BENEFIT THE IDA RECOMMENDING THE TAX  EXEMPTION  BENEFITS  WAS
CREATED, WHETHER SUCH PROPOSED STATE SALES AND USE TAX EXEMPTION BENEFIT
PLAN  FOR  SUCH PROJECT IS CONSISTENT WITH REGIONAL ECONOMIC DEVELOPMENT
STRATEGIES.
  (E) THE COMMISSIONER OF ECONOMIC DEVELOPMENT SHALL  REVIEW  THE  IDA'S
FINDINGS,  IF  ANY,  AND  APPROVE OR DISAPPROVE THE PROPOSED BENEFITS OR
DENY THEM IF SUCH COMMISSIONER DOES NOT APPROVE SUCH IDA'S FINDINGS THAT

S. 2609                            63                            A. 3009

THE AGENT/PROJECT OPERATOR IS A BUSINESS ENTITY OF  THE  TYPE  REQUIRED.
SUCH  COMMISSIONER  IS ALSO AUTHORIZED TO MODIFY THE IDA'S PROPOSED PLAN
BY REDUCING THE TOTAL AMOUNT  OF  ANY  SUCH  STATE  SALES  AND  USE  TAX
EXEMPTION  BENEFITS  OR  BY SPECIFYING THAT SUCH BENEFITS SHALL APPLY TO
ONLY SOME OF THE TYPES OF PROPERTY OR SERVICES  PROPOSED  TO  BE  EXEMPT
FROM  SUCH  STATE TAXES OR BY REDUCING THE TIME PERIOD DURING WHICH SUCH
BENEFITS MAY BE PROVIDED. SUCH COMMISSIONER  SHALL  ADVISE  THE  IDA  IN
WRITING  OF HIS OR HER APPROVAL, DISAPPROVAL, DENIAL, OR MODIFICATION OF
THE IDA'S PLAN, AND SUCH APPROVAL, DISAPPROVAL, DENIAL, OR  MODIFICATION
SHALL BIND THE IDA AS TO WHETHER THE IDA CAN PROVIDE STATE SALES AND USE
TAX  EXEMPTION  BENEFITS  AND,  IF APPROVED IN WHOLE OR AS MODIFIED, THE
AMOUNT OF STATE SALES AND USE TAX EXEMPTION BENEFITS THAT  THE  IDA  CAN
PROVIDE WITH RESPECT TO SUCH PROJECT, THE TYPES OF PROPERTY AND SERVICES
THAT  MAY  BE  ELIGIBLE  FOR  EXEMPTION, AND THE DURATION OF TIME DURING
WHICH SUCH EXEMPTION BENEFITS MAY APPLY. HOWEVER, THE  IDA  MAY  PROVIDE
STATE SALES AND USE TAX EXEMPTION BENEFITS IN A LESSER AMOUNT, FOR FEWER
TYPES OF PROPERTY OR SERVICES, OR FOR A SHORTER PERIOD, THAN AS APPROVED
BY SUCH COMMISSIONER.
  (F)  NOTWITHSTANDING  THE  FOREGOING, IF AT THE TIME AN IDA PROPOSES A
STATE SALES AND USE TAX EXEMPTION BENEFIT  PLAN  THERE  IS  NO  REGIONAL
ECONOMIC  DEVELOPMENT COUNCIL IN THE APPLICABLE REGION, THEN THE COMMIS-
SIONER OF ECONOMIC DEVELOPMENT SHALL REVIEW SUCH PLAN AND ANY SUCH FIND-
INGS AS PROVIDED IN PARAGRAPH (D) OF THIS SUBDIVISION, WITHOUT REGARD TO
THE RECOMMENDATION OF ANY OTHER BODY.
  (G) AN IDA SHALL NOT PROVIDE STATE SALES AND USE TAX  EXEMPTION  BENE-
FITS IN AN AMOUNT GREATER, FOR PROPERTY OR SERVICES OTHER, OR FOR A TIME
PERIOD  LONGER THAN AS APPROVED BY THE COMMISSIONER OF ECONOMIC DEVELOP-
MENT. ANY AMOUNT OF STATE SALES AND USE TAX EXEMPTION BENEFITS  THAT  AN
IDA PURPORTS TO PROVIDE IN EXCESS OF THE AMOUNT APPROVED, OR FOR DIFFER-
ENT  PROPERTY  OR  SERVICES  THAN  APPROVED, OR FOR A PERIOD LONGER THAN
APPROVED BY SUCH COMMISSIONER SHALL BE VOID FROM ITS INCEPTION,  AND  AN
AGENT, PROJECT OPERATOR, OR OTHER PERSON OR ENTITY THAT MAKES A PURCHASE
OR  USE WITHOUT PAYING STATE SALES AND USE TAXES, OR WHO PAID SUCH TAXES
BUT OBTAINED A REFUND OR CREDIT OF THEM, AS A RESULT SHALL  BE  REQUIRED
TO PAY SUCH AMOUNT OF TAX TO THE COMMISSIONER OF TAXATION AND FINANCE IN
ACCORDANCE  WITH  ARTICLES  TWENTY-EIGHT AND TWENTY-NINE OF THE TAX LAW.
THE COMMISSIONER SHALL BE AUTHORIZED TO DETERMINE AND ASSESS STATE SALES
AND USE TAXES FOREGONE ON ACCOUNT OF AN AGENT, PROJECT OPERATOR OR OTHER
PERSON OR ENTITY NOT HAVING PAID SUCH STATE SALES OR USE TAX THAT SHOULD
HAVE BEEN PAID, OR WHO OBTAINED SUCH A REFUND OR CREDIT BUT  SHOULD  NOT
HAVE,  IN  ACCORD  WITH THE APPLICABLE PROVISIONS OF THE TAX LAW, EXCEPT
THAT ANY STATUTE THAT LIMITS THE TIME BY  WHICH  THE  COMMISSIONER  MUST
DETERMINE  OR  ASSESS  SUCH TAX SHALL NOT BEGIN TO RUN UNTIL THE COMMIS-
SIONER HAS RECEIVED ACTUAL NOTICE OF SUCH IMPROPER PURCHASES OR USES.
  3. AN IDA SHALL KEEP RECORDS OF THE AMOUNT OF STATE  AND  LOCAL  SALES
AND  USE  TAX EXEMPTION BENEFITS PROVIDED TO EACH PROJECT AND EACH AGENT
OR PROJECT OPERATOR, AND  SHALL  MAKE  SUCH  RECORDS  AVAILABLE  TO  THE
COMMISSIONER  AND  STATE  COMPTROLLER UPON REQUEST. SUCH IDA SHALL ALSO,
WITHIN THIRTY DAYS OF PROVIDING FINANCIAL ASSISTANCE TO A  PROJECT  THAT
INCLUDES  ANY  AMOUNT  OF  STATE  SALES  AND USE TAX EXEMPTION BENEFITS,
REPORT TO THE COMMISSIONER AND THE STATE COMPTROLLER THE AMOUNT OF  SUCH
BENEFITS FOR SUCH PROJECT, THE PROJECT TO WHICH THEY ARE BEING PROVIDED,
ANY  LIMITATION  ON  THE APPLICATION OR EXERCISE OF SUCH EXEMPTIONS, THE
TYPES OF PROPERTY AND SERVICES TO BE EXEMPTED,  THE  TIME  DURING  WHICH
SUCH  EXEMPTION BENEFITS APPLY, AND THE NAME AND ADDRESS OF THE AGENT OR
PROJECT OPERATOR OF SUCH PROJECT, TOGETHER WITH SUCH  OTHER  INFORMATION

S. 2609                            64                            A. 3009

AND  SUCH SPECIFICITY AND DETAIL AS THE COMMISSIONER MAY PRESCRIBE, WITH
A COPY OF SUCH REPORT FURNISHED AT THE SAME TIME TO THE AGENT OR PROJECT
OPERATOR. THIS REPORT MAY BE MADE  IN  CONJUNCTION  WITH  THE  STATEMENT
REQUIRED  BY  SUBDIVISION  NINE OF SECTION EIGHT HUNDRED SEVENTY-FOUR OF
THIS ARTICLE OR IT MAY BE MADE AS A SEPARATE REPORT, AT  THE  DISCRETION
OF  THE  COMMISSIONER.  AN  AGENT OR PROJECT OPERATOR OR OTHER PERSON OR
ENTITY SHALL NOT AVAIL ITSELF OF  STATE  OR  LOCAL  SALES  AND  USE  TAX
EXEMPTIONS  IN  EXCESS OF THE AMOUNT OR IN CONTRAVENTION OF THE TIME AND
OTHER LIMITATIONS SET OUT IN SUCH REPORT OR  FOR  PROPERTY  OR  SERVICES
OTHER  THAN THOSE SET OUT IN SUCH REPORT. AN IDA THAT FAILS TO MAKE SUCH
RECORDS AVAILABLE TO THE COMMISSIONER OR TO THE STATE COMPTROLLER OR  TO
FILE  SUCH REPORT OR TO COMPLY WITH ANY OTHER REQUIREMENT OF THIS SUBDI-
VISION SHALL BE PROHIBITED  FROM  PROVIDING  STATE  SALES  AND  USE  TAX
EXEMPTION  BENEFITS FOR ANY PROJECT UNLESS AND UNTIL SUCH IDA COMES INTO
COMPLIANCE WITH ALL SUCH REQUIREMENTS.
  4. NOTWITHSTANDING ANY PROVISION OF THIS SECTION OR OTHER LAW,  IN  NO
CASE  SHALL  AN  IDA  AGENT, PROJECT OPERATOR, OR OTHER PERSON OR ENTITY
TAKE ANY STATE SALES AND USE TAX EXEMPTION BENEFITS AS EXEMPTIONS AT THE
TIME OF PURCHASE OR USE. RATHER, IN ALL  CASES,  THE  PERSON  OR  ENTITY
SHALL PAY STATE SALES OR USE TAX TO THE PERSON REQUIRED TO COLLECT IT AT
THE  TIME OF PURCHASE OR TO THE COMMISSIONER IN ACCORD WITH THE REQUIRE-
MENTS OF ARTICLE TWENTY-EIGHT OF THE TAX LAW. AFTER HAVING PAID  TAX  TO
THE PERSON REQUIRED TO COLLECT IT OR TO THE COMMISSIONER, SUCH PERSON OR
ENTITY MAY THEN APPLY TO THE COMMISSIONER FOR A REFUND OR CREDIT OF SUCH
TAX  ACTUALLY  PAID. ANY SUCH REFUND OR CREDIT SHALL THEN BE APPLIED FOR
IN THE MANNER ESTABLISHED BY AND SUBJECT TO THE PROVISIONS OF SUCH ARTI-
CLE TWENTY-EIGHT.
  5. NOTWITHSTANDING ANY PROVISION OF THIS SECTION OR OTHER LAW, AN  IDA
SHALL NOT CREATE A PROJECT OR ANY PORTION OF A PROJECT, OR AUTHORIZE THE
USE OF ANY PROJECT OR PROJECT PROPERTY, OUTSIDE THIS STATE.
  6.  AN IDA THAT ENTERS INTO AN AGREEMENT REQUIRING PAYMENTS IN LIEU OF
STATE SALES AND USE TAXES TO BE PAID TO IT SHALL REMIT THE  FULL  AMOUNT
OF  ANY SUCH PAYMENTS IT RECEIVES TO THE COMMISSIONER WITHIN THIRTY DAYS
OF THE DATE THAT THE IDA RECEIVES THE PAYMENT, TOGETHER WITH A RETURN OR
REPORT REQUIRED BY THE COMMISSIONER. THE IDA SHALL SEND A  COPY  OF  ANY
SUCH  AGREEMENT  FOR  PAYMENT  IN LIEU OF SUCH TAXES TO THE COMMISSIONER
WITHIN THIRTY DAYS OF THE DATE IT IS EXECUTED. IF THE PERSON  OR  ENTITY
REQUIRED  TO  MAKE SUCH PAYMENTS TO THE IDA FAILS TO DO SO TIMELY, OR IF
THE IDA FAILS TO REMIT SUCH PAYMENTS TO  THE  COMMISSIONER  TIMELY,  THE
AMOUNT  OF  ANY  SUCH  UNTIMELY  PAYMENTS OR REMISSIONS, TOGETHER WITH A
PENALTY OF FIVE PERCENT OF THE AMOUNT OF SUCH LATE PAYMENTS AND INTEREST
ON SUCH LATE PAYMENTS AT THE RATE OF ONE PERCENT  PER MONTH,  SHALL  ALL
BE DEEMED TO BE SALES TAX WHICH A RETURN OR REPORT SHOWS TO BE DUE UNDER
SECTION  ONE  HUNDRED  SEVENTY-THREE-A  OF  THE TAX LAW AND SUCH AMOUNTS
SHALL BE PAID UPON NOTICE AND DEMAND AND SHALL BE  ASSESSED,  COLLECTED,
AND  PAID  IN  THE  MANNER  PROVIDED  FOR SALES TAX, AND SUCH NOTICE AND
DEMAND SHALL  NOT  BE  CONSIDERED  AS  A  NOTICE  OF  DETERMINATION,  AS
DESCRIBED IN SUCH SECTION ONE HUNDRED SEVENTY-THREE-A. AN IDA SHALL JOIN
THE  COMMISSIONER  AS  A  PARTY IN ANY ACTION OR PROCEEDING THAT THE IDA
COMMENCES TO RECOVER, OBTAIN, OR OTHERWISE SEEK, ANY UNPAID PAYMENTS  IN
LIEU OF STATE SALES AND USE TAX FROM AN AGENT, PROJECT OPERATOR OR OTHER
PERSON OR ENTITY. THE PROVISIONS OF THIS SUBDIVISION SHALL ALSO APPLY TO
ANY  INTEREST  OR  PENALTY  THAT THE IDA IMPOSES ON ANY SUCH PAYMENTS IN
LIEU OF TAXES OR THAT ARE IMPOSED ON SUCH PAYMENTS BY OPERATION  OF  LAW
OR  BY JUDICIAL ORDER OR OTHERWISE. ANY SUCH PAYMENTS, TOGETHER WITH ANY
INTEREST OR PENALTIES THEREON, SHALL BE DEEMED TO BE STATE SALES AND USE

S. 2609                            65                            A. 3009

TAXES AND THE IDA SHALL RECEIVE ANY SUCH PAYMENTS, WHETHER AS  A  RESULT
OF  COURT  ACTION  OR  OTHERWISE,  AS  TRUSTEE FOR AND ON ACCOUNT OF THE
STATE.
  7.  AN  IDA  OR IDA AGENT OR PROJECT OPERATOR SHALL NOT BE EXEMPT FROM
THE TAXES IMPOSED BY PARAGRAPH TEN OF SUBDIVISION (C) OF SECTION  ELEVEN
HUNDRED  FIVE  OR  BY ARTICLE TWENTY-EIGHT-A OR TWENTY-NINE-A OF THE TAX
LAW.
  8. IF AN IDA RECOVERS, RECAPTURES, RECEIVES, OR OTHERWISE OBTAINS, ANY
AMOUNT OF STATE SALES AND USE TAX  EXEMPTION  BENEFITS  FROM  AN  AGENT,
PROJECT OPERATOR OR OTHER PERSON OR ENTITY, THE IDA SHALL, WITHIN THIRTY
DAYS  OF  COMING INTO POSSESSION OF SUCH AMOUNT, REMIT IT TO THE COMMIS-
SIONER, TOGETHER WITH SUCH INFORMATION AND REPORT THAT THE  COMMISSIONER
DEEMS  NECESSARY TO ADMINISTER PAYMENT OVER OF SUCH AMOUNT. AN IDA SHALL
JOIN THE COMMISSIONER AS A PARTY IN ANY ACTION OR  PROCEEDING  THAT  THE
IDA  COMMENCES  TO  RECOVER,  RECAPTURE,  OBTAIN,  OR OTHERWISE SEEK THE
RETURN OF, STATE SALES AND USE TAX EXEMPTION  BENEFITS  FROM  AN  AGENT,
PROJECT  OPERATOR  OR  OTHER  PERSON OR ENTITY.   THIS SUBDIVISION SHALL
APPLY TO ANY AMOUNTS OF STATE SALES AND USE TAX EXEMPTION BENEFITS  THAT
AN  IDA RECOVERS, RECAPTURES, RECEIVES, OR OTHERWISE OBTAINS, REGARDLESS
OF WHETHER THE IDA OR THE AGENT, PROJECT OPERATOR  OR  OTHER  PERSON  OR
ENTITY  CHARACTERIZES  SUCH BENEFITS RECOVERED, RECAPTURED, RECEIVED, OR
OTHERWISE OBTAINED, AS A PENALTY OR LIQUIDATED OR  CONTRACT  DAMAGES  OR
OTHERWISE.  THE  PROVISIONS  OF THIS SUBDIVISION SHALL ALSO APPLY TO ANY
INTEREST OR PENALTY THAT THE IDA IMPOSES ON ANY SUCH AMOUNTS OR THAT ARE
IMPOSED ON SUCH AMOUNTS BY OPERATION OF LAW  OR  BY  JUDICIAL  ORDER  OR
OTHERWISE.  ANY  SUCH  AMOUNTS  OR PAYMENTS THAT AN IDA RECOVERS, RECAP-
TURES, RECEIVES, OR OTHERWISE OBTAINS, TOGETHER  WITH  ANY  INTEREST  OR
PENALTIES  THEREON,  SHALL BE DEEMED TO BE STATE SALES AND USE TAXES AND
THE IDA SHALL RECEIVE ANY SUCH AMOUNTS OR PAYMENTS, WHETHER AS A  RESULT
OF  COURT  ACTION  OR  OTHERWISE,  AS  TRUSTEE FOR AND ON ACCOUNT OF THE
STATE.
  9. THE COMMISSIONER SHALL DEPOSIT AND DISPOSE OF  ANY  AMOUNT  OF  ANY
PAYMENTS  OR  MONEYS  RECEIVED FROM OR PAID OVER BY AN IDA OR FROM OR BY
ANY PERSON OR ENTITY, OR RECEIVED PURSUANT TO AN  ACTION  OR  PROCEEDING
COMMENCED  BY  AN  IDA, TOGETHER WITH ANY INTEREST OR PENALTIES THEREON,
PURSUANT TO SUBDIVISION SIX OR EIGHT OF THIS SECTION, AS STATE SALES AND
USE TAXES IN ACCORD WITH THE PROVISIONS OF ARTICLE TWENTY-EIGHT  OF  THE
TAX  LAW.   THE AMOUNT OF ANY SUCH PAYMENTS OR MONEYS, TOGETHER WITH ANY
INTEREST OR PENALTIES THEREON, SHALL BE ATTRIBUTED TO THE TAXES  IMPOSED
BY SECTIONS ELEVEN HUNDRED FIVE AND ELEVEN HUNDRED TEN, ON THE ONE HAND,
AND SECTION ELEVEN HUNDRED NINE OF THE TAX LAW, ON THE OTHER HAND, OR TO
ANY  LIKE TAXES OR FEES IMPOSED BY SUCH ARTICLE, BASED ON THE PROPORTION
THAT THE RATES OF SUCH TAXES OR FEES BEAR TO EACH OTHER, UNLESS THERE IS
EVIDENCE TO SHOW THAT ONLY ONE OR THE OTHER OF SUCH TAXES  OR  FEES  WAS
IMPOSED OR RECEIVED OR PAID OVER.
  10.  THE  STATEMENT  THAT  AN  IDA  IS REQUIRED BY SUBDIVISION NINE OF
SECTION EIGHT HUNDRED SEVENTY-FOUR OF THIS  ARTICLE  TO  FILE  WITH  THE
COMMISSIONER  SHALL  NOT BE CONSIDERED AN EXEMPTION OR OTHER CERTIFICATE
OR DOCUMENT UNDER ARTICLE TWENTY-EIGHT OR TWENTY-NINE OF  THE  TAX  LAW.
THE  IDA  SHALL  NOT  REPRESENT TO ANY AGENT, PROJECT OPERATOR, OR OTHER
PERSON OR ENTITY THAT A COPY OF SUCH STATEMENT MAY SERVE AS A  SALES  OR
USE  TAX EXEMPTION CERTIFICATE OR DOCUMENT. NO AGENT OR PROJECT OPERATOR
MAY TENDER A COPY OF SUCH STATEMENT TO ANY PERSON  REQUIRED  TO  COLLECT
SALES OR USE TAXES AS THE BASIS TO MAKE ANY PURCHASE EXEMPT FROM TAX. NO
SUCH  PERSON  REQUIRED  TO  COLLECT SALES OR USE TAXES MAY ACCEPT SUCH A
STATEMENT IN LIEU OF COLLECTING ANY TAX REQUIRED TO  BE  COLLECTED.  THE

S. 2609                            66                            A. 3009

CIVIL  AND  CRIMINAL PENALTIES FOR MISUSE OF A COPY OF SUCH STATEMENT AS
AN EXEMPTION CERTIFICATE OR DOCUMENT OR FOR FAILURE TO  PAY  OR  COLLECT
TAX  SHALL BE AS PROVIDED IN THE TAX LAW. IN ADDITION, THE USE BY AN IDA
OR AGENT, PROJECT OPERATOR, OR OTHER PERSON OR ENTITY OF SUCH STATEMENT,
OR  THE  IDA'S RECOMMENDATION OF THE USE OR TENDERING OF SUCH STATEMENT,
AS SUCH AN EXEMPTION CERTIFICATE OR DOCUMENT  SHALL  BE  DEEMED  TO  BE,
UNDER  ARTICLES  TWENTY-EIGHT AND THIRTY-SEVEN OF THE TAX LAW, THE ISSU-
ANCE OF A FALSE OR FRAUDULENT EXEMPTION  CERTIFICATE  OR  DOCUMENT  WITH
INTENT TO EVADE TAX.
  11. IN CONSULTATION WITH THE COMMISSIONER OF ECONOMIC DEVELOPMENT, THE
COMMISSIONER OF TAXATION AND FINANCE IS HEREBY AUTHORIZED TO ADOPT RULES
AND  REGULATIONS AND TO ISSUE PUBLICATIONS AND OTHER GUIDANCE IMPLEMENT-
ING THE PROVISIONS OF THIS SECTION AND OF THE  OTHER  SECTIONS  OF  THIS
ARTICLE  RELATING  TO  ANY  STATE  OR  LOCAL TAX OR FEE, OR EXEMPTION OR
EXCLUSION THEREFROM, THAT THE COMMISSIONER ADMINISTERS AND THAT  MAY  BE
AFFECTED  BY ANY PROVISION OF THIS ARTICLE, AND ANY SUCH RULES AND REGU-
LATIONS OF THE COMMISSIONER SHALL HAVE THE SAME FORCE  AND  EFFECT  WITH
RESPECT  TO SUCH TAXES AND FEES, OR AMOUNTS MEASURED IN RESPECT OF THEM,
AS IF THEY HAD BEEN ADOPTED BY THE COMMISSIONER PURSUANT TO THE AUTHORI-
TY OF THE TAX LAW.
  12. TO THE EXTENT THAT A PROVISION OF THIS SECTION  CONFLICTS  WITH  A
PROVISION  OF  ANY OTHER SECTION OF THIS ARTICLE, THE PROVISIONS OF THIS
SECTION SHALL CONTROL.
  S 2. The public authorities law is amended by  adding  a  new  section
1963-b to read as follows:
  S  1963-B. SPECIAL PROVISIONS APPLICABLE TO STATE SALES AND COMPENSAT-
ING USE TAXES AND CERTAIN TYPES OF FACILITIES. THE PROVISIONS OF SECTION
EIGHT HUNDRED SEVENTY-FIVE OF THE GENERAL MUNICIPAL LAW SHALL  APPLY  TO
THE  PROVISIONS OF THIS TITLE AND TO THE AUTHORITY CREATED BY THIS TITLE
WITH THE SAME FORCE AND EFFECT AS IF  THE  PROVISIONS  OF  SUCH  SECTION
EIGHT HUNDRED SEVENTY-FIVE HAD BEEN INCORPORATED IN FULL INTO THIS TITLE
AND  HAD  EXPRESSLY REFERRED TO THE PROVISIONS OF THIS TITLE AND TO SUCH
AUTHORITY, WITH SUCH CHANGES TO SUCH SECTION AS ARE NECESSARY  TO  REFER
TO  THE  PROVISIONS  OF  THIS TITLE AND TO THE AUTHORITY CREATED BY THIS
TITLE.
  S 3. The public authorities law is amended by  adding  a  new  section
2326-a to read as follows:
  S  2326-A. SPECIAL PROVISIONS APPLICABLE TO STATE SALES AND COMPENSAT-
ING USE TAXES AND CERTAIN TYPES OF FACILITIES. THE PROVISIONS OF SECTION
EIGHT HUNDRED SEVENTY-FIVE OF THE GENERAL MUNICIPAL LAW SHALL  APPLY  TO
THE  PROVISIONS OF THIS TITLE AND TO THE AUTHORITY CREATED BY THIS TITLE
WITH THE SAME FORCE AND EFFECT AS IF  THE  PROVISIONS  OF  SUCH  SECTION
EIGHT HUNDRED SEVENTY-FIVE HAD BEEN INCORPORATED IN FULL INTO THIS TITLE
AND  HAD  EXPRESSLY REFERRED TO THE PROVISIONS OF THIS TITLE AND TO SUCH
AUTHORITY, WITH SUCH CHANGES TO SUCH SECTION AS ARE NECESSARY  TO  REFER
TO  THE  PROVISIONS  OF  THIS TITLE AND TO THE AUTHORITY CREATED BY THIS
TITLE.
  S 4. Subdivision 3 of section 810 of the  general  municipal  law,  as
amended  by  chapter  356  of  the  laws  of 1993, is amended to read as
follows:
  3. The term "local officer or employee" shall mean  the  heads  (other
than local elected officials) of any agency, department, division, coun-
cil,  board,  commission, or bureau of a political subdivision and their
deputies and assistants, and the officers and employees  of  such  agen-
cies,  departments,  divisions, boards, bureaus, commissions or councils
who hold policy-making positions, as annually determined by the appoint-

S. 2609                            67                            A. 3009

ing authority and set forth in a written instrument which shall be filed
with the appropriate body during the month of February; except that  the
term  "local officer or employee" shall not mean a judge, justice, offi-
cer  or  employee  of  the  unified court system. Members, officers, and
employees of each industrial development  agency  and  authority  ESTAB-
LISHED BY THIS CHAPTER OR CREATED BY THE PUBLIC AUTHORITIES LAW shall be
deemed  officers  or employees of the county, city, village, or town for
whose benefit such agency or authority is established OR CREATED.
  S 5. Subdivision 4 of section 854 of the  general  municipal  law,  as
amended  by  chapter  478  of  the  laws  of 2011, is amended to read as
follows:
  (4) "Project" - shall mean any land, any building  or  other  improve-
ment,  and  all real and personal properties located within the state of
New York and within or outside or partially within and partially outside
the municipality for whose benefit the agency  was  created,  including,
but  not  limited  to,  machinery, equipment and other facilities deemed
necessary or desirable in connection therewith, or  incidental  thereto,
whether  or  not  now in existence or under construction, which shall be
suitable for manufacturing, warehousing, research, commercial or  indus-
trial  purposes  or  other  economically  sound  purposes identified and
called for to implement a state designated urban cultural  park  manage-
ment  plan  as provided in title G of the parks, recreation and historic
preservation law and which may include or mean an  industrial  pollution
control facility, a recreation facility, educational or cultural facili-
ty, a horse racing facility, a railroad facility or an automobile racing
facility,  provided,  however,  no agency shall use its funds OR PROVIDE
FINANCIAL ASSISTANCE in respect  of  any  project  wholly  or  partially
outside  the municipality for whose benefit the agency was created with-
out the prior consent thereto by the governing body or bodies of all the
other municipalities in which a part or parts of the project is,  or  is
to  be,  located,  AND  SUCH PORTION OF THE PROJECT LOCATED OUTSIDE SUCH
MUNICIPALITY FOR WHOSE BENEFIT THE AGENCY WAS CREATED SHALL  BE  CONTIG-
UOUS WITH THE PORTION OF THE PROJECT INSIDE SUCH MUNICIPALITY.
  S 6. Section 883 of the general municipal law, as added by chapter 356
of the laws of 1993, is amended to read as follows:
  S  883. Conflicts of interest. All members, officers, and employees of
an agency or INDUSTRIAL DEVELOPMENT authority ESTABLISHED BY THIS  CHAP-
TER  OR  CREATED  BY  THE PUBLIC AUTHORITIES LAW shall be subject to the
provisions of article eighteen of this chapter.
  S 7. Subdivision 9 of section 874 of the  general  municipal  law,  as
added  by  section 1 of subpart C of part S of chapter 57 of the laws of
2010, is amended to read as follows:
  (9) (A) Within thirty days of the date that the  agency  designates  a
project  operator  or  other  person  to  act as agent of the agency for
purposes of providing financial assistance consisting of any  sales  and
compensating  use  tax exemption to such person, the agency shall file a
statement with the department of taxation and finance relating  thereto,
on  a  form  and  in such manner as is prescribed by the commissioner of
taxation and finance, identifying each such agent so named by the  agen-
cy, setting forth the taxpayer identification number of each such agent,
giving  a  brief description of the property and/or services intended to
be exempted from such taxes as a result of such  appointment  as  agent,
indicating  the  agency's  rough  estimate  of the value of the property
and/or services to which such appointment as agent  relates,  indicating
the  date when such designation as agent became effective and indicating
the date upon which such designation as agent shall cease.

S. 2609                            68                            A. 3009

  (B) WITHIN THIRTY DAYS OF  THE  DATE  THAT  THE  AGENCY'S  DESIGNATION
DESCRIBED  IN PARAGRAPH (A) OF THIS SUBDIVISION HAS BEEN AMENDED, TERMI-
NATED, BEEN REVOKED, OR BECOME INVALID OR INEFFECTIVE  FOR  ANY  REASON,
THE  AGENCY  SHALL  FILE A STATEMENT WITH THE DEPARTMENT OF TAXATION AND
FINANCE  RELATING THERETO, ON A FORM AND IN SUCH MANNER AS IS PRESCRIBED
BY THE COMMISSIONER OF TAXATION AND FINANCE, IDENTIFYING EACH SUCH AGENT
SO NAMED BY THE AGENCY IN THE ORIGINAL DESIGNATION AND SETTING FORTH THE
TAXPAYER IDENTIFICATION NUMBER AND OTHER IDENTIFYING INFORMATION OF EACH
SUCH AGENT, THE DATE AS OF WHICH THE ORIGINAL DESIGNATION  WAS  AMENDED,
TERMINATED,  REVOKED,  OR  BECAME  INVALID OR INEFFECTIVE AND THE REASON
THEREFOR, TOGETHER WITH A COPY OF THE ORIGINAL DESIGNATION.
  S 8. Subdivision 4 of section 1963 of the public authorities  law,  as
added  by  section 2 of subpart C of part S of chapter 57 of the laws of
2010, is amended to read as follows;
  4. (A) Within thirty days of the date that the authority designates  a
project  operator  or  other person to act as agent of the authority for
purposes of providing financial assistance consisting of any  sales  and
compensating  use  tax exemption to such person, the agency shall file a
statement with the department of taxation and finance relating  thereto,
on  a  form  and  in such manner as is prescribed by the commissioner of
taxation and finance, identifying  each  such  agent  so  named  by  the
authority, setting forth the taxpayer identification number of each such
agent,  giving  a  brief  description  of  the  property and/or services
intended to be exempted from such taxes as a result of such  appointment
as  agent, indicating the authority's rough estimate of the value of the
property and/or services to which such  appointment  as  agent  relates,
indicating  the date when such designation as agent became effective and
indicating the date upon which such designation as agent shall cease.
  (B) WITHIN THIRTY DAYS OF THE DATE THAT  THE  AUTHORITY'S  DESIGNATION
DESCRIBED  IN PARAGRAPH (A) OF THIS SUBDIVISION HAS BEEN AMENDED, TERMI-
NATED, BEEN REVOKED, OR BECOME INVALID OR INEFFECTIVE  FOR  ANY  REASON,
THE AUTHORITY SHALL FILE A STATEMENT WITH THE DEPARTMENT OF TAXATION AND
FINANCE  RELATING THERETO, ON A FORM AND IN SUCH MANNER AS IS PRESCRIBED
BY THE COMMISSIONER OF TAXATION AND FINANCE, IDENTIFYING EACH SUCH AGENT
SO NAMED BY THE AUTHORITY IN THE ORIGINAL DESIGNATION AND SETTING  FORTH
THE  TAXPAYER IDENTIFICATION NUMBER AND OTHER IDENTIFYING INFORMATION OF
EACH SUCH AGENT, THE DATE AS  OF  WHICH  THE  ORIGINAL  DESIGNATION  WAS
AMENDED,  TERMINATED,  REVOKED, OR BECAME INVALID OR INEFFECTIVE AND THE
REASON THEREFOR, TOGETHER WITH A COPY OF THE ORIGINAL DESIGNATION.
  S 9. Subdivision 4 of section 2326 of the public authorities  law,  as
added  by  section 3 of subpart C of part S of chapter 57 of the laws of
2010, is amended to read as follows:
  4. (A) Within thirty days of the date that the authority designates  a
project  operator  or  other person to act as agent of the authority for
purposes of providing financial assistance consisting of any  sales  and
compensating  use  tax exemption to such person, the agency shall file a
statement with the department of taxation and finance relating  thereto,
on  a  form  and  in such manner as is prescribed by the commissioner of
taxation and finance, identifying  each  such  agent  so  named  by  the
authority, setting forth the taxpayer identification number of each such
agent,  giving  a  brief  description  of  the  property and/or services
intended to be exempted from such taxes as a result of such  appointment
as  agent, indicating the authority's rough estimate of the value of the
property and/or services to which such  appointment  as  agent  relates,
indicating  the date when such designation as agent became effective and
indicating the date upon which such designation as agent shall cease.

S. 2609                            69                            A. 3009

  (B) WITHIN THIRTY DAYS OF THE DATE THAT  THE  AUTHORITY'S  DESIGNATION
DESCRIBED  IN PARAGRAPH (A) OF THIS SUBDIVISION HAS BEEN AMENDED, TERMI-
NATED, BEEN REVOKED, OR BECOME INVALID OR INEFFECTIVE  FOR  ANY  REASON,
THE AUTHORITY SHALL FILE A STATEMENT WITH THE DEPARTMENT OF TAXATION AND
FINANCE  RELATING THERETO, ON A FORM AND IN SUCH MANNER AS IS PRESCRIBED
BY THE COMMISSIONER OF TAXATION AND FINANCE, IDENTIFYING EACH SUCH AGENT
SO NAMED BY THE AUTHORITY IN THE ORIGINAL DESIGNATION AND SETTING  FORTH
THE  TAXPAYER IDENTIFICATION NUMBER AND OTHER IDENTIFYING INFORMATION OF
EACH SUCH AGENT, THE DATE AS  OF  WHICH  THE  ORIGINAL  DESIGNATION  WAS
AMENDED,  TERMINATED,  REVOKED, OR BECAME INVALID OR INEFFECTIVE AND THE
REASON THEREFOR, TOGETHER WITH A COPY OF THE ORIGINAL DESIGNATION.
  S 10. Severability. If any provision of this act shall for any  reason
be  finally adjudged by any court of competent jurisdiction to be inval-
id, such judgment shall not affect, impair, or invalidate the  remainder
of  this  act,  but  shall be confined in its operation to the provision
directly involved in the controversy in which such judgment  shall  have
been rendered. It is hereby declared to be the intent of the legislature
that this act would have been enacted even if such invalid provision had
not been included in this act.
  S  11.  This  act shall take effect immediately and shall apply to (a)
any project established, agent or project operator appointed,  financial
assistance  provided,  and agreement regarding payments in lieu of taxes
entered into, on or after the date this act shall have become a law, (b)
any amendment or revision made on or after the date this act shall  have
become  a  law  to  any  project  established, agent or project operator
appointed, financial assistance provided, or payment in  lieu  of  taxes
entered  into,  prior to that date, (c) any state sales and compensating
use tax exemption benefits recovered, recaptured, received, or otherwise
obtained by an industrial development agency or authority established by
the general municipal law or created by the public authorities law on or
after such date, and (d) any payments in lieu of state sales and compen-
sating use taxes of such an industrial development agency  or  authority
receives on or after such date.

                                 PART K

  Section  1. Paragraph 42 of subdivision (a) of section 1115 of the tax
law, as added by section 11 of part W-1 of chapter 109 of  the  laws  of
2006, is amended to read as follows:
  (42)  E85, CNG or hydrogen, for use or consumption directly and exclu-
sively in the engine of a motor vehicle AND NATURAL  GAS  PURCHASED  AND
CONVERTED  INTO CNG, FOR USE OR FOR SALE FOR USE OR CONSUMPTION DIRECTLY
AND EXCLUSIVELY IN THE ENGINE OF A MOTOR VEHICLE.
  S 2. This act shall take effect on the first day of a sales tax  quar-
terly period, as described in subdivision (b) of section 1136 of the tax
law,  next  commencing  after this act shall have become a law and shall
apply in accordance  with  the  applicable  transitional  provisions  in
sections  1106  and  1217  of  the  tax law; provided, however, that the
amendments to paragraph 42 of subdivision (a) of section 1115 of the tax
law made by section one of this act shall not affect the repeal of  such
paragraph and shall be deemed repealed therewith.

                                 PART L

  Section  1.  Section  301-c  of the tax law is amended by adding a new
subdivision (p) to read as follows:

S. 2609                            70                            A. 3009

  (P) REIMBURSEMENT FOR MOTOR FUEL AND  DIESEL  MOTOR  FUEL  USED  BY  A
VOLUNTARY AMBULANCE SERVICE, AS DEFINED IN SECTION THREE THOUSAND ONE OF
THE  PUBLIC  HEALTH LAW, A FIRE COMPANY OR A FIRE DEPARTMENT, AS DEFINED
IN SECTION THREE OF THE VOLUNTEER FIREFIGHTERS' BENEFIT LAW, OR A VOLUN-
TEER RESCUE SQUAD SUPPORTED IN WHOLE OR IN PART BY TAX MONIES, WHERE ANY
SUCH  ENTITY  IS THE PURCHASER, USER OR CONSUMER OF MOTOR FUEL OR DIESEL
MOTOR FUEL IN A VEHICLE OWNED AND  OPERATED  BY  SUCH  ENTITY  AND  USED
EXCLUSIVELY  FOR  SUCH  ENTITY'S PURPOSES. A PURCHASER SHALL BE ELIGIBLE
FOR REIMBURSEMENT OF THE TAX IMPOSED PURSUANT TO THIS ARTICLE IF (1) ANY
TAX IMPOSED PURSUANT TO THIS ARTICLE HAS BEEN PAID WITH RESPECT TO  SUCH
GALLONAGE  AND  THE  ENTIRE AMOUNT OF SUCH TAX HAS BEEN ABSORBED BY SUCH
PURCHASER, AND (2) SUCH PURCHASER POSSESSES DOCUMENTARY PROOF  SATISFAC-
TORY  TO THE COMMISSIONER EVIDENCING THE ABSORPTION BY SUCH PURCHASER OF
THE ENTIRE AMOUNT OF SUCH TAX. PROVIDED,  THAT  THE  COMMISSIONER  SHALL
REQUIRE SUCH DOCUMENTARY PROOF TO QUALIFY FOR ANY REIMBURSEMENT PROVIDED
HEREUNDER AS THE COMMISSIONER DEEMS APPROPRIATE.
  S  2.  This  act shall take effect on the first day of the first month
next succeeding the sixtieth day after it shall have become a law.

                                 PART M

  Section 1. Subparagraphs (A) and (B) of paragraph 4 of subdivision (a)
of section 1134 of the tax law, subparagraph (A) as amended  by  section
21-a of part U of chapter 61 of the laws of 2011 and subparagraph (B) as
amended  by  chapter  2  of  the  laws  of  1995, are amended to read as
follows:
  (A) Where a person who holds a certificate of authority (i)  willfully
fails to file a report or return required by this article, (ii) willful-
ly  files,  causes  to  be  filed, gives or causes to be given a report,
return, certificate or affidavit required under this  article  which  is
false,  (iii) willfully fails to comply with the provisions of paragraph
two or three of subdivision (e) of section eleven  hundred  thirty-seven
of  this  article,  (iv)  willfully fails to prepay, collect, truthfully
account for or pay over any tax imposed under this article  or  pursuant
to  the  authority  of article twenty-nine of this chapter, (v) fails to
obtain a bond pursuant to paragraph two of subdivision  (e)  of  section
eleven  hundred  thirty-seven  of  this  part, or fails to comply with a
notice issued by the commissioner pursuant to paragraph  three  of  such
subdivision,  [or]  (vi)  has  been convicted of a crime provided for in
this chapter, OR UNDER THE PENAL LAW OF THIS STATE WHERE THE  UNDERLYING
CONDUCT  CONSTITUTES  A  CRIME  UNDER THIS CHAPTER, OR IS CONVICTED OF A
CRIMINAL OFFENSE OF THE UNITED STATES, ANY OTHER STATE, OR  A  POLITICAL
SUBDIVISION  OF  THIS  STATE  OR ANY OTHER STATE, WHICH, IF COMMITTED IN
THIS STATE, WOULD CONSTITUTE A SIMILAR CRIME UNDER THIS CHAPTER OR (VII)
SUCH PERSON WOULD BE INELIGIBLE TO RECEIVE SUCH CERTIFICATE OF AUTHORITY
PURSUANT TO CLAUSES (I), (II), (IV) OR (V) OF SUBPARAGRAPH (B)  OF  THIS
PARAGRAPH,  the  commissioner  may revoke or suspend such certificate of
authority and  all  duplicates  thereof.  Provided,  however,  that  the
commissioner  may  revoke or suspend a certificate of authority based on
the grounds set forth in clause (vi) of this subparagraph only where the
conviction referred to occurred not more  than  [one  year]  FIVE  YEARS
prior to the date of revocation or suspension.
  (B)  Where  a person files a certificate of registration for a certif-
icate of authority under this subdivision and in considering such appli-
cation the commissioner ascertains that (i) any tax imposed  under  this
chapter  or  any related statute, as defined in section eighteen hundred

S. 2609                            71                            A. 3009

of this chapter, has been finally determined to be due from such  person
and  has not been paid in full, (ii) [a] ANY tax [due under this article
or any law, ordinance or resolution enacted pursuant to the authority of
article  twenty-nine]  IMPOSED  BY  OR PURSUANT TO THE AUTHORITY OF THIS
CHAPTER OR ANY RELATED STATUTE AS DEFINED IN SECTION EIGHTEEN HUNDRED of
this chapter has been finally determined to  be  due  from  an  officer,
director,  partner or employee of such person, and, where such person is
a limited liability company, also a member or manager of such person, in
the officer's, director's, partner's, member's, manager's or  employee's
capacity as a person required to collect tax on behalf of such person or
another  person  and  has  not  been  paid,  (iii)  such person has been
convicted of a crime provided for in this chapter, OR  UNDER  THE  PENAL
LAW OF THIS STATE WHERE THE UNDERLYING CONDUCT CONSTITUTES A CRIME UNDER
THIS  CHAPTER,  OR  IS  CONVICTED  OF  A  CRIMINAL OFFENSE OF THE UNITED
STATES, ANY OTHER STATE, OR A POLITICAL SUBDIVISION OF THIS STATE OR ANY
OTHER STATE, WHICH, IF COMMITTED IN THIS STATE, WOULD CONSTITUTE A SIMI-
LAR CRIME UNDER THIS CHAPTER within [one year] FIVE YEARS from the  date
on  which  such  certificate  of registration is filed, (iv) an officer,
director, partner or employee of such person, and, where such person  is
a  limited  liability  company, also a member or manager of such person,
which officer, director, partner,  member,  manager  or  employee  is  a
person required to collect tax on behalf of such person filing a certif-
icate  of  registration  has  in  the  officer's, director's, partner's,
member's, manager's or employee's  capacity  as  a  person  required  to
collect tax on behalf of such person or of another person been convicted
of  a  crime [provided for in this chapter] SET FORTH IN CLAUSE (III) OF
THIS SUBPARAGRAPH WHERE THE CONVICTION REFERRED TO OCCURRED within  [one
year] FIVE YEARS from the date on which such certificate of registration
is filed, (v) a shareholder owning more than fifty percent of the number
of  shares  of stock of such person (where such person is a corporation)
entitling the holder thereof to vote for the election  of  directors  or
trustees,  OR  A  PERSON  HAVING  MORE  THAN FIFTY PERCENT OF THE VOTING
RIGHTS OF SUCH PERSON (WHERE SUCH PERSON IS A LIMITED  LIABILITY  COMPA-
NY),  OR  A PERSON HAVING A CONTROLLING INTEREST IN ANY FORM OF PARTNER-
SHIP (CONTROLLING INTEREST MEANING MORE THAN FIFTY PERCENT OF THE  CAPI-
TAL,  PROFITS OR BENEFICIAL INTEREST IN SUCH PARTNERSHIP) who owned more
than fifty percent of the number of such shares of another person (where
such other person is a corporation), OR HAD MORE THAN FIFTY  PERCENT  OF
THE  VOTING  RIGHTS  OF  A LIMITED LIABILITY COMPANY, OR HAD CONTROLLING
INTEREST IN ANY FORM OF PARTNERSHIP (CONTROLLING INTEREST  MEANING  MORE
THAN  FIFTY  PERCENT  OF  THE CAPITAL, PROFITS OR BENEFICIAL INTEREST IN
SUCH PARTNERSHIP) at the time any tax imposed under this chapter or  any
related  statute  as defined in section eighteen hundred of this chapter
was finally determined to  be  due  FROM  SUCH  CORPORATION  OR  LIMITED
LIABILITY  COMPANY  and  where such tax has not been paid in full, or at
the time such other person was convicted of a  crime  [provided  for  in
this  chapter]  SET FORTH IN CLAUSE (III) OF THIS SUBPARAGRAPH WHERE THE
CONVICTION REFERRED TO OCCURRED within [one year] FIVE  YEARS  from  the
date  on  which  such  certificate of registration is filed, [or] (vi) a
certificate of authority issued to  such  person  has  been  revoked  or
suspended  pursuant  to  subparagraph  (A) of this paragraph within [one
year] THREE YEARS from the date on which such certificate  of  registra-
tion  is  filed,  (VII)  A  CERTIFICATE OF AUTHORITY ISSUED TO ANY OTHER
PERSON HAS BEEN REVOKED OR SUSPENDED PURSUANT  TO  SUBPARAGRAPH  (A)  OF
THIS  PARAGRAPH  WITHIN  THREE YEARS FROM THE DATE ON WHICH SUCH CERTIF-
ICATE OF REGISTRATION IS FILED AND AN OFFICER, DIRECTOR, MEMBER,  MANAG-

S. 2609                            72                            A. 3009

ER, PARTNER OR EMPLOYEE OF SUCH PERSON WAS, AT THAT TIME OF SUCH REVOCA-
TION, A PERSON REQUIRED TO COLLECT TAX ON BEHALF OF SUCH PERSON AND SUCH
OFFICER,  DIRECTOR,  MEMBER,  MANAGER,  PARTNER  OR EMPLOYEE IS A PERSON
REQUIRED  TO COLLECT TAX ON BEHALF OF THE PERSON FILING A CERTIFICATE OF
REGISTRATION, OR (VIII) SUCH PERSON HAS COMMITTED  AN  ACT  WHICH  WOULD
GIVE  THE  COMMISSIONER  THE AUTHORITY TO REVOKE OR SUSPEND SUCH CERTIF-
ICATE PURSUANT TO CLAUSE (I), (II), (III), (IV), OR (V) OF  SUBPARAGRAPH
(A)  OF  THIS  PARAGRAPH, the commissioner may refuse to issue a certif-
icate of authority.
  S 2. Subparagraph (A) of paragraph 4 of  subdivision  (a)  of  section
1134  of  the  tax  law, as amended by chapter 2 of the laws of 1995, is
amended to read as follows:
  (A) Where a person who holds a certificate of authority (i)  willfully
fails to file a report or return required by this article, (ii) willful-
ly  files,  causes  to  be  filed, gives or causes to be given a report,
return, certificate or affidavit required under this  article  which  is
false,  (iii) willfully fails to comply with the provisions of paragraph
two or three of subdivision (e) of section eleven  hundred  thirty-seven
of  this  article,  (iv)  willfully fails to prepay, collect, truthfully
account for or pay over any tax imposed under this article  or  pursuant
to  the  authority  of article twenty-nine of this chapter, [or] (v) has
been convicted of a crime provided for in this  chapter,  OR  UNDER  THE
PENAL LAW OF THIS STATE WHERE THE UNDERLYING CONDUCT CONSTITUTES A CRIME
UNDER  THIS CHAPTER, OR IS CONVICTED OF A CRIMINAL OFFENSE OF THE UNITED
STATES, ANY OTHER STATE, OR A POLITICAL SUBDIVISION OF THIS STATE OR ANY
OTHER STATE, WHICH, IF COMMITTED IN THIS STATE, WOULD CONSTITUTE A SIMI-
LAR CRIME UNDER THIS CHAPTER, OR (VI) SUCH PERSON WOULD BE INELIGIBLE TO
RECEIVE SUCH CERTIFICATE OF AUTHORITY PURSUANT  TO  CLAUSES  (I),  (II),
(IV)  OR (V) OF SUBPARAGRAPH (B) OF THIS PARAGRAPH, the commissioner may
revoke or suspend such certificate of authority and all duplicates ther-
eof. Provided, however, that the commissioner may revoke  or  suspend  a
certificate of authority based on the grounds set forth in clause (v) of
this  subparagraph  only  where  the conviction referred to occurred not
more than [one year] FIVE YEARS prior  to  the  date  of  revocation  or
suspension.
  S  3.  Subparagraphs  (C)  and  (E)  of paragraph 4 and paragraph 5 of
subdivision (a) of section 1134 of the tax law, as amended by chapter  2
of the laws of 1995, are amended to read as follows:
  (C)  In  any  of  the  foregoing  instances where the commissioner may
suspend or revoke or refuse to issue a  certificate  of  authority,  the
commissioner may condition the retention or issuance of a certificate of
authority upon (I) the filing of a bond [or], (II) the deposit of tax in
the  manner  provided  in  paragraph  two or three of subdivision (e) of
section eleven hundred thirty-seven OF THIS PART, (III)  NOTWITHSTANDING
PARAGRAPH  TWO  OF SUBDIVISION (A) OF THIS SECTION, THE ISSUANCE OF SUCH
CERTIFICATE FOR A SPECIFIED TERM OF LESS  THAN  THREE  YEARS,  (IV)  THE
FILING  OF  PART-QUARTERLY RETURNS PURSUANT TO PARAGRAPH TWO OF SUBDIVI-
SION (A) OF SECTION ELEVEN HUNDRED THIRTY-SIX  OF  THIS  PART,  (V)  THE
FILING OF ANY UNFILED RETURNS, (VI) ENTERING INTO AN INSTALLMENT PAYMENT
AGREEMENT  OR  OTHERWISE MAKING PAYMENT ARRANGEMENTS SATISFACTORY TO THE
COMMISSIONER, AND/OR (VII) SUCH OTHER  TERMS  AS  THE  COMMISSIONER  AND
APPLICANT MAY AGREE TO.
  (E) After the commissioner has suspended or revoked a person's certif-
icate  of  authority,  by  a  notice of suspension or revocation, or has
refused to issue a certificate of authority, by a notice of refusal,  to
such  person  and such decision has become final as provided for in this

S. 2609                            73                            A. 3009

paragraph, or after a person's certificate of authority has expired,  OR
A  PERSON  WAS  NOTIFIED THAT SUCH PERSON'S CERTIFICATE OF AUTHORITY WAS
DEEMED TO EXPIRE PURSUANT TO PARAGRAPH FIVE OF SUBDIVISION (A)  OF  THIS
SECTION and such person has failed to renew such certificate or obtain a
new  certificate of authority, OR WHERE A PERSON REQUIRED TO COLLECT TAX
HAS FAILED TO APPLY FOR SUCH CERTIFICATE OF AUTHORITY, ANY  such  person
is  prohibited  from  engaging in any business in this state for which a
certificate of authority is required.  If despite such prohibition  such
person  continues  to  be  so  engaged in business, the commissioner may
bring an action to enjoin such person from so engaging in business.   NO
SUCH  ACTION  SHALL BE INSTITUTED BY THE COMMISSIONER BEFORE THE COMMIS-
SIONER GIVES NOTICE TO THE ATTORNEY GENERAL APPRISING HIM OR HER OF SUCH
ACTION AND THE NATURE AND PURPOSE THEREOF, SO THAT THE ATTORNEY  GENERAL
MAY  PARTICIPATE  OR JOIN THEREIN IF IN HIS OR HER OPINION THE INTERESTS
OF THE STATE SO WARRANT, AND THE COMMISSIONER  MAY  NOT  INSTITUTE  SUCH
ACTION  UNTIL  TWO  WEEKS  AFTER  PROVIDING  SUCH NOTICE TO THE ATTORNEY
GENERAL.
  (5) If the commissioner considers it necessary for the proper adminis-
tration of the sales and use taxes and prepaid  taxes  imposed  by  this
article  and  pursuant  to  the authority of article twenty-nine of this
chapter, it may require every  person  under  this  section  or  section
twelve  hundred  fifty-three  of this chapter who holds a certificate of
authority to file a new certificate of registration in such form and  at
such  time  as  the  commissioner  may  prescribe  and to surrender such
certificate of authority. The commissioner may require such  filing  and
such  surrender  not more often than once every three years; HOWEVER, IN
ANY INSTANCE WHERE A HOLDER OF A CERTIFICATE OF AUTHORITY HAS FAILED  TO
FILE  A  SALES TAX RETURN AS REQUIRED BY THIS CHAPTER FOR A PERIOD OF AT
LEAST ONE YEAR SUCH CERTIFICATE SHALL BE DEEMED EXPIRED AND THE  COMMIS-
SIONER  SHALL REQUIRE A NEW CERTIFICATE OF REGISTRATION PURSUANT TO THIS
SUBDIVISION. Upon the filing of such certificate of registration and, TO
THE EXTENT REQUIRED BY THE COMMISSIONER, the surrender of  such  certif-
icate  of  authority,  the commissioner shall issue, within such time as
the commissioner may prescribe, a new certificate of authority,  without
charge,  to  each registrant and a duplicate thereof for each additional
place of business of such registrant.
  S 4. Subparagraph (i) of paragraph 3 of  subdivision  (a)  of  section
1145 of the tax law, as amended by section 48 of part K of chapter 61 of
the laws of 2011, is amended to read as follows:
  (i)  Any  person  required  to obtain a certificate of authority under
section eleven hundred thirty-four of this part who, without  possessing
a  valid  certificate of authority, (A) sells tangible personal property
or services subject to tax, receives amusement  charges  or  operates  a
hotel, (B) purchases or sells tangible personal property for resale, (C)
sells  petroleum products, or (D) sells cigarettes shall, in addition to
any other penalty imposed by this chapter, be subject to a penalty in an
amount [not exceeding] OF five hundred dollars [for  the  first]  A  day
FROM  THE  FIRST DAY on which such sales or purchases are made, [plus an
amount not exceeding two hundred dollars  for  each  subsequent  day  on
which  such  sales  or  purchases  are made,] not to exceed [ten] TWENTY
thousand dollars in the aggregate. THE  WILLFUL  FAILURE  TO  OBTAIN  OR
MAINTAIN  A VALID CERTIFICATE OF AUTHORITY SHALL BE SUBJECT TO A PENALTY
IN AN AMOUNT OF ONE THOUSAND DOLLARS A DAY FROM THE FIRST DAY SUCH SALES
OR PURCHASES ARE MADE, NOT TO  EXCEED  FIFTY  THOUSAND  DOLLARS  IN  THE
AGGREGATE,  IN  ADDITION  TO THE PENALTIES IMPOSED BY SUBDIVISION (B) OF
SECTION EIGHTEEN HUNDRED SEVENTEEN OF THIS ARTICLE, OR ANY OTHER PENALTY

S. 2609                            74                            A. 3009

IMPOSED BY THIS CHAPTER. FOR THE PURPOSES OF THIS SECTION,  THE  PENALTY
FOR  THE  WILLFUL  FAILURE  TO OBTAIN OR MAINTAIN A VALID CERTIFICATE OF
AUTHORITY SHALL BE ALTERNATE  TO  THE  TWENTY  THOUSAND  DOLLAR  PENALTY
DESCRIBED  ABOVE,  AND THE TERM "WILLFUL" SHALL HAVE THE SAME MEANING AS
"WILLFULLY" AS DEFINED IN SUBDIVISION (C) OF  SECTION  EIGHTEEN  HUNDRED
ONE OF THIS CHAPTER.
  S  5. Subparagraphs (ii), (iii) and (iv) of paragraph 3 of subdivision
(a) of section 1145 of the tax law, as amended by chapter 65 of the laws
of 1985, are amended to read as follows:
  (ii) Any person who fails to surrender a certificate of authority when
a notice of revocation, EXPIRATION or suspension has become final shall,
in addition to any other penalty imposed by this chapter, be subject  to
a penalty in an amount not exceeding five hundred dollars [for the first
day  of such failure, together with a penalty in an amount not exceeding
two hundred dollars for each subsequent] A day [of]  FOR  such  failure,
not to exceed [ten] TWENTY thousand dollars in the aggregate.
  (iii)  Any person described in paragraph one or two of subdivision (a)
of section eleven hundred thirty-four OF THIS PART who takes  possession
of  or  pays for business assets under circumstances requiring notifica-
tion by such person to the [tax  commission]  COMMISSIONER  pursuant  to
subdivision (c) of section eleven hundred forty-one OF THIS PART without
having  filed  a  certificate of registration pursuant to section eleven
hundred thirty-four OF THIS PART shall, in addition to any other penalty
imposed by this chapter, be subject  to  a  penalty  in  an  amount  not
exceeding two [hundred] THOUSAND dollars.
  (iv)  If the [tax commission] COMMISSIONER determines that any failure
or act described in this paragraph was due to reasonable cause  and  not
due  to  willful  neglect,  [it] HE OR SHE may remit all or part of such
penalty. PROVIDED, HOWEVER, THIS CLAUSE SHALL NOT APPLY TO A PENALTY FOR
THE WILLFUL FAILURE TO OBTAIN A CERTIFICATE OF AUTHORITY.
  S 6. Paragraph 4 of subdivision (a) of section 1145 of the tax law, as
amended by chapter 65 of the  laws  of  1985,  is  amended  to  read  as
follows:
  (4)  Any  person  required by this article to display a certificate of
authority, who fails to display such certificate in the manner  required
by  this  article  or any rule or regulation adopted by the [tax commis-
sion] COMMISSIONER in connection with such requirement shall,  in  addi-
tion  to  any  other  penalty  imposed  by this chapter, be subject to a
penalty of [fifty] ONE HUNDRED dollars. If the [tax commission]  COMMIS-
SIONER determines that such failure was due to reasonable cause [and not
due  to  willful  neglect], [it] HE OR SHE may remit all or part of such
penalty.
  S 7. Subdivision (g) of section 1146 of the tax law, as added by chap-
ter 577 of the laws of 1997, is amended to read as follows:
  (g) (1) Notwithstanding the provisions  of  subdivision  (a)  of  this
section,  if  the  commissioner  determines  that  a  person required to
collect tax is liable for any tax, penalty or interest under this  arti-
cle  or  is liable for a penalty under subdivision (e) of section eleven
hundred forty-five of this [article] PART with respect to  any  failure,
upon  request in writing of such person, the commissioner shall disclose
in writing to such person  [(1)]  (I)  the  name  of  any  other  person
required  to  collect  tax  or  any other person liable for such penalty
under such subdivision (e) whom the commissioner has  determined  to  be
liable  for  the  same tax, penalty or interest or for such penalty with
respect to such failure, and [(2)] (II)  whether  the  commissioner  has
attempted  to collect such tax, penalty or interest or such penalty from

S. 2609                            75                            A. 3009

such other person, the general nature of such collection activities, and
the amount collected.
  (2) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER TO THE CONTRARY, FOR
THE PURPOSES OF SUBPARAGRAPH (B) OF PARAGRAPH FOUR OF SUBDIVISION (A) OF
SECTION  ELEVEN  HUNDRED  THIRTY-FOUR  OF THIS PART, IF THE COMMISSIONER
DETERMINES THAT ANY TAX IMPOSED UNDER THIS CHAPTER OR ANY RELATED  STAT-
UTE,  AS  DEFINED  IN SECTION EIGHTEEN HUNDRED OF THIS CHAPTER, HAS BEEN
FINALLY DETERMINED TO BE DUE FROM A PERSON REQUIRED TO COLLECT  TAX  AND
HAS  NOT  BEEN  PAID,  UPON  WRITTEN REQUEST OF THE PERSON WHO FILED THE
CERTIFICATE OF REGISTRATION FOR A  CERTIFICATE  OF  AUTHORITY  THAT  WAS
REFUSED,  THE  COMMISSIONER  MAY DISCLOSE TO SUCH PERSON THE NAME OF THE
PERSON OR PERSONS REQUIRED TO COLLECT TAX WHOSE TAX LIABILITY OR LIABIL-
ITIES WERE GROUNDS FOR THE REFUSAL TO ISSUE THE CERTIFICATE OF AUTHORITY
AND THE AMOUNT OR AMOUNTS OF TAX DUE FOR EACH SUCH PERSON OR PERSONS.
  S 8. Subdivisions (a) and (b) of section  1817  of  the  tax  law,  as
amended  by  section 53 of part K of chapter 61 of the laws of 2011, are
amended to read as follows:
  (a) Any person required to obtain a  certificate  of  authority  under
section eleven hundred thirty-four of this chapter who, without possess-
ing  a  valid  certificate  of authority, OR POSSESSING A CERTIFICATE OF
AUTHORITY THAT WAS DEEMED TO HAVE EXPIRED PURSUANT TO PARAGRAPH FIVE  OF
SUBDIVISION  (A)  OF  SECTION ELEVEN HUNDRED THIRTY-FOUR OF THIS CHAPTER
willfully (1) sells tangible personal property or  services  subject  to
tax,  receives  amusement  charges or operates a hotel, (2) purchases or
sells tangible personal property for  resale,  or  (3)  sells  petroleum
products; and any person who fails to surrender a certificate of author-
ity as required by such article shall be guilty of [a misdemeanor] CRIM-
INAL TAX FRAUD IN THE FIFTH DEGREE.
  (b)  Any  person  required  to obtain a certificate of authority under
section eleven hundred thirty-four of this chapter who within five years
after a determination by the commissioner[,] pursuant to such section[,]
to suspend, revoke or refuse to issue a  certificate  of  authority  has
become  final,  OR  WAS  NOTIFIED  BY THE COMMISSIONER THAT THE PERSON'S
CERTIFICATE OF AUTHORITY WAS DEEMED TO HAVE EXPIRED  PURSUANT  TO  PARA-
GRAPH  FIVE  OF SUBDIVISION (A) OF SECTION ELEVEN HUNDRED THIRTY-FOUR OF
THIS CHAPTER, and without possession of a valid certificate of authority
WILLFULLY (1) sells tangible personal property or  services  subject  to
tax,  receives  amusement  charges or operates a hotel, (2) purchases or
sells tangible personal property for  resale,  or  (3)  sells  petroleum
products,  shall  be guilty of [a misdemeanor] CRIMINAL TAX FRAUD IN THE
FOURTH DEGREE.   It shall be an affirmative  defense  that  such  person
performed  the  acts  described in this subdivision without knowledge of
such determination. Any person who violates a provision of this subdivi-
sion, upon conviction, shall be subject to a fine in any amount  author-
ized  by  this article, but not less than five hundred dollars, in addi-
tion to any other penalty provided by law.
  S 9. This act shall take effect immediately, provided that the  amend-
ments  to  subparagraph (A) of paragraph 4 of subdivision (a) of section
1134 of the tax law made by section one of this act shall be subject  to
the expiration and reversion of such subparagraph pursuant to section 23
of  part  U of chapter 61 of the laws of 2011, as amended when upon such
date the provisions of section two of this act shall take effect.

                                 PART N

S. 2609                            76                            A. 3009

  Section 1. Subdivision 1 of section 480-a of the tax law is amended by
adding a new paragraph (f) to read as follows:
  (F)  WHEN A PERSON FILES AN APPLICATION FOR A CERTIFICATE OF REGISTRA-
TION UNDER THIS SECTION, AND IN CONSIDERING SUCH APPLICATION THE COMMIS-
SIONER ASCERTAINS THE EXISTENCE OF  ONE  OR  MORE  OF  THE  GROUNDS  FOR
REFUSAL OF A CERTIFICATE OF AUTHORITY IN CLAUSES (I), (II), (III), (IV),
AND  (V)  OF  SUBPARAGRAPH  (B)  OF PARAGRAPH FOUR OF SUBDIVISION (A) OF
SECTION ELEVEN HUNDRED THIRTY-FOUR OF THIS CHAPTER, THE COMMISSIONER MAY
REFUSE TO ISSUE  A  CERTIFICATE  OF  REGISTRATION.  NOTWITHSTANDING  ANY
PROVISION  OF  THIS CHAPTER TO THE CONTRARY, IF THE COMMISSIONER REFUSES
TO ISSUE A CERTIFICATE  OF  REGISTRATION  UNDER  THIS  SUBDIVISION,  THE
COMMISSIONER SHALL UPON WRITTEN REQUEST OF THE PERSON FILING SUCH APPLI-
CATION  DISCLOSE THE NAME OF THE PERSON OR PERSONS WHOSE TAX LIABILITIES
WERE GROUNDS FOR THE REFUSAL TO ISSUE THE CERTIFICATE OF REGISTRATION.
  S 2.  Paragraph (d) of subdivision 2 of section 480-a of the tax  law,
as  amended  by  chapter  760 of the laws of 1992, is amended to read as
follows:
  (d) Except as otherwise provided in this section, all  the  provisions
of article twenty-eight of this chapter relating to the personal liabil-
ity  for  the  tax, administration, collection and determination of tax,
and deposit and disposition of revenue, including section eleven hundred
thirty-eight of this  chapter  relating  to  determination  of  tax  and
section  eleven  hundred forty-five of this chapter (but only paragraphs
one and two of subdivision (a) of such section)  relating  to  penalties
and  interest  for  failure  to file a return or pay tax within the time
required, shall apply to the applications for registration and the  fees
for  filing  such  applications required by this section and the penalty
imposed pursuant to subdivision three of this section, as if such appli-
cations were returns required under section eleven hundred thirty-six of
this chapter and such filing fees, penalties  and  interest  were  taxes
required  to  be paid pursuant to such article twenty-eight, in the same
manner and with the same force and effect as if  the  language  of  such
provisions  of  such  article twenty-eight had been incorporated in full
into this article, except to the  extent  that  any  such  provision  is
either  inconsistent with a provision of this section or is not relevant
thereto and with such other modifications as may be necessary  to  adapt
the  language  of  such  provisions  to  the provisions of this section.
[Section] EXCEPT AS PROVIDED FOR IN PARAGRAPH (F) OF SUBDIVISION ONE  OF
THIS  SECTION,  SECTION eleven hundred thirty-four of such article twen-
ty-eight shall not apply to this section. Provided,  however,  that  the
commissioner  of taxation and finance shall refund or credit an applica-
tion fee paid with respect to the registration of a vending machine or a
retail place of business in  this  state  through  which  cigarettes  or
tobacco  products  were  to  be  sold  if, prior to the beginning of the
calendar year with respect  to  which  such  registration  relates,  the
certificate  of registration described in paragraph (a) of this subdivi-
sion is returned to the department of taxation and finance, or  if  such
certificate  has  been  destroyed,  the retail dealer or vending machine
operator satisfactorily accounts to the  commissioner  for  the  missing
certificate,  but  such  vending machine or retail place of business may
not be used to sell cigarettes or tobacco products in this state  during
such  calendar  year,  unless  it  is  re-registered.  The provisions of
section eleven hundred thirty-nine of this chapter shall  apply  to  the
refund  or  credit  authorized  by  the  preceding sentence and for such
purposes, such refund or credit shall be deemed a refund of tax paid  in

S. 2609                            77                            A. 3009

error  provided,  however,  no  interest shall be allowed or paid on any
such refund.
  S 3. This act shall take effect immediately and shall apply to certif-
icates  of  registration  applications  filed for calendar year 2014 and
thereafter.

                                 PART O

  Section 1. Subparagraph (i) of  paragraph  (b)  of  subdivision  1  of
section  481  of  the  tax law, as amended by chapter 604 of the laws of
2008, is amended to read as follows:
  (i) In addition to any other penalty  imposed  by  this  article,  the
commissioner may (A) impose a penalty of not more than [one] SIX hundred
[fifty] dollars for each two hundred cigarettes, or fraction thereof, in
excess  of  one  thousand  cigarettes in unstamped or unlawfully stamped
packages in the possession or under the control of  any  person  or  (B)
impose a penalty of not more than two hundred dollars for each ten unaf-
fixed  false,  altered  or counterfeit cigarette tax stamps, imprints or
impressions, or fraction thereof, in the possession or under the control
of any person. In addition, the commissioner may impose a penalty of not
more than seventy-five dollars for each fifty cigars  or  one  pound  of
tobacco,  or  fraction thereof, in excess of two hundred fifty cigars or
five pounds of tobacco in the possession or under  the  control  of  any
person and a penalty of not more than one hundred fifty dollars for each
fifty cigars or pound of tobacco, or fraction thereof, in excess of five
hundred  cigars  or ten pounds of tobacco in the possession or under the
control of any person, with respect to which the  tobacco  products  tax
has  not been paid or assumed by a distributor or tobacco products deal-
er; provided, however, that any such penalty imposed  shall  not  exceed
seven  thousand  five hundred dollars in the aggregate. The commissioner
may impose a penalty of not more  than  seventy-five  dollars  for  each
fifty  cigars or one pound of tobacco, or fraction thereof, in excess of
fifty cigars or one pound of tobacco in  the  possession  or  under  the
control  of  any tobacco products dealer or distributor appointed by the
commissioner, and a penalty of not more than one hundred  fifty  dollars
for  each  fifty  cigars  or  pound  of tobacco, or fraction thereof, in
excess of two hundred fifty cigars or five  pounds  of  tobacco  in  the
possession  or under the control of any such dealer or distributor, with
respect to which the tobacco products tax has not been paid  or  assumed
by  a  distributor or a tobacco products dealer; provided, however, that
any such penalty imposed shall not exceed fifteen  thousand  dollars  in
the aggregate.
  S 2. This act shall take effect June 1, 2013.

                                 PART P

  Section  1.  The  tax  law is amended by adding a new section 171-v to
read as follows:
  S 171-V. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH THE SUSPEN-
SION OF DRIVERS' LICENSES. (1) THE COMMISSIONER SHALL ENTER INTO A WRIT-
TEN AGREEMENT WITH THE COMMISSIONER OF MOTOR VEHICLES, WHICH  SHALL  SET
FORTH  THE  PROCEDURES FOR THE TWO DEPARTMENTS TO COOPERATE IN A PROGRAM
TO IMPROVE TAX COLLECTION THROUGH THE SUSPENSION OF DRIVERS' LICENSES OF
TAXPAYERS WITH PAST-DUE TAX LIABILITIES EQUAL TO OR  IN  EXCESS  OF  TEN
THOUSAND  DOLLARS.    FOR  THE  PURPOSES  OF THIS SECTION, THE TERM "TAX
LIABILITIES" SHALL MEAN ANY TAX, SURCHARGE, OR FEE ADMINISTERED  BY  THE

S. 2609                            78                            A. 3009

COMMISSIONER, OR ANY PENALTY OR INTEREST DUE ON THESE AMOUNTS OWED BY AN
INDIVIDUAL WITH A NEW YORK DRIVER'S LICENSE, THE TERM "DRIVER'S LICENSE"
MEANS ANY LICENSE ISSUED BY THE DEPARTMENT OF MOTOR VEHICLES, EXCEPT FOR
A  COMMERCIAL  DRIVER'S LICENSE AS DEFINED IN SECTION FIVE HUNDRED ONE-A
OF THE VEHICLE AND TRAFFIC LAW, AND THE TERM "PAST-DUE TAX  LIABILITIES"
MEANS ANY TAX LIABILITY OR LIABILITIES WHICH HAVE BECOME FIXED AND FINAL
SUCH  THAT  THE  TAXPAYER  NO  LONGER HAS ANY RIGHT TO ADMINISTRATIVE OR
JUDICIAL REVIEW.
  (2) THE AGREEMENT SHALL INCLUDE THE FOLLOWING PROVISIONS:
  (A) THE PROCEDURES BY WHICH THE DEPARTMENT SHALL  NOTIFY  THE  COMMIS-
SIONER  OF  MOTOR  VEHICLES  OF TAXPAYERS WITH PAST-DUE TAX LIABILITIES,
INCLUDING THE PROCEDURES BY WHICH THE DEPARTMENT AND THE  DEPARTMENT  OF
MOTOR  VEHICLES  SHALL SHARE THE INFORMATION NECESSARY TO IDENTIFY INDI-
VIDUALS WITH PAST-DUE TAX LIABILITIES, WHICH SHALL INCLUDE A  TAXPAYER'S
NAME,  SOCIAL  SECURITY  NUMBER,  AND ANY OTHER INFORMATION NECESSARY TO
ENSURE THE PROPER IDENTIFICATION OF THE TAXPAYER;
  (B) THE PROCEDURES BY WHICH THE COMMISSIONER SHALL NOTIFY THE  DEPART-
MENT OF MOTOR VEHICLES THAT A TAXPAYER HAS SATISFIED HIS OR HER PAST-DUE
TAX LIABILITIES, OR HAS ENTERED INTO AN INSTALLMENT PAYMENT AGREEMENT OR
HAS  OTHERWISE MADE PAYMENT ARRANGEMENTS SATISFACTORY TO THE COMMISSION-
ER, SO THAT THE SUSPENSION OF THE TAXPAYER'S  DRIVER'S  LICENSE  MAY  BE
LIFTED; AND
  (C)  ANY OTHER MATTER THE DEPARTMENT AND THE DEPARTMENT OF MOTOR VEHI-
CLES SHALL DEEM NECESSARY TO CARRY OUT THE PROVISIONS OF THIS SECTION.
  (3) THE DEPARTMENT SHALL PROVIDE NOTICE TO THE TAXPAYER OF HIS OR  HER
INCLUSION  IN  THE  LICENSE  SUSPENSION PROGRAM NO LATER THAN FORTY-FIVE
DAYS PRIOR TO THE DATE THE DEPARTMENT INTENDS TO INFORM THE COMMISSIONER
OF MOTOR VEHICLES OF THE TAXPAYER'S INCLUSION. HOWEVER, NO  SUCH  NOTICE
SHALL  BE  ISSUED  TO  A TAXPAYER WHOSE WAGES ARE BEING GARNISHED BY THE
DEPARTMENT FOR THE PAYMENT OF PAST-DUE TAX LIABILITIES OR PAST-DUE CHILD
SUPPORT OR COMBINED CHILD AND SPOUSAL SUPPORT ARREARS.  NOTICE SHALL  BE
PROVIDED  BY  FIRST  CLASS  MAIL TO THE TAXPAYER'S LAST KNOWN ADDRESS AS
SUCH ADDRESS APPEARS IN THE ELECTRONIC SYSTEMS OR RECORDS OF THE DEPART-
MENT. SUCH NOTICE SHALL INCLUDE:
  (A) A CLEAR STATEMENT OF THE PAST-DUE TAX  LIABILITIES  ALONG  WITH  A
STATEMENT  THAT  THE DEPARTMENT SHALL PROVIDE TO THE DEPARTMENT OF MOTOR
VEHICLES THE TAXPAYER'S NAME, SOCIAL SECURITY NUMBER AND ANY OTHER IDEN-
TIFYING INFORMATION NECESSARY FOR THE PURPOSE OF SUSPENDING HIS  OR  HER
DRIVER'S  LICENSE  PURSUANT  TO  THIS  SECTION AND SUBDIVISION FOUR-F OF
SECTION FIVE HUNDRED TEN OF THE VEHICLE AND TRAFFIC LAW FORTY-FIVE  DAYS
AFTER THE MAILING OR SENDING OF SUCH NOTICE TO THE TAXPAYER;
  (B)  A  STATEMENT THAT THE TAXPAYER MAY AVOID SUSPENSION OF HIS OR HER
LICENSE BY FULLY SATISFYING THE PAST-DUE TAX LIABILITIES  OR  BY  MAKING
PAYMENT  ARRANGEMENTS  SATISFACTORY TO THE COMMISSIONER, AND INFORMATION
AS TO HOW THE TAXPAYER CAN PAY  THE  PAST-DUE  TAX  LIABILITIES  TO  THE
DEPARTMENT,  ENTER  INTO  A  PAYMENT  ARRANGEMENT  OR REQUEST ADDITIONAL
INFORMATION;
  (C) A STATEMENT THAT THE TAXPAYER'S RIGHT TO  PROTEST  THE  NOTICE  IS
LIMITED TO RAISING ISSUES SET FORTH IN SUBDIVISION FIVE OF THIS SECTION;
  (D) A STATEMENT THAT THE SUSPENSION OF THE TAXPAYER'S DRIVER'S LICENSE
SHALL  CONTINUE UNTIL THE PAST-DUE TAX LIABILITIES ARE FULLY PAID OR THE
TAXPAYER MAKES PAYMENT ARRANGEMENTS SATISFACTORY  TO  THE  COMMISSIONER;
AND
  (E) ANY OTHER INFORMATION THAT THE COMMISSIONER DEEMS NECESSARY.
  (4) AFTER THE EXPIRATION OF THE FORTY-FIVE DAY PERIOD, IF THE TAXPAYER
HAS  NOT  CHALLENGED  THE  NOTICE  PURSUANT  TO SUBDIVISION FIVE OF THIS

S. 2609                            79                            A. 3009

SECTION AND THE TAXPAYER HAS FAILED TO SATISFY THE PAST-DUE TAX  LIABIL-
ITIES OR MAKE PAYMENT ARRANGEMENTS SATISFACTORY TO THE COMMISSIONER, THE
DEPARTMENT  SHALL NOTIFY THE DEPARTMENT OF MOTOR VEHICLES, IN THE MANNER
AGREED  UPON  BY  THE TWO AGENCIES, THAT THE TAXPAYER'S DRIVER'S LICENSE
SHALL BE SUSPENDED  PURSUANT  TO  SUBDIVISION  FOUR-F  OF  SECTION  FIVE
HUNDRED  TEN  OF  THE VEHICLE AND TRAFFIC LAW; PROVIDED, HOWEVER, IN ANY
CASE WHERE A TAXPAYER FAILS TO  COMPLY  WITH  THE  TERMS  OF  A  CURRENT
PAYMENT  ARRANGEMENT  MORE  THAN  ONCE WITHIN A TWELVE MONTH PERIOD, THE
COMMISSIONER SHALL IMMEDIATELY NOTIFY THE DEPARTMENT OF  MOTOR  VEHICLES
THAT THE TAXPAYER'S DRIVER'S LICENSE SHALL BE SUSPENDED.
  (5)  NOTWITHSTANDING ANY OTHER PROVISION OF LAW, AND EXCEPT AS SPECIF-
ICALLY PROVIDED HEREIN, THE TAXPAYER SHALL HAVE NO RIGHT TO  COMMENCE  A
COURT  ACTION  OR  PROCEEDING OR TO ANY OTHER LEGAL RECOURSE AGAINST THE
DEPARTMENT OR THE DEPARTMENT OF MOTOR VEHICLES REGARDING A NOTICE ISSUED
BY THE DEPARTMENT PURSUANT TO THIS  SECTION  AND  THE  REFERRAL  BY  THE
DEPARTMENT  OF ANY TAXPAYER WITH PAST-DUE TAX LIABILITIES TO THE DEPART-
MENT OF MOTOR VEHICLES PURSUANT TO  THIS  SECTION  FOR  THE  PURPOSE  OF
SUSPENDING  THE  TAXPAYER'S  DRIVER'S LICENSE. A TAXPAYER MAY ONLY CHAL-
LENGE SUCH SUSPENSION OR REFERRAL ON THE GROUNDS THAT (I) THE INDIVIDUAL
TO WHOM THE NOTICE WAS PROVIDED IS NOT THE TAXPAYER AT ISSUE;  (II)  THE
PAST-DUE  TAX LIABILITIES WERE SATISFIED; (III) THE TAXPAYER'S WAGES ARE
BEING GARNISHED BY THE DEPARTMENT FOR THE PAYMENT OF  THE  PAST-DUE  TAX
LIABILITIES AT ISSUE OR FOR PAST-DUE CHILD SUPPORT OR COMBINED CHILD AND
SPOUSAL  SUPPORT  ARREARS; (IV) THE TAXPAYER'S WAGES ARE BEING GARNISHED
FOR THE PAYMENT OF PAST-DUE CHILD SUPPORT OR COMBINED CHILD AND  SPOUSAL
SUPPORT  ARREARS  PURSUANT  TO  AN  INCOME  EXECUTION ISSUED PURSUANT TO
SECTION FIVE THOUSAND TWO HUNDRED FORTY-ONE OF THE  CIVIL  PRACTICE  LAW
AND  RULES; (V) THE TAXPAYER'S DRIVER'S LICENSE IS A COMMERCIAL DRIVER'S
LICENSE AS DEFINED IN SECTION FIVE HUNDRED  ONE-A  OF  THE  VEHICLE  AND
TRAFFIC  LAW; OR (VI) THE DEPARTMENT INCORRECTLY FOUND THAT THE TAXPAYER
HAS FAILED TO COMPLY WITH THE TERMS OF A PAYMENT ARRANGEMENT  MADE  WITH
THE  COMMISSIONER  MORE  THAN  ONCE WITHIN A TWELVE MONTH PERIOD FOR THE
PURPOSES OF SUBDIVISION THREE OF THIS SECTION.
  HOWEVER, NOTHING IN THIS SUBDIVISION IS INTENDED TO LIMIT  A  TAXPAYER
FROM SEEKING RELIEF FROM JOINT AND SEVERAL LIABILITY PURSUANT TO SECTION
SIX  HUNDRED FIFTY-FOUR OF THIS CHAPTER, TO THE EXTENT THAT HE OR SHE IS
ELIGIBLE PURSUANT TO THAT SUBDIVISION, OR ESTABLISHING TO THE DEPARTMENT
THAT THE ENFORCEMENT OF THE UNDERLYING TAX LIABILITIES HAS  BEEN  STAYED
BY  THE  FILING  OF  A  PETITION PURSUANT TO THE BANKRUPTCY CODE OF 1978
(TITLE ELEVEN OF THE UNITED STATES CODE).
  (6) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER TO THE CONTRARY, THE
DEPARTMENT MAY DISCLOSE TO THE DEPARTMENT OF MOTOR VEHICLES THE INFORMA-
TION DESCRIBED IN THIS SECTION THAT, IN THE DISCRETION  OF  THE  COMMIS-
SIONER,  IS  NECESSARY  FOR  THE  PROPER  IDENTIFICATION  OF  A TAXPAYER
REFERRED TO THE DEPARTMENT OF MOTOR VEHICLES FOR THE PURPOSE OF SUSPEND-
ING THE TAXPAYER'S DRIVER'S LICENSE PURSUANT TO THIS SECTION AND  SUBDI-
VISION  FOUR-F  OF  SECTION  FIVE HUNDRED TEN OF THE VEHICLE AND TRAFFIC
LAW. THE DEPARTMENT OF MOTOR VEHICLES MAY NOT REDISCLOSE  THIS  INFORMA-
TION  TO  ANY  OTHER  ENTITY  OR  PERSON,  OTHER THAN FOR THE PURPOSE OF
INFORMING THE TAXPAYER  THAT  HIS  OR  HER  DRIVER'S  LICENSE  HAS  BEEN
SUSPENDED.
  (7)  EXCEPT  AS  OTHERWISE PROVIDED IN THIS SECTION, THE ACTIVITIES TO
COLLECT PAST-DUE TAX LIABILITIES UNDERTAKEN BY THE  DEPARTMENT  PURSUANT
TO  THIS  SECTION  SHALL  NOT  IN  ANY WAY LIMIT, RESTRICT OR IMPAIR THE
DEPARTMENT FROM EXERCISING ANY OTHER AUTHORITY TO COLLECT OR ENFORCE TAX
LIABILITIES UNDER ANY OTHER APPLICABLE PROVISION OF LAW.

S. 2609                            80                            A. 3009

  S 2. Section 510 of the vehicle and traffic law is amended by adding a
new subdivision 4-f to read as follows:
  4-F.  SUSPENSION  FOR FAILURE TO PAY PAST-DUE TAX LIABILITIES. (1) THE
COMMISSIONER SHALL ENTER INTO A WRITTEN AGREEMENT WITH THE  COMMISSIONER
OF   TAXATION   AND   FINANCE,   AS  PROVIDED  IN  SECTION  ONE  HUNDRED
SEVENTY-ONE-V OF THE TAX LAW, WHICH SHALL SET FORTH THE  PROCEDURES  FOR
SUSPENDING  THE  DRIVERS'  LICENSES  OF  INDIVIDUALS  WHO HAVE FAILED TO
SATISFY PAST-DUE TAX LIABILITIES AS  SUCH  TERMS  ARE  DEFINED  IN  SUCH
SECTION.
  (2)  UPON  RECEIPT OF NOTIFICATION FROM THE DEPARTMENT OF TAXATION AND
FINANCE THAT AN INDIVIDUAL HAS FAILED TO SATISFY  PAST-DUE  TAX  LIABIL-
ITIES,  OR  TO  OTHERWISE  MAKE PAYMENT ARRANGEMENTS SATISFACTORY TO THE
COMMISSIONER OF TAXATION AND FINANCE, OR HAS FAILED TO COMPLY  WITH  THE
TERMS  OF SUCH PAYMENT ARRANGEMENTS MORE THAN ONCE WITHIN A TWELVE MONTH
PERIOD, THE COMMISSIONER OR HIS OR HER AGENT SHALL SUSPEND  THE  LICENSE
OF  SUCH  PERSON TO OPERATE A MOTOR VEHICLE. IN THE EVENT SUCH PERSON IS
UNLICENSED, SUCH PERSON'S PRIVILEGE OF  OBTAINING  A  LICENSE  SHALL  BE
SUSPENDED.  SUCH SUSPENSION SHALL TAKE EFFECT NO LATER THAN FIFTEEN DAYS
FROM THE DATE OF THE NOTICE THEREOF PROVIDED TO THE PERSON WHOSE LICENSE
OR PRIVILEGE OF OBTAINING A LICENSE IS TO BE SUSPENDED, AND SHALL REMAIN
IN EFFECT UNTIL SUCH TIME AS THE COMMISSIONER IS ADVISED THAT THE PERSON
HAS SATISFIED HIS OR HER PAST-DUE TAX LIABILITIES, OR HAS OTHERWISE MADE
PAYMENT ARRANGEMENTS SATISFACTORY TO THE COMMISSIONER  OF  TAXATION  AND
FINANCE.
  (3)  FROM  THE  TIME THE COMMISSIONER IS NOTIFIED BY THE DEPARTMENT OF
TAXATION AND FINANCE UNDER  THIS  SECTION,  THE  COMMISSIONER  SHALL  BE
RELIEVED  FROM  ALL  LIABILITY  TO SUCH PERSON WHICH MAY OTHERWISE ARISE
UNDER THIS SECTION, AND SUCH PERSON SHALL HAVE NO RIGHT  TO  COMMENCE  A
COURT  ACTION  OR  PROCEEDING OR TO ANY OTHER LEGAL RECOURSE AGAINST THE
COMMISSIONER TO RECOVER SUCH DRIVING PRIVILEGES AS  AUTHORIZED  BY  THIS
SECTION.  IN  ADDITION, NOTWITHSTANDING ANY OTHER PROVISION OF LAW, SUCH
PERSON SHALL HAVE NO RIGHT TO A HEARING OR APPEAL PURSUANT TO THIS CHAP-
TER WITH RESPECT TO A SUSPENSION OF DRIVING PRIVILEGES AS AUTHORIZED  BY
THIS SECTION.
  (4)  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, THE DEPART-
MENT SHALL FURNISH THE DEPARTMENT  OF  TAXATION  AND  FINANCE  WITH  THE
INFORMATION  NECESSARY  FOR  THE  PROPER IDENTIFICATION OF AN INDIVIDUAL
REFERRED TO THE DEPARTMENT FOR THE PURPOSE OF DRIVER'S  LICENSE  SUSPEN-
SION  PURSUANT  TO THIS SECTION AND SECTION ONE HUNDRED SEVENTY-ONE-V OF
THE TAX LAW. THIS SHALL INCLUDE THE INDIVIDUAL'S NAME,  SOCIAL  SECURITY
NUMBER  AND  ANY  OTHER  INFORMATION  THE COMMISSIONER OF MOTOR VEHICLES
DEEMS NECESSARY.
  (5) ANY PERSON WHOSE DRIVER'S LICENSE IS SUSPENDED PURSUANT  TO  PARA-
GRAPH TWO OF THIS SUBDIVISION MAY APPLY FOR THE ISSUANCE OF A RESTRICTED
USE LICENSE AS PROVIDED IN SECTION FIVE HUNDRED THIRTY OF THIS TITLE.
  S  3.  Subdivision 7 of section 511 of the vehicle and traffic law, as
added by chapter 81 of the laws of 1995, is amended to read as follows:
  7. Exceptions. When a person is convicted of a violation  of  subdivi-
sion  one  [of]  OR  two  of this section, and the suspension was issued
pursuant to (A) subdivision four-e of section five hundred ten  of  this
article  due  to a support arrears, OR (B) SUBDIVISION FOUR-F OF SECTION
FIVE HUNDRED TEN OF THE ARTICLE DUE TO  PAST-DUE  TAX  LIABILITIES,  the
mandatory  penalties set forth in subdivision one or two of this section
shall not be applicable if, on or before the return date  or  subsequent
adjourned  date, such person presents proof that such support arrears OR
PAST-DUE TAX LIABILITIES have  been  satisfied  as  shown  by  certified

S. 2609                            81                            A. 3009

check,  notice  issued  by  the court ordering the suspension, or notice
from a support collection unit OR DEPARTMENT OF TAXATION AND FINANCE  AS
APPLICABLE.  The sentencing court shall take the satisfaction of arrears
OR  THE PAYMENT OF THE PAST-DUE TAX LIABILITIES into account when impos-
ing a sentence for any such conviction. FOR LICENSES SUSPENDED FOR  NON-
PAYMENT  OF  PAST-DUE  TAX  LIABILITIES,  THE COURT SHALL ALSO TAKE INTO
CONSIDERATION PROOF, IN THE FORM OF A  NOTICE  FROM  THE  DEPARTMENT  OF
TAXATION  AND  FINANCE,  THAT  SUCH PERSON HAS MADE PAYMENT ARRANGEMENTS
THAT ARE SATISFACTORY TO THE COMMISSIONER OF TAXATION AND FINANCE.
  S 4. Section 530 of the vehicle and traffic law is amended by adding a
new subdivision 5-b to read as follows:
  (5-B) ISSUANCE OF A RESTRICTED LICENSE SHALL  NOT  BE  DENIED  TO  ANY
PERSON  WHOSE  LICENSE  IS  SUSPENDED  PURSUANT TO SUBDIVISION FOUR-F OF
SECTION FIVE HUNDRED TEN OF THIS TITLE FOR ANY REASON  OTHER  THAN  SUCH
PERSON'S  FAILURE  TO  OTHERWISE  HAVE  A  VALID  OR  RENEWABLE DRIVER'S
LICENSE. THE RESTRICTIONS ON THE TYPES OF VEHICLES WHICH MAY BE OPERATED
WITH A RESTRICTED LICENSE CONTAINED IN SUCH  SUBDIVISION  FIVE  OF  THIS
SECTION  SHALL  NOT  BE  APPLICABLE  TO A RESTRICTED LICENSE ISSUED TO A
PERSON PURSUANT TO SUBDIVISION FOUR-F OF SECTION  FIVE  HUNDRED  TEN  OF
THIS TITLE. THE ISSUANCE OF A RESTRICTED LICENSE ISSUED AS A RESULT OF A
SUSPENSION  UNDER SUBDIVISION FOUR-F OF SECTION FIVE HUNDRED TEN OF THIS
TITLE SHALL  NOT  IN  ANY  WAY  AFFECT  A  PERSON'S  ELIGIBILITY  FOR  A
RESTRICTED LICENSE AT SOME FUTURE TIME.
  S  5.  Section 2335-a of the insurance law, as added by chapter 152 of
the laws of 1998, is amended to read as follows:
  S 2335-a. Prohibition of rate increases for persons involved in  emer-
gency  use of vehicles OR DUE TO A DRIVER'S LICENSE SUSPENSION FOR PAST-
DUE TAX LIABILITIES.
  (A) No insurer authorized to transact or transacting business in  this
state,  or  controlling  or  controlled by or under common control by or
with an insurer authorized to transact or transacting business  in  this
state,  [which]  THAT  sells  a policy providing motor vehicle liability
insurance coverage in this state, shall increase the policy  premium  in
connection  with  the  insurance  permitted  or required by this chapter
solely because the insured or any other person who customarily  operates
an  automobile covered by the policy has had an accident while operating
a motor vehicle in response to  an  emergency,  where  the  insured  was
either responding to a call to duty as a paid or volunteer member of any
police  or  fire department or first aid squad[;], or was performing any
other function on behalf of the state, any political subdivision  there-
of, a public authority, public benefit corporation, or any other govern-
mental agency or instrumentality in a public emergency.
  (B)  NO INSURER AUTHORIZED TO TRANSACT OR TRANSACTING BUSINESS IN THIS
STATE, OR CONTROLLING OR CONTROLLED BY OR UNDER  COMMON  CONTROL  BY  OR
WITH  AN  INSURER AUTHORIZED TO TRANSACT OR TRANSACTING BUSINESS IN THIS
STATE, THAT SELLS A POLICY PROVIDING MOTOR VEHICLE INSURANCE COVERAGE IN
THIS STATE SHALL INCREASE THE POLICY  PREMIUM  IN  CONNECTION  WITH  THE
INSURANCE  PERMITTED  OR  REQUIRED  BY  THIS  CHAPTER SOLELY BECAUSE THE
INSURED OR ANY OTHER  PERSON  WHO  CUSTOMARILY  OPERATES  AN  AUTOMOBILE
COVERED  BY  THE  POLICY  HAS  HAD HIS OR HER DRIVER'S LICENSE SUSPENDED
PURSUANT TO SUBDIVISION FOUR-F OF SECTION FIVE HUNDRED TEN OF THE  VEHI-
CLE  AND TRAFFIC LAW FOR PAST-DUE TAX LIABILITIES, AS DEFINED IN SECTION
ONE HUNDRED SEVENTY-ONE-V OF THE TAX LAW, OR HAS APPLIED FOR OR RECEIVED
A RESTRICTED USE LICENSE AS PROVIDED FOR BY SECTION FIVE HUNDRED  THIRTY
OF THE VEHICLE AND TRAFFIC LAW, AS THE RESULT OF SUCH SUSPENSION.

S. 2609                            82                            A. 3009

  S 6. The insurance law is amended by adding a new section 2616 to read
as follows:
  S  2616.  DISCRIMINATION  BECAUSE OF A DRIVER'S LICENSE SUSPENSION FOR
PAST-DUE TAX LIABILITIES. AN INDIVIDUAL OR ENTITY SHALL  NOT  REFUSE  TO
ISSUE  ANY  POLICY  OF  MOTOR VEHICLE INSURANCE, OR CANCEL OR DECLINE TO
RENEW SUCH POLICY, BECAUSE THE APPLICANT OR POLICY HOLDER HAS HAD HIS OR
HER DRIVER'S LICENSE SUSPENDED PURSUANT TO SUBDIVISION FOUR-F OF SECTION
FIVE HUNDRED TEN OF THE VEHICLE AND TRAFFIC LAW FOR PAST-DUE TAX LIABIL-
ITIES, AS DEFINED IN SECTION ONE HUNDRED SEVENTY-ONE-V OF THE  TAX  LAW,
OR HAS APPLIED FOR OR RECEIVED A RESTRICTED USE LICENSE, AS PROVIDED FOR
BY  SECTION  FIVE  HUNDRED THIRTY OF THE VEHICLE AND TRAFFIC LAW, AS THE
RESULT OF SUCH SUSPENSION.
  S 7. This act shall take effect immediately; provided,  however,  that
the department of taxation and finance and the department of motor vehi-
cles  shall have up to six months after this act shall have become a law
to execute the written agreement and implement the necessary  procedures
as described in sections one and two of this act.

                                 PART Q

  Section  1.  The  tax  law is amended by adding a new section 174-c to
read as follows:
  S 174-C. SERVICE OF INCOME EXECUTION WITHOUT FILING  A  WARRANT.    1.
NOTWITHSTANDING  ANY PROVISION OF LAW TO THE CONTRARY, IF ANY INDIVIDUAL
LIABLE FOR THE PAYMENT OF ANY TAX OR OTHER  IMPOSITION  ADMINISTERED  BY
THE COMMISSIONER, INCLUDING ANY ADDITIONS TO TAX, PENALTIES AND INTEREST
IN CONNECTION THEREWITH, FAILS TO PAY OR TO COLLECT OR PAY OVER THE SAME
WITHIN  TWENTY-ONE  CALENDAR  DAYS  AFTER  NOTICE AND DEMAND THEREFOR IS
GIVEN TO SUCH INDIVIDUAL (TEN BUSINESS DAYS IF THE AMOUNT FOR WHICH SUCH
NOTICE AND DEMAND  IS  MADE  EQUALS  OR  EXCEEDS  ONE  HUNDRED  THOUSAND
DOLLARS), THE COMMISSIONER IS AUTHORIZED TO SERVE AN INCOME EXECUTION ON
THE  INDIVIDUAL  OR ON THE PERSON FROM WHOM THE INDIVIDUAL IS RECEIVING,
OR WILL RECEIVE, MONEY, WITHOUT FILING A WARRANT IN THE  OFFICE  OF  THE
CLERK  OF  THE  APPROPRIATE  COUNTY  OR  IN  THE  DEPARTMENT OF STATE AS
PROVIDED FOR  IN  THIS  CHAPTER.  FOR  PURPOSES  OF  SERVING  AN  INCOME
EXECUTION PURSUANT TO THIS SECTION, THE COMMISSIONER SHALL, IN THE RIGHT
OF THE PEOPLE OF THE STATE OF NEW YORK, BE DEEMED TO HAVE OBTAINED JUDG-
MENT  AGAINST  THE  INDIVIDUAL  FOR THE TAX OR OTHER IMPOSITION, AND THE
ADDITIONS TO TAX, PENALTIES AND  INTEREST  IN  CONNECTION  THEREOF,  AND
THERE  SHALL BE A LIEN ON THE AMOUNT OF THE INDIVIDUAL'S INCOME THAT MAY
BE GARNISHED. IF THE COMMISSIONER CHOOSES TO SERVE AN  INCOME  EXECUTION
WITHOUT FILING A WARRANT PURSUANT TO THIS SECTION, THE COMMISSIONER MUST
SERVE  THE  INCOME  EXECUTION  WITHIN  SIX  YEARS AFTER THE FIRST DATE A
WARRANT COULD BE FILED PURSUANT TO SECTION ONE HUNDRED SEVENTY-FOUR-B OF
THIS ARTICLE. WHEN SERVING AN INCOME EXECUTION WITHOUT THE FILING  OF  A
WARRANT,  THE  COMMISSIONER  SHALL  FOLLOW  THE  PROCEDURES SET FORTH IN
SECTION FIVE THOUSAND TWO HUNDRED THIRTY-ONE OF THE CIVIL  PRACTICE  LAW
AND  RULES,  WITH THE REFERENCES IN SUCH SECTION TO "SHERIFF" TO BE READ
AS  REFERRING  TO  THE  COMMISSIONER  OR  THE  DEPARTMENT.  SUCH  INCOME
EXECUTION  SHALL CONTINUE TO BE IN EFFECT UNTIL SUCH LIABILITY IS SATIS-
FIED OR UNTIL TWENTY YEARS FROM THE FIRST DATE A WARRANT COULD BE  FILED
BY  THE  COMMISSIONER  PURSUANT TO SECTION ONE HUNDRED SEVENTY-FOUR-B OF
THIS ARTICLE, WHETHER OR NOT A WARRANT IS FILED FOR THAT LIABILITY.
  2. THE PROVISIONS OF THIS SECTION SHALL BE IN ADDITION TO  THE  PROCE-
DURES  RELATING TO COLLECTION OR ADMINISTRATION PROVIDED WITH RESPECT TO
ANY TAX OR OTHER IMPOSITION ADMINISTERED BY THE  COMMISSIONER.  WHERE  A

S. 2609                            83                            A. 3009

PROVISION  OF  THIS SECTION IS INCONSISTENT WITH ANY SUCH PROVISION WITH
RESPECT TO SUCH TAX OR OTHER IMPOSITION, THE PROVISIONS OF THIS  SECTION
WILL  APPLY. NOTHING IN THIS SECTION SHALL PREVENT THE COMMISSIONER FROM
TIMELY FILING A WARRANT IN ORDER TO PURSUE ANY OF THE COLLECTION METHODS
AUTHORIZED UNDER ARTICLE FIFTY-TWO OF THE CIVIL PRACTICE LAW AND RULES.
  S 2. This act shall take effect immediately.

                                 PART R

  Section  1.  Subparagraph (i) of the opening paragraph of section 1210
of the tax law is REPEALED and a new subparagraph (i) is added  to  read
as follows:
  (I)  WITH  RESPECT  TO A CITY OF ONE MILLION OR MORE AND THE FOLLOWING
COUNTIES (1) ANY SUCH CITY HAVING A POPULATION OF ONE MILLION OR MORE IS
HEREBY AUTHORIZED AND EMPOWERED TO ADOPT AND  AMEND  LOCAL  LAWS,  ORDI-
NANCES  OR RESOLUTIONS IMPOSING SUCH TAXES IN ANY SUCH CITY, AT THE RATE
OF FOUR AND ONE-HALF PERCENT;
  (2) THE FOLLOWING COUNTIES THAT IMPOSE TAXES DESCRIBED IN  SUBDIVISION
(A)  OF THIS SECTION AT THE RATE OF THREE PERCENT AS AUTHORIZED ABOVE IN
THIS PARAGRAPH FOR SUCH  COUNTIES  ARE  HEREBY  FURTHER  AUTHORIZED  AND
EMPOWERED  TO  ADOPT  AND  AMEND  LOCAL LAWS, ORDINANCES, OR RESOLUTIONS
IMPOSING SUCH TAXES DESCRIBED IN SUBDIVISION (A) OF THIS SECTION AT  THE
FOLLOWING  ADDITIONAL  RATES, IN QUARTER PERCENT INCREMENTS, WHICH RATES
ARE ADDITIONAL TO THE THREE PERCENT RATE AUTHORIZED ABOVE IN THIS  PARA-
GRAPH,  AND,  IN THE CASE OF A COUNTY AUTHORIZED TO IMPOSE MORE THAN ONE
ADDITIONAL RATE, ALSO IN ADDITION TO EACH OTHER, FOR EACH  SUCH  COUNTY,
PROVIDED  THAT (A) THE COUNTY OF ROCKLAND MAY IMPOSE ADDITIONAL RATES OF
FIVE-EIGHTHS PERCENT AND THREE-EIGHTHS PERCENT, IN LIEU OF IMPOSING SUCH
ADDITIONAL RATE IN QUARTER PERCENT INCREMENTS; (B) THE COUNTY OF ONTARIO
MAY IMPOSE ADDITIONAL RATES  OF  ONE-EIGHTH  PERCENT  AND  THREE-EIGHTHS
PERCENT,  IN  LIEU  OF  IMPOSING SUCH ADDITIONAL RATE IN QUARTER PERCENT
INCREMENTS; (C) THREE-QUARTERS PERCENT OF THE ADDITIONAL RATE AUTHORIZED
TO BE IMPOSED BY THE COUNTY OF NASSAU SHALL BE SUBJECT TO THE LIMITATION
SET FORTH IN SECTION TWELVE HUNDRED SIXTY-TWO-E OF THIS ARTICLE:
  (A) ONE-QUARTER OF ONE PERCENT - NONE.
  (B) ONE-HALF OF ONE PERCENT - CHAUTAUQUA, ONTARIO, SCHENECTADY.
  (C) THREE-QUARTERS OF ONE PERCENT - DUTCHESS, ESSEX, JEFFERSON, LEWIS,
ORANGE.
  (D) ONE  PERCENT  -  ALBANY,  BROOME,  CATTARAUGUS,  CAYUGA,  CHEMUNG,
CHENANGO, CLINTON, COLUMBIA, CORTLAND, DELAWARE, FRANKLIN, FULTON, GENE-
SEE, GREENE, LIVINGSTON, MADISON, MONROE, MONTGOMERY, NIAGARA, ONONDAGA,
ORLEANS,   OSWEGO,  OTSEGO,  PUTNAM,  RENSSELAER,  ROCKLAND,  SCHOHARIE,
SCHUYLER, SENECA, STEUBEN, SUFFOLK, SULLIVAN, TIOGA,  TOMPKINS,  ULSTER,
WAYNE, WYOMING, YATES.
  (E) ONE AND ONE-QUARTER PERCENT - HERKIMER, NASSAU.
  (F) ONE AND ONE-HALF PERCENT - ALLEGANY.
  (G) ONE AND THREE-QUARTERS PERCENT - ERIE, ONEIDA.
  S 2. Subparagraph (ii) of the opening paragraph of section 1210 of the
tax  law  is  REPEALED  and  a new subparagraph (ii) is added to read as
follows:
   (II) THE FOLLOWING CITIES THAT IMPOSE TAXES DESCRIBED IN  SUBDIVISION
(A) OF THIS SECTION AT THE RATE OF ONE AND ONE-HALF PERCENT OR HIGHER AS
AUTHORIZED  ABOVE  IN  THIS PARAGRAPH FOR SUCH CITIES ARE HEREBY FURTHER
AUTHORIZED AND EMPOWERED TO ADOPT AND AMEND LOCAL LAWS,  ORDINANCES,  OR
RESOLUTIONS  IMPOSING  SUCH  TAXES  DESCRIBED IN SUBDIVISION (A) OF THIS
SECTION AT THE FOLLOWING ADDITIONAL RATES,  IN  QUARTER  PERCENT  INCRE-

S. 2609                            84                            A. 3009

MENTS,  WHICH  RATES  ARE  ADDITIONAL TO THE ONE AND ONE-HALF PERCENT OR
HIGHER RATES AUTHORIZED ABOVE IN THIS PARAGRAPH AND, IN THE  CASE  OF  A
CITY  AUTHORIZED  TO IMPOSE MORE THAN ONE ADDITIONAL RATE, ALSO IN ADDI-
TION TO EACH OTHER, FOR EACH SUCH CITY:
  (1) ONE-QUARTER OF ONE PERCENT - NONE.
  (2) ONE-HALF OF ONE PERCENT - NONE.
  (3) THREE-QUARTERS OF ONE PERCENT - NONE.
  (4) ONE PERCENT - MOUNT VERNON; YONKERS; OSWEGO, FOR THE PERIOD BEGIN-
NING DECEMBER FIRST, TWO THOUSAND ELEVEN, AND ENDING NOVEMBER THIRTIETH,
TWO  THOUSAND  THIRTEEN;  NEW ROCHELLE, FOR THE PERIOD BEGINNING JANUARY
FIRST, TWO THOUSAND TWELVE, AND ENDING DECEMBER THIRTY-FIRST, TWO  THOU-
SAND  THIRTEEN;  WHITE PLAINS, FOR THE PERIOD BEGINNING SEPTEMBER FIRST,
TWO THOUSAND ELEVEN, AND ENDING AUGUST THIRTY-FIRST, TWO THOUSAND  THIR-
TEEN.
  (5) ONE AND ONE-QUARTER PERCENT - NONE.
  (6) ONE AND ONE-HALF PERCENT - NONE.
  (7) ONE AND THREE-QUARTERS PERCENT - NONE.
  S  3.  Subparagraph  (iii) of the opening paragraph of section 1210 of
the tax law is REPEALED and a new subparagraph (iii) is added to read as
follows:
  (III)  THE  MAXIMUM  RATE  REFERRED  TO  IN  SECTION  TWELVE   HUNDRED
TWENTY-FOUR OF THIS ARTICLE SHALL BE CALCULATED WITHOUT REFERENCE TO THE
ADDITIONAL  RATES  AUTHORIZED  FOR  COUNTIES, OTHER THAN THE COUNTIES OF
CAYUGA, CORTLAND, FULTON, MADISON, AND OTSEGO IN  SUBPARAGRAPH  (I)  AND
THE CITIES IN SUBPARAGRAPH (II) OF THIS PARAGRAPH.
  S  4.  Section 1210 of the tax law is amended by adding a new subdivi-
sion (q) to read as follows:
  (Q) NOTWITHSTANDING ANY PROVISION OF THIS SECTION OR ANY OTHER LAW,  A
COUNTY  MAY, BY A MAJORITY VOTE OF ITS GOVERNING BODY, PASS A LOCAL LAW,
ORDINANCE OR RESOLUTION TO IMPOSE THE ADDITIONAL RATE OR RATES  OF  SUCH
SALES  AND  COMPENSATING  USE TAXES AUTHORIZED BY CLAUSE TWO OF SUBPARA-
GRAPH (I) OF THE OPENING PARAGRAPH OF THIS SECTION FOR A PERIOD  NOT  TO
EXCEED  TWO  YEARS.   ANY SUCH LOCAL LAW, ORDINANCE, OR RESOLUTION SHALL
ALSO BE SUBJECT TO THE PROVISIONS OF SUBDIVISIONS (D) AND  (E)  OF  THIS
SECTION.
  S 5. Section 1210-E of the tax law is REPEALED.
  S  6.  Subdivisions  (d),  (e), (f), (g), (h) (i), (j), (k), (l), (m),
(n), (o), (p), (q), (r), (t), (u), (v), (w), (x), (y), (z), (z-1), (aa),
(bb), (cc), (dd), (ee), (ff) and (gg) of section 1224 of the tax law are
REPEALED.
  S 7. Section 1224 of the tax law is amended by adding four new  subdi-
visions (d),(e), (f), and (g) to read as follows:
  (D)  FOR  PURPOSES  OF THIS SECTION, THE TERM "PRIOR RIGHT" SHALL MEAN
THE PREFERENTIAL RIGHT TO IMPOSE ANY TAX DESCRIBED  IN  SECTIONS  TWELVE
HUNDRED  TWO  AND TWELVE HUNDRED THREE, OR TWELVE HUNDRED TEN AND TWELVE
HUNDRED ELEVEN, OF THIS ARTICLE AND THEREBY TO PREEMPT SUCH TAX  AND  TO
PRECLUDE  ANOTHER  MUNICIPAL CORPORATION FROM IMPOSING OR CONTINUING THE
IMPOSITION OF SUCH TAX TO THE  EXTENT  THAT  SUCH  RIGHT  IS  EXERCISED.
HOWEVER, THE RIGHT OF PREEMPTION SHALL ONLY APPLY WITHIN THE TERRITORIAL
LIMITS OF THE TAXING JURISDICTION HAVING THE RIGHT OR PREEMPTION.
  (E)  EACH  OF  THE  FOLLOWING  COUNTIES AND CITIES SHALL HAVE THE SOLE
RIGHT TO IMPOSE THE FOLLOWING ADDITIONAL RATE OF SALES AND  COMPENSATING
USE TAXES IN EXCESS OF THREE PERCENT THAT SUCH COUNTY OR CITY IS AUTHOR-
IZED  TO  IMPOSE PURSUANT TO THE AUTHORITY OF SUBDIVISION (A) OF SECTION
TWELVE HUNDRED TEN OF THIS ARTICLE. SUCH ADDITIONAL RATES OF  TAX  SHALL
NOT BE SUBJECT TO PREEMPTION.

S. 2609                            85                            A. 3009

  (1) COUNTIES:
  (A) ONE-QUARTER OF ONE PERCENT - NONE.
  (B) ONE-HALF OF ONE PERCENT - CHAUTAUQUA, ONTARIO, SCHENECTADY.
  (C) THREE-QUARTERS OF ONE PERCENT - DUTCHESS, ESSEX, JEFFERSON, LEWIS,
ORANGE.
  (D)  ONE  PERCENT  -  ALBANY,  BROOME, CATTARAUGUS, CHEMUNG, CHENANGO,
CLINTON, COLUMBIA,  DELAWARE,  FRANKLIN,  GENESEE,  GREENE,  LIVINGSTON,
MONROE,  MONTGOMERY, NIAGARA, ONONDAGA, ORLEANS, OTSEGO, PUTNAM, RENSSE-
LAER, ROCKLAND, SCHOHARIE, SCHUYLER, SENECA, STEUBEN, SUFFOLK, SULLIVAN,
TIOGA, TOMPKINS, ULSTER, WAYNE, WYOMING, YATES.
  (E) ONE AND ONE-QUARTER PERCENT - HERKIMER, NASSAU.
  (F) ONE AND ONE-HALF PERCENT - ALLEGANY.
  (G) ONE AND THREE-QUARTERS PERCENT - ERIE, ONEIDA.
  (2) CITIES:
  (A) ONE-QUARTER OF ONE PERCENT - NONE.
  (B) ONE-HALF OF ONE PERCENT - NONE.
  (C) THREE-QUARTERS OF ONE PERCENT - NONE.
  (D) ONE PERCENT - MOUNT VERNON, NEW ROCHELLE, WHITE PLAINS, YONKERS.
  (F) EACH OF THE FOLLOWING CITIES IS AUTHORIZED TO  PREEMPT  THE  TAXES
IMPOSED  BY  THE COUNTY IN WHICH IT IS LOCATED PURSUANT TO THE AUTHORITY
OF SUBDIVISION (A) OF SECTION TWELVE HUNDRED TEN OF THIS ARTICLE, TO THE
EXTENT OF ONE-HALF THE MAXIMUM AGGREGATE RATE AUTHORIZED  UNDER  SECTION
TWELVE  HUNDRED  TEN OF THIS ARTICLE, INCLUDING THE ADDITIONAL RATE THAT
THE COUNTY IN WHICH SUCH  CITY  IS  LOCATED  IS  AUTHORIZED  TO  IMPOSE:
AUBURN, IN CAYUGA COUNTY; CORTLAND, IN CORTLAND COUNTY; GLOVERSVILLE AND
JOHNSTOWN,  IN  FULTON  COUNTY;  ONEIDA,  IN MADISON COUNTY; ONEONTA, IN
OTSEGO COUNTY. AS OF THE DATE THIS SUBDIVISION TAKES  EFFECT,  ANY  SUCH
PREEMPTION  BY SUCH A CITY IN EFFECT ON SUCH DATE SHALL CONTINUE IN FULL
FORCE AND EFFECT UNTIL THE EFFECTIVE DATE OF A LOCAL LAW, ORDINANCE,  OR
RESOLUTION  ADOPTED  OR  AMENDED  BY THE CITY TO CHANGE SUCH PREEMPTION,
PROVIDED SUCH A CITY'S RATE OF TAX IN EXCESS OF ONE AND ONE-HALF PERCENT
SHALL NOT CONTINUE IN EFFECT IF THE COUNTY IN WHICH IT IS  LOCATED  DOES
NOT  EXTEND  ITS  ADDITIONAL  RATE  IN  EXCESS  OF  THREE PERCENT.   ANY
PREEMPTION BY SUCH A CITY TO TAKE EFFECT UNDER  THIS  SUBDIVISION  AFTER
THE  DATE  THIS  SUBDIVISION TAKES EFFECT SHALL BE SUBJECT TO THE NOTICE
REQUIREMENTS IN SECTION TWELVE HUNDRED TWENTY-THREE OF THIS SUBPART  AND
TO THE OTHER REQUIREMENTS OF THIS ARTICLE.
  (G)  NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION OR OTHER
LAW, IF THE COUNTY OF DUTCHESS WITHDRAWS FROM THE METROPOLITAN  COMMUTER
TRANSPORTATION DISTRICT AND IMPOSES THE ADDITIONAL THREE-EIGHTHS PERCENT
RATE OF TAX, THE NET COLLECTIONS FROM WHICH THE COUNTY HAS SET ASIDE FOR
MASS  TRANSPORTATION PURPOSES, AS AUTHORIZED BY SUBPARAGRAPH (IV) OF THE
OPENING PARAGRAPH OF SECTION TWELVE HUNDRED TEN OF  THIS  ARTICLE,  SUCH
ADDITIONAL THREE-EIGHTHS PERCENT RATE OF TAX SHALL BE IN ADDITION TO ANY
OTHER  ADDITIONAL  RATE  OF  TAX SUCH COUNTY IS AUTHORIZED TO IMPOSE AND
SHALL NOT BE SUBJECT TO PREEMPTION AND SUCH  COUNTY  SHALL  NOT  INCLUDE
SUCH  ADDITIONAL  THREE-EIGHTHS  PERCENT  RATE OF TAX IN DETERMINING ITS
ADDITIONAL RATE OF TAX ON THE AREA OF THE COUNTY OUTSIDE ANY CITY IN THE
COUNTY IMPOSING TAX FOR PURPOSES OF SUBDIVISION (D)  OF  SECTION  TWELVE
HUNDRED SIXTY-TWO OF THIS ARTICLE.
  S  8.  The  tax  law  is  amended by adding three new sections 1262-t,
1262-u, and 1262-v to read as follows:
  S 1262-T. ONEIDA COUNTY NET COLLECTIONS FROM ADDITIONAL RATE  OF  TAX.
NET COLLECTIONS FROM AN ADDITIONAL THREE-QUARTERS PERCENT RATE OF ONEIDA
COUNTY'S  SALES  AND  COMPENSATING  USE  TAXES  IMPOSED  PURSUANT TO THE
AUTHORITY OF CLAUSE TWO OF SUBPARAGRAPH (I) OF THE OPENING PARAGRAPH  OF

S. 2609                            86                            A. 3009

SECTION  TWELVE  HUNDRED TEN OF THIS ARTICLE SHALL NOT BE SUBJECT TO ANY
REVENUE DISTRIBUTION AGREEMENT ENTERED INTO BY THE COUNTY AND THE CITIES
IN THE COUNTY UNDER SUBDIVISION (C) OF SECTION TWELVE HUNDRED  SIXTY-TWO
OF THIS PART.
  S  1262-U. CLINTON COUNTY NET COLLECTIONS FROM ADDITIONAL RATE OF TAX.
NET COLLECTIONS FROM ANY ADDITIONAL RATE OF SALES AND  COMPENSATING  USE
TAXES  CLINTON COUNTY IMPOSES PURSUANT TO THE AUTHORITY OF CLAUSE TWO OF
SUBPARAGRAPH (I) OF THE OPENING PARAGRAPH OF SECTION TWELVE HUNDRED  TEN
OF  THIS  ARTICLE  SHALL  BE PAID TO THE COUNTY AND THE COUNTY SHALL SET
ASIDE SUCH NET COLLECTIONS AND USE THEM SOLELY FOR COUNTY PURPOSES. SUCH
NET COLLECTIONS SHALL NOT BE SUBJECT TO ANY REVENUE DISTRIBUTION  AGREE-
MENT  ENTERED INTO BY THE COUNTY AND THE CITY IN THE COUNTY UNDER SUBDI-
VISION (C) OF SECTION TWELVE HUNDRED SIXTY-TWO OF THIS PART.
  S 1262-V. ONTARIO COUNTY NET COLLECTIONS FROM ADDITIONAL RATE OF  TAX.
NOTWITHSTANDING  ANY LAW TO THE CONTRARY, AFTER ONTARIO COUNTY ALLOCATES
NET COLLECTIONS FROM ITS ADDITIONAL ONE-EIGHTH OF ONE  PERCENT  RATE  OF
SALES  AND  COMPENSATING  USE TAXES PURSUANT TO THE AUTHORITY OF SECTION
TWELVE HUNDRED SIXTY-TWO-R OF THIS PART, AS ADDED BY CHAPTER THIRTY-SEV-
EN OF THE LAWS OF TWO THOUSAND SIX, NET COLLECTIONS  FROM  THE  COUNTY'S
ADDITIONAL  THREE-EIGHTHS OF ONE PERCENT RATE OF SUCH TAXES SHALL BE SET
ASIDE FOR COUNTY PURPOSES AND SHALL NOT  BE  SUBJECT  TO  ANY  AGREEMENT
ENTERED  INTO  BY THE COUNTY AND THE CITIES IN THE COUNTY UNDER SUBDIVI-
SION (C) OF SECTION TWELVE HUNDRED SIXTY-TWO OR SECTION  TWELVE  HUNDRED
SIXTY-TWO-R  OF  THIS PART, AS ADDED BY CHAPTER THIRTY-SEVEN OF THE LAWS
OF TWO THOUSAND SIX.
  S 9. Section 1262-s of the tax law, as amended by chapter 226  of  the
laws of 2011, is amended to read as follows:
  S 1262-s. Disposition of net collections from the additional one-quar-
ter of one percent rate of sales and compensating use taxes in the coun-
ty  of  Herkimer.  Notwithstanding any contrary provision of law, if the
county of Herkimer imposes the additional  one-quarter  of  one  percent
rate  of  sales  and  compensating  use  taxes IN EXCESS OF FOUR PERCENT
authorized by [section twelve hundred ten-E] THE  OPENING  PARAGRAPH  OF
SECTION  TWELVE  HUNDRED  TEN of this article [for all or any portion of
the period beginning December  first,  two  thousand  seven  and  ending
November thirtieth, two thousand thirteen], the county shall use all net
collections  from such additional one-quarter of one percent rate to pay
the county's expenses for the construction  of  additional  correctional
facilities.  The net collections from [the] SUCH additional rate imposed
[pursuant to section twelve hundred  ten-E]  shall  be  deposited  in  a
special  fund  to  be created by such county separate and apart from any
other funds and accounts of  the  county.  Any  and  all  remaining  net
collections  from  such  additional  tax,  after  the  expenses  of such
construction are paid, shall be deposited by the county of  Herkimer  in
the general fund of such county for any county purpose.
  S  10.  The tax law is amended by adding a new section 1265 to read as
follows:
  S 1265. REFERENCES TO CERTAIN PROVISIONS AUTHORIZING ADDITIONAL  RATES
OR  TO  EXPIRATIONS OF A PERIOD. NOTWITHSTANDING ANY PROVISION OF LAW TO
THE CONTRARY: ANY REFERENCE IN ANY SECTION OF THIS CHAPTER OR OTHER LAW,
OR IN ANY LOCAL LAW, ORDINANCE, OR RESOLUTION ADOPTED  PURSUANT  TO  THE
AUTHORITY  OF THIS ARTICLE, OR IN ANY AGREEMENT ENTERED INTO BY A COUNTY
AND ALL THE CITIES IN THAT  COUNTY  UNDER  SUBDIVISION  (C)  OF  SECTION
TWELVE  HUNDRED  SIXTY-TWO  OF THIS PART, TO NET COLLECTIONS OR REVENUES
FROM A TAX IMPOSED BY A COUNTY OR CITY PURSUANT TO THE  AUTHORITY  OF  A
CLAUSE,  OR  TO  A SUBCLAUSE OF A CLAUSE, OF SUBPARAGRAPH (I) OR (II) OF

S. 2609                            87                            A. 3009

THE OPENING PARAGRAPH OF SECTION TWELVE  HUNDRED  TEN  OF  THIS  ARTICLE
REPEALED  BY  SECTION ONE OR TWO OF THE CHAPTER OF THE LAWS OF TWO THOU-
SAND THIRTEEN THAT ADDED THIS SECTION OR TO SECTION TWELVE HUNDRED TEN-E
OF  THIS ARTICLE REPEALED BY SECTION FIVE OF SUCH CHAPTER OF THE LAWS OF
TWO THOUSAND  THIRTEEN  SHALL  BE  DEEMED  TO  BE  A  REFERENCE  TO  NET
COLLECTIONS OR REVENUES FROM A TAX IMPOSED BY THAT COUNTY OR CITY PURSU-
ANT  TO  THE  AUTHORITY  OF  THE  EQUIVALENT  PROVISION OF CLAUSE TWO OF
SUBPARAGRAPH (I) OR TO SUBPARAGRAPH (II) OF  THE  OPENING  PARAGRAPH  OF
SUCH  SECTION  TWELVE HUNDRED TEN AS ADDED BY SUCH SECTION ONE OR TWO OF
SUCH CHAPTER OF THE LAWS OF TWO THOUSAND THIRTEEN.
  S 11. Severability. If any provision of this act shall for any  reason
be  finally adjudged by any court of competent jurisdiction to be inval-
id, such judgment shall not affect, impair, or invalidate the  remainder
of  this  act,  but  shall be confined in its operation to the provision
directly involved in the controversy in which such judgment  shall  have
been rendered. It it hereby declared to be the intent of the legislature
that this act would have been enacted even if such invalid provision had
not been included in this act.
  S 12. This act shall take effect immediately.

                                 PART S

  Section  1.  Paragraph  1  of subdivision a of section 1612 of the tax
law, as amended by chapter 147 of the laws of 2010, subparagraph (A)  as
amended  by  section  1  of part S of chapter 59 of the laws of 2012, is
amended to read as follows:
  (1) sixty percent of the total amount for which tickets have been sold
for [a lawful lottery] THE QUICK DRAW game [introduced on or  after  the
effective date of this paragraph,] subject to [the following provisions:
  (A) such game shall be available only on premises occupied by licensed
lottery sales agents, subject to the following provisions:
  (i)  if  the  licensee  does not hold a license issued pursuant to the
alcoholic beverage control law to sell alcoholic beverages for  consump-
tion  on  the  premises,  then  the  premises must have a minimum square
footage greater than two thousand five hundred square feet;
  (ii) notwithstanding the foregoing  provisions,  television  equipment
that  automatically  displays  the  results  of  such  drawings  may  be
installed and used without regard to the square footage if such premises
are used as:
  (I) a commercial bowling establishment, or
  (II) a facility authorized under the racing, pari-mutuel wagering  and
breeding law to accept pari-mutuel wagers;
  (B) the] rules for the operation of such game [shall be] as prescribed
by regulations promulgated and adopted by the division[, provided howev-
er,  that such rules shall provide that no person under the age of twen-
ty-one may participate in such games on the premises of a  licensee  who
holds a license issued pursuant to the alcoholic beverage control law to
sell alcoholic beverages for consumption on the premises; and, provided,
further,  that such regulations may be revised on an emergency basis not
later than ninety days after the enactment of this paragraph in order to
conform such regulations to the requirements of this paragraph]; or
  S 2. This act shall take effect immediately.

                                 PART T

S. 2609                            88                            A. 3009

  Section 1. Clause (F) of subparagraph (ii) of paragraph 1 of  subdivi-
sion b of section 1612 of the tax law, as amended by section 6 of part K
of chapter 57 of the laws of 2010, is amended to read as follows:
  (F) notwithstanding clauses (A), (B), (C), (D) and (E) of this subpar-
agraph,  when  a  vendor track, is located in Sullivan county and within
sixty miles from any gaming facility in a contiguous state  such  vendor
fee  shall, for a period of [five] SIX years commencing April first, two
thousand eight, be at a rate of forty-one percent of the  total  revenue
wagered  at  the  vendor  track after payout for prizes pursuant to this
chapter, after which time such rate shall be as for all tracks in clause
(C) of this subparagraph.
  S 2. This act shall take effect immediately and  shall  be  deemed  to
have been in full force and effect on and after April 1, 2013.

                                 PART U

  Section  1.  Paragraph  (a)  of  subdivision  1 of section 1003 of the
racing, pari-mutuel wagering and breeding law, as amended by  section  1
of  part  O  of  chapter  59  of the laws of 2012, is amended to read as
follows:
  (a) Any  racing  association  or  corporation  or  regional  off-track
betting  corporation,  authorized  to conduct pari-mutuel wagering under
this chapter, desiring to display the simulcast of horse races on  which
pari-mutuel  betting shall be permitted in the manner and subject to the
conditions provided for in this article may apply to  the  board  for  a
license so to do. Applications for licenses shall be in such form as may
be  prescribed  by the board and shall contain such information or other
material or evidence as the board  may  require.  No  license  shall  be
issued  by the board authorizing the simulcast transmission of thorough-
bred races from a track located in Suffolk  county.  The  fee  for  such
licenses  shall  be five hundred dollars per simulcast facility per year
payable by the licensee to the board for deposit into the general  fund.
Except  as  provided herein, the board shall not approve any application
to conduct simulcasting into individual or group  residences,  homes  or
other areas for the purposes of or in connection with pari-mutuel wager-
ing.  The board may approve simulcasting into residences, homes or other
areas to be conducted jointly by one or more regional off-track  betting
corporations and one or more of the following: a franchised corporation,
thoroughbred racing corporation or a harness racing corporation or asso-
ciation;  provided  (i) the simulcasting consists only of those races on
which pari-mutuel betting is authorized by this chapter at one  or  more
simulcast  facilities  for  each  of  the  contracting off-track betting
corporations which shall include wagers made in accordance with  section
one thousand fifteen, one thousand sixteen and one thousand seventeen of
this  article;  provided  further  that the contract provisions or other
simulcast arrangements for such simulcast  facility  shall  be  no  less
favorable than those in effect on January first, two thousand five; (ii)
that  each  off-track  betting  corporation having within its geographic
boundaries such residences, homes or other areas technically capable  of
receiving  the  simulcast signal shall be a contracting party; (iii) the
distribution of revenues shall be subject to  contractual  agreement  of
the  parties  except that statutory payments to non-contracting parties,
if any, may not be reduced; provided, however, that  nothing  herein  to
the  contrary  shall  prevent  a  track  from televising its races on an
irregular basis primarily for promotional or marketing purposes as found
by the board. For purposes of this paragraph, the provisions of  section

S. 2609                            89                            A. 3009

one  thousand  thirteen  of  this article shall not apply. Any agreement
authorizing an in-home simulcasting experiment commencing prior  to  May
fifteenth,  nineteen  hundred  ninety-five,  may,  and all its terms, be
extended [until June thirtieth, two thousand thirteen]; provided, howev-
er,  that any party to such agreement may elect to terminate such agree-
ment upon conveying written notice to all other parties of  such  agree-
ment  at  least  forty-five  days  prior  to  the  effective date of the
termination, via registered mail. Any party to  an  agreement  receiving
such  notice of an intent to terminate, may request the board to mediate
between the parties new terms and conditions in a replacement  agreement
between the parties as will permit continuation of an in-home experiment
[until  June  thirtieth,  two  thousand  thirteen];  and (iv) no in-home
simulcasting in the thoroughbred special betting  district  shall  occur
without the approval of the regional thoroughbred track.
  S  2.  Subparagraph  (iii)  of paragraph d of subdivision 3 of section
1007 of the racing, pari-mutuel wagering and breeding law, as amended by
section 2 of part O of chapter 59 of the laws of  2012,  is  amended  to
read as follows:
  (iii) Of the sums retained by a receiving track located in Westchester
county  on  races received from a franchised corporation, for the period
commencing January first, two thousand  eight  [and  continuing  through
June  thirtieth, two thousand thirteen], the amount used exclusively for
purses to be awarded at races conducted by such receiving track shall be
computed as follows: of the sums so retained, two and  one-half  percent
of  the  total pools. Such amount shall be increased or decreased in the
amount of fifty percent of the difference in  total  commissions  deter-
mined  by  comparing  the total commissions available after July twenty-
first, nineteen hundred ninety-five to the total commissions that  would
have  been  available to such track prior to July twenty-first, nineteen
hundred ninety-five.
  S 3. Section 1014 of the racing, pari-mutuel wagering and breeding law
is REPEALED.
  S 4. Subdivision 1 of section 1015 of the racing, pari-mutuel wagering
and breeding law, as amended by section 4 of part O of chapter 59 of the
laws of 2012, is amended to read as follows:
  1. The provisions of this section shall  govern  the  simulcasting  of
races  conducted  at  harness tracks located in another state or country
during the period COMMENCING July first,  nineteen  hundred  ninety-four
[through  June  thirtieth,  two  thousand  thirteen]. This section shall
supersede all inconsistent provisions of this chapter.
  S 5. The opening paragraph of subdivision 1 of  section  1016  of  the
racing,  pari-mutuel  wagering and breeding law, as amended by section 5
of part O of chapter 59 of the laws of  2012,  is  amended  to  read  as
follows:
  The  provisions of this section shall govern the simulcasting of races
conducted at thoroughbred tracks located in another state or country  on
any  day  during which a franchised corporation is not conducting a race
meeting in Saratoga county at  Saratoga  thoroughbred  racetrack  [until
June  thirtieth,  two thousand thirteen]. Every off-track betting corpo-
ration branch office and every simulcasting facility licensed in accord-
ance with section one thousand seven that have entered  into  a  written
agreement with such facility's representative horsemen's organization as
approved  by  the board, one thousand eight or one thousand nine of this
article shall be authorized to accept wagers and display the live  full-
card  simulcast signal of thoroughbred tracks (which may include quarter
horse or mixed meetings provided that all such wagering  on  such  races

S. 2609                            90                            A. 3009

shall be construed to be thoroughbred races) located in another state or
foreign country, subject to the following provisions; provided, however,
no  such written agreement shall be required of a franchised corporation
licensed in accordance with section one thousand seven of this article:
  S  6. The opening paragraph of section 1018 of the racing, pari-mutuel
wagering and breeding law, as amended by section 6 of part O of  chapter
59 of the laws of 2012, is amended to read as follows:
  Notwithstanding  any  other  provision of this chapter, for the period
COMMENCING  July  twenty-fifth,  two  thousand  one  [through  September
eighth,  two thousand twelve], when a franchised corporation is conduct-
ing a race meeting within the state at Saratoga Race Course, every  off-
track  betting corporation branch office and every simulcasting facility
licensed in accordance with section one thousand seven (that has entered
into a written agreement with such facility's representative  horsemen's
organization  as approved by the board), one thousand eight or one thou-
sand nine of this article shall  be  authorized  to  accept  wagers  and
display  the  live  simulcast signal from thoroughbred tracks located in
another state, provided that such facility shall accept wagers on  races
run  at  all  in-state  thoroughbred  tracks which are conducting racing
programs subject to the following provisions; provided, however, no such
written agreement shall be required of a franchised corporation licensed
in accordance with section one thousand seven of this article.
  S 7. Section 32 of chapter 281 of  the  laws  of  1994,  amending  the
racing,  pari-mutuel  wagering and breeding law  and other laws relating
to simulcasting, as amended by section 7 of part O of chapter 59 of  the
laws of 2012, is amended to read as follows:
  S  32. This act shall take effect immediately [and the pari-mutuel tax
reductions in section six  of  this  act  shall  expire  and  be  deemed
repealed  on  July  1,  2013]; provided, however, that nothing contained
herein shall be deemed to affect the application, qualification, expira-
tion, or repeal of any provision of law amended by any section  of  this
act,  and  such provisions shall be applied or qualified or shall expire
or be deemed repealed in the same manner, to the same extent and on  the
same  date  as  the  case  may be as otherwise provided by law; provided
further, however, that sections twenty-three and twenty-five of this act
shall remain in full force and effect only until May 1, 1997 and at such
time shall be deemed to be repealed.
  S 8. Section 54 of chapter 346 of  the  laws  of  1990,  amending  the
racing, pari-mutuel wagering and breeding law and other laws relating to
simulcasting  and the imposition of certain taxes, as amended by section
8 of part O of chapter 59 of the laws of 2012, is  amended  to  read  as
follows:
  S  54.  This  act  shall  take  effect immediately; provided, however,
sections three through twelve of this act shall take effect  on  January
1,  1991,  and  [section  1013  of  the racing, pari-mutuel wagering and
breeding law, as added by section thirty-eight of this act, shall expire
and be deemed repealed on July 1, 2013; and] section  eighteen  of  this
act  shall take effect on July 1, 2008 and sections fifty-one and fifty-
two of this act shall take effect as of the same date as chapter 772  of
the laws of 1989 took effect.
  S  9.  Paragraph  (a)  of  subdivision 1 of section 238 of the racing,
pari-mutuel wagering and breeding law, as amended by section 9 of part O
of chapter 59 of the laws of 2012, is amended to read as follows:
  (a) The  franchised  corporation  authorized  under  this  chapter  to
conduct pari-mutuel betting at a race meeting or races run thereat shall
distribute  all sums deposited in any pari-mutuel pool to the holders of

S. 2609                            91                            A. 3009

winning tickets therein, provided such tickets be presented for  payment
before  April  first  of  the year following the year of their purchase,
less an amount which shall be established and  retained  by  such  fran-
chised  corporation  of  between  twelve  to seventeen per centum of the
total deposits in pools resulting from on-track regular bets, and  four-
teen  to  twenty-one per centum of the total deposits in pools resulting
from on-track multiple bets and fifteen to twenty-five per centum of the
total deposits in pools resulting from on-track exotic bets and  fifteen
to  thirty-six  per centum of the total deposits in pools resulting from
on-track super exotic bets, plus the breaks. The retention  rate  to  be
established  is subject to the prior approval of the racing and wagering
board. Such rate may not be changed more than once per calendar  quarter
to  be effective on the first day of the calendar quarter. "Exotic bets"
and "multiple bets" shall have the meanings set forth  in  section  five
hundred  nineteen  of this chapter.   "Super exotic bets" shall have the
meaning set forth in section three hundred  one  of  this  chapter.  For
purposes  of  this  section, a "pick six bet" shall mean a single bet or
wager on the outcomes of six races. The breaks are hereby defined as the
odd cents over any multiple of five for payoffs greater than one  dollar
five  cents  but  less  than  five dollars, over any multiple of ten for
payoffs greater than five dollars but  less  than  twenty-five  dollars,
over  any  multiple  of twenty-five for payoffs greater than twenty-five
dollars but less than two hundred fifty dollars, or over any multiple of
fifty for payoffs over two hundred fifty dollars. Out of the  amount  so
retained  there  shall  be  paid  by  such franchised corporation to the
commissioner of taxation and finance, as a reasonable tax by  the  state
for  the privilege of conducting pari-mutuel betting on the races run at
the race meetings held by such  franchised  corporation,  the  following
percentages  of  the  total  pool for regular and multiple bets five per
centum of regular bets and four per centum of multiple bets plus  twenty
per  centum  of  the  breaks;  for  exotic wagers seven and one-half per
centum plus twenty per centum of the breaks, and for super  exotic  bets
seven  and  one-half per centum plus fifty per centum of the breaks. For
the period June first, nineteen hundred  ninety-five  through  September
ninth, nineteen hundred ninety-nine, such tax on regular wagers shall be
three  per  centum and such tax on multiple wagers shall be two and one-
half per centum, plus twenty per centum of the breaks.  For  the  period
September  tenth,  nineteen  hundred  ninety-nine  through March thirty-
first, two thousand one, such tax on all wagers shall be  two  and  six-
tenths  per  centum and for the period COMMENCING April first, two thou-
sand one [through December thirty-first, two  thousand  thirteen],  such
tax  on all wagers shall be one and six-tenths per centum, plus, in each
such period, twenty per centum of the breaks. Payment to  the  New  York
state  thoroughbred  breeding  and  development  fund by such franchised
corporation shall be one-half of one per centum of total daily  on-track
pari-mutuel  pools  resulting from regular, multiple and exotic bets and
three per centum of super exotic bets provided, however,  that  for  the
period September tenth, nineteen hundred ninety-nine through March thir-
ty-first,  two thousand one, such payment shall be six-tenths of one per
centum of regular, multiple and exotic pools and for the period COMMENC-
ING April first, two thousand one [through  December  thirty-first,  two
thousand thirteen], such payment shall be seven-tenths of one per centum
of such pools.
  S  10. Subdivision 5 of section 1012 of the racing, pari-mutuel wager-
ing and breeding law is REPEALED.
  S 11. This act shall take effect immediately.

S. 2609                            92                            A. 3009

  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be  adjudged  by  any  court  of
competent  jurisdiction  to  be invalid, such judgment shall not affect,
impair, or invalidate the remainder thereof, but shall  be  confined  in
its  operation  to the clause, sentence, paragraph, subdivision, section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the legislature that this act would  have  been  enacted  even  if  such
invalid provisions had not been included herein.
  S  3.  This  act shall take effect immediately provided, however, that
the applicable effective date of Parts A through U of this act shall  be
as specifically set forth in the last section of such Parts.

S2609A - Bill Details

See Assembly Version of this Bill:
A3009D
Law Section:
Budget Bills
Laws Affected:
Amd Various Laws, generally

S2609A - Bill Texts

view summary

Enacts into law major components of legislation necessary to implement the state fiscal plan for the 2013-2014 state fiscal year; relates to the temporary metropolitan transportation business tax surcharge; relates to the empire state film production credit and to the empire state film post production credit; relates to reports; establishes the New York business incubator and innovation hot spot support act; relates to extending for three years the charitable contributions deduction limitation; relates to the exclusion of certain royalty payments from the entire net income or other taxable basis of corporations, banking corporations, and insurance corporations, from the unrelated business income of corporations, and from the adjusted gross income of individual taxpayers; relates to the historic preservation tax credit; provides a tax credit for electric vehicle recharging property; relates to extending provisions relating to mandatory electronic filing of tax documents and improving sales tax compliance; relates to restrictions on funds of the industrial development agency and relates to industrial development agencies and authorities; relates to expanding the exemption of CNG in the sales tax to include natural gas purchased and used to produce CNG for use exclusively and directly in the engine of a motor vehicle; relates to allowing voluntary ambulance services, fire companies, fire departments and rescue squads to claim reimbursement of the petroleum business tax for fuel used in their vehicles; relates to increasing the penalty for the possession of unstamped and unlawfully stamped cigarettes; relates to the suspension of drivers' licenses of persons who are delinquent in the payment of past-due tax liabilities; relates to serving an income execution with respect to individual tax debtors without filing a warrant; relates to vendor fees paid to vendor tracks; relates to licenses for simulcasting facilities, sums relating to track simulcast, simulcast of out-of-state thoroughbred races, simulcasting of races run by out-of-state harness tracks and distributions of wagers; extends certain provisions of law; relates to the credit for the rehabilitation of historic homes; relates to allowing certain tax-free interdistributor sales of highway diesel motor fuel; relates to updating the farming exemption in the highway use tax to reflect current industry practice; relates to providing a subtraction from income for small businesses and small farms; relates to providing tax cuts to manufacturers; relates to adding a hire a vet credit; relates to extending the temporary state energy and utility conservation assessment; relates to a credit for middle income taxpayers with children; relates to the New York youth works tax credit program; relates to adding a minimum wage reimbursement credit; relates to personal income tax rates; relates to the gift for New York state teen health education fund; relates to establishing the New York state teen health education fund; relates to eligible businesses participating in the excelsior linked deposit program; relates to small business loan funds for business enterprises that are minority- and women-owned; and relates to establishing a New York state innovation capital fund.

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

    S. 2609--A                                            A. 3009--A

                      S E N A T E - A S S E M B L Y

                            January 22, 2013
                               ___________

IN  SENATE -- A BUDGET BILL, submitted by the Governor pursuant to arti-
  cle seven of the Constitution -- read twice and ordered  printed,  and
  when  printed to be committed to the Committee on Finance -- committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

IN ASSEMBLY -- A BUDGET BILL, submitted  by  the  Governor  pursuant  to
  article  seven  of  the  Constitution -- read once and referred to the
  Committee on Ways and Means --  committee  discharged,  bill  amended,
  ordered reprinted as amended and recommitted to said committee

AN  ACT  to amend the tax law, in relation to the temporary metropolitan
  transportation business tax surcharge (Part A); to amend the tax  law,
  in  relation to the empire state film production credit and the empire
  state film post production credit; and to amend part Y-1 of chapter 57
  of the laws of 2009 amending the tax law relating to the empire  state
  film  production credit, in relation to reports (Part B); to amend the
  economic development law, the tax law and the administrative  code  of
  the  city  of New York, in relation to establishing the New York inno-
  vation hot spot program (Part C); to amend the tax law and the  admin-
  istrative  code  of the city of New York, in relation to extending for
  three years the charitable contributions  deduction  limitation  (Part
  D);  to  amend  the tax law and the administrative code of the city of
  New York, in relation to the exclusion  of  certain  royalty  payments
  from  the  entire  net  income or other taxable basis of corporations,
  banking corporations, and insurance corporations, from  the  unrelated
  business income of corporations, and from the adjusted gross income of
  individual  taxpayers; and to repeal certain provisions of the tax law
  relating thereto (Part E); to amend the tax law, in  relation  to  the
  historic  preservation  tax  credit (Part F); to amend the tax law, in
  relation to providing a tax credit  for  electric  vehicle  recharging
  property  (Part  G);  to amend chapter 61 of the laws of 2011 amending
  the real property tax law and  other  laws  relating  to  establishing
  standards for electronic real property tax administration, in relation
  to  making  permanent,  provisions  relating  to  mandatory electronic
  filing of tax documents and improving  sales  tax  compliance  and  to
  repeal  certain  provisions of the tax law and the administrative code
  of the city of New York relating thereto (Part H); to  amend  the  tax

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD12574-02-3

S. 2609--A                          2                         A. 3009--A

  law,  in  relation to exempting sales made at a Taste-NY facility from
  sales and compensating use taxes; and to amend the alcoholic  beverage
  control  law,  in relation to allowing sales of all types of alcoholic
  beverages at a Taste-NY facility (Part I); to amend the general munic-
  ipal  law  and  the  public authorities law, in relation to industrial
  development agencies and authorities (Part J); to amend the  tax  law,
  in  relation  to  expanding  the  exemption of CNG in the sales tax to
  include natural gas purchased and used to produce CNG for  use  exclu-
  sively  and  directly  in  the  engine of a motor vehicle (Part K); to
  amend the  tax  law,  in  relation  to  allowing  voluntary  ambulance
  services,  fire companies, fire departments and rescue squads to claim
  reimbursement of the petroleum business tax for  fuel  used  in  their
  vehicles  (Part  L); to amend the tax law, in relation to the power of
  the commissioner of taxation and finance to refuse to issue a  certif-
  icate of authority to collect the sales and use taxes and the power of
  the  commissioner of taxation and finance to revoke such a certificate
  once granted and penalties related to  the  operation  of  a  business
  without  such  certificate (Part M); to amend the tax law, in relation
  to allowing the department of taxation and finance to refuse a certif-
  icate of registration to retail  dealers  of  cigarettes  and  tobacco
  products  if  such  dealers  have certain tax liabilities or have been
  convicted of a tax crime within one year of applying for or renewing a
  certificate of registration  (Part  N);  to  amend  the  tax  law,  in
  relation to increasing the penalty for the possession of unstamped and
  unlawfully  stamped  cigarettes  (Part  O);  to amend the tax law, the
  vehicle and traffic law and the insurance  law,  in  relation  to  the
  suspension  of  drivers' licenses of persons who are delinquent in the
  payment of past-due tax liabilities (Part P); to amend the tax law, in
  relation to serving an income execution with respect to individual tax
  debtors without filing a warrant (Part Q); to amend the  tax  law,  in
  relation to the authority of counties to impose sales and compensating
  use  taxes pursuant to the authority of article 29 of such law; and to
  repeal certain provisions of sections 1210 and 1224 and section 1210-E
  of such law relating thereto (Part  R);  to  amend  the  tax  law,  in
  relation  to a keno style lottery game (Part S); to amend the tax law,
  in relation to vendor fees paid to vendor tracks (Part  T);  to  amend
  the  racing,  pari-mutuel  wagering  and  breeding law, in relation to
  licenses for simulcast facilities, sums relating to  track  simulcast,
  simulcast  of  out-of-state  thoroughbred races, simulcasting of races
  run by out-of-state harness tracks and  distributions  of  wagers;  to
  amend chapter 281 of the laws of 1994, amending the racing, pari-mutu-
  el  wagering  and breeding law and other laws relating to simulcasting
  and chapter 346 of the laws of 1990, amending the racing,  pari-mutuel
  wagering  and breeding law and other laws relating to simulcasting and
  the imposition of certain  taxes,  in  relation  to  making  permanent
  certain  provisions thereof; to amend the racing, pari-mutuel wagering
  and breeding law, in relation to making permanent  certain  provisions
  thereof;  and  to  repeal subdivision 5 of section 1012 of the racing,
  pari-mutuel wagering and breeding law relating to  telephone  accounts
  and  telephone  wagering  and  section 1014 of the racing, pari-mutuel
  wagering and breeding law relating  to  simulcasting  of  out-of-state
  thoroughbred  races (Part U); and to amend the tax law, in relation to
  the credit for the rehabilitation of historic homes (Part V)

S. 2609--A                          3                         A. 3009--A

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

  Section  1.  This  act enacts into law major components of legislation
which are necessary to implement the state fiscal plan for the 2013-2014
state fiscal year. Each component is  wholly  contained  within  a  Part
identified  as Parts A through V. The effective date for each particular
provision contained within such Part is set forth in the last section of
such Part. Any provision in any section contained within a Part, includ-
ing the effective date of the Part, which makes a reference to a section
"of this act", when used in connection with that  particular  component,
shall  be  deemed  to mean and refer to the corresponding section of the
Part in which it is found. Section three of  this  act  sets  forth  the
general effective date of this act.

                                 PART A

  Section  1.  Subdivision 1 of section 183-a of the tax law, as amended
by section 1 of part II-1 of chapter 57 of the laws of 2008, is  amended
to read as follows:
  1.  The  term  "corporation"  as used in this section shall include an
association, within the meaning of paragraph three of subsection (a)  of
section  seventy-seven hundred one of the internal revenue code (includ-
ing a limited liability company), a publicly traded partnership  treated
as  a  corporation for purposes of the internal revenue code pursuant to
section seventy-seven hundred four thereof and any business conducted by
a trustee or trustees wherein interest  or  ownership  is  evidenced  by
certificates  or  other  written  instruments. Every corporation, joint-
stock company or association formed for or principally  engaged  in  the
conduct  of  canal,  steamboat,  ferry (except a ferry company operating
between any of the boroughs of the city of New York under a lease grant-
ed by the city),  express,  navigation,  pipe  line,  transfer,  baggage
express,  omnibus,  taxicab, telegraph, or telephone business, or formed
for or principally engaged in the conduct of  two  or  more  such  busi-
nesses, and every corporation, joint-stock company or association formed
for  or  principally  engaged  in the conduct of a railroad, palace car,
sleeping car or trucking business or formed for or  principally  engaged
in  the  conduct of two or more of such businesses and which has made an
election pursuant to subdivision ten of section one hundred eighty-three
of this article, and every other  corporation,  joint-stock  company  or
association  principally  engaged  in the conduct of a transportation or
transmission business, except  a  corporation,  joint-stock  company  or
association  formed for or principally engaged in the conduct of a rail-
road, palace car, sleeping car or trucking business  or  formed  for  or
principally engaged in the conduct of two or more of such businesses and
which  has  not  made  the  election  provided for in subdivision ten of
section one hundred eighty-three of this article, and  except  a  corpo-
ration,  joint-stock  company  or association principally engaged in the
conduct of aviation (including air freight forwarders acting as  princi-
pal and like indirect air carriers) and except a corporation principally
engaged  in  providing  telecommunication  services between aircraft and
dispatcher, aircraft and air  traffic  control  or  ground  station  and
ground  station  (or  any combination of the foregoing), at least ninety
percent of the voting stock of which corporation is owned,  directly  or
indirectly,  by  air carriers and which corporation's principal function
is to fulfill the requirements of  (i)  the  federal  aviation  adminis-

S. 2609--A                          4                         A. 3009--A

tration  (or  the  successor  thereto)  or  (ii) the international civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and  air  traffic  control  or ground station and ground station (or any
combination of the foregoing) for the purposes of air safety and naviga-
tion and except a corporation, joint-stock company or association  which
is  liable  to  taxation under article thirty-two of this chapter, shall
pay for the privilege of exercising its corporate franchise, or of doing
business, or of employing capital, or of owning or leasing  property  in
the  metropolitan  commuter transportation district in such corporate or
organized capacity, or of maintaining an office in such district, a  tax
surcharge  for all or any part of its years commencing on or after Janu-
ary first, nineteen hundred eighty-two but ending before December  thir-
ty-first,  two  thousand  [thirteen]  EIGHTEEN,  which tax surcharge, in
addition to the tax imposed by section one hundred eighty-three of  this
article,  shall  be  computed at the rate of eighteen percent of the tax
imposed under such section one hundred eighty-three for  such  years  or
any  part  of  such  years ending before December thirty-first, nineteen
hundred eighty-three after the deduction of any credits otherwise allow-
able under this article, and at the rate of seventeen percent of the tax
imposed under such section for such years or  any  part  of  such  years
ending  on or after December thirty-first, nineteen hundred eighty-three
after the deduction of any credits otherwise allowable under this  arti-
cle;  provided,  however,  that  such  rates  of  tax surcharge shall be
applied only to that portion  of  the  tax  imposed  under  section  one
hundred  eighty-three of this article after the deduction of any credits
otherwise allowable under this article  which  is  attributable  to  the
taxpayer's business activity carried on within the metropolitan commuter
transportation district as so determined in the manner prescribed by the
rules  and  regulations  promulgated  by the commissioner; and provided,
further, that the tax surcharge imposed by this  section  shall  not  be
imposed  upon  any taxpayer for more than [three] FOUR hundred [seventy-
two] THIRTY-TWO months.
  S 2. The opening paragraph of subdivision 1 of section  184-a  of  the
tax  law, as amended by section 2 of part II-1 of chapter 57 of the laws
of 2008, is amended to read as follows:
  The term "corporation" as used in this section shall include an  asso-
ciation,  within  the  meaning  of  paragraph three of subsection (a) of
section seventy-seven hundred one of the internal revenue code  (includ-
ing  a  limited  liability  company),  and a publicly traded partnership
treated as a corporation for  purposes  of  the  internal  revenue  code
pursuant  to  section  seventy-seven hundred four thereof.  Every corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease  granted  by  the city), express, navigation, pipe line, transfer,
baggage express, omnibus, taxicab, telegraph or  local  telephone  busi-
ness, or formed for or principally engaged in the conduct of two or more
such  businesses,  and every corporation, joint-stock company or associ-
ation formed for or principally engaged in  the  conduct  of  a  surface
railroad,  whether  or  not operated by steam, subway railroad, elevated
railroad, palace car, sleeping car or trucking business  or  principally
engaged in the conduct of two or more such businesses and which has made
an  election  pursuant to subdivision ten of section one hundred eighty-
three of this article, and every other corporation, joint-stock  company
or  association  formed  for  or principally engaged in the conduct of a

S. 2609--A                          5                         A. 3009--A

transportation or transmission business (other than  a  telephone  busi-
ness)  except  a  corporation, joint-stock company or association formed
for or principally engaged in the conduct of a surface railroad, whether
or  not  operated  by  steam, subway railroad, elevated railroad, palace
car, sleeping car or trucking business or  principally  engaged  in  the
conduct  of  two  or  more  such  businesses  and which has not made the
election provided for in subdivision ten of section one hundred  eighty-
three  of this article, and except a corporation, joint-stock company or
association principally engaged in the conduct  of  aviation  (including
air  freight forwarders acting as principal and like indirect air carri-
ers) and except a corporation principally engaged in providing  telecom-
munication  services  between  aircraft and dispatcher, aircraft and air
traffic control or ground station and ground station (or any combination
of the foregoing), at least ninety percent of the voting stock of  which
corporation  is owned, directly or indirectly, by air carriers and which
corporation's principal function is to fulfill the requirements  of  (i)
the  federal  aviation administration (or the successor thereto) or (ii)
the international civil aviation organization (or the  successor  there-
to),  relating  to  the  existence  of  a  communication  system between
aircraft and dispatcher, aircraft and  air  traffic  control  or  ground
station and ground station (or any combination of the foregoing) for the
purposes  of  air safety and navigation and except a corporation, joint-
stock company or association which is liable to taxation  under  article
thirty-two  of  this  chapter, shall pay for the privilege of exercising
its corporate franchise, or of doing business, or of employing  capital,
or  of owning or leasing property in the metropolitan commuter transpor-
tation district in such corporate or organized capacity, or of maintain-
ing an office in such district, a tax surcharge for all or any  part  of
its taxable years commencing on or after January first, nineteen hundred
eighty-two, but ending before December thirty-first, two thousand [thir-
teen]  EIGHTEEN,  which tax surcharge, in addition to the tax imposed by
section one hundred eighty-four of this article, shall  be  computed  at
the  rate  of eighteen percent of the tax imposed under such section one
hundred eighty-four for such taxable years or any part of  such  taxable
years ending before December thirty-first, nineteen hundred eighty-three
after  the deduction of any credits otherwise allowable under this arti-
cle, and at the rate of seventeen percent of the tax imposed under  such
section  for such taxable years or any part of such taxable years ending
on or after December thirty-first, nineteen hundred  eighty-three  after
the  deduction  of  any  credits otherwise allowable under this article;
provided, however, that such rates of tax  surcharge  shall  be  applied
only to that portion of the tax imposed under section one hundred eight-
y-four  of  this  article  after  the deduction of any credits otherwise
allowable under this article which is  attributable  to  the  taxpayer's
business  activity carried on within the metropolitan commuter transpor-
tation district; and provided, further, that the tax  surcharge  imposed
by  this section on corporations, joint-stock companies and associations
formed for or principally engaged in the conduct of telephone  or  tele-
graph business shall be computed in accordance with this subdivision and
paragraph  (c)  of subdivision two of this section as if the three-quar-
ters of one percent rate of tax  provided  for  in  subdivision  one  of
section  one hundred eighty-four of this article were applicable to such
telephone and telegraph businesses for taxable years  commencing  on  or
after  January  first,  nineteen  hundred  eighty-five  and ending on or
before  December  thirty-first,  nineteen   hundred   eighty-nine;   and
provided,  further, that the tax surcharge imposed by this section shall

S. 2609--A                          6                         A. 3009--A

not be imposed upon any taxpayer for  more  than  [three]  FOUR  hundred
[seventy-two]  THIRTY-TWO  months.  Provided,  however, that for taxable
years beginning in two thousand and thereafter,  for  purposes  of  this
subdivision  the  tax  imposed  under section one hundred eighty-four of
this article shall be deemed to have been imposed at the rate of  three-
quarters  of  one  percent,  except  that  in the case of a corporation,
joint-stock company or association which has made an  election  pursuant
to  subdivision ten of section one hundred eighty-three of this article,
for purposes of this subdivision  the  tax  imposed  under  section  one
hundred eighty-four of this article shall be deemed to have been imposed
at the rate of six-tenths of one percent.
  S 3. Subparagraph 1 of paragraph (a) of subdivision 1 of section 186-c
of  the  tax  law, as amended by section 3 of part II-1 of chapter 57 of
the laws of 2008, is amended to read as follows:
  (1) Every utility doing business in the metropolitan  commuter  trans-
portation  district  shall  pay  a tax surcharge, in addition to the tax
imposed by section one hundred eighty-six-a of this article, for all  or
any  parts  of  its  taxable years commencing on or after January first,
nineteen hundred eighty-two but ending before December thirty-first, two
thousand [thirteen] EIGHTEEN, to be computed at  the  rate  of  eighteen
percent  of  the  tax  imposed under section one hundred eighty-six-a of
this article for such taxable years or any part of  such  taxable  years
ending before December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise allowable under this article, and
at  the  rate of seventeen percent of the tax imposed under such section
for such taxable years or any part of such taxable years  ending  on  or
after  December  thirty-first,  nineteen  hundred eighty-three after the
deduction of credits otherwise allowable under this article  except  any
utility  credit  provided  for  by  article  thirteen-A of this chapter;
provided, however, that such rates of tax  surcharge  shall  be  applied
only to that portion of the tax imposed under section one hundred eight-
y-six-a  of this article after the deduction of credits otherwise allow-
able under this article, except any utility credit provided for by arti-
cle thirteen-A of this chapter, which is attributable to the  taxpayer's
gross income or gross operating income from business activity carried on
within  the metropolitan commuter transportation district; and provided,
further, that the tax surcharge imposed by this  section  shall  not  be
imposed  upon  any taxpayer for more than [three] FOUR hundred [seventy-
two] THIRTY-TWO months.
  S 4. Subdivision 1 of section 209-B of the  tax  law,  as  amended  by
section  4 of part II-1 of chapter 57 of the laws of 2008, is amended to
read as follows:
  1. For the privilege of exercising  its  corporate  franchise,  or  of
doing business, or of employing capital, or of owning or leasing proper-
ty  in a corporate or organized capacity, or of maintaining an office in
the metropolitan commuter transportation district, for all or  any  part
of its taxable year, there is hereby imposed on every corporation, other
than  a New York S corporation, subject to tax under section two hundred
nine of this article, or any receiver,  referee,  trustee,  assignee  or
other  fiduciary,  or  any  officer or agent appointed by any court, who
conducts the business of any such corporation,  for  the  taxable  years
commencing  on  or  after January first, nineteen hundred eighty-two but
ending before December thirty-first, two thousand [thirteen] EIGHTEEN, a
tax surcharge, in addition to the tax imposed under section two  hundred
nine  of this article, to be computed at the rate of eighteen percent of
the tax imposed under such section two hundred  nine  for  such  taxable

S. 2609--A                          7                         A. 3009--A

years  or  any part of such taxable years ending before December thirty-
first, nineteen hundred eighty-three after the deduction of any  credits
otherwise  allowable  under  this  article, and at the rate of seventeen
percent  of the tax imposed under such section for such taxable years or
any part of such taxable years ending on or after December thirty-first,
nineteen hundred eighty-three after the deduction of any credits  other-
wise allowable under this article; provided, however, that such rates of
tax  surcharge  shall be applied only to that portion of the tax imposed
under section two hundred nine of this article after  the  deduction  of
any credits otherwise allowable under this article which is attributable
to  the  taxpayer's business activity carried on within the metropolitan
commuter transportation district; and provided, further,  that  the  tax
surcharge imposed by this section shall not be imposed upon any taxpayer
for  more  than  [three]  FOUR  hundred [seventy-two] THIRTY-TWO months.
Provided however, that for taxable years commencing  on  or  after  July
first, nineteen hundred ninety-eight, such surcharge shall be calculated
as if the tax imposed under section two hundred ten of this article were
imposed under the law in effect for taxable years commencing on or after
July  first,  nineteen hundred ninety-seven and before July first, nine-
teen hundred ninety-eight. Provided  however,  that  for  taxable  years
commencing on or after January first, two thousand seven, such surcharge
shall  be calculated using the highest of the tax bases imposed pursuant
to paragraphs (a), (b), (c) or (d) of subdivision  one  of  section  two
hundred  ten  of this article and the amount imposed under paragraph (e)
of subdivision one of such section two  hundred  ten,  for  the  taxable
year; and, provided further that, if such highest amount is the tax base
imposed  under  paragraph  (a), (b) or (c) of such subdivision, then the
surcharge shall be computed as if the tax rates  and  limitations  under
such  paragraph  were the tax rates and limitations under such paragraph
in effect for taxable years commencing on or after July first,  nineteen
hundred  ninety-seven  and  before  July first, nineteen hundred ninety-
eight.
  S 5. Subsection 1 of section 1455-B of the  tax  law,  as  amended  by
section  5 of part II-1 of chapter 57 of the laws of 2008, is amended to
read as follows:
  1. For the privilege of exercising its franchise or doing business  in
the  metropolitan  commuter  transportation  district  in a corporate or
organized capacity, there is hereby imposed on every taxpayer subject to
tax under this article, other than a New York  S  corporation,  for  the
taxable  years  commencing  on  or after January first, nineteen hundred
eighty-two but ending before December thirty-first, two thousand  [thir-
teen]  EIGHTEEN,  a  tax surcharge, in addition to the tax imposed under
section fourteen hundred fifty-one of this article, at the rate of eigh-
teen percent of the tax imposed  under  such  section  fourteen  hundred
fifty-one  of  this  article, for such taxable years or any part of such
taxable years ending  before  December  thirty-first,  nineteen  hundred
eighty-three  after  the  deduction  of  any credits otherwise allowable
under this article, and at the rate of  seventeen  percent  of  the  tax
imposed  under  such  section for such taxable years or any part of such
taxable years ending on or after December thirty-first, nineteen hundred
eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article; provided however, that such rates of tax surcharge
shall be applied only to that portion of the tax imposed  under  section
fourteen  hundred  fifty-one  of this article after the deduction of any
credits otherwise allowable under this article which is attributable  to
the  taxpayer's  business  activity  carried  on within the metropolitan

S. 2609--A                          8                         A. 3009--A

commuter transportation district; and provided, further,  that  the  tax
surcharge imposed by this section shall not be imposed upon any taxpayer
for  more  than  [three]  FOUR  hundred [seventy-two] THIRTY-TWO months.
Provided  however,  that  for  taxable years commencing on or after July
first, two thousand, such surcharge shall be calculated as if  the  rate
of  the  basic  tax  computed  under  subsection (a) of section fourteen
hundred fifty-five of this article was nine percent.
  S 6. Paragraphs 1 and 3 of subdivision (a) of section  1505-a  of  the
tax  law, as amended by section 6 of part II-1 of chapter 57 of the laws
of 2008, are amended to read as follows:
  (1) Every domestic insurance corporation and every  foreign  or  alien
insurance corporation, and every life insurance corporation described in
subdivision  (b) of section fifteen hundred one of this article, for the
privilege of exercising its corporate franchise, or of  doing  business,
or  of employing capital, or of owning or leasing property in the metro-
politan commuter transportation district in  a  corporate  or  organized
capacity,  or  of  maintaining  an  office  in the metropolitan commuter
transportation district, for all  or  any  part  of  its  taxable  years
commencing  on  or after January first, nineteen hundred eighty-two, but
ending before December thirty-first, two thousand  [thirteen]  EIGHTEEN,
except  corporations  specified  in  subdivision  (c) of section fifteen
hundred twelve of this article, shall annually pay, in addition  to  the
taxes  otherwise  imposed  by this article, a tax surcharge on the taxes
imposed under this article after the deduction of any credits  otherwise
allowable  under  this article as allocated to such district. Such taxes
shall be allocated to such district for purposes of computing  such  tax
surcharge upon taxpayers subject to tax under subdivision (b) of section
fifteen  hundred ten of this article by applying the methodology, proce-
dures and computations set forth in subdivisions (a) and (b) of  section
fifteen  hundred  four  of this article, except that references to terms
denoting New York premiums, and total wages, salaries, personal  service
compensation  and  commissions within New York shall be read as denoting
within the  metropolitan  commuter  transportation  district  and  terms
denoting  total  premiums  and  total  wages, salaries, personal service
compensation and commissions shall be read as denoting within the state.
If it shall appear to the commissioner that the application of the meth-
odology, procedures and computations set forth in such subdivisions  (a)
and  (b) does not properly reflect the activity, business or income of a
taxpayer within the metropolitan commuter transportation district,  then
the  commissioner shall be authorized, in the commissioner's discretion,
to adjust such methodology, procedures and computations for the  purpose
of allocating such taxes by:
  (A) excluding one or more factors therein;
  (B)  including  one  or  more other factors therein, such as expenses,
purchases, receipts other  than  premiums,  real  property  or  tangible
personal property; or
  (C)  any  other similar or different method which allocates such taxes
by attributing a fair and proper portion of such taxes to the  metropol-
itan  commuter  transportation  district.  The commissioner from time to
time shall publish all rulings of general public interest  with  respect
to  any  application  of  the  provisions of the preceding sentence. The
commissioner may promulgate rules and regulations to  further  implement
the provisions of this section.
  (3)  Such  tax  surcharge  shall  be  computed at the rate of eighteen
percent of the taxes imposed under  sections  fifteen  hundred  one  and
fifteen  hundred  ten  of  this  article  as  limited by section fifteen

S. 2609--A                          9                         A. 3009--A

hundred five of this article, as allocated to such  district,  for  such
taxable  years  or any part of such taxable years ending before December
thirty-first, nineteen hundred eighty-three after the deduction  of  any
credits otherwise allowable under this article, at the rate of seventeen
percent  of  the taxes imposed under such sections as limited by section
fifteen hundred five of this article, as allocated to such district, for
such taxable years or any part of such taxable years ending on or  after
December  thirty-first, nineteen hundred eighty-three and before January
first, two thousand three after the deduction of any  credits  otherwise
allowable  under  this  article, and at the rate of seventeen percent of
the taxes imposed under sections fifteen hundred  one,  fifteen  hundred
two-a,  and fifteen hundred ten of this article, as limited or otherwise
determined by subdivision (a) or (b) of section fifteen hundred five  of
this  article,  as allocated to such district, for such taxable years or
any part of such taxable years ending after December  thirty-first,  two
thousand  two  after  the  deduction  of any credits otherwise allowable
under this article; provided, however, that the tax surcharge imposed by
this section shall not be  imposed  upon  any  taxpayer  for  more  than
[three]  FOUR hundred [seventy-two] THIRTY-TWO months. Provided however,
that for taxable years commencing on or after July first, two  thousand,
and  in  the  case  of  taxpayers  subject  to tax under section fifteen
hundred two-a of this article,  for  taxable  years  of  such  taxpayers
beginning on or after July first, two thousand and before January first,
two  thousand  three,  such  surcharge shall be calculated as if (i) the
rate of the tax computed under  paragraph  one  of  subdivision  (a)  of
section  fifteen  hundred  two of this article was nine percent and (ii)
the rate of the limitation on tax set forth in section  fifteen  hundred
five  of  this  article for domestic, foreign and alien insurance corpo-
rations except  life  insurance  corporations  was  two  and  six-tenths
percent.
  S 7. This act shall take effect immediately.

                                 PART B

  Section  1.    Paragraph 3 of subdivision (b) of section 24 of the tax
law, as added by section 1 of part P of chapter 60 of the laws of  2004,
is amended to read as follows:
  (3)  "Qualified  film"  means  a feature-length film, television film,
RELOCATED TELEVISION PRODUCTION, television pilot and/or each episode of
a television series, regardless of the medium  by  means  of  which  the
film,  pilot  or  episode is created or conveyed. "Qualified film" shall
not include (i) a documentary film, news  or  current  affairs  program,
interview  or  talk  program,  "how-to"  (i.e.,  instructional)  film or
program, film or program consisting primarily of stock footage, sporting
event or sporting program, game show, award ceremony,  film  or  program
intended primarily for industrial, corporate or institutional end-users,
fundraising film or program, daytime drama (i.e., daytime "soap opera"),
commercials, music videos or "reality" program, or (ii) a production for
which records are required under section 2257 of title 18, United States
code,  to be maintained with respect to any performer in such production
(reporting of books, films,  etc.  with  respect  to  sexually  explicit
conduct).
  S 2. Subdivision (b) of section 24 of the tax law is amended by adding
a new paragraph 8 to read as follows:
  (8)  "RELOCATED TELEVISION PRODUCTION" SHALL MEAN, NOTWITHSTANDING THE
LIMITATIONS IN SUBPARAGRAPH (I) OF PARAGRAPH THREE OF THIS  SUBDIVISION,

S. 2609--A                         10                         A. 3009--A

A TELEVISION PRODUCTION THAT IS A TALK OR VARIETY PROGRAM THAT FILMED AT
LEAST FIVE SEASONS OUTSIDE THE STATE PRIOR TO ITS FIRST RELOCATED SEASON
IN  NEW  YORK,  THE  EPISODES ARE FILMED BEFORE A STUDIO AUDIENCE OF TWO
HUNDRED  OR  MORE, AND THE RELOCATED TELEVISION PRODUCTION INCURS (I) AT
LEAST THIRTY MILLION DOLLARS IN ANNUAL PRODUCTION COSTS IN THE STATE, OR
(II) AT LEAST TEN MILLION DOLLARS IN CAPITAL EXPENDITURES AT A QUALIFIED
PRODUCTION FACILITY IN THE STATE.
  S 3. Paragraph 4 of subdivision (e) of section 24 of the tax  law,  as
added by chapter 268 of the laws of 2012, is amended to read as follows:
  (4) Additional pool 2 - The aggregate amount of tax credits allowed in
subdivision  (a)  of  this  section  shall be increased by an [addition]
ADDITIONAL four hundred twenty million dollars in EACH YEAR STARTING  IN
two  thousand  ten[, four hundred twenty million dollars in two thousand
eleven, four hundred twenty million dollars in two thousand twelve, four
hundred twenty million dollars in two thousand thirteen and four hundred
twenty million dollars in two thousand fourteen]  THROUGH  TWO  THOUSAND
NINETEEN  provided  however,  seven  million dollars of the annual allo-
cation shall be available for the  empire  state  film  post  production
credit  pursuant  to section thirty-one of this [chapter] ARTICLE IN TWO
THOUSAND THIRTEEN AND TWO  THOUSAND  FOURTEEN  AND  TWENTY-FIVE  MILLION
DOLLARS OF THE ANNUAL ALLOCATION SHALL BE AVAILABLE FOR THE EMPIRE STATE
FILM POST PRODUCTION CREDIT PURSUANT TO SECTION THIRTY-ONE OF THIS ARTI-
CLE  IN  EACH YEAR STARTING IN TWO THOUSAND FIFTEEN THROUGH TWO THOUSAND
NINETEEN.  This amount shall be allocated by the governor's  office  for
motion  picture and television development among taxpayers in accordance
with subdivision (a) of this section. If the [director of the governor's
office for motion picture and television  development]  COMMISSIONER  OF
ECONOMIC DEVELOPMENT determines that the aggregate amount of tax credits
available  from  additional  pool 2 for the empire state film production
tax credit have been previously allocated, and determines that the pend-
ing applications from eligible applicants for the EMPIRE STATE FILM post
production tax credit pursuant to section thirty-one of  this  [chapter]
ARTICLE  is  insufficient  to  utilize the balance of unallocated EMPIRE
STATE FILM post production tax credits from such  pool,  the  remainder,
after  such pending applications are considered, shall be made available
for allocation in the empire state film  tax  credit  pursuant  to  this
section,   subdivision   thirty-six  of  section  two  hundred  ten  and
subsection (gg) of section six hundred six of this chapter.    ALSO,  IF
THE  COMMISSIONER  OF ECONOMIC DEVELOPMENT DETERMINES THAT THE AGGREGATE
AMOUNT OF TAX CREDITS AVAILABLE FROM ADDITIONAL POOL 2  FOR  THE  EMPIRE
STATE  FILM  POST  PRODUCTION TAX CREDIT HAVE BEEN PREVIOUSLY ALLOCATED,
AND DETERMINES THAT THE PENDING APPLICATIONS  FROM  ELIGIBLE  APPLICANTS
FOR THE EMPIRE STATE FILM PRODUCTION TAX CREDIT PURSUANT TO THIS SECTION
IS  INSUFFICIENT  TO  UTILIZE THE BALANCE OF UNALLOCATED FILM PRODUCTION
TAX CREDITS FROM SUCH POOL, THEN ALL OR PART  OF  THE  REMAINDER,  AFTER
SUCH  PENDING  APPLICATIONS  ARE CONSIDERED, SHALL BE MADE AVAILABLE FOR
ALLOCATION FOR THE EMPIRE STATE FILM POST PRODUCTION CREDIT PURSUANT  TO
THIS  SECTION,  SUBDIVISION  FORTY-ONE  OF  SECTION  TWO HUNDRED TEN AND
SUBSECTION (GG) OF SECTION SIX HUNDRED SIX OF THIS CHAPTER.  The  gover-
nor's  office  for motion picture and television development must notify
taxpayers of their allocation year and include the  allocation  year  on
the  certificate  of  tax credit.   Taxpayers eligible to claim a credit
must report the allocation year directly  on  their  empire  state  film
production credit tax form for each year a credit is claimed and include
a copy of the certificate with their tax return. In the case of a quali-
fied  film  that  receives funds from additional pool 2, no empire state

S. 2609--A                         11                         A. 3009--A

film production credit shall be claimed before the later of the  taxable
year  the  production  of the qualified film is complete, or the taxable
year immediately following the allocation year for which  the  film  has
been  allocated  credit  by the governor's office for motion picture and
television development.
  S 4. Paragraph 1 of subdivision (b) of section 24 of the tax  law,  as
amended  by  section  6  of part Q of chapter 57 of the laws of 2010, is
amended to read as follows:
  (1) "Qualified production costs" means production costs  only  to  the
extent  such  costs  are attributable to the use of tangible property or
the performance of services within the state directly and  predominantly
in  the  production  (including pre-production and post production) of a
qualified film[, provided,  however,  that  qualified  production  costs
shall  not  include post production costs unless the portion of the post
production costs paid or incurred that is attributable  to  the  use  of
tangible  property  or  the  performance  of services in New York in the
production of such qualified film equals or exceeds seventy-five percent
of the total post production costs spent within and without New York  in
the production of such qualified film].
  S  5.  Paragraph 3 of subdivision (a) of section 31 of the tax law, as
added by section 12 of part Q of chapter 57 of  the  laws  of  2010,  is
amended to read as follows:
  (3) (I) A taxpayer shall not be eligible for the credit established by
this  section  FOR  QUALIFIED POST PRODUCTION COSTS, EXCLUDING THE COSTS
FOR VISUAL EFFECTS AND ANIMATION, unless the qualified  post  production
costs, EXCLUDING THE COSTS FOR VISUAL EFFECTS AND ANIMATION, at a quali-
fied post production facility meet or exceed seventy-five percent of the
total  post production costs, EXCLUDING THE COSTS FOR VISUAL EFFECTS AND
ANIMATION, paid or incurred in the post production of the qualified film
at any post production facility.  (II) A TAXPAYER SHALL NOT BE  ELIGIBLE
FOR THE CREDIT ESTABLISHED BY THIS SECTION FOR QUALIFIED POST PRODUCTION
COSTS  WHICH ARE COSTS FOR VISUAL EFFECTS OR ANIMATION UNLESS THE QUALI-
FIED POST PRODUCTION COSTS FOR VISUAL EFFECTS OR ANIMATION AT  A  QUALI-
FIED  POST  PRODUCTION  FACILITY MEET OR EXCEED THREE MILLION DOLLARS OR
TWENTY PERCENT OF THE TOTAL POST PRODUCTION COSTS FOR VISUAL EFFECTS  OR
ANIMATION PAID OR INCURRED IN THE POST PRODUCTION OF A QUALIFIED FILM AT
ANY  POST  PRODUCTION  FACILITY, WHICHEVER IS LESS. (III) A TAXPAYER MAY
CLAIM A CREDIT FOR QUALIFIED POST PRODUCTION COSTS EXCLUDING  THE  COSTS
FOR  VISUAL  EFFECTS  AND  ANIMATION,  AND FOR QUALIFIED POST PRODUCTION
COSTS OF VISUAL EFFECTS AND ANIMATION, PROVIDED  THAT  THE  CRITERIA  IN
SUBPARAGRAPHS  (I)  AND  (II)  OF THIS PARAGRAPH ARE BOTH SATISFIED. The
credit shall be allowed for the taxable year in which the production  of
such qualified film is completed.
  S  5-a.  Subdivision  (a)  of  section  31 of the tax law, as added by
section 12 of part Q of chapter 57 of the laws of 2010,  is  amended  by
adding a new paragraph 5 to read as follows:
  (5)  IF  THE  AMOUNT OF THE CREDIT IS AT LEAST ONE MILLION DOLLARS BUT
LESS THAN FIVE MILLION DOLLARS, THE CREDIT SHALL BE CLAIMED OVER  A  TWO
YEAR  PERIOD BEGINNING IN THE FIRST TAXABLE YEAR IN WHICH THE CREDIT MAY
BE CLAIMED AND IN THE NEXT SUCCEEDING TAXABLE YEAR, WITH ONE-HALF OF THE
AMOUNT OF CREDIT ALLOWED BEING CLAIMED IN EACH YEAR. IF  THE  AMOUNT  OF
THE CREDIT IS AT LEAST FIVE MILLION DOLLARS, THE CREDIT SHALL BE CLAIMED
OVER  A  THREE  YEAR PERIOD BEGINNING IN THE FIRST TAXABLE YEAR IN WHICH
THE CREDIT MAY BE CLAIMED AND IN THE NEXT TWO SUCCEEDING TAXABLE  YEARS,
WITH ONE-THIRD OF THE AMOUNT OF THE CREDIT ALLOWED BEING CLAIMED IN EACH
YEAR.

S. 2609--A                         12                         A. 3009--A

  S 6. Section 3 of part Y-1 of chapter 57 of the laws of 2009, amending
the  tax  law  relating  to  the empire state film production credit, is
amended to read as follows:
  S  3. A. The governor's office of motion picture and television devel-
opment shall file a report on a quarterly basis with the director of the
division of the budget and the chairmen of the assembly ways  and  means
committee and senate finance committee. The report shall be filed within
fifteen  days  after the close of the calendar quarter. The first report
shall cover the calendar quarter that begins April 1, 2009.  The  report
must contain the following information for the calendar quarter:
  (1)  the total dollar amount of credits allocated during each month of
the calendar quarter, broken down by month;
  (2) the number of film projects which have been allocated tax  credits
of less than $1 million per project and the total dollar amount of cred-
its allocated to those projects;
  (3)  the number of film projects which have been allocated tax credits
of $1 million or more but less than $5 million per project and the total
dollar amount of credits allocated to those projects;
  (4) the number of film projects which have been allocated tax  credits
of $5 million or more per project and the total dollar amount of credits
allocated to those projects; [and]
  (5)  a list of each film project which has been allocated a tax credit
and  for  each  of  those projects (a) the estimated number of employees
associated with the project, (b) the estimated qualified costs  for  the
project, [and] (c) the estimated total costs of the project, AND (D) THE
CREDIT-ELIGIBLE MAN HOURS FOR EACH PROJECT; AND
  (6)(A)  THE  NAME  OF  EACH  TAXPAYER  ALLOCATED A TAX CREDIT FOR EACH
PROJECT; PROVIDED HOWEVER, IF THE TAXPAYER CLAIMS A TAX  CREDIT  BECAUSE
THE  TAXPAYER IS A MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER IN A
PARTNERSHIP OR A SHAREHOLDER IN A SUBCHAPTER S CORPORATION, THE NAME  OF
EACH  LIMITED LIABILITY COMPANY, PARTNERSHIP OR SUBCHAPTER S CORPORATION
EARNING ANY OF THOSE TAX CREDITS MUST BE INCLUDED IN THE REPORT  INSTEAD
OF  INFORMATION  ABOUT  THE  TAXPAYER  CLAIMING  THE TAX CREDIT, (B) THE
AMOUNT OF TAX CREDIT ALLOCATED TO EACH TAXPAYER;  PROVIDED  HOWEVER,  IF
THE  TAXPAYER  CLAIMS A TAX CREDIT BECAUSE THE TAXPAYER IS A MEMBER OF A
LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP OR  A  SHAREHOLDER
IN  A  SUBCHAPTER S CORPORATION, THE AMOUNT OF TAX CREDIT EARNED BY EACH
ENTITY MUST BE INCLUDED IN THE REPORT INSTEAD OF INFORMATION  ABOUT  THE
TAXPAYER  CLAIMING  THE  TAX CREDIT, AND (C) INFORMATION IDENTIFYING THE
PROJECT ASSOCIATED WITH EACH TAXPAYER FOR WHICH A TAX CREDIT WAS CLAIMED
UNDER SECTION 24 OR SECTION 31, AS ADDED BY CHAPTER 57 OF  THE  LAWS  OF
2010, OF THE TAX LAW, INCLUDING THE NAME OF THE FILM AND COUNTY IN WHICH
THE PROJECT IS LOCATED; AND
  B.  THE GOVERNOR'S OFFICE OF MOTION PICTURE AND TELEVISION DEVELOPMENT
SHALL FILE A REPORT ON A BIENNIAL BASIS WITH THE DIRECTOR OF  THE  DIVI-
SION OF THE BUDGET AND THE CHAIRS OF THE ASSEMBLY WAYS AND MEANS COMMIT-
TEE  AND  SENATE  FINANCE  COMMITTEE.  THE  REPORT SHALL BE FILED WITHIN
FIFTEEN DAYS AFTER THE CLOSE OF THE  CALENDAR  YEAR.  THE  FIRST  REPORT
SHALL COVER A TWO YEAR PERIOD THAT BEGINS ON JANUARY FIRST, TWO THOUSAND
THIRTEEN.  THE  REPORT  MUST  BE  PREPARED BY AN INDEPENDENT THIRD PARTY
AUDITOR AND INCLUDE: (1) INFORMATION REGARDING  THE  EMPIRE  STATE  FILM
PRODUCTION  CREDIT  AND  POST  PRODUCTION  CREDIT PROGRAMS INCLUDING THE
EFFICIENCY OF OPERATIONS, RELIABILITY OF FINANCIAL REPORTING, COMPLIANCE
WITH LAWS AND REGULATIONS AND DISTRIBUTION OF ASSETS AND FUNDS;  (2)  AN
ECONOMIC IMPACT STUDY PREPARED BY AN INDEPENDENT THIRD PARTY OF THE FILM
CREDIT  PROGRAMS; AND (3) ANY OTHER INFORMATION AND/OR OTHER STATISTICAL

S. 2609--A                         13                         A. 3009--A

INFORMATION THAT THE COMMISSIONER OF ECONOMIC DEVELOPMENT  DEEMS  TO  BE
USEFUL IN ANALYZING THE EFFECTS OF THE PROGRAM.
  S  7.  This act shall take effect immediately, provided, however, that
sections four and five of this act shall apply to  taxpayers  submitting
initial  applications  to  the  governor's  office of motion picture and
television development on or after the date this act shall have become a
law, and to taxpayers who filed an initial application before  this  act
shall  have become a law but who have not yet submitted a final applica-
tion to the governor's office of motion picture and television  develop-
ment  on  or  before  the date this act shall have become a law; and the
amendments made to section 3 of part Y-1 of chapter 57 of  the  laws  of
2009,  amending the tax law relating to the empire state film production
credit, with the exception of subdivision b of such section, shall  only
apply  to  taxpayers  submitting  initial applications to the governor's
office of motion picture and television development on or after the date
this act shall become a law.

                                 PART C

  Section 1. Legislative intent. This act is intended to create a state-
wide network of university affiliated or college affiliated and  private
sector  affiliated  innovation  hot  spots  in New York state to support
start-up companies and those in the  early  stage  of  development.  The
mission  of  the  innovation hot spots shall be to promote job creation,
entrepreneurship and technology transfer, as well as to provide  support
services  to  hot  spot tenants, including, but not limited to, business
planning,  management  assistance,  financial-packaging,   linkages   to
financing  and  technology services, and coordination with other sources
of assistance.
  S 2. The economic development law is amended by adding a  new  section
361 to read as follows:
  S  361. NEW YORK INNOVATION HOT SPOT PROGRAM.  1. DEFINITIONS. AS USED
IN THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
  (A) "INNOVATION HOT SPOT" SHALL MEAN A FACILITY OR  FACILITIES  DESIG-
NATED AS SUCH BY THE COMMISSIONER.
  (B) "QUALIFIED ENTITY" SHALL MEAN A BUSINESS ENTERPRISE THAT IS:
  (I) IN THE FORMATIVE STAGE OF DEVELOPMENT;
  (II) LOCATED IN NEW YORK STATE;
  (III) EITHER: (A) ANY CORPORATION, EXCEPT A CORPORATION WHICH:
  (1)  OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING THE
HOLDERS THEREOF TO VOTE FOR THE ELECTION OF  DIRECTORS  OR  TRUSTEES  IS
OWNED  OR  CONTROLLED,  EITHER  DIRECTLY  OR  INDIRECTLY,  BY A TAXPAYER
SUBJECT TO TAX UNDER THE FOLLOWING PROVISIONS OF THE TAX LAW:    ARTICLE
NINE-A; SECTION ONE HUNDRED EIGHTY-THREE, ONE HUNDRED EIGHTY-FOUR OR ONE
HUNDRED EIGHTY-FIVE OF ARTICLE NINE; ARTICLE THIRTY-TWO OR ARTICLE THIR-
TY-THREE; OR
  (2)  IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A BUSI-
NESS ENTITY (OR  ENTITIES)  TAXABLE  OR  PREVIOUSLY  TAXABLE  UNDER  THE
FOLLOWING PROVISIONS OF THE TAX LAW: ARTICLE NINE-A; SECTION ONE HUNDRED
EIGHTY-THREE, ONE HUNDRED EIGHTY-FOUR, ONE HUNDRED EIGHTY-FIVE OR FORMER
SECTION  ONE  HUNDRED  EIGHTY-SIX  OF  ARTICLE NINE; ARTICLE THIRTY-TWO;
ARTICLE THIRTY-THREE; ARTICLE TWENTY-THREE, OR WOULD HAVE  BEEN  SUBJECT
TO TAX UNDER SUCH ARTICLE TWENTY-THREE (AS SUCH ARTICLE WAS IN EFFECT ON
JANUARY  FIRST,  NINETEEN  HUNDRED  EIGHTY) OR THE INCOME (OR LOSSES) OF
WHICH IS (OR WAS) INCLUDABLE UNDER ARTICLE TWENTY-TWO; OR

S. 2609--A                         14                         A. 3009--A

  (B) A SOLE PROPRIETORSHIP, PARTNERSHIP, LIMITED LIABILITY COMPANY,  OR
NEW  YORK  SUBCHAPTER S CORPORATION THAT IS NOT SUBSTANTIALLY SIMILAR IN
OPERATION AND IN OWNERSHIP TO A BUSINESS ENTITY (OR  ENTITIES)  TAXABLE,
OR  PREVIOUSLY TAXABLE, UNDER ARTICLE NINE-A OF THE TAX LAW, SECTION ONE
HUNDRED  EIGHTY-THREE,  ONE HUNDRED EIGHTY-FOUR, ONE HUNDRED EIGHTY-FIVE
OR FORMER SECTION ONE HUNDRED EIGHTY-SIX OF ARTICLE NINE OF THE TAX LAW,
ARTICLE THIRTY-TWO OR THIRTY-THREE OF THE TAX LAW, ARTICLE  TWENTY-THREE
OF  THE TAX LAW OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH ARTI-
CLE TWENTY-THREE (AS SUCH ARTICLE WAS IN EFFECT ON JANUARY FIRST,  NINE-
TEEN  HUNDRED  EIGHTY)  OR  THE  INCOME (OR LOSSES) OF WHICH IS (OR WAS)
INCLUDABLE UNDER ARTICLE TWENTY-TWO OF THE TAX LAW; AND
  (IV) IS APPROVED TO LOCATE IN AN INNOVATION HOT SPOT BY  THE  OPERATOR
OF SUCH INNOVATION HOT SPOT.
  (C) "OPERATOR OF AN INNOVATION HOT SPOT" SHALL MEAN:
  (I)  AN  ACCREDITED POST-SECONDARY EDUCATIONAL INSTITUTION, COLLEGE OR
UNIVERSITY; NOT-FOR-PROFIT ENTITY AFFILIATED WITH A  HIGHER  EDUCATIONAL
INSTITUTION; OR, COLLABORATIVE ENTERPRISE BETWEEN ONE OR MORE ACCREDITED
POST-SECONDARY   EDUCATIONAL  INSTITUTION,  COLLEGE  OR  UNIVERSITY  AND
NOT-FOR-PROFIT ENTITY AFFILIATED WITH A HIGHER EDUCATIONAL INSTITUTION;
  (II) LOCATED IN NEW YORK STATE; AND
  (III) DESIGNATED BY  THE  COMMISSIONER  TO  OPERATE  A  FACILITY  THAT
PROVIDES:   LOW-COST  SPACE;  TECHNICAL  ASSISTANCE;  SUPPORT  SERVICES,
INCLUDING, BUT NOT LIMITED TO, CENTRAL SERVICES; AND, EDUCATIONAL OPPOR-
TUNITIES, TO A "QUALIFIED ENTITY."
  2. THE COMMISSIONER SHALL:
  (A) SOLICIT APPLICATIONS FROM POST-SECONDARY EDUCATIONAL INSTITUTIONS,
COLLEGES, UNIVERSITIES, OR NOT-FOR-PROFIT  ENTITIES  AFFILIATED  WITH  A
HIGHER EDUCATION INSTITUTION OR COLLABORATIVE ENTERPRISES BETWEEN ONE OR
MORE  ACCREDITED  POST-SECONDARY  EDUCATIONAL INSTITUTIONS, COLLEGES, OR
UNIVERSITIES AND NOT-FOR-PROFIT ENTITIES FOR APPROVAL TO  OPERATE  INNO-
VATION HOT SPOTS IN PROPERTY OWNED OR LEASED BY SUCH ENTITIES TO ATTRACT
INDUSTRIES  WITH  SIGNIFICANT POTENTIAL FOR ECONOMIC GROWTH AND DEVELOP-
MENT IN NEW YORK  STATE,  AND  IDENTIFY  TECHNOLOGICAL  AREAS  THAT  CAN
CONTRIBUTE  TO  THE  GROWTH OF VARIOUS INDUSTRIES LOCATED THROUGHOUT NEW
YORK STATE;
  (B) RECEIVE RECOMMENDATIONS FROM  THE  REGIONAL  ECONOMIC  DEVELOPMENT
COUNCILS REGARDING THE APPROVAL OR REJECTION OF THE APPLICANTS AS OPERA-
TORS OF INNOVATION HOT SPOTS.
  3. THE COMMISSIONER SHALL ESTABLISH CRITERIA CONCERNING THE INNOVATION
HOT  SPOT PROGRAM.   (A) THE CRITERIA THAT APPLICANTS MUST SATISFY TO BE
DESIGNATED AS AN OPERATOR OF AN INNOVATION HOT SPOT INCLUDE, BUT ARE NOT
LIMITED TO, THE FOLLOWING:
  (I) A RECORD OF, OR PLAN TO CONFORM TO, BEST PRACTICES INCLUDING,  BUT
NOT  LIMITED  TO,  CLEAR POLICIES FOR THE RESIDENT BUSINESS ENTITIES AND
GRADUATION FROM THE SPACE;
  (II) A COMPREHENSIVE  SUITE  OF  ENTREPRENEURIAL  MENTORING  PRACTICES
INCLUDING, BUT NOT LIMITED TO, ADVISING, COACHING, PLANNING AND CONNECT-
ING TO FUNDING AND TECHNOLOGY SOURCES;
  (III)  THE  CAPACITY TO SECURE SUBSTANTIAL PRIVATE AND OTHER NON-STATE
GOVERNMENTAL FUNDING FOR THE PROPOSED INNOVATION HOT SPOT,  IN  ADDITION
TO  DIRECT  SUPPORT  FROM THE SPONSORING ACADEMIC INSTITUTION OR RELATED
FOUNDATION;
  (IV) THE ABILITY  AND  WILLINGNESS  TO  COOPERATE  WITH  OTHER  LOCAL,
REGIONAL  AND  STATEWIDE  ECONOMIC  DEVELOPMENT  ORGANIZATIONS, BUSINESS
SUPPORT NETWORKS, VENTURE AND ANGEL CAPITAL FUNDING SOURCES,  AND  WORK-
FORCE DEVELOPMENT ADVOCATES;

S. 2609--A                         15                         A. 3009--A

  (V)  THE  CAPACITY TO COLLABORATE WITH OTHER BUSINESSES AND INDUSTRIES
INDIVIDUALLY; AND
  (VI)  SUCH  OTHER REQUIREMENTS AS THE DEPARTMENT DEEMS APPROPRIATE FOR
THE FORMAT, CONTENT AND FILING OF APPLICATIONS FOR DESIGNATION AS  INNO-
VATION HOT SPOTS.
  (B) THE COMMISSIONER SHALL ALSO ESTABLISH CRITERIA FOR THE DESIGNATION
OF INNOVATION HOT SPOTS.
  (C)  AFTER  ESTABLISHING SUCH CRITERIA, THE COMMISSIONER SHALL APPROVE
AND DESIGNATE FIVE INNOVATION HOT SPOTS AND THEIR  OPERATORS  IN  FISCAL
YEAR  TWO  THOUSAND  THIRTEEN--TWO THOUSAND FOURTEEN AND FIVE ADDITIONAL
INNOVATION HOT SPOTS AND THEIR OPERATORS IN  FISCAL  YEAR  TWO  THOUSAND
FOURTEEN--TWO THOUSAND FIFTEEN.
  (D)  THE  COMMISSIONER  SHALL ISSUE A CERTIFICATE OF APPROVAL FOR EACH
DESIGNATED INNOVATION HOT SPOT AND EACH APPROVED OPERATOR  OF  AN  INNO-
VATION HOT SPOT.
  (E)  THE OPERATOR OF AN APPROVED INNOVATION HOT SPOT MAY ACCEPT APPLI-
CATIONS FOR TENANCIES FROM QUALIFIED ENTITIES FOR A PERIOD OF FIVE YEARS
AFTER THE RECEIPT BY SUCH INNOVATION HOT  SPOT  OF  ITS  CERTIFICATE  OF
APPROVAL  FROM  THE  COMMISSIONER.  QUALIFIED ENTITIES THAT LOCATE THEIR
BUSINESSES IN AN INNOVATION HOT SPOT ARE ELIGIBLE TO RECEIVE  TAX  BENE-
FITS  UNDER  SECTION THIRTY-EIGHT OF THE TAX LAW FOR FIVE TAXABLE YEARS,
BEGINNING WITH THE FIRST TAXABLE YEAR DURING WHICH SUCH QUALIFIED  ENTI-
TIES BECOME TENANTS IN AN INNOVATION HOT SPOT.
  4.  EACH  OPERATOR OF AN INNOVATION HOT SPOT SHALL REPORT ON AN ANNUAL
BASIS ON ITS ACTIVITIES TO THE COMMISSIONER IN A MANNER AND ACCORDING TO
THE SCHEDULE ESTABLISHED BY THE DEPARTMENT, AND SHALL PROVIDE SUCH ADDI-
TIONAL INFORMATION AS THE COMMISSIONER  MAY  REQUIRE.  THE  COMMISSIONER
SHALL  EVALUATE THE OPERATIONS OF THE INNOVATION HOT SPOTS USING METHODS
INCLUDING BUT NOT LIMITED TO SITE VISITS, REPORTS PURSUANT TO  SPECIFIED
INFORMATION,  AND REVIEW EVALUATIONS. IF THE COMMISSIONER IS UNSATISFIED
WITH THE PROGRESS OF AN OPERATOR OF AN INNOVATION HOT SPOT, THE  COMMIS-
SIONER  SHALL NOTIFY SUCH OPERATOR OF THE RESULTS OF ITS EVALUATIONS AND
THE FINDINGS OF DEFICIENCIES IN THE OPERATION OF SUCH HOT SPOT AND SHALL
ALLOW AND COOPERATE WITH SUCH OPERATOR TO  REMEDY  SUCH  FINDINGS  IN  A
TIMELY MANNER.
  5.  NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER, EMPLOYEES AND OFFI-
CERS OF THE DEPARTMENT AND THE DEPARTMENT OF TAXATION AND FINANCE  SHALL
BE ALLOWED AND ARE DIRECTED TO SHARE AND EXCHANGE:
  (I)  INFORMATION  DERIVED FROM TAX RETURNS OR REPORTS THAT IS RELEVANT
TO A QUALIFIED ENTITY'S ELIGIBILITY TO PARTICIPATE IN THE INNOVATION HOT
SPOTS PROGRAM, AND
  (II) INFORMATION REGARDING THE TAX BENEFITS APPLIED FOR,  ALLOWED,  OR
CLAIMED  PURSUANT TO SECTION THIRTY-EIGHT OF THE TAX LAW AND THE TAXPAY-
ERS WHO ARE APPLYING FOR OR ARE CLAIMING THE TAX BENEFITS.
  ALL INFORMATION EXCHANGED BETWEEN THE DEPARTMENT AND THE DEPARTMENT OF
TAXATION AND FINANCE SHALL  NOT BE SUBJECT TO DISCLOSURE  OR  INSPECTION
PURSUANT  TO  THE  STATE'S  FREEDOM OF INFORMATION LAW.   THE DEPARTMENT
SHALL NOT DISCLOSE ANY INFORMATION OBTAINED FROM THE DEPARTMENT OF TAXA-
TION AND FINANCE THAT CONCERNS SPECIFIC TAXPAYERS.
  S 3. The tax law is amended by adding a new  section  38  to  read  as
follows:
  S  38.  NEW YORK INNOVATION HOT SPOT PROGRAM TAX BENEFITS. (A) AS USED
IN THIS CHAPTER, THE TERMS "INNOVATION HOT SPOT" AND "QUALIFIED  ENTITY"
SHALL  HAVE THE SAME MEANING AS UNDER SECTION THREE HUNDRED SIXTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW.

S. 2609--A                         16                         A. 3009--A

  (B) A TAXPAYER UNDER ARTICLE NINE-A OF THIS CHAPTER THAT IS  A  QUALI-
FIED ENTITY AND ALSO A TENANT IN AN INNOVATION HOT SPOT SHALL BE SUBJECT
ONLY  TO  THE  FIXED  DOLLAR MINIMUM TAX, IMPOSED UNDER PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  CHAPTER,  FOR  FIVE
TAXABLE  YEARS,  BEGINNING  WITH THE FIRST TAXABLE YEAR DURING WHICH THE
QUALIFIED ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT. A  TAXPAYER
UNDER  ARTICLE  NINE-A  OF THIS CHAPTER THAT IS A CORPORATE PARTNER IN A
QUALIFIED ENTITY, OR IS A QUALIFIED ENTITY THAT IS LOCATED  BOTH  WITHIN
AND  WITHOUT  AN  INNOVATION HOT SPOT, SHALL BE ALLOWED ONLY A DEDUCTION
FOR THE AMOUNT OF INCOME OR GAIN INCLUDED IN ITS FEDERAL TAXABLE  INCOME
TO  THE EXTENT THAT THE INCOME OR GAIN IS ATTRIBUTABLE TO THE OPERATIONS
AT THE INNOVATION HOT SPOT. THE DEDUCTION IS ALLOWED  FOR  FIVE  TAXABLE
YEARS,  BEGINNING WITH THE FIRST TAXABLE YEAR DURING WHICH THE QUALIFIED
ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT.
  (C) AN INDIVIDUAL WHO IS THE SOLE PROPRIETOR OF A QUALIFIED ENTITY  OR
A MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP OR A
SHAREHOLDER  IN  A  NEW  YORK SUBCHAPTER S CORPORATION WHERE THE LIMITED
LIABILITY COMPANY, PARTNERSHIP, OR S CORPORATION IS A QUALIFIED  ENTITY,
THAT  IS  TAXABLE  UNDER  ARTICLE  TWENTY-TWO  OF  THIS CHAPTER SHALL BE
ALLOWED A DEDUCTION FOR THE AMOUNT OF INCOME OR  GAIN  INCLUDED  IN  ITS
FEDERAL  ADJUSTED  GROSS INCOME TO THE EXTENT THAT THE INCOME OR GAIN IS
ATTRIBUTABLE TO THE OPERATIONS OF A QUALIFIED ENTITY WHICH IS  A  TENANT
IN  AN  INNOVATION  HOT  SPOT. THE DEDUCTION IS ALLOWED FOR FIVE TAXABLE
YEARS, BEGINNING WITH THE FIRST TAXABLE YEAR DURING WHICH THE  QUALIFIED
ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT.
  (D)  A  QUALIFIED  ENTITY  THAT  IS A TENANT IN AN INNOVATION HOT SPOT
SHALL BE ELIGIBLE FOR A CREDIT OR REFUND FOR SALES AND USE TAXES IMPOSED
ON THE RETAIL SALE OF  TANGIBLE  PERSONAL  PROPERTY  OR  SERVICES  UNDER
SUBDIVISIONS  (A),  (B),  AND  (C)  OF  SECTION  ELEVEN HUNDRED FIVE AND
SECTION ELEVEN HUNDRED TEN OF THIS CHAPTER. THE CREDIT OR  REFUND  SHALL
BE  ALLOWED  FOR  SIXTY MONTHS BEGINNING WITH THE FIRST FULL MONTH AFTER
THE QUALIFIED ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT.
  (E) A TAXPAYER WHO CLAIMS ANY OF THE TAX BENEFITS  DESCRIBED  IN  THIS
SECTION  IS  NO LONGER ELIGIBLE FOR ANY OTHER NEW YORK STATE EXEMPTIONS,
DEDUCTIONS, OR CREDIT OR REFUNDS UNDER THIS CHAPTER TO THE  EXTENT  THAT
ANY  SUCH  EXEMPTION, DEDUCTION, CREDIT OR REFUND IS ATTRIBUTABLE TO THE
BUSINESS OPERATIONS OF A TENANT IN AN INNOVATION HOT SPOT. THE  ELECTION
TO CLAIM THE TAX BENEFITS DESCRIBED IN THIS SECTION IS NOT REVOCABLE.
  (F) CROSS-REFERENCES. FOR APPLICATION OF THE TAX BENEFITS PROVIDED FOR
IN THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (I) ARTICLE 9-A, SECTION 208, SUBDIVISION (9), PARAGRAPH (A), SUBPARA-
GRAPH (18).
  (II) ARTICLE 9-A, SECTION 209, SUBDIVISION 11.
  (III) ARTICLE 22, SECTION 612, SUBSECTION (C), PARAGRAPH (39).
  (IV) ARTICLE 28, SECTION 1119, SUBDIVISION (D).
  S  4.  Paragraph (a) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 18 to read as follows:
  (18) THE AMOUNT OF INCOME OR GAIN INCLUDED IN FEDERAL  TAXABLE  INCOME
OF  A TAXPAYER THAT IS A PARTNER IN A QUALIFIED ENTITY OR IS A QUALIFIED
ENTITY THAT IS LOCATED BOTH WITHIN AND WITHOUT AN INNOVATION  HOT  SPOT,
TO  THE EXTENT THAT THE INCOME OR GAIN IS ATTRIBUTABLE TO THE OPERATIONS
OF A QUALIFIED ENTITY AT THE INNOVATION HOT SPOT AS PROVIDED IN  SECTION
THIRTY-EIGHT OF THIS CHAPTER.
  S 5. Section 209 of the tax law is amended by adding a new subdivision
11 to read as follows:

S. 2609--A                         17                         A. 3009--A

  11.  EXCEPT  AS  PROVIDED IN SUBPARAGRAPH EIGHTEEN OF PARAGRAPH (A) OF
SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE, A  CORPO-
RATION THAT IS A QUALIFIED ENTITY AND ALSO A TENANT IN AN INNOVATION HOT
SPOT  SHALL  BE SUBJECT ONLY TO THE FIXED DOLLAR MINIMUM TAX UNDER PARA-
GRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE,
AS PROVIDED IN SECTION THIRTY-EIGHT OF THIS CHAPTER.
  S 6. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 39 to read as follows:
  (39)  ANY  INCOME  OR  GAIN,  TO  THE EXTENT IT IS INCLUDED IN FEDERAL
ADJUSTED GROSS INCOME OF AN INDIVIDUAL WHO IS THE SOLE PROPRIETOR  OF  A
QUALIFIED  ENTITY  OR A MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER
IN A PARTNERSHIP OR A SHAREHOLDER IN A NEW YORK SUBCHAPTER S CORPORATION
THAT IS A QUALIFIED ENTITY, ATTRIBUTABLE TO THE OPERATIONS OF  A  QUALI-
FIED  ENTITY  AT  ITS LOCATION IN AN INNOVATION HOT SPOT, AS PROVIDED IN
SECTION THIRTY-EIGHT OF THIS CHAPTER.
  S 7. Paragraph 1 of subdivision (d) of section 1119 of the tax law, as
added by section 31 of part S-1 of chapter 57 of the laws  of  2009,  is
amended to read as follows:
  (1)  Subject  to  the  conditions and limitations provided for in this
section, a refund or credit will be allowed for  taxes  imposed  on  the
retail  sale  of tangible personal property described in subdivision (a)
of section eleven hundred five of this article, and  on  every  sale  of
services  described  in  subdivisions  (b)  and (c) of such section, and
consideration given or contracted to be given for, or for  the  use  of,
such  tangible  personal  property  or  services,  where  such  tangible
personal property or services are sold to a qualified empire zone enter-
prise OR TO A QUALIFIED ENTITY THAT IS ALSO A TENANT  IN  AN  INNOVATION
HOT  SPOT  AS PROVIDED IN SECTION THIRTY-EIGHT OF THIS CHAPTER, provided
that (A) such tangible personal property or tangible  personal  property
upon which such a service has been performed or such service (other than
a service described in subdivision (b) of section eleven hundred five of
this article) is directly and predominantly, or such a service described
in clause (A) or (D) of paragraph one of such subdivision (b) of section
eleven hundred five of this article is directly and exclusively, used or
consumed  by (I) such QUALIFIED EMPIRE ZONE enterprise in an area desig-
nated as an empire zone pursuant to article eighteen-B  of  the  general
municipal  law with respect to which such enterprise is certified pursu-
ant to such article eighteen-B, OR (II)  SUCH  QUALIFIED  ENTITY  IN  AN
INNOVATION HOT SPOT or (B) such a service described in clause (B) or (C)
of  paragraph  one  of subdivision (b) of section eleven hundred five of
this article is delivered and  billed  to  (I)  such  enterprise  at  an
address in such empire zone OR (II) SUCH QUALIFIED ENTITY AT THE ADDRESS
OF THE INNOVATION HOT SPOT WHERE IT IS A TENANT, or (C) the enterprise's
place  of  primary use of the service described in paragraph two of such
subdivision (b) of section eleven hundred five is at an address in  such
empire  zone  OR  AT AN INNOVATION HOT SPOT; provided, further, that, in
order for a motor vehicle, as defined  in  subdivision  (c)  of  section
eleven  hundred seventeen of this article, or tangible personal property
related to such a motor vehicle to be found to be used predominantly  in
such a zone, at least fifty percent of such motor vehicle's use shall be
exclusively  within  such  zone  or at least fifty percent of such motor
vehicle's use shall be in activities originating or terminating in  such
zone,  or  both; and either or both such usages shall be computed either
on the basis of mileage or hours of  use,  at  the  discretion  of  such
enterprise. For purposes of this subdivision, tangible personal property
related  to  such  a motor vehicle shall include a battery, diesel motor

S. 2609--A                         18                         A. 3009--A

fuel, an engine, engine components, motor fuel,  a  muffler,  tires  and
similar tangible personal property used in or on such a motor vehicle.
  S  8. Subdivision (c) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 35 to read  as
follows:
  (35) AS PROVIDED IN SECTION THIRTY-EIGHT OF THE TAX LAW, ANY INCOME OR
GAIN,  TO  THE EXTENT IT IS INCLUDED IN FEDERAL ADJUSTED GROSS INCOME OF
AN INDIVIDUAL WHO IS THE SOLE PROPRIETOR OF  A  QUALIFIED  ENTITY  OR  A
MEMBER  OF  A LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP OR A
SHAREHOLDER IN A NEW YORK SUBCHAPTER S CORPORATION THAT IS  A  QUALIFIED
ENTITY  AS  DEFINED IN PARAGRAPH (B) OF SUBDIVISION ONE OF SECTION THREE
HUNDRED SIXTY-ONE OF THE ECONOMIC DEVELOPMENT LAW, ATTRIBUTABLE  TO  THE
OPERATIONS OF SUCH QUALIFIED ENTITY AT ITS LOCATION IN AN INNOVATION HOT
SPOT,  AS  DEFINED  IN PARAGRAPH (A) OF SUBDIVISION ONE OF SECTION THREE
HUNDRED SIXTY-ONE OF THE ECONOMIC DEVELOPMENT LAW.
  S 9. This act shall take effect immediately.

                                 PART D

  Section 1. Subsection (g) of section 615 of the tax law, as  added  by
section  3  of  part HH of chapter 57 of the laws of 2010, is amended to
read as follows:
  (g)(1) With respect to an individual whose  New  York  adjusted  gross
income is over one million dollars and no more than ten million dollars,
the  New  York  itemized  deduction  shall  be  an amount equal to fifty
percent of any charitable contribution deduction allowed  under  section
one  hundred  seventy  of  the  internal  revenue code for taxable years
beginning after two thousand nine and  before  two  thousand  [thirteen]
SIXTEEN.  With  respect  to  an individual whose New York adjusted gross
income is over one million dollars,  the  New  York  itemized  deduction
shall be an amount equal to fifty percent of any charitable contribution
deduction  allowed  under  section  one  hundred seventy of the internal
revenue code for taxable years beginning in two thousand nine  or  after
two thousand [twelve] FIFTEEN.
  (2) With respect to an individual whose New York adjusted gross income
is over ten million dollars, the New York itemized deduction shall be an
amount  equal  to  twenty-five  percent  of  any charitable contribution
deduction allowed under section one  hundred  seventy  of  the  internal
revenue  code  for  taxable  years beginning after two thousand nine and
ending before two thousand [thirteen] SIXTEEN.
  S 2. Subdivision (g) of section 11-1715 of the administrative code  of
the  city of New York, as added by section 7 of part HH of chapter 57 of
the laws of 2010, is amended to read as follows:
  (g) (1) With respect to an individual whose New  York  adjusted  gross
income is over one million dollars but no more than ten million dollars,
the  New  York  itemized  deduction  shall  be  an amount equal to fifty
percent of any charitable contribution deduction allowed  under  section
one  hundred  seventy  of  the  internal  revenue code for taxable years
beginning after two thousand nine and  before  two  thousand  [thirteen]
SIXTEEN.  With  respect  to  an individual whose New York adjusted gross
income is over one million dollars,  the  New  York  itemized  deduction
shall be an amount equal to fifty percent of any charitable contribution
deduction  allowed  under  section  one  hundred seventy of the internal
revenue code for taxable years beginning in two thousand nine  or  after
two thousand [twelve] FIFTEEN.

S. 2609--A                         19                         A. 3009--A

  (2) With respect to an individual whose New York adjusted gross income
is over ten million dollars, the New York itemized deduction shall be an
amount  equal  to  twenty-five  percent  of  any charitable contribution
deduction allowed under section one  hundred  seventy  of  the  internal
revenue  code  for  taxable  years beginning after two thousand nine AND
ENDING BEFORE TWO THOUSAND SIXTEEN.
  S 3. This act shall take effect immediately.

                                 PART E

  Section 1. Subparagraph 17  of  paragraph  (a)  of  subdivision  9  of
section 208 of the tax law is REPEALED.
  S  2. Paragraph (o) of subdivision 9 of section 208 of the tax law, as
amended by section 1 of part M of chapter  686  of  the  laws  of  2003,
clause  (A) of subparagraph 2 as amended by section 4 of part J of chap-
ter 60 of the laws of 2007, is amended to read as follows:
  (o) Related members expense add back [and income exclusion]. (1) Defi-
nitions. (A) Related member [or members. For purposes of this paragraph,
the term related member or members means a person, corporation, or other
entity, including an entity that is treated as a  partnership  or  other
pass-through  vehicle  for  purposes  of  federal taxation, whether such
person, corporation or entity is a  taxpayer  or  not,  where  one  such
person,  corporation, or entity, or set of related persons, corporations
or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all
taxpayers under articles nine, nine-A, thirteen, twenty-two, thirty-two,
thirty-three or thirty-three-A of this chapter]. "RELATED MEMBER"  MEANS
A  RELATED  PERSON  AS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVEN-
UE CODE, EXCEPT THAT "FIFTY  PERCENT"  SHALL  BE  SUBSTITUTED  FOR  "TEN
PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY STATE OR U.S.  POSSESSION, THE  MAXIMUM  STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-
DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET
INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER
WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER  ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF  TAX  IMPOSED  BY  SAID
JURISDICTION  SHALL  BE  DECREASED  TO REFLECT THE STATUTORY RATE OF TAX

S. 2609--A                         20                         A. 3009--A

THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by  the commissioner, and [includes] INCLUDE amounts allowable as inter-
est deductions under section one hundred  sixty-three  of  the  internal
revenue  code to the extent such amounts are directly or indirectly for,
related to or in connection with the acquisition,  use,  maintenance  or
management,  ownership, sale, exchange or disposition of such intangible
assets.
  (D) Valid Business Purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in  a combined report with a related member pursuant to subdivision four
of section two hundred eleven  of  this  article,  for  the  purpose  of
computing entire net income or other applicable taxable basis, a taxpay-
er  must  add  back royalty payments [to a] DIRECTLY OR INDIRECTLY PAID,
ACCRUED, OR INCURRED IN CONNECTION WITH ONE OR MORE DIRECT  OR  INDIRECT
TRANSACTIONS  WITH ONE OR MORE related [member] MEMBERS during the taxa-
ble year to the extent deductible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and  such  transaction  was  done for a valid business
purpose and the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income or other taxable basis, a taxpayer shall  be  allowed  to  deduct
royalty  payments  directly or indirectly received from a related member
during the taxable year to the extent included in the taxpayer's federal
taxable income unless such royalty payments would not be required to  be
added  back  under  subparagraph  two of this paragraph or other similar
provision in this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT  REQUIRED  IN
THIS  PARAGRAPH  SHALL  NOT  APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE
TYPE  AND  IN  THE  FORM SPECIFIED BY THE COMMISSIONER, MEETS ALL OF THE
FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS  SUBJECT  TO  TAX  IN
THIS  STATE  OR  ANOTHER  STATE  OR POSSESSION OF THE UNITED STATES OR A
FOREIGN NATION OR SOME COMBINATION THEREOF ON A TAX BASE  THAT  INCLUDED
THE  ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER; (II) THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED OR INCURRED SUCH PORTION TO A  PERSON  THAT  IS  NOT  A  RELATED

S. 2609--A                         21                         A. 3009--A

MEMBER;  AND  (III)  THE  TRANSACTION GIVING RISE TO THE ROYALTY PAYMENT
BETWEEN THE TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR  A  VALID
BUSINESS PURPOSE.
  (II)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION TWO HUNDRED TEN  OF  THIS  ARTICLE
FOR THE TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE ROYALTY PAYMENT
WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER  ORGANIZED  UNDER  THE
LAWS  OF  A  COUNTRY  OTHER  THAN  THE  UNITED  STATES; (II) THE RELATED
MEMBER'S INCOME FROM THE TRANSACTION  WAS  SUBJECT  TO  A  COMPREHENSIVE
INCOME  TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III) THE
RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX BASE THAT
INCLUDED THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE  TAXPAYER;
(IV)  THE RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS TAXED IN SUCH
COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO  THAT  IMPOSED  BY
THIS  STATE;  AND  (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED
PURSUANT TO A TRANSACTION THAT  WAS  UNDERTAKEN  FOR  A  VALID  BUSINESS
PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 3. Paragraph 6 of subdivision (a) of section 292 of the tax law,  as
amended  by  section 15 of part M of chapter 686 of the laws of 2003, is
amended to read as follows:
  (6) Related members expense add back  [and  income  exclusion].    (A)
Definitions.  (i) Related member [or members. For purposes of this para-
graph, the term related member or members means a  person,  corporation,
or other entity, including an entity that is treated as a partnership or
other  pass-through  vehicle  for  purposes of federal taxation, whether
such person, corporation or entity is a taxpayer or not, where one  such
person,  corporation, or entity, or set of related persons, corporations
or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all
taxpayers under article nine, nine-A, thirteen, twenty-two,  thirty-two,
thirty-three or thirty-three-A of this chapter].  "RELATED MEMBER" MEANS
A  RELATED  PERSON  AS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVEN-
UE CODE, EXCEPT THAT "FIFTY  PERCENT"  SHALL  BE  SUBSTITUTED  FOR  "TEN
PERCENT".
  (ii)  [Controlling  interest. A controlling interest shall mean (I) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or

S. 2609--A                         22                         A. 3009--A

thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (II) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX"  MEANS,  AS  TO ANY STATE OR U.S. POSSESSION, THE MAXIMUM STATUTORY
RATE OF TAX IMPOSED BY THE STATE OR  POSSESSION  ON  OR  MEASURED  BY  A
RELATED  MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT PERCENTAGE,
IF ANY, APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF  SAID  JURIS-
DICTION.  FOR  PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF TAX AS
TO ANY STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED  MEMBER'S  NET
INCOME  TAX  LIABILITY IN SAID JURISDICTION IS REPORTED ON A COMBINED OR
CONSOLIDATED RETURN INCLUDING BOTH THE TAXPAYER AND THE  RELATED  MEMBER
WHERE  THE  REPORTED  TRANSACTIONS  BETWEEN THE TAXPAYER AND THE RELATED
MEMBER ARE ELIMINATED OR OFFSET.  ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF  TAX  IMPOSED  BY  SAID
JURISDICTION  SHALL  BE  DECREASED  TO REFLECT THE STATUTORY RATE OF TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (iii)  Royalty  payments.  Royalty  payments  are  payments   directly
connected to the acquisition, use, maintenance or management, ownership,
sale,  exchange, or any other disposition of licenses, trademarks, copy-
rights, trade names, trade  dress,  service  marks,  mask  works,  trade
secrets,  patents  and  any  other similar types of intangible assets as
determined by the commissioner, and [includes] INCLUDE amounts allowable
as interest deductions under section  one  hundred  sixty-three  of  the
internal  revenue  code to the extent such amounts are directly or indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance or management, ownership, sale, exchange or disposition of  such
intangible assets.
  (iv)  Valid  business purpose. A valid business purpose is one or more
business purposes other than the  avoidance  or  reduction  of  taxation
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the  economic  position  of
the taxpayer. The economic position of the taxpayer includes an increase
in  the  market share of the taxpayer, or the entry by the taxpayer into
new business markets.
  (B) Royalty expense add backs. (i) For the purpose  of  computing  New
York unrelated business taxable income, a taxpayer must add back royalty
payments  [to  a]  DIRECTLY  OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN
CONNECTION WITH ONE OR MORE DIRECT OR INDIRECT TRANSACTIONS WITH ONE  OR
MORE  related  [member]  MEMBERS  during  the taxable year to the extent
deductible in calculating federal unrelated business taxable income;
  (ii) [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (I) the related member during the same taxable year directly or  indi-
rectly  paid  or incurred the amount to a person or entity that is not a
related member, and such transaction was done for a valid  business  and
the payments are made at arm's length;
  (II)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are

S. 2609--A                         23                         A. 3009--A

subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (C)  Royalty  income exclusions. For the purpose of computing New York
unrelated business taxable income, a taxpayer shall be allowed to deduct
royalty payments directly or indirectly received from a  related  member
during the taxable year to the extent included in the taxpayer's federal
taxable  income unless such royalty payments would not be required to be
added back under subparagraph (B) of this  paragraph  or  other  similar
provision  in  this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT REQUIRED IN
THIS PARAGRAPH SHALL NOT APPLY TO THE PORTION  OF  THE  ROYALTY  PAYMENT
THAT  THE  TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER,  MEETS  ALL  OF  THE
FOLLOWING  REQUIREMENTS:  (A)  THE  RELATED MEMBER WAS SUBJECT TO TAX IN
THIS STATE OR ANOTHER STATE OR POSSESSION OF  THE  UNITED  STATES  OR  A
FOREIGN  NATION  OR SOME COMBINATION THEREOF ON A TAX BASE THAT INCLUDED
THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER;  (B)  THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED  OR  INCURRED  SUCH  PORTION  TO  A PERSON THAT IS NOT A RELATED
MEMBER; AND (C) THE TRANSACTION  GIVING  RISE  TO  THE  ROYALTY  PAYMENT
BETWEEN  THE  TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR A VALID
BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF  THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE RELATED  MEMBER
WAS  SUBJECT  TO  TAX  ON OR MEASURED BY ITS NET INCOME IN THIS STATE OR
ANOTHER STATE OR POSSESSION OF THE UNITED  STATES  OR  SOME  COMBINATION
THEREOF;  (B)  THE  TAX  BASE  FOR SAID TAX INCLUDED THE ROYALTY PAYMENT
PAID, ACCRUED OR INCURRED BY THE TAXPAYER; AND (C) THE AGGREGATE  EFFEC-
TIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDICTIONS IS
NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT APPLIED TO
THE  TAXPAYER  UNDER  SECTION TWO HUNDRED NINETY OF THIS ARTICLE FOR THE
TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE ROYALTY PAYMENT
WAS  PAID,  ACCRUED  OR INCURRED TO A RELATED MEMBER ORGANIZED UNDER THE
LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (B) THE RELATED MEMBER'S
INCOME FROM THE TRANSACTION WAS SUBJECT TO A  COMPREHENSIVE  INCOME  TAX
TREATY  BETWEEN  SUCH  COUNTRY  AND  THE  UNITED STATES; (C) THE RELATED
MEMBER WAS SUBJECT TO TAX IN  A  FOREIGN  NATION  ON  A  TAX  BASE  THAT
INCLUDED  THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER;
(D) THE RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS TAXED  IN  SUCH
COUNTRY  AT  AN  EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT IMPOSED BY
THIS STATE; AND (E) THE ROYALTY PAYMENT WAS PAID,  ACCRUED  OR  INCURRED
PURSUANT  TO  A  TRANSACTION  THAT  WAS  UNDERTAKEN FOR A VALID BUSINESS
PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF  THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR  HER  DISCRETION,  AGREE  TO  THE  APPLICATION  OR USE OF ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF SUCH AGREEMENT THE INCOME OF  THE  TAXPAYER  WOULD  NOT  BE  PROPERLY
REFLECTED.
  S  4.  Paragraph 19 of subsection (c) of section 612 of the tax law is
REPEALED.

S. 2609--A                         24                         A. 3009--A

  S 5. Subsection (r) of section 612 of  the  tax  law,  as  amended  by
section  3  of  part M of chapter 686 of the laws of 2003, is amended to
read as follows:
  (r)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related  member  [or  members.  For  purposes  of  this
subsection,  the  term  related member or members means a person, corpo-
ration, or other entity, including an entity that is treated as a  part-
nership  or other pass-through vehicle for purposes of federal taxation,
whether such person, corporation or entity is a taxpayer or  not,  where
one  such  person,  corporation,  or  entity, or set of related persons,
corporations or entities, directly or  indirectly  owns  or  controls  a
controlling  interest  in  another  entity.  Such entity or entities may
include all taxpayers under article nine, nine-A, thirteen,  twenty-two,
thirty-two,  thirty-three  or thirty-three-A of this chapter].  "RELATED
MEMBER" MEANS A RELATED PERSON AS DEFINED IN SUBPARAGRAPH (C)  OF  PARA-
GRAPH  THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE
INTERNAL REVENUE CODE, EXCEPT THAT "FIFTY PERCENT" SHALL BE  SUBSTITUTED
FOR "TEN PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX.   "EFFECTIVE  RATE
OF TAX" MEANS, AS TO ANY STATE OR U.S. POSSESSION, THE MAXIMUM STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-
DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET
INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER
WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER  ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF  TAX  IMPOSED  BY  SAID
JURISDICTION  SHALL  BE  DECREASED  TO REFLECT THE STATUTORY RATE OF TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by the commissioner, and [includes] INCLUDE amounts allowable as  inter-
est  deductions  under  section  one hundred sixty-three of the internal
revenue code to the extent such amounts are directly or indirectly  for,
related  to  or  in connection with the acquisition, use, maintenance or
management, ownership, sale, exchange or disposition of such  intangible
assets.

S. 2609--A                         25                         A. 3009--A

  (D)  Valid  business  purpose. A valid business purpose is one or more
business purposes, other than the avoidance or  reduction  of  taxation,
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2)  Royalty  expense  add backs. (A) For the purpose of computing New
York adjusted gross income, a taxpayer must add  back  royalty  payments
[to  a]  DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN CONNECTION
WITH ONE OR MORE DIRECT  OR  INDIRECT  TRANSACTIONS  WITH  ONE  OR  MORE
related  [member]  MEMBERS during the taxable year to the extent deduct-
ible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing  New  York
adjusted  gross  income,  a  taxpayer shall be allowed to deduct royalty
payments directly or indirectly received from a  related  member  during
the  taxable year to the extent included in the taxpayer's federal taxa-
ble income unless such royalty payments would  not  be  required  to  be
added  back  under  paragraph  two  of  this subsection or other similar
provision in this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT  REQUIRED  IN
THIS  SUBSECTION  SHALL  NOT APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE
TYPE  AND  IN  THE  FORM SPECIFIED BY THE COMMISSIONER, MEETS ALL OF THE
FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS  SUBJECT  TO  TAX  IN
THIS  STATE  OR  ANOTHER  STATE  OR POSSESSION OF THE UNITED STATES OR A
FOREIGN NATION OR SOME COMBINATION THEREOF ON A TAX BASE  THAT  INCLUDED
THE  ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER; (II) THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED OR INCURRED SUCH PORTION TO A  PERSON  THAT  IS  NOT  A  RELATED
MEMBER;  AND  (III)  THE  TRANSACTION GIVING RISE TO THE ROYALTY PAYMENT
BETWEEN THE TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR  A  VALID
BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE RELATED  MEMBER
WAS  SUBJECT  TO  TAX  ON OR MEASURED BY ITS NET INCOME IN THIS STATE OR
ANOTHER STATE OR POSSESSION OF THE UNITED  STATES  OR  SOME  COMBINATION
THEREOF;  (II)  THE  TAX BASE FOR SAID TAX  INCLUDED THE ROYALTY PAYMENT
PAID, ACCRUED OR INCURRED BY  THE  TAXPAYER;  AND  (III)  THE  AGGREGATE
EFFECTIVE  RATE  OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDIC-
TIONS IS NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF  TAX  THAT
APPLIED  TO  THE  TAXPAYER UNDER SECTION SIX HUNDRED ONE OF THIS ARTICLE
FOR THE TAXABLE YEAR.

S. 2609--A                         26                         A. 3009--A

  (III) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL  NOT  APPLY  IF
THE  TAXPAYER  ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE
AND IN THE FORM SPECIFIED BY THE COMMISSIONER,  THAT:  (I)  THE  ROYALTY
PAYMENT  WAS  PAID,  ACCRUED  OR  INCURRED TO A RELATED MEMBER ORGANIZED
UNDER  THE  LAWS  OF  A  COUNTRY  OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED  IN  SUCH  COUNTRY AT AN EFFECTIVE TAX RATE AT LEAST EQUAL TO THAT
IMPOSED BY THIS STATE; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED  OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF  ALTERNATIVE  ADJUSTMENTS OR COMPUTATIONS.   THE COMMISSIONER MAY, IN
HIS OR HER DISCRETION, AGREE TO THE APPLICATION OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 6. Paragraph 17 of subsection (e) of section 1453 of the tax law  is
REPEALED.
  S  7.  Subsection  (r)  of  section 1453 of the tax law, as amended by
section 5 of part M of chapter 686 of the laws of 2003, subparagraph (A)
of paragraph 2 as amended by section 5 of part J of chapter  60  of  the
laws of 2007, is amended to read as follows:
  (r)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related  member  [or  members.  For  purposes  of  this
subsection,  the  term  related member or members means a person, corpo-
ration, or other entity, including an entity that is treated as a  part-
nership  or other pass-through vehicle for purposes of federal taxation,
whether such person, corporation or entity is a taxpayer or  not,  where
one  such  person,  corporation,  or  entity, or set of related persons,
corporations or entities, directly or  indirectly  owns  or  controls  a
controlling  interest  in  another  entity.  Such entity or entities may
include all taxpayers under article nine, nine-A, thirteen,  twenty-two,
thirty-two,  thirty-three  or thirty-three-A of this chapter].  "RELATED
MEMBER" MEANS A RELATED PERSON AS DEFINED IN SUBPARAGRAPH (C)  OF  PARA-
GRAPH  THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE
INTERNAL REVENUE CODE, EXCEPT THAT "FIFTY PERCENT" SHALL BE  SUBSTITUTED
FOR "TEN PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY STATE OR U.S.  POSSESSION, THE  MAXIMUM  STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-
DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET

S. 2609--A                         27                         A. 3009--A

INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER
WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER  ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF  TAX  IMPOSED  BY  SAID
JURISDICTION  SHALL  BE  DECREASED  TO REFLECT THE STATUTORY RATE OF TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by the commissioner, and [includes] INCLUDE amounts allowable as  inter-
est  deductions  under  section  one hundred sixty-three of the internal
revenue code to the extent such amounts are directly or indirectly  for,
related  to  or  in connection with the acquisition, use, maintenance or
management, ownership, sale, exchange or disposition of such  intangible
assets.
  (D)  Valid  business  purpose. A valid business purpose is one or more
business purposes, other than the avoidance or  reduction  of  taxation,
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the  economic  position  of
the taxpayer. The economic position of the taxpayer includes an increase
in  the  market share of the taxpayer, or the entry by the taxpayer into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in a combined return with a related member pursuant to subsection (f) of
section fourteen hundred sixty-two of this article, for the  purpose  of
computing  entire  net income, a taxpayer must add back royalty payments
[to a] DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED  IN  CONNECTION
WITH  ONE  OR  MORE  DIRECT  OR  INDIRECT  TRANSACTIONS WITH ONE OR MORE
related [member] MEMBERS during the taxable year to the  extent  deduct-
ible in calculating federal taxable income.
  (B)  [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (i) the related member during the same taxable year directly or  indi-
rectly  paid  or incurred the amount to a person or entity that is not a
related member, and such transaction was done for a valid  business  and
the payments are made at arm's length;
  (ii)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income,  a taxpayer shall be allowed to deduct royalty payments directly
or indirectly received from a related member during the taxable year  to
the extent included in the taxpayer's federal taxable income unless such
royalty  payments would not be required to be added back under paragraph
two of this subsection or other  similar  provision  in  this  chapter.]

S. 2609--A                         28                         A. 3009--A

EXCEPTIONS.  (I)  THE  ADJUSTMENT  REQUIRED IN THIS SUBSECTION SHALL NOT
APPLY TO THE PORTION OF THE ROYALTY PAYMENT  THAT  THE  TAXPAYER  ESTAB-
LISHES,  BY  CLEAR  AND  CONVINCING EVIDENCE OF THE TYPE AND IN THE FORM
SPECIFIED  BY THE COMMISSIONER, MEETS ALL OF THE FOLLOWING REQUIREMENTS:
(I) THE RELATED MEMBER WAS SUBJECT TO TAX IN THIS STATE OR ANOTHER STATE
OR POSSESSION OF THE UNITED STATES OR A FOREIGN NATION OR SOME  COMBINA-
TION  THEREOF  ON  A  TAX  BASE  THAT INCLUDED THE ROYALTY PAYMENT PAID,
ACCRUED OR INCURRED BY THE TAXPAYER; (II) THE RELATED MEMBER DURING  THE
SAME  TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID, ACCRUED OR INCURRED SUCH
PORTION TO A PERSON THAT IS NOT A RELATED MEMBER; AND (III)  THE  TRANS-
ACTION  GIVING  RISE TO THE ROYALTY PAYMENT BETWEEN THE TAXPAYER AND THE
RELATED MEMBER WAS UNDERTAKEN FOR A VALID BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION  FOURTEEN  HUNDRED  FIFTY-FIVE  OF
THIS ARTICLE FOR THE TAXABLE YEAR.
  (III)  THE  ADJUSTMENT  REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN  THE  FORM  SPECIFIED BY THE COMMISSIONER, THAT: (I) THE ROYALTY
PAYMENT WAS PAID, ACCRUED OR INCURRED  TO  A  RELATED  MEMBER  ORGANIZED
UNDER  THE  LAWS  OF  A  COUNTRY  OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY THIS STATE; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 8. Paragraph 14 of subdivision (b) of section 1503 of the  tax  law,
as  amended  by  section 7 of part M of chapter 686 of the laws of 2003,
clause (i) of subparagraph (B) as amended by section  6  of  part  J  of
chapter 60 of the laws of 2007, is amended to read as follows:
  (14)  Related  members  expense  add back [and income exclusion].  (A)
Definitions. (i) Related member [or members. For purposes of this  para-
graph,  the  term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling

S. 2609--A                         29                         A. 3009--A

interest in another entity. Such entity  or  entities  may  include  all
taxpayers  under article nine, nine-A, thirteen, twenty-two, thirty-two,
thirty-three or thirty-three-A of this chapter]. "RELATED MEMBER"  MEANS
A  RELATED  PERSON  AS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVEN-
UE CODE, EXCEPT THAT "FIFTY  PERCENT"  SHALL  BE  SUBSTITUTED  FOR  "TEN
PERCENT".
  (ii)  [Controlling  interest. A controlling interest shall mean (I) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (II) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY STATE OR U.S. POSSESSION,  THE  MAXIMUM  STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-
DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET
INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER
WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER  ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING  INTANGIBLE PROPERTY OR COLLECTING  INTEREST  INCOME
IN  THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
JURISDICTION SHALL BE DECREASED TO REFLECT THE  STATUTORY  RATE  OF  TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (iii)   Royalty  payments.  Royalty  payments  are  payments  directly
connected to the acquisition, use, maintenance or management, ownership,
sale, exchange, or any other disposition of licenses, trademarks,  copy-
rights,  trade  names,  trade  dress,  service  marks, mask works, trade
secrets, patents and any other similar types  of  intangible  assets  as
determined by the commissioner, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (iv) Valid business purpose. A valid business purpose is one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (B) Royalty expense add backs. (i) Except where a taxpayer is included
in  a  combined return with a related member pursuant to subdivision (f)
of section fifteen hundred fifteen of this article, for the  purpose  of
computing  entire  net income, a taxpayer must add back royalty payments

S. 2609--A                         30                         A. 3009--A

[to a] DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED  IN  CONNECTION
WITH  ONE  OR  MORE  DIRECT  OR  INDIRECT  TRANSACTIONS WITH ONE OR MORE
related [member] MEMBERS during the taxable year to the  extent  deduct-
ible in calculating federal taxable income.
  (ii) [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (I)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (II) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (C) Royalty income exclusions. For the purpose of computing entire net
income, a taxpayer shall be allowed to deduct royalty payments  directly
or  indirectly received from a related member during the taxable year to
the extent included in the taxpayer's federal taxable income unless such
royalty payments would not be required to be added back  under  subpara-
graph (B) of this paragraph or other similar provision in this chapter.]
EXCEPTIONS.    (I)  THE  ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT
APPLY TO THE PORTION OF THE ROYALTY PAYMENT  THAT  THE  TAXPAYER  ESTAB-
LISHES,  BY  CLEAR  AND  CONVINCING EVIDENCE OF THE TYPE AND IN THE FORM
SPECIFIED BY THE COMMISSIONER, MEETS ALL OF THE FOLLOWING  REQUIREMENTS:
(A) THE RELATED MEMBER WAS SUBJECT TO TAX IN THIS STATE OR ANOTHER STATE
OR  POSSESSION OF THE UNITED STATES OR A FOREIGN NATION OR SOME COMBINA-
TION THEREOF ON A TAX BASE  THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,
ACCRUED  OR  INCURRED BY THE TAXPAYER; (B) THE RELATED MEMBER DURING THE
SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID, ACCRUED OR INCURRED  SUCH
PORTION  TO  A  PERSON  THAT IS NOT A RELATED MEMBER; AND (C) THE TRANS-
ACTION GIVING RISE TO THE ROYALTY PAYMENT BETWEEN THE TAXPAYER  AND  THE
RELATED MEMBER WAS UNDERTAKEN FOR A VALID BUSINESS PURPOSE.
  (II)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (B) THE TAX BASE FOR SAID  TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED OR INCURRED BY THE TAXPAYER; AND (C) THE AGGREGATE EFFEC-
TIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDICTIONS IS
NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT APPLIED TO
THE TAXPAYER UNDER SECTION FIFTEEN HUNDRED TWO, FIFTEEN  HUNDRED  TWO-A,
OR FIFTEEN HUNDRED TWO-B OF THIS ARTICLE FOR THE TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE ROYALTY PAYMENT
WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER  ORGANIZED  UNDER  THE
LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (B) THE RELATED MEMBER'S
INCOME  FROM  THE  TRANSACTION WAS SUBJECT TO A COMPREHENSIVE INCOME TAX
TREATY BETWEEN SUCH COUNTRY AND  THE  UNITED  STATES;  (C)  THE  RELATED
MEMBER  WAS  SUBJECT  TO  TAX  IN  A  FOREIGN  NATION ON A TAX BASE THAT
INCLUDED THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE  TAXPAYER;
(D)  THE  RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS TAXED IN SUCH
COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO  THAT  IMPOSED  BY
THIS  STATE;  AND  (E) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED

S. 2609--A                         31                         A. 3009--A

PURSUANT TO A TRANSACTION THAT  WAS  UNDERTAKEN  FOR  A  VALID  BUSINESS
PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 9. Subdivision (e) of section 11-506 of the administrative  code  of
the city of New York, as added by section 17 of part M of chapter 686 of
the  laws  of 2003 and as relettered by chapter 633 of the laws of 2005,
is amended to read as follows:
  (e) Related members expense add back  [and  income  exclusion].    (1)
Definitions. (A) Related member [or members. For purposes of this subdi-
vision,  the term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers  under this title]. "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY
THE  CITY  ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED BY
THE APPORTIONMENT PERCENTAGE, IF ANY, APPLICABLE TO THE  RELATED  MEMBER
UNDER  THE  LAWS  OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFINITION,
THE EFFECTIVE RATE OF TAX AS TO ANY  CITY  IS  ZERO  WHERE  THE  RELATED
MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A COMBINED
OR  CONSOLIDATED  RETURN  INCLUDING  BOTH  THE  TAXPAYER AND THE RELATED
MEMBER WHERE THE REPORTED TRANSACTIONS  BETWEEN  THE  TAXPAYER  AND  THE
RELATED  MEMBER  ARE  ELIMINATED  OR  OFFSET. ALSO, FOR PURPOSES OF THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET  BY  A  CREDIT  OR
SIMILAR  ADJUSTMENT  THAT  IS  DEPENDENT  UPON THE RELATED MEMBER EITHER
MAINTAINING OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING  INTEREST
INCOME  IN  THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
CITY SHALL BE DECREASED TO  REFLECT  THE  STATUTORY  RATE  OF  TAX  THAT
APPLIES  TO  THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined

S. 2609--A                         32                         A. 3009--A

by the commissioner of finance, and [includes] INCLUDE amounts allowable
as interest deductions under section  one  hundred  sixty-three  of  the
internal  revenue  code to the extent such amounts are directly or indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2)  Royalty expense add backs. (A) For the purpose of computing unin-
corporated business entire net income, a taxpayer must add back  royalty
payments  [to  a]  DIRECTLY  OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN
CONNECTION WITH ONE OR MORE DIRECT OR INDIRECT TRANSACTIONS WITH ONE  OR
MORE  related  [member]  MEMBERS  during  the taxable year to the extent
deductible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing unincorpo-
rated business entire net income, a taxpayer shall be allowed to  deduct
royalty  payments  directly or indirectly received from a related member
during the taxable year to the extent included in the taxpayer's federal
taxable income unless such royalty payments would not be required to  be
added  back  under  paragraph  two  of this subdivision or other similar
provision in this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT  REQUIRED  IN
THIS  SUBDIVISION  SHALL NOT APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS ALL
OF THE FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX
IN  THIS  CITY  OR  ANOTHER  CITY  WITHIN THE UNITED STATES OR A FOREIGN
NATION OR SOME COMBINATION THEREOF ON  A  TAX  BASE  THAT  INCLUDED  THE
ROYALTY  PAYMENT  PAID,  ACCRUED  OR  INCURRED BY THE TAXPAYER; (II) THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED OR INCURRED SUCH PORTION TO A  PERSON  THAT  IS  NOT  A  RELATED
MEMBER;  AND  (III)  THE  TRANSACTION GIVING RISE TO THE ROYALTY PAYMENT
BETWEEN THE TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR  A  VALID
BUSINESS PURPOSE.
  (II)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE
RELATED MEMBER WAS SUBJECT TO TAX ON OR MEASURED BY ITS  NET  INCOME  IN
THIS  CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT

S. 2609--A                         33                         A. 3009--A

PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED  TO  THE  TAXPAYER  UNDER SECTION 11-503 OF THIS CHAPTER FOR THE
TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT  APPLY  IF
THE  TAXPAYER  ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE
AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I)  THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED  UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY  THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL  NOT  APPLY  IF
THE  TAXPAYER  AND  THE  COMMISSIONER OF FINANCE AGREE IN WRITING TO THE
APPLICATION OR USE  OF  ALTERNATIVE  ADJUSTMENTS  OR  COMPUTATIONS.  THE
COMMISSIONER  OF  FINANCE  MAY,  IN  HIS OR HER DISCRETION, AGREE TO THE
APPLICATION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR
SHE CONCLUDES THAT IN THE ABSENCE OF SUCH AGREEMENT THE  INCOME  OF  THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S 10. Paragraph (n) of subdivision 8 of section 11-602 of the adminis-
trative code of the city of New York, as amended by section 19 of part M
of chapter 686 of the laws of 2003, is amended to read as follows:
  (n)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related member [or members. For purposes of this  para-
graph,  the  term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers  under this title]. "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY
THE  CITY  ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED BY
THE APPORTIONMENT PERCENTAGE, IF ANY, APPLICABLE TO THE  RELATED  MEMBER
UNDER  THE  LAWS  OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFINITION,
THE EFFECTIVE RATE OF TAX AS TO ANY  CITY  IS  ZERO  WHERE  THE  RELATED
MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A COMBINED

S. 2609--A                         34                         A. 3009--A

OR  CONSOLIDATED  RETURN  INCLUDING  BOTH  THE  TAXPAYER AND THE RELATED
MEMBER WHERE THE REPORTED TRANSACTIONS  BETWEEN  THE  TAXPAYER  AND  THE
RELATED  MEMBER  ARE  ELIMINATED  OR  OFFSET. ALSO, FOR PURPOSES OF THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A  RELATED  MEMBER'S  NET  INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR
SIMILAR ADJUSTMENT THAT IS DEPENDENT  UPON  THE  RELATED  MEMBER  EITHER
MAINTAINING  OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING INTEREST
INCOME IN THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED  BY  SAID
CITY  SHALL  BE  DECREASED  TO  REFLECT  THE  STATUTORY RATE OF TAX THAT
APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH  CREDIT  OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by the commissioner of finance, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) For the purpose of computing entire
net  income  or other applicable taxable basis, a taxpayer must add back
royalty payments  [to  a]  DIRECTLY  OR  INDIRECTLY  PAID,  ACCRUED,  OR
INCURRED  IN CONNECTION WITH ONE OR MORE DIRECT OR INDIRECT TRANSACTIONS
WITH ONE OR MORE related [member] MEMBERS during the taxable year to the
extent deductible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and  such  transaction  was  done for a valid business
purpose and the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income or other taxable basis, a taxpayer shall  be  allowed  to  deduct
royalty  payments  directly or indirectly received from a related member
during the taxable year to the extent included in the taxpayer's federal
taxable income unless such royalty payments would not be required to  be
added  back  under  subparagraph  two of this paragraph or other similar
provision in this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT  REQUIRED  IN
THIS  PARAGRAPH  SHALL  NOT  APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE

S. 2609--A                         35                         A. 3009--A

TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS ALL
OF THE FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX
IN  THIS  CITY  OR  ANOTHER  CITY  WITHIN THE UNITED STATES OR A FOREIGN
NATION  OR  SOME  COMBINATION  THEREOF  ON  A TAX BASE THAT INCLUDED THE
ROYALTY PAYMENT PAID, ACCRUED OR INCURRED  BY  THE  TAXPAYER;  (II)  THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED  OR  INCURRED  SUCH  PORTION  TO  A PERSON THAT IS NOT A RELATED
MEMBER; AND (III) THE TRANSACTION GIVING RISE  TO  THE  ROYALTY  PAYMENT
BETWEEN  THE  TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR A VALID
BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF  THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER  OF  FINANCE,  THAT:  (I)  THE
RELATED  MEMBER  WAS  SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME IN
THIS CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME  COMBINATION
THEREOF;  (II)  THE  TAX  BASE FOR SAID TAX INCLUDED THE ROYALTY PAYMENT
PAID, ACCRUED OR INCURRED BY  THE  TAXPAYER;  AND  (III)  THE  AGGREGATE
EFFECTIVE  RATE  OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDIC-
TIONS IS NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF  TAX  THAT
APPLIED  TO THE TAXPAYER UNDER SECTION 11-604 OF THIS SUBCHAPTER FOR THE
TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE  FORM  SPECIFIED  BY  THE COMMISSIONER OF FINANCE, THAT: (I) THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II)  THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE  RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX BASE
THAT INCLUDED THE ROYALTY PAYMENT  PAID,  ACCRUED  OR  INCURRED  BY  THE
TAXPAYER;  (IV)  THE  RELATED  MEMBER'S  INCOME FROM THE TRANSACTION WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED BY THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID,  ACCRUED  OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER OF FINANCE AGREE IN WRITING TO THE  APPLI-
CATION  OR  USE  OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMIS-
SIONER OF FINANCE MAY, IN HIS OR HER DISCRETION, AGREE TO  THE  APPLICA-
TION  OR  USE  OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE
CONCLUDES THAT IN THE ABSENCE  OF  SUCH  AGREEMENT  THE  INCOME  OF  THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S  11. Subdivision (q) of section 11-641 of the administrative code of
the city of New York, as added by section 21 of part M of chapter 686 of
the laws of 2003, is amended to read as follows:
  (q) Related members expense add back  [and  income  exclusion].    (1)
Definitions. (A) Related member [or members. For purposes of this subdi-
vision,  the term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers under this title].  "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED  IN  SUBPARAGRAPH  (C)  OF  PARAGRAPH THREE OF SUBSECTION (B) OF

S. 2609--A                         36                         A. 3009--A

SECTION FOUR HUNDRED SIXTY-FIVE OF THE  INTERNAL  REVENUE  CODE,  EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX.   "EFFECTIVE  RATE
OF TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED
BY  THE  CITY ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED
BY THE APPORTIONMENT PERCENTAGE,  IF  ANY,  APPLICABLE  TO  THE  RELATED
MEMBER  UNDER  THE LAWS OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFI-
NITION, THE EFFECTIVE RATE OF TAX AS TO  ANY  CITY  IS  ZERO  WHERE  THE
RELATED  MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A
COMBINED OR CONSOLIDATED RETURN INCLUDING  BOTH  THE  TAXPAYER  AND  THE
RELATED  MEMBER WHERE THE REPORTED TRANSACTIONS BETWEEN THE TAXPAYER AND
THE RELATED MEMBER ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF  THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A  RELATED  MEMBER'S  NET  INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR
SIMILAR ADJUSTMENT THAT IS DEPENDENT  UPON  THE  RELATED  MEMBER  EITHER
MAINTAINING  OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING INTEREST
INCOME IN THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED  BY  SAID
CITY  SHALL  BE  DECREASED  TO  REFLECT  THE  STATUTORY RATE OF TAX THAT
APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH  CREDIT  OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by the commissioner of finance, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) For the purpose of computing entire
net income, a taxpayer must add back royalty payments [to a] DIRECTLY OR
INDIRECTLY  PAID,  ACCRUED,  OR  INCURRED IN CONNECTION WITH ONE OR MORE
DIRECT OR INDIRECT  TRANSACTIONS  WITH  ONE  OR  MORE  related  [member]
MEMBERS  during the taxable year to the extent deductible in calculating
federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a

S. 2609--A                         37                         A. 3009--A

related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income,  a taxpayer shall be allowed to deduct royalty payments directly
or indirectly received from a related member during the taxable year  to
the extent included in the taxpayer's federal taxable income unless such
royalty  payments would not be required to be added back under paragraph
two of this subdivision or other similar  provision  in  this  chapter.]
EXCEPTIONS.  (I)  THE  ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT
APPLY TO THE PORTION OF THE ROYALTY PAYMENT  THAT  THE  TAXPAYER  ESTAB-
LISHES,  BY  CLEAR  AND  CONVINCING EVIDENCE OF THE TYPE AND IN THE FORM
SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS  ALL  OF  THE  FOLLOWING
REQUIREMENTS:  (I) THE RELATED MEMBER WAS SUBJECT TO TAX IN THIS CITY OR
ANOTHER CITY WITHIN THE UNITED STATES OR A FOREIGN NATION OR SOME COMBI-
NATION THEREOF ON A TAX BASE THAT INCLUDED  THE  ROYALTY  PAYMENT  PAID,
ACCRUED  OR INCURRED BY THE TAXPAYER; (II) THE RELATED MEMBER DURING THE
SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID, ACCRUED OR INCURRED  SUCH
PORTION  TO  A PERSON THAT IS NOT A RELATED MEMBER; AND (III) THE TRANS-
ACTION GIVING RISE TO THE ROYALTY PAYMENT BETWEEN THE TAXPAYER  AND  THE
RELATED MEMBER WAS UNDERTAKEN FOR A VALID BUSINESS PURPOSE.
  (II)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE
RELATED MEMBER WAS SUBJECT TO TAX ON OR MEASURED BY ITS  NET  INCOME  IN
THIS  CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION 11-643.5  OF  THIS  PART  FOR  THE
TAXABLE YEAR.
  (III)  THE  ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II)  THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE  RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX BASE
THAT INCLUDED THE ROYALTY PAYMENT  PAID,  ACCRUED  OR  INCURRED  BY  THE
TAXPAYER;  (IV)  THE  RELATED  MEMBER'S  INCOME FROM THE TRANSACTION WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED BY THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID,  ACCRUED  OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER AND THE COMMISSIONER OF FINANCE AGREE  IN  WRITING  TO  THE
APPLICATION  OR  USE  OF  ALTERNATIVE  ADJUSTMENTS  OR COMPUTATIONS. THE
COMMISSIONER OF FINANCE MAY, IN HIS OR  HER  DISCRETION,  AGREE  TO  THE
APPLICATION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR

S. 2609--A                         38                         A. 3009--A

SHE  CONCLUDES  THAT  IN THE ABSENCE OF SUCH AGREEMENT THE INCOME OF THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S 12. Subdivision (t) of section 11-1712 of the administrative code of
the city of New York, as added by section 26 of part M of chapter 686 of
the laws of 2003, is amended to read as follows:
  (t)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related member [or members. For purposes of this subdi-
vision, the term related member or members means a person,  corporation,
or other entity, including an entity that is treated as a partnership or
other  pass-through  vehicle  for  purposes of federal taxation, whether
such person, corporation or entity is a taxpayer or not, where one  such
person,  corporation  or entity, or set of related persons, corporations
or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all
taxpayers under this title].  "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY
THE  CITY  ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED BY
THE APPORTIONMENT PERCENTAGE, IF ANY, APPLICABLE TO THE  RELATED  MEMBER
UNDER  THE  LAWS  OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFINITION,
THE EFFECTIVE RATE OF TAX AS TO ANY  CITY  IS  ZERO  WHERE  THE  RELATED
MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A COMBINED
OR  CONSOLIDATED  RETURN  INCLUDING  BOTH  THE  TAXPAYER AND THE RELATED
MEMBER WHERE THE REPORTED TRANSACTIONS  BETWEEN  THE  TAXPAYER  AND  THE
RELATED  MEMBER  ARE  ELIMINATED  OR  OFFSET. ALSO, FOR PURPOSES OF THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET  BY  A  CREDIT  OR
SIMILAR  ADJUSTMENT  THAT  IS  DEPENDENT  UPON THE RELATED MEMBER EITHER
MAINTAINING OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING  INTEREST
INCOME  IN  THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
CITY SHALL BE DECREASED TO  REFLECT  THE  STATUTORY  RATE  OF  TAX  THAT
APPLIES  TO  THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by the state  commissioner  of  taxation  and  finance,  and  [includes]
INCLUDE  amounts  allowable  as  interest  deductions  under section one
hundred sixty-three of the internal revenue  code  to  the  extent  such
amounts are directly or indirectly for, related to or in connection with
the  acquisition,  use,  maintenance  or  management,  ownership,  sale,
exchange or disposition of such intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,

S. 2609--A                         39                         A. 3009--A

which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in  the  market share of the taxpayer, or the entry by the taxpayer into
new business markets.
  (2) Royalty expense add backs. (A) For the purpose of  computing  city
adjusted  gross income, a taxpayer must add back royalty payments [to a]
DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN CONNECTION WITH ONE
OR MORE DIRECT  OR  INDIRECT  TRANSACTIONS  WITH  ONE  OR  MORE  related
[member]  MEMBERS  during  the  taxable year to the extent deductible in
calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. (A) For the purpose of  computing  city
adjusted  gross  income,  a  taxpayer shall be allowed to deduct royalty
payments directly or indirectly received from a  related  member  during
the  taxable year to the extent included in the taxpayer's federal taxa-
ble income unless such royalty payments would  not  be  required  to  be
added  back  under  paragraph  two  of this subdivision or other similar
provision in this title.] EXCEPTIONS.   (I) THE ADJUSTMENT  REQUIRED  IN
THIS  SUBDIVISION  SHALL NOT APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS ALL
OF THE FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX
IN  THIS  CITY  OR  ANOTHER  CITY  WITHIN THE UNITED STATES OR A FOREIGN
NATION OR SOME COMBINATION THEREOF ON  A  TAX  BASE  THAT  INCLUDED  THE
ROYALTY  PAYMENT  PAID,  ACCRUED  OR  INCURRED BY THE TAXPAYER; (II) THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED OR INCURRED SUCH PORTION TO A  PERSON  THAT  IS  NOT  A  RELATED
MEMBER;  AND  (III)  THE  TRANSACTION GIVING RISE TO THE ROYALTY PAYMENT
BETWEEN THE TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR  A  VALID
BUSINESS PURPOSE.
  (II)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE
RELATED MEMBER WAS SUBJECT TO TAX ON OR MEASURED BY ITS  NET  INCOME  IN
THIS  CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX   INCLUDED THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION 11-1701 OF THIS  CHAPTER  FOR  THE
TAXABLE YEAR.
  (III)  THE  ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE

S. 2609--A                         40                         A. 3009--A

ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II)  THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE  RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX BASE
THAT INCLUDED THE ROYALTY PAYMENT  PAID,  ACCRUED  OR  INCURRED  BY  THE
TAXPAYER;  (IV)  THE  RELATED  MEMBER'S  INCOME FROM THE TRANSACTION WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED BY THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID,  ACCRUED  OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER AND THE COMMISSIONER OF FINANCE AGREE  IN  WRITING  TO  THE
APPLICATION  OR  USE  OF  ALTERNATIVE  ADJUSTMENTS  OR COMPUTATIONS. THE
COMMISSIONER OF FINANCE MAY, IN HIS OR  HER  DISCRETION,  AGREE  TO  THE
APPLICATION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR
SHE  CONCLUDES  THAT  IN THE ABSENCE OF SUCH AGREEMENT THE INCOME OF THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S 13. This act shall take effect immediately and shall apply to  taxa-
ble years beginning on or after January 1, 2013.

                                 PART F

  Section 1. Subparagraph (A) of paragraph 1,  and paragraphs 4 and 5 of
subsection (oo) of section 606 of the tax law, subparagraph (A) of para-
graph 1 as amended by chapter 472 of the laws of 2010 and paragraph 4 as
amended and paragraph 5 as added by chapter 239 of the laws of 2009, are
amended to read as follows:
  (A)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first,  two  thousand  [fifteen]  TWENTY,  a
taxpayer  shall be allowed a credit as hereinafter provided, against the
tax imposed by this article, in an amount equal to one  hundred  percent
of the amount of credit allowed the taxpayer with respect to a certified
historic structure under subsection (a) (2) of section 47 of the federal
internal  revenue  code  with  respect to a certified historic structure
located within the state. Provided, however, the credit shall not exceed
five million dollars. For taxable years beginning on  or  after  January
first,  two  thousand  [fifteen]  TWENTY,  a taxpayer shall be allowed a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2) of section 47 of the federal internal revenue code  with  respect
to  a  certified  historic structure located within the state; provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4) If the amount of the credit [allowable under this  subsection  for
any  taxable  year  shall  exceed  the taxpayer's tax for such year, the
excess may be carried over to the following year or years,  and  may  be
applied against the taxpayer's tax for such year or years] ALLOWED UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR
SUCH  YEAR,  THE  EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE
CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS  OF  SECTION  SIX
HUNDRED  EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST
SHALL BE PAID THEREON.
  (5) To be eligible for the credit allowable under this subsection  the
rehabilitation  project  shall  be  in whole or in part [a targeted area
residence within the meaning of section 143(j) of the  internal  revenue

S. 2609--A                         41                         A. 3009--A

code  or]  located within a census tract which is identified as being at
or below one hundred percent of the state median family income  [in  the
most  recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE FROM
THE  AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 2. Subparagraph (A) of paragraph 1, and paragraphs 4 and 5 of subdi-
vision 40 of section 210 of the tax law, subparagraph (A) of paragraph 1
and paragraph 4 as amended and paragraph 5 as added by  chapter  472  of
the laws of 2010, are amended to read as follows:
  (A)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first,  two  thousand  [fifteen]  TWENTY,  a
taxpayer  shall be allowed a credit as hereinafter provided, against the
tax imposed by this article, in an amount equal to one  hundred  percent
of the amount of credit allowed the taxpayer with respect to a certified
historic structure under subsection (a) (2) of section 47 of the federal
internal  revenue  code  with  respect to a certified historic structure
located within the state. Provided, however, the credit shall not exceed
five million dollars. For taxable years beginning on  or  after  January
first,  two  thousand  [fifteen]  TWENTY,  a taxpayer shall be allowed a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2) of section 47 of the federal internal revenue code  with  respect
to  a  certified  historic structure located within the state. Provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4) The credit allowed under this subdivision  for  any  taxable  year
shall  not  reduce  the tax due for such year to less than the higher of
the amounts prescribed in paragraphs (c) and (d) of subdivision  one  of
this section. However, if the amount of the credit [allowable under this
subdivision  for  any  taxable  year shall exceed the taxpayer's tax for
such year, the excess may be carried  over  to  the  following  year  or
years,  and  may  be  deducted  from the taxpayer's tax for such year or
years] ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE
TAX  TO  SUCH  AMOUNT,  ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.    PROVIDED,  HOWEVER,  THE PROVISIONS OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (5)  To  be  eligible for the credit allowable under this subdivision,
the rehabilitation project shall be in whole or in part [a targeted area
residence within the meaning of section 143(j) of the  internal  revenue
code  or]  located within a census tract which is identified as being at
or below one hundred percent of the state median family income  [in  the
most  recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE FROM
THE AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND  SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S  3.  Subparagraph  (A)  of  paragraph  1,  and paragraphs 4 and 5 of
subsection (u) of section 1456 of the tax law, as added by  chapter  472
of the laws of 2010, are amended to read as follows:
  (A)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first,  two  thousand  [fifteen]  TWENTY,  a
taxpayer  shall be allowed a credit as hereinafter provided, against the
tax imposed by this article, in an amount equal to one  hundred  percent
of the amount of credit allowed the taxpayer with respect to a certified
historic  structure under subsection (a)(2) of section 47 of the federal

S. 2609--A                         42                         A. 3009--A

internal revenue code with respect to  a  certified  historic  structure
located within the state. Provided, however, the credit shall not exceed
five  million  dollars.  For taxable years beginning on or after January
first,  two  thousand  [fifteen]  TWENTY,  a taxpayer shall be allowed a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2) of section 47 of the federal internal revenue code  with  respect
to  a  certified  historic structure located within the state. Provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4) The credit allowed under this  subsection  for  any  taxable  year
shall not reduce the tax to less than the dollar amount fixed as a mini-
mum tax by subsection (b) of section fourteen hundred fifty-five of this
article.  [If  the  amount of credit allowable under this subsection for
any taxable year reduces the tax to  such  amount,  the  excess  may  be
carried  over  to  the following year or years, and may be deducted from
the taxpayer's tax for such year or years.] HOWEVER, IF  THE  AMOUNT  OF
CREDIT  ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCTIBLE  IN  SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (5) To be eligible for the credit allowable under this subsection  the
rehabilitation  project  shall  be  in whole or in part [a targeted area
residence within the meaning of section 143(j) of the  internal  revenue
code  or]  located within a census tract which is identified as being at
or below one hundred percent of the state median family income  [in  the
most  recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE FROM
THE AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND  SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 4. Subparagraph (A) of paragraph 1, and paragraphs 4 and 5 of subdi-
vision  (y)  of  section 1511 of the tax law, as added by chapter 472 of
the laws of 2010, are amended to read as follows:
  (A) For taxable years beginning on or after January first,  two  thou-
sand  ten  and  before  January  first, two thousand [fifteen] TWENTY, a
taxpayer shall be allowed a credit as hereinafter provided, against  the
tax  imposed  by this article, in an amount equal to one hundred percent
of the amount of credit allowed the taxpayer with respect to a certified
historic structure under subsection (a)(2) of section 47 of the  federal
internal  revenue  code  with  respect to a certified historic structure
located within the state. Provided, however, the credit shall not exceed
five million dollars. For taxable years beginning on  or  after  January
first,  two  thousand  [fifteen]  TWENTY,  a taxpayer shall be allowed a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2) of section 47 of the federal internal revenue code  with  respect
to  a  certified  historic structure located within the state. Provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4) The credit allowed under this subdivision  for  any  taxable  year
shall  not  reduce  the  tax  due for such year to less than the minimum
fixed by paragraph four of subdivision (a) of  section  fifteen  hundred
two  or  section  fifteen  hundred  two-a  of this article, whichever is
applicable.  [If the amount of the credit allowable under this  subdivi-

S. 2609--A                         43                         A. 3009--A

sion for any taxable year reduces the tax to such amount, the excess may
be carried over to the following year or years, and may be deducted from
the  taxpayer's  tax  for such year or years.] HOWEVER, IF THE AMOUNT OF
CREDITS  ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCTIBLE  IN  SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (5) To be eligible for the credit allowable  under  this  subdivision,
the rehabilitation project shall be in whole or in part [a targeted area
residence  within  the meaning of section 143(j) of the internal revenue
code or] located within a census tract which is identified as  being  at
or  below  one hundred percent of the state median family income [in the
most recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE  FROM
THE  AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 5. This act shall take effect immediately and shall apply to taxable
years beginning on and after  January  1,  2013;  provided  however  the
amendments  to  paragraph 4 of subsection (oo) of section 606 of the tax
law made by section one of this act, the amendments to  paragraph  4  of
subdivision 40 of section 210 of the tax law made by section two of this
act,  the amendments to paragraph 4 of subsection (u) of section 1456 of
the tax law made by section three of this  act  and  the  amendments  to
paragraph  4  of  subdivision (y) of section 1511 of the tax law made by
section four of this act shall take effect January  1,  2015  and  shall
apply to taxable years beginning on and after January 1, 2015 for quali-
fied rehabilitation placed in service on or after January 1, 2015.

                                 PART G

  Section  1.  Section 187-b of the tax law, as amended by section 14 of
part W-1 of chapter 109 of the laws of  2006,  is  amended  to  read  as
follows:
  S  187-b. [Alternative fuels credit] ELECTRIC VEHICLE RECHARGING PROP-
ERTY CREDIT. 1. General. A taxpayer shall be allowed  a  credit,  to  be
credited  against  the  taxes imposed under sections one hundred eighty-
three, one hundred eighty-four, and  one  hundred  eighty-five  of  this
article.  Such  credit, to be computed as hereinafter provided, shall be
allowed  for  [alternative  fuel  vehicle  refueling]  ELECTRIC  VEHICLE
RECHARGING property placed in service during the taxable year. Provided,
however,  that  the  amount  of  such  credit  allowable against the tax
imposed by section one hundred eighty-four of this article shall be  the
excess  of  the  credit  allowed by this section over the amount of such
credit allowable against the tax imposed by section one hundred  eighty-
three of this article.
  2.  [Alternative  fuel  vehicle  refueling  property] ELECTRIC VEHICLE
RECHARGING PROPERTY.   The credit under this  section  for  [alternative
fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING property shall equal
FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOUSAND DOLLARS OR
fifty percent of the cost of any such property:
  (a) which is located in this state; [and]
  (b)  [for  which  a  credit  is  allowed under section thirty C of the
internal revenue code but not including alternative fuel vehicle refuel-
ing property relating to a qualified hybrid vehicle as such  vehicle  is

S. 2609--A                         44                         A. 3009--A

defined  in  subparagraph  (B)  of  paragraph three of subsection (p) of
section six hundred six of  this  chapter]  WHICH  CONSTITUTES  ELECTRIC
VEHICLE RECHARGING PROPERTY; AND
  (C)  FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM THE PROCEEDS OF
GRANTS, INCLUDING GRANTS FROM THE NEW YORK  STATE  ENERGY  RESEARCH  AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  3.  Definitions.  [(a)]  The term ["alternative fuel vehicle refueling
property"] "ELECTRIC VEHICLE RECHARGING PROPERTY" means [any such  prop-
erty  which  is  qualified within the meaning of section thirty C of the
internal revenue code, but shall not include  alternative  fuel  vehicle
refueling  property relating to a qualified hybrid vehicle as such vehi-
cle is defined in subparagraph (B) of paragraph three of subsection  (p)
of  section six hundred six of this chapter] ALL THE EQUIPMENT NEEDED TO
CONVEY ELECTRIC POWER FROM THE ELECTRIC GRID OR ANOTHER POWER SOURCE  TO
AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  [(b)  The  term "qualified hybrid vehicle" shall have the same meaning
as provided for under subparagraph (B) of paragraph three of  subsection
(p) of section six hundred six of this chapter.]
  4.  Carryovers.  In  no  event  shall the credit under this section be
allowed in an amount which will reduce the tax payable to less than  the
applicable  minimum tax fixed by section one hundred eighty-three or one
hundred eighty-five of this article. If, however, the amount  of  credit
allowable  under  this  section  for any taxable year reduces the tax to
such amount, any amount of credit not deductible in  such  taxable  year
may  be  carried over to the following year or years and may be deducted
from the taxpayer's tax for such year or years.
  5. Credit recapture[; Alternative fuel  vehicle  refueling  property].
If, at any time before the end of its recovery period, [alternative fuel
vehicle  refueling]  ELECTRIC  VEHICLE  RECHARGING property ceases to be
qualified, a recapture amount must be added back in the  year  in  which
such cessation occurs.
  (i)  Cessation  of  qualification. [Alternative fuel vehicle refueling
property] ELECTRIC VEHICLE RECHARGING PROPERTY ceases  to  be  qualified
if:
  (I) the property no longer qualifies as [property described in section
thirty C of the internal revenue code] ELECTRIC VEHICLE RECHARGING PROP-
ERTY; or
  (II)  fifty  percent  or  more of the use of the property in a taxable
year is other than a trade or business in this state; or
  (III) the taxpayer receiving the credit under this  section  sells  or
disposes  of the property and knows or has reason to know that the prop-
erty will be used in a manner described in this subparagraph.
  (ii) Recapture amount. The recapture amount is  equal  to  the  credit
allowable  under this section multiplied by a fraction, the numerator of
which is the total recovery period for the property minus the number  of
recovery  years prior to, but not including, the recapture year, and the
denominator of which is the total recovery period.
  6. Termination. The credit allowed by subdivision two of this  section
shall  not apply in taxable years beginning after December thirty-first,
two thousand [ten] SEVENTEEN.
  S 2. Subdivision 24 of section 210 of  the  tax  law,  as  amended  by
section 15 of part W-1 of chapter 109 of the laws of 2006, is amended to
read as follows:
  24.  [Alternative  fuels] ELECTRIC VEHICLE RECHARGING PROPERTY credit.
(a) General. A taxpayer shall be allowed a credit,  to  be  computed  as
hereinafter  provided,  against  the  tax  imposed  by  this article for

S. 2609--A                         45                         A. 3009--A

[alternative fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING proper-
ty placed in service during the taxable year.
  (b)  [Alternative  fuel  vehicle  refueling property] ELECTRIC VEHICLE
RECHARGING PROPERTY.  The credit under this subdivision for [alternative
fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING property shall equal
FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOUSAND DOLLARS OR
fifty percent of the cost of any such property:
  (i) which is located in this state; [and]
  (ii) [for which a credit is allowed under  section  thirty  C  of  the
internal revenue code but not including alternative fuel refueling prop-
erty  relating  to a qualified hybrid vehicle as such vehicle is defined
in subparagraph (B) of paragraph three of subsection (p) of section  six
hundred  six of this chapter] WHICH IS ELECTRIC VEHICLE RECHARGING PROP-
ERTY; AND
  (III) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM  THE  PROCEEDS
OF  GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (c) Definitions. The term ["alternative fuel vehicle refueling proper-
ty"] "ELECTRIC VEHICLE RECHARGING PROPERTY"  means  [any  such  property
which  is qualified within the meaning of section thirty C of the inter-
nal revenue code but shall not include alternative fuel vehicle  refuel-
ing  property  relating to a qualified hybrid vehicle as such vehicle is
defined in subparagraph (B) of paragraph  three  of  subsection  (p)  of
section  six hundred six of this chapter] ALL OF THE EQUIPMENT NEEDED TO
CONVEY ELECTRIC POWER FROM THE ELECTRIC GRID OR ANOTHER POWER SOURCE  TO
AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  (d) Carryovers. In no event shall the credit under this subdivision be
allowed  in an amount which will reduce the tax payable to less than the
higher of the amounts prescribed in paragraphs (c) and (d)  of  subdivi-
sion one of this section. Provided, however, that if the amount of cred-
it allowable under this subdivision for any taxable year reduces the tax
to such amount, any amount of credit not deductible in such taxable year
may  be  carried over to the following year or years and may be deducted
from the taxpayer's tax for such year or years.
  (e) Credit recapture. [(i) Alternative fuel vehicle refueling  proper-
ty.] If, at any time before the end of its recovery period, [alternative
fuel  vehicle  refueling] ELECTRIC VEHICLE RECHARGING property ceases to
be qualified, a recapture amount must be added back in the year in which
such cessation occurs.
  (A) [Alternative fuel vehicle refueling] ELECTRIC  VEHICLE  RECHARGING
property ceases to be qualified if:
  (1) the property no longer qualifies as [property described in section
thirty C of the internal revenue code] ELECTRIC VEHICLE RECHARGING PROP-
ERTY; or
  (2) fifty percent or more of the use of the property in a taxable year
is other than in a trade or business in this state; or
  (3)  the taxpayer receiving the credit under this subdivision sells or
disposes of the property and knows or has reason to know that the  prop-
erty  will  be used in a manner described in clauses one and two of this
subparagraph.
  (B) Recapture amount. The recapture amount  is  equal  to  the  credit
allowable under this subdivision multiplied by a fraction, the numerator
of  which is the total recovery period for the property minus the number
of recovery years prior to, but not including, the recapture  year,  and
the denominator of which is the total recovery period.

S. 2609--A                         46                         A. 3009--A

  [(f)  Affiliates. (i) If a credit under this subdivision is allowed to
a taxpayer with respect to a taxable year,  the  action  taken  by  such
taxpayer which resulted in such credit being allowed thereto may, at the
election  of  the taxpayer and an affiliate thereof, be ascribed to such
affiliate.  Where  such  affiliate, based on such ascription, is allowed
such credit and deducts from the tax otherwise due the  amount  of  such
credit, such credit shall be deemed in all respects to have been allowed
to  such affiliate, provided that any action or inaction by the taxpayer
which constitutes an event of recapture described in  paragraph  (e)  of
this subdivision shall be ascribed to the affiliate and shall constitute
an  event  of recapture with respect to the credit allowed to the affil-
iate pursuant to this subdivision.
  (ii) Notwithstanding any other provision of law to  the  contrary,  in
the case of the credit provided for under this subdivision being allowed
to, or asserted to be allowed to, an affiliate, pursuant to subparagraph
(i)  of this paragraph, the commissioner shall have the same powers with
respect to examining the books and records of  the  taxpayer,  and  have
such  other powers of investigation with respect to the taxpayer, as are
afforded under this  chapter  with  respect  to  a  taxpayer  which  has
deducted  the  credit allowed under this section from tax otherwise due,
as if it were the taxpayer which  had  deducted  such  credit  from  tax
otherwise due.
  (iii)  The term "affiliate" shall mean a corporation substantially all
the capital stock of which is owned or  controlled  either  directly  or
indirectly by the taxpayer, or which owns or controls either directly or
indirectly  substantially  all  the  capital  stock  of the taxpayer, or
substantially all the capital stock of  which  is  owned  or  controlled
either  directly  or indirectly by interests which own or control either
directly or indirectly  substantially  all  the  capital  stock  of  the
taxpayer.]
  [(g)]  (F)  Termination.  The  credit allowed by paragraph (b) of this
subdivision shall not apply in taxable years  beginning  after  December
thirty-first, two thousand [ten] SEVENTEEN.
  S  3.  Subsection  (p)  of  section  606 of the tax law, as amended by
section 16 of part W-1 of chapter 109 of the laws of 2006, is amended to
read as follows:
  (p) [Alternative fuels] ELECTRIC VEHICLE RECHARGING  PROPERTY  credit.
(1)  General.  A  taxpayer  shall be allowed a credit, to be computed as
hereinafter provided, against the  tax  imposed  by  this  article,  for
[alternative fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING proper-
ty placed in service during the taxable year.
  (2)  [Alternative  fuel  vehicle  refueling property] ELECTRIC VEHICLE
RECHARGING PROPERTY.  The credit under this subsection  for  [clean-fuel
vehicle  refueling] ELECTRIC VEHICLE RECHARGING property shall equal FOR
EACH INSTALLATION OF PROPERTY THE LESSER OF  FIVE  THOUSAND  DOLLARS  OR
fifty percent of the cost of any such property
  (A) which is located in this state [and];
  (B)  [for  which  a  credit  is  allowed under section thirty C of the
internal revenue code but not including alternative fuel vehicle refuel-
ing property relating to a qualified hybrid vehicle as such  vehicle  is
defined in subparagraph (B) of paragraph three of this subsection] WHICH
IS ELECTRIC VEHICLE RECHARGING PROPERTY; AND
  (C)  FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM THE PROCEEDS OF
GRANTS, INCLUDING GRANTS FROM THE NEW YORK  STATE  ENERGY  RESEARCH  AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.

S. 2609--A                         47                         A. 3009--A

  (3)  Definitions.  [(A)] The term ["alternative fuel vehicle refueling
property"] "ELECTRIC VEHICLE RECHARGING PROPERTY" means [any such  prop-
erty  which  is  qualified within the meaning of section thirty C of the
internal revenue code, but such term shall not include alternative  fuel
vehicle  refueling  property  relating  to a qualified hybrid vehicle as
such vehicle is defined in subparagraph (B) of this paragraph]  ALL  THE
EQUIPMENT  NEEDED  TO  CONVEY  ELECTRIC  POWER FROM THE ELECTRIC GRID OR
ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  [(B) The term "qualified hybrid vehicle" means  a  motor  vehicle,  as
defined  in  section  one hundred twenty-five of the vehicle and traffic
law,, that:
  (i) draws propulsion energy from both
  (a) an internal combustion engine (or heat engine that uses  combusti-
ble fuel); and
  (b) an energy storage device; and
  (ii) employs a regenerative vehicle braking system that recovers waste
energy to charge such energy storage device.]
  (4)   Carryovers.  If  the  amount  of  credit  allowable  under  this
subsection shall exceed the taxpayer's tax for such year, the excess may
be carried over to the following year or years and may be deducted  from
the taxpayer's tax for such year or years.
  (5) Credit recapture. (A) [Vehicles.
  (i) If, within three full years from the date a qualified hybrid vehi-
cle or a vehicle of which alternative fuel vehicle property is a part is
placed  in  service,  such  qualified hybrid vehicle or vehicle of which
alternative fuel vehicle property is a part] IF, AT ANY TIME BEFORE  THE
END  OF ITS RECOVERY PERIOD, ELECTRIC VEHICLE RECHARGING PROPERTY ceases
to be qualified, a recapture amount must be added back in the  tax  year
in which such cessation occurs.
  [(ii)] (B) Cessation of qualification. [(I) A qualified hybrid vehicle
ceases to be qualified if
  (a)  it  is  modified  by  the taxpayer so that it no longer meets the
requirements of a qualified hybrid vehicle as  defined  in  subparagraph
(B) of paragraph three of this subsection.
  (b)  the  taxpayer receiving the credit under this subsection sells or
disposes of the vehicle and knows or has reason to know that the vehicle
will be so modified.
  (B) Alternative fuel vehicle refueling property. (i) If, at  any  time
before  the end of its recovery period, alternative fuel vehicle refuel-
ing property ceases to be qualified, a recapture amount  must  be  added
back in the year in which such cessation occurs.
  (ii)  Cessation  of qualification. Clean-fuel vehicle refueling] ELEC-
TRIC VEHICLE RECHARGING property ceases to be qualified if:
  [(I)] (I) the property no longer qualifies as [property  described  in
section thirty C of the internal revenue code] ELECTRIC VEHICLE RECHARG-
ING PROPERTY, or
  [(II)]  (II)  fifty  percent  or  more of the use of the property in a
taxable year is other than in a trade or business in this state, or
  [(III)] (III) the taxpayer receiving the credit under this  subsection
sells  or  disposes of the property and knows or has reason to know that
the property will be used in a manner described in [item (I)] CLAUSE (I)
or [(II)] (II) of this [clause] SUBPARAGRAPH.
  [(iii)] (C) Recapture amount. The recapture amount  is  equal  to  the
credit  allowable  under  this  subsection multiplied by a fraction, the
numerator of which is the total recovery period for the  property  minus

S. 2609--A                         48                         A. 3009--A

the  number of recovery years prior to, but not including, the recapture
year, and the denominator of which is the total recovery period.
  (6)  Termination.  The  credit  allowed  by  [paragraph  two  of] this
subsection shall not apply in taxable  years  beginning  after  December
thirty-first, two thousand [ten] SEVENTEEN.
  S  4. Clause (ix) of subparagraph (B) of paragraph 1 of subsection (i)
of section 606 of the tax law, as amended by section 7 of  part  C-1  of
chapter 57 of the laws of 2009, is amended to read as follows:

(ix) [Alternative fuels]             [Cost] AMOUNT OF CREDIT
ELECTRIC VEHICLE                     under subdivision twenty-four
RECHARGING PROPERTY                  of section two hundred ten
credit under subsection (p)

  S 5. This act shall take effect immediately and shall apply to taxable
years  beginning  on  or  after  January  1, 2013 for property placed in
service on or after such date.

                                 PART H

  Section 1. Paragraph 10 of subsection (g) of section 658  of  the  tax
law is REPEALED.
  S  2. Paragraph 10 of subdivision (g) of section 11-1758 of the admin-
istrative code of the city of New York is REPEALED.
  S 3. Paragraph 5 of subsection (u) of section 685 of the  tax  law  is
REPEALED.
  S 4. Paragraph 5 of subdivision (t) of section 11-1785 of the adminis-
trative code of the city of New York is REPEALED.
  S  5.  Section  23  of  part  U  of chapter 61 of the laws of 2011, as
amended by section 1 of part G of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  S 23. This act shall take effect immediately; provided, however, that:
  (a)  the amendments to section 29 of the tax law made by section thir-
teen of this act shall apply to tax documents filed or  required  to  be
filed  on  or  after  the  sixtieth  day after which this act shall have
become a law [and shall expire  and  be  deemed  repealed  December  31,
2013],  provided  however that the amendments to paragraph 4 of subdivi-
sion (a) of section 29 of the tax law and paragraph 2 of subdivision (e)
of section 29 of the tax law made by section thirteen of this  act  with
regard  to individual taxpayers shall take effect September 15, 2011 but
only if the commissioner of taxation and finance  has  reported  in  the
report  required  by section seventeen-b of this act that the percentage
of individual taxpayers electronically  filing  their  2010  income  tax
returns is less than eighty-five percent; provided that the commissioner
of  taxation  and  finance  shall  notify  the legislative bill drafting
commission of the date of the issuance of such report in order that  the
commission  may  maintain  an accurate and timely effective data base of
the official text of the laws of the state of New York in furtherance of
effectuating the provisions of section 44 of  the  legislative  law  and
section 70-b of the public officers law;
  (b)  sections  fourteen,  fifteen,  sixteen  and seventeen of this act
shall take effect September 15, 2011 but only  if  the  commissioner  of
taxation  and  finance  has  reported  in the report required by section
seventeen-b of this act that  the  percentage  of  individual  taxpayers
electronically  filing their 2010 income tax returns is less than eight-
y-five percent;

S. 2609--A                         49                         A. 3009--A

  (c) sections fourteen-a and fifteen-a of this act  shall  take  effect
September  15,  2011 and expire and be deemed repealed December 31, 2012
but shall take effect only if the commissioner of taxation  and  finance
has  reported  in the report required by section seventeen-b of this act
that  the percentage of individual taxpayers electronically filing their
2010 income tax returns is eighty-five percent or greater; AND
  (d) sections fourteen-b, fifteen-b, sixteen-a and seventeen-a of  this
act  shall  take  effect January 1, 2014 but only if the commissioner of
taxation and finance has reported in  the  report  required  by  section
seventeen-b  of  this  act  that  the percentage of individual taxpayers
electronically filing their 2010 income tax returns is less than  eight-
y-five percent[; and
  (e)  sections twenty-one and twenty-one-a of this act shall expire and
be deemed repealed December 31, 2013].
  S 6. This act shall take effect immediately.

                                 PART I

  Section 1. Legislative intent. The legislature  seeks  to  demonstrate
that  the  state of New York is open for business by promoting, attract-
ing, and encouraging the development of business  in  the  state.    The
legislature  intends  to encourage businesses to locate in the state and
produce goods and services within  the  state,  thereby  increasing  job
creation  and economic growth. The legislature further intends to foster
economic development by showcasing various goods that  are  produced  in
New  York.  In  order  to  accomplish  these objectives, the legislature
intends that there shall be  established  "Taste-NY  facilities,"  which
will  sell  a variety of products, including but not limited to products
produced within the state, and prominently  feature  New  York  produced
goods, including alcoholic beverages.
  S  2.  Subdivision  (b)  of  section 1101 of the tax law is amended by
adding a new paragraph 39 to read as follows:
  (39) TASTE-NY FACILITY. "TASTE-NY  FACILITY"  SHALL  MEAN  A  FACILITY
OPERATED  BY  A PERSON DESIGNATED BY AND PURSUANT TO A WRITTEN AGREEMENT
WITH A STATE AGENCY, PUBLIC AUTHORITY, OR AN INTERSTATE AGENCY OR PUBLIC
CORPORATION CREATED PURSUANT TO AN AGREEMENT  OR  COMPACT  WITH  ANOTHER
STATE  OR  THE DOMINION OF CANADA, FROM WHICH SALES ARE MADE OF TANGIBLE
PERSONAL PROPERTY OR FOOD AND DRINK (WHETHER OR NOT FOR  CONSUMPTION  ON
THE  PREMISES  OF SUCH FACILITY), AND THAT PROMINENTLY FEATURES PRODUCTS
PRODUCED WITHIN THE STATE.
  S 3. Subdivision (a) of section 1115 of the  tax  law  is  amended  by
adding a new paragraph 44 to read as follows:
  (44)  TANGIBLE  PERSONAL  PROPERTY  SOLD  AT  A  TASTE-NY FACILITY, AS
DEFINED IN PARAGRAPH THIRTY-NINE OF SECTION ELEVEN HUNDRED ONE  OF  THIS
ARTICLE,  FOR  WHICH THE RECEIPT OR CONSIDERATION GIVEN OR CONTRACTED TO
BE GIVEN IS LESS THAN TWO HUNDRED DOLLARS PER ITEM.
  S 4. Section 1115 of the tax law is amended by adding a  new  subdivi-
sion (ii) to read as follows:
  (II) RECEIPTS FROM SALES OF THE FOLLOWING AT A TASTE-NY FACILITY SHALL
BE  EXEMPT  FROM THE SALES TAX IMPOSED UNDER SECTION ELEVEN HUNDRED FIVE
AND THE COMPENSATING USE TAX IMPOSED UNDER SECTION ELEVEN HUNDRED TEN OF
THIS ARTICLE: (1) FOOD OR DRINK FOR CONSUMPTION ON THE PREMISES OF  SUCH
FACILITY;  (2)  FOOD  OR  DRINK SOLD FOR CONSUMPTION OFF THE PREMISES OF
SUCH FACILITY THAT IS SOLD IN A HEATED STATE; (3)  SANDWICHES  SOLD  FOR
CONSUMPTION  OFF THE PREMISES OF SUCH FACILITY, WHETHER OR NOT SOLD IN A
HEATED STATE; (4) FOOD OR DRINK SOLD THROUGH VENDING MACHINES;  AND  (5)

S. 2609--A                         50                         A. 3009--A

FOOD  OR DRINK SOLD IN AN UNHEATED STATE THAT IS OF A TYPE COMMONLY SOLD
FOR OFF-PREMISES CONSUMPTION AND IS NOT IN  THE  SAME  FORM,  CONDITION,
QUANTITIES AND PACKAGING AS IN ESTABLISHMENTS THAT ARE FOOD STORES OTHER
THAN THOSE PRINCIPALLY ENGAGED IN SELLING FOODS PREPARED AND READY TO BE
EATEN.
  S  5.  The  alcoholic  beverage control law is amended by adding a new
section 63-b to read as follows:
  S 63-B. SPECIAL LICENSE TO SELL  ALCOHOLIC  BEVERAGES  AT  RETAIL  FOR
CONSUMPTION  OFF  THE  PREMISES.  1.  ANY PERSON AUTHORIZED TO OPERATE A
TASTE-NY FACILITY DESIGNATED BY AND PURSUANT TO A WRITTEN AGREEMENT WITH
A STATE AGENCY, PUBLIC AUTHORITY, OR  AN  INTERSTATE  AGENCY  OR  PUBLIC
CORPORATION  CREATED  PURSUANT  TO  AN AGREEMENT OR COMPACT WITH ANOTHER
STATE OR THE DOMINION OF CANADA MAY MAKE APPLICATION  TO  THE  AUTHORITY
FOR A SPECIAL LICENSE TO SELL ALCOHOLIC BEVERAGES AT RETAIL FOR CONSUMP-
TION OFF THE LICENSED PREMISES.
  2.  AN  APPLICATION  FOR A LICENSE UNDER THIS SECTION SHALL BE IN SUCH
FORM AND SHALL CONTAIN SUCH INFORMATION AS  SHALL  BE  REQUIRED  BY  THE
AUTHORITY  AND  SHALL  BE  ACCOMPANIED BY A CHECK OR DRAFT IN THE AMOUNT
REQUIRED BY THIS ARTICLE.
  3. SECTION FIFTY-FOUR OF THIS CHAPTER  SHALL  CONTROL  SO  FAR  AS  IS
APPLICABLE THE PROCEDURE IN CONNECTION WITH SUCH APPLICATION.
  4. A LICENSE UNDER THIS SECTION SHALL BE ISSUED TO ALL ELIGIBLE APPLI-
CANTS EXCEPT FOR GOOD CAUSE SHOWN.
  5. A LICENSE UNDER THIS CHAPTER SHALL NOT BE SUBJECT TO THE PROVISIONS
OF  SUBDIVISIONS TWO, THREE, SIX AND SIXTEEN OF SECTION ONE HUNDRED FIVE
OF THIS CHAPTER.
  6. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION FOURTEEN  OF  SECTION
ONE  HUNDRED  FIVE  OF  THIS CHAPTER, THE HOURS OF OPERATION AND SALE OF
ALCOHOLIC BEVERAGES SHALL BE GOVERNED BY THE LICENSEE'S  WRITTEN  AGREE-
MENT  WITH  THE  STATE  AGENCY,  PUBLIC  AUTHORITY, INTERSTATE AGENCY OR
COMPACT ENTITY.
  7. SUBJECT TO ANY RESTRICTION CONTAINED IN THE WRITTEN AGREEMENT  WITH
THE STATE AGENCY, PUBLIC AUTHORITY, INTERSTATE AGENCY OR COMPACT ENTITY,
THE  HOLDER  OF A LICENSE ISSUED UNDER THIS SECTION MAY OFFER SAMPLES OF
ALCOHOLIC BEVERAGES TO CUSTOMERS TO BE CONSUMED ON THE LICENSED PREMISES
UPON THE FOLLOWING CONDITIONS:
  (A) NO FEE SHALL BE CHARGED FOR ANY SAMPLE;
  (B) EACH SAMPLE SHALL BE LIMITED:
  (I) IN THE CASE OF BEER, WINE PRODUCTS AND CIDER, TO THREE  OUNCES  OR
LESS;
  (II) IN THE CASE OF WINE, TO TWO OUNCES;
  (III) IN THE CASE OF LIQUOR, TO ONE-QUARTER OUNCE;
  (C) NO SAMPLE SHALL BE PROVIDED TO A CUSTOMER DURING THE HOURS PROHIB-
ITED BY THE PROVISIONS OF SUBDIVISION FIVE OF SECTION ONE HUNDRED SIX OF
THIS CHAPTER; AND
  (D)  NO  CUSTOMER  MAY BE PROVIDED WITH MORE THAN THREE SAMPLES IN ONE
CALENDAR DAY.
  S 6. Section 66 of the alcoholic beverage control law  is  amended  by
adding a new subdivision 11 to read as follows:
  11.  THE  ANNUAL FEE FOR A SPECIAL LICENSE TO SELL ALCOHOLIC BEVERAGES
AT RETAIL FOR CONSUMPTION  OFF  THE  LICENSED  PREMISES  SHALL  BE  FIVE
HUNDRED DOLLARS.
  S  7.  Section 67 of the alcoholic beverage control law, as amended by
section 4 of part Z of chapter 85 of the laws of  2002,  is  amended  to
read as follows:

S. 2609--A                         51                         A. 3009--A

  S 67. License  fees,  duration  of  licenses;  fee  for  part of year.
[Effective April first,  nineteen  hundred  eighty-three,  licenses]  1.
LICENSES  issued pursuant to sections sixty-one, sixty-two, sixty-three,
[sixty-four, sixty-four-a and sixty-four-b] AND  SIXTY-THREE-B  of  this
article  shall  be  effective for three years at three times that annual
fee, except that, in implementing the  purposes  of  this  section,  the
liquor  authority  shall  schedule  the commencement dates, duration and
expiration dates thereof to  provide  for  an  equal  cycle  of  license
renewals issued under each such section through the course of the fiscal
year.     [Effective  December  first,  nineteen  hundred  ninety-eight,
licenses]
  2. LICENSES issued pursuant to sections sixty-four,  sixty-four-a  and
sixty-four-b  of  this  article  shall be effective for two years at two
times that annual fee, except that, in implementing the purposes of this
section, the liquor authority shall  schedule  the  commencement  dates,
duration  and  expiration dates thereof to provide for an equal cycle of
license renewals issued under each such section through  the  course  of
the  fiscal year. [Notwithstanding the foregoing, commencing on December
first, nineteen hundred ninety-eight  and  concluding  on  July  thirty-
first, two thousand two, a licensee issued a license pursuant to section
sixty-four,  sixty-four-a  or  sixty-four-b of this article may elect to
remit the fee for  such  license  in  equal  annual  installments.  Such
installments  shall  be due on dates established by the liquor authority
and the failure of a licensee to have remitted such annual  installments
after  a  due  date  shall  be a violation of this chapter. For licenses
issued for less than the three-year licensing period,  the  license  fee
shall be levied on a pro-rated basis.]
  3.  The  entire  license  fee  shall be due and payable at the time of
application. The liquor authority may make such rules as shall be appro-
priate to carry out the purpose of this section.
  S 8. Subdivisions 1 and 2 of section 56-a of  the  alcoholic  beverage
control  law, as amended by chapter 108 of the laws of 2012, are amended
to read as follows:
  1. In addition to the annual fees provided for in this chapter,  there
shall  be  paid  to  the  authority  with each initial application for a
license filed pursuant to section fifty-one,  fifty-one-a,  fifty-three,
fifty-eight,  sixty-one, sixty-two, seventy-six or seventy-eight of this
chapter, a filing fee of four hundred dollars; with each initial  appli-
cation   for   a   license   filed   pursuant  to  section  sixty-three,
SIXTY-THREE-B, sixty-four, sixty-four-a or sixty-four-b of this chapter,
a filing fee of two hundred dollars; with each initial application for a
license filed pursuant to section fifty-three-a, fifty-four, fifty-five,
fifty-five-a, seventy-nine, eighty-one or eighty-one-a of this  chapter,
a filing fee of one hundred dollars; with each initial application for a
permit  filed  pursuant to section ninety-one, ninety-one-a, ninety-two,
ninety-two-a, ninety-three, ninety-three-a, if  such  permit  is  to  be
issued on a calendar year basis, ninety-four, ninety-five, ninety-six or
ninety-six-a,  or  pursuant to paragraph b, c, e or j of subdivision one
of section ninety-nine-b of this chapter if such permit is to be  issued
on  a calendar year basis, or for an additional bar pursuant to subdivi-
sion four of section one hundred of this chapter, a filing fee of twenty
dollars; and with each application for a permit  under  section  ninety-
three-a  of this chapter, other than a permit to be issued on a calendar
year basis, section ninety-seven, ninety-eight, ninety-nine, or  ninety-
nine-b  of  this  chapter,  other than a permit to be issued pursuant to

S. 2609--A                         52                         A. 3009--A

paragraph b, c, e or j of subdivision one of  section  ninety-nine-b  of
this chapter on a calendar year basis, a filing fee of ten dollars.
  2.  In addition to the annual fees provided for in this chapter, there
shall be paid to the authority  with  each  renewal  application  for  a
license  filed  pursuant to section fifty-one, fifty-one-a, fifty-three,
fifty-eight, sixty-one, sixty-two, seventy-six or seventy-eight of  this
chapter, a filing fee of one hundred dollars; with each renewal applica-
tion for a license filed pursuant to section sixty-three, SIXTY-THREE-B,
sixty-four,  sixty-four-a  or sixty-four-b of this chapter, a filing fee
of ninety dollars; with each renewal application  for  a  license  filed
pursuant  to  section  seventy-nine,  eighty-one or eighty-one-a of this
chapter, a filing fee of twenty-five  dollars;  and  with  each  renewal
application  for  a  license  or permit filed pursuant to section fifty-
three-a, fifty-four, fifty-five, fifty-five-a, ninety-one, ninety-one-a,
ninety-two, ninety-two-a, ninety-three, ninety-three-a, if  such  permit
is issued on a calendar year basis, ninety-four, ninety-five, ninety-six
or ninety-six-a of this chapter or pursuant to subdivisions b, c, e or j
of  section  ninety-nine-b,  if such permit is issued on a calendar year
basis, or with each renewal application for an additional  bar  pursuant
to subdivision four of section one hundred of this chapter, a filing fee
of thirty dollars.
  S  9.  Paragraph  (a) of subdivision 1 of section 101 of the alcoholic
beverage control law, as amended by chapter 22 of the laws of  2011,  is
amended to read as follows:
  (a)  Be  interested  directly  or indirectly in any premises where any
alcoholic beverage is sold at retail; or in any business devoted  wholly
or  partially  to  the sale of any alcoholic beverage at retail by stock
ownership, interlocking directors, mortgage or lien or any  personal  or
real  property,  or by any other means. The provisions of this paragraph
shall not apply to:
  (i) any such premises or business constituting the  overnight  lodging
and  resort facility located wholly within the boundaries of the town of
North Elba, county of Essex, township eleven,  Richard's  survey,  great
lot  numbers  two  hundred  seventy-eight, two hundred seventy-nine, two
hundred eighty, two hundred ninety-eight, two hundred ninety-nine, three
hundred, three hundred eighteen, three hundred nineteen,  three  hundred
twenty,  three  hundred  thirty-five  and  three hundred thirty-six, and
township twelve, Thorn's survey, great lot numbers one hundred  six  and
one  hundred  thirteen,  as shown on the Adirondack map, compiled by the
conservation department of the state of  New  York  -  nineteen  hundred
sixty-four  edition,  in  the Essex county atlas at page twenty-seven in
the Essex county clerk's office, Elizabethtown, New York, provided  that
such facility maintains not less than two hundred fifty rooms and suites
for overnight lodging[,];
  (ii)  any such premises or business constituting the overnight lodging
and resort facility located wholly within the boundaries of  that  tract
or parcel of land situate in the city of Canandaigua, county of Ontario,
beginning  at a point in the northerly line of village lot nine where it
meets with South Main Street, thence south sixty-nine degrees fifty-four
minutes west  a  distance  of  nine  hundred  sixteen  and  twenty-three
hundredths  feet to an iron pin; thence in the same course a distance of
fourteen feet to an iron pin; thence in the same course  a  distance  of
fourteen  and  four-tenths feet to a point; thence south fifteen degrees
thirty-eight minutes and forty seconds east a distance of  four  hundred
forty-six  and  eighty-seven  hundredths  feet  to a point; thence south
twenty-eight degrees thirty-seven  minutes  and  fifty  seconds  east  a

S. 2609--A                         53                         A. 3009--A

distance  of  one  hundred thirteen and eighty-four hundredths feet to a
point; thence south eighty-five degrees and forty-seven minutes  east  a
distance  of  forty-seven  and sixty-one hundredths feet to an iron pin;
thence  on  the  same  course a distance of three hundred and sixty-five
feet to an iron pin; thence north seventeen degrees  twenty-one  minutes
and  ten seconds east a distance of four hundred fifty-seven and thirty-
two hundredths feet to an iron pin; thence north  nineteen  degrees  and
thirty  minutes west a distance of two hundred and forty-eight feet to a
point; thence north sixty-nine degrees and  fifty-four  minutes  east  a
distance  of two hundred eighty-four and twenty-six hundredths feet to a
point; thence north nineteen degrees and thirty minutes west a  distance
of  sixty  feet  to the point and place of beginning, provided that such
facility maintains not less than one hundred twenty rooms and suites for
overnight lodging[,];
  (iii) any such premises or business constituting the overnight lodging
facility located wholly within the boundaries of that tract or parcel of
land situated in the borough of Manhattan, city and county of New  York,
beginning  at  a point on the northerly side of west fifty-fourth street
at a point one hundred feet easterly from the intersection of  the  said
northerly  side  of  west  fifty-fourth  street and the easterly side of
seventh avenue; running thence northerly and parallel with the  easterly
side  of  seventh avenue one hundred feet five inches to the center line
of the block; running thence easterly and parallel  with  the  northerly
side  of west fifty-fourth street and along the center line of the block
fifty feet to a point; running thence northerly and  parallel  with  the
easterly  side  of  seventh  avenue  one hundred feet five inches to the
southerly side of west fifty-fifth street at a point distant one hundred
fifty feet easterly from the intersection of the said southerly side  of
west fifty-fifth street and the easterly side of seventh avenue; running
thence  easterly  along  the  southerly  side of west fifty-fifth street
thirty-one feet three inches to a point; running  thence  southerly  and
parallel  with  the easterly side of the seventh avenue one hundred feet
five inches to the center line of the  block;  running  thence  easterly
along  the center line of the block and parallel with the southerly side
of west fifty-fifth street, one hundred feet; running  thence  northerly
and  parallel  with the easterly side of seventh avenue one hundred feet
five inches to the southerly side of west  fifty-fifth  street;  running
thence  easterly  along  the  southerly  side of west fifty-fifth street
twenty-one feet ten and one-half  inches  to  a  point;  running  thence
southerly  and  parallel  with  the  easterly side of seventh avenue one
hundred feet five inches to the center line of the block; running thence
westerly along the center line of the block and parallel with the north-
erly side of west fifty-fourth street three feet one and one-half  inch-
es;  running  thence  southerly  and  parallel with the easterly side of
seventh avenue one hundred feet five inches to  the  northerly  side  of
west  fifty-fourth street at a point distant three hundred feet easterly
from the intersection of the said northerly side  of  west  fifty-fourth
street  and the easterly side of seventh avenue; running thence westerly
and along the northerly side of west  fifty-fourth  street  two  hundred
feet  to  the  point  or place of beginning, provided that such facility
maintains not less than four hundred guest rooms and  suites  for  over-
night lodging[,];
  (iv)  any such premises or business located on that tract or parcel of
land, or any subdivision thereof, situate in the Village of Lake Placid,
Town of North Elba, Essex County, New York; it being also a part of  Lot
No.    279,  Township  No.  11, Old Military Tract, Richard's Survey; it

S. 2609--A                         54                         A. 3009--A

being also all of Lot No. 23 and part of Lot No. 22 as shown and  desig-
nated  on a certain map entitled "Map of Building Sites for Sale by B.R.
Brewster" made by G.T. Chellis C.E. in 1892; also being PARCEL No. 1  on
a  certain  map  of  lands  of  Robert  J. Mahoney and wife made by G.C.
Sylvester, P.E.  & L.S.  # 21300, dated August 4, 1964, and filed in the
Essex County Clerk's Office on August 27, 1964,  and  more  particularly
bounded  and  described as follows; BEGINNING at the intersection of the
northerly bounds of  Shore  Drive  (formerly  Mirror  Street)  with  the
westerly  bounds  of  Park  Place (formerly Rider Street) which point is
also the northeast corner of Lot No. 23, from thence South  21°50'  East
in  the  westerly  bounds  of Park Place a distance of 119 feet, more or
less, to a lead plug in the edge of the sidewalk marking  the  southeast
corner of Lot No. 23 and the northeast corner of Lot No. 24; from thence
South  68°00'50"  West  a  distance of 50.05 feet to an iron pipe set in
concrete at the corner of Lots 23 and 22; from  thence  South  65°10'50"
West  a  distance  of 7.94 feet along the south line of Lot No. 22 to an
iron pipe for a corner; from thence North 23°21'40" West  and  at  17.84
feet  along  said line passing over a drill hole in a concrete sidewalk,
and at 68.04 feet further along said line passing over an iron  pipe  at
the  southerly  edge of another sidewalk, and at 1.22 feet further along
said line passing over  another  drill  hole  in  a  sidewalk,  a  total
distance  of  119  feet, more or less, to the northerly line of Lot. No.
22; from thence easterly in the northerly line of Lot 22 and 23  to  the
northeast  corner of Lot No. 23 and the point of beginning. Also includ-
ing the lands to the center of Shore Drive included between the norther-
ly straight line continuation of the side lines of the  above  described
parcel,  and  to  the  center  of  Park Place, where they abut the above
described premises SUBJECT to the use thereof for street purposes. Being
the same premises conveyed by Morestuff, Inc.  to  Madeline  Sellers  by
deed dated June 30, 1992, recorded in the Essex County Clerk's Office on
July 10, 1992 in Book 1017 of Deeds at Page 318;
  (v)  any  such  premises  or business located on that certain piece or
parcel of land, or any subdivision thereof, situate, lying and being  in
the  Town of Plattsburgh, County of Clinton, State of New York and being
more particularly bounded and described as follows: Starting at an  iron
pipe  found in the easterly bounds of the highway known as the Old Mili-
tary Turnpike, said iron pipe being located 910.39  feet  southeasterly,
as measured along the easterly bounds of said highway, from the souther-
ly  bounds  of  the  roadway  known  as  Industrial Parkway West, THENCE
running S 31 ° 54' 33" E along the easterly bounds of said Old  Military
Turnpike  Extension,  239.88  feet to a point marking the beginning of a
curve concave to the west; thence southerly along said curve,  having  a
radius  of  987.99  feet,  248.12 feet to an iron pipe found marking the
point of beginning for the parcel herein  being  described,  said  point
also  marked  the  southerly  corner of lands of Larry Garrow, et al, as
described in Book 938 of Deeds at page 224; thence N 07° 45' 4" E  along
the  easterly  bounds  of  said  Garrow, 748.16 feet to a 3"x4" concrete
monument marking the northeasterly corner of said Garrow, the  northwes-
terly corner of the parcel herein being described and said monument also
marking  the  southerly  bounds  of  lands  of  Salerno Plastic Corp. as
described in Book 926 of Deeds at Page 186; thence S 81° 45' 28" E along
a portion of the southerly bounds of said Salerno Plastic Corp.,  441.32
feet to an iron pin found marking the northeasterly corner of the parcel
herein  being  described  and  also  marking the northwest corner of the
remaining lands now or formerly owned by said Marx and Delaura; thence S
07° 45' 40" W along the Westerly bounds of lands now of formerly of said

S. 2609--A                         55                         A. 3009--A

Marx and DeLaura and along the easterly  bounds  of  the  parcel  herein
being  described,  560.49  feet  to  an iron pin; thence N 83° 43' 21" W
along a portion of the remaining lands of said Marx and  DeLaura,  41.51
feet  to  an  iron  pin;  thence S 08° 31' 30" W, along a portion of the
remaining lands of said Marx and Delaura, 75.01  feet  to  an  iron  pin
marking northeasterly corner of lands currently owned by the Joint Coun-
cil  for Economic Opportunity of Plattsburgh and Clinton County, Inc. as
described in Book 963 of Deeds at Page 313; thence N 82° 20' 32" W along
a portion of the northerly bounds of said J.C.E.O., 173.50  feet  to  an
iron pin; thence 61° 21' 12" W, continuing along a portion of the north-
erly  bounds  of said J.C.E.O., 134.14 feet to an iron pin; thence S 07°
45' 42" W along the westerly bounds of said J.C.E.O., 50 feet to an iron
pin; thence S 66° 48' 56" W along a portion of the northerly  bounds  of
remaining  lands  of  said Marx and DeLaura, 100.00 feet to an iron pipe
found on the easterly bounds of the aforesaid highway,  said  from  pipe
also  being  located  on a curve concave to the west; thence running and
running northerly along the easterly bounds of the aforesaid highway and
being along said curve, with the curve having a radius of  987.93  feet,
60.00 feet to the point of beginning and containing 6.905 acres of land.
Being  the  same  premises  as conveyed to Ronald Marx and Alice Marx by
deed of CIT Small Business Lending Corp., as agent of the administrator,
U.S. Small Business Administration,  an  agency  of  the  United  States
Government  dated  September  10, 2001 and recorded in the office of the
Clinton County Clerk on September 21, 2001 as Instrument #135020; [or]
  (vi) any such premises or business located on the  west  side  of  New
York  state  route  414 in military lots 64 and 75 located wholly within
the boundaries of that tract or parcel of land situated in the  town  of
Lodi, county of Seneca beginning at an iron pin on the assumed west line
of New York State Route 414 on the apparent north line of lands reputed-
ly  of  White (lib. 420, page 155); said iron pin also being northerly a
distance of 1200 feet more or less from the centerline of  South  Miller
Road;  Thence leaving the point of beginning north 85-17'-44" west along
said lands of White a distance of 2915.90 feet to  an  iron  pin  Thence
north 03-52'-48" east along said lands of White, passing through an iron
pin 338.36 feet distant, and continuing further along that same course a
distance  of 13.64 feet farther, the total distance being 352.00 feet to
a point in the assumed centerline of Nellie Neal Creek; Thence in gener-
ally a north westerly direction  the  following  courses  and  distances
along the assumed centerline of Nellie Neal Creek; north 69-25'-11" west
a  distance  of 189.56 feet to a point; north 63-40'-00" west a distance
of 156.00 feet to a point; north 49-25'-00" west  a  distance  of  80.00
feet  to  a  point;  south 80-21'-00" west a distance of 90.00 feet to a
point; north 72-03'-00" west a distance of 566.00 feet to a point; north
68-15'-00" west a distance of 506.00 feet to a point;  north  55-16'-00"
west  a  distance  of  135.00  feet  to a point; south 69-18'-00" west a
distance of 200.00 feet to a point; south 88-00'-00" west a distance  of
170.00  feet  to a point on a tie line at or near the high water line of
Seneca Lake; Thence north 25-17'-00" east along said tie line a distance
of 238.00 feet to an iron pipe; Thence south 82-04'-15" east along lands
reputedly of M. Wagner (lib. 464, page 133) a distance of 100.00 feet to
an iron pin; Thence north 06-56'-47" east along said lands of M.  Wagner
a  distance of 100.00 feet to an iron pipe; Thence north 09-34'-28" east
along lands reputedly of Schneider (lib. 429, page  37)  a  distance  of
50.10  feet  to  an  iron pipe; Thence north 07-49'-11" east along lands
reputedly of Oney (lib. 484, page 24) a distance of  50.00  feet  to  an
iron  pipe;  Thence  north  82-29'-40"  west  along said lands of Oney a

S. 2609--A                         56                         A. 3009--A

distance of 95.30 feet to an iron pipe on a tie  line  at  or  near  the
highwater  line  of Seneca Lake; Thence north 08-15'-22" east along said
tie line a  distance  of  25.00  feet  to  an  iron  pin;  Thence  south
82-28'-00"  east  along  lands  reputedly  of  Yu (lib. 405, page 420) a
distance of 96.53 feet to an iron pipe;  Thence  north  34-36'-59"  east
along  said  lands  of  Yu  a  distance  of 95.00 feet to a point in the
assumed centerline of Van Liew Creek; Thence in  generally  an  easterly
direction  the following courses and distances along the assumed center-
line of Van Liew Creek; north 72-46'-37" east a distance of 159.98  feet
to  a  point; north 87-53'-00" east a distance of 94.00 feet to a point;
south 71-12'-00" east a  distance  of  52.00  feet  to  a  point;  south
84-10'-00"  east  a distance of 158.00 feet to a point; south 59-51'-00"
east a distance of 160.00 feet to  a  point;  south  83-29'-00"  east  a
distance  of  187.00 feet to a point; Thence north 01-33'-40" east along
lands reputedly of Hansen (lib. 515, page 205) passing through  an  iron
pipe  32.62  feet distant, and continuing further along that same course
passing through an iron pin 205.38 feet farther,  and  continuing  still
further  along  that  same  course a distance of 21.45 feet farther, the
total distance being 259.45 feet to the assumed remains of a  White  Oak
stump;  Thence  north  69-16'-11" east along lands reputedly of Schwartz
(lib. 374, page 733) being tie lines along the top of the south bank  of
Campbell  Creek  a  distance  of  338.00  feet  to a point; Thence south
57-17'32" east along said tie line a distance of 136.60 feet to a point;
Thence south 74-45'-00" east along said tie line a  distance  of  100.00
feet  to  an  iron pin; Thence north 04-46'-00" east along said lands of
Schwartz a distance of 100.00 feet to a point in the assumed  centerline
of Campbell Creek; Thence in generally an easterly direction the follow-
ing  courses  and  distances  along  the  assumed centerline of Campbell
Creek; south 71-34'-00" east a distance of 330.00 feet to a point; north
76-53'-00" east a distance of 180.00 feet to a  point;  north  83-05'00"
east  a  distance  of  230.00  feet  to a point; south 66-44'-00" east a
distance of 90.00 feet to a point; south 81-10'-00" east a  distance  of
240.00  feet  to a point; south 45-29'-15" east a distance of 73.18 feet
to a point; Thence south 05-25'-50" west along lands reputedly of  Stan-
ley  Wagner (lib. 450, page 276) a distance of 135.00 feet to a point on
the assumed north line of Military Lot 75; Thence south 84-34'-10"  east
along said lands of Wagner and the assumed north line of Military Lot 75
a  distance  of 1195.06 feet to an iron pin; Thence south O6-57'52" west
along said lands of M. Wagner (lib. 414, page 267)  passing  through  an
iron  pin  215.58  feet  distant, and continuing further along that same
course a distance of 20.59 feet farther, the total distance being 236.17
feet to a point in the assumed centerline of Campbell Creek;  Thence  in
generally  a south easterly direction the following course and distances
along the assumed centerline of Campbell Creek; north 78-23'-09" east  a
distance  of  29.99 feet to a point; south 46-09'-15" east a distance of
65.24 feet to a point; north 85-55'-09" east a distance of 60.10 feet to
a point; south 61-59'-50" east a distance of 206.91  feet  to  a  point;
north  63-58'-27"  east  a  distance  of  43.12  feet  to a point; south
28-51'-21" east a distance of 47.72 feet to a  point;  south  15-14'-08"
west  a  distance  of  33.42  feet  to  a point; south 79-16'-32" east a
distance of 255.15 feet to a point; south 62-19'-46" east a distance  of
75.82 feet to a point; north 76-10'-42" east a distance of 99.60 feet to
a point; north 82-12'55" east a distance of 86.00 feet to a point; south
44-13'53"  east  a  distance  of 64.08 feet to a point; north 67-52'-46"
east a distance of 73.98 feet  to  a  point;  north  88-13'-13"  east  a
distance  of  34.64 feet to a point on the assumed west line of New York

S. 2609--A                         57                         A. 3009--A

State Route 414; Thence south 20-13'-30" east  along  the  assumed  west
line of New York State Route 414 a distance of 248.04 feet to a concrete
monument;  Thence  south 02-10'-30" west along said road line a distance
of  322.90  feet  to an iron pin; Thence 13-14'-50" west along said road
line a distance of 487.41 feet to an iron pin, said iron pin  being  the
point  and  place  of  beginning; Comprising an area of 126.807 acres of
land according to a survey completed  by  Michael  D.  Karlsen  entitled
"Plan  Owned  by  Stanley  A.    Wagner" known as Parcel A of Job number
98-505.  This survey is subject to all utility easements  and  easements
and  right-of-ways  of record which may affect the parcel of land.  This
survey is also subject to the rights of the public in and to lands here-
in referred to as New York State Route 414.    This  survey  intends  to
describe  a  portion  of  the  premises as conveyed by Ruth V. Wagner to
Stanley A. Wagner by deed recorded February 10, 1989  in  Liber  450  of
deeds,  at  Page 286.  This survey also intends to describe a portion of
the premises as conveyed by Stanley W. VanVleet to Stanley A. Wagner  by
deed recorded April 30, 1980 in Liber 385 of Deeds, at Page 203.
 ALSO ALL THAT OTHER TRACT OR PARCEL OF LAND SITUATE on the east side of
New  York State Route 414 in Military Lot 75 in the Town of Lodi, County
of Seneca, State of New York bounded and described as follows:    Begin-
ning  at  an  iron  pin on the assumed east line of New York State Route
414, said iron pin being north 50-44'-57" east a distance of 274.92 feet
from the south east corner of the parcel of land herein above described;
Thence leaving the point of beginning north 00-26'01" east along a math-
ematical tie line a distance of 504.91 feet to an iron pin; Thence south
37-00'-20" east along lands reputedly of Tomberelli (lib. 419, page 243)
passing through an iron pin 176.00 feet distant, and continuing  further
along  that  same  course  a  distance  of  2.01 feet farther, the total
distance being 178.01 feet to a  point;  Thence  south  09-03'-55"  west
along  lands  reputedly  of M. Wagner (lib. 491, page 181) a distance of
68.19 feet to an iron pipe; Thence  south  15-36'-04"  west  along  said
lands  of  M.  Wagner  a distance of 300.15 feet to an iron pipe; Thence
south 72-04'-59" west along said lands of M. Wagner a distance of  20.49
feet  to  an iron pin, said iron pin being the point and place of begin-
ning.  Comprising an area of 0.727 acre of lands according to  a  survey
completed  by Michael D. Karlsen entitled "Plan of Land Owned by Stanley
A. Wagner" known as Parcel B of job  number  98-505.    This  survey  is
subject  to  all  utility  easements  and easements and right-of-ways of
record which may affect this parcel  of  land.    This  survey  is  also
subject  to  the rights of the public in and to lands herein referred to
as New York State Route 414.  This survey intends to describe  the  same
premises  as  conveyed  by Henry W. Eighmey as executor of the Last Will
and Testament of Mary C. Eighmey to Stanley A. Wagner by  deed  recorded
July  2,  1996  in  liber  542,  page  92.   This survey also intends to
describe a portion of the premises as conveyed  by  Ruth  V.  Wagner  to
Stanley  A.  Wagner  by  deed recorded February 10, 1989 in Liber 450 of
deeds, at Page 286[.];
  [The provisions of this paragraph shall not apply to] (VII) any  prem-
ises  or  business located wholly within the following described parcel:
ALL THAT TRACT OR PARCEL OF LAND situate in the City of Corning,  County
of  Steuben  and  State  of  New  York bounded and described as follows:
Beginning at an iron pin situate at the terminus of the westerly line of
Townley Avenue at its intersection with the southwesterly  line  of  New
York  State  Route 17; thence S 00° 45' 18" E along the westerly line of
Townley Avenue, a distance of 256.09 feet to a point; thence S  89°  02'
07"  W  through an iron pin placed at a distance of 200.00 feet, a total

S. 2609--A                         58                         A. 3009--A

distance of 300.00 feet to an iron  pin;  thence  N  00°  59'  17"  W  a
distance of 47.13 feet to an iron pin; thence S 89° 02' 07" W a distance
of  114.56 feet to a point situate in the southeast corner of Parcel A-2
as set forth on a survey map hereinafter described; thence N 14° 18' 49"
E  a  distance  of  124.40  feet to an iron pin situate at the southeast
corner of lands now or formerly of Cicci (Liber 923, Page 771); thence N
14° 18' 49" E a distance of 76.46 feet to an iron pin; thence N 00°  57'
53"  W  a  distance  of  26.25 feet to an iron pin marking the southeast
corner of parcel A-1 as set forth on the  hereinafter  described  survey
map;  thence N 00° 58' 01" W a distance of 166.00 to an iron pin situate
at the northeast corner of said Parcel A-1, which  pin  also  marks  the
southeast  corner  of lands now or formerly of Becraft (Liber 1048, Page
1086); thence N 00° 57' 53" W a distance of 106.00 feet to an  iron  pin
situate  in  the  southerly  line of lands now or formerly of the United
States Postal Service; thence N 89° 02' 07" E along the  southerly  line
of  said  United  States  Postal  Service  a distance of 81.47 feet to a
point; thence N 14° 18' 49" E along the easterly  line  of  said  United
States  Postal  Service a distance of 114.29 feet to an iron pin situate
in the southwesterly line of New York State Route 17; thence S  32°  00'
31"  E  along  the  southwesterly  line  of  New  York State Route 17, a
distance of 358.93 feet to an iron  pin;  thence  continuing  along  the
southwesterly  line  of  New  York  state  Route  17,  S 38° 30' 04" E a
distance of 108.18 feet to the iron pin marking the place of  beginning.
Said  premises  are  set forth and shown as approximately 4.026 acres of
land designated as Parcel A (excluding Parcels A-1 and A-2) on a  survey
map  entitled  "As-Built  Survey  of Lands of New York Inn, LLC, City of
Corning, Steuben County, New York" by Weiler Associates, dated  December
27, 2001, designated Job No. 12462; [or (vii)]
  (VIII)  any  such premises or businesses located on that certain plot,
piece or parcel of land, situate, lying and being in the Second Ward  of
the  City of Schenectady, on the Northerly side of Union Street, bounded
and described as follows: to wit; Beginning at the Southeasterly  corner
of  the lands lately owned by Elisha L. Freeman and now by Albert Shear;
and running from thence Easterly along the line of Union Street, 44 feet
to the lands now owned by or in the possession of James  G.  Van  Vorst;
thence  Northerly  in a straight line along the last mentioned lands and
the lands of the late John Lake, 102 feet to the lands of one Miss Rodg-
ers; thence Westerly along the line of the last mentioned lands of  said
Rodgers  to  the lands of the said Shear; and thence Southerly along the
lands of said Shear 101 feet, 6 inches to Union  Street,  the  place  of
beginning.
  Also  all  that  tract  or parcel of land, with the buildings thereon,
situate in the City of Schenectady, County of Schenectady, and State  of
New  York,  situate  in  the First, formerly the Second Ward of the said
City, on the Northerly side of  Union  Street,  which  was  conveyed  by
William  Meeker  and  wife to Elisha L. Freeman by deed dated the second
day of December 1843, and recorded in the Clerk's Office of  Schenectady
County on December 5, 1843, in Book V of Deeds at page 392, which lot in
said  deed  is bounded and described as follows: Beginning at a point in
the Northerly line of Union Street where it is intersected by the  East-
erly  line  of  property  numbered  235  Union  Street,  which is hereby
conveyed, and running thence Northerly along the Easterly line  of  said
property,  One  Hundred  Forty  and  Five-tenths (140.5) feet to a point
sixteen (16) feet Southerly from the Southerly line of  the  new  garage
built  upon  land  adjoining on the North; thence Westerly parallel with
said garage, Forty-six and Seven-tenths (46.7)  feet;  thence  Southerly

S. 2609--A                         59                         A. 3009--A

One  Hundred Forty and Eight-tenths (140.8) feet to the Northerly margin
of Union Street; thence Easterly along the  Northerly  margin  of  Union
Street,  about  Forty-eight and three-tenths (48.3) feet to the point or
place of beginning.  The two above parcels are together more particular-
ly  described  as follows:  All that parcel of land in the City of Sche-
nectady beginning at a point in the northerly margin of Union Street  at
the southwesterly corner of lands now or formerly of Friedman (Deed Book
636  at  page 423) which point is about 60 feet westerly of the westerly
line of North College Street and runs thence N. 86 deg. 42' 20" W. 92.30
feet to the southeasterly corner of  other  lands  now  or  formerly  of
Friedman  (Deed  Book  798  at  page  498); thence N. 04 deg. 06' 48" E.
140.50 feet to the southwesterly corner of  lands  now  or  formerly  of
Stockade  Associates (Deed Book 1038 at page 521); thence S. 87 deg. 05'
27" E. 46.70 feet to lands now or formerly of McCarthy (Deed  Book  1129
at  page  281); thence along McCarthy S. 00 deg. 52' 02" E. 3.69 feet to
the northwesterly corner of lands now or formerly of SONYMA  (Deed  Book
1502  at  page  621);  thence  along  lands  of SONYMA S. 02 deg 24' 56"
W.34.75 feet to a corner; thence still along lands of SONYMA  and  lands
now  or formerly of Magee (Deed Book 399 at page 165) S. 86 deg. 11' 52"
E. 42.57 feet to a corner; thence still along lands of Magee  and  Lands
of  Friedman  first above mentioned S. 03 deg. 10' 08" W. 102.00 feet to
the point of beginning.  Excepting and reserving all that portion of the
above parcel lying easterly of a line described as follows:    All  that
tract  or parcel of land, situated in the City of Schenectady and County
of Schenectady and State of New York, on the  Northerly  side  of  Union
Street  bounded  and  described as follows:  Beginning at a point in the
northerly line of Union Street, said point being in  the  division  line
between lands now or formerly of Electric Brew Pubs, Inc. (1506 of Deeds
at  page  763)  on the West and lands now or formerly of Margaret Wexler
and Donna Lee Wexler Pavlovic, as trustees under Will of Ruth F.  Wexler
(Street  number  241 Union Street) on the East; thence North 03 deg. 04'
10" East, along the building known as Street No.  241  Union  Street,  a
distance  of  30.50  feet to a point; thence North 88 deg. 45' 45" West,
along said building and building eve, a  distance  of  5.62  feet  to  a
point;  thence  North  03  deg. 03' 30" East, along said building eve of
Street No. 241 Union Street, a distance of 32.74 feet; thence  South  88
deg. 45' 45" East, along said building eve, a distance of 1.2 feet to an
intersection  of  building  corner  of Street No. 241 Union Street and a
brick wall; thence north 03 deg. 37' 30" East, along said brick wall,  a
distance  of  14.47  feet  to  a  point in the corner of the brick wall,
thence South 86 deg. 46' 45" East along said brick wall  a  distance  of
4.42  feet  to  the  intersection  of  brick wall with the boundary line
between the Electric Brew Pubs, Inc. (aforesaid) on the West  and  lands
of  Margaret  Wexler  and  Donna Lee Wexler Pavlovic, (aforesaid) on the
East; thence North 03 deg 10' 08" East a distance of 0.62  feet  to  the
Northeast  corner  of  lands  belonging to Margaret Wexler and Donna Lee
Wexler Pavlovic.  Also all that tract or parcel of land  commonly  known
as the Union Street School, located on the Northeasterly corner of Union
and  North  College  Streets in the First Ward of the City and County of
Schenectady and  State  of  New  York,  more  particularly  bounded  and
described as follows:  Beginning at a point in the Northerly street line
of  Union  Street where it is intersected by the Easterly street line of
North College Street, and  runs  thence  Northerly  along  the  Easterly
street  line  of North College Street, one hundred seven and five-tenths
(107.5) feet to a point, thence easterly at  an  angle  of  ninety  (90)
degrees,  one  hundred  ninety-one  and seventy-five hundredths (191.75)

S. 2609--A                         60                         A. 3009--A

feet to a point in the  Northwesterly  street  line  of  Erie  Boulevard
thence  southwesterly along the Northwesterly street line of Erie Boule-
vard, one hundred twenty-three and  eight-tenths  (123.8)  feet  to  its
intersection  with  the  Northerly  street  line of Union Street; thence
Westerly along the Northerly street line of Union  Street,  one  hundred
twenty-four  and  fifty-five  hundredths  (124.55)  feet to the point or
place of beginning.
  The above described parcel of property includes the Blue  Line  parcel
of  land,  which is a portion of the abandoned Erie Canal Lands, located
in the First Ward of the City of Schenectady, New York, and  which  Blue
Line parcel lies between the Northwesterly line of Erie Boulevard as set
forth  in the above described premises and the Northeasterly lot line of
the old Union Street School as it runs parallel with  the  Northwesterly
line of Erie Boulevard as aforesaid.
  The  two  above  parcels  are  together more particularly described as
follows: All that parcel of land in the City of Schenectady beginning at
a point in the northerly margin of Union Street  and  the  northwesterly
margin  of  Erie Boulevard and runs thence along Union Street N. 86 deg.
42' 20" W. 124.55 feet to the easterly margin of North  College  Street;
thence  along  North  College Street N. 05 deg 04' 40" E. 107.50 feet to
the southeasterly corner of lands now or formerly of McCarthy (Deed Book
1129 at page 279); thence along McCarthy, Cottage Alley and lands now or
formerly of McGregor (Deed Book 912 at page 624) S. 84 deg. 55'  20"  E.
191.75  feet to the northwesterly margin of Erie Boulevard; thence along
Erie Boulevard S. 38 deg. 03' 53" W. 123.54 feet to the point of  begin-
ning; [or (viii)]
  (IX)  any  such premises or businesses located on that tract or parcel
of land situate in the Town of Hopewell, Ontario County,  State  of  New
York, bounded and described as follows: Commencing at a 5/8" rebar found
on  the  division line between lands now or formerly of Ontario County -
Finger Lakes Community College (Liber 698 of Deeds,  Page  466)  on  the
north  and  lands now or formerly of James W. Baird (Liber 768 of Deeds,
Page 1109) on the south; thence, North 43°-33'-40" West, on  said  divi-
sion  line,  a distance of 77.32 feet to the Point of Beginning. Thence,
North 43°-33'-40" West, continuing on said  division  line  and  through
said  lands  of  Ontario County, a distance of 520.45 feet to a point on
the southeasterly edge  of  an  existing  concrete  pad;  thence,  South
74°-19'-53"  West, along said edge of concrete and the projection there-
of, a distance of 198.78 feet to a point on the easterly edge  of  pave-
ment  of an existing campus drive; thence, the following two (2) courses
and distances along said edge of pavement: Northeasterly on a  curve  to
the  left  having  a  radius  of  2221.65 feet, a chord bearing of North
30°-16'-39" East, a  chord  distance  of  280.79,  a  central  angle  of
07°-14'-47",  a  length  of 280.98 feet to a point of reverse curvature;
thence, Northeasterly on a curve to the right having a radius of  843.42
feet,  a  chord  bearing  of North 45°-25'-09" East, a chord distance of
534.08, a central angle of 36°-55'-01", a length of  543.43  feet  to  a
point;  thence,  South 30°-04'-59" East, a distance of 18.28 feet to the
corner of the property acquired by Ontario County (Liber 766  of  Deeds,
Page  1112),  as  shown  on a map recorded in the Ontario County Clerk's
Office as Map No. 6313; thence,  the  following  four  (4)  courses  and
distances  along  said property line: South 30°-04'-59" East, a distance
of 177.17 feet to a point; thence, South 02°-20'-33" East, a distance of
147.53 feet to a point; thence, South 41°-31'-35" East,  a  distance  of
200.93 feet to a point; thence, South 23°-48'-53" West, along said prop-
erty  line,  and the projection thereof, through the first said lands of

S. 2609--A                         61                         A. 3009--A

Ontario County - Finger Lakes Community College  (Liber  698  of  Deeds,
Page  466), a distance of 517.96 feet to Point of Beginning. Said parcel
containing 7.834 acres, more  or  less,  as  shown  on  a  map  entitled
"Proposed  Lease  Area  -  Friends  of  the Finger Lakes Performing Arts
Center, Hopewell, NY", prepared by Bergmann Associates,  drawing  LM-01,
dated June 10, 2005, last revised August 17, 2005. The related PAC Prop-
erties  are  shown  on  the Map denominated "FLCC Campus Property, FLPAC
Ground Lease, Parking, Vehicular & Pedestrian Access", recorded  in  the
Ontario County Clerk's Office on December 10, 2009 in Book 1237 of Deeds
at  page  9 and are comprised of the areas separately labeled as Parking
Lot 'A', Parking Lot 'G', the Ticket Booth area, the Sidewalks, and  the
Entry Roads[.];
  (X)  ANY  PREMISES  LICENSED PURSUANT TO SECTION SIXTY-THREE-B OF THIS
CHAPTER.
  [The provisions of this paragraph shall not apply to] (XI)  any  prem-
ises  licensed  under  section  sixty-four  of  this  chapter in which a
manufacturer or wholesaler holds a direct or indirect interest, provided
that: [(I)] (1) said premises consist of  an  interactive  entertainment
facility  which  predominantly  offers  interactive  computer  and video
entertainment attractions,  and  other  games  and  also  offers  themed
merchandise  and  food  and  beverages, [(II)] (2) the sale of alcoholic
beverages within the premises shall be restricted to an area  consisting
of not more than twenty-five percent of the total interior floor area of
the premises, [(III)] (3) the retail licenses shall derive not less than
sixty-five  percent  of the total revenue generated by the facility from
interactive video entertainment activities and  other  games,  including
related  attractions  and sales of merchandise other than food and alco-
holic beverages, [(IV)] (4) the interested manufacturer  or  wholesaler,
or its parent company, shall be listed on a national securities exchange
and  its direct or indirect equity interest in the retail licensee shall
not exceed twenty-five percent, [(V)] (5) no more than  fifteen  percent
of  said  licensee's  purchases  of  alcoholic beverages for sale in the
premises shall be products produced or distributed by  the  manufacturer
or wholesaler, [(VI)] (6) neither the name of the manufacturer or whole-
saler  nor  the  name  of  any  brand  of alcoholic beverage produced or
distributed by said manufacturer or wholesaler shall be part of the name
of the premises, [(VII)] (7) the name of the manufacturer or  wholesaler
or  the  name  of  products  sold or distributed by such manufacturer or
wholesaler shall not be identified on  signage  affixed  to  either  the
interior  or  the  exterior of the premises in any fashion, [(VIII)] (8)
promotions involving alcoholic beverages produced or distributed by  the
manufacturer  or  wholesaler  are not held in such premises and further,
retail and consumer advertising specialties  bearing  the  name  of  the
manufacturer  or  wholesaler or the name of alcoholic beverages produced
or distributed by the manufacturer or wholesaler are not utilized in any
fashion, given away or sold in said premises, and [(IX)] (9)  except  to
the  extent  provided  in this paragraph, the licensing of each premises
covered by this exception  is  subject  to  all  provisions  of  section
sixty-four of this chapter, including but not limited to liquor authori-
ty approval of the specific location thereof.
  The provisions of this paragraph shall not prohibit (1) a manufacturer
or  wholesaler, if an individual, or a partner, of a partnership, or, if
a corporation, an officer or director thereof, from being an officer  or
director  of a duly licensed charitable organization which is the holder
of a license for on-premises consumption under this chapter, nor  (2)  a
manufacturer  from  acquiring  any such premises if the liquor authority

S. 2609--A                         62                         A. 3009--A

first consents thereto after determining, upon such proofs as  it  shall
deem  sufficient, that such premises is contiguous to the licensed prem-
ises of such manufacturer, and is reasonably necessary for the expansion
of  the  facilities of such manufacturer. After any such acquisition, it
shall be illegal for a manufacturer acquiring any such premises to  sell
or deliver alcoholic beverages manufactured by him to any licensee occu-
pying such premises.
  S  10.  If  any provision of this act or the application thereof shall
for any reason be finally adjudged by a court of competent  jurisdiction
to  be  invalid  or  unconstitutional,  such  judgment shall not affect,
impair, or invalidate the remainder of this act but shall be confined in
its operation to the provision or provisions directly  involved  in  the
controversy in which such judgment shall have been rendered. It is here-
by declared to be the intent of the legislature that this act would have
been  enacted  even if such invalid provision or provisions had not been
included.  In the event that any provision of the laws of New  York,  as
amended  by  this act, shall be finally adjudged by a court of competent
jurisdiction to be invalid or unconstitutional, the provisions  of  such
laws  in  effect  prior to the date this act shall have become law shall
not be affected by such judgment.
  S 11. This act shall take effect immediately; provided, however,  that
the  sales tax exemptions created by sections three and four of this act
shall take effect on the first day of a sales tax quarterly  period,  as
described  in  subdivision  (b)  of  section  1136  of the tax law, next
commencing at least 30 days after this act shall have become a  law  and
shall apply in accordance with the applicable transitional provisions in
sections  1106  and  1217  of the tax law; and provided further that the
amendments to subdivisions 1 and 2 of  section  56-a  of  the  alcoholic
beverage control law made by section eight of this act shall take effect
on the same date and in the same manner as sections 7 and 8, respective-
ly, of chapter 108 of the laws of 2012, as amended, take effect.

                                 PART J

  Section  1.  The  general  municipal  law  is  amended by adding a new
section 875 to read as follows:
  S 875. SPECIAL PROVISIONS APPLICABLE TO STATE SALES  AND  COMPENSATING
USE  TAXES  AND  CERTAIN  TYPES  OF  FACILITIES. 1. FOR PURPOSES OF THIS
SECTION: "STATE SALES AND USE TAXES" MEANS SALES  AND  COMPENSATING  USE
TAXES  AND FEES IMPOSED BY ARTICLE TWENTY-EIGHT OR TWENTY-EIGHT-A OF THE
TAX LAW BUT EXCLUDING SUCH TAXES IMPOSED IN A  CITY  BY  SECTION  ELEVEN
HUNDRED  SEVEN  OR  ELEVEN  HUNDRED  EIGHT OF SUCH ARTICLE TWENTY-EIGHT.
"IDA" MEANS AN INDUSTRIAL DEVELOPMENT AGENCY ESTABLISHED BY THIS ARTICLE
OR AN INDUSTRIAL DEVELOPMENT AUTHORITY CREATED BY THE PUBLIC AUTHORITIES
LAW. "COMMISSIONER" MEANS THE COMMISSIONER OF TAXATION AND FINANCE.
  2. (A) AN IDA SHALL NOT PROVIDE STATE  SALES  AND  USE  TAX  EXEMPTION
BENEFITS  WITH RESPECT TO ANY PROJECT UNLESS AND UNTIL THE PREREQUISITES
SET FORTH IN PARAGRAPHS (B), (C), (D) AND (E) OF  THIS  SUBDIVISION  ARE
MET.
  (B) EITHER (I) THE AGENT OR PROJECT OPERATOR OF SUCH PROJECT MUST HAVE
BEEN  CERTIFIED  AS A PARTICIPANT IN THE EXCELSIOR JOBS PROGRAM, AS SUCH
TERM "PARTICIPANT" IS DEFINED IN SECTION THREE HUNDRED FIFTY-TWO OF  THE
ECONOMIC DEVELOPMENT LAW, AND PROVIDES TO THE IDA VALID PROOF OF PARTIC-
IPATION  IN  SUCH  PROGRAM, OR (II) IF SUCH AGENT OR PROJECT OPERATOR IS
NOT A PARTICIPANT IN SUCH PROGRAM, THE IDA, AFTER REVIEWING THE FACTS ON
THE RECORD, MUST FIND THAT THE AGENT OR PROJECT OPERATOR IS  A  BUSINESS

S. 2609--A                         63                         A. 3009--A

ENTITY OF THE TYPE DESCRIBED IN SUBDIVISION ONE OF SECTION THREE HUNDRED
FIFTY-THREE  OF  THE  ECONOMIC  DEVELOPMENT  LAW AND REGULATIONS ADOPTED
PURSUANT TO SUCH SECTION.
  (C)  IF  THE  PREREQUISITE IN EITHER SUBPARAGRAPH (I) OR (II) OF PARA-
GRAPH (B) OF THIS SUBDIVISION HAS BEEN MET,  THE  IDA  SHALL  SUBMIT  IN
WRITING ITS PLAN TO PROVIDE SUCH STATE SALES AND USE TAX EXEMPTION BENE-
FITS  FOR  SUCH  PROJECT,  TOGETHER WITH THE FINDINGS IT MADE UNDER SUCH
SUBPARAGRAPH (II) OF PARAGRAPH  (B)  TO  THE  COMMISSIONER  OF  ECONOMIC
DEVELOPMENT.
  (D)  THE  COMMISSIONER  OF  ECONOMIC  DEVELOPMENT  SHALL  REVIEW  SUCH
PROPOSED STATE SALES AND USE TAX EXEMPTION BENEFIT PLAN FOR SUCH PROJECT
AND DETERMINE, IN CONSULTATION WITH THE  REGIONAL  ECONOMIC  DEVELOPMENT
COUNCIL  ESTABLISHED  BY  THE GOVERNOR THAT ENCOMPASSES THE JURISDICTION
FOR WHOSE BENEFIT THE IDA RECOMMENDING THE TAX  EXEMPTION  BENEFITS  WAS
CREATED, WHETHER SUCH PROPOSED STATE SALES AND USE TAX EXEMPTION BENEFIT
PLAN  FOR  SUCH PROJECT IS CONSISTENT WITH REGIONAL ECONOMIC DEVELOPMENT
STRATEGIES.
  (E) THE COMMISSIONER OF ECONOMIC DEVELOPMENT SHALL  REVIEW  THE  IDA'S
FINDINGS,  IF  ANY,  AND  APPROVE OR DISAPPROVE THE PROPOSED BENEFITS OR
DENY THEM IF SUCH COMMISSIONER DOES NOT APPROVE SUCH IDA'S FINDINGS THAT
THE AGENT/PROJECT OPERATOR IS A BUSINESS ENTITY OF  THE  TYPE  REQUIRED.
SUCH  COMMISSIONER  IS ALSO AUTHORIZED TO MODIFY THE IDA'S PROPOSED PLAN
BY REDUCING THE TOTAL AMOUNT  OF  ANY  SUCH  STATE  SALES  AND  USE  TAX
EXEMPTION  BENEFITS  OR  BY SPECIFYING THAT SUCH BENEFITS SHALL APPLY TO
ONLY SOME OF THE TYPES OF PROPERTY OR SERVICES  PROPOSED  TO  BE  EXEMPT
FROM  SUCH  STATE TAXES OR BY REDUCING THE TIME PERIOD DURING WHICH SUCH
BENEFITS MAY BE PROVIDED. SUCH COMMISSIONER  SHALL  ADVISE  THE  IDA  IN
WRITING  OF HIS OR HER APPROVAL, DISAPPROVAL, DENIAL, OR MODIFICATION OF
THE IDA'S PLAN, AND SUCH APPROVAL, DISAPPROVAL, DENIAL, OR  MODIFICATION
SHALL BIND THE IDA AS TO WHETHER THE IDA CAN PROVIDE STATE SALES AND USE
TAX  EXEMPTION  BENEFITS  AND,  IF APPROVED IN WHOLE OR AS MODIFIED, THE
AMOUNT OF STATE SALES AND USE TAX EXEMPTION BENEFITS THAT  THE  IDA  CAN
PROVIDE WITH RESPECT TO SUCH PROJECT, THE TYPES OF PROPERTY AND SERVICES
THAT  MAY  BE  ELIGIBLE  FOR  EXEMPTION, AND THE DURATION OF TIME DURING
WHICH SUCH EXEMPTION BENEFITS MAY APPLY. HOWEVER, THE  IDA  MAY  PROVIDE
STATE SALES AND USE TAX EXEMPTION BENEFITS IN A LESSER AMOUNT, FOR FEWER
TYPES OF PROPERTY OR SERVICES, OR FOR A SHORTER PERIOD, THAN AS APPROVED
BY SUCH COMMISSIONER.
  (F)  NOTWITHSTANDING  THE  FOREGOING, IF AT THE TIME AN IDA PROPOSES A
STATE SALES AND USE TAX EXEMPTION BENEFIT  PLAN  THERE  IS  NO  REGIONAL
ECONOMIC  DEVELOPMENT COUNCIL IN THE APPLICABLE REGION, THEN THE COMMIS-
SIONER OF ECONOMIC DEVELOPMENT SHALL REVIEW SUCH PLAN AND ANY SUCH FIND-
INGS AS PROVIDED IN PARAGRAPH (D) OF THIS SUBDIVISION, WITHOUT REGARD TO
THE RECOMMENDATION OF ANY OTHER BODY.
  (G) AN IDA SHALL NOT PROVIDE STATE SALES AND USE TAX  EXEMPTION  BENE-
FITS IN AN AMOUNT GREATER, FOR PROPERTY OR SERVICES OTHER, OR FOR A TIME
PERIOD  LONGER THAN AS APPROVED BY THE COMMISSIONER OF ECONOMIC DEVELOP-
MENT. ANY AMOUNT OF STATE SALES AND USE TAX EXEMPTION BENEFITS  THAT  AN
IDA PURPORTS TO PROVIDE IN EXCESS OF THE AMOUNT APPROVED, OR FOR DIFFER-
ENT  PROPERTY  OR  SERVICES  THAN  APPROVED, OR FOR A PERIOD LONGER THAN
APPROVED BY SUCH COMMISSIONER SHALL BE VOID FROM ITS INCEPTION,  AND  AN
AGENT, PROJECT OPERATOR, OR OTHER PERSON OR ENTITY THAT MAKES A PURCHASE
OR  USE WITHOUT PAYING STATE SALES AND USE TAXES, OR WHO PAID SUCH TAXES
BUT OBTAINED A REFUND OR CREDIT OF THEM, AS A RESULT SHALL  BE  REQUIRED
TO PAY SUCH AMOUNT OF TAX TO THE COMMISSIONER OF TAXATION AND FINANCE IN
ACCORDANCE  WITH  ARTICLES  TWENTY-EIGHT AND TWENTY-NINE OF THE TAX LAW.

S. 2609--A                         64                         A. 3009--A

THE COMMISSIONER SHALL BE AUTHORIZED TO DETERMINE AND ASSESS STATE SALES
AND USE TAXES FOREGONE ON ACCOUNT OF AN AGENT, PROJECT OPERATOR OR OTHER
PERSON OR ENTITY NOT HAVING PAID SUCH STATE SALES OR USE TAX THAT SHOULD
HAVE  BEEN  PAID, OR WHO OBTAINED SUCH A REFUND OR CREDIT BUT SHOULD NOT
HAVE, IN ACCORD WITH THE APPLICABLE PROVISIONS OF THE  TAX  LAW,  EXCEPT
THAT  ANY  STATUTE  THAT  LIMITS THE TIME BY WHICH THE COMMISSIONER MUST
DETERMINE OR ASSESS SUCH TAX SHALL NOT BEGIN TO RUN  UNTIL  THE  COMMIS-
SIONER HAS RECEIVED ACTUAL NOTICE OF SUCH IMPROPER PURCHASES OR USES.
  3.  AN  IDA  SHALL KEEP RECORDS OF THE AMOUNT OF STATE AND LOCAL SALES
AND USE TAX EXEMPTION BENEFITS PROVIDED TO EACH PROJECT AND  EACH  AGENT
OR  PROJECT  OPERATOR,  AND  SHALL  MAKE  SUCH  RECORDS AVAILABLE TO THE
COMMISSIONER AND STATE COMPTROLLER UPON REQUEST. SUCH  IDA  SHALL  ALSO,
WITHIN  THIRTY  DAYS OF PROVIDING FINANCIAL ASSISTANCE TO A PROJECT THAT
INCLUDES ANY AMOUNT OF STATE  SALES  AND  USE  TAX  EXEMPTION  BENEFITS,
REPORT  TO THE COMMISSIONER AND THE STATE COMPTROLLER THE AMOUNT OF SUCH
BENEFITS FOR SUCH PROJECT, THE PROJECT TO WHICH THEY ARE BEING PROVIDED,
ANY LIMITATION ON THE APPLICATION OR EXERCISE OF  SUCH  EXEMPTIONS,  THE
TYPES  OF  PROPERTY  AND  SERVICES TO BE EXEMPTED, THE TIME DURING WHICH
SUCH EXEMPTION BENEFITS APPLY, AND THE NAME AND ADDRESS OF THE AGENT  OR
PROJECT  OPERATOR  OF SUCH PROJECT, TOGETHER WITH SUCH OTHER INFORMATION
AND SUCH SPECIFICITY AND DETAIL AS THE COMMISSIONER MAY PRESCRIBE,  WITH
A COPY OF SUCH REPORT FURNISHED AT THE SAME TIME TO THE AGENT OR PROJECT
OPERATOR.  THIS  REPORT  MAY  BE  MADE IN CONJUNCTION WITH THE STATEMENT
REQUIRED BY SUBDIVISION NINE OF SECTION EIGHT  HUNDRED  SEVENTY-FOUR  OF
THIS  ARTICLE  OR IT MAY BE MADE AS A SEPARATE REPORT, AT THE DISCRETION
OF THE COMMISSIONER. AN AGENT OR PROJECT OPERATOR  OR  OTHER  PERSON  OR
ENTITY  SHALL  NOT  AVAIL  ITSELF  OF  STATE  OR LOCAL SALES AND USE TAX
EXEMPTIONS IN EXCESS OF THE AMOUNT OR IN CONTRAVENTION OF THE  TIME  AND
OTHER  LIMITATIONS  SET  OUT  IN SUCH REPORT OR FOR PROPERTY OR SERVICES
OTHER THAN THOSE SET OUT IN SUCH REPORT. AN IDA THAT FAILS TO MAKE  SUCH
RECORDS  AVAILABLE TO THE COMMISSIONER OR TO THE STATE COMPTROLLER OR TO
FILE SUCH REPORT OR TO COMPLY WITH ANY OTHER REQUIREMENT OF THIS  SUBDI-
VISION  SHALL  BE  PROHIBITED  FROM  PROVIDING  STATE  SALES AND USE TAX
EXEMPTION BENEFITS FOR ANY PROJECT UNLESS AND UNTIL SUCH IDA COMES  INTO
COMPLIANCE WITH ALL SUCH REQUIREMENTS.
  4.  NOTWITHSTANDING  ANY PROVISION OF THIS SECTION OR OTHER LAW, IN NO
CASE SHALL AN IDA AGENT, PROJECT OPERATOR, OR  OTHER  PERSON  OR  ENTITY
TAKE ANY STATE SALES AND USE TAX EXEMPTION BENEFITS AS EXEMPTIONS AT THE
TIME  OF  PURCHASE  OR  USE.  RATHER, IN ALL CASES, THE PERSON OR ENTITY
SHALL PAY STATE SALES OR USE TAX TO THE PERSON REQUIRED TO COLLECT IT AT
THE TIME OF PURCHASE OR TO THE COMMISSIONER IN ACCORD WITH THE  REQUIRE-
MENTS  OF  ARTICLE TWENTY-EIGHT OF THE TAX LAW. AFTER HAVING PAID TAX TO
THE PERSON REQUIRED TO COLLECT IT OR TO THE COMMISSIONER, SUCH PERSON OR
ENTITY MAY THEN APPLY TO THE COMMISSIONER FOR A REFUND OR CREDIT OF SUCH
TAX ACTUALLY PAID. ANY SUCH REFUND OR CREDIT SHALL THEN BE  APPLIED  FOR
IN THE MANNER ESTABLISHED BY AND SUBJECT TO THE PROVISIONS OF SUCH ARTI-
CLE TWENTY-EIGHT.
  5.  NOTWITHSTANDING ANY PROVISION OF THIS SECTION OR OTHER LAW, AN IDA
SHALL NOT CREATE A PROJECT OR ANY PORTION OF A PROJECT, OR AUTHORIZE THE
USE OF ANY PROJECT OR PROJECT PROPERTY, OUTSIDE THIS STATE.
  6. AN IDA THAT ENTERS INTO AN AGREEMENT REQUIRING PAYMENTS IN LIEU  OF
STATE  SALES  AND USE TAXES TO BE PAID TO IT SHALL REMIT THE FULL AMOUNT
OF ANY SUCH PAYMENTS IT RECEIVES TO THE COMMISSIONER WITHIN THIRTY  DAYS
OF THE DATE THAT THE IDA RECEIVES THE PAYMENT, TOGETHER WITH A RETURN OR
REPORT  REQUIRED  BY  THE COMMISSIONER. THE IDA SHALL SEND A COPY OF ANY
SUCH AGREEMENT FOR PAYMENT IN LIEU OF SUCH  TAXES  TO  THE  COMMISSIONER

S. 2609--A                         65                         A. 3009--A

WITHIN  THIRTY  DAYS OF THE DATE IT IS EXECUTED. IF THE PERSON OR ENTITY
REQUIRED TO MAKE SUCH PAYMENTS TO THE IDA FAILS TO DO SO TIMELY,  OR  IF
THE  IDA  FAILS  TO  REMIT SUCH PAYMENTS TO THE COMMISSIONER TIMELY, THE
AMOUNT  OF  ANY  SUCH  UNTIMELY  PAYMENTS OR REMISSIONS, TOGETHER WITH A
PENALTY OF FIVE PERCENT OF THE AMOUNT OF SUCH LATE PAYMENTS AND INTEREST
ON SUCH LATE PAYMENTS AT THE RATE OF ONE PERCENT  PER MONTH,  SHALL  ALL
BE DEEMED TO BE SALES TAX WHICH A RETURN OR REPORT SHOWS TO BE DUE UNDER
SECTION  ONE  HUNDRED  SEVENTY-THREE-A  OF  THE TAX LAW AND SUCH AMOUNTS
SHALL BE PAID UPON NOTICE AND DEMAND AND SHALL BE  ASSESSED,  COLLECTED,
AND  PAID  IN  THE  MANNER  PROVIDED  FOR SALES TAX, AND SUCH NOTICE AND
DEMAND SHALL  NOT  BE  CONSIDERED  AS  A  NOTICE  OF  DETERMINATION,  AS
DESCRIBED IN SUCH SECTION ONE HUNDRED SEVENTY-THREE-A. AN IDA SHALL JOIN
THE  COMMISSIONER  AS  A  PARTY IN ANY ACTION OR PROCEEDING THAT THE IDA
COMMENCES TO RECOVER, OBTAIN, OR OTHERWISE SEEK, ANY UNPAID PAYMENTS  IN
LIEU OF STATE SALES AND USE TAX FROM AN AGENT, PROJECT OPERATOR OR OTHER
PERSON OR ENTITY. THE PROVISIONS OF THIS SUBDIVISION SHALL ALSO APPLY TO
ANY  INTEREST  OR  PENALTY  THAT THE IDA IMPOSES ON ANY SUCH PAYMENTS IN
LIEU OF TAXES OR THAT ARE IMPOSED ON SUCH PAYMENTS BY OPERATION  OF  LAW
OR  BY JUDICIAL ORDER OR OTHERWISE. ANY SUCH PAYMENTS, TOGETHER WITH ANY
INTEREST OR PENALTIES THEREON, SHALL BE DEEMED TO BE STATE SALES AND USE
TAXES AND THE IDA SHALL RECEIVE ANY SUCH PAYMENTS, WHETHER AS  A  RESULT
OF  COURT  ACTION  OR  OTHERWISE,  AS  TRUSTEE FOR AND ON ACCOUNT OF THE
STATE.
  7. AN IDA OR IDA AGENT OR PROJECT OPERATOR SHALL NOT  BE  EXEMPT  FROM
THE  TAXES IMPOSED BY PARAGRAPH TEN OF SUBDIVISION (C) OF SECTION ELEVEN
HUNDRED FIVE OR BY ARTICLE TWENTY-EIGHT-A OR TWENTY-NINE-A  OF  THE  TAX
LAW.
  8. IF AN IDA RECOVERS, RECAPTURES, RECEIVES, OR OTHERWISE OBTAINS, ANY
AMOUNT  OF  STATE  SALES  AND  USE TAX EXEMPTION BENEFITS FROM AN AGENT,
PROJECT OPERATOR OR OTHER PERSON OR ENTITY, THE IDA SHALL, WITHIN THIRTY
DAYS OF COMING INTO POSSESSION OF SUCH AMOUNT, REMIT IT TO  THE  COMMIS-
SIONER,  TOGETHER WITH SUCH INFORMATION AND REPORT THAT THE COMMISSIONER
DEEMS NECESSARY TO ADMINISTER PAYMENT OVER OF SUCH AMOUNT. AN IDA  SHALL
JOIN  THE  COMMISSIONER  AS A PARTY IN ANY ACTION OR PROCEEDING THAT THE
IDA COMMENCES TO RECOVER,  RECAPTURE,  OBTAIN,  OR  OTHERWISE  SEEK  THE
RETURN  OF,  STATE  SALES  AND USE TAX EXEMPTION BENEFITS FROM AN AGENT,
PROJECT OPERATOR OR OTHER PERSON OR  ENTITY.    THIS  SUBDIVISION  SHALL
APPLY  TO ANY AMOUNTS OF STATE SALES AND USE TAX EXEMPTION BENEFITS THAT
AN IDA RECOVERS, RECAPTURES, RECEIVES, OR OTHERWISE OBTAINS,  REGARDLESS
OF  WHETHER  THE  IDA  OR THE AGENT, PROJECT OPERATOR OR OTHER PERSON OR
ENTITY CHARACTERIZES SUCH BENEFITS RECOVERED, RECAPTURED,  RECEIVED,  OR
OTHERWISE  OBTAINED,  AS  A PENALTY OR LIQUIDATED OR CONTRACT DAMAGES OR
OTHERWISE. THE PROVISIONS OF THIS SUBDIVISION SHALL ALSO  APPLY  TO  ANY
INTEREST OR PENALTY THAT THE IDA IMPOSES ON ANY SUCH AMOUNTS OR THAT ARE
IMPOSED  ON  SUCH  AMOUNTS  BY  OPERATION OF LAW OR BY JUDICIAL ORDER OR
OTHERWISE. ANY SUCH AMOUNTS OR PAYMENTS THAT  AN  IDA  RECOVERS,  RECAP-
TURES,  RECEIVES,  OR  OTHERWISE  OBTAINS, TOGETHER WITH ANY INTEREST OR
PENALTIES THEREON, SHALL BE DEEMED TO BE STATE SALES AND USE  TAXES  AND
THE  IDA SHALL RECEIVE ANY SUCH AMOUNTS OR PAYMENTS, WHETHER AS A RESULT
OF COURT ACTION OR OTHERWISE, AS TRUSTEE  FOR  AND  ON  ACCOUNT  OF  THE
STATE.
  9.  THE  COMMISSIONER  SHALL  DEPOSIT AND DISPOSE OF ANY AMOUNT OF ANY
PAYMENTS OR MONEYS RECEIVED FROM OR PAID OVER BY AN IDA OR  FROM  OR  BY
ANY  PERSON  OR  ENTITY, OR RECEIVED PURSUANT TO AN ACTION OR PROCEEDING
COMMENCED BY AN IDA, TOGETHER WITH ANY INTEREST  OR  PENALTIES  THEREON,
PURSUANT TO SUBDIVISION SIX OR EIGHT OF THIS SECTION, AS STATE SALES AND

S. 2609--A                         66                         A. 3009--A

USE  TAXES  IN ACCORD WITH THE PROVISIONS OF ARTICLE TWENTY-EIGHT OF THE
TAX LAW.  THE AMOUNT OF ANY SUCH PAYMENTS OR MONEYS, TOGETHER  WITH  ANY
INTEREST  OR PENALTIES THEREON, SHALL BE ATTRIBUTED TO THE TAXES IMPOSED
BY SECTIONS ELEVEN HUNDRED FIVE AND ELEVEN HUNDRED TEN, ON THE ONE HAND,
AND SECTION ELEVEN HUNDRED NINE OF THE TAX LAW, ON THE OTHER HAND, OR TO
ANY  LIKE TAXES OR FEES IMPOSED BY SUCH ARTICLE, BASED ON THE PROPORTION
THAT THE RATES OF SUCH TAXES OR FEES BEAR TO EACH OTHER, UNLESS THERE IS
EVIDENCE TO SHOW THAT ONLY ONE OR THE OTHER OF SUCH TAXES  OR  FEES  WAS
IMPOSED OR RECEIVED OR PAID OVER.
  10.  THE  STATEMENT  THAT  AN  IDA  IS REQUIRED BY SUBDIVISION NINE OF
SECTION EIGHT HUNDRED SEVENTY-FOUR OF THIS  ARTICLE  TO  FILE  WITH  THE
COMMISSIONER  SHALL  NOT BE CONSIDERED AN EXEMPTION OR OTHER CERTIFICATE
OR DOCUMENT UNDER ARTICLE TWENTY-EIGHT OR TWENTY-NINE OF  THE  TAX  LAW.
THE  IDA  SHALL  NOT  REPRESENT TO ANY AGENT, PROJECT OPERATOR, OR OTHER
PERSON OR ENTITY THAT A COPY OF SUCH STATEMENT MAY SERVE AS A  SALES  OR
USE  TAX EXEMPTION CERTIFICATE OR DOCUMENT. NO AGENT OR PROJECT OPERATOR
MAY TENDER A COPY OF SUCH STATEMENT TO ANY PERSON  REQUIRED  TO  COLLECT
SALES OR USE TAXES AS THE BASIS TO MAKE ANY PURCHASE EXEMPT FROM TAX. NO
SUCH  PERSON  REQUIRED  TO  COLLECT SALES OR USE TAXES MAY ACCEPT SUCH A
STATEMENT IN LIEU OF COLLECTING ANY TAX REQUIRED TO  BE  COLLECTED.  THE
CIVIL  AND  CRIMINAL PENALTIES FOR MISUSE OF A COPY OF SUCH STATEMENT AS
AN EXEMPTION CERTIFICATE OR DOCUMENT OR FOR FAILURE TO  PAY  OR  COLLECT
TAX  SHALL BE AS PROVIDED IN THE TAX LAW. IN ADDITION, THE USE BY AN IDA
OR AGENT, PROJECT OPERATOR, OR OTHER PERSON OR ENTITY OF SUCH STATEMENT,
OR THE IDA'S RECOMMENDATION OF THE USE OR TENDERING OF  SUCH  STATEMENT,
AS  SUCH  AN  EXEMPTION  CERTIFICATE  OR DOCUMENT SHALL BE DEEMED TO BE,
UNDER ARTICLES TWENTY-EIGHT AND THIRTY-SEVEN OF THE TAX LAW,  THE  ISSU-
ANCE  OF  A  FALSE  OR FRAUDULENT EXEMPTION CERTIFICATE OR DOCUMENT WITH
INTENT TO EVADE TAX.
  11. IN CONSULTATION WITH THE COMMISSIONER OF ECONOMIC DEVELOPMENT, THE
COMMISSIONER OF TAXATION AND FINANCE IS HEREBY AUTHORIZED TO ADOPT RULES
AND REGULATIONS AND TO ISSUE PUBLICATIONS AND OTHER GUIDANCE  IMPLEMENT-
ING  THE  PROVISIONS  OF  THIS SECTION AND OF THE OTHER SECTIONS OF THIS
ARTICLE RELATING TO ANY STATE OR LOCAL  TAX  OR  FEE,  OR  EXEMPTION  OR
EXCLUSION  THEREFROM,  THAT THE COMMISSIONER ADMINISTERS AND THAT MAY BE
AFFECTED BY ANY PROVISION OF THIS ARTICLE, AND ANY SUCH RULES AND  REGU-
LATIONS  OF  THE  COMMISSIONER SHALL HAVE THE SAME FORCE AND EFFECT WITH
RESPECT TO SUCH TAXES AND FEES, OR AMOUNTS MEASURED IN RESPECT OF  THEM,
AS IF THEY HAD BEEN ADOPTED BY THE COMMISSIONER PURSUANT TO THE AUTHORI-
TY OF THE TAX LAW.
  12.  TO  THE  EXTENT THAT A PROVISION OF THIS SECTION CONFLICTS WITH A
PROVISION OF ANY OTHER SECTION OF THIS ARTICLE, THE PROVISIONS  OF  THIS
SECTION SHALL CONTROL.
  S  2.  The  public  authorities law is amended by adding a new section
1963-b to read as follows:
  S 1963-B. SPECIAL PROVISIONS APPLICABLE TO STATE SALES AND  COMPENSAT-
ING USE TAXES AND CERTAIN TYPES OF FACILITIES. THE PROVISIONS OF SECTION
EIGHT  HUNDRED  SEVENTY-FIVE OF THE GENERAL MUNICIPAL LAW SHALL APPLY TO
THE PROVISIONS OF THIS TITLE AND TO THE AUTHORITY CREATED BY THIS  TITLE
WITH  THE  SAME  FORCE  AND  EFFECT AS IF THE PROVISIONS OF SUCH SECTION
EIGHT HUNDRED SEVENTY-FIVE HAD BEEN INCORPORATED IN FULL INTO THIS TITLE
AND HAD EXPRESSLY REFERRED TO THE PROVISIONS OF THIS TITLE AND  TO  SUCH
AUTHORITY,  WITH  SUCH CHANGES TO SUCH SECTION AS ARE NECESSARY TO REFER
TO THE PROVISIONS OF THIS TITLE AND TO THE  AUTHORITY  CREATED  BY  THIS
TITLE.

S. 2609--A                         67                         A. 3009--A

  S  3.  The  public  authorities law is amended by adding a new section
2326-a to read as follows:
  S  2326-A. SPECIAL PROVISIONS APPLICABLE TO STATE SALES AND COMPENSAT-
ING USE TAXES AND CERTAIN TYPES OF FACILITIES. THE PROVISIONS OF SECTION
EIGHT HUNDRED SEVENTY-FIVE OF THE GENERAL MUNICIPAL LAW SHALL  APPLY  TO
THE  PROVISIONS OF THIS TITLE AND TO THE AUTHORITY CREATED BY THIS TITLE
WITH THE SAME FORCE AND EFFECT AS IF  THE  PROVISIONS  OF  SUCH  SECTION
EIGHT HUNDRED SEVENTY-FIVE HAD BEEN INCORPORATED IN FULL INTO THIS TITLE
AND  HAD  EXPRESSLY REFERRED TO THE PROVISIONS OF THIS TITLE AND TO SUCH
AUTHORITY, WITH SUCH CHANGES TO SUCH SECTION AS ARE NECESSARY  TO  REFER
TO  THE  PROVISIONS  OF  THIS TITLE AND TO THE AUTHORITY CREATED BY THIS
TITLE.
  S 4. Subdivision 3 of section 810 of the  general  municipal  law,  as
amended  by  chapter  356  of  the  laws  of 1993, is amended to read as
follows:
  3. The term "local officer or employee" shall mean  the  heads  (other
than local elected officials) of any agency, department, division, coun-
cil,  board,  commission, or bureau of a political subdivision and their
deputies and assistants, and the officers and employees  of  such  agen-
cies,  departments,  divisions, boards, bureaus, commissions or councils
who hold policy-making positions, as annually determined by the appoint-
ing authority and set forth in a written instrument which shall be filed
with the appropriate body during the month of February; except that  the
term  "local officer or employee" shall not mean a judge, justice, offi-
cer or employee of the unified  court  system.  Members,  officers,  and
employees  of  each  industrial  development agency and authority ESTAB-
LISHED BY THIS CHAPTER OR CREATED BY THE PUBLIC AUTHORITIES LAW shall be
deemed officers or employees of the county, city, village, or  town  for
whose benefit such agency or authority is established OR CREATED.
  S  5.  Subdivision  4  of section 854 of the general municipal law, as
amended by chapter 478 of the laws  of  2011,  is  amended  to  read  as
follows:
  (4)  "Project"  -  shall mean any land, any building or other improve-
ment, and all real and personal properties located within the  state  of
New York and within or outside or partially within and partially outside
the  municipality  for  whose benefit the agency was created, including,
but not limited to, machinery, equipment  and  other  facilities  deemed
necessary  or  desirable in connection therewith, or incidental thereto,
whether or not now in existence or under construction,  which  shall  be
suitable  for manufacturing, warehousing, research, commercial or indus-
trial purposes or  other  economically  sound  purposes  identified  and
called  for  to implement a state designated urban cultural park manage-
ment plan as provided in title G of the parks, recreation  and  historic
preservation  law  and which may include or mean an industrial pollution
control facility, a recreation facility, educational or cultural facili-
ty, a horse racing facility, a railroad facility or an automobile racing
facility, provided, however, no agency shall use its  funds  OR  PROVIDE
FINANCIAL  ASSISTANCE  in  respect  of  any  project wholly or partially
outside the municipality for whose benefit the agency was created  with-
out the prior consent thereto by the governing body or bodies of all the
other  municipalities  in which a part or parts of the project is, or is
to be, located, AND SUCH PORTION OF THE  PROJECT  LOCATED  OUTSIDE  SUCH
MUNICIPALITY  FOR  WHOSE BENEFIT THE AGENCY WAS CREATED SHALL BE CONTIG-
UOUS WITH THE PORTION OF THE PROJECT INSIDE SUCH MUNICIPALITY.
  S 6. Section 883 of the general municipal law, as added by chapter 356
of the laws of 1993, is amended to read as follows:

S. 2609--A                         68                         A. 3009--A

  S 883. Conflicts of interest. All members, officers, and employees  of
an  agency or INDUSTRIAL DEVELOPMENT authority ESTABLISHED BY THIS CHAP-
TER OR CREATED BY THE PUBLIC AUTHORITIES LAW shall  be  subject  to  the
provisions of article eighteen of this chapter.
  S  7.  Subdivision  9  of section 874 of the general municipal law, as
added by section 1 of subpart C of part S of chapter 57 of the  laws  of
2010, is amended to read as follows:
  (9)  (A)  Within  thirty days of the date that the agency designates a
project operator or other person to act  as  agent  of  the  agency  for
purposes  of  providing financial assistance consisting of any sales and
compensating use tax exemption to such person, the agency shall  file  a
statement  with the department of taxation and finance relating thereto,
on a form and in such manner as is prescribed  by  the  commissioner  of
taxation  and finance, identifying each such agent so named by the agen-
cy, setting forth the taxpayer identification number of each such agent,
giving a brief description of the property and/or services  intended  to
be  exempted  from  such taxes as a result of such appointment as agent,
indicating the agency's rough estimate of  the  value  of  the  property
and/or  services  to which such appointment as agent relates, indicating
the date when such designation as agent became effective and  indicating
the date upon which such designation as agent shall cease.
  (B)  WITHIN  THIRTY  DAYS  OF  THE  DATE THAT THE AGENCY'S DESIGNATION
DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION HAS BEEN AMENDED,  TERMI-
NATED,  BEEN  REVOKED,  OR BECOME INVALID OR INEFFECTIVE FOR ANY REASON,
THE AGENCY SHALL FILE A STATEMENT WITH THE DEPARTMENT  OF  TAXATION  AND
FINANCE  RELATING THERETO, ON A FORM AND IN SUCH MANNER AS IS PRESCRIBED
BY THE COMMISSIONER OF TAXATION AND FINANCE, IDENTIFYING EACH SUCH AGENT
SO NAMED BY THE AGENCY IN THE ORIGINAL DESIGNATION AND SETTING FORTH THE
TAXPAYER IDENTIFICATION NUMBER AND OTHER IDENTIFYING INFORMATION OF EACH
SUCH AGENT, THE DATE AS OF WHICH THE ORIGINAL DESIGNATION  WAS  AMENDED,
TERMINATED,  REVOKED,  OR  BECAME  INVALID OR INEFFECTIVE AND THE REASON
THEREFOR, TOGETHER WITH A COPY OF THE ORIGINAL DESIGNATION.
  S 8. Subdivision 4 of section 1963 of the public authorities  law,  as
added  by  section 2 of subpart C of part S of chapter 57 of the laws of
2010, is amended to read as follows;
  4. (A) Within thirty days of the date that the authority designates  a
project  operator  or  other person to act as agent of the authority for
purposes of providing financial assistance consisting of any  sales  and
compensating  use  tax exemption to such person, the agency shall file a
statement with the department of taxation and finance relating  thereto,
on  a  form  and  in such manner as is prescribed by the commissioner of
taxation and finance, identifying  each  such  agent  so  named  by  the
authority, setting forth the taxpayer identification number of each such
agent,  giving  a  brief  description  of  the  property and/or services
intended to be exempted from such taxes as a result of such  appointment
as  agent, indicating the authority's rough estimate of the value of the
property and/or services to which such  appointment  as  agent  relates,
indicating  the date when such designation as agent became effective and
indicating the date upon which such designation as agent shall cease.
  (B) WITHIN THIRTY DAYS OF THE DATE THAT  THE  AUTHORITY'S  DESIGNATION
DESCRIBED  IN PARAGRAPH (A) OF THIS SUBDIVISION HAS BEEN AMENDED, TERMI-
NATED, BEEN REVOKED, OR BECOME INVALID OR INEFFECTIVE  FOR  ANY  REASON,
THE AUTHORITY SHALL FILE A STATEMENT WITH THE DEPARTMENT OF TAXATION AND
FINANCE  RELATING THERETO, ON A FORM AND IN SUCH MANNER AS IS PRESCRIBED
BY THE COMMISSIONER OF TAXATION AND FINANCE, IDENTIFYING EACH SUCH AGENT
SO NAMED BY THE AUTHORITY IN THE ORIGINAL DESIGNATION AND SETTING  FORTH

S. 2609--A                         69                         A. 3009--A

THE  TAXPAYER IDENTIFICATION NUMBER AND OTHER IDENTIFYING INFORMATION OF
EACH SUCH AGENT, THE DATE AS  OF  WHICH  THE  ORIGINAL  DESIGNATION  WAS
AMENDED,  TERMINATED,  REVOKED, OR BECAME INVALID OR INEFFECTIVE AND THE
REASON THEREFOR, TOGETHER WITH A COPY OF THE ORIGINAL DESIGNATION.
  S  9.  Subdivision 4 of section 2326 of the public authorities law, as
added by section 3 of subpart C of part S of chapter 57 of the  laws  of
2010, is amended to read as follows:
  4.  (A) Within thirty days of the date that the authority designates a
project operator or other person to act as agent of  the  authority  for
purposes  of  providing financial assistance consisting of any sales and
compensating use tax exemption to such person, the agency shall  file  a
statement  with the department of taxation and finance relating thereto,
on a form and in such manner as is prescribed  by  the  commissioner  of
taxation  and  finance,  identifying  each  such  agent  so named by the
authority, setting forth the taxpayer identification number of each such
agent, giving a  brief  description  of  the  property  and/or  services
intended  to be exempted from such taxes as a result of such appointment
as agent, indicating the authority's rough estimate of the value of  the
property  and/or  services  to  which such appointment as agent relates,
indicating the date when such designation as agent became effective  and
indicating the date upon which such designation as agent shall cease.
  (B)  WITHIN  THIRTY  DAYS OF THE DATE THAT THE AUTHORITY'S DESIGNATION
DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION HAS BEEN AMENDED,  TERMI-
NATED,  BEEN  REVOKED,  OR BECOME INVALID OR INEFFECTIVE FOR ANY REASON,
THE AUTHORITY SHALL FILE A STATEMENT WITH THE DEPARTMENT OF TAXATION AND
FINANCE RELATING THERETO, ON A FORM AND IN SUCH MANNER AS IS  PRESCRIBED
BY THE COMMISSIONER OF TAXATION AND FINANCE, IDENTIFYING EACH SUCH AGENT
SO  NAMED BY THE AUTHORITY IN THE ORIGINAL DESIGNATION AND SETTING FORTH
THE TAXPAYER IDENTIFICATION NUMBER AND OTHER IDENTIFYING INFORMATION  OF
EACH  SUCH  AGENT,  THE  DATE  AS  OF WHICH THE ORIGINAL DESIGNATION WAS
AMENDED, TERMINATED, REVOKED, OR BECAME INVALID OR INEFFECTIVE  AND  THE
REASON THEREFOR, TOGETHER WITH A COPY OF THE ORIGINAL DESIGNATION.
  S  10. Severability. If any provision of this act shall for any reason
be finally adjudged by any court of competent jurisdiction to be  inval-
id,  such judgment shall not affect, impair, or invalidate the remainder
of this act, but shall be confined in its  operation  to  the  provision
directly  involved  in the controversy in which such judgment shall have
been rendered. It is hereby declared to be the intent of the legislature
that this act would have been enacted even if such invalid provision had
not been included in this act.
  S 11. This act shall take effect immediately and shall  apply  to  (a)
any  project established, agent or project operator appointed, financial
assistance provided, and agreement regarding payments in lieu  of  taxes
entered into, on or after the date this act shall have become a law, (b)
any  amendment or revision made on or after the date this act shall have
become a law to any  project  established,  agent  or  project  operator
appointed,  financial  assistance  provided, or payment in lieu of taxes
entered into, prior to that date, (c) any state sales  and  compensating
use tax exemption benefits recovered, recaptured, received, or otherwise
obtained by an industrial development agency or authority established by
the general municipal law or created by the public authorities law on or
after such date, and (d) any payments in lieu of state sales and compen-
sating  use  taxes of such an industrial development agency or authority
receives on or after such date.

                                 PART K

S. 2609--A                         70                         A. 3009--A

  Section 1. Paragraph 42 of subdivision (a) of section 1115 of the  tax
law,  as  added  by section 11 of part W-1 of chapter 109 of the laws of
2006, is amended to read as follows:
  (42)  E85, CNG or hydrogen, for use or consumption directly and exclu-
sively in the engine of a motor vehicle AND NATURAL  GAS  PURCHASED  AND
CONVERTED  INTO CNG, FOR USE OR FOR SALE FOR USE OR CONSUMPTION DIRECTLY
AND EXCLUSIVELY IN THE ENGINE OF A MOTOR VEHICLE.
  S 2. This act shall take effect on the first day of a sales tax  quar-
terly period, as described in subdivision (b) of section 1136 of the tax
law,  next  commencing  after this act shall have become a law and shall
apply in accordance  with  the  applicable  transitional  provisions  in
sections  1106  and  1217  of  the  tax law; provided, however, that the
amendments to paragraph 42 of subdivision (a) of section 1115 of the tax
law made by section one of this act shall not affect the repeal of  such
paragraph and shall be deemed repealed therewith.

                                 PART L

  Section  1.  Section  301-c  of the tax law is amended by adding a new
subdivision (p) to read as follows:
  (P) REIMBURSEMENT FOR MOTOR FUEL AND  DIESEL  MOTOR  FUEL  USED  BY  A
VOLUNTARY AMBULANCE SERVICE, AS DEFINED IN SECTION THREE THOUSAND ONE OF
THE  PUBLIC  HEALTH LAW, A FIRE COMPANY OR A FIRE DEPARTMENT, AS DEFINED
IN SECTION THREE OF THE VOLUNTEER FIREFIGHTERS' BENEFIT LAW, OR A VOLUN-
TEER RESCUE SQUAD SUPPORTED IN WHOLE OR IN PART BY TAX MONIES, WHERE ANY
SUCH ENTITY IS THE PURCHASER, USER OR CONSUMER OF MOTOR FUEL  OR  DIESEL
MOTOR  FUEL  IN  A  VEHICLE  OWNED  AND OPERATED BY SUCH ENTITY AND USED
EXCLUSIVELY FOR SUCH ENTITY'S PURPOSES. A PURCHASER  SHALL  BE  ELIGIBLE
FOR REIMBURSEMENT OF THE TAX IMPOSED PURSUANT TO THIS ARTICLE IF (1) ANY
TAX  IMPOSED PURSUANT TO THIS ARTICLE HAS BEEN PAID WITH RESPECT TO SUCH
GALLONAGE AND THE ENTIRE AMOUNT OF SUCH TAX HAS BEEN  ABSORBED  BY  SUCH
PURCHASER,  AND (2) SUCH PURCHASER POSSESSES DOCUMENTARY PROOF SATISFAC-
TORY TO THE COMMISSIONER EVIDENCING THE ABSORPTION BY SUCH PURCHASER  OF
THE  ENTIRE  AMOUNT  OF  SUCH TAX. PROVIDED, THAT THE COMMISSIONER SHALL
REQUIRE SUCH DOCUMENTARY PROOF TO QUALIFY FOR ANY REIMBURSEMENT PROVIDED
HEREUNDER AS THE COMMISSIONER DEEMS APPROPRIATE.
  S 2. This act shall take effect on the first day of  the  first  month
next succeeding the sixtieth day after it shall have become a law.

                                 PART M

  Section 1. Subparagraphs (A) and (B) of paragraph 4 of subdivision (a)
of  section  1134 of the tax law, subparagraph (A) as amended by section
21-a of part U of chapter 61 of the laws of 2011 and subparagraph (B) as
amended by chapter 2 of the  laws  of  1995,  are  amended  to  read  as
follows:
  (A)  Where a person who holds a certificate of authority (i) willfully
fails to file a report or return required by this article, (ii) willful-
ly files, causes to be filed, gives or causes  to  be  given  a  report,
return,  certificate  or  affidavit required under this article which is
false, (iii) willfully fails to comply with the provisions of  paragraph
two  or  three of subdivision (e) of section eleven hundred thirty-seven
of this article, (iv) willfully fails  to  prepay,  collect,  truthfully
account  for  or pay over any tax imposed under this article or pursuant
to the authority of article twenty-nine of this chapter,  (v)  fails  to
obtain  a  bond  pursuant to paragraph two of subdivision (e) of section

S. 2609--A                         71                         A. 3009--A

eleven hundred thirty-seven of this part, or  fails  to  comply  with  a
notice  issued  by  the commissioner pursuant to paragraph three of such
subdivision, [or] (vi) has been convicted of a  crime  provided  for  in
this  chapter, OR UNDER THE PENAL LAW OF THIS STATE WHERE THE UNDERLYING
CONDUCT CONSTITUTES A CRIME UNDER THIS CHAPTER, OR  IS  CONVICTED  OF  A
CRIMINAL  OFFENSE  OF THE UNITED STATES, ANY OTHER STATE, OR A POLITICAL
SUBDIVISION OF THIS STATE OR ANY OTHER STATE,  WHICH,  IF  COMMITTED  IN
THIS STATE, WOULD CONSTITUTE A SIMILAR CRIME UNDER THIS CHAPTER OR (VII)
SUCH PERSON WOULD BE INELIGIBLE TO RECEIVE SUCH CERTIFICATE OF AUTHORITY
PURSUANT  TO  CLAUSES (I), (II), (IV) OR (V) OF SUBPARAGRAPH (B) OF THIS
PARAGRAPH, the commissioner may revoke or suspend  such  certificate  of
authority  and  all  duplicates  thereof.  Provided,  however,  that the
commissioner may revoke or suspend a certificate of authority  based  on
the grounds set forth in clause (vi) of this subparagraph only where the
conviction  referred  to  occurred  not  more than [one year] FIVE YEARS
prior to the date of revocation or suspension.
  (B) Where a person files a certificate of registration for  a  certif-
icate of authority under this subdivision and in considering such appli-
cation  the  commissioner ascertains that (i) any tax imposed under this
chapter or any related statute, as defined in section  eighteen  hundred
of  this chapter, has been finally determined to be due from such person
and has not been paid in full, (ii) [a] ANY tax [due under this  article
or any law, ordinance or resolution enacted pursuant to the authority of
article  twenty-nine]  IMPOSED  BY  OR PURSUANT TO THE AUTHORITY OF THIS
CHAPTER OR ANY RELATED STATUTE AS DEFINED IN SECTION EIGHTEEN HUNDRED of
this chapter has been finally determined to  be  due  from  an  officer,
director,  partner or employee of such person, and, where such person is
a limited liability company, also a member or manager of such person, in
the officer's, director's, partner's, member's, manager's or  employee's
capacity as a person required to collect tax on behalf of such person or
another  person  and  has  not  been  paid,  (iii)  such person has been
convicted of a crime provided for in this chapter, OR  UNDER  THE  PENAL
LAW OF THIS STATE WHERE THE UNDERLYING CONDUCT CONSTITUTES A CRIME UNDER
THIS  CHAPTER,  OR  IS  CONVICTED  OF  A  CRIMINAL OFFENSE OF THE UNITED
STATES, ANY OTHER STATE, OR A POLITICAL SUBDIVISION OF THIS STATE OR ANY
OTHER STATE, WHICH, IF COMMITTED IN THIS STATE, WOULD CONSTITUTE A SIMI-
LAR CRIME UNDER THIS CHAPTER within [one year] FIVE YEARS from the  date
on  which  such  certificate  of registration is filed, (iv) an officer,
director, partner or employee of such person, and, where such person  is
a  limited  liability  company, also a member or manager of such person,
which officer, director, partner,  member,  manager  or  employee  is  a
person required to collect tax on behalf of such person filing a certif-
icate  of  registration  has  in  the  officer's, director's, partner's,
member's, manager's or employee's  capacity  as  a  person  required  to
collect tax on behalf of such person or of another person been convicted
of  a  crime [provided for in this chapter] SET FORTH IN CLAUSE (III) OF
THIS SUBPARAGRAPH WHERE THE CONVICTION REFERRED TO OCCURRED within  [one
year] FIVE YEARS from the date on which such certificate of registration
is filed, (v) a shareholder owning more than fifty percent of the number
of  shares  of stock of such person (where such person is a corporation)
entitling the holder thereof to vote for the election  of  directors  or
trustees,  OR  A  PERSON  HAVING  MORE  THAN FIFTY PERCENT OF THE VOTING
RIGHTS OF SUCH PERSON (WHERE SUCH PERSON IS A LIMITED  LIABILITY  COMPA-
NY),  OR  A PERSON HAVING A CONTROLLING INTEREST IN ANY FORM OF PARTNER-
SHIP (CONTROLLING INTEREST MEANING MORE THAN FIFTY PERCENT OF THE  CAPI-
TAL,  PROFITS OR BENEFICIAL INTEREST IN SUCH PARTNERSHIP) who owned more

S. 2609--A                         72                         A. 3009--A

than fifty percent of the number of such shares of another person (where
such other person is a corporation), OR HAD MORE THAN FIFTY  PERCENT  OF
THE  VOTING  RIGHTS  OF  A LIMITED LIABILITY COMPANY, OR HAD CONTROLLING
INTEREST  IN  ANY FORM OF PARTNERSHIP (CONTROLLING INTEREST MEANING MORE
THAN FIFTY PERCENT OF THE CAPITAL, PROFITS  OR  BENEFICIAL  INTEREST  IN
SUCH  PARTNERSHIP) at the time any tax imposed under this chapter or any
related statute as defined in section eighteen hundred of  this  chapter
was  finally  determined to be due FROM SUCH CORPORATION, PARTNERSHIP OR
LIMITED LIABILITY COMPANY and where such tax has not been paid in  full,
or  at the time such other person was convicted of a crime [provided for
in this chapter] SET FORTH IN CLAUSE (III) OF  THIS  SUBPARAGRAPH  WHERE
THE  CONVICTION  REFERRED  TO OCCURRED within [one year] FIVE YEARS from
the date on which such certificate of registration is filed, [or] (vi) a
certificate of authority issued to  such  person  has  been  revoked  or
suspended  pursuant  to  subparagraph  (A) of this paragraph within [one
year] THREE YEARS from the date on which such certificate  of  registra-
tion  is  filed,  (VII)  A  CERTIFICATE OF AUTHORITY ISSUED TO ANY OTHER
PERSON HAS BEEN REVOKED OR SUSPENDED PURSUANT  TO  SUBPARAGRAPH  (A)  OF
THIS  PARAGRAPH  WITHIN  THREE YEARS FROM THE DATE ON WHICH SUCH CERTIF-
ICATE OF REGISTRATION IS FILED AND AN OFFICER, DIRECTOR, MEMBER,  MANAG-
ER, PARTNER OR EMPLOYEE OF SUCH PERSON WAS, AT THAT TIME OF SUCH REVOCA-
TION, A PERSON REQUIRED TO COLLECT TAX ON BEHALF OF SUCH PERSON AND SUCH
OFFICER,  DIRECTOR,  MEMBER,  MANAGER,  PARTNER  OR EMPLOYEE IS A PERSON
REQUIRED TO COLLECT TAX ON BEHALF OF THE PERSON FILING A CERTIFICATE  OF
REGISTRATION,  OR  (VIII)  SUCH  PERSON HAS COMMITTED AN ACT WHICH WOULD
GIVE THE COMMISSIONER THE AUTHORITY TO REVOKE OR  SUSPEND  SUCH  CERTIF-
ICATE  PURSUANT TO CLAUSE (I), (II), (III), (IV), OR (V) OF SUBPARAGRAPH
(A) OF THIS PARAGRAPH, the commissioner may refuse to  issue  a  certif-
icate of authority.
  S  2.  Subparagraph  (A)  of paragraph 4 of subdivision (a) of section
1134 of the tax law, as amended by chapter 2 of the  laws  of  1995,  is
amended to read as follows:
  (A)  Where a person who holds a certificate of authority (i) willfully
fails to file a report or return required by this article, (ii) willful-
ly files, causes to be filed, gives or causes  to  be  given  a  report,
return,  certificate  or  affidavit required under this article which is
false, (iii) willfully fails to comply with the provisions of  paragraph
two  or  three of subdivision (e) of section eleven hundred thirty-seven
of this article, (iv) willfully fails  to  prepay,  collect,  truthfully
account  for  or pay over any tax imposed under this article or pursuant
to the authority of article twenty-nine of this chapter,  [or]  (v)  has
been  convicted  of  a  crime provided for in this chapter, OR UNDER THE
PENAL LAW OF THIS STATE WHERE THE UNDERLYING CONDUCT CONSTITUTES A CRIME
UNDER THIS CHAPTER, OR IS CONVICTED OF A CRIMINAL OFFENSE OF THE  UNITED
STATES, ANY OTHER STATE, OR A POLITICAL SUBDIVISION OF THIS STATE OR ANY
OTHER STATE, WHICH, IF COMMITTED IN THIS STATE, WOULD CONSTITUTE A SIMI-
LAR CRIME UNDER THIS CHAPTER, OR (VI) SUCH PERSON WOULD BE INELIGIBLE TO
RECEIVE  SUCH  CERTIFICATE  OF  AUTHORITY PURSUANT TO CLAUSES (I), (II),
(IV) OR (V) OF SUBPARAGRAPH (B) OF THIS PARAGRAPH, the commissioner  may
revoke or suspend such certificate of authority and all duplicates ther-
eof.  Provided,  however,  that the commissioner may revoke or suspend a
certificate of authority based on the grounds set forth in clause (v) of
this subparagraph only where the conviction  referred  to  occurred  not
more  than  [one  year]  FIVE  YEARS  prior to the date of revocation or
suspension.

S. 2609--A                         73                         A. 3009--A

  S 3. Subparagraphs (C) and (E) of  paragraph  4  and  paragraph  5  of
subdivision  (a) of section 1134 of the tax law, as amended by chapter 2
of the laws of 1995, are amended to read as follows:
  (C)  In  any  of  the  foregoing  instances where the commissioner may
suspend or revoke or refuse to issue a  certificate  of  authority,  the
commissioner may condition the retention or issuance of a certificate of
authority upon (I) the filing of a bond [or], (II) the deposit of tax in
the  manner  provided  in  paragraph  two or three of subdivision (e) of
section eleven hundred thirty-seven OF THIS PART, (III)  NOTWITHSTANDING
PARAGRAPH  TWO  OF SUBDIVISION (A) OF THIS SECTION, THE ISSUANCE OF SUCH
CERTIFICATE FOR A SPECIFIED TERM OF LESS  THAN  THREE  YEARS,  (IV)  THE
FILING  OF  PART-QUARTERLY RETURNS PURSUANT TO PARAGRAPH TWO OF SUBDIVI-
SION (A) OF SECTION ELEVEN HUNDRED THIRTY-SIX  OF  THIS  PART,  (V)  THE
FILING OF ANY UNFILED RETURNS, (VI) ENTERING INTO AN INSTALLMENT PAYMENT
AGREEMENT  OR  OTHERWISE MAKING PAYMENT ARRANGEMENTS SATISFACTORY TO THE
COMMISSIONER, AND/OR (VII) SUCH OTHER  TERMS  AS  THE  COMMISSIONER  AND
APPLICANT MAY AGREE TO.
  (E) After the commissioner has suspended or revoked a person's certif-
icate  of  authority,  by  a  notice of suspension or revocation, or has
refused to issue a certificate of authority, by a notice of refusal,  to
such  person  and such decision has become final as provided for in this
paragraph, or after a person's certificate of authority has expired,  OR
A  PERSON  WAS  NOTIFIED THAT SUCH PERSON'S CERTIFICATE OF AUTHORITY WAS
DEEMED TO EXPIRE PURSUANT TO PARAGRAPH FIVE OF SUBDIVISION (A)  OF  THIS
SECTION and such person has failed to renew such certificate or obtain a
new  certificate of authority, OR WHERE A PERSON REQUIRED TO COLLECT TAX
HAS FAILED TO APPLY FOR SUCH CERTIFICATE OF AUTHORITY, ANY  such  person
is  prohibited  from  engaging in any business in this state for which a
certificate of authority is required.  If despite such prohibition  such
person  continues  to  be  so  engaged in business, the commissioner may
bring an action to enjoin such person from so engaging in business.   NO
SUCH  ACTION  SHALL BE INSTITUTED BY THE COMMISSIONER BEFORE THE COMMIS-
SIONER GIVES NOTICE TO THE ATTORNEY GENERAL APPRISING HIM OR HER OF SUCH
ACTION AND THE NATURE AND PURPOSE THEREOF, SO THAT THE ATTORNEY  GENERAL
MAY  PARTICIPATE  OR JOIN THEREIN IF IN HIS OR HER OPINION THE INTERESTS
OF THE STATE SO WARRANT, AND THE COMMISSIONER  MAY  NOT  INSTITUTE  SUCH
ACTION  UNTIL  TWO  WEEKS  AFTER  PROVIDING  SUCH NOTICE TO THE ATTORNEY
GENERAL.
  (5) If the commissioner considers it necessary for the proper adminis-
tration of the sales and use taxes and prepaid  taxes  imposed  by  this
article  and  pursuant  to  the authority of article twenty-nine of this
chapter, it may require every  person  under  this  section  or  section
twelve  hundred  fifty-three  of this chapter who holds a certificate of
authority to file a new certificate of registration in such form and  at
such  time  as  the  commissioner  may  prescribe  and to surrender such
certificate of authority. The commissioner may require such  filing  and
such  surrender  not more often than once every three years; HOWEVER, IN
ANY INSTANCE WHERE A HOLDER OF A CERTIFICATE OF AUTHORITY HAS FAILED  TO
FILE  A  SALES TAX RETURN AS REQUIRED BY THIS CHAPTER FOR A PERIOD OF AT
LEAST ONE YEAR SUCH CERTIFICATE SHALL BE DEEMED EXPIRED AND THE  COMMIS-
SIONER  SHALL REQUIRE A NEW CERTIFICATE OF REGISTRATION PURSUANT TO THIS
SUBDIVISION. Upon the filing of such certificate of registration and, TO
THE EXTENT REQUIRED BY THE COMMISSIONER, the surrender of  such  certif-
icate  of  authority,  the commissioner shall issue, within such time as
the commissioner may prescribe, a new certificate of authority,  without

S. 2609--A                         74                         A. 3009--A

charge,  to  each registrant and a duplicate thereof for each additional
place of business of such registrant.
  S  4.  Subparagraph  (i)  of paragraph 3 of subdivision (a) of section
1145 of the tax law, as amended by section 48 of part K of chapter 61 of
the laws of 2011, is amended to read as follows:
  (i) Any person required to obtain a  certificate  of  authority  under
section  eleven hundred thirty-four of this part who, without possessing
a valid certificate of authority, (A) sells tangible  personal  property
or  services  subject  to  tax, receives amusement charges or operates a
hotel, (B) purchases or sells tangible personal property for resale, (C)
sells petroleum products, or (D) sells cigarettes shall, in addition  to
any other penalty imposed by this chapter, be subject to a penalty in an
amount  [not  exceeding]  OF  five hundred dollars [for the first] A day
FROM THE FIRST DAY on which such sales or purchases are made,  [plus  an
amount  not  exceeding  two  hundred  dollars for each subsequent day on
which such sales or purchases are made,]  not  to  exceed  [ten]  TWENTY
thousand  dollars  in  the  aggregate.  THE WILLFUL FAILURE TO OBTAIN OR
MAINTAIN A VALID CERTIFICATE OF AUTHORITY SHALL BE SUBJECT TO A  PENALTY
IN AN AMOUNT OF ONE THOUSAND DOLLARS A DAY FROM THE FIRST DAY SUCH SALES
OR  PURCHASES  ARE  MADE,  NOT  TO  EXCEED FIFTY THOUSAND DOLLARS IN THE
AGGREGATE, IN ADDITION TO THE PENALTIES IMPOSED BY  SUBDIVISION  (B)  OF
SECTION EIGHTEEN HUNDRED SEVENTEEN OF THIS ARTICLE, OR ANY OTHER PENALTY
IMPOSED  BY  THIS CHAPTER. FOR THE PURPOSES OF THIS SECTION, THE PENALTY
FOR THE WILLFUL FAILURE TO OBTAIN OR MAINTAIN  A  VALID  CERTIFICATE  OF
AUTHORITY  SHALL  BE  ALTERNATE  TO  THE  TWENTY THOUSAND DOLLAR PENALTY
DESCRIBED ABOVE, AND THE TERM "WILLFUL" SHALL HAVE THE SAME  MEANING  AS
"WILLFULLY"  AS  DEFINED  IN SUBDIVISION (C) OF SECTION EIGHTEEN HUNDRED
ONE OF THIS CHAPTER.
  S 5. Subparagraphs (ii), (iii) and (iv) of paragraph 3 of  subdivision
(a) of section 1145 of the tax law, as amended by chapter 65 of the laws
of 1985, are amended to read as follows:
  (ii) Any person who fails to surrender a certificate of authority when
a notice of revocation, EXPIRATION or suspension has become final shall,
in  addition to any other penalty imposed by this chapter, be subject to
a penalty in an amount not exceeding five hundred dollars [for the first
day of such failure, together with a penalty in an amount not  exceeding
two  hundred  dollars  for each subsequent] A day [of] FOR such failure,
not to exceed [ten] TWENTY thousand dollars in the aggregate.
  (iii) Any person described in paragraph one or two of subdivision  (a)
of  section eleven hundred thirty-four OF THIS PART who takes possession
of or pays for business assets under circumstances  requiring  notifica-
tion  by  such  person  to the [tax commission] COMMISSIONER pursuant to
subdivision (c) of section eleven hundred forty-one OF THIS PART without
having filed a certificate of registration pursuant  to  section  eleven
hundred thirty-four OF THIS PART shall, in addition to any other penalty
imposed  by  this  chapter,  be  subject  to  a penalty in an amount not
exceeding two [hundred] THOUSAND dollars.
  (iv) If the [tax commission] COMMISSIONER determines that any  failure
or  act  described in this paragraph was due to reasonable cause and not
due to willful neglect, [it] HE OR SHE may remit all  or  part  of  such
penalty. PROVIDED, HOWEVER, THIS CLAUSE SHALL NOT APPLY TO A PENALTY FOR
THE WILLFUL FAILURE TO OBTAIN A CERTIFICATE OF AUTHORITY.
  S 6. Paragraph 4 of subdivision (a) of section 1145 of the tax law, as
amended  by  chapter  65  of  the  laws  of  1985, is amended to read as
follows:

S. 2609--A                         75                         A. 3009--A

  (4) Any person required by this article to display  a  certificate  of
authority,  who fails to display such certificate in the manner required
by this article or any rule or regulation adopted by  the  [tax  commis-
sion]  COMMISSIONER  in connection with such requirement shall, in addi-
tion  to  any  other  penalty  imposed  by this chapter, be subject to a
penalty of [fifty] ONE HUNDRED dollars. If the [tax commission]  COMMIS-
SIONER determines that such failure was due to reasonable cause [and not
due  to  willful  neglect], [it] HE OR SHE may remit all or part of such
penalty.
  S 7. Subdivision (g) of section 1146 of the tax law, as added by chap-
ter 577 of the laws of 1997, is amended to read as follows:
  (g) (1) Notwithstanding the provisions  of  subdivision  (a)  of  this
section,  if  the  commissioner  determines  that  a  person required to
collect tax is liable for any tax, penalty or interest under this  arti-
cle  or  is liable for a penalty under subdivision (e) of section eleven
hundred forty-five of this [article] PART with respect to  any  failure,
upon  request in writing of such person, the commissioner shall disclose
in writing to such person  [(1)]  (I)  the  name  of  any  other  person
required  to  collect  tax  or  any other person liable for such penalty
under such subdivision (e) whom the commissioner has  determined  to  be
liable  for  the  same tax, penalty or interest or for such penalty with
respect to such failure, and [(2)] (II)  whether  the  commissioner  has
attempted  to collect such tax, penalty or interest or such penalty from
such other person, the general nature of such collection activities, and
the amount collected.
  (2) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER TO THE CONTRARY, FOR
THE PURPOSES OF SUBPARAGRAPH (B) OF PARAGRAPH FOUR OF SUBDIVISION (A) OF
SECTION ELEVEN HUNDRED THIRTY-FOUR OF THIS  PART,  IF  THE  COMMISSIONER
DETERMINES  THAT ANY TAX IMPOSED UNDER THIS CHAPTER OR ANY RELATED STAT-
UTE, AS DEFINED IN SECTION EIGHTEEN HUNDRED OF THIS  CHAPTER,  HAS  BEEN
FINALLY  DETERMINED  TO BE DUE FROM A PERSON REQUIRED TO COLLECT TAX AND
HAS NOT BEEN PAID, UPON WRITTEN REQUEST OF  THE  PERSON  WHO  FILED  THE
CERTIFICATE  OF  REGISTRATION  FOR  A  CERTIFICATE OF AUTHORITY THAT WAS
REFUSED, THE COMMISSIONER MAY DISCLOSE TO SUCH PERSON THE  NAME  OF  THE
PERSON OR PERSONS REQUIRED TO COLLECT TAX WHOSE TAX LIABILITY OR LIABIL-
ITIES WERE GROUNDS FOR THE REFUSAL TO ISSUE THE CERTIFICATE OF AUTHORITY
AND THE AMOUNT OR AMOUNTS OF TAX DUE FOR EACH SUCH PERSON OR PERSONS.
  S  8.  Subdivisions  (a)  and  (b)  of section 1817 of the tax law, as
amended by section 53 of part K of chapter 61 of the laws of  2011,  are
amended to read as follows:
  (a)  Any  person  required  to obtain a certificate of authority under
section eleven hundred thirty-four of this chapter who, without possess-
ing a valid certificate of authority, OR  POSSESSING  A  CERTIFICATE  OF
AUTHORITY  THAT WAS DEEMED TO HAVE EXPIRED PURSUANT TO PARAGRAPH FIVE OF
SUBDIVISION (A) OF SECTION ELEVEN HUNDRED THIRTY-FOUR  OF  THIS  CHAPTER
willfully  (1)  sells  tangible personal property or services subject to
tax, receives amusement charges or operates a hotel,  (2)  purchases  or
sells  tangible  personal  property  for  resale, or (3) sells petroleum
products; and any person who fails to surrender a certificate of author-
ity as required by such article shall be guilty of [a misdemeanor] CRIM-
INAL TAX FRAUD IN THE FIFTH DEGREE.
  (b) Any person required to obtain a  certificate  of  authority  under
section eleven hundred thirty-four of this chapter who within five years
after a determination by the commissioner[,] pursuant to such section[,]
to  suspend,  revoke  or  refuse to issue a certificate of authority has
become final, OR WAS NOTIFIED BY  THE  COMMISSIONER  THAT  THE  PERSON'S

S. 2609--A                         76                         A. 3009--A

CERTIFICATE  OF  AUTHORITY  WAS DEEMED TO HAVE EXPIRED PURSUANT TO PARA-
GRAPH FIVE OF SUBDIVISION (A) OF SECTION ELEVEN HUNDRED  THIRTY-FOUR  OF
THIS CHAPTER, and without possession of a valid certificate of authority
WILLFULLY  (1)  sells  tangible personal property or services subject to
tax, receives amusement charges or operates a hotel,  (2)  purchases  or
sells  tangible  personal  property  for  resale, or (3) sells petroleum
products, shall be guilty of [a misdemeanor] CRIMINAL TAX FRAUD  IN  THE
FOURTH  DEGREE.    It  shall  be an affirmative defense that such person
performed the acts described in this subdivision  without  knowledge  of
such determination. Any person who violates a provision of this subdivi-
sion,  upon conviction, shall be subject to a fine in any amount author-
ized by this article, but not less than five hundred dollars,  in  addi-
tion to any other penalty provided by law.
  S  9. This act shall take effect immediately, provided that the amend-
ments to subparagraph (A) of paragraph 4 of subdivision (a)  of  section
1134  of the tax law made by section one of this act shall be subject to
the expiration and reversion of such subparagraph pursuant to section 23
of part U of chapter 61 of the laws of 2011, as amended when  upon  such
date the provisions of section two of this act shall take effect.

                                 PART N

  Section 1. Subdivision 1 of section 480-a of the tax law is amended by
adding a new paragraph (f) to read as follows:
  (F)  WHEN A PERSON FILES AN APPLICATION FOR A CERTIFICATE OF REGISTRA-
TION UNDER THIS SECTION, AND IN CONSIDERING SUCH APPLICATION THE COMMIS-
SIONER ASCERTAINS THE EXISTENCE OF  ONE  OR  MORE  OF  THE  GROUNDS  FOR
REFUSAL OF A CERTIFICATE OF AUTHORITY IN CLAUSES (I), (II), (III), (IV),
AND  (V)  OF  SUBPARAGRAPH  (B)  OF PARAGRAPH FOUR OF SUBDIVISION (A) OF
SECTION ELEVEN HUNDRED THIRTY-FOUR OF THIS CHAPTER, THE COMMISSIONER MAY
REFUSE TO ISSUE  A  CERTIFICATE  OF  REGISTRATION.  NOTWITHSTANDING  ANY
PROVISION  OF  THIS CHAPTER TO THE CONTRARY, IF THE COMMISSIONER REFUSES
TO ISSUE A CERTIFICATE  OF  REGISTRATION  UNDER  THIS  SUBDIVISION,  THE
COMMISSIONER SHALL UPON WRITTEN REQUEST OF THE PERSON FILING SUCH APPLI-
CATION  DISCLOSE THE NAME OF THE PERSON OR PERSONS WHOSE TAX LIABILITIES
WERE GROUNDS FOR THE REFUSAL TO ISSUE THE CERTIFICATE OF REGISTRATION.
  S 2.  Paragraph (d) of subdivision 2 of section 480-a of the tax  law,
as  amended  by  chapter  760 of the laws of 1992, is amended to read as
follows:
  (d) Except as otherwise provided in this section, all  the  provisions
of article twenty-eight of this chapter relating to the personal liabil-
ity  for  the  tax, administration, collection and determination of tax,
and deposit and disposition of revenue, including section eleven hundred
thirty-eight of this  chapter  relating  to  determination  of  tax  and
section  eleven  hundred forty-five of this chapter (but only paragraphs
one and two of subdivision (a) of such section)  relating  to  penalties
and  interest  for  failure  to file a return or pay tax within the time
required, shall apply to the applications for registration and the  fees
for  filing  such  applications required by this section and the penalty
imposed pursuant to subdivision three of this section, as if such appli-
cations were returns required under section eleven hundred thirty-six of
this chapter and such filing fees, penalties  and  interest  were  taxes
required  to  be paid pursuant to such article twenty-eight, in the same
manner and with the same force and effect as if  the  language  of  such
provisions  of  such  article twenty-eight had been incorporated in full
into this article, except to the  extent  that  any  such  provision  is

S. 2609--A                         77                         A. 3009--A

either  inconsistent with a provision of this section or is not relevant
thereto and with such other modifications as may be necessary  to  adapt
the  language  of  such  provisions  to  the provisions of this section.
[Section]  EXCEPT AS PROVIDED FOR IN PARAGRAPH (F) OF SUBDIVISION ONE OF
THIS SECTION, SECTION eleven hundred thirty-four of such  article  twen-
ty-eight  shall  not  apply to this section. Provided, however, that the
commissioner of taxation and finance shall refund or credit an  applica-
tion fee paid with respect to the registration of a vending machine or a
retail  place  of  business  in  this  state through which cigarettes or
tobacco products were to be sold if,  prior  to  the  beginning  of  the
calendar  year  with  respect  to  which  such registration relates, the
certificate of registration described in paragraph (a) of this  subdivi-
sion  is  returned to the department of taxation and finance, or if such
certificate has been destroyed, the retail  dealer  or  vending  machine
operator  satisfactorily  accounts  to  the commissioner for the missing
certificate, but such vending machine or retail place  of  business  may
not  be used to sell cigarettes or tobacco products in this state during
such calendar year,  unless  it  is  re-registered.  The  provisions  of
section  eleven  hundred  thirty-nine of this chapter shall apply to the
refund or credit authorized by  the  preceding  sentence  and  for  such
purposes,  such refund or credit shall be deemed a refund of tax paid in
error provided, however, no interest shall be allowed  or  paid  on  any
such refund.
  S 3. This act shall take effect immediately and shall apply to certif-
icates  of  registration  applications  filed for calendar year 2014 and
thereafter.

                                 PART O

  Section 1. Subparagraph (i) of  paragraph  (b)  of  subdivision  1  of
section  481  of  the  tax law, as amended by chapter 604 of the laws of
2008, is amended to read as follows:
  (i) In addition to any other penalty  imposed  by  this  article,  the
commissioner may (A) impose a penalty of not more than [one] SIX hundred
[fifty] dollars for each two hundred cigarettes, or fraction thereof, in
excess  of  one  thousand  cigarettes in unstamped or unlawfully stamped
packages in the possession or under the control of  any  person  or  (B)
impose a penalty of not more than two hundred dollars for each ten unaf-
fixed  false,  altered  or counterfeit cigarette tax stamps, imprints or
impressions, or fraction thereof, in the possession or under the control
of any person. In addition, the commissioner may impose a penalty of not
more than seventy-five dollars for each fifty cigars  or  one  pound  of
tobacco,  or  fraction thereof, in excess of two hundred fifty cigars or
five pounds of tobacco in the possession or under  the  control  of  any
person and a penalty of not more than one hundred fifty dollars for each
fifty cigars or pound of tobacco, or fraction thereof, in excess of five
hundred  cigars  or ten pounds of tobacco in the possession or under the
control of any person, with respect to which the  tobacco  products  tax
has  not been paid or assumed by a distributor or tobacco products deal-
er; provided, however, that any such penalty imposed  shall  not  exceed
seven  thousand  five hundred dollars in the aggregate. The commissioner
may impose a penalty of not more  than  seventy-five  dollars  for  each
fifty  cigars or one pound of tobacco, or fraction thereof, in excess of
fifty cigars or one pound of tobacco in  the  possession  or  under  the
control  of  any tobacco products dealer or distributor appointed by the
commissioner, and a penalty of not more than one hundred  fifty  dollars

S. 2609--A                         78                         A. 3009--A

for  each  fifty  cigars  or  pound  of tobacco, or fraction thereof, in
excess of two hundred fifty cigars or five  pounds  of  tobacco  in  the
possession  or under the control of any such dealer or distributor, with
respect  to  which the tobacco products tax has not been paid or assumed
by a distributor or a tobacco products dealer; provided,  however,  that
any  such  penalty  imposed shall not exceed fifteen thousand dollars in
the aggregate.
  S 2. This act shall take effect June 1, 2013.

                                 PART P

  Section 1. The tax law is amended by adding a  new  section  171-v  to
read as follows:
  S 171-V. ENFORCEMENT OF DELINQUENT TAX LIABILITIES THROUGH THE SUSPEN-
SION OF DRIVERS' LICENSES. (1) THE COMMISSIONER SHALL ENTER INTO A WRIT-
TEN  AGREEMENT  WITH THE COMMISSIONER OF MOTOR VEHICLES, WHICH SHALL SET
FORTH THE PROCEDURES FOR THE TWO DEPARTMENTS TO COOPERATE IN  A  PROGRAM
TO IMPROVE TAX COLLECTION THROUGH THE SUSPENSION OF DRIVERS' LICENSES OF
TAXPAYERS  WITH  PAST-DUE  TAX  LIABILITIES EQUAL TO OR IN EXCESS OF TEN
THOUSAND DOLLARS.   FOR THE PURPOSES OF  THIS  SECTION,  THE  TERM  "TAX
LIABILITIES"  SHALL  MEAN ANY TAX, SURCHARGE, OR FEE ADMINISTERED BY THE
COMMISSIONER, OR ANY PENALTY OR INTEREST DUE ON THESE AMOUNTS OWED BY AN
INDIVIDUAL WITH A NEW YORK DRIVER'S LICENSE, THE TERM "DRIVER'S LICENSE"
MEANS ANY LICENSE ISSUED BY THE DEPARTMENT OF MOTOR VEHICLES, EXCEPT FOR
A COMMERCIAL DRIVER'S LICENSE AS DEFINED IN SECTION FIVE  HUNDRED  ONE-A
OF  THE VEHICLE AND TRAFFIC LAW, AND THE TERM "PAST-DUE TAX LIABILITIES"
MEANS ANY TAX LIABILITY OR LIABILITIES WHICH HAVE BECOME FIXED AND FINAL
SUCH THAT THE TAXPAYER NO LONGER HAS  ANY  RIGHT  TO  ADMINISTRATIVE  OR
JUDICIAL REVIEW.
  (2) THE AGREEMENT SHALL INCLUDE THE FOLLOWING PROVISIONS:
  (A)  THE  PROCEDURES  BY WHICH THE DEPARTMENT SHALL NOTIFY THE COMMIS-
SIONER OF MOTOR VEHICLES OF TAXPAYERS  WITH  PAST-DUE  TAX  LIABILITIES,
INCLUDING  THE  PROCEDURES BY WHICH THE DEPARTMENT AND THE DEPARTMENT OF
MOTOR VEHICLES SHALL SHARE THE INFORMATION NECESSARY TO  IDENTIFY  INDI-
VIDUALS  WITH PAST-DUE TAX LIABILITIES, WHICH SHALL INCLUDE A TAXPAYER'S
NAME, SOCIAL SECURITY NUMBER, AND ANY  OTHER  INFORMATION  NECESSARY  TO
ENSURE THE PROPER IDENTIFICATION OF THE TAXPAYER;
  (B)  THE PROCEDURES BY WHICH THE COMMISSIONER SHALL NOTIFY THE DEPART-
MENT OF MOTOR VEHICLES THAT A TAXPAYER HAS SATISFIED HIS OR HER PAST-DUE
TAX LIABILITIES, OR HAS ENTERED INTO AN INSTALLMENT PAYMENT AGREEMENT OR
HAS OTHERWISE MADE PAYMENT ARRANGEMENTS SATISFACTORY TO THE  COMMISSION-
ER,  SO  THAT  THE  SUSPENSION OF THE TAXPAYER'S DRIVER'S LICENSE MAY BE
LIFTED; AND
  (C) ANY OTHER MATTER THE DEPARTMENT AND THE DEPARTMENT OF MOTOR  VEHI-
CLES SHALL DEEM NECESSARY TO CARRY OUT THE PROVISIONS OF THIS SECTION.
  (3)  THE DEPARTMENT SHALL PROVIDE NOTICE TO THE TAXPAYER OF HIS OR HER
INCLUSION IN THE LICENSE SUSPENSION PROGRAM  NO  LATER  THAN  FORTY-FIVE
DAYS PRIOR TO THE DATE THE DEPARTMENT INTENDS TO INFORM THE COMMISSIONER
OF  MOTOR  VEHICLES OF THE TAXPAYER'S INCLUSION. HOWEVER, NO SUCH NOTICE
SHALL BE ISSUED TO A TAXPAYER WHOSE WAGES ARE  BEING  GARNISHED  BY  THE
DEPARTMENT FOR THE PAYMENT OF PAST-DUE TAX LIABILITIES OR PAST-DUE CHILD
SUPPORT  OR COMBINED CHILD AND SPOUSAL SUPPORT ARREARS.  NOTICE SHALL BE
PROVIDED BY FIRST CLASS MAIL TO THE TAXPAYER'S  LAST  KNOWN  ADDRESS  AS
SUCH ADDRESS APPEARS IN THE ELECTRONIC SYSTEMS OR RECORDS OF THE DEPART-
MENT. SUCH NOTICE SHALL INCLUDE:

S. 2609--A                         79                         A. 3009--A

  (A)  A  CLEAR  STATEMENT  OF THE PAST-DUE TAX LIABILITIES ALONG WITH A
STATEMENT THAT THE DEPARTMENT SHALL PROVIDE TO THE DEPARTMENT  OF  MOTOR
VEHICLES THE TAXPAYER'S NAME, SOCIAL SECURITY NUMBER AND ANY OTHER IDEN-
TIFYING  INFORMATION  NECESSARY FOR THE PURPOSE OF SUSPENDING HIS OR HER
DRIVER'S  LICENSE  PURSUANT  TO  THIS  SECTION AND SUBDIVISION FOUR-F OF
SECTION FIVE HUNDRED TEN OF THE VEHICLE AND TRAFFIC LAW FORTY-FIVE  DAYS
AFTER THE MAILING OR SENDING OF SUCH NOTICE TO THE TAXPAYER;
  (B)  A  STATEMENT THAT THE TAXPAYER MAY AVOID SUSPENSION OF HIS OR HER
LICENSE BY FULLY SATISFYING THE PAST-DUE TAX LIABILITIES  OR  BY  MAKING
PAYMENT  ARRANGEMENTS  SATISFACTORY TO THE COMMISSIONER, AND INFORMATION
AS TO HOW THE TAXPAYER CAN PAY  THE  PAST-DUE  TAX  LIABILITIES  TO  THE
DEPARTMENT,  ENTER  INTO  A  PAYMENT  ARRANGEMENT  OR REQUEST ADDITIONAL
INFORMATION;
  (C) A STATEMENT THAT THE TAXPAYER'S RIGHT TO  PROTEST  THE  NOTICE  IS
LIMITED TO RAISING ISSUES SET FORTH IN SUBDIVISION FIVE OF THIS SECTION;
  (D) A STATEMENT THAT THE SUSPENSION OF THE TAXPAYER'S DRIVER'S LICENSE
SHALL  CONTINUE UNTIL THE PAST-DUE TAX LIABILITIES ARE FULLY PAID OR THE
TAXPAYER MAKES PAYMENT ARRANGEMENTS SATISFACTORY  TO  THE  COMMISSIONER;
AND
  (E) ANY OTHER INFORMATION THAT THE COMMISSIONER DEEMS NECESSARY.
  (4) AFTER THE EXPIRATION OF THE FORTY-FIVE DAY PERIOD, IF THE TAXPAYER
HAS  NOT  CHALLENGED  THE  NOTICE  PURSUANT  TO SUBDIVISION FIVE OF THIS
SECTION AND THE TAXPAYER HAS FAILED TO SATISFY THE PAST-DUE TAX  LIABIL-
ITIES OR MAKE PAYMENT ARRANGEMENTS SATISFACTORY TO THE COMMISSIONER, THE
DEPARTMENT  SHALL NOTIFY THE DEPARTMENT OF MOTOR VEHICLES, IN THE MANNER
AGREED UPON BY THE TWO AGENCIES, THAT THE  TAXPAYER'S  DRIVER'S  LICENSE
SHALL  BE  SUSPENDED  PURSUANT  TO  SUBDIVISION  FOUR-F  OF SECTION FIVE
HUNDRED TEN OF THE VEHICLE AND TRAFFIC LAW; PROVIDED,  HOWEVER,  IN  ANY
CASE  WHERE  A  TAXPAYER  FAILS  TO  COMPLY  WITH THE TERMS OF A CURRENT
PAYMENT ARRANGEMENT MORE THAN ONCE WITHIN A  TWELVE  MONTH  PERIOD,  THE
COMMISSIONER  SHALL  IMMEDIATELY NOTIFY THE DEPARTMENT OF MOTOR VEHICLES
THAT THE TAXPAYER'S DRIVER'S LICENSE SHALL BE SUSPENDED.
  (5) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, AND EXCEPT AS  SPECIF-
ICALLY  PROVIDED  HEREIN, THE TAXPAYER SHALL HAVE NO RIGHT TO COMMENCE A
COURT ACTION OR PROCEEDING OR TO ANY OTHER LEGAL  RECOURSE  AGAINST  THE
DEPARTMENT OR THE DEPARTMENT OF MOTOR VEHICLES REGARDING A NOTICE ISSUED
BY  THE  DEPARTMENT  PURSUANT  TO  THIS  SECTION AND THE REFERRAL BY THE
DEPARTMENT OF ANY TAXPAYER WITH PAST-DUE TAX LIABILITIES TO THE  DEPART-
MENT  OF  MOTOR  VEHICLES  PURSUANT  TO  THIS SECTION FOR THE PURPOSE OF
SUSPENDING THE TAXPAYER'S DRIVER'S LICENSE. A TAXPAYER  MAY  ONLY  CHAL-
LENGE SUCH SUSPENSION OR REFERRAL ON THE GROUNDS THAT (I) THE INDIVIDUAL
TO  WHOM  THE NOTICE WAS PROVIDED IS NOT THE TAXPAYER AT ISSUE; (II) THE
PAST-DUE TAX LIABILITIES WERE SATISFIED; (III) THE TAXPAYER'S WAGES  ARE
BEING  GARNISHED  BY  THE DEPARTMENT FOR THE PAYMENT OF THE PAST-DUE TAX
LIABILITIES AT ISSUE OR FOR PAST-DUE CHILD SUPPORT OR COMBINED CHILD AND
SPOUSAL SUPPORT ARREARS; (IV) THE TAXPAYER'S WAGES ARE  BEING  GARNISHED
FOR  THE PAYMENT OF PAST-DUE CHILD SUPPORT OR COMBINED CHILD AND SPOUSAL
SUPPORT ARREARS PURSUANT TO  AN  INCOME  EXECUTION  ISSUED  PURSUANT  TO
SECTION  FIVE  THOUSAND  TWO HUNDRED FORTY-ONE OF THE CIVIL PRACTICE LAW
AND RULES; (V) THE TAXPAYER'S DRIVER'S LICENSE IS A COMMERCIAL  DRIVER'S
LICENSE  AS  DEFINED  IN  SECTION  FIVE HUNDRED ONE-A OF THE VEHICLE AND
TRAFFIC LAW; OR (VI) THE DEPARTMENT INCORRECTLY FOUND THAT THE  TAXPAYER
HAS  FAILED  TO COMPLY WITH THE TERMS OF A PAYMENT ARRANGEMENT MADE WITH
THE COMMISSIONER MORE THAN ONCE WITHIN A TWELVE  MONTH  PERIOD  FOR  THE
PURPOSES OF SUBDIVISION THREE OF THIS SECTION.

S. 2609--A                         80                         A. 3009--A

  HOWEVER,  NOTHING  IN THIS SUBDIVISION IS INTENDED TO LIMIT A TAXPAYER
FROM SEEKING RELIEF FROM JOINT AND SEVERAL LIABILITY PURSUANT TO SECTION
SIX HUNDRED FIFTY-FOUR OF THIS CHAPTER, TO THE EXTENT THAT HE OR SHE  IS
ELIGIBLE PURSUANT TO THAT SUBDIVISION, OR ESTABLISHING TO THE DEPARTMENT
THAT  THE  ENFORCEMENT OF THE UNDERLYING TAX LIABILITIES HAS BEEN STAYED
BY THE FILING OF A PETITION PURSUANT TO  THE  BANKRUPTCY  CODE  OF  1978
(TITLE ELEVEN OF THE UNITED STATES CODE).
  (6) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER TO THE CONTRARY, THE
DEPARTMENT MAY DISCLOSE TO THE DEPARTMENT OF MOTOR VEHICLES THE INFORMA-
TION  DESCRIBED  IN  THIS SECTION THAT, IN THE DISCRETION OF THE COMMIS-
SIONER, IS  NECESSARY  FOR  THE  PROPER  IDENTIFICATION  OF  A  TAXPAYER
REFERRED TO THE DEPARTMENT OF MOTOR VEHICLES FOR THE PURPOSE OF SUSPEND-
ING  THE TAXPAYER'S DRIVER'S LICENSE PURSUANT TO THIS SECTION AND SUBDI-
VISION FOUR-F OF SECTION FIVE HUNDRED TEN OF  THE  VEHICLE  AND  TRAFFIC
LAW.  THE  DEPARTMENT OF MOTOR VEHICLES MAY NOT REDISCLOSE THIS INFORMA-
TION TO ANY OTHER ENTITY OR  PERSON,  OTHER  THAN  FOR  THE  PURPOSE  OF
INFORMING  THE  TAXPAYER  THAT  HIS  OR  HER  DRIVER'S  LICENSE HAS BEEN
SUSPENDED.
  (7) EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION,  THE  ACTIVITIES  TO
COLLECT  PAST-DUE  TAX LIABILITIES UNDERTAKEN BY THE DEPARTMENT PURSUANT
TO THIS SECTION SHALL NOT IN ANY  WAY  LIMIT,  RESTRICT  OR  IMPAIR  THE
DEPARTMENT FROM EXERCISING ANY OTHER AUTHORITY TO COLLECT OR ENFORCE TAX
LIABILITIES UNDER ANY OTHER APPLICABLE PROVISION OF LAW.
  S 2. Section 510 of the vehicle and traffic law is amended by adding a
new subdivision 4-f to read as follows:
  4-F.  SUSPENSION  FOR FAILURE TO PAY PAST-DUE TAX LIABILITIES. (1) THE
COMMISSIONER SHALL ENTER INTO A WRITTEN AGREEMENT WITH THE  COMMISSIONER
OF   TAXATION   AND   FINANCE,   AS  PROVIDED  IN  SECTION  ONE  HUNDRED
SEVENTY-ONE-V OF THE TAX LAW, WHICH SHALL SET FORTH THE  PROCEDURES  FOR
SUSPENDING  THE  DRIVERS'  LICENSES  OF  INDIVIDUALS  WHO HAVE FAILED TO
SATISFY PAST-DUE TAX LIABILITIES AS  SUCH  TERMS  ARE  DEFINED  IN  SUCH
SECTION.
  (2)  UPON  RECEIPT OF NOTIFICATION FROM THE DEPARTMENT OF TAXATION AND
FINANCE THAT AN INDIVIDUAL HAS FAILED TO SATISFY  PAST-DUE  TAX  LIABIL-
ITIES,  OR  TO  OTHERWISE  MAKE PAYMENT ARRANGEMENTS SATISFACTORY TO THE
COMMISSIONER OF TAXATION AND FINANCE, OR HAS FAILED TO COMPLY  WITH  THE
TERMS  OF SUCH PAYMENT ARRANGEMENTS MORE THAN ONCE WITHIN A TWELVE MONTH
PERIOD, THE COMMISSIONER OR HIS OR HER AGENT SHALL SUSPEND  THE  LICENSE
OF  SUCH  PERSON TO OPERATE A MOTOR VEHICLE. IN THE EVENT SUCH PERSON IS
UNLICENSED, SUCH PERSON'S PRIVILEGE OF  OBTAINING  A  LICENSE  SHALL  BE
SUSPENDED.  SUCH SUSPENSION SHALL TAKE EFFECT NO LATER THAN FIFTEEN DAYS
FROM THE DATE OF THE NOTICE THEREOF PROVIDED TO THE PERSON WHOSE LICENSE
OR PRIVILEGE OF OBTAINING A LICENSE IS TO BE SUSPENDED, AND SHALL REMAIN
IN EFFECT UNTIL SUCH TIME AS THE COMMISSIONER IS ADVISED THAT THE PERSON
HAS SATISFIED HIS OR HER PAST-DUE TAX LIABILITIES, OR HAS OTHERWISE MADE
PAYMENT ARRANGEMENTS SATISFACTORY TO THE COMMISSIONER  OF  TAXATION  AND
FINANCE.
  (3)  FROM  THE  TIME THE COMMISSIONER IS NOTIFIED BY THE DEPARTMENT OF
TAXATION AND FINANCE UNDER  THIS  SECTION,  THE  COMMISSIONER  SHALL  BE
RELIEVED  FROM  ALL  LIABILITY  TO SUCH PERSON WHICH MAY OTHERWISE ARISE
UNDER THIS SECTION, AND SUCH PERSON SHALL HAVE NO RIGHT  TO  COMMENCE  A
COURT  ACTION  OR  PROCEEDING OR TO ANY OTHER LEGAL RECOURSE AGAINST THE
COMMISSIONER TO RECOVER SUCH DRIVING PRIVILEGES AS  AUTHORIZED  BY  THIS
SECTION.  IN  ADDITION, NOTWITHSTANDING ANY OTHER PROVISION OF LAW, SUCH
PERSON SHALL HAVE NO RIGHT TO A HEARING OR APPEAL PURSUANT TO THIS CHAP-

S. 2609--A                         81                         A. 3009--A

TER WITH RESPECT TO A SUSPENSION OF DRIVING PRIVILEGES AS AUTHORIZED  BY
THIS SECTION.
  (4)  NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, THE DEPART-
MENT SHALL FURNISH THE DEPARTMENT  OF  TAXATION  AND  FINANCE  WITH  THE
INFORMATION  NECESSARY  FOR  THE  PROPER IDENTIFICATION OF AN INDIVIDUAL
REFERRED TO THE DEPARTMENT FOR THE PURPOSE OF DRIVER'S  LICENSE  SUSPEN-
SION  PURSUANT  TO THIS SECTION AND SECTION ONE HUNDRED SEVENTY-ONE-V OF
THE TAX LAW. THIS SHALL INCLUDE THE INDIVIDUAL'S NAME,  SOCIAL  SECURITY
NUMBER  AND  ANY  OTHER  INFORMATION  THE COMMISSIONER OF MOTOR VEHICLES
DEEMS NECESSARY.
  (5) ANY PERSON WHOSE DRIVER'S LICENSE IS SUSPENDED PURSUANT  TO  PARA-
GRAPH TWO OF THIS SUBDIVISION MAY APPLY FOR THE ISSUANCE OF A RESTRICTED
USE LICENSE AS PROVIDED IN SECTION FIVE HUNDRED THIRTY OF THIS TITLE.
  S  3.  Subdivision 7 of section 511 of the vehicle and traffic law, as
added by chapter 81 of the laws of 1995, is amended to read as follows:
  7. Exceptions. When a person is convicted of a violation  of  subdivi-
sion  one  [of]  OR  two  of this section, and the suspension was issued
pursuant to (A) subdivision four-e of section five hundred ten  of  this
article  due  to a support arrears, OR (B) SUBDIVISION FOUR-F OF SECTION
FIVE HUNDRED TEN OF THE ARTICLE DUE TO  PAST-DUE  TAX  LIABILITIES,  the
mandatory  penalties set forth in subdivision one or two of this section
shall not be applicable if, on or before the return date  or  subsequent
adjourned  date, such person presents proof that such support arrears OR
PAST-DUE TAX LIABILITIES have  been  satisfied  as  shown  by  certified
check,  notice  issued  by  the court ordering the suspension, or notice
from a support collection unit OR DEPARTMENT OF TAXATION AND FINANCE  AS
APPLICABLE.  The sentencing court shall take the satisfaction of arrears
OR THE PAYMENT OF THE PAST-DUE TAX LIABILITIES into account when  impos-
ing  a sentence for any such conviction. FOR LICENSES SUSPENDED FOR NON-
PAYMENT OF PAST-DUE TAX LIABILITIES, THE  COURT  SHALL  ALSO  TAKE  INTO
CONSIDERATION  PROOF,  IN  THE  FORM  OF A NOTICE FROM THE DEPARTMENT OF
TAXATION AND FINANCE, THAT SUCH PERSON  HAS  MADE  PAYMENT  ARRANGEMENTS
THAT ARE SATISFACTORY TO THE COMMISSIONER OF TAXATION AND FINANCE.
  S 4. Section 530 of the vehicle and traffic law is amended by adding a
new subdivision 5-b to read as follows:
  (5-B)  ISSUANCE  OF  A  RESTRICTED  LICENSE SHALL NOT BE DENIED TO ANY
PERSON WHOSE LICENSE IS SUSPENDED  PURSUANT  TO  SUBDIVISION  FOUR-F  OF
SECTION  FIVE  HUNDRED  TEN OF THIS TITLE FOR ANY REASON OTHER THAN SUCH
PERSON'S FAILURE  TO  OTHERWISE  HAVE  A  VALID  OR  RENEWABLE  DRIVER'S
LICENSE. THE RESTRICTIONS ON THE TYPES OF VEHICLES WHICH MAY BE OPERATED
WITH  A  RESTRICTED  LICENSE  CONTAINED IN SUCH SUBDIVISION FIVE OF THIS
SECTION SHALL NOT BE APPLICABLE TO A  RESTRICTED  LICENSE  ISSUED  TO  A
PERSON  PURSUANT  TO  SUBDIVISION  FOUR-F OF SECTION FIVE HUNDRED TEN OF
THIS TITLE. THE ISSUANCE OF A RESTRICTED LICENSE ISSUED AS A RESULT OF A
SUSPENSION UNDER SUBDIVISION FOUR-F OF SECTION FIVE HUNDRED TEN OF  THIS
TITLE  SHALL  NOT  IN  ANY  WAY  AFFECT  A  PERSON'S  ELIGIBILITY  FOR A
RESTRICTED LICENSE AT SOME FUTURE TIME.
  S 5. Section 2335-a of the insurance law, as added by chapter  152  of
the laws of 1998, is amended to read as follows:
  S  2335-a. Prohibition of rate increases for persons involved in emer-
gency use of vehicles OR DUE TO A DRIVER'S LICENSE SUSPENSION FOR  PAST-
DUE TAX LIABILITIES.
  (A)  No insurer authorized to transact or transacting business in this
state, or controlling or controlled by or under  common  control  by  or
with  an  insurer authorized to transact or transacting business in this
state, [which] THAT sells a policy  providing  motor  vehicle  liability

S. 2609--A                         82                         A. 3009--A

insurance  coverage  in this state, shall increase the policy premium in
connection with the insurance permitted  or  required  by  this  chapter
solely  because the insured or any other person who customarily operates
an  automobile covered by the policy has had an accident while operating
a motor vehicle in response to  an  emergency,  where  the  insured  was
either responding to a call to duty as a paid or volunteer member of any
police  or  fire department or first aid squad[;], or was performing any
other function on behalf of the state, any political subdivision  there-
of, a public authority, public benefit corporation, or any other govern-
mental agency or instrumentality in a public emergency.
  (B)  NO INSURER AUTHORIZED TO TRANSACT OR TRANSACTING BUSINESS IN THIS
STATE, OR CONTROLLING OR CONTROLLED BY OR UNDER  COMMON  CONTROL  BY  OR
WITH  AN  INSURER AUTHORIZED TO TRANSACT OR TRANSACTING BUSINESS IN THIS
STATE, THAT SELLS A POLICY PROVIDING MOTOR VEHICLE INSURANCE COVERAGE IN
THIS STATE SHALL INCREASE THE POLICY  PREMIUM  IN  CONNECTION  WITH  THE
INSURANCE  PERMITTED  OR  REQUIRED  BY  THIS  CHAPTER SOLELY BECAUSE THE
INSURED OR ANY OTHER  PERSON  WHO  CUSTOMARILY  OPERATES  AN  AUTOMOBILE
COVERED  BY  THE  POLICY  HAS  HAD HIS OR HER DRIVER'S LICENSE SUSPENDED
PURSUANT TO SUBDIVISION FOUR-F OF SECTION FIVE HUNDRED TEN OF THE  VEHI-
CLE  AND TRAFFIC LAW FOR PAST-DUE TAX LIABILITIES, AS DEFINED IN SECTION
ONE HUNDRED SEVENTY-ONE-V OF THE TAX LAW, OR HAS APPLIED FOR OR RECEIVED
A RESTRICTED USE LICENSE AS PROVIDED FOR BY SECTION FIVE HUNDRED  THIRTY
OF THE VEHICLE AND TRAFFIC LAW, AS THE RESULT OF SUCH SUSPENSION.
  S 6. The insurance law is amended by adding a new section 2616 to read
as follows:
  S  2616.  DISCRIMINATION  BECAUSE OF A DRIVER'S LICENSE SUSPENSION FOR
PAST-DUE TAX LIABILITIES. AN INDIVIDUAL OR ENTITY SHALL  NOT  REFUSE  TO
ISSUE  ANY  POLICY  OF  MOTOR VEHICLE INSURANCE, OR CANCEL OR DECLINE TO
RENEW SUCH POLICY, BECAUSE THE APPLICANT OR POLICY HOLDER HAS HAD HIS OR
HER DRIVER'S LICENSE SUSPENDED PURSUANT TO SUBDIVISION FOUR-F OF SECTION
FIVE HUNDRED TEN OF THE VEHICLE AND TRAFFIC LAW FOR PAST-DUE TAX LIABIL-
ITIES, AS DEFINED IN SECTION ONE HUNDRED SEVENTY-ONE-V OF THE  TAX  LAW,
OR HAS APPLIED FOR OR RECEIVED A RESTRICTED USE LICENSE, AS PROVIDED FOR
BY  SECTION  FIVE  HUNDRED THIRTY OF THE VEHICLE AND TRAFFIC LAW, AS THE
RESULT OF SUCH SUSPENSION.
  S 7. This act shall take effect immediately; provided,  however,  that
the department of taxation and finance and the department of motor vehi-
cles  shall have up to six months after this act shall have become a law
to execute the written agreement and implement the necessary  procedures
as described in sections one and two of this act.

                                 PART Q

  Section  1.  The  tax  law is amended by adding a new section 174-c to
read as follows:
  S 174-C. SERVICE OF INCOME EXECUTION WITHOUT FILING  A  WARRANT.    1.
NOTWITHSTANDING  ANY PROVISION OF LAW TO THE CONTRARY, IF ANY INDIVIDUAL
LIABLE FOR THE PAYMENT OF ANY TAX OR OTHER  IMPOSITION  ADMINISTERED  BY
THE COMMISSIONER, INCLUDING ANY ADDITIONS TO TAX, PENALTIES AND INTEREST
IN CONNECTION THEREWITH, FAILS TO PAY OR TO COLLECT OR PAY OVER THE SAME
WITHIN  TWENTY-ONE  CALENDAR  DAYS  AFTER  NOTICE AND DEMAND THEREFOR IS
GIVEN TO SUCH INDIVIDUAL (TEN BUSINESS DAYS IF THE AMOUNT FOR WHICH SUCH
NOTICE AND DEMAND  IS  MADE  EQUALS  OR  EXCEEDS  ONE  HUNDRED  THOUSAND
DOLLARS), THE COMMISSIONER IS AUTHORIZED TO SERVE AN INCOME EXECUTION ON
THE  INDIVIDUAL  OR ON THE PERSON FROM WHOM THE INDIVIDUAL IS RECEIVING,
OR WILL RECEIVE, MONEY, WITHOUT FILING A WARRANT IN THE  OFFICE  OF  THE

S. 2609--A                         83                         A. 3009--A

CLERK  OF  THE  APPROPRIATE  COUNTY  OR  IN  THE  DEPARTMENT OF STATE AS
PROVIDED FOR  IN  THIS  CHAPTER.  FOR  PURPOSES  OF  SERVING  AN  INCOME
EXECUTION PURSUANT TO THIS SECTION, THE COMMISSIONER SHALL, IN THE RIGHT
OF THE PEOPLE OF THE STATE OF NEW YORK, BE DEEMED TO HAVE OBTAINED JUDG-
MENT  AGAINST  THE  INDIVIDUAL  FOR THE TAX OR OTHER IMPOSITION, AND THE
ADDITIONS TO TAX, PENALTIES AND  INTEREST  IN  CONNECTION  THEREOF,  AND
THERE  SHALL BE A LIEN ON THE AMOUNT OF THE INDIVIDUAL'S INCOME THAT MAY
BE GARNISHED. IF THE COMMISSIONER CHOOSES TO SERVE AN  INCOME  EXECUTION
WITHOUT FILING A WARRANT PURSUANT TO THIS SECTION, THE COMMISSIONER MUST
SERVE  THE  INCOME  EXECUTION  WITHIN  SIX  YEARS AFTER THE FIRST DATE A
WARRANT COULD BE FILED PURSUANT TO SECTION ONE HUNDRED SEVENTY-FOUR-B OF
THIS ARTICLE. WHEN SERVING AN INCOME EXECUTION WITHOUT THE FILING  OF  A
WARRANT,  THE  COMMISSIONER  SHALL  FOLLOW  THE  PROCEDURES SET FORTH IN
SECTION FIVE THOUSAND TWO HUNDRED THIRTY-ONE OF THE CIVIL  PRACTICE  LAW
AND  RULES,  WITH THE REFERENCES IN SUCH SECTION TO "SHERIFF" TO BE READ
AS  REFERRING  TO  THE  COMMISSIONER  OR  THE  DEPARTMENT.  SUCH  INCOME
EXECUTION  SHALL CONTINUE TO BE IN EFFECT UNTIL SUCH LIABILITY IS SATIS-
FIED OR UNTIL TWENTY YEARS FROM THE FIRST DATE A WARRANT COULD BE  FILED
BY  THE  COMMISSIONER  PURSUANT TO SECTION ONE HUNDRED SEVENTY-FOUR-B OF
THIS ARTICLE, WHETHER OR NOT A WARRANT IS FILED FOR THAT LIABILITY.
  2. THE PROVISIONS OF THIS SECTION SHALL BE IN ADDITION TO  THE  PROCE-
DURES  RELATING TO COLLECTION OR ADMINISTRATION PROVIDED WITH RESPECT TO
ANY TAX OR OTHER IMPOSITION ADMINISTERED BY THE  COMMISSIONER.  WHERE  A
PROVISION  OF  THIS SECTION IS INCONSISTENT WITH ANY SUCH PROVISION WITH
RESPECT TO SUCH TAX OR OTHER IMPOSITION, THE PROVISIONS OF THIS  SECTION
WILL  APPLY. NOTHING IN THIS SECTION SHALL PREVENT THE COMMISSIONER FROM
TIMELY FILING A WARRANT IN ORDER TO PURSUE ANY OF THE COLLECTION METHODS
AUTHORIZED UNDER ARTICLE FIFTY-TWO OF THE CIVIL PRACTICE LAW AND RULES.
  S 2. This act shall take effect immediately.

                                 PART R

  Section 1. Subparagraph (i) of the opening paragraph of  section  1210
of  the  tax law is REPEALED and a new subparagraph (i) is added to read
as follows:
  (I) WITH RESPECT TO A CITY OF ONE MILLION OR MORE  AND  THE  FOLLOWING
COUNTIES (1) ANY SUCH CITY HAVING A POPULATION OF ONE MILLION OR MORE IS
HEREBY  AUTHORIZED  AND  EMPOWERED  TO ADOPT AND AMEND LOCAL LAWS, ORDI-
NANCES OR RESOLUTIONS IMPOSING SUCH TAXES IN ANY SUCH CITY, AT THE  RATE
OF FOUR AND ONE-HALF PERCENT;
  (2)  THE FOLLOWING COUNTIES THAT IMPOSE TAXES DESCRIBED IN SUBDIVISION
(A) OF THIS SECTION AT THE RATE OF THREE PERCENT AS AUTHORIZED ABOVE  IN
THIS  PARAGRAPH  FOR  SUCH  COUNTIES  ARE  HEREBY FURTHER AUTHORIZED AND
EMPOWERED TO ADOPT AND AMEND  LOCAL  LAWS,  ORDINANCES,  OR  RESOLUTIONS
IMPOSING  SUCH TAXES DESCRIBED IN SUBDIVISION (A) OF THIS SECTION AT THE
FOLLOWING ADDITIONAL RATES, IN QUARTER PERCENT INCREMENTS,  WHICH  RATES
ARE  ADDITIONAL TO THE THREE PERCENT RATE AUTHORIZED ABOVE IN THIS PARA-
GRAPH, AND, IN THE CASE OF A COUNTY AUTHORIZED TO IMPOSE MORE  THAN  ONE
ADDITIONAL  RATE,  ALSO IN ADDITION TO EACH OTHER, FOR EACH SUCH COUNTY,
PROVIDED THAT (A) THE COUNTY OF ROCKLAND MAY IMPOSE ADDITIONAL RATES  OF
FIVE-EIGHTHS PERCENT AND THREE-EIGHTHS PERCENT, IN LIEU OF IMPOSING SUCH
ADDITIONAL RATE IN QUARTER PERCENT INCREMENTS; (B) THE COUNTY OF ONTARIO
MAY  IMPOSE  ADDITIONAL  RATES  OF  ONE-EIGHTH PERCENT AND THREE-EIGHTHS
PERCENT, IN LIEU OF IMPOSING SUCH ADDITIONAL  RATE  IN  QUARTER  PERCENT
INCREMENTS; (C) THREE-QUARTERS PERCENT OF THE ADDITIONAL RATE AUTHORIZED

S. 2609--A                         84                         A. 3009--A

TO BE IMPOSED BY THE COUNTY OF NASSAU SHALL BE SUBJECT TO THE LIMITATION
SET FORTH IN SECTION TWELVE HUNDRED SIXTY-TWO-E OF THIS ARTICLE:
  (A) ONE-QUARTER OF ONE PERCENT - NONE.
  (B) ONE-HALF OF ONE PERCENT - CHAUTAUQUA, ONTARIO, SCHENECTADY.
  (C) THREE-QUARTERS OF ONE PERCENT - DUTCHESS, ESSEX, JEFFERSON, LEWIS,
ORANGE.
  (D)  ONE  PERCENT  -  ALBANY,  BROOME,  CATTARAUGUS,  CAYUGA, CHEMUNG,
CHENANGO, CLINTON, COLUMBIA, CORTLAND, DELAWARE, FRANKLIN, FULTON, GENE-
SEE, GREENE, LIVINGSTON, MADISON, MONROE, MONTGOMERY, NIAGARA, ONONDAGA,
ORLEANS,  OSWEGO,  OTSEGO,  PUTNAM,  RENSSELAER,  ROCKLAND,   SCHOHARIE,
SCHUYLER,  SENECA,  STEUBEN, SUFFOLK, SULLIVAN, TIOGA, TOMPKINS, ULSTER,
WAYNE, WYOMING, YATES.
  (E) ONE AND ONE-QUARTER PERCENT - HERKIMER, NASSAU.
  (F) ONE AND ONE-HALF PERCENT - ALLEGANY.
  (G) ONE AND THREE-QUARTERS PERCENT - ERIE, ONEIDA.
  S 2. Subparagraph (ii) of the opening paragraph of section 1210 of the
tax law is REPEALED and a new subparagraph (ii)  is  added  to  read  as
follows:
   (II)  THE FOLLOWING CITIES THAT IMPOSE TAXES DESCRIBED IN SUBDIVISION
(A) OF THIS SECTION AT THE RATE OF ONE AND ONE-HALF PERCENT OR HIGHER AS
AUTHORIZED ABOVE IN THIS PARAGRAPH FOR SUCH CITIES  ARE  HEREBY  FURTHER
AUTHORIZED  AND  EMPOWERED TO ADOPT AND AMEND LOCAL LAWS, ORDINANCES, OR
RESOLUTIONS IMPOSING SUCH TAXES DESCRIBED IN  SUBDIVISION  (A)  OF  THIS
SECTION  AT  THE  FOLLOWING  ADDITIONAL RATES, IN QUARTER PERCENT INCRE-
MENTS, WHICH RATES ARE ADDITIONAL TO THE ONE  AND  ONE-HALF  PERCENT  OR
HIGHER  RATES  AUTHORIZED  ABOVE IN THIS PARAGRAPH AND, IN THE CASE OF A
CITY AUTHORIZED TO IMPOSE MORE THAN ONE ADDITIONAL RATE, ALSO  IN  ADDI-
TION TO EACH OTHER, FOR EACH SUCH CITY:
  (1) ONE-QUARTER OF ONE PERCENT - NONE.
  (2) ONE-HALF OF ONE PERCENT - NONE.
  (3) THREE-QUARTERS OF ONE PERCENT - NONE.
  (4) ONE PERCENT - MOUNT VERNON; YONKERS; OSWEGO, FOR THE PERIOD BEGIN-
NING DECEMBER FIRST, TWO THOUSAND ELEVEN, AND ENDING NOVEMBER THIRTIETH,
TWO  THOUSAND  THIRTEEN;  NEW ROCHELLE, FOR THE PERIOD BEGINNING JANUARY
FIRST, TWO THOUSAND TWELVE, AND ENDING DECEMBER THIRTY-FIRST, TWO  THOU-
SAND  THIRTEEN;  WHITE PLAINS, FOR THE PERIOD BEGINNING SEPTEMBER FIRST,
TWO THOUSAND ELEVEN, AND ENDING AUGUST THIRTY-FIRST, TWO THOUSAND  THIR-
TEEN.
  (5) ONE AND ONE-QUARTER PERCENT - NONE.
  (6) ONE AND ONE-HALF PERCENT - NONE.
  (7) ONE AND THREE-QUARTERS PERCENT - NONE.
  S  3.  Subparagraph  (iii) of the opening paragraph of section 1210 of
the tax law is REPEALED and a new subparagraph (iii) is added to read as
follows:
  (III)  THE  MAXIMUM  RATE  REFERRED  TO  IN  SECTION  TWELVE   HUNDRED
TWENTY-FOUR OF THIS ARTICLE SHALL BE CALCULATED WITHOUT REFERENCE TO THE
ADDITIONAL  RATES  AUTHORIZED  FOR  COUNTIES, OTHER THAN THE COUNTIES OF
CAYUGA, CORTLAND, FULTON, MADISON, AND OTSEGO IN  SUBPARAGRAPH  (I)  AND
THE CITIES IN SUBPARAGRAPH (II) OF THIS PARAGRAPH.
  S  4.  Section 1210 of the tax law is amended by adding a new subdivi-
sion (q) to read as follows:
  (Q) NOTWITHSTANDING ANY PROVISION OF THIS SECTION OR ANY OTHER LAW,  A
COUNTY  MAY, BY A MAJORITY VOTE OF ITS GOVERNING BODY, PASS A LOCAL LAW,
ORDINANCE OR RESOLUTION TO IMPOSE THE ADDITIONAL RATE OR RATES  OF  SUCH
SALES  AND  COMPENSATING  USE TAXES AUTHORIZED BY CLAUSE TWO OF SUBPARA-
GRAPH (I) OF THE OPENING PARAGRAPH OF THIS SECTION FOR A PERIOD  NOT  TO

S. 2609--A                         85                         A. 3009--A

EXCEED  TWO  YEARS.   ANY SUCH LOCAL LAW, ORDINANCE, OR RESOLUTION SHALL
ALSO BE SUBJECT TO THE PROVISIONS OF SUBDIVISIONS (D) AND  (E)  OF  THIS
SECTION.
  S 5. Section 1210-E of the tax law is REPEALED.
  S  6.  Subdivisions  (d),  (e), (f), (g), (h) (i), (j), (k), (l), (m),
(n), (o), (p), (q), (r), (t), (u), (v), (w), (x), (y), (z), (z-1), (aa),
(bb), (cc), (dd), (ee), (ff) and (gg) of section 1224 of the tax law are
REPEALED.
  S 7. Section 1224 of the tax law is amended by adding four new  subdi-
visions (d),(e), (f), and (g) to read as follows:
  (D)  FOR  PURPOSES  OF THIS SECTION, THE TERM "PRIOR RIGHT" SHALL MEAN
THE PREFERENTIAL RIGHT TO IMPOSE ANY TAX DESCRIBED  IN  SECTIONS  TWELVE
HUNDRED  TWO  AND TWELVE HUNDRED THREE, OR TWELVE HUNDRED TEN AND TWELVE
HUNDRED ELEVEN, OF THIS ARTICLE AND THEREBY TO PREEMPT SUCH TAX  AND  TO
PRECLUDE  ANOTHER  MUNICIPAL CORPORATION FROM IMPOSING OR CONTINUING THE
IMPOSITION OF SUCH TAX TO THE  EXTENT  THAT  SUCH  RIGHT  IS  EXERCISED.
HOWEVER, THE RIGHT OF PREEMPTION SHALL ONLY APPLY WITHIN THE TERRITORIAL
LIMITS OF THE TAXING JURISDICTION HAVING THE RIGHT OR PREEMPTION.
  (E)  EACH  OF  THE  FOLLOWING  COUNTIES AND CITIES SHALL HAVE THE SOLE
RIGHT TO IMPOSE THE FOLLOWING ADDITIONAL RATE OF SALES AND  COMPENSATING
USE TAXES IN EXCESS OF THREE PERCENT THAT SUCH COUNTY OR CITY IS AUTHOR-
IZED  TO  IMPOSE PURSUANT TO THE AUTHORITY OF SUBDIVISION (A) OF SECTION
TWELVE HUNDRED TEN OF THIS ARTICLE. SUCH ADDITIONAL RATES OF  TAX  SHALL
NOT BE SUBJECT TO PREEMPTION.
  (1) COUNTIES:
  (A) ONE-QUARTER OF ONE PERCENT - NONE.
  (B) ONE-HALF OF ONE PERCENT - CHAUTAUQUA, ONTARIO, SCHENECTADY.
  (C) THREE-QUARTERS OF ONE PERCENT - DUTCHESS, ESSEX, JEFFERSON, LEWIS,
ORANGE.
  (D)  ONE  PERCENT  -  ALBANY,  BROOME, CATTARAUGUS, CHEMUNG, CHENANGO,
CLINTON, COLUMBIA,  DELAWARE,  FRANKLIN,  GENESEE,  GREENE,  LIVINGSTON,
MONROE,  MONTGOMERY, NIAGARA, ONONDAGA, ORLEANS, OTSEGO, PUTNAM, RENSSE-
LAER, ROCKLAND, SCHOHARIE, SCHUYLER, SENECA, STEUBEN, SUFFOLK, SULLIVAN,
TIOGA, TOMPKINS, ULSTER, WAYNE, WYOMING, YATES.
  (E) ONE AND ONE-QUARTER PERCENT - HERKIMER, NASSAU.
  (F) ONE AND ONE-HALF PERCENT - ALLEGANY.
  (G) ONE AND THREE-QUARTERS PERCENT - ERIE, ONEIDA.
  (2) CITIES:
  (A) ONE-QUARTER OF ONE PERCENT - NONE.
  (B) ONE-HALF OF ONE PERCENT - NONE.
  (C) THREE-QUARTERS OF ONE PERCENT - NONE.
  (D) ONE PERCENT - MOUNT VERNON, NEW ROCHELLE, WHITE PLAINS, YONKERS.
  (F) EACH OF THE FOLLOWING CITIES IS AUTHORIZED TO  PREEMPT  THE  TAXES
IMPOSED  BY  THE COUNTY IN WHICH IT IS LOCATED PURSUANT TO THE AUTHORITY
OF SUBDIVISION (A) OF SECTION TWELVE HUNDRED TEN OF THIS ARTICLE, TO THE
EXTENT OF ONE-HALF THE MAXIMUM AGGREGATE RATE AUTHORIZED  UNDER  SECTION
TWELVE  HUNDRED  TEN OF THIS ARTICLE, INCLUDING THE ADDITIONAL RATE THAT
THE COUNTY IN WHICH SUCH  CITY  IS  LOCATED  IS  AUTHORIZED  TO  IMPOSE:
AUBURN, IN CAYUGA COUNTY; CORTLAND, IN CORTLAND COUNTY; GLOVERSVILLE AND
JOHNSTOWN,  IN  FULTON  COUNTY;  ONEIDA,  IN MADISON COUNTY; ONEONTA, IN
OTSEGO COUNTY. AS OF THE DATE THIS SUBDIVISION TAKES  EFFECT,  ANY  SUCH
PREEMPTION  BY SUCH A CITY IN EFFECT ON SUCH DATE SHALL CONTINUE IN FULL
FORCE AND EFFECT UNTIL THE EFFECTIVE DATE OF A LOCAL LAW, ORDINANCE,  OR
RESOLUTION  ADOPTED  OR  AMENDED  BY THE CITY TO CHANGE SUCH PREEMPTION,
PROVIDED SUCH A CITY'S RATE OF TAX IN EXCESS OF ONE AND ONE-HALF PERCENT
SHALL NOT CONTINUE IN EFFECT IF THE COUNTY IN WHICH IT IS  LOCATED  DOES

S. 2609--A                         86                         A. 3009--A

NOT  EXTEND  ITS  ADDITIONAL  RATE  IN  EXCESS  OF  THREE PERCENT.   ANY
PREEMPTION BY SUCH A CITY TO TAKE EFFECT UNDER  THIS  SUBDIVISION  AFTER
THE  DATE  THIS  SUBDIVISION TAKES EFFECT SHALL BE SUBJECT TO THE NOTICE
REQUIREMENTS  IN SECTION TWELVE HUNDRED TWENTY-THREE OF THIS SUBPART AND
TO THE OTHER REQUIREMENTS OF THIS ARTICLE.
  (G) NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION OR  OTHER
LAW,  IF THE COUNTY OF DUTCHESS WITHDRAWS FROM THE METROPOLITAN COMMUTER
TRANSPORTATION DISTRICT AND IMPOSES THE ADDITIONAL THREE-EIGHTHS PERCENT
RATE OF TAX, THE NET COLLECTIONS FROM WHICH THE COUNTY HAS SET ASIDE FOR
MASS TRANSPORTATION PURPOSES, AS AUTHORIZED BY SUBPARAGRAPH (IV) OF  THE
OPENING  PARAGRAPH  OF  SECTION TWELVE HUNDRED TEN OF THIS ARTICLE, SUCH
ADDITIONAL THREE-EIGHTHS PERCENT RATE OF TAX SHALL BE IN ADDITION TO ANY
OTHER ADDITIONAL RATE OF TAX SUCH COUNTY IS  AUTHORIZED  TO  IMPOSE  AND
SHALL  NOT  BE  SUBJECT  TO PREEMPTION AND SUCH COUNTY SHALL NOT INCLUDE
SUCH ADDITIONAL THREE-EIGHTHS PERCENT RATE OF  TAX  IN  DETERMINING  ITS
ADDITIONAL RATE OF TAX ON THE AREA OF THE COUNTY OUTSIDE ANY CITY IN THE
COUNTY  IMPOSING  TAX  FOR PURPOSES OF SUBDIVISION (D) OF SECTION TWELVE
HUNDRED SIXTY-TWO OF THIS ARTICLE.
  S 8. The tax law is amended  by  adding  three  new  sections  1262-t,
1262-u, and 1262-v to read as follows:
  S  1262-T.  ONEIDA COUNTY NET COLLECTIONS FROM ADDITIONAL RATE OF TAX.
NET COLLECTIONS FROM AN ADDITIONAL THREE-QUARTERS PERCENT RATE OF ONEIDA
COUNTY'S SALES AND  COMPENSATING  USE  TAXES  IMPOSED  PURSUANT  TO  THE
AUTHORITY  OF CLAUSE TWO OF SUBPARAGRAPH (I) OF THE OPENING PARAGRAPH OF
SECTION TWELVE HUNDRED TEN OF THIS ARTICLE SHALL NOT BE SUBJECT  TO  ANY
REVENUE DISTRIBUTION AGREEMENT ENTERED INTO BY THE COUNTY AND THE CITIES
IN  THE COUNTY UNDER SUBDIVISION (C) OF SECTION TWELVE HUNDRED SIXTY-TWO
OF THIS PART.
  S 1262-U. CLINTON COUNTY NET COLLECTIONS FROM ADDITIONAL RATE OF  TAX.
NET  COLLECTIONS  FROM ANY ADDITIONAL RATE OF SALES AND COMPENSATING USE
TAXES CLINTON COUNTY IMPOSES PURSUANT TO THE AUTHORITY OF CLAUSE TWO  OF
SUBPARAGRAPH  (I) OF THE OPENING PARAGRAPH OF SECTION TWELVE HUNDRED TEN
OF THIS ARTICLE SHALL BE PAID TO THE COUNTY AND  THE  COUNTY  SHALL  SET
ASIDE SUCH NET COLLECTIONS AND USE THEM SOLELY FOR COUNTY PURPOSES. SUCH
NET  COLLECTIONS SHALL NOT BE SUBJECT TO ANY REVENUE DISTRIBUTION AGREE-
MENT ENTERED INTO BY THE COUNTY AND THE CITY IN THE COUNTY UNDER  SUBDI-
VISION (C) OF SECTION TWELVE HUNDRED SIXTY-TWO OF THIS PART.
  S  1262-V. ONTARIO COUNTY NET COLLECTIONS FROM ADDITIONAL RATE OF TAX.
NOTWITHSTANDING ANY LAW TO THE CONTRARY, AFTER ONTARIO COUNTY  ALLOCATES
NET  COLLECTIONS  FROM  ITS ADDITIONAL ONE-EIGHTH OF ONE PERCENT RATE OF
SALES AND COMPENSATING USE TAXES PURSUANT TO THE  AUTHORITY  OF  SECTION
TWELVE HUNDRED SIXTY-TWO-R OF THIS PART, AS ADDED BY CHAPTER THIRTY-SEV-
EN  OF  THE  LAWS OF TWO THOUSAND SIX, NET COLLECTIONS FROM THE COUNTY'S
ADDITIONAL THREE-EIGHTHS OF ONE PERCENT RATE OF SUCH TAXES SHALL BE  SET
ASIDE  FOR  COUNTY  PURPOSES  AND  SHALL NOT BE SUBJECT TO ANY AGREEMENT
ENTERED INTO BY THE COUNTY AND THE CITIES IN THE COUNTY  UNDER  SUBDIVI-
SION  (C)  OF SECTION TWELVE HUNDRED SIXTY-TWO OR SECTION TWELVE HUNDRED
SIXTY-TWO-R OF THIS PART, AS ADDED BY CHAPTER THIRTY-SEVEN OF  THE  LAWS
OF TWO THOUSAND SIX.
  S  9.  Section 1262-s of the tax law, as amended by chapter 226 of the
laws of 2011, is amended to read as follows:
  S 1262-s. Disposition of net collections from the additional one-quar-
ter of one percent rate of sales and compensating use taxes in the coun-
ty of Herkimer. Notwithstanding any contrary provision of  law,  if  the
county  of  Herkimer  imposes  the additional one-quarter of one percent
rate of sales and compensating use  taxes  IN  EXCESS  OF  FOUR  PERCENT

S. 2609--A                         87                         A. 3009--A

authorized  by  [section  twelve hundred ten-E] THE OPENING PARAGRAPH OF
SECTION TWELVE HUNDRED TEN of this article [for all or  any  portion  of
the  period  beginning  December  first,  two  thousand seven and ending
November thirtieth, two thousand thirteen], the county shall use all net
collections  from such additional one-quarter of one percent rate to pay
the county's expenses for the construction  of  additional  correctional
facilities.  The net collections from [the] SUCH additional rate imposed
[pursuant to section twelve hundred  ten-E]  shall  be  deposited  in  a
special  fund  to  be created by such county separate and apart from any
other funds and accounts of  the  county.  Any  and  all  remaining  net
collections  from  such  additional  tax,  after  the  expenses  of such
construction are paid, shall be deposited by the county of  Herkimer  in
the general fund of such county for any county purpose.
  S  10.  The tax law is amended by adding a new section 1265 to read as
follows:
  S 1265. REFERENCES TO CERTAIN PROVISIONS AUTHORIZING ADDITIONAL  RATES
OR  TO  EXPIRATIONS OF A PERIOD. NOTWITHSTANDING ANY PROVISION OF LAW TO
THE CONTRARY: ANY REFERENCE IN ANY SECTION OF THIS CHAPTER OR OTHER LAW,
OR IN ANY LOCAL LAW, ORDINANCE, OR RESOLUTION ADOPTED  PURSUANT  TO  THE
AUTHORITY  OF THIS ARTICLE, OR IN ANY AGREEMENT ENTERED INTO BY A COUNTY
AND ALL THE CITIES IN THAT  COUNTY  UNDER  SUBDIVISION  (C)  OF  SECTION
TWELVE  HUNDRED  SIXTY-TWO  OF THIS PART, TO NET COLLECTIONS OR REVENUES
FROM A TAX IMPOSED BY A COUNTY OR CITY PURSUANT TO THE  AUTHORITY  OF  A
CLAUSE,  OR  TO  A SUBCLAUSE OF A CLAUSE, OF SUBPARAGRAPH (I) OR (II) OF
THE OPENING PARAGRAPH OF SECTION TWELVE  HUNDRED  TEN  OF  THIS  ARTICLE
REPEALED  BY  SECTION ONE OR TWO OF THE CHAPTER OF THE LAWS OF TWO THOU-
SAND THIRTEEN THAT ADDED THIS SECTION OR TO SECTION TWELVE HUNDRED TEN-E
OF THIS ARTICLE REPEALED BY SECTION FIVE OF SUCH CHAPTER OF THE LAWS  OF
TWO  THOUSAND  THIRTEEN  SHALL  BE  DEEMED  TO  BE  A  REFERENCE  TO NET
COLLECTIONS OR REVENUES FROM A TAX IMPOSED BY THAT COUNTY OR CITY PURSU-
ANT TO THE AUTHORITY OF  THE  EQUIVALENT  PROVISION  OF  CLAUSE  TWO  OF
SUBPARAGRAPH  (I)  OR  TO  SUBPARAGRAPH (II) OF THE OPENING PARAGRAPH OF
SUCH SECTION TWELVE HUNDRED TEN AS ADDED BY SUCH SECTION ONE OR  TWO  OF
SUCH CHAPTER OF THE LAWS OF TWO THOUSAND THIRTEEN.
  S  11. Severability. If any provision of this act shall for any reason
be finally adjudged by any court of competent jurisdiction to be  inval-
id,  such judgment shall not affect, impair, or invalidate the remainder
of this act, but shall be confined in its  operation  to  the  provision
directly  involved  in the controversy in which such judgment shall have
been rendered. It it hereby declared to be the intent of the legislature
that this act would have been enacted even if such invalid provision had
not been included in this act.
  S 12. This act shall take effect immediately.

                                 PART S

  Section 1. Paragraph 1 of subdivision a of section  1612  of  the  tax
law,  as amended by chapter 147 of the laws of 2010, subparagraph (A) as
amended by section 1 of part S of chapter 59 of the  laws  of  2012,  is
amended to read as follows:
  (1) sixty percent of the total amount for which tickets have been sold
for  [a  lawful lottery] THE QUICK DRAW game [introduced on or after the
effective date of this paragraph,] subject to [the following provisions:
  (A) such game shall be available only on premises occupied by licensed
lottery sales agents, subject to the following provisions:

S. 2609--A                         88                         A. 3009--A

  (i) if the licensee does not hold a license  issued  pursuant  to  the
alcoholic  beverage control law to sell alcoholic beverages for consump-
tion on the premises, then the  premises  must  have  a  minimum  square
footage greater than two thousand five hundred square feet;
  (ii)  notwithstanding  the  foregoing provisions, television equipment
that  automatically  displays  the  results  of  such  drawings  may  be
installed and used without regard to the square footage if such premises
are used as:
  (I) a commercial bowling establishment, or
  (II)  a facility authorized under the racing, pari-mutuel wagering and
breeding law to accept pari-mutuel wagers;
  (B) the] rules for the operation of such game [shall be] as prescribed
by regulations promulgated and adopted by the division[, provided howev-
er, that such rules shall provide that no person under the age of  twen-
ty-one  may  participate in such games on the premises of a licensee who
holds a license issued pursuant to the alcoholic beverage control law to
sell alcoholic beverages for consumption on the premises; and, provided,
further, that such regulations may be revised on an emergency basis  not
later than ninety days after the enactment of this paragraph in order to
conform such regulations to the requirements of this paragraph]; or
  S 2. This act shall take effect immediately.

                                 PART T

  Section  1. Clause (F) of subparagraph (ii) of paragraph 1 of subdivi-
sion b of section 1612 of the tax law, as amended by section 6 of part K
of chapter 57 of the laws of 2010, is amended to read as follows:
  (F) notwithstanding clauses (A), (B), (C), (D) and (E) of this subpar-
agraph, when a vendor track, is located in Sullivan  county  and  within
sixty  miles  from any gaming facility in a contiguous state such vendor
fee shall, for a period of [five] SIX years commencing April first,  two
thousand  eight,  be at a rate of forty-one percent of the total revenue
wagered at the vendor track after payout for  prizes  pursuant  to  this
chapter, after which time such rate shall be as for all tracks in clause
(C) of this subparagraph.
  S  2.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 2013.

                                 PART U

  Section 1. Paragraph (a) of subdivision  1  of  section  1003  of  the
racing,  pari-mutuel  wagering and breeding law, as amended by section 1
of part O of chapter 59 of the laws of  2012,  is  amended  to  read  as
follows:
  (a)  Any  racing  association  or  corporation  or  regional off-track
betting corporation, authorized to conduct  pari-mutuel  wagering  under
this  chapter, desiring to display the simulcast of horse races on which
pari-mutuel betting shall be permitted in the manner and subject to  the
conditions  provided  for  in  this article may apply to the board for a
license so to do. Applications for licenses shall be in such form as may
be prescribed by the board and shall contain such information  or  other
material  or  evidence  as  the  board  may require. No license shall be
issued by the board authorizing the simulcast transmission of  thorough-
bred  races  from  a  track  located in Suffolk county. The fee for such
licenses shall be five hundred dollars per simulcast facility  per  year
payable  by the licensee to the board for deposit into the general fund.

S. 2609--A                         89                         A. 3009--A

Except as provided herein, the board shall not approve  any  application
to  conduct  simulcasting  into individual or group residences, homes or
other areas for the purposes of or in connection with pari-mutuel wager-
ing.  The board may approve simulcasting into residences, homes or other
areas to be conducted jointly by one or more regional off-track  betting
corporations and one or more of the following: a franchised corporation,
thoroughbred racing corporation or a harness racing corporation or asso-
ciation;  provided  (i) the simulcasting consists only of those races on
which pari-mutuel betting is authorized by this chapter at one  or  more
simulcast  facilities  for  each  of  the  contracting off-track betting
corporations which shall include wagers made in accordance with  section
one thousand fifteen, one thousand sixteen and one thousand seventeen of
this  article;  provided  further  that the contract provisions or other
simulcast arrangements for such simulcast  facility  shall  be  no  less
favorable than those in effect on January first, two thousand five; (ii)
that  each  off-track  betting  corporation having within its geographic
boundaries such residences, homes or other areas technically capable  of
receiving  the  simulcast signal shall be a contracting party; (iii) the
distribution of revenues shall be subject to  contractual  agreement  of
the  parties  except that statutory payments to non-contracting parties,
if any, may not be reduced; provided, however, that  nothing  herein  to
the  contrary  shall  prevent  a  track  from televising its races on an
irregular basis primarily for promotional or marketing purposes as found
by the board. For purposes of this paragraph, the provisions of  section
one  thousand  thirteen  of  this article shall not apply. Any agreement
authorizing an in-home simulcasting experiment commencing prior  to  May
fifteenth,  nineteen  hundred  ninety-five,  may,  and all its terms, be
extended [until June thirtieth, two thousand thirteen]; provided, howev-
er, that any party to such agreement may elect to terminate such  agree-
ment  upon  conveying written notice to all other parties of such agree-
ment at least forty-five  days  prior  to  the  effective  date  of  the
termination,  via  registered  mail. Any party to an agreement receiving
such notice of an intent to terminate, may request the board to  mediate
between  the parties new terms and conditions in a replacement agreement
between the parties as will permit continuation of an in-home experiment
[until June thirtieth, two  thousand  thirteen];  and  (iv)  no  in-home
simulcasting  in  the  thoroughbred special betting district shall occur
without the approval of the regional thoroughbred track.
  S 2. Subparagraph (iii) of paragraph d of  subdivision  3  of  section
1007 of the racing, pari-mutuel wagering and breeding law, as amended by
section  2  of  part  O of chapter 59 of the laws of 2012, is amended to
read as follows:
  (iii) Of the sums retained by a receiving track located in Westchester
county on races received from a franchised corporation, for  the  period
commencing  January  first,  two  thousand eight [and continuing through
June thirtieth, two thousand thirteen], the amount used exclusively  for
purses to be awarded at races conducted by such receiving track shall be
computed  as  follows: of the sums so retained, two and one-half percent
of the total pools. Such amount shall be increased or decreased  in  the
amount  of  fifty  percent of the difference in total commissions deter-
mined by comparing the total commissions available  after  July  twenty-
first,  nineteen hundred ninety-five to the total commissions that would
have been available to such track prior to July  twenty-first,  nineteen
hundred ninety-five.
  S 3. Section 1014 of the racing, pari-mutuel wagering and breeding law
is REPEALED.

S. 2609--A                         90                         A. 3009--A

  S 4. Subdivision 1 of section 1015 of the racing, pari-mutuel wagering
and breeding law, as amended by section 4 of part O of chapter 59 of the
laws of 2012, is amended to read as follows:
  1.  The  provisions  of  this section shall govern the simulcasting of
races conducted at harness tracks located in another  state  or  country
during  the  period  COMMENCING July first, nineteen hundred ninety-four
[through June thirtieth, two  thousand  thirteen].  This  section  shall
supersede all inconsistent provisions of this chapter.
  S  5.  The  opening  paragraph of subdivision 1 of section 1016 of the
racing, pari-mutuel wagering and breeding law, as amended by  section  5
of  part  O  of  chapter  59  of the laws of 2012, is amended to read as
follows:
  The provisions of this section shall govern the simulcasting of  races
conducted  at thoroughbred tracks located in another state or country on
any day during which a franchised corporation is not conducting  a  race
meeting  in  Saratoga  county  at Saratoga thoroughbred racetrack [until
June thirtieth, two thousand thirteen]. Every off-track  betting  corpo-
ration branch office and every simulcasting facility licensed in accord-
ance  with  section  one thousand seven that have entered into a written
agreement with such facility's representative horsemen's organization as
approved by the board, one thousand eight or one thousand nine  of  this
article  shall be authorized to accept wagers and display the live full-
card simulcast signal of thoroughbred tracks (which may include  quarter
horse  or  mixed  meetings provided that all such wagering on such races
shall be construed to be thoroughbred races) located in another state or
foreign country, subject to the following provisions; provided, however,
no such written agreement shall be required of a franchised  corporation
licensed in accordance with section one thousand seven of this article:
  S  6. The opening paragraph of section 1018 of the racing, pari-mutuel
wagering and breeding law, as amended by section 6 of part O of  chapter
59 of the laws of 2012, is amended to read as follows:
  Notwithstanding  any  other  provision of this chapter, for the period
COMMENCING  July  twenty-fifth,  two  thousand  one  [through  September
eighth,  two thousand twelve], when a franchised corporation is conduct-
ing a race meeting within the state at Saratoga Race Course, every  off-
track  betting corporation branch office and every simulcasting facility
licensed in accordance with section one thousand seven (that has entered
into a written agreement with such facility's representative  horsemen's
organization  as approved by the board), one thousand eight or one thou-
sand nine of this article shall  be  authorized  to  accept  wagers  and
display  the  live  simulcast signal from thoroughbred tracks located in
another state, provided that such facility shall accept wagers on  races
run  at  all  in-state  thoroughbred  tracks which are conducting racing
programs subject to the following provisions; provided, however, no such
written agreement shall be required of a franchised corporation licensed
in accordance with section one thousand seven of this article.
  S 7. Section 32 of chapter 281 of  the  laws  of  1994,  amending  the
racing,  pari-mutuel  wagering and breeding law  and other laws relating
to simulcasting, as amended by section 7 of part O of chapter 59 of  the
laws of 2012, is amended to read as follows:
  S  32. This act shall take effect immediately [and the pari-mutuel tax
reductions in section six  of  this  act  shall  expire  and  be  deemed
repealed  on  July  1,  2013]; provided, however, that nothing contained
herein shall be deemed to affect the application, qualification, expira-
tion, or repeal of any provision of law amended by any section  of  this
act,  and  such provisions shall be applied or qualified or shall expire

S. 2609--A                         91                         A. 3009--A

or be deemed repealed in the same manner, to the same extent and on  the
same  date  as  the  case  may be as otherwise provided by law; provided
further, however, that sections twenty-three and twenty-five of this act
shall remain in full force and effect only until May 1, 1997 and at such
time shall be deemed to be repealed.
  S  8.  Section  54  of  chapter  346 of the laws of 1990, amending the
racing, pari-mutuel wagering and breeding law and other laws relating to
simulcasting and the imposition of certain taxes, as amended by  section
8  of  part  O  of chapter 59 of the laws of 2012, is amended to read as
follows:
  S 54. This act  shall  take  effect  immediately;  provided,  however,
sections  three  through twelve of this act shall take effect on January
1, 1991, and [section 1013  of  the  racing,  pari-mutuel  wagering  and
breeding law, as added by section thirty-eight of this act, shall expire
and  be  deemed  repealed on July 1, 2013; and] section eighteen of this
act shall take effect on July 1, 2008 and sections fifty-one and  fifty-
two  of this act shall take effect as of the same date as chapter 772 of
the laws of 1989 took effect.
  S 9. Paragraph (a) of subdivision 1 of  section  238  of  the  racing,
pari-mutuel wagering and breeding law, as amended by section 9 of part O
of chapter 59 of the laws of 2012, is amended to read as follows:
  (a)  The  franchised  corporation  authorized  under  this  chapter to
conduct pari-mutuel betting at a race meeting or races run thereat shall
distribute all sums deposited in any pari-mutuel pool to the holders  of
winning  tickets therein, provided such tickets be presented for payment
before April first of the year following the  year  of  their  purchase,
less  an  amount  which  shall be established and retained by such fran-
chised corporation of between twelve to  seventeen  per  centum  of  the
total  deposits in pools resulting from on-track regular bets, and four-
teen to twenty-one per centum of the total deposits in  pools  resulting
from on-track multiple bets and fifteen to twenty-five per centum of the
total  deposits in pools resulting from on-track exotic bets and fifteen
to thirty-six per centum of the total deposits in pools  resulting  from
on-track  super  exotic  bets, plus the breaks. The retention rate to be
established is subject to the prior approval of the racing and  wagering
board.  Such rate may not be changed more than once per calendar quarter
to be effective on the first day of the calendar quarter. "Exotic  bets"
and  "multiple  bets"  shall have the meanings set forth in section five
hundred nineteen of this chapter.  "Super exotic bets"  shall  have  the
meaning  set  forth  in  section  three hundred one of this chapter. For
purposes of this section, a "pick six bet" shall mean a  single  bet  or
wager on the outcomes of six races. The breaks are hereby defined as the
odd  cents over any multiple of five for payoffs greater than one dollar
five cents but less than five dollars, over  any  multiple  of  ten  for
payoffs  greater  than  five  dollars but less than twenty-five dollars,
over any multiple of twenty-five for payoffs  greater  than  twenty-five
dollars but less than two hundred fifty dollars, or over any multiple of
fifty  for  payoffs over two hundred fifty dollars. Out of the amount so
retained there shall be paid  by  such  franchised  corporation  to  the
commissioner  of  taxation and finance, as a reasonable tax by the state
for the privilege of conducting pari-mutuel betting on the races run  at
the  race  meetings  held  by such franchised corporation, the following
percentages of the total pool for regular and  multiple  bets  five  per
centum  of regular bets and four per centum of multiple bets plus twenty
per centum of the breaks; for  exotic  wagers  seven  and  one-half  per
centum  plus  twenty per centum of the breaks, and for super exotic bets

S. 2609--A                         92                         A. 3009--A

seven and one-half per centum plus fifty per centum of the  breaks.  For
the  period  June  first, nineteen hundred ninety-five through September
ninth, nineteen hundred ninety-nine, such tax on regular wagers shall be
three  per  centum and such tax on multiple wagers shall be two and one-
half per centum, plus twenty per centum of the breaks.  For  the  period
September  tenth,  nineteen  hundred  ninety-nine  through March thirty-
first, two thousand one, such tax on all wagers shall be  two  and  six-
tenths  per  centum and for the period COMMENCING April first, two thou-
sand one [through December thirty-first, two  thousand  thirteen],  such
tax  on all wagers shall be one and six-tenths per centum, plus, in each
such period, twenty per centum of the breaks. Payment to  the  New  York
state  thoroughbred  breeding  and  development  fund by such franchised
corporation shall be one-half of one per centum of total daily  on-track
pari-mutuel  pools  resulting from regular, multiple and exotic bets and
three per centum of super exotic bets provided, however,  that  for  the
period September tenth, nineteen hundred ninety-nine through March thir-
ty-first,  two thousand one, such payment shall be six-tenths of one per
centum of regular, multiple and exotic pools and for the period COMMENC-
ING April first, two thousand one [through  December  thirty-first,  two
thousand thirteen], such payment shall be seven-tenths of one per centum
of such pools.
  S  10. Subdivision 5 of section 1012 of the racing, pari-mutuel wager-
ing and breeding law is REPEALED.
  S 11. This act shall take effect immediately.

                                 PART V

  Section 1. Subparagraphs (A) and (B) of paragraph 2 of subsection (pp)
of section 606 of the tax law, as amended by chapter 472 of the laws  of
2010, are amended to read as follows:
  (A) With respect to any particular residence of a taxpayer, the credit
allowed  under  paragraph  one of this subsection shall not exceed fifty
thousand dollars for taxable years beginning on or after January  first,
two thousand ten and before January first, two thousand [fifteen] TWENTY
and twenty-five thousand dollars for taxable years beginning on or after
January  first, two thousand [fifteen] TWENTY.  In the case of a husband
and wife, the amount of the credit shall be divided between them equally
or in such other manner as they may both elect.  If  a  taxpayer  incurs
qualified rehabilitation expenditures in relation to more than one resi-
dence  in  the same year, the total amount of credit allowed under para-
graph one of this subsection for all such expenditures shall not  exceed
fifty  thousand  dollars for taxable years beginning on or after January
first, two thousand ten and before January first, two thousand [fifteen]
TWENTY and twenty-five thousand dollars for taxable years  beginning  on
or after January first, two thousand [fifteen] TWENTY.
  (B)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first, two thousand [fifteen] TWENTY, if the
amount of credit  allowable  under  this  subsection  shall  exceed  the
taxpayer's tax for such year, and the taxpayer's New York adjusted gross
income  for such year does not exceed sixty thousand dollars, the excess
shall be treated as an overpayment of tax to be credited or refunded  in
accordance with the provisions of section six hundred eighty-six of this
article,  provided,  however, that no interest shall be paid thereon. If
the taxpayer's New York adjusted gross  income  for  such  year  exceeds
sixty  thousand  dollars,  the excess credit that may be carried over to
the following year or years and may be deducted from the taxpayer's  tax

S. 2609--A                         93                         A. 3009--A

for  such year or years. For taxable years beginning on or after January
first, two thousand [fifteen] TWENTY, if the amount of credit  allowable
under this subsection shall exceed the taxpayer's tax for such year, the
excess  may  be  carried  over to the following year or years and may be
deducted from the taxpayer's tax for such year or years.
  S 2. This act shall take effect immediately.
  S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
sion, section or part of this act shall be  adjudged  by  any  court  of
competent  jurisdiction  to  be invalid, such judgment shall not affect,
impair, or invalidate the remainder thereof, but shall  be  confined  in
its  operation  to the clause, sentence, paragraph, subdivision, section
or part thereof directly involved in the controversy in which such judg-
ment shall have been rendered. It is hereby declared to be the intent of
the legislature that this act would  have  been  enacted  even  if  such
invalid provisions had not been included herein.
  S  3.  This  act shall take effect immediately provided, however, that
the applicable effective date of Parts A through V of this act shall  be
as specifically set forth in the last section of such Parts.

S2609B - Bill Details

See Assembly Version of this Bill:
A3009D
Law Section:
Budget Bills
Laws Affected:
Amd Various Laws, generally

S2609B - Bill Texts

view summary

Enacts into law major components of legislation necessary to implement the state fiscal plan for the 2013-2014 state fiscal year; relates to the temporary metropolitan transportation business tax surcharge; relates to the empire state film production credit and to the empire state film post production credit; relates to reports; establishes the New York business incubator and innovation hot spot support act; relates to extending for three years the charitable contributions deduction limitation; relates to the exclusion of certain royalty payments from the entire net income or other taxable basis of corporations, banking corporations, and insurance corporations, from the unrelated business income of corporations, and from the adjusted gross income of individual taxpayers; relates to the historic preservation tax credit; provides a tax credit for electric vehicle recharging property; relates to extending provisions relating to mandatory electronic filing of tax documents and improving sales tax compliance; relates to restrictions on funds of the industrial development agency and relates to industrial development agencies and authorities; relates to expanding the exemption of CNG in the sales tax to include natural gas purchased and used to produce CNG for use exclusively and directly in the engine of a motor vehicle; relates to allowing voluntary ambulance services, fire companies, fire departments and rescue squads to claim reimbursement of the petroleum business tax for fuel used in their vehicles; relates to increasing the penalty for the possession of unstamped and unlawfully stamped cigarettes; relates to the suspension of drivers' licenses of persons who are delinquent in the payment of past-due tax liabilities; relates to serving an income execution with respect to individual tax debtors without filing a warrant; relates to vendor fees paid to vendor tracks; relates to licenses for simulcasting facilities, sums relating to track simulcast, simulcast of out-of-state thoroughbred races, simulcasting of races run by out-of-state harness tracks and distributions of wagers; extends certain provisions of law; relates to the credit for the rehabilitation of historic homes; relates to allowing certain tax-free interdistributor sales of highway diesel motor fuel; relates to updating the farming exemption in the highway use tax to reflect current industry practice; relates to providing a subtraction from income for small businesses and small farms; relates to providing tax cuts to manufacturers; relates to adding a hire a vet credit; relates to extending the temporary state energy and utility conservation assessment; relates to a credit for middle income taxpayers with children; relates to the New York youth works tax credit program; relates to adding a minimum wage reimbursement credit; relates to personal income tax rates; relates to the gift for New York state teen health education fund; relates to establishing the New York state teen health education fund; relates to eligible businesses participating in the excelsior linked deposit program; relates to small business loan funds for business enterprises that are minority- and women-owned; and relates to establishing a New York state innovation capital fund.

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

    S. 2609--B                                            A. 3009--B

                      S E N A T E - A S S E M B L Y

                            January 22, 2013
                               ___________

IN  SENATE -- A BUDGET BILL, submitted by the Governor pursuant to arti-
  cle seven of the Constitution -- read twice and ordered  printed,  and
  when  printed to be committed to the Committee on Finance -- committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

IN  ASSEMBLY  --  A  BUDGET  BILL, submitted by the Governor pursuant to
  article seven of the Constitution -- read once  and  referred  to  the
  Committee  on  Ways  and  Means -- committee discharged, bill amended,
  ordered reprinted as amended and  recommitted  to  said  committee  --
  again  reported from said committee with amendments, ordered reprinted
  as amended and recommitted to said committee

AN ACT to amend the tax law, in relation to the  temporary  metropolitan
  transportation  business tax surcharge (Part A); to amend the tax law,
  in relation to the empire state film production credit and the  empire
  state film post production credit; and to amend part Y-1 of chapter 57
  of  the laws of 2009 amending the tax law relating to the empire state
  film production credit, in relation to reports (Part B); to amend  the
  economic  development  law, the tax law and the administrative code of
  the city of New York, in relation to establishing the New  York  inno-
  vation  hot spot program (Part C); to amend the tax law and the admin-
  istrative code of the city of New York, in relation to  extending  for
  three  years  the  charitable contributions deduction limitation (Part
  D); to amend the tax law and the administrative code of  the  city  of
  New  York,  in  relation  to the exclusion of certain royalty payments
  from the entire net income or other  taxable  basis  of  corporations,
  banking  corporations,  and insurance corporations, from the unrelated
  business income of corporations, and from the adjusted gross income of
  individual taxpayers; and to repeal certain provisions of the tax  law
  relating  thereto  (Part  E); to amend the tax law, in relation to the
  historic preservation tax credit (Part F); to amend the  tax  law,  in
  relation  to  providing  a  tax credit for electric vehicle recharging
  property (Part G); to amend chapter 61 of the laws  of  2011  amending
  the  real  property  tax  law  and other laws relating to establishing
  standards for electronic real property tax administration, in relation
  to making  permanent,  provisions  relating  to  mandatory  electronic

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD12574-03-3

S. 2609--B                          2                         A. 3009--B

  filing  of  tax  documents  and  improving sales tax compliance and to
  repeal certain provisions of the tax law and the  administrative  code
  of  the  city  of New York relating thereto (Part H); to amend the tax
  law,  in  relation to exempting sales made at a Taste-NY facility from
  sales and compensating use taxes; and to amend the alcoholic  beverage
  control  law,  in relation to allowing sales of all types of alcoholic
  beverages at a Taste-NY facility (Part I); to amend the general munic-
  ipal law and the public authorities law,  in  relation  to  industrial
  development  agencies  and authorities (Part J); to amend the tax law,
  in relation to expanding the exemption of CNG  in  the  sales  tax  to
  include  natural  gas purchased and used to produce CNG for use exclu-
  sively and directly in the engine of a  motor  vehicle  (Part  K);  to
  amend  the  tax  law,  in  relation  to  allowing  voluntary ambulance
  services, fire companies, fire departments and rescue squads to  claim
  reimbursement  of  the  petroleum  business tax for fuel used in their
  vehicles (Part L); to amend the tax law, in relation to the  power  of
  the  commissioner of taxation and finance to refuse to issue a certif-
  icate of authority to collect the sales and use taxes and the power of
  the commissioner of taxation and finance to revoke such a  certificate
  once  granted  and  penalties  related  to the operation of a business
  without such certificate (Part M); to amend the tax law,  in  relation
  to allowing the department of taxation and finance to refuse a certif-
  icate  of  registration  to  retail  dealers of cigarettes and tobacco
  products if such dealers have certain tax  liabilities  or  have  been
  convicted of a tax crime within one year of applying for or renewing a
  certificate  of  registration  (Part  N);  to  amend  the  tax law, in
  relation to increasing the penalty for the possession of unstamped and
  unlawfully stamped cigarettes (Part O); to  amend  the  tax  law,  the
  vehicle  and  traffic  law  and  the insurance law, in relation to the
  suspension of drivers' licenses of persons who are delinquent  in  the
  payment of past-due tax liabilities (Part P); to amend the tax law, in
  relation to serving an income execution with respect to individual tax
  debtors  without  filing  a warrant (Part Q); to amend the tax law, in
  relation to the authority of counties to impose sales and compensating
  use taxes pursuant to the authority of article 29 of such law; and  to
  repeal certain provisions of sections 1210 and 1224 and section 1210-E
  of  such  law  relating  thereto  (Part  R);  to amend the tax law, in
  relation to a keno style lottery game (Part S); to amend the tax  law,
  in  relation  to  vendor fees paid to vendor tracks (Part T); to amend
  the racing, pari-mutuel wagering and  breeding  law,  in  relation  to
  licenses  for  simulcast facilities, sums relating to track simulcast,
  simulcast of out-of-state thoroughbred races,  simulcasting  of  races
  run  by  out-of-state  harness  tracks and distributions of wagers; to
  amend chapter 281 of the laws of 1994, amending the racing, pari-mutu-
  el wagering and breeding law and other laws relating  to  simulcasting
  and  chapter 346 of the laws of 1990, amending the racing, pari-mutuel
  wagering and breeding law and other laws relating to simulcasting  and
  the  imposition  of  certain  taxes,  in  relation to making permanent
  certain provisions thereof; to amend the racing, pari-mutuel  wagering
  and  breeding  law, in relation to making permanent certain provisions
  thereof; and to repeal subdivision 5 of section 1012  of  the  racing,
  pari-mutuel  wagering  and breeding law relating to telephone accounts
  and telephone wagering and section 1014  of  the  racing,  pari-mutuel
  wagering  and  breeding  law  relating to simulcasting of out-of-state
  thoroughbred races (Part U); to amend the tax law, in relation to  the
  credit for the rehabilitation of historic homes (Part V); to amend the

S. 2609--B                          3                         A. 3009--B

  tax  law,  in  relation  to allowing certain tax-free interdistributor
  sales of highway diesel motor fuel (Part W); and to amend the tax law,
  in relation to updating the farming exemption in the highway  use  tax
  to reflect current industry practice (Part X)

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

  Section 1. This act enacts into law major  components  of  legislation
which are necessary to implement the state fiscal plan for the 2013-2014
state  fiscal  year.  Each  component  is wholly contained within a Part
identified as Parts A through X. The effective date for each  particular
provision contained within such Part is set forth in the last section of
such Part. Any provision in any section contained within a Part, includ-
ing the effective date of the Part, which makes a reference to a section
"of  this  act", when used in connection with that particular component,
shall be deemed to mean and refer to the corresponding  section  of  the
Part  in  which  it  is  found. Section three of this act sets forth the
general effective date of this act.

                                 PART A

  Section 1. Subdivision 1 of section 183-a of the tax law,  as  amended
by  section 1 of part II-1 of chapter 57 of the laws of 2008, is amended
to read as follows:
  1. The term "corporation" as used in this  section  shall  include  an
association,  within the meaning of paragraph three of subsection (a) of
section seventy-seven hundred one of the internal revenue code  (includ-
ing  a limited liability company), a publicly traded partnership treated
as a corporation for purposes of the internal revenue code  pursuant  to
section seventy-seven hundred four thereof and any business conducted by
a  trustee  or  trustees  wherein  interest or ownership is evidenced by
certificates or other written  instruments.  Every  corporation,  joint-
stock  company  or  association formed for or principally engaged in the
conduct of canal, steamboat, ferry (except  a  ferry  company  operating
between any of the boroughs of the city of New York under a lease grant-
ed  by  the  city),  express,  navigation,  pipe line, transfer, baggage
express, omnibus, taxicab, telegraph, or telephone business,  or  formed
for  or  principally  engaged  in  the conduct of two or more such busi-
nesses, and every corporation, joint-stock company or association formed
for or principally engaged in the conduct of  a  railroad,  palace  car,
sleeping  car  or trucking business or formed for or principally engaged
in the conduct of two or more of such businesses and which has  made  an
election pursuant to subdivision ten of section one hundred eighty-three
of  this  article,  and  every other corporation, joint-stock company or
association principally engaged in the conduct of  a  transportation  or
transmission  business,  except  a  corporation,  joint-stock company or
association formed for or principally engaged in the conduct of a  rail-
road,  palace  car,  sleeping  car or trucking business or formed for or
principally engaged in the conduct of two or more of such businesses and
which has not made the election  provided  for  in  subdivision  ten  of
section  one  hundred  eighty-three of this article, and except a corpo-
ration, joint-stock company or association principally  engaged  in  the
conduct  of aviation (including air freight forwarders acting as princi-
pal and like indirect air carriers) and except a corporation principally

S. 2609--B                          4                         A. 3009--B

engaged in providing telecommunication  services  between  aircraft  and
dispatcher,  aircraft  and  air  traffic  control  or ground station and
ground station (or any combination of the foregoing),  at  least  ninety
percent  of  the voting stock of which corporation is owned, directly or
indirectly, by air carriers and which corporation's  principal  function
is  to  fulfill  the  requirements  of (i) the federal aviation adminis-
tration (or the successor  thereto)  or  (ii)  the  international  civil
aviation organization (or the successor thereto), relating to the exist-
ence of a communication system between aircraft and dispatcher, aircraft
and  air  traffic  control  or ground station and ground station (or any
combination of the foregoing) for the purposes of air safety and naviga-
tion and except a corporation, joint-stock company or association  which
is  liable  to  taxation under article thirty-two of this chapter, shall
pay for the privilege of exercising its corporate franchise, or of doing
business, or of employing capital, or of owning or leasing  property  in
the  metropolitan  commuter transportation district in such corporate or
organized capacity, or of maintaining an office in such district, a  tax
surcharge  for all or any part of its years commencing on or after Janu-
ary first, nineteen hundred eighty-two but ending before December  thir-
ty-first,  two  thousand  [thirteen]  EIGHTEEN,  which tax surcharge, in
addition to the tax imposed by section one hundred eighty-three of  this
article,  shall  be  computed at the rate of eighteen percent of the tax
imposed under such section one hundred eighty-three for  such  years  or
any  part  of  such  years ending before December thirty-first, nineteen
hundred eighty-three after the deduction of any credits otherwise allow-
able under this article, and at the rate of seventeen percent of the tax
imposed under such section for such years or  any  part  of  such  years
ending  on or after December thirty-first, nineteen hundred eighty-three
after the deduction of any credits otherwise allowable under this  arti-
cle;  provided,  however,  that  such  rates  of  tax surcharge shall be
applied only to that portion  of  the  tax  imposed  under  section  one
hundred  eighty-three of this article after the deduction of any credits
otherwise allowable under this article  which  is  attributable  to  the
taxpayer's business activity carried on within the metropolitan commuter
transportation district as so determined in the manner prescribed by the
rules  and  regulations  promulgated  by the commissioner; and provided,
further, that the tax surcharge imposed by this  section  shall  not  be
imposed  upon  any taxpayer for more than [three] FOUR hundred [seventy-
two] THIRTY-TWO months.
  S 2. The opening paragraph of subdivision 1 of section  184-a  of  the
tax  law, as amended by section 2 of part II-1 of chapter 57 of the laws
of 2008, is amended to read as follows:
  The term "corporation" as used in this section shall include an  asso-
ciation,  within  the  meaning  of  paragraph three of subsection (a) of
section seventy-seven hundred one of the internal revenue code  (includ-
ing  a  limited  liability  company),  and a publicly traded partnership
treated as a corporation for  purposes  of  the  internal  revenue  code
pursuant  to  section  seventy-seven hundred four thereof.  Every corpo-
ration, joint-stock company or association  formed  for  or  principally
engaged in the conduct of canal, steamboat, ferry (except a ferry compa-
ny operating between any of the boroughs of the city of New York under a
lease  granted  by  the city), express, navigation, pipe line, transfer,
baggage express, omnibus, taxicab, telegraph or  local  telephone  busi-
ness, or formed for or principally engaged in the conduct of two or more
such  businesses,  and every corporation, joint-stock company or associ-
ation formed for or principally engaged in  the  conduct  of  a  surface

S. 2609--B                          5                         A. 3009--B

railroad,  whether  or  not operated by steam, subway railroad, elevated
railroad, palace car, sleeping car or trucking business  or  principally
engaged in the conduct of two or more such businesses and which has made
an  election  pursuant to subdivision ten of section one hundred eighty-
three of this article, and every other corporation, joint-stock  company
or  association  formed  for  or principally engaged in the conduct of a
transportation or transmission business (other than  a  telephone  busi-
ness)  except  a  corporation, joint-stock company or association formed
for or principally engaged in the conduct of a surface railroad, whether
or not operated by steam, subway  railroad,  elevated  railroad,  palace
car,  sleeping  car  or  trucking business or principally engaged in the
conduct of two or more such  businesses  and  which  has  not  made  the
election  provided for in subdivision ten of section one hundred eighty-
three of this article, and except a corporation, joint-stock company  or
association  principally  engaged  in the conduct of aviation (including
air freight forwarders acting as principal and like indirect air  carri-
ers)  and except a corporation principally engaged in providing telecom-
munication services between aircraft and dispatcher,  aircraft  and  air
traffic control or ground station and ground station (or any combination
of  the foregoing), at least ninety percent of the voting stock of which
corporation is owned, directly or indirectly, by air carriers and  which
corporation's  principal  function is to fulfill the requirements of (i)
the federal aviation administration (or the successor thereto)  or  (ii)
the  international  civil aviation organization (or the successor there-
to), relating  to  the  existence  of  a  communication  system  between
aircraft  and  dispatcher,  aircraft  and  air traffic control or ground
station and ground station (or any combination of the foregoing) for the
purposes of air safety and navigation and except a  corporation,  joint-
stock  company  or association which is liable to taxation under article
thirty-two of this chapter, shall pay for the  privilege  of  exercising
its  corporate franchise, or of doing business, or of employing capital,
or of owning or leasing property in the metropolitan commuter  transpor-
tation district in such corporate or organized capacity, or of maintain-
ing  an  office in such district, a tax surcharge for all or any part of
its taxable years commencing on or after January first, nineteen hundred
eighty-two, but ending before December thirty-first, two thousand [thir-
teen] EIGHTEEN, which tax surcharge, in addition to the tax  imposed  by
section  one  hundred  eighty-four of this article, shall be computed at
the rate of eighteen percent of the tax imposed under such  section  one
hundred  eighty-four  for such taxable years or any part of such taxable
years ending before December thirty-first, nineteen hundred eighty-three
after the deduction of any credits otherwise allowable under this  arti-
cle,  and at the rate of seventeen percent of the tax imposed under such
section for such taxable years or any part of such taxable years  ending
on  or  after December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise  allowable  under  this  article;
provided,  however,  that  such  rates of tax surcharge shall be applied
only to that portion of the tax imposed under section one hundred eight-
y-four of this article after the  deduction  of  any  credits  otherwise
allowable  under  this  article  which is attributable to the taxpayer's
business activity carried on within the metropolitan commuter  transpor-
tation  district;  and provided, further, that the tax surcharge imposed
by this section on corporations, joint-stock companies and  associations
formed  for  or principally engaged in the conduct of telephone or tele-
graph business shall be computed in accordance with this subdivision and
paragraph (c) of subdivision two of this section as if  the  three-quar-

S. 2609--B                          6                         A. 3009--B

ters  of  one  percent  rate  of  tax provided for in subdivision one of
section one hundred eighty-four of this article were applicable to  such
telephone  and  telegraph  businesses for taxable years commencing on or
after  January  first,  nineteen  hundred  eighty-five  and ending on or
before  December  thirty-first,  nineteen   hundred   eighty-nine;   and
provided,  further, that the tax surcharge imposed by this section shall
not be imposed upon any taxpayer for  more  than  [three]  FOUR  hundred
[seventy-two]  THIRTY-TWO  months.  Provided,  however, that for taxable
years beginning in two thousand and thereafter,  for  purposes  of  this
subdivision  the  tax  imposed  under section one hundred eighty-four of
this article shall be deemed to have been imposed at the rate of  three-
quarters  of  one  percent,  except  that  in the case of a corporation,
joint-stock company or association which has made an  election  pursuant
to  subdivision ten of section one hundred eighty-three of this article,
for purposes of this subdivision  the  tax  imposed  under  section  one
hundred eighty-four of this article shall be deemed to have been imposed
at the rate of six-tenths of one percent.
  S 3. Subparagraph 1 of paragraph (a) of subdivision 1 of section 186-c
of  the  tax  law, as amended by section 3 of part II-1 of chapter 57 of
the laws of 2008, is amended to read as follows:
  (1) Every utility doing business in the metropolitan  commuter  trans-
portation  district  shall  pay  a tax surcharge, in addition to the tax
imposed by section one hundred eighty-six-a of this article, for all  or
any  parts  of  its  taxable years commencing on or after January first,
nineteen hundred eighty-two but ending before December thirty-first, two
thousand [thirteen] EIGHTEEN, to be computed at  the  rate  of  eighteen
percent  of  the  tax  imposed under section one hundred eighty-six-a of
this article for such taxable years or any part of  such  taxable  years
ending before December thirty-first, nineteen hundred eighty-three after
the deduction of any credits otherwise allowable under this article, and
at  the  rate of seventeen percent of the tax imposed under such section
for such taxable years or any part of such taxable years  ending  on  or
after  December  thirty-first,  nineteen  hundred eighty-three after the
deduction of credits otherwise allowable under this article  except  any
utility  credit  provided  for  by  article  thirteen-A of this chapter;
provided, however, that such rates of tax  surcharge  shall  be  applied
only to that portion of the tax imposed under section one hundred eight-
y-six-a  of this article after the deduction of credits otherwise allow-
able under this article, except any utility credit provided for by arti-
cle thirteen-A of this chapter, which is attributable to the  taxpayer's
gross income or gross operating income from business activity carried on
within  the metropolitan commuter transportation district; and provided,
further, that the tax surcharge imposed by this  section  shall  not  be
imposed  upon  any taxpayer for more than [three] FOUR hundred [seventy-
two] THIRTY-TWO months.
  S 4. Subdivision 1 of section 209-B of the  tax  law,  as  amended  by
section  4 of part II-1 of chapter 57 of the laws of 2008, is amended to
read as follows:
  1. For the privilege of exercising  its  corporate  franchise,  or  of
doing business, or of employing capital, or of owning or leasing proper-
ty  in a corporate or organized capacity, or of maintaining an office in
the metropolitan commuter transportation district, for all or  any  part
of its taxable year, there is hereby imposed on every corporation, other
than  a New York S corporation, subject to tax under section two hundred
nine of this article, or any receiver,  referee,  trustee,  assignee  or
other  fiduciary,  or  any  officer or agent appointed by any court, who

S. 2609--B                          7                         A. 3009--B

conducts the business of any such corporation,  for  the  taxable  years
commencing  on  or  after January first, nineteen hundred eighty-two but
ending before December thirty-first, two thousand [thirteen] EIGHTEEN, a
tax  surcharge, in addition to the tax imposed under section two hundred
nine of this article, to be computed at the rate of eighteen percent  of
the  tax  imposed  under  such section two hundred nine for such taxable
years or any part of such taxable years ending before  December  thirty-
first,  nineteen hundred eighty-three after the deduction of any credits
otherwise allowable under this article, and at  the  rate  of  seventeen
percent  of the tax imposed under such section for such taxable years or
any part of such taxable years ending on or after December thirty-first,
nineteen hundred eighty-three after the deduction of any credits  other-
wise allowable under this article; provided, however, that such rates of
tax  surcharge  shall be applied only to that portion of the tax imposed
under section two hundred nine of this article after  the  deduction  of
any credits otherwise allowable under this article which is attributable
to  the  taxpayer's business activity carried on within the metropolitan
commuter transportation district; and provided, further,  that  the  tax
surcharge imposed by this section shall not be imposed upon any taxpayer
for  more  than  [three]  FOUR  hundred [seventy-two] THIRTY-TWO months.
Provided however, that for taxable years commencing  on  or  after  July
first, nineteen hundred ninety-eight, such surcharge shall be calculated
as if the tax imposed under section two hundred ten of this article were
imposed under the law in effect for taxable years commencing on or after
July  first,  nineteen hundred ninety-seven and before July first, nine-
teen hundred ninety-eight. Provided  however,  that  for  taxable  years
commencing on or after January first, two thousand seven, such surcharge
shall  be calculated using the highest of the tax bases imposed pursuant
to paragraphs (a), (b), (c) or (d) of subdivision  one  of  section  two
hundred  ten  of this article and the amount imposed under paragraph (e)
of subdivision one of such section two  hundred  ten,  for  the  taxable
year; and, provided further that, if such highest amount is the tax base
imposed  under  paragraph  (a), (b) or (c) of such subdivision, then the
surcharge shall be computed as if the tax rates  and  limitations  under
such  paragraph  were the tax rates and limitations under such paragraph
in effect for taxable years commencing on or after July first,  nineteen
hundred  ninety-seven  and  before  July first, nineteen hundred ninety-
eight.
  S 5. Subsection 1 of section 1455-B of the  tax  law,  as  amended  by
section  5 of part II-1 of chapter 57 of the laws of 2008, is amended to
read as follows:
  1. For the privilege of exercising its franchise or doing business  in
the  metropolitan  commuter  transportation  district  in a corporate or
organized capacity, there is hereby imposed on every taxpayer subject to
tax under this article, other than a New York  S  corporation,  for  the
taxable  years  commencing  on  or after January first, nineteen hundred
eighty-two but ending before December thirty-first, two thousand  [thir-
teen]  EIGHTEEN,  a  tax surcharge, in addition to the tax imposed under
section fourteen hundred fifty-one of this article, at the rate of eigh-
teen percent of the tax imposed  under  such  section  fourteen  hundred
fifty-one  of  this  article, for such taxable years or any part of such
taxable years ending  before  December  thirty-first,  nineteen  hundred
eighty-three  after  the  deduction  of  any credits otherwise allowable
under this article, and at the rate of  seventeen  percent  of  the  tax
imposed  under  such  section for such taxable years or any part of such
taxable years ending on or after December thirty-first, nineteen hundred

S. 2609--B                          8                         A. 3009--B

eighty-three after the deduction  of  any  credits  otherwise  allowable
under  this  article; provided however, that such rates of tax surcharge
shall be applied only to that portion of the tax imposed  under  section
fourteen  hundred  fifty-one  of this article after the deduction of any
credits otherwise allowable under this article which is attributable  to
the  taxpayer's  business  activity  carried  on within the metropolitan
commuter transportation district; and provided, further,  that  the  tax
surcharge imposed by this section shall not be imposed upon any taxpayer
for  more  than  [three]  FOUR  hundred [seventy-two] THIRTY-TWO months.
Provided however, that for taxable years commencing  on  or  after  July
first,  two  thousand, such surcharge shall be calculated as if the rate
of the basic tax computed  under  subsection  (a)  of  section  fourteen
hundred fifty-five of this article was nine percent.
  S  6.  Paragraphs  1 and 3 of subdivision (a) of section 1505-a of the
tax law, as amended by section 6 of part II-1 of chapter 57 of the  laws
of 2008, are amended to read as follows:
  (1)  Every  domestic  insurance corporation and every foreign or alien
insurance corporation, and every life insurance corporation described in
subdivision (b) of section fifteen hundred one of this article, for  the
privilege  of  exercising its corporate franchise, or of doing business,
or of employing capital, or of owning or leasing property in the  metro-
politan  commuter  transportation  district  in a corporate or organized
capacity, or of maintaining  an  office  in  the  metropolitan  commuter
transportation  district,  for  all  or  any  part  of its taxable years
commencing on or after January first, nineteen hundred  eighty-two,  but
ending  before  December thirty-first, two thousand [thirteen] EIGHTEEN,
except corporations specified in  subdivision  (c)  of  section  fifteen
hundred  twelve  of this article, shall annually pay, in addition to the
taxes otherwise imposed by this article, a tax surcharge  on  the  taxes
imposed  under this article after the deduction of any credits otherwise
allowable under this article as allocated to such district.  Such  taxes
shall  be  allocated to such district for purposes of computing such tax
surcharge upon taxpayers subject to tax under subdivision (b) of section
fifteen hundred ten of this article by applying the methodology,  proce-
dures  and computations set forth in subdivisions (a) and (b) of section
fifteen hundred four of this article, except that  references  to  terms
denoting  New York premiums, and total wages, salaries, personal service
compensation and commissions within New York shall be read  as  denoting
within  the  metropolitan  commuter  transportation  district  and terms
denoting total premiums and  total  wages,  salaries,  personal  service
compensation and commissions shall be read as denoting within the state.
If it shall appear to the commissioner that the application of the meth-
odology,  procedures and computations set forth in such subdivisions (a)
and (b) does not properly reflect the activity, business or income of  a
taxpayer  within the metropolitan commuter transportation district, then
the commissioner shall be authorized, in the commissioner's  discretion,
to  adjust such methodology, procedures and computations for the purpose
of allocating such taxes by:
  (A) excluding one or more factors therein;
  (B) including one or more other factors  therein,  such  as  expenses,
purchases,  receipts  other  than  premiums,  real  property or tangible
personal property; or
  (C) any other similar or different method which allocates  such  taxes
by  attributing a fair and proper portion of such taxes to the metropol-
itan commuter transportation district. The  commissioner  from  time  to
time  shall  publish all rulings of general public interest with respect

S. 2609--B                          9                         A. 3009--B

to any application of the provisions  of  the  preceding  sentence.  The
commissioner  may  promulgate rules and regulations to further implement
the provisions of this section.
  (3)  Such  tax  surcharge  shall  be  computed at the rate of eighteen
percent of the taxes imposed under  sections  fifteen  hundred  one  and
fifteen  hundred  ten  of  this  article  as  limited by section fifteen
hundred five of this article, as allocated to such  district,  for  such
taxable  years  or any part of such taxable years ending before December
thirty-first, nineteen hundred eighty-three after the deduction  of  any
credits otherwise allowable under this article, at the rate of seventeen
percent  of  the taxes imposed under such sections as limited by section
fifteen hundred five of this article, as allocated to such district, for
such taxable years or any part of such taxable years ending on or  after
December  thirty-first, nineteen hundred eighty-three and before January
first, two thousand three after the deduction of any  credits  otherwise
allowable  under  this  article, and at the rate of seventeen percent of
the taxes imposed under sections fifteen hundred  one,  fifteen  hundred
two-a,  and fifteen hundred ten of this article, as limited or otherwise
determined by subdivision (a) or (b) of section fifteen hundred five  of
this  article,  as allocated to such district, for such taxable years or
any part of such taxable years ending after December  thirty-first,  two
thousand  two  after  the  deduction  of any credits otherwise allowable
under this article; provided, however, that the tax surcharge imposed by
this section shall not be  imposed  upon  any  taxpayer  for  more  than
[three]  FOUR hundred [seventy-two] THIRTY-TWO months. Provided however,
that for taxable years commencing on or after July first, two  thousand,
and  in  the  case  of  taxpayers  subject  to tax under section fifteen
hundred two-a of this article,  for  taxable  years  of  such  taxpayers
beginning on or after July first, two thousand and before January first,
two  thousand  three,  such  surcharge shall be calculated as if (i) the
rate of the tax computed under  paragraph  one  of  subdivision  (a)  of
section  fifteen  hundred  two of this article was nine percent and (ii)
the rate of the limitation on tax set forth in section  fifteen  hundred
five  of  this  article for domestic, foreign and alien insurance corpo-
rations except  life  insurance  corporations  was  two  and  six-tenths
percent.
  S 7. This act shall take effect immediately.

                                 PART B

  Section  1.    Paragraph 3 of subdivision (b) of section 24 of the tax
law, as added by section 1 of part P of chapter 60 of the laws of  2004,
is amended to read as follows:
  (3)  "Qualified  film"  means  a feature-length film, television film,
RELOCATED TELEVISION PRODUCTION, television pilot and/or each episode of
a television series, regardless of the medium  by  means  of  which  the
film,  pilot  or  episode is created or conveyed. "Qualified film" shall
not include (i) a documentary film, news  or  current  affairs  program,
interview  or  talk  program,  "how-to"  (i.e.,  instructional)  film or
program, film or program consisting primarily of stock footage, sporting
event or sporting program, game show, award ceremony,  film  or  program
intended primarily for industrial, corporate or institutional end-users,
fundraising film or program, daytime drama (i.e., daytime "soap opera"),
commercials, music videos or "reality" program, or (ii) a production for
which records are required under section 2257 of title 18, United States
code,  to be maintained with respect to any performer in such production

S. 2609--B                         10                         A. 3009--B

(reporting of books, films,  etc.  with  respect  to  sexually  explicit
conduct).
  S 2. Subdivision (b) of section 24 of the tax law is amended by adding
a new paragraph 8 to read as follows:
  (8)  "RELOCATED TELEVISION PRODUCTION" SHALL MEAN, NOTWITHSTANDING THE
LIMITATIONS IN SUBPARAGRAPH (I) OF PARAGRAPH THREE OF THIS  SUBDIVISION,
A TELEVISION PRODUCTION THAT IS A TALK OR VARIETY PROGRAM THAT FILMED AT
LEAST FIVE SEASONS OUTSIDE THE STATE PRIOR TO ITS FIRST RELOCATED SEASON
IN  NEW  YORK,  THE  EPISODES ARE FILMED BEFORE A STUDIO AUDIENCE OF TWO
HUNDRED OR MORE, AND THE RELOCATED TELEVISION PRODUCTION INCURS  (I)  AT
LEAST THIRTY MILLION DOLLARS IN ANNUAL PRODUCTION COSTS IN THE STATE, OR
(II) AT LEAST TEN MILLION DOLLARS IN CAPITAL EXPENDITURES AT A QUALIFIED
PRODUCTION FACILITY IN THE STATE.
  S  3.  Paragraph 4 of subdivision (e) of section 24 of the tax law, as
added by chapter 268 of the laws of 2012, is amended to read as follows:
  (4) Additional pool 2 - The aggregate amount of tax credits allowed in
subdivision (a) of this section shall  be  increased  by  an  [addition]
ADDITIONAL  four hundred twenty million dollars in EACH YEAR STARTING IN
two thousand ten[, four hundred twenty million dollars in  two  thousand
eleven, four hundred twenty million dollars in two thousand twelve, four
hundred twenty million dollars in two thousand thirteen and four hundred
twenty  million  dollars  in two thousand fourteen] THROUGH TWO THOUSAND
NINETEEN provided however, seven million dollars  of  the  annual  allo-
cation  shall  be  available  for  the empire state film post production
credit pursuant to section thirty-one of this [chapter] ARTICLE  IN  TWO
THOUSAND  THIRTEEN  AND  TWO  THOUSAND  FOURTEEN AND TWENTY-FIVE MILLION
DOLLARS OF THE ANNUAL ALLOCATION SHALL BE AVAILABLE FOR THE EMPIRE STATE
FILM POST PRODUCTION CREDIT PURSUANT TO SECTION THIRTY-ONE OF THIS ARTI-
CLE IN EACH YEAR STARTING IN TWO THOUSAND FIFTEEN THROUGH  TWO  THOUSAND
NINETEEN.    This amount shall be allocated by the governor's office for
motion picture and television development among taxpayers in  accordance
with subdivision (a) of this section. If the [director of the governor's
office  for  motion  picture and television development] COMMISSIONER OF
ECONOMIC DEVELOPMENT determines that the aggregate amount of tax credits
available from additional pool 2 for the empire  state  film  production
tax credit have been previously allocated, and determines that the pend-
ing applications from eligible applicants for the EMPIRE STATE FILM post
production  tax  credit pursuant to section thirty-one of this [chapter]
ARTICLE is insufficient to utilize the  balance  of  unallocated  EMPIRE
STATE  FILM  post  production tax credits from such pool, the remainder,
after such pending applications are considered, shall be made  available
for  allocation  in  the  empire  state film tax credit pursuant to this
section,  subdivision  thirty-six  of  section  two  hundred   ten   and
subsection  (gg)  of  section six hundred six of this chapter.  ALSO, IF
THE COMMISSIONER OF ECONOMIC DEVELOPMENT DETERMINES THAT  THE  AGGREGATE
AMOUNT  OF  TAX  CREDITS AVAILABLE FROM ADDITIONAL POOL 2 FOR THE EMPIRE
STATE FILM POST PRODUCTION TAX CREDIT HAVE  BEEN  PREVIOUSLY  ALLOCATED,
AND  DETERMINES  THAT  THE PENDING APPLICATIONS FROM ELIGIBLE APPLICANTS
FOR THE EMPIRE STATE FILM PRODUCTION TAX CREDIT PURSUANT TO THIS SECTION
IS INSUFFICIENT TO UTILIZE THE BALANCE OF  UNALLOCATED  FILM  PRODUCTION
TAX  CREDITS  FROM  SUCH  POOL, THEN ALL OR PART OF THE REMAINDER, AFTER
SUCH PENDING APPLICATIONS ARE CONSIDERED, SHALL BE  MADE  AVAILABLE  FOR
ALLOCATION  FOR THE EMPIRE STATE FILM POST PRODUCTION CREDIT PURSUANT TO
THIS SECTION, SUBDIVISION FORTY-ONE  OF  SECTION  TWO  HUNDRED  TEN  AND
SUBSECTION  (GG)  OF SECTION SIX HUNDRED SIX OF THIS CHAPTER. The gover-
nor's office for motion picture and television development  must  notify

S. 2609--B                         11                         A. 3009--B

taxpayers  of  their  allocation year and include the allocation year on
the certificate of tax credit.   Taxpayers eligible to  claim  a  credit
must  report  the  allocation  year  directly on their empire state film
production credit tax form for each year a credit is claimed and include
a copy of the certificate with their tax return. In the case of a quali-
fied  film  that  receives funds from additional pool 2, no empire state
film production credit shall be claimed before the later of the  taxable
year  the  production  of the qualified film is complete, or the taxable
year immediately following the allocation year for which  the  film  has
been  allocated  credit  by the governor's office for motion picture and
television development.
  S 4. Paragraph 1 of subdivision (b) of section 24 of the tax  law,  as
amended  by  section  6  of part Q of chapter 57 of the laws of 2010, is
amended to read as follows:
  (1) "Qualified production costs" means production costs  only  to  the
extent  such  costs  are attributable to the use of tangible property or
the performance of services within the state directly and  predominantly
in  the  production  (including pre-production and post production) of a
qualified film[, provided,  however,  that  qualified  production  costs
shall  not  include post production costs unless the portion of the post
production costs paid or incurred that is attributable  to  the  use  of
tangible  property  or  the  performance  of services in New York in the
production of such qualified film equals or exceeds seventy-five percent
of the total post production costs spent within and without New York  in
the production of such qualified film].
  S  5.  Paragraph 3 of subdivision (a) of section 31 of the tax law, as
added by section 12 of part Q of chapter 57 of  the  laws  of  2010,  is
amended to read as follows:
  (3) (I) A taxpayer shall not be eligible for the credit established by
this  section  FOR  QUALIFIED POST PRODUCTION COSTS, EXCLUDING THE COSTS
FOR VISUAL EFFECTS AND ANIMATION, unless the qualified  post  production
costs, EXCLUDING THE COSTS FOR VISUAL EFFECTS AND ANIMATION, at a quali-
fied post production facility meet or exceed seventy-five percent of the
total  post production costs, EXCLUDING THE COSTS FOR VISUAL EFFECTS AND
ANIMATION, paid or incurred in the post production of the qualified film
at any post production facility.  (II) A TAXPAYER SHALL NOT BE  ELIGIBLE
FOR THE CREDIT ESTABLISHED BY THIS SECTION FOR QUALIFIED POST PRODUCTION
COSTS  WHICH ARE COSTS FOR VISUAL EFFECTS OR ANIMATION UNLESS THE QUALI-
FIED POST PRODUCTION COSTS FOR VISUAL EFFECTS OR ANIMATION AT  A  QUALI-
FIED  POST  PRODUCTION  FACILITY MEET OR EXCEED THREE MILLION DOLLARS OR
TWENTY PERCENT OF THE TOTAL POST PRODUCTION COSTS FOR VISUAL EFFECTS  OR
ANIMATION PAID OR INCURRED IN THE POST PRODUCTION OF A QUALIFIED FILM AT
ANY  POST  PRODUCTION  FACILITY, WHICHEVER IS LESS. (III) A TAXPAYER MAY
CLAIM A CREDIT FOR QUALIFIED POST PRODUCTION COSTS EXCLUDING  THE  COSTS
FOR  VISUAL  EFFECTS  AND  ANIMATION,  AND FOR QUALIFIED POST PRODUCTION
COSTS OF VISUAL EFFECTS AND ANIMATION, PROVIDED  THAT  THE  CRITERIA  IN
SUBPARAGRAPHS  (I)  AND  (II)  OF THIS PARAGRAPH ARE BOTH SATISFIED. The
credit shall be allowed for the taxable year in which the production  of
such qualified film is completed.
  S  5-a.  Subdivision  (a)  of  section  31 of the tax law, as added by
section 12 of part Q of chapter 57 of the laws of 2010,  is  amended  by
adding a new paragraph 5 to read as follows:
  (5)  IF  THE  AMOUNT OF THE CREDIT IS AT LEAST ONE MILLION DOLLARS BUT
LESS THAN FIVE MILLION DOLLARS, THE CREDIT SHALL BE CLAIMED OVER  A  TWO
YEAR  PERIOD BEGINNING IN THE FIRST TAXABLE YEAR IN WHICH THE CREDIT MAY
BE CLAIMED AND IN THE NEXT SUCCEEDING TAXABLE YEAR, WITH ONE-HALF OF THE

S. 2609--B                         12                         A. 3009--B

AMOUNT OF CREDIT ALLOWED BEING CLAIMED IN EACH YEAR. IF  THE  AMOUNT  OF
THE CREDIT IS AT LEAST FIVE MILLION DOLLARS, THE CREDIT SHALL BE CLAIMED
OVER  A  THREE  YEAR PERIOD BEGINNING IN THE FIRST TAXABLE YEAR IN WHICH
THE  CREDIT MAY BE CLAIMED AND IN THE NEXT TWO SUCCEEDING TAXABLE YEARS,
WITH ONE-THIRD OF THE AMOUNT OF THE CREDIT ALLOWED BEING CLAIMED IN EACH
YEAR.
  S 6. Section 3 of part Y-1 of chapter 57 of the laws of 2009, amending
the tax law relating to the empire  state  film  production  credit,  is
amended to read as follows:
  S  3. A. The governor's office of motion picture and television devel-
opment shall file a report on a quarterly basis with the director of the
division of the budget and the chairmen of the assembly ways  and  means
committee and senate finance committee. The report shall be filed within
fifteen  days  after the close of the calendar quarter. The first report
shall cover the calendar quarter that begins April 1, 2009.  The  report
must contain the following information for the calendar quarter:
  (1)  the total dollar amount of credits allocated during each month of
the calendar quarter, broken down by month;
  (2) the number of film projects which have been allocated tax  credits
of less than $1 million per project and the total dollar amount of cred-
its allocated to those projects;
  (3)  the number of film projects which have been allocated tax credits
of $1 million or more but less than $5 million per project and the total
dollar amount of credits allocated to those projects;
  (4) the number of film projects which have been allocated tax  credits
of $5 million or more per project and the total dollar amount of credits
allocated to those projects; [and]
  (5)  a list of each film project which has been allocated a tax credit
and  for  each  of  those projects (a) the estimated number of employees
associated with the project, (b) the estimated qualified costs  for  the
project, [and] (c) the estimated total costs of the project, AND (D) THE
CREDIT-ELIGIBLE MAN HOURS FOR EACH PROJECT; AND
  (6)(A)  THE  NAME  OF  EACH  TAXPAYER  ALLOCATED A TAX CREDIT FOR EACH
PROJECT; PROVIDED HOWEVER, IF THE TAXPAYER CLAIMS A TAX  CREDIT  BECAUSE
THE  TAXPAYER IS A MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER IN A
PARTNERSHIP OR A SHAREHOLDER IN A SUBCHAPTER S CORPORATION, THE NAME  OF
EACH  LIMITED LIABILITY COMPANY, PARTNERSHIP OR SUBCHAPTER S CORPORATION
EARNING ANY OF THOSE TAX CREDITS MUST BE INCLUDED IN THE REPORT  INSTEAD
OF  INFORMATION  ABOUT  THE  TAXPAYER  CLAIMING  THE TAX CREDIT, (B) THE
AMOUNT OF TAX CREDIT ALLOCATED TO EACH TAXPAYER;  PROVIDED  HOWEVER,  IF
THE  TAXPAYER  CLAIMS A TAX CREDIT BECAUSE THE TAXPAYER IS A MEMBER OF A
LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP OR  A  SHAREHOLDER
IN  A  SUBCHAPTER S CORPORATION, THE AMOUNT OF TAX CREDIT EARNED BY EACH
ENTITY MUST BE INCLUDED IN THE REPORT INSTEAD OF INFORMATION  ABOUT  THE
TAXPAYER  CLAIMING  THE  TAX CREDIT, AND (C) INFORMATION IDENTIFYING THE
PROJECT ASSOCIATED WITH EACH TAXPAYER FOR WHICH A TAX CREDIT WAS CLAIMED
UNDER SECTION 24 OR SECTION 31, AS ADDED BY CHAPTER 57 OF  THE  LAWS  OF
2010, OF THE TAX LAW, INCLUDING THE NAME OF THE FILM AND COUNTY IN WHICH
THE PROJECT IS LOCATED; AND
  B.  THE GOVERNOR'S OFFICE OF MOTION PICTURE AND TELEVISION DEVELOPMENT
SHALL FILE A REPORT ON A BIENNIAL BASIS WITH THE DIRECTOR OF  THE  DIVI-
SION OF THE BUDGET AND THE CHAIRS OF THE ASSEMBLY WAYS AND MEANS COMMIT-
TEE  AND  SENATE  FINANCE  COMMITTEE.  THE  REPORT SHALL BE FILED WITHIN
FIFTEEN DAYS AFTER THE CLOSE OF THE  CALENDAR  YEAR.  THE  FIRST  REPORT
SHALL COVER A TWO YEAR PERIOD THAT BEGINS ON JANUARY FIRST, TWO THOUSAND
THIRTEEN.  THE  REPORT  MUST  BE  PREPARED BY AN INDEPENDENT THIRD PARTY

S. 2609--B                         13                         A. 3009--B

AUDITOR AND INCLUDE: (1) INFORMATION REGARDING  THE  EMPIRE  STATE  FILM
PRODUCTION  CREDIT  AND  POST  PRODUCTION  CREDIT PROGRAMS INCLUDING THE
EFFICIENCY OF OPERATIONS, RELIABILITY OF FINANCIAL REPORTING, COMPLIANCE
WITH  LAWS  AND REGULATIONS AND DISTRIBUTION OF ASSETS AND FUNDS; (2) AN
ECONOMIC IMPACT STUDY PREPARED BY AN INDEPENDENT THIRD PARTY OF THE FILM
CREDIT PROGRAMS; AND (3) ANY OTHER INFORMATION AND/OR OTHER  STATISTICAL
INFORMATION  THAT  THE  COMMISSIONER OF ECONOMIC DEVELOPMENT DEEMS TO BE
USEFUL IN ANALYZING THE EFFECTS OF THE PROGRAM.
  S 7.  This act shall take effect immediately, provided, however,  that
sections  four  and five of this act shall apply to taxpayers submitting
initial applications to the governor's  office  of  motion  picture  and
television development on or after the date this act shall have become a
law,  and  to taxpayers who filed an initial application before this act
shall have become a law but who have not yet submitted a final  applica-
tion  to the governor's office of motion picture and television develop-
ment on or before the date this act shall have become  a  law;  and  the
amendments  made  to  section 3 of part Y-1 of chapter 57 of the laws of
2009, amending the tax law relating to the empire state film  production
credit,  with the exception of subdivision b of such section, shall only
apply to taxpayers submitting initial  applications  to  the  governor's
office of motion picture and television development on or after the date
this act shall become a law.

                                 PART C

  Section 1. Legislative intent. This act is intended to create a state-
wide  network of university affiliated or college affiliated and private
sector affiliated innovation hot spots in  New  York  state  to  support
start-up  companies  and  those  in  the early stage of development. The
mission of the innovation hot spots shall be to  promote  job  creation,
entrepreneurship  and technology transfer, as well as to provide support
services to hot spot tenants, including, but not  limited  to,  business
planning,   management   assistance,  financial-packaging,  linkages  to
financing and technology services, and coordination with  other  sources
of assistance.
  S  2.  The economic development law is amended by adding a new section
361 to read as follows:
  S 361. NEW YORK INNOVATION HOT SPOT PROGRAM.  1. DEFINITIONS. AS  USED
IN THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
  (A)  "INNOVATION  HOT SPOT" SHALL MEAN A FACILITY OR FACILITIES DESIG-
NATED AS SUCH BY THE COMMISSIONER.
  (B) "QUALIFIED ENTITY" SHALL MEAN A BUSINESS ENTERPRISE THAT IS:
  (I) IN THE FORMATIVE STAGE OF DEVELOPMENT;
  (II) LOCATED IN NEW YORK STATE;
  (III) EITHER: (A) ANY CORPORATION, EXCEPT A CORPORATION WHICH:
  (1) OVER FIFTY PERCENT OF THE NUMBER OF SHARES OF STOCK ENTITLING  THE
HOLDERS  THEREOF  TO  VOTE  FOR THE ELECTION OF DIRECTORS OR TRUSTEES IS
OWNED OR CONTROLLED,  EITHER  DIRECTLY  OR  INDIRECTLY,  BY  A  TAXPAYER
SUBJECT  TO  TAX UNDER THE FOLLOWING PROVISIONS OF THE TAX LAW:  ARTICLE
NINE-A; SECTION ONE HUNDRED EIGHTY-THREE, ONE HUNDRED EIGHTY-FOUR OR ONE
HUNDRED EIGHTY-FIVE OF ARTICLE NINE; ARTICLE THIRTY-TWO OR ARTICLE THIR-
TY-THREE; OR
  (2) IS SUBSTANTIALLY SIMILAR IN OPERATION AND IN OWNERSHIP TO A  BUSI-
NESS  ENTITY  (OR  ENTITIES)  TAXABLE  OR  PREVIOUSLY  TAXABLE UNDER THE
FOLLOWING PROVISIONS OF THE TAX LAW: ARTICLE NINE-A; SECTION ONE HUNDRED
EIGHTY-THREE, ONE HUNDRED EIGHTY-FOUR, ONE HUNDRED EIGHTY-FIVE OR FORMER

S. 2609--B                         14                         A. 3009--B

SECTION ONE HUNDRED EIGHTY-SIX  OF  ARTICLE  NINE;  ARTICLE  THIRTY-TWO;
ARTICLE  THIRTY-THREE;  ARTICLE TWENTY-THREE, OR WOULD HAVE BEEN SUBJECT
TO TAX UNDER SUCH ARTICLE TWENTY-THREE (AS SUCH ARTICLE WAS IN EFFECT ON
JANUARY  FIRST,  NINETEEN  HUNDRED  EIGHTY) OR THE INCOME (OR LOSSES) OF
WHICH IS (OR WAS) INCLUDABLE UNDER ARTICLE TWENTY-TWO; OR
  (B) A SOLE PROPRIETORSHIP, PARTNERSHIP, LIMITED LIABILITY COMPANY,  OR
NEW  YORK  SUBCHAPTER S CORPORATION THAT IS NOT SUBSTANTIALLY SIMILAR IN
OPERATION AND IN OWNERSHIP TO A BUSINESS ENTITY (OR  ENTITIES)  TAXABLE,
OR  PREVIOUSLY TAXABLE, UNDER ARTICLE NINE-A OF THE TAX LAW, SECTION ONE
HUNDRED EIGHTY-THREE, ONE HUNDRED EIGHTY-FOUR, ONE  HUNDRED  EIGHTY-FIVE
OR FORMER SECTION ONE HUNDRED EIGHTY-SIX OF ARTICLE NINE OF THE TAX LAW,
ARTICLE  THIRTY-TWO OR THIRTY-THREE OF THE TAX LAW, ARTICLE TWENTY-THREE
OF THE TAX LAW OR WHICH WOULD HAVE BEEN SUBJECT TO TAX UNDER SUCH  ARTI-
CLE  TWENTY-THREE (AS SUCH ARTICLE WAS IN EFFECT ON JANUARY FIRST, NINE-
TEEN HUNDRED EIGHTY) OR THE INCOME (OR LOSSES)  OF  WHICH  IS  (OR  WAS)
INCLUDABLE UNDER ARTICLE TWENTY-TWO OF THE TAX LAW; AND
  (IV)  IS  APPROVED TO LOCATE IN AN INNOVATION HOT SPOT BY THE OPERATOR
OF SUCH INNOVATION HOT SPOT.
  (C) "OPERATOR OF AN INNOVATION HOT SPOT" SHALL MEAN:
  (I) AN ACCREDITED POST-SECONDARY EDUCATIONAL INSTITUTION,  COLLEGE  OR
UNIVERSITY;  NOT-FOR-PROFIT  ENTITY AFFILIATED WITH A HIGHER EDUCATIONAL
INSTITUTION; OR, COLLABORATIVE ENTERPRISE BETWEEN ONE OR MORE ACCREDITED
POST-SECONDARY  EDUCATIONAL  INSTITUTION,  COLLEGE  OR  UNIVERSITY   AND
NOT-FOR-PROFIT ENTITY AFFILIATED WITH A HIGHER EDUCATIONAL INSTITUTION;
  (II) LOCATED IN NEW YORK STATE; AND
  (III)  DESIGNATED  BY  THE  COMMISSIONER  TO  OPERATE  A FACILITY THAT
PROVIDES:  LOW-COST  SPACE;  TECHNICAL  ASSISTANCE;  SUPPORT   SERVICES,
INCLUDING, BUT NOT LIMITED TO, CENTRAL SERVICES; AND, EDUCATIONAL OPPOR-
TUNITIES, TO A "QUALIFIED ENTITY."
  2. THE COMMISSIONER SHALL:
  (A) SOLICIT APPLICATIONS FROM POST-SECONDARY EDUCATIONAL INSTITUTIONS,
COLLEGES,  UNIVERSITIES,  OR  NOT-FOR-PROFIT  ENTITIES AFFILIATED WITH A
HIGHER EDUCATION INSTITUTION OR COLLABORATIVE ENTERPRISES BETWEEN ONE OR
MORE ACCREDITED POST-SECONDARY EDUCATIONAL  INSTITUTIONS,  COLLEGES,  OR
UNIVERSITIES  AND  NOT-FOR-PROFIT ENTITIES FOR APPROVAL TO OPERATE INNO-
VATION HOT SPOTS IN PROPERTY OWNED OR LEASED BY SUCH ENTITIES TO ATTRACT
INDUSTRIES WITH SIGNIFICANT POTENTIAL FOR ECONOMIC GROWTH  AND  DEVELOP-
MENT  IN  NEW  YORK  STATE,  AND  IDENTIFY  TECHNOLOGICAL AREAS THAT CAN
CONTRIBUTE TO THE GROWTH OF VARIOUS INDUSTRIES  LOCATED  THROUGHOUT  NEW
YORK STATE;
  (B)  RECEIVE  RECOMMENDATIONS  FROM  THE REGIONAL ECONOMIC DEVELOPMENT
COUNCILS REGARDING THE APPROVAL OR REJECTION OF THE APPLICANTS AS OPERA-
TORS OF INNOVATION HOT SPOTS.
  3. THE COMMISSIONER SHALL ESTABLISH CRITERIA CONCERNING THE INNOVATION
HOT SPOT PROGRAM.  (A) THE CRITERIA THAT APPLICANTS MUST SATISFY  TO  BE
DESIGNATED AS AN OPERATOR OF AN INNOVATION HOT SPOT INCLUDE, BUT ARE NOT
LIMITED TO, THE FOLLOWING:
  (I)  A RECORD OF, OR PLAN TO CONFORM TO, BEST PRACTICES INCLUDING, BUT
NOT LIMITED TO, CLEAR POLICIES FOR THE RESIDENT  BUSINESS  ENTITIES  AND
GRADUATION FROM THE SPACE;
  (II)  A  COMPREHENSIVE  SUITE  OF  ENTREPRENEURIAL MENTORING PRACTICES
INCLUDING, BUT NOT LIMITED TO, ADVISING, COACHING, PLANNING AND CONNECT-
ING TO FUNDING AND TECHNOLOGY SOURCES;
  (III) THE CAPACITY TO SECURE SUBSTANTIAL PRIVATE AND  OTHER  NON-STATE
GOVERNMENTAL  FUNDING  FOR THE PROPOSED INNOVATION HOT SPOT, IN ADDITION

S. 2609--B                         15                         A. 3009--B

TO DIRECT SUPPORT FROM THE SPONSORING ACADEMIC  INSTITUTION  OR  RELATED
FOUNDATION;
  (IV)  THE  ABILITY  AND  WILLINGNESS  TO  COOPERATE  WITH OTHER LOCAL,
REGIONAL AND  STATEWIDE  ECONOMIC  DEVELOPMENT  ORGANIZATIONS,  BUSINESS
SUPPORT  NETWORKS,  VENTURE AND ANGEL CAPITAL FUNDING SOURCES, AND WORK-
FORCE DEVELOPMENT ADVOCATES;
  (V) THE CAPACITY TO COLLABORATE WITH OTHER BUSINESSES  AND  INDUSTRIES
INDIVIDUALLY; AND
  (VI)  SUCH  OTHER REQUIREMENTS AS THE DEPARTMENT DEEMS APPROPRIATE FOR
THE FORMAT, CONTENT AND FILING OF APPLICATIONS FOR DESIGNATION AS  INNO-
VATION HOT SPOTS.
  (B) THE COMMISSIONER SHALL ALSO ESTABLISH CRITERIA FOR THE DESIGNATION
OF INNOVATION HOT SPOTS.
  (C)  AFTER  ESTABLISHING SUCH CRITERIA, THE COMMISSIONER SHALL APPROVE
AND DESIGNATE FIVE INNOVATION HOT SPOTS AND THEIR  OPERATORS  IN  FISCAL
YEAR  TWO  THOUSAND  THIRTEEN--TWO THOUSAND FOURTEEN AND FIVE ADDITIONAL
INNOVATION HOT SPOTS AND THEIR OPERATORS IN  FISCAL  YEAR  TWO  THOUSAND
FOURTEEN--TWO THOUSAND FIFTEEN.
  (D)  THE  COMMISSIONER  SHALL ISSUE A CERTIFICATE OF APPROVAL FOR EACH
DESIGNATED INNOVATION HOT SPOT AND EACH APPROVED OPERATOR  OF  AN  INNO-
VATION HOT SPOT.
  (E)  THE OPERATOR OF AN APPROVED INNOVATION HOT SPOT MAY ACCEPT APPLI-
CATIONS FOR TENANCIES FROM QUALIFIED ENTITIES FOR A PERIOD OF FIVE YEARS
AFTER THE RECEIPT BY SUCH INNOVATION HOT  SPOT  OF  ITS  CERTIFICATE  OF
APPROVAL  FROM  THE  COMMISSIONER.  QUALIFIED ENTITIES THAT LOCATE THEIR
BUSINESSES IN AN INNOVATION HOT SPOT ARE ELIGIBLE TO RECEIVE  TAX  BENE-
FITS  UNDER  SECTION THIRTY-EIGHT OF THE TAX LAW FOR FIVE TAXABLE YEARS,
BEGINNING WITH THE FIRST TAXABLE YEAR DURING WHICH SUCH QUALIFIED  ENTI-
TIES BECOME TENANTS IN AN INNOVATION HOT SPOT.
  4.  EACH  OPERATOR OF AN INNOVATION HOT SPOT SHALL REPORT ON AN ANNUAL
BASIS ON ITS ACTIVITIES TO THE COMMISSIONER IN A MANNER AND ACCORDING TO
THE SCHEDULE ESTABLISHED BY THE DEPARTMENT, AND SHALL PROVIDE SUCH ADDI-
TIONAL INFORMATION AS THE COMMISSIONER  MAY  REQUIRE.  THE  COMMISSIONER
SHALL  EVALUATE THE OPERATIONS OF THE INNOVATION HOT SPOTS USING METHODS
INCLUDING BUT NOT LIMITED TO SITE VISITS, REPORTS PURSUANT TO  SPECIFIED
INFORMATION,  AND REVIEW EVALUATIONS. IF THE COMMISSIONER IS UNSATISFIED
WITH THE PROGRESS OF AN OPERATOR OF AN INNOVATION HOT SPOT, THE  COMMIS-
SIONER  SHALL NOTIFY SUCH OPERATOR OF THE RESULTS OF ITS EVALUATIONS AND
THE FINDINGS OF DEFICIENCIES IN THE OPERATION OF SUCH HOT SPOT AND SHALL
ALLOW AND COOPERATE WITH SUCH OPERATOR TO  REMEDY  SUCH  FINDINGS  IN  A
TIMELY MANNER.
  5.  NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER, EMPLOYEES AND OFFI-
CERS OF THE DEPARTMENT AND THE DEPARTMENT OF TAXATION AND FINANCE  SHALL
BE ALLOWED AND ARE DIRECTED TO SHARE AND EXCHANGE:
  (I)  INFORMATION  DERIVED FROM TAX RETURNS OR REPORTS THAT IS RELEVANT
TO A QUALIFIED ENTITY'S ELIGIBILITY TO PARTICIPATE IN THE INNOVATION HOT
SPOTS PROGRAM, AND
  (II) INFORMATION REGARDING THE TAX BENEFITS APPLIED FOR,  ALLOWED,  OR
CLAIMED  PURSUANT TO SECTION THIRTY-EIGHT OF THE TAX LAW AND THE TAXPAY-
ERS WHO ARE APPLYING FOR OR ARE CLAIMING THE TAX BENEFITS.
  ALL INFORMATION EXCHANGED BETWEEN THE DEPARTMENT AND THE DEPARTMENT OF
TAXATION AND FINANCE SHALL  NOT BE SUBJECT TO DISCLOSURE  OR  INSPECTION
PURSUANT  TO  THE  STATE'S  FREEDOM OF INFORMATION LAW.   THE DEPARTMENT
SHALL NOT DISCLOSE ANY INFORMATION OBTAINED FROM THE DEPARTMENT OF TAXA-
TION AND FINANCE THAT CONCERNS SPECIFIC TAXPAYERS.

S. 2609--B                         16                         A. 3009--B

  S 3. The tax law is amended by adding a new  section  38  to  read  as
follows:
  S  38.  NEW YORK INNOVATION HOT SPOT PROGRAM TAX BENEFITS. (A) AS USED
IN THIS CHAPTER, THE TERMS "INNOVATION HOT SPOT" AND "QUALIFIED  ENTITY"
SHALL  HAVE THE SAME MEANING AS UNDER SECTION THREE HUNDRED SIXTY-ONE OF
THE ECONOMIC DEVELOPMENT LAW.
  (B) A TAXPAYER UNDER ARTICLE NINE-A OF THIS CHAPTER THAT IS  A  QUALI-
FIED ENTITY AND ALSO A TENANT IN AN INNOVATION HOT SPOT SHALL BE SUBJECT
ONLY  TO  THE  FIXED  DOLLAR MINIMUM TAX, IMPOSED UNDER PARAGRAPH (D) OF
SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF  THIS  CHAPTER,  FOR  FIVE
TAXABLE  YEARS,  BEGINNING  WITH THE FIRST TAXABLE YEAR DURING WHICH THE
QUALIFIED ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT. A  TAXPAYER
UNDER  ARTICLE  NINE-A  OF THIS CHAPTER THAT IS A CORPORATE PARTNER IN A
QUALIFIED ENTITY, OR IS A QUALIFIED ENTITY THAT IS LOCATED  BOTH  WITHIN
AND  WITHOUT  AN  INNOVATION HOT SPOT, SHALL BE ALLOWED ONLY A DEDUCTION
FOR THE AMOUNT OF INCOME OR GAIN INCLUDED IN ITS FEDERAL TAXABLE  INCOME
TO  THE EXTENT THAT THE INCOME OR GAIN IS ATTRIBUTABLE TO THE OPERATIONS
AT THE INNOVATION HOT SPOT. THE DEDUCTION IS ALLOWED  FOR  FIVE  TAXABLE
YEARS,  BEGINNING WITH THE FIRST TAXABLE YEAR DURING WHICH THE QUALIFIED
ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT.
  (C) AN INDIVIDUAL WHO IS THE SOLE PROPRIETOR OF A QUALIFIED ENTITY  OR
A MEMBER OF A LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP OR A
SHAREHOLDER  IN  A  NEW  YORK SUBCHAPTER S CORPORATION WHERE THE LIMITED
LIABILITY COMPANY, PARTNERSHIP, OR S CORPORATION IS A QUALIFIED  ENTITY,
THAT  IS  TAXABLE  UNDER  ARTICLE  TWENTY-TWO  OF  THIS CHAPTER SHALL BE
ALLOWED A DEDUCTION FOR THE AMOUNT OF INCOME OR  GAIN  INCLUDED  IN  ITS
FEDERAL  ADJUSTED  GROSS INCOME TO THE EXTENT THAT THE INCOME OR GAIN IS
ATTRIBUTABLE TO THE OPERATIONS OF A QUALIFIED ENTITY WHICH IS  A  TENANT
IN  AN  INNOVATION  HOT  SPOT. THE DEDUCTION IS ALLOWED FOR FIVE TAXABLE
YEARS, BEGINNING WITH THE FIRST TAXABLE YEAR DURING WHICH THE  QUALIFIED
ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT.
  (D)  A  QUALIFIED  ENTITY  THAT  IS A TENANT IN AN INNOVATION HOT SPOT
SHALL BE ELIGIBLE FOR A CREDIT OR REFUND FOR SALES AND USE TAXES IMPOSED
ON THE RETAIL SALE OF  TANGIBLE  PERSONAL  PROPERTY  OR  SERVICES  UNDER
SUBDIVISIONS  (A),  (B),  AND  (C)  OF  SECTION  ELEVEN HUNDRED FIVE AND
SECTION ELEVEN HUNDRED TEN OF THIS CHAPTER. THE CREDIT OR  REFUND  SHALL
BE  ALLOWED  FOR  SIXTY MONTHS BEGINNING WITH THE FIRST FULL MONTH AFTER
THE QUALIFIED ENTITY BECOMES A TENANT IN AN INNOVATION HOT SPOT.
  (E) A TAXPAYER WHO CLAIMS ANY OF THE TAX BENEFITS  DESCRIBED  IN  THIS
SECTION  IS  NO LONGER ELIGIBLE FOR ANY OTHER NEW YORK STATE EXEMPTIONS,
DEDUCTIONS, OR CREDIT OR REFUNDS UNDER THIS CHAPTER TO THE  EXTENT  THAT
ANY  SUCH  EXEMPTION, DEDUCTION, CREDIT OR REFUND IS ATTRIBUTABLE TO THE
BUSINESS OPERATIONS OF A TENANT IN AN INNOVATION HOT SPOT. THE  ELECTION
TO CLAIM THE TAX BENEFITS DESCRIBED IN THIS SECTION IS NOT REVOCABLE.
  (F) CROSS-REFERENCES. FOR APPLICATION OF THE TAX BENEFITS PROVIDED FOR
IN THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (I) ARTICLE 9-A, SECTION 208, SUBDIVISION (9), PARAGRAPH (A), SUBPARA-
GRAPH (18).
  (II) ARTICLE 9-A, SECTION 209, SUBDIVISION 11.
  (III) ARTICLE 22, SECTION 612, SUBSECTION (C), PARAGRAPH (39).
  (IV) ARTICLE 28, SECTION 1119, SUBDIVISION (D).
  S  4.  Paragraph (a) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 18 to read as follows:
  (18) THE AMOUNT OF INCOME OR GAIN INCLUDED IN FEDERAL  TAXABLE  INCOME
OF  A TAXPAYER THAT IS A PARTNER IN A QUALIFIED ENTITY OR IS A QUALIFIED
ENTITY THAT IS LOCATED BOTH WITHIN AND WITHOUT AN INNOVATION  HOT  SPOT,

S. 2609--B                         17                         A. 3009--B

TO  THE EXTENT THAT THE INCOME OR GAIN IS ATTRIBUTABLE TO THE OPERATIONS
OF A QUALIFIED ENTITY AT THE INNOVATION HOT SPOT AS PROVIDED IN  SECTION
THIRTY-EIGHT OF THIS CHAPTER.
  S 5. Section 209 of the tax law is amended by adding a new subdivision
11 to read as follows:
  11.  EXCEPT  AS  PROVIDED IN SUBPARAGRAPH EIGHTEEN OF PARAGRAPH (A) OF
SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE, A  CORPO-
RATION THAT IS A QUALIFIED ENTITY AND ALSO A TENANT IN AN INNOVATION HOT
SPOT  SHALL  BE SUBJECT ONLY TO THE FIXED DOLLAR MINIMUM TAX UNDER PARA-
GRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE,
AS PROVIDED IN SECTION THIRTY-EIGHT OF THIS CHAPTER.
  S 6. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 39 to read as follows:
  (39) ANY INCOME OR GAIN, TO THE  EXTENT  IT  IS  INCLUDED  IN  FEDERAL
ADJUSTED  GROSS  INCOME OF AN INDIVIDUAL WHO IS THE SOLE PROPRIETOR OF A
QUALIFIED ENTITY OR A MEMBER OF A LIMITED LIABILITY COMPANY,  A  PARTNER
IN A PARTNERSHIP OR A SHAREHOLDER IN A NEW YORK SUBCHAPTER S CORPORATION
THAT  IS  A QUALIFIED ENTITY, ATTRIBUTABLE TO THE OPERATIONS OF A QUALI-
FIED ENTITY AT ITS LOCATION IN AN INNOVATION HOT SPOT,  AS  PROVIDED  IN
SECTION THIRTY-EIGHT OF THIS CHAPTER.
  S 7. Paragraph 1 of subdivision (d) of section 1119 of the tax law, as
added  by  section  31 of part S-1 of chapter 57 of the laws of 2009, is
amended to read as follows:
  (1) Subject to the conditions and limitations  provided  for  in  this
section,  a  refund  or  credit will be allowed for taxes imposed on the
retail sale of tangible personal property described in  subdivision  (a)
of  section  eleven  hundred  five of this article, and on every sale of
services described in subdivisions (b) and  (c)  of  such  section,  and
consideration  given  or  contracted to be given for, or for the use of,
such  tangible  personal  property  or  services,  where  such  tangible
personal property or services are sold to a qualified empire zone enter-
prise  OR  TO  A QUALIFIED ENTITY THAT IS ALSO A TENANT IN AN INNOVATION
HOT SPOT AS PROVIDED IN SECTION THIRTY-EIGHT OF THIS  CHAPTER,  provided
that  (A)  such tangible personal property or tangible personal property
upon which such a service has been performed or such service (other than
a service described in subdivision (b) of section eleven hundred five of
this article) is directly and predominantly, or such a service described
in clause (A) or (D) of paragraph one of such subdivision (b) of section
eleven hundred five of this article is directly and exclusively, used or
consumed by (I) such QUALIFIED EMPIRE ZONE enterprise in an area  desig-
nated  as  an  empire zone pursuant to article eighteen-B of the general
municipal law with respect to which such enterprise is certified  pursu-
ant  to  such  article  eighteen-B,  OR (II) SUCH QUALIFIED ENTITY IN AN
INNOVATION HOT SPOT or (B) such a service described in clause (B) or (C)
of paragraph one of subdivision (b) of section eleven  hundred  five  of
this  article  is  delivered  and  billed  to  (I) such enterprise at an
address in such empire zone OR (II) SUCH QUALIFIED ENTITY AT THE ADDRESS
OF THE INNOVATION HOT SPOT WHERE IT IS A TENANT, or (C) the enterprise's
place of primary use of the service described in paragraph two  of  such
subdivision  (b) of section eleven hundred five is at an address in such
empire zone OR AT AN INNOVATION HOT SPOT; provided,  further,  that,  in
order  for  a  motor  vehicle,  as defined in subdivision (c) of section
eleven hundred seventeen of this article, or tangible personal  property
related  to such a motor vehicle to be found to be used predominantly in
such a zone, at least fifty percent of such motor vehicle's use shall be
exclusively within such zone or at least fifty  percent  of  such  motor

S. 2609--B                         18                         A. 3009--B

vehicle's  use shall be in activities originating or terminating in such
zone, or both; and either or both such usages shall be  computed  either
on  the  basis  of  mileage  or  hours of use, at the discretion of such
enterprise. For purposes of this subdivision, tangible personal property
related  to  such  a motor vehicle shall include a battery, diesel motor
fuel, an engine, engine components, motor fuel,  a  muffler,  tires  and
similar tangible personal property used in or on such a motor vehicle.
  S  8. Subdivision (c) of section 11-1712 of the administrative code of
the city of New York is amended by adding a new paragraph 35 to read  as
follows:
  (35) AS PROVIDED IN SECTION THIRTY-EIGHT OF THE TAX LAW, ANY INCOME OR
GAIN,  TO  THE EXTENT IT IS INCLUDED IN FEDERAL ADJUSTED GROSS INCOME OF
AN INDIVIDUAL WHO IS THE SOLE PROPRIETOR OF  A  QUALIFIED  ENTITY  OR  A
MEMBER  OF  A LIMITED LIABILITY COMPANY, A PARTNER IN A PARTNERSHIP OR A
SHAREHOLDER IN A NEW YORK SUBCHAPTER S CORPORATION THAT IS  A  QUALIFIED
ENTITY  AS  DEFINED IN PARAGRAPH (B) OF SUBDIVISION ONE OF SECTION THREE
HUNDRED SIXTY-ONE OF THE ECONOMIC DEVELOPMENT LAW, ATTRIBUTABLE  TO  THE
OPERATIONS OF SUCH QUALIFIED ENTITY AT ITS LOCATION IN AN INNOVATION HOT
SPOT,  AS  DEFINED  IN PARAGRAPH (A) OF SUBDIVISION ONE OF SECTION THREE
HUNDRED SIXTY-ONE OF THE ECONOMIC DEVELOPMENT LAW.
  S 9. This act shall take effect immediately.

                                 PART D

  Section 1. Subsection (g) of section 615 of the tax law, as  added  by
section  3  of  part HH of chapter 57 of the laws of 2010, is amended to
read as follows:
  (g)(1) With respect to an individual whose  New  York  adjusted  gross
income is over one million dollars and no more than ten million dollars,
the  New  York  itemized  deduction  shall  be  an amount equal to fifty
percent of any charitable contribution deduction allowed  under  section
one  hundred  seventy  of  the  internal  revenue code for taxable years
beginning after two thousand nine and  before  two  thousand  [thirteen]
SIXTEEN.  With  respect  to  an individual whose New York adjusted gross
income is over one million dollars,  the  New  York  itemized  deduction
shall be an amount equal to fifty percent of any charitable contribution
deduction  allowed  under  section  one  hundred seventy of the internal
revenue code for taxable years beginning in two thousand nine  or  after
two thousand [twelve] FIFTEEN.
  (2) With respect to an individual whose New York adjusted gross income
is over ten million dollars, the New York itemized deduction shall be an
amount  equal  to  twenty-five  percent  of  any charitable contribution
deduction allowed under section one  hundred  seventy  of  the  internal
revenue  code  for  taxable  years beginning after two thousand nine and
ending before two thousand [thirteen] SIXTEEN.
  S 2. Subdivision (g) of section 11-1715 of the administrative code  of
the  city of New York, as added by section 7 of part HH of chapter 57 of
the laws of 2010, is amended to read as follows:
  (g) (1) With respect to an individual whose New  York  adjusted  gross
income is over one million dollars but no more than ten million dollars,
the  New  York  itemized  deduction  shall  be  an amount equal to fifty
percent of any charitable contribution deduction allowed  under  section
one  hundred  seventy  of  the  internal  revenue code for taxable years
beginning after two thousand nine and  before  two  thousand  [thirteen]
SIXTEEN.  With  respect  to  an individual whose New York adjusted gross
income is over one million dollars,  the  New  York  itemized  deduction

S. 2609--B                         19                         A. 3009--B

shall be an amount equal to fifty percent of any charitable contribution
deduction  allowed  under  section  one  hundred seventy of the internal
revenue code for taxable years beginning in two thousand nine  or  after
two thousand [twelve] FIFTEEN.
  (2) With respect to an individual whose New York adjusted gross income
is over ten million dollars, the New York itemized deduction shall be an
amount  equal  to  twenty-five  percent  of  any charitable contribution
deduction allowed under section one  hundred  seventy  of  the  internal
revenue  code  for  taxable  years beginning after two thousand nine AND
ENDING BEFORE TWO THOUSAND SIXTEEN.
  S 3. This act shall take effect immediately.

                                 PART E

  Section 1. Subparagraph 17  of  paragraph  (a)  of  subdivision  9  of
section 208 of the tax law is REPEALED.
  S  2. Paragraph (o) of subdivision 9 of section 208 of the tax law, as
amended by section 1 of part M of chapter  686  of  the  laws  of  2003,
clause  (A) of subparagraph 2 as amended by section 4 of part J of chap-
ter 60 of the laws of 2007, is amended to read as follows:
  (o) Related members expense add back [and income exclusion]. (1) Defi-
nitions. (A) Related member [or members. For purposes of this paragraph,
the term related member or members means a person, corporation, or other
entity, including an entity that is treated as a  partnership  or  other
pass-through  vehicle  for  purposes  of  federal taxation, whether such
person, corporation or entity is a  taxpayer  or  not,  where  one  such
person,  corporation, or entity, or set of related persons, corporations
or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all
taxpayers under articles nine, nine-A, thirteen, twenty-two, thirty-two,
thirty-three or thirty-three-A of this chapter]. "RELATED MEMBER"  MEANS
A  RELATED  PERSON  AS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVEN-
UE CODE, EXCEPT THAT "FIFTY  PERCENT"  SHALL  BE  SUBSTITUTED  FOR  "TEN
PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY STATE OR U.S.  POSSESSION, THE  MAXIMUM  STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-
DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET
INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER
WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER  ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-

S. 2609--B                         20                         A. 3009--B

TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF  TAX  IMPOSED  BY  SAID
JURISDICTION  SHALL  BE  DECREASED  TO REFLECT THE STATUTORY RATE OF TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by  the commissioner, and [includes] INCLUDE amounts allowable as inter-
est deductions under section one hundred  sixty-three  of  the  internal
revenue  code to the extent such amounts are directly or indirectly for,
related to or in connection with the acquisition,  use,  maintenance  or
management,  ownership, sale, exchange or disposition of such intangible
assets.
  (D) Valid Business Purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in  a combined report with a related member pursuant to subdivision four
of section two hundred eleven  of  this  article,  for  the  purpose  of
computing entire net income or other applicable taxable basis, a taxpay-
er  must  add  back royalty payments [to a] DIRECTLY OR INDIRECTLY PAID,
ACCRUED, OR INCURRED IN CONNECTION WITH ONE OR MORE DIRECT  OR  INDIRECT
TRANSACTIONS  WITH ONE OR MORE related [member] MEMBERS during the taxa-
ble year to the extent deductible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and  such  transaction  was  done for a valid business
purpose and the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income or other taxable basis, a taxpayer shall  be  allowed  to  deduct
royalty  payments  directly or indirectly received from a related member
during the taxable year to the extent included in the taxpayer's federal
taxable income unless such royalty payments would not be required to  be
added  back  under  subparagraph  two of this paragraph or other similar
provision in this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT  REQUIRED  IN
THIS  PARAGRAPH  SHALL  NOT  APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE
TYPE  AND  IN  THE  FORM SPECIFIED BY THE COMMISSIONER, MEETS ALL OF THE
FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS  SUBJECT  TO  TAX  IN
THIS  STATE  OR  ANOTHER  STATE  OR POSSESSION OF THE UNITED STATES OR A
FOREIGN NATION OR SOME COMBINATION THEREOF ON A TAX BASE  THAT  INCLUDED

S. 2609--B                         21                         A. 3009--B

THE  ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER; (II) THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED OR INCURRED SUCH PORTION TO A  PERSON  THAT  IS  NOT  A  RELATED
MEMBER;  AND  (III)  THE  TRANSACTION GIVING RISE TO THE ROYALTY PAYMENT
BETWEEN THE TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR  A  VALID
BUSINESS PURPOSE.
  (II)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION TWO HUNDRED TEN  OF  THIS  ARTICLE
FOR THE TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE ROYALTY PAYMENT
WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER  ORGANIZED  UNDER  THE
LAWS  OF  A  COUNTRY  OTHER  THAN  THE  UNITED  STATES; (II) THE RELATED
MEMBER'S INCOME FROM THE TRANSACTION  WAS  SUBJECT  TO  A  COMPREHENSIVE
INCOME  TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III) THE
RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX BASE THAT
INCLUDED THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE  TAXPAYER;
(IV)  THE RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS TAXED IN SUCH
COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO  THAT  IMPOSED  BY
THIS  STATE;  AND  (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED
PURSUANT TO A TRANSACTION THAT  WAS  UNDERTAKEN  FOR  A  VALID  BUSINESS
PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 3. Paragraph 6 of subdivision (a) of section 292 of the tax law,  as
amended  by  section 15 of part M of chapter 686 of the laws of 2003, is
amended to read as follows:
  (6) Related members expense add back  [and  income  exclusion].    (A)
Definitions.  (i) Related member [or members. For purposes of this para-
graph, the term related member or members means a  person,  corporation,
or other entity, including an entity that is treated as a partnership or
other  pass-through  vehicle  for  purposes of federal taxation, whether
such person, corporation or entity is a taxpayer or not, where one  such
person,  corporation, or entity, or set of related persons, corporations
or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all
taxpayers under article nine, nine-A, thirteen, twenty-two,  thirty-two,
thirty-three or thirty-three-A of this chapter].  "RELATED MEMBER" MEANS
A  RELATED  PERSON  AS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVEN-
UE CODE, EXCEPT THAT "FIFTY  PERCENT"  SHALL  BE  SUBSTITUTED  FOR  "TEN
PERCENT".

S. 2609--B                         22                         A. 3009--B

  (ii)  [Controlling  interest. A controlling interest shall mean (I) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (II) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX"  MEANS,  AS  TO ANY STATE OR U.S. POSSESSION, THE MAXIMUM STATUTORY
RATE OF TAX IMPOSED BY THE STATE OR  POSSESSION  ON  OR  MEASURED  BY  A
RELATED  MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT PERCENTAGE,
IF ANY, APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF  SAID  JURIS-
DICTION.  FOR  PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF TAX AS
TO ANY STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED  MEMBER'S  NET
INCOME  TAX  LIABILITY IN SAID JURISDICTION IS REPORTED ON A COMBINED OR
CONSOLIDATED RETURN INCLUDING BOTH THE TAXPAYER AND THE  RELATED  MEMBER
WHERE  THE  REPORTED  TRANSACTIONS  BETWEEN THE TAXPAYER AND THE RELATED
MEMBER ARE ELIMINATED OR OFFSET.  ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF  TAX  IMPOSED  BY  SAID
JURISDICTION  SHALL  BE  DECREASED  TO REFLECT THE STATUTORY RATE OF TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (iii)  Royalty  payments.  Royalty  payments  are  payments   directly
connected to the acquisition, use, maintenance or management, ownership,
sale,  exchange, or any other disposition of licenses, trademarks, copy-
rights, trade names, trade  dress,  service  marks,  mask  works,  trade
secrets,  patents  and  any  other similar types of intangible assets as
determined by the commissioner, and [includes] INCLUDE amounts allowable
as interest deductions under section  one  hundred  sixty-three  of  the
internal  revenue  code to the extent such amounts are directly or indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance or management, ownership, sale, exchange or disposition of  such
intangible assets.
  (iv)  Valid  business purpose. A valid business purpose is one or more
business purposes other than the  avoidance  or  reduction  of  taxation
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the  economic  position  of
the taxpayer. The economic position of the taxpayer includes an increase
in  the  market share of the taxpayer, or the entry by the taxpayer into
new business markets.
  (B) Royalty expense add backs. (i) For the purpose  of  computing  New
York unrelated business taxable income, a taxpayer must add back royalty
payments  [to  a]  DIRECTLY  OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN
CONNECTION WITH ONE OR MORE DIRECT OR INDIRECT TRANSACTIONS WITH ONE  OR
MORE  related  [member]  MEMBERS  during  the taxable year to the extent
deductible in calculating federal unrelated business taxable income;
  (ii) [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (I) the related member during the same taxable year directly or  indi-
rectly  paid  or incurred the amount to a person or entity that is not a

S. 2609--B                         23                         A. 3009--B

related member, and such transaction was done for a valid  business  and
the payments are made at arm's length;
  (II)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (C)  Royalty  income exclusions. For the purpose of computing New York
unrelated business taxable income, a taxpayer shall be allowed to deduct
royalty payments directly or indirectly received from a  related  member
during the taxable year to the extent included in the taxpayer's federal
taxable  income unless such royalty payments would not be required to be
added back under subparagraph (B) of this  paragraph  or  other  similar
provision  in  this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT REQUIRED IN
THIS PARAGRAPH SHALL NOT APPLY TO THE PORTION  OF  THE  ROYALTY  PAYMENT
THAT  THE  TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER,  MEETS  ALL  OF  THE
FOLLOWING  REQUIREMENTS:  (A)  THE  RELATED MEMBER WAS SUBJECT TO TAX IN
THIS STATE OR ANOTHER STATE OR POSSESSION OF  THE  UNITED  STATES  OR  A
FOREIGN  NATION  OR SOME COMBINATION THEREOF ON A TAX BASE THAT INCLUDED
THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER;  (B)  THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED  OR  INCURRED  SUCH  PORTION  TO  A PERSON THAT IS NOT A RELATED
MEMBER; AND (C) THE TRANSACTION  GIVING  RISE  TO  THE  ROYALTY  PAYMENT
BETWEEN  THE  TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR A VALID
BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF  THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE RELATED  MEMBER
WAS  SUBJECT  TO  TAX  ON OR MEASURED BY ITS NET INCOME IN THIS STATE OR
ANOTHER STATE OR POSSESSION OF THE UNITED  STATES  OR  SOME  COMBINATION
THEREOF;  (B)  THE  TAX  BASE  FOR SAID TAX INCLUDED THE ROYALTY PAYMENT
PAID, ACCRUED OR INCURRED BY THE TAXPAYER; AND (C) THE AGGREGATE  EFFEC-
TIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDICTIONS IS
NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT APPLIED TO
THE  TAXPAYER  UNDER  SECTION TWO HUNDRED NINETY OF THIS ARTICLE FOR THE
TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE ROYALTY PAYMENT
WAS  PAID,  ACCRUED  OR INCURRED TO A RELATED MEMBER ORGANIZED UNDER THE
LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (B) THE RELATED MEMBER'S
INCOME FROM THE TRANSACTION WAS SUBJECT TO A  COMPREHENSIVE  INCOME  TAX
TREATY  BETWEEN  SUCH  COUNTRY  AND  THE  UNITED STATES; (C) THE RELATED
MEMBER WAS SUBJECT TO TAX IN  A  FOREIGN  NATION  ON  A  TAX  BASE  THAT
INCLUDED  THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER;
(D) THE RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS TAXED  IN  SUCH
COUNTRY  AT  AN  EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT IMPOSED BY
THIS STATE; AND (E) THE ROYALTY PAYMENT WAS PAID,  ACCRUED  OR  INCURRED
PURSUANT  TO  A  TRANSACTION  THAT  WAS  UNDERTAKEN FOR A VALID BUSINESS
PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF  THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR  HER  DISCRETION,  AGREE  TO  THE  APPLICATION  OR USE OF ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE

S. 2609--B                         24                         A. 3009--B

OF SUCH AGREEMENT THE INCOME OF  THE  TAXPAYER  WOULD  NOT  BE  PROPERLY
REFLECTED.
  S  4.  Paragraph 19 of subsection (c) of section 612 of the tax law is
REPEALED.
  S 5. Subsection (r) of section 612 of  the  tax  law,  as  amended  by
section  3  of  part M of chapter 686 of the laws of 2003, is amended to
read as follows:
  (r) Related members expense add back  [and  income  exclusion].    (1)
Definitions.  (A)  Related  member  [or  members.  For  purposes of this
subsection, the term related member or members means  a  person,  corpo-
ration,  or other entity, including an entity that is treated as a part-
nership or other pass-through vehicle for purposes of federal  taxation,
whether  such  person, corporation or entity is a taxpayer or not, where
one such person, corporation, or entity,  or  set  of  related  persons,
corporations  or  entities,  directly  or  indirectly owns or controls a
controlling interest in another entity.  Such  entity  or  entities  may
include  all taxpayers under article nine, nine-A, thirteen, twenty-two,
thirty-two, thirty-three or thirty-three-A of this chapter].    "RELATED
MEMBER"  MEANS  A RELATED PERSON AS DEFINED IN SUBPARAGRAPH (C) OF PARA-
GRAPH THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF  THE
INTERNAL  REVENUE CODE, EXCEPT THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED
FOR "TEN PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation,  trust  or other entity.] EFFECTIVE RATE OF TAX.  "EFFECTIVE RATE
OF TAX" MEANS, AS TO ANY STATE OR U.S. POSSESSION, THE MAXIMUM STATUTORY
RATE OF TAX IMPOSED BY THE STATE OR  POSSESSION  ON  OR  MEASURED  BY  A
RELATED  MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT PERCENTAGE,
IF ANY, APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF  SAID  JURIS-
DICTION.  FOR  PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF TAX AS
TO ANY STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED  MEMBER'S  NET
INCOME  TAX  LIABILITY IN SAID JURISDICTION IS REPORTED ON A COMBINED OR
CONSOLIDATED RETURN INCLUDING BOTH THE TAXPAYER AND THE  RELATED  MEMBER
WHERE  THE  REPORTED  TRANSACTIONS  BETWEEN THE TAXPAYER AND THE RELATED
MEMBER ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS  DEFINITION,
WHEN  COMPUTING  THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN WHICH A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR ADJUSTMENT THAT IS DEPENDENT UPON THE RELATED  MEMBER  EITHER  MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT  JURISDICTION,  THE  MAXIMUM  STATUTORY RATE OF TAX IMPOSED BY SAID
JURISDICTION SHALL BE DECREASED TO REFLECT THE  STATUTORY  RATE  OF  TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by  the commissioner, and [includes] INCLUDE amounts allowable as inter-
est deductions under section one hundred  sixty-three  of  the  internal
revenue  code to the extent such amounts are directly or indirectly for,

S. 2609--B                         25                         A. 3009--B

related to or in connection with the acquisition,  use,  maintenance  or
management,  ownership, sale, exchange or disposition of such intangible
assets.
  (D)  Valid  business  purpose. A valid business purpose is one or more
business purposes, other than the avoidance or  reduction  of  taxation,
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the  economic  position  of
the taxpayer. The economic position of the taxpayer includes an increase
in  the  market share of the taxpayer, or the entry by the taxpayer into
new business markets.
  (2) Royalty expense add backs. (A) For the purpose  of  computing  New
York  adjusted  gross  income, a taxpayer must add back royalty payments
[to a] DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED  IN  CONNECTION
WITH  ONE  OR  MORE  DIRECT  OR  INDIRECT  TRANSACTIONS WITH ONE OR MORE
related [member] MEMBERS during the taxable year to the  extent  deduct-
ible in calculating federal taxable income.
  (B)  [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (i) the related member during the same taxable year directly or  indi-
rectly  paid  or incurred the amount to a person or entity that is not a
related member, and such transaction was done for a valid  business  and
the payments are made at arm's length;
  (ii)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (3)  Royalty  income exclusions. For the purpose of computing New York
adjusted gross income, a taxpayer shall be  allowed  to  deduct  royalty
payments  directly  or  indirectly received from a related member during
the taxable year to the extent included in the taxpayer's federal  taxa-
ble  income  unless  such  royalty  payments would not be required to be
added back under paragraph two  of  this  subsection  or  other  similar
provision  in  this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT REQUIRED IN
THIS SUBSECTION SHALL NOT APPLY TO THE PORTION OF  THE  ROYALTY  PAYMENT
THAT  THE  TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER,  MEETS  ALL  OF  THE
FOLLOWING  REQUIREMENTS:  (I)  THE  RELATED MEMBER WAS SUBJECT TO TAX IN
THIS STATE OR ANOTHER STATE OR POSSESSION OF  THE  UNITED  STATES  OR  A
FOREIGN  NATION  OR SOME COMBINATION THEREOF ON A TAX BASE THAT INCLUDED
THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE TAXPAYER; (II)  THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED  OR  INCURRED  SUCH  PORTION  TO  A PERSON THAT IS NOT A RELATED
MEMBER; AND (III) THE TRANSACTION GIVING RISE  TO  THE  ROYALTY  PAYMENT
BETWEEN  THE  TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR A VALID
BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX   INCLUDED THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT

S. 2609--B                         26                         A. 3009--B

APPLIED TO THE TAXPAYER UNDER SECTION SIX HUNDRED ONE  OF  THIS  ARTICLE
FOR THE TAXABLE YEAR.
  (III)  THE  ADJUSTMENT  REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN  THE  FORM  SPECIFIED BY THE COMMISSIONER, THAT: (I) THE ROYALTY
PAYMENT WAS PAID, ACCRUED OR INCURRED  TO  A  RELATED  MEMBER  ORGANIZED
UNDER  THE  LAWS  OF  A  COUNTRY  OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED  IN  SUCH  COUNTRY AT AN EFFECTIVE TAX RATE AT LEAST EQUAL TO THAT
IMPOSED BY THIS STATE; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED  OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF  ALTERNATIVE  ADJUSTMENTS OR COMPUTATIONS.   THE COMMISSIONER MAY, IN
HIS OR HER DISCRETION, AGREE TO THE APPLICATION OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 6. Paragraph 17 of subsection (e) of section 1453 of the tax law  is
REPEALED.
  S  7.  Subsection  (r)  of  section 1453 of the tax law, as amended by
section 5 of part M of chapter 686 of the laws of 2003, subparagraph (A)
of paragraph 2 as amended by section 5 of part J of chapter  60  of  the
laws of 2007, is amended to read as follows:
  (r)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related  member  [or  members.  For  purposes  of  this
subsection,  the  term  related member or members means a person, corpo-
ration, or other entity, including an entity that is treated as a  part-
nership  or other pass-through vehicle for purposes of federal taxation,
whether such person, corporation or entity is a taxpayer or  not,  where
one  such  person,  corporation,  or  entity, or set of related persons,
corporations or entities, directly or  indirectly  owns  or  controls  a
controlling  interest  in  another  entity.  Such entity or entities may
include all taxpayers under article nine, nine-A, thirteen,  twenty-two,
thirty-two,  thirty-three  or thirty-three-A of this chapter].  "RELATED
MEMBER" MEANS A RELATED PERSON AS DEFINED IN SUBPARAGRAPH (C)  OF  PARA-
GRAPH  THREE OF SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE
INTERNAL REVENUE CODE, EXCEPT THAT "FIFTY PERCENT" SHALL BE  SUBSTITUTED
FOR "TEN PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY STATE OR U.S.  POSSESSION, THE  MAXIMUM  STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-

S. 2609--B                         27                         A. 3009--B

DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET
INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER
WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER  ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING INTANGIBLE PROPERTY OR COLLECTING INTEREST INCOME IN
THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF  TAX  IMPOSED  BY  SAID
JURISDICTION  SHALL  BE  DECREASED  TO REFLECT THE STATUTORY RATE OF TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by the commissioner, and [includes] INCLUDE amounts allowable as  inter-
est  deductions  under  section  one hundred sixty-three of the internal
revenue code to the extent such amounts are directly or indirectly  for,
related  to  or  in connection with the acquisition, use, maintenance or
management, ownership, sale, exchange or disposition of such  intangible
assets.
  (D)  Valid  business  purpose. A valid business purpose is one or more
business purposes, other than the avoidance or  reduction  of  taxation,
which alone or in combination constitute the primary motivation for some
business  activity or transaction, which activity or transaction changes
in a meaningful way, apart from tax effects, the  economic  position  of
the taxpayer. The economic position of the taxpayer includes an increase
in  the  market share of the taxpayer, or the entry by the taxpayer into
new business markets.
  (2) Royalty expense add backs. (A) Except where a taxpayer is included
in a combined return with a related member pursuant to subsection (f) of
section fourteen hundred sixty-two of this article, for the  purpose  of
computing  entire  net income, a taxpayer must add back royalty payments
[to a] DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED  IN  CONNECTION
WITH  ONE  OR  MORE  DIRECT  OR  INDIRECT  TRANSACTIONS WITH ONE OR MORE
related [member] MEMBERS during the taxable year to the  extent  deduct-
ible in calculating federal taxable income.
  (B)  [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (i) the related member during the same taxable year directly or  indi-
rectly  paid  or incurred the amount to a person or entity that is not a
related member, and such transaction was done for a valid  business  and
the payments are made at arm's length;
  (ii)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income,  a taxpayer shall be allowed to deduct royalty payments directly
or indirectly received from a related member during the taxable year  to
the extent included in the taxpayer's federal taxable income unless such

S. 2609--B                         28                         A. 3009--B

royalty  payments would not be required to be added back under paragraph
two of this subsection or other  similar  provision  in  this  chapter.]
EXCEPTIONS.  (I)  THE  ADJUSTMENT  REQUIRED IN THIS SUBSECTION SHALL NOT
APPLY  TO  THE  PORTION  OF THE ROYALTY PAYMENT THAT THE TAXPAYER ESTAB-
LISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE  AND  IN  THE  FORM
SPECIFIED  BY THE COMMISSIONER, MEETS ALL OF THE FOLLOWING REQUIREMENTS:
(I) THE RELATED MEMBER WAS SUBJECT TO TAX IN THIS STATE OR ANOTHER STATE
OR POSSESSION OF THE UNITED STATES OR A FOREIGN NATION OR SOME  COMBINA-
TION  THEREOF  ON  A  TAX  BASE  THAT INCLUDED THE ROYALTY PAYMENT PAID,
ACCRUED OR INCURRED BY THE TAXPAYER; (II) THE RELATED MEMBER DURING  THE
SAME  TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID, ACCRUED OR INCURRED SUCH
PORTION TO A PERSON THAT IS NOT A RELATED MEMBER; AND (III)  THE  TRANS-
ACTION  GIVING  RISE TO THE ROYALTY PAYMENT BETWEEN THE TAXPAYER AND THE
RELATED MEMBER WAS UNDERTAKEN FOR A VALID BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (I) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION  FOURTEEN  HUNDRED  FIFTY-FIVE  OF
THIS ARTICLE FOR THE TAXABLE YEAR.
  (III)  THE  ADJUSTMENT  REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN  THE  FORM  SPECIFIED BY THE COMMISSIONER, THAT: (I) THE ROYALTY
PAYMENT WAS PAID, ACCRUED OR INCURRED  TO  A  RELATED  MEMBER  ORGANIZED
UNDER  THE  LAWS  OF  A  COUNTRY  OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY THIS STATE; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBSECTION SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 8. Paragraph 14 of subdivision (b) of section 1503 of the  tax  law,
as  amended  by  section 7 of part M of chapter 686 of the laws of 2003,
clause (i) of subparagraph (B) as amended by section  6  of  part  J  of
chapter 60 of the laws of 2007, is amended to read as follows:
  (14)  Related  members  expense  add back [and income exclusion].  (A)
Definitions. (i) Related member [or members. For purposes of this  para-
graph,  the  term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such

S. 2609--B                         29                         A. 3009--B

person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers  under article nine, nine-A, thirteen, twenty-two, thirty-two,
thirty-three or thirty-three-A of this chapter]. "RELATED MEMBER"  MEANS
A  RELATED  PERSON  AS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF
SUBSECTION (B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVEN-
UE CODE, EXCEPT THAT "FIFTY  PERCENT"  SHALL  BE  SUBSTITUTED  FOR  "TEN
PERCENT".
  (ii)  [Controlling  interest. A controlling interest shall mean (I) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (II) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY STATE OR U.S. POSSESSION,  THE  MAXIMUM  STATUTORY
RATE  OF  TAX  IMPOSED  BY  THE  STATE OR POSSESSION ON OR MEASURED BY A
RELATED MEMBER'S NET INCOME MULTIPLIED BY THE APPORTIONMENT  PERCENTAGE,
IF  ANY,  APPLICABLE TO THE RELATED MEMBER UNDER THE LAWS OF SAID JURIS-
DICTION. FOR PURPOSES OF THIS DEFINITION, THE EFFECTIVE RATE OF  TAX  AS
TO  ANY  STATE OR U.S. POSSESSION IS ZERO WHERE THE RELATED MEMBER'S NET
INCOME TAX LIABILITY IN SAID JURISDICTION IS REPORTED ON A  COMBINED  OR
CONSOLIDATED  RETURN  INCLUDING BOTH THE TAXPAYER AND THE RELATED MEMBER
WHERE THE REPORTED TRANSACTIONS BETWEEN THE  TAXPAYER  AND  THE  RELATED
MEMBER  ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF THIS DEFINITION,
WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A JURISDICTION IN  WHICH  A
RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR SIMI-
LAR  ADJUSTMENT  THAT  IS DEPENDENT UPON THE RELATED MEMBER EITHER MAIN-
TAINING OR MANAGING  INTANGIBLE PROPERTY OR COLLECTING  INTEREST  INCOME
IN  THAT JURISDICTION, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
JURISDICTION SHALL BE DECREASED TO REFLECT THE  STATUTORY  RATE  OF  TAX
THAT APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT
OR SIMILAR ADJUSTMENT.
  (iii)   Royalty  payments.  Royalty  payments  are  payments  directly
connected to the acquisition, use, maintenance or management, ownership,
sale, exchange, or any other disposition of licenses, trademarks,  copy-
rights,  trade  names,  trade  dress,  service  marks, mask works, trade
secrets, patents and any other similar types  of  intangible  assets  as
determined by the commissioner, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (iv) Valid business purpose. A valid business purpose is one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (B) Royalty expense add backs. (i) Except where a taxpayer is included
in  a  combined return with a related member pursuant to subdivision (f)

S. 2609--B                         30                         A. 3009--B

of section fifteen hundred fifteen of this article, for the  purpose  of
computing  entire  net income, a taxpayer must add back royalty payments
[to a] DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED  IN  CONNECTION
WITH  ONE  OR  MORE  DIRECT  OR  INDIRECT  TRANSACTIONS WITH ONE OR MORE
related [member] MEMBERS during the taxable year to the  extent  deduct-
ible in calculating federal taxable income.
  (ii) [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (I)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (II) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (C) Royalty income exclusions. For the purpose of computing entire net
income, a taxpayer shall be allowed to deduct royalty payments  directly
or  indirectly received from a related member during the taxable year to
the extent included in the taxpayer's federal taxable income unless such
royalty payments would not be required to be added back  under  subpara-
graph (B) of this paragraph or other similar provision in this chapter.]
EXCEPTIONS.    (I)  THE  ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT
APPLY TO THE PORTION OF THE ROYALTY PAYMENT  THAT  THE  TAXPAYER  ESTAB-
LISHES,  BY  CLEAR  AND  CONVINCING EVIDENCE OF THE TYPE AND IN THE FORM
SPECIFIED BY THE COMMISSIONER, MEETS ALL OF THE FOLLOWING  REQUIREMENTS:
(A) THE RELATED MEMBER WAS SUBJECT TO TAX IN THIS STATE OR ANOTHER STATE
OR  POSSESSION OF THE UNITED STATES OR A FOREIGN NATION OR SOME COMBINA-
TION THEREOF ON A TAX BASE  THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,
ACCRUED  OR  INCURRED BY THE TAXPAYER; (B) THE RELATED MEMBER DURING THE
SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID, ACCRUED OR INCURRED  SUCH
PORTION  TO  A  PERSON  THAT IS NOT A RELATED MEMBER; AND (C) THE TRANS-
ACTION GIVING RISE TO THE ROYALTY PAYMENT BETWEEN THE TAXPAYER  AND  THE
RELATED MEMBER WAS UNDERTAKEN FOR A VALID BUSINESS PURPOSE.
  (II)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE RELATED MEMBER
WAS SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME  IN  THIS  STATE  OR
ANOTHER  STATE  OR  POSSESSION  OF THE UNITED STATES OR SOME COMBINATION
THEREOF; (B) THE TAX BASE FOR SAID  TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED OR INCURRED BY THE TAXPAYER; AND (C) THE AGGREGATE EFFEC-
TIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDICTIONS IS
NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT APPLIED TO
THE TAXPAYER UNDER SECTION FIFTEEN HUNDRED TWO, FIFTEEN  HUNDRED  TWO-A,
OR FIFTEEN HUNDRED TWO-B OF THIS ARTICLE FOR THE TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER, THAT: (A) THE ROYALTY PAYMENT
WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER  ORGANIZED  UNDER  THE
LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (B) THE RELATED MEMBER'S
INCOME  FROM  THE  TRANSACTION WAS SUBJECT TO A COMPREHENSIVE INCOME TAX
TREATY BETWEEN SUCH COUNTRY AND  THE  UNITED  STATES;  (C)  THE  RELATED
MEMBER  WAS  SUBJECT  TO  TAX  IN  A  FOREIGN  NATION ON A TAX BASE THAT
INCLUDED THE ROYALTY PAYMENT PAID, ACCRUED OR INCURRED BY THE  TAXPAYER;
(D)  THE  RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS TAXED IN SUCH

S. 2609--B                         31                         A. 3009--B

COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO  THAT  IMPOSED  BY
THIS  STATE;  AND  (E) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED
PURSUANT TO A TRANSACTION THAT  WAS  UNDERTAKEN  FOR  A  VALID  BUSINESS
PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER AND THE COMMISSIONER AGREE IN WRITING TO THE APPLICATION OR USE
OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS. THE COMMISSIONER MAY, IN HIS
OR HER DISCRETION, AGREE  TO  THE  APPLICATION  OR  USE  OF  ALTERNATIVE
ADJUSTMENTS OR COMPUTATIONS WHEN HE OR SHE CONCLUDES THAT IN THE ABSENCE
OF  SUCH  AGREEMENT  THE  INCOME  OF  THE TAXPAYER WOULD NOT BE PROPERLY
REFLECTED.
  S 9. Subdivision (e) of section 11-506 of the administrative  code  of
the city of New York, as added by section 17 of part M of chapter 686 of
the  laws  of 2003 and as relettered by chapter 633 of the laws of 2005,
is amended to read as follows:
  (e) Related members expense add back  [and  income  exclusion].    (1)
Definitions. (A) Related member [or members. For purposes of this subdi-
vision,  the term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers  under this title]. "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY
THE  CITY  ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED BY
THE APPORTIONMENT PERCENTAGE, IF ANY, APPLICABLE TO THE  RELATED  MEMBER
UNDER  THE  LAWS  OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFINITION,
THE EFFECTIVE RATE OF TAX AS TO ANY  CITY  IS  ZERO  WHERE  THE  RELATED
MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A COMBINED
OR  CONSOLIDATED  RETURN  INCLUDING  BOTH  THE  TAXPAYER AND THE RELATED
MEMBER WHERE THE REPORTED TRANSACTIONS  BETWEEN  THE  TAXPAYER  AND  THE
RELATED  MEMBER  ARE  ELIMINATED  OR  OFFSET. ALSO, FOR PURPOSES OF THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET  BY  A  CREDIT  OR
SIMILAR  ADJUSTMENT  THAT  IS  DEPENDENT  UPON THE RELATED MEMBER EITHER
MAINTAINING OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING  INTEREST
INCOME  IN  THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
CITY SHALL BE DECREASED TO  REFLECT  THE  STATUTORY  RATE  OF  TAX  THAT
APPLIES  TO  THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,

S. 2609--B                         32                         A. 3009--B

trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by the commissioner of finance, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2)  Royalty expense add backs. (A) For the purpose of computing unin-
corporated business entire net income, a taxpayer must add back  royalty
payments  [to  a]  DIRECTLY  OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN
CONNECTION WITH ONE OR MORE DIRECT OR INDIRECT TRANSACTIONS WITH ONE  OR
MORE  related  [member]  MEMBERS  during  the taxable year to the extent
deductible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing unincorpo-
rated business entire net income, a taxpayer shall be allowed to  deduct
royalty  payments  directly or indirectly received from a related member
during the taxable year to the extent included in the taxpayer's federal
taxable income unless such royalty payments would not be required to  be
added  back  under  paragraph  two  of this subdivision or other similar
provision in this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT  REQUIRED  IN
THIS  SUBDIVISION  SHALL NOT APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS ALL
OF THE FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX
IN  THIS  CITY  OR  ANOTHER  CITY  WITHIN THE UNITED STATES OR A FOREIGN
NATION OR SOME COMBINATION THEREOF ON  A  TAX  BASE  THAT  INCLUDED  THE
ROYALTY  PAYMENT  PAID,  ACCRUED  OR  INCURRED BY THE TAXPAYER; (II) THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED OR INCURRED SUCH PORTION TO A  PERSON  THAT  IS  NOT  A  RELATED
MEMBER;  AND  (III)  THE  TRANSACTION GIVING RISE TO THE ROYALTY PAYMENT
BETWEEN THE TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR  A  VALID
BUSINESS PURPOSE.
  (II)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE
RELATED MEMBER WAS SUBJECT TO TAX ON OR MEASURED BY ITS  NET  INCOME  IN

S. 2609--B                         33                         A. 3009--B

THIS  CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE  RATE  OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDIC-
TIONS IS NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF  TAX  THAT
APPLIED  TO  THE  TAXPAYER  UNDER SECTION 11-503 OF THIS CHAPTER FOR THE
TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT  APPLY  IF
THE  TAXPAYER  ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE
AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I)  THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED  UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY  THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL  NOT  APPLY  IF
THE  TAXPAYER  AND  THE  COMMISSIONER OF FINANCE AGREE IN WRITING TO THE
APPLICATION OR USE  OF  ALTERNATIVE  ADJUSTMENTS  OR  COMPUTATIONS.  THE
COMMISSIONER  OF  FINANCE  MAY,  IN  HIS OR HER DISCRETION, AGREE TO THE
APPLICATION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR
SHE CONCLUDES THAT IN THE ABSENCE OF SUCH AGREEMENT THE  INCOME  OF  THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S 10. Paragraph (n) of subdivision 8 of section 11-602 of the adminis-
trative code of the city of New York, as amended by section 19 of part M
of chapter 686 of the laws of 2003, is amended to read as follows:
  (n)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related member [or members. For purposes of this  para-
graph,  the  term related member or members means a person, corporation,
or other entity, including an entity that is treated as a partnership or
other pass-through vehicle for purposes  of  federal  taxation,  whether
such  person, corporation or entity is a taxpayer or not, where one such
person, corporation, or entity, or set of related persons,  corporations
or  entities,  directly  or  indirectly  owns  or controls a controlling
interest in another entity. Such entity  or  entities  may  include  all
taxpayers  under this title]. "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY
THE  CITY  ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED BY
THE APPORTIONMENT PERCENTAGE, IF ANY, APPLICABLE TO THE  RELATED  MEMBER
UNDER  THE  LAWS  OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFINITION,

S. 2609--B                         34                         A. 3009--B

THE EFFECTIVE RATE OF TAX AS TO ANY  CITY  IS  ZERO  WHERE  THE  RELATED
MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A COMBINED
OR  CONSOLIDATED  RETURN  INCLUDING  BOTH  THE  TAXPAYER AND THE RELATED
MEMBER  WHERE  THE  REPORTED  TRANSACTIONS  BETWEEN THE TAXPAYER AND THE
RELATED MEMBER ARE ELIMINATED OR OFFSET.  ALSO,  FOR  PURPOSES  OF  THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A  RELATED  MEMBER'S  NET  INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR
SIMILAR ADJUSTMENT THAT IS DEPENDENT  UPON  THE  RELATED  MEMBER  EITHER
MAINTAINING  OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING INTEREST
INCOME IN THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED  BY  SAID
CITY  SHALL  BE  DECREASED  TO  REFLECT  THE  STATUTORY RATE OF TAX THAT
APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH  CREDIT  OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by the commissioner of finance, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) For the purpose of computing entire
net  income  or other applicable taxable basis, a taxpayer must add back
royalty payments  [to  a]  DIRECTLY  OR  INDIRECTLY  PAID,  ACCRUED,  OR
INCURRED  IN CONNECTION WITH ONE OR MORE DIRECT OR INDIRECT TRANSACTIONS
WITH ONE OR MORE related [member] MEMBERS during the taxable year to the
extent deductible in calculating federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:
  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and  such  transaction  was  done for a valid business
purpose and the payments are made at arm's length;
  (ii) the royalty payments are paid or incurred  to  a  related  member
organized  under the laws of a country other than the United States, are
subject to a comprehensive income tax treaty between  such  country  and
the  United States, and are taxed in such country at a tax rate at least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income or other taxable basis, a taxpayer shall  be  allowed  to  deduct
royalty  payments  directly or indirectly received from a related member
during the taxable year to the extent included in the taxpayer's federal
taxable income unless such royalty payments would not be required to  be
added  back  under  subparagraph  two of this paragraph or other similar
provision in this chapter.] EXCEPTIONS. (I) THE ADJUSTMENT  REQUIRED  IN

S. 2609--B                         35                         A. 3009--B

THIS  PARAGRAPH  SHALL  NOT  APPLY TO THE PORTION OF THE ROYALTY PAYMENT
THAT THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE  OF  THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS ALL
OF THE FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX
IN  THIS  CITY  OR  ANOTHER  CITY  WITHIN THE UNITED STATES OR A FOREIGN
NATION OR SOME COMBINATION THEREOF ON  A  TAX  BASE  THAT  INCLUDED  THE
ROYALTY  PAYMENT  PAID,  ACCRUED  OR  INCURRED BY THE TAXPAYER; (II) THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED OR INCURRED SUCH PORTION TO A  PERSON  THAT  IS  NOT  A  RELATED
MEMBER;  AND  (III)  THE  TRANSACTION GIVING RISE TO THE ROYALTY PAYMENT
BETWEEN THE TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR  A  VALID
BUSINESS PURPOSE.
  (II)  THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE  TYPE  AND
IN  THE  FORM  SPECIFIED  BY  THE COMMISSIONER OF FINANCE, THAT: (I) THE
RELATED MEMBER WAS SUBJECT TO TAX ON OR MEASURED BY ITS  NET  INCOME  IN
THIS  CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION 11-604 OF THIS SUBCHAPTER FOR  THE
TAXABLE YEAR.
  (III) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF THE
TAXPAYER  ESTABLISHES,  BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE AND
IN THE FORM SPECIFIED BY THE COMMISSIONER  OF  FINANCE,  THAT:  (I)  THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED  UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY  THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS PARAGRAPH SHALL NOT APPLY IF  THE
TAXPAYER  AND THE COMMISSIONER OF FINANCE AGREE IN WRITING TO THE APPLI-
CATION OR USE OF ALTERNATIVE ADJUSTMENTS OR  COMPUTATIONS.  THE  COMMIS-
SIONER  OF  FINANCE MAY, IN HIS OR HER DISCRETION, AGREE TO THE APPLICA-
TION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN  HE  OR  SHE
CONCLUDES  THAT  IN  THE  ABSENCE  OF  SUCH  AGREEMENT THE INCOME OF THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S 11. Subdivision (q) of section 11-641 of the administrative code  of
the city of New York, as added by section 21 of part M of chapter 686 of
the laws of 2003, is amended to read as follows:
  (q)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related member [or members. For purposes of this subdi-
vision, the term related member or members means a person,  corporation,
or other entity, including an entity that is treated as a partnership or
other  pass-through  vehicle  for  purposes of federal taxation, whether
such person, corporation or entity is a taxpayer or not, where one  such
person,  corporation, or entity, or set of related persons, corporations
or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all

S. 2609--B                         36                         A. 3009--B

taxpayers under this title].  "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B)  [Controlling  interest.  A controlling interest shall mean (i) in
the case of a corporation, either thirty percent or more  of  the  total
combined  voting  power  of all classes of stock of such corporation, or
thirty percent or more of the capital, profits or beneficial interest in
such voting stock of such corporation, and (ii) in the case of  a  part-
nership,  association,  trust or other entity, thirty percent or more of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX.   "EFFECTIVE  RATE
OF TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED
BY  THE  CITY ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED
BY THE APPORTIONMENT PERCENTAGE,  IF  ANY,  APPLICABLE  TO  THE  RELATED
MEMBER  UNDER  THE LAWS OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFI-
NITION, THE EFFECTIVE RATE OF TAX AS TO  ANY  CITY  IS  ZERO  WHERE  THE
RELATED  MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A
COMBINED OR CONSOLIDATED RETURN INCLUDING  BOTH  THE  TAXPAYER  AND  THE
RELATED  MEMBER WHERE THE REPORTED TRANSACTIONS BETWEEN THE TAXPAYER AND
THE RELATED MEMBER ARE ELIMINATED OR OFFSET. ALSO, FOR PURPOSES OF  THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A  RELATED  MEMBER'S  NET  INCOME IS ELIMINATED OR OFFSET BY A CREDIT OR
SIMILAR ADJUSTMENT THAT IS DEPENDENT  UPON  THE  RELATED  MEMBER  EITHER
MAINTAINING  OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING INTEREST
INCOME IN THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED  BY  SAID
CITY  SHALL  BE  DECREASED  TO  REFLECT  THE  STATUTORY RATE OF TAX THAT
APPLIES TO THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH  CREDIT  OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to  the  acquisition,  use,  maintenance or management, ownership, sale,
exchange, or any other disposition of licenses, trademarks,  copyrights,
trade  names,  trade  dress,  service  marks, mask works, trade secrets,
patents and any other similar types of intangible assets  as  determined
by the commissioner of finance, and [includes] INCLUDE amounts allowable
as  interest  deductions  under  section  one hundred sixty-three of the
internal revenue code to the extent such amounts are directly  or  indi-
rectly for, related to or in connection with the acquisition, use, main-
tenance  or management, ownership, sale, exchange or disposition of such
intangible assets.
  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2) Royalty expense add backs. (A) For the purpose of computing entire
net income, a taxpayer must add back royalty payments [to a] DIRECTLY OR
INDIRECTLY  PAID,  ACCRUED,  OR  INCURRED IN CONNECTION WITH ONE OR MORE
DIRECT OR INDIRECT  TRANSACTIONS  WITH  ONE  OR  MORE  related  [member]
MEMBERS  during the taxable year to the extent deductible in calculating
federal taxable income.
  (B) [The add back of royalty payments shall not be required if and  to
the extent that such payments meet either of the following conditions:

S. 2609--B                         37                         A. 3009--B

  (i)  the related member during the same taxable year directly or indi-
rectly paid or incurred the amount to a person or entity that is  not  a
related  member,  and such transaction was done for a valid business and
the payments are made at arm's length;
  (ii)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (3) Royalty income exclusions. For the purpose of computing entire net
income,  a taxpayer shall be allowed to deduct royalty payments directly
or indirectly received from a related member during the taxable year  to
the extent included in the taxpayer's federal taxable income unless such
royalty  payments would not be required to be added back under paragraph
two of this subdivision or other similar  provision  in  this  chapter.]
EXCEPTIONS.  (I)  THE  ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT
APPLY TO THE PORTION OF THE ROYALTY PAYMENT  THAT  THE  TAXPAYER  ESTAB-
LISHES,  BY  CLEAR  AND  CONVINCING EVIDENCE OF THE TYPE AND IN THE FORM
SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS  ALL  OF  THE  FOLLOWING
REQUIREMENTS:  (I) THE RELATED MEMBER WAS SUBJECT TO TAX IN THIS CITY OR
ANOTHER CITY WITHIN THE UNITED STATES OR A FOREIGN NATION OR SOME COMBI-
NATION THEREOF ON A TAX BASE THAT INCLUDED  THE  ROYALTY  PAYMENT  PAID,
ACCRUED  OR INCURRED BY THE TAXPAYER; (II) THE RELATED MEMBER DURING THE
SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID, ACCRUED OR INCURRED  SUCH
PORTION  TO  A PERSON THAT IS NOT A RELATED MEMBER; AND (III) THE TRANS-
ACTION GIVING RISE TO THE ROYALTY PAYMENT BETWEEN THE TAXPAYER  AND  THE
RELATED MEMBER WAS UNDERTAKEN FOR A VALID BUSINESS PURPOSE.
  (II)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE
RELATED MEMBER WAS SUBJECT TO TAX ON OR MEASURED BY ITS  NET  INCOME  IN
THIS  CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME COMBINATION
THEREOF; (II) THE TAX BASE FOR SAID TAX  INCLUDED  THE  ROYALTY  PAYMENT
PAID,  ACCRUED  OR  INCURRED  BY  THE  TAXPAYER; AND (III) THE AGGREGATE
EFFECTIVE RATE OF TAX APPLIED TO THE RELATED MEMBER IN  THOSE  JURISDIC-
TIONS  IS  NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF TAX THAT
APPLIED TO THE TAXPAYER UNDER SECTION 11-643.5  OF  THIS  PART  FOR  THE
TAXABLE YEAR.
  (III)  THE  ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF  THE  TYPE
AND  IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I) THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II)  THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE  RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX BASE
THAT INCLUDED THE ROYALTY PAYMENT  PAID,  ACCRUED  OR  INCURRED  BY  THE
TAXPAYER;  (IV)  THE  RELATED  MEMBER'S  INCOME FROM THE TRANSACTION WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED BY THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID,  ACCRUED  OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV)  THE  ADJUSTMENT  REQUIRED IN THIS SUBDIVISION SHALL NOT APPLY IF
THE TAXPAYER AND THE COMMISSIONER OF FINANCE AGREE  IN  WRITING  TO  THE
APPLICATION  OR  USE  OF  ALTERNATIVE  ADJUSTMENTS  OR COMPUTATIONS. THE
COMMISSIONER OF FINANCE MAY, IN HIS OR  HER  DISCRETION,  AGREE  TO  THE

S. 2609--B                         38                         A. 3009--B

APPLICATION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR
SHE  CONCLUDES  THAT  IN THE ABSENCE OF SUCH AGREEMENT THE INCOME OF THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S 12. Subdivision (t) of section 11-1712 of the administrative code of
the city of New York, as added by section 26 of part M of chapter 686 of
the laws of 2003, is amended to read as follows:
  (t)  Related  members  expense  add back [and income exclusion].   (1)
Definitions. (A) Related member [or members. For purposes of this subdi-
vision, the term related member or members means a person,  corporation,
or other entity, including an entity that is treated as a partnership or
other  pass-through  vehicle  for  purposes of federal taxation, whether
such person, corporation or entity is a taxpayer or not, where one  such
person,  corporation  or entity, or set of related persons, corporations
or entities, directly or  indirectly  owns  or  controls  a  controlling
interest  in  another  entity.  Such  entity or entities may include all
taxpayers under this title].  "RELATED MEMBER" MEANS A RELATED PERSON AS
DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH  THREE  OF  SUBSECTION  (B)  OF
SECTION  FOUR  HUNDRED  SIXTY-FIVE  OF THE INTERNAL REVENUE CODE, EXCEPT
THAT "FIFTY PERCENT" SHALL BE SUBSTITUTED FOR "TEN PERCENT".
  (B) [Controlling interest. A controlling interest shall  mean  (i)  in
the  case  of  a corporation, either thirty percent or more of the total
combined voting power of all classes of stock of  such  corporation,  or
thirty percent or more of the capital, profits or beneficial interest in
such  voting  stock of such corporation, and (ii) in the case of a part-
nership, association, trust or other entity, thirty percent or  more  of
the capital, profits or beneficial interest in such partnership, associ-
ation, trust or other entity.] EFFECTIVE RATE OF TAX. "EFFECTIVE RATE OF
TAX" MEANS, AS TO ANY CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY
THE  CITY  ON OR MEASURED BY A RELATED MEMBER'S NET INCOME MULTIPLIED BY
THE APPORTIONMENT PERCENTAGE, IF ANY, APPLICABLE TO THE  RELATED  MEMBER
UNDER  THE  LAWS  OF SAID JURISDICTION. FOR PURPOSES OF THIS DEFINITION,
THE EFFECTIVE RATE OF TAX AS TO ANY  CITY  IS  ZERO  WHERE  THE  RELATED
MEMBER'S NET INCOME TAX LIABILITY IN SAID CITY IS REPORTED ON A COMBINED
OR  CONSOLIDATED  RETURN  INCLUDING  BOTH  THE  TAXPAYER AND THE RELATED
MEMBER WHERE THE REPORTED TRANSACTIONS  BETWEEN  THE  TAXPAYER  AND  THE
RELATED  MEMBER  ARE  ELIMINATED  OR  OFFSET. ALSO, FOR PURPOSES OF THIS
DEFINITION, WHEN COMPUTING THE EFFECTIVE RATE OF TAX FOR A CITY IN WHICH
A RELATED MEMBER'S NET INCOME IS ELIMINATED OR OFFSET  BY  A  CREDIT  OR
SIMILAR  ADJUSTMENT  THAT  IS  DEPENDENT  UPON THE RELATED MEMBER EITHER
MAINTAINING OR  MANAGING  INTANGIBLE  PROPERTY  OR  COLLECTING  INTEREST
INCOME  IN  THAT CITY, THE MAXIMUM STATUTORY RATE OF TAX IMPOSED BY SAID
CITY SHALL BE DECREASED TO  REFLECT  THE  STATUTORY  RATE  OF  TAX  THAT
APPLIES  TO  THE RELATED MEMBER AS EFFECTIVELY REDUCED BY SUCH CREDIT OR
SIMILAR ADJUSTMENT.
  (C) Royalty payments. Royalty payments are payments directly connected
to the acquisition, use, maintenance  or  management,  ownership,  sale,
exchange,  or any other disposition of licenses, trademarks, copyrights,
trade names, trade dress, service  marks,  mask  works,  trade  secrets,
patents  and  any other similar types of intangible assets as determined
by the state  commissioner  of  taxation  and  finance,  and  [includes]
INCLUDE  amounts  allowable  as  interest  deductions  under section one
hundred sixty-three of the internal revenue  code  to  the  extent  such
amounts are directly or indirectly for, related to or in connection with
the  acquisition,  use,  maintenance  or  management,  ownership,  sale,
exchange or disposition of such intangible assets.

S. 2609--B                         39                         A. 3009--B

  (D) Valid business purpose. A valid business purpose is  one  or  more
business  purposes,  other  than the avoidance or reduction of taxation,
which alone or in combination constitute the primary motivation for some
business activity or transaction, which activity or transaction  changes
in  a  meaningful  way, apart from tax effects, the economic position of
the taxpayer. The economic position of the taxpayer includes an increase
in the market share of the taxpayer, or the entry by the  taxpayer  into
new business markets.
  (2)  Royalty  expense add backs. (A) For the purpose of computing city
adjusted gross income, a taxpayer must add back royalty payments [to  a]
DIRECTLY OR INDIRECTLY PAID, ACCRUED, OR INCURRED IN CONNECTION WITH ONE
OR  MORE  DIRECT  OR  INDIRECT  TRANSACTIONS  WITH  ONE  OR MORE related
[member] MEMBERS during the taxable year to  the  extent  deductible  in
calculating federal taxable income.
  (B)  [The add back of royalty payments shall not be required if and to
the extent that such payments meet either of the following conditions:
  (i) the related member during the same taxable year directly or  indi-
rectly  paid  or incurred the amount to a person or entity that is not a
related member, and such transaction was done for a valid  business  and
the payments are made at arm's length;
  (ii)  the  royalty  payments  are paid or incurred to a related member
organized under the laws of a country other than the United States,  are
subject  to  a  comprehensive income tax treaty between such country and
the United States, and are taxed in such country at a tax rate at  least
equal to that imposed by this state.
  (3)  Royalty  income exclusions. (A) For the purpose of computing city
adjusted gross income, a taxpayer shall be  allowed  to  deduct  royalty
payments  directly  or  indirectly received from a related member during
the taxable year to the extent included in the taxpayer's federal  taxa-
ble  income  unless  such  royalty  payments would not be required to be
added back under paragraph two of  this  subdivision  or  other  similar
provision  in  this title.] EXCEPTIONS.   (I) THE ADJUSTMENT REQUIRED IN
THIS SUBDIVISION SHALL NOT APPLY TO THE PORTION OF THE  ROYALTY  PAYMENT
THAT  THE  TAXPAYER ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE
TYPE AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, MEETS ALL
OF THE FOLLOWING REQUIREMENTS: (I) THE RELATED MEMBER WAS SUBJECT TO TAX
IN THIS CITY OR ANOTHER CITY WITHIN  THE  UNITED  STATES  OR  A  FOREIGN
NATION  OR  SOME  COMBINATION  THEREOF  ON  A TAX BASE THAT INCLUDED THE
ROYALTY PAYMENT PAID, ACCRUED OR INCURRED  BY  THE  TAXPAYER;  (II)  THE
RELATED MEMBER DURING THE SAME TAXABLE YEAR DIRECTLY OR INDIRECTLY PAID,
ACCRUED  OR  INCURRED  SUCH  PORTION  TO  A PERSON THAT IS NOT A RELATED
MEMBER; AND (III) THE TRANSACTION GIVING RISE  TO  THE  ROYALTY  PAYMENT
BETWEEN  THE  TAXPAYER AND THE RELATED MEMBER WAS UNDERTAKEN FOR A VALID
BUSINESS PURPOSE.
  (II) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL  NOT  APPLY  IF
THE  TAXPAYER  ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE
AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I)  THE
RELATED  MEMBER  WAS  SUBJECT TO TAX ON OR MEASURED BY ITS NET INCOME IN
THIS CITY OR ANOTHER CITY WITHIN THE UNITED STATES, OR SOME  COMBINATION
THEREOF;  (II)  THE  TAX BASE FOR SAID TAX  INCLUDED THE ROYALTY PAYMENT
PAID, ACCRUED OR INCURRED BY  THE  TAXPAYER;  AND  (III)  THE  AGGREGATE
EFFECTIVE  RATE  OF TAX APPLIED TO THE RELATED MEMBER IN THOSE JURISDIC-
TIONS IS NO LESS THAN EIGHTY PERCENT OF THE STATUTORY RATE OF  TAX  THAT
APPLIED  TO  THE  TAXPAYER UNDER SECTION 11-1701 OF THIS CHAPTER FOR THE
TAXABLE YEAR.

S. 2609--B                         40                         A. 3009--B

  (III) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL NOT  APPLY  IF
THE  TAXPAYER  ESTABLISHES, BY CLEAR AND CONVINCING EVIDENCE OF THE TYPE
AND IN THE FORM SPECIFIED BY THE COMMISSIONER OF FINANCE, THAT: (I)  THE
ROYALTY PAYMENT WAS PAID, ACCRUED OR INCURRED TO A RELATED MEMBER ORGAN-
IZED  UNDER THE LAWS OF A COUNTRY OTHER THAN THE UNITED STATES; (II) THE
RELATED MEMBER'S INCOME FROM THE TRANSACTION WAS SUBJECT TO A COMPREHEN-
SIVE INCOME TAX TREATY BETWEEN SUCH COUNTRY AND THE UNITED STATES; (III)
THE RELATED MEMBER WAS SUBJECT TO TAX IN A FOREIGN NATION ON A TAX  BASE
THAT  INCLUDED  THE  ROYALTY  PAYMENT  PAID,  ACCRUED OR INCURRED BY THE
TAXPAYER; (IV) THE RELATED MEMBER'S  INCOME  FROM  THE  TRANSACTION  WAS
TAXED IN SUCH COUNTRY AT AN EFFECTIVE RATE OF TAX AT LEAST EQUAL TO THAT
IMPOSED  BY  THIS CITY; AND (V) THE ROYALTY PAYMENT WAS PAID, ACCRUED OR
INCURRED PURSUANT TO A TRANSACTION THAT WAS UNDERTAKEN FOR A VALID BUSI-
NESS PURPOSE AND USING TERMS THAT REFLECT AN ARM'S LENGTH RELATIONSHIP.
  (IV) THE ADJUSTMENT REQUIRED IN THIS SUBDIVISION SHALL  NOT  APPLY  IF
THE  TAXPAYER  AND  THE  COMMISSIONER OF FINANCE AGREE IN WRITING TO THE
APPLICATION OR USE  OF  ALTERNATIVE  ADJUSTMENTS  OR  COMPUTATIONS.  THE
COMMISSIONER  OF  FINANCE  MAY,  IN  HIS OR HER DISCRETION, AGREE TO THE
APPLICATION OR USE OF ALTERNATIVE ADJUSTMENTS OR COMPUTATIONS WHEN HE OR
SHE CONCLUDES THAT IN THE ABSENCE OF SUCH AGREEMENT THE  INCOME  OF  THE
TAXPAYER WOULD NOT BE PROPERLY REFLECTED.
  S  13. This act shall take effect immediately and shall apply to taxa-
ble years beginning on or after January 1, 2013.

                                 PART F

  Section 1. Subparagraph (A) of paragraph 1,  and paragraphs 4 and 5 of
subsection (oo) of section 606 of the tax law, subparagraph (A) of para-
graph 1 as amended by chapter 472 of the laws of 2010 and paragraph 4 as
amended and paragraph 5 as added by chapter 239 of the laws of 2009, are
amended to read as follows:
  (A) For taxable years beginning on or after January first,  two  thou-
sand  ten  and  before  January  first, two thousand [fifteen] TWENTY, a
taxpayer shall be allowed a credit as hereinafter provided, against  the
tax  imposed  by this article, in an amount equal to one hundred percent
of the amount of credit allowed the taxpayer with respect to a certified
historic structure under subsection (a) (2) of section 47 of the federal
internal revenue code with respect to  a  certified  historic  structure
located within the state. Provided, however, the credit shall not exceed
five  million  dollars.  For taxable years beginning on or after January
first, two thousand [fifteen] TWENTY, a  taxpayer  shall  be  allowed  a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2)  of  section 47 of the federal internal revenue code with respect
to a certified historic structure located within  the  state;  provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4)  If  the amount of the credit [allowable under this subsection for
any taxable year shall exceed the taxpayer's  tax  for  such  year,  the
excess  may  be  carried over to the following year or years, and may be
applied against the taxpayer's tax for such year or years] ALLOWED UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR
SUCH YEAR, THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF  TAX  TO  BE
CREDITED  OR  REFUNDED  IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX
HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO  INTEREST
SHALL BE PAID THEREON.

S. 2609--B                         41                         A. 3009--B

  (5)  To be eligible for the credit allowable under this subsection the
rehabilitation project shall be in whole or in  part  [a  targeted  area
residence  within  the meaning of section 143(j) of the internal revenue
code or] located within a census tract which is identified as  being  at
or  below  one hundred percent of the state median family income [in the
most recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE  FROM
THE  AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 2. Subparagraph (A) of paragraph 1, and paragraphs 4 and 5 of subdi-
vision 40 of section 210 of the tax law, subparagraph (A) of paragraph 1
and paragraph 4 as amended and paragraph 5 as added by  chapter  472  of
the laws of 2010, are amended to read as follows:
  (A)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first,  two  thousand  [fifteen]  TWENTY,  a
taxpayer  shall be allowed a credit as hereinafter provided, against the
tax imposed by this article, in an amount equal to one  hundred  percent
of the amount of credit allowed the taxpayer with respect to a certified
historic structure under subsection (a) (2) of section 47 of the federal
internal  revenue  code  with  respect to a certified historic structure
located within the state. Provided, however, the credit shall not exceed
five million dollars. For taxable years beginning on  or  after  January
first,  two  thousand  [fifteen]  TWENTY,  a taxpayer shall be allowed a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2) of section 47 of the federal internal revenue code  with  respect
to  a  certified  historic structure located within the state. Provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4) The credit allowed under this subdivision  for  any  taxable  year
shall  not  reduce  the tax due for such year to less than the higher of
the amounts prescribed in paragraphs (c) and (d) of subdivision  one  of
this section. However, if the amount of the credit [allowable under this
subdivision  for  any  taxable  year shall exceed the taxpayer's tax for
such year, the excess may be carried  over  to  the  following  year  or
years,  and  may  be  deducted  from the taxpayer's tax for such year or
years] ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR  REDUCES  THE
TAX  TO  SUCH  AMOUNT,  ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.    PROVIDED,  HOWEVER,  THE PROVISIONS OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (5)  To  be  eligible for the credit allowable under this subdivision,
the rehabilitation project shall be in whole or in part [a targeted area
residence within the meaning of section 143(j) of the  internal  revenue
code  or]  located within a census tract which is identified as being at
or below one hundred percent of the state median family income  [in  the
most  recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE FROM
THE AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND  SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S  3.  Subparagraph  (A)  of  paragraph  1,  and paragraphs 4 and 5 of
subsection (u) of section 1456 of the tax law, as added by  chapter  472
of the laws of 2010, are amended to read as follows:
  (A)  For  taxable years beginning on or after January first, two thou-
sand ten and before January first,  two  thousand  [fifteen]  TWENTY,  a
taxpayer  shall be allowed a credit as hereinafter provided, against the

S. 2609--B                         42                         A. 3009--B

tax imposed by this article, in an amount equal to one  hundred  percent
of the amount of credit allowed the taxpayer with respect to a certified
historic  structure under subsection (a)(2) of section 47 of the federal
internal  revenue  code  with  respect to a certified historic structure
located within the state. Provided, however, the credit shall not exceed
five million dollars. For taxable years beginning on  or  after  January
first,  two  thousand  [fifteen]  TWENTY,  a taxpayer shall be allowed a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2) of section 47 of the federal internal revenue code  with  respect
to  a  certified  historic structure located within the state. Provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4) The credit allowed under this  subsection  for  any  taxable  year
shall not reduce the tax to less than the dollar amount fixed as a mini-
mum tax by subsection (b) of section fourteen hundred fifty-five of this
article.  [If  the  amount of credit allowable under this subsection for
any taxable year reduces the tax to  such  amount,  the  excess  may  be
carried  over  to  the following year or years, and may be deducted from
the taxpayer's tax for such year or years.] HOWEVER, IF  THE  AMOUNT  OF
CREDIT  ALLOWED  UNDER  THIS SUBSECTION FOR ANY TAXABLE YEAR REDUCES THE
TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS  NOT  DEDUCTIBLE  IN  SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (5) To be eligible for the credit allowable under this subsection  the
rehabilitation  project  shall  be  in whole or in part [a targeted area
residence within the meaning of section 143(j) of the  internal  revenue
code  or]  located within a census tract which is identified as being at
or below one hundred percent of the state median family income  [in  the
most  recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE FROM
THE AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND  SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 4. Subparagraph (A) of paragraph 1, and paragraphs 4 and 5 of subdi-
vision  (y)  of  section 1511 of the tax law, as added by chapter 472 of
the laws of 2010, are amended to read as follows:
  (A) For taxable years beginning on or after January first,  two  thou-
sand  ten  and  before  January  first, two thousand [fifteen] TWENTY, a
taxpayer shall be allowed a credit as hereinafter provided, against  the
tax  imposed  by this article, in an amount equal to one hundred percent
of the amount of credit allowed the taxpayer with respect to a certified
historic structure under subsection (a)(2) of section 47 of the  federal
internal  revenue  code  with  respect to a certified historic structure
located within the state. Provided, however, the credit shall not exceed
five million dollars. For taxable years beginning on  or  after  January
first,  two  thousand  [fifteen]  TWENTY,  a taxpayer shall be allowed a
credit as hereinafter provided, against the tax imposed by this article,
in an amount equal to thirty percent of the amount of credit allowed the
taxpayer with respect to a certified historic structure under subsection
(a)(2) of section 47 of the federal internal revenue code  with  respect
to  a  certified  historic structure located within the state. Provided,
however, the credit shall not exceed one hundred thousand dollars.
  (4) The credit allowed under this subdivision  for  any  taxable  year
shall  not  reduce  the  tax  due for such year to less than the minimum

S. 2609--B                         43                         A. 3009--B

fixed by paragraph four of subdivision (a) of  section  fifteen  hundred
two  or  section  fifteen  hundred  two-a  of this article, whichever is
applicable.  [If the amount of the credit allowable under this  subdivi-
sion for any taxable year reduces the tax to such amount, the excess may
be carried over to the following year or years, and may be deducted from
the  taxpayer's  tax  for such year or years.] HOWEVER, IF THE AMOUNT OF
CREDITS ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE
TAX  TO  SUCH  AMOUNT,  ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH
TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR
REFUNDED IN ACCORDANCE WITH  THE  PROVISIONS  OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  (5)  To  be  eligible for the credit allowable under this subdivision,
the rehabilitation project shall be in whole or in part [a targeted area
residence within the meaning of section 143(j) of the  internal  revenue
code  or]  located within a census tract which is identified as being at
or below one hundred percent of the state median family income  [in  the
most  recent federal census] AS CALCULATED USING A FIVE YEAR SAMPLE FROM
THE AMERICAN COMMUNITY SURVEY BEGINNING WITH THE YEAR TWO THOUSAND  SIX-
-YEAR TWO THOUSAND ELEVEN SAMPLE.
  S 5. This act shall take effect immediately and shall apply to taxable
years  beginning  on  and  after  January  1, 2013; provided however the
amendments to paragraph 4 of subsection (oo) of section 606 of  the  tax
law  made  by  section one of this act, the amendments to paragraph 4 of
subdivision 40 of section 210 of the tax law made by section two of this
act, the amendments to paragraph 4 of subsection (u) of section 1456  of
the  tax  law  made  by  section three of this act and the amendments to
paragraph 4 of subdivision (y) of section 1511 of the tax  law  made  by
section  four  of  this  act shall take effect January 1, 2015 and shall
apply to taxable years beginning on and after January 1, 2015 for quali-
fied rehabilitation placed in service on or after January 1, 2015.

                                 PART G

  Section 1. Section 187-b of the tax law, as amended by section  14  of
part  W-1  of  chapter  109  of  the laws of 2006, is amended to read as
follows:
  S 187-b. [Alternative fuels credit] ELECTRIC VEHICLE RECHARGING  PROP-
ERTY  CREDIT.  1.  General.  A taxpayer shall be allowed a credit, to be
credited against the taxes imposed under sections  one  hundred  eighty-
three,  one  hundred  eighty-four,  and  one hundred eighty-five of this
article. Such credit, to be computed as hereinafter provided,  shall  be
allowed  for  [alternative  fuel  vehicle  refueling]  ELECTRIC  VEHICLE
RECHARGING property placed in service during the taxable year. Provided,
however, that the amount  of  such  credit  allowable  against  the  tax
imposed  by section one hundred eighty-four of this article shall be the
excess of the credit allowed by this section over  the  amount  of  such
credit  allowable against the tax imposed by section one hundred eighty-
three of this article.
  2. [Alternative fuel  vehicle  refueling  property]  ELECTRIC  VEHICLE
RECHARGING  PROPERTY.    The  credit under this section for [alternative
fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING property shall equal
FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOUSAND DOLLARS OR
fifty percent of the cost of any such property:
  (a) which is located in this state; [and]

S. 2609--B                         44                         A. 3009--B

  (b) [for which a credit is allowed  under  section  thirty  C  of  the
internal revenue code but not including alternative fuel vehicle refuel-
ing  property  relating to a qualified hybrid vehicle as such vehicle is
defined in subparagraph (B) of paragraph  three  of  subsection  (p)  of
section  six  hundred  six  of  this chapter] WHICH CONSTITUTES ELECTRIC
VEHICLE RECHARGING PROPERTY; AND
  (C) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM THE PROCEEDS  OF
GRANTS,  INCLUDING  GRANTS  FROM  THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  3. Definitions. [(a)] The term ["alternative  fuel  vehicle  refueling
property"]  "ELECTRIC VEHICLE RECHARGING PROPERTY" means [any such prop-
erty which is qualified within the meaning of section thirty  C  of  the
internal  revenue  code,  but shall not include alternative fuel vehicle
refueling property relating to a qualified hybrid vehicle as such  vehi-
cle  is defined in subparagraph (B) of paragraph three of subsection (p)
of section six hundred six of this chapter] ALL THE EQUIPMENT NEEDED  TO
CONVEY  ELECTRIC POWER FROM THE ELECTRIC GRID OR ANOTHER POWER SOURCE TO
AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  [(b) The term "qualified hybrid vehicle" shall have the  same  meaning
as  provided for under subparagraph (B) of paragraph three of subsection
(p) of section six hundred six of this chapter.]
  4. Carryovers. In no event shall the  credit  under  this  section  be
allowed  in an amount which will reduce the tax payable to less than the
applicable minimum tax fixed by section one hundred eighty-three or  one
hundred  eighty-five  of this article. If, however, the amount of credit
allowable under this section for any taxable year  reduces  the  tax  to
such  amount,  any  amount of credit not deductible in such taxable year
may be carried over to the following year or years and may  be  deducted
from the taxpayer's tax for such year or years.
  5.  Credit  recapture[;  Alternative fuel vehicle refueling property].
If, at any time before the end of its recovery period, [alternative fuel
vehicle refueling] ELECTRIC VEHICLE RECHARGING  property  ceases  to  be
qualified,  a  recapture  amount must be added back in the year in which
such cessation occurs.
  (i) Cessation of qualification. [Alternative  fuel  vehicle  refueling
property]  ELECTRIC  VEHICLE  RECHARGING PROPERTY ceases to be qualified
if:
  (I) the property no longer qualifies as [property described in section
thirty C of the internal revenue code] ELECTRIC VEHICLE RECHARGING PROP-
ERTY; or
  (II) fifty percent or more of the use of the  property  in  a  taxable
year is other than a trade or business in this state; or
  (III)  the  taxpayer  receiving the credit under this section sells or
disposes of the property and knows or has reason to know that the  prop-
erty will be used in a manner described in this subparagraph.
  (ii)  Recapture  amount.  The  recapture amount is equal to the credit
allowable under this section multiplied by a fraction, the numerator  of
which  is the total recovery period for the property minus the number of
recovery years prior to, but not including, the recapture year, and  the
denominator of which is the total recovery period.
  6.  Termination. The credit allowed by subdivision two of this section
shall not apply in taxable years beginning after December  thirty-first,
two thousand [ten] SEVENTEEN.
  S  2.  Subdivision  24  of  section  210 of the tax law, as amended by
section 15 of part W-1 of chapter 109 of the laws of 2006, is amended to
read as follows:

S. 2609--B                         45                         A. 3009--B

  24. [Alternative fuels] ELECTRIC VEHICLE RECHARGING  PROPERTY  credit.
(a)  General.  A  taxpayer  shall be allowed a credit, to be computed as
hereinafter provided, against  the  tax  imposed  by  this  article  for
[alternative fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING proper-
ty placed in service during the taxable year.
  (b)  [Alternative  fuel  vehicle  refueling property] ELECTRIC VEHICLE
RECHARGING PROPERTY.  The credit under this subdivision for [alternative
fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING property shall equal
FOR EACH INSTALLATION OF PROPERTY THE LESSER OF FIVE THOUSAND DOLLARS OR
fifty percent of the cost of any such property:
  (i) which is located in this state; [and]
  (ii) [for which a credit is allowed under  section  thirty  C  of  the
internal revenue code but not including alternative fuel refueling prop-
erty  relating  to a qualified hybrid vehicle as such vehicle is defined
in subparagraph (B) of paragraph three of subsection (p) of section  six
hundred  six of this chapter] WHICH IS ELECTRIC VEHICLE RECHARGING PROP-
ERTY; AND
  (III) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM  THE  PROCEEDS
OF  GRANTS, INCLUDING GRANTS FROM THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (c) Definitions. The term ["alternative fuel vehicle refueling proper-
ty"] "ELECTRIC VEHICLE RECHARGING PROPERTY"  means  [any  such  property
which  is qualified within the meaning of section thirty C of the inter-
nal revenue code but shall not include alternative fuel vehicle  refuel-
ing  property  relating to a qualified hybrid vehicle as such vehicle is
defined in subparagraph (B) of paragraph  three  of  subsection  (p)  of
section  six hundred six of this chapter] ALL OF THE EQUIPMENT NEEDED TO
CONVEY ELECTRIC POWER FROM THE ELECTRIC GRID OR ANOTHER POWER SOURCE  TO
AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  (d) Carryovers. In no event shall the credit under this subdivision be
allowed  in an amount which will reduce the tax payable to less than the
higher of the amounts prescribed in paragraphs (c) and (d)  of  subdivi-
sion one of this section. Provided, however, that if the amount of cred-
it allowable under this subdivision for any taxable year reduces the tax
to such amount, any amount of credit not deductible in such taxable year
may  be  carried over to the following year or years and may be deducted
from the taxpayer's tax for such year or years.
  (e) Credit recapture. [(i) Alternative fuel vehicle refueling  proper-
ty.] If, at any time before the end of its recovery period, [alternative
fuel  vehicle  refueling] ELECTRIC VEHICLE RECHARGING property ceases to
be qualified, a recapture amount must be added back in the year in which
such cessation occurs.
  (A) [Alternative fuel vehicle refueling] ELECTRIC  VEHICLE  RECHARGING
property ceases to be qualified if:
  (1) the property no longer qualifies as [property described in section
thirty C of the internal revenue code] ELECTRIC VEHICLE RECHARGING PROP-
ERTY; or
  (2) fifty percent or more of the use of the property in a taxable year
is other than in a trade or business in this state; or
  (3)  the taxpayer receiving the credit under this subdivision sells or
disposes of the property and knows or has reason to know that the  prop-
erty  will  be used in a manner described in clauses one and two of this
subparagraph.
  (B) Recapture amount. The recapture amount  is  equal  to  the  credit
allowable under this subdivision multiplied by a fraction, the numerator
of  which is the total recovery period for the property minus the number

S. 2609--B                         46                         A. 3009--B

of recovery years prior to, but not including, the recapture  year,  and
the denominator of which is the total recovery period.
  [(f)  Affiliates. (i) If a credit under this subdivision is allowed to
a taxpayer with respect to a taxable year,  the  action  taken  by  such
taxpayer which resulted in such credit being allowed thereto may, at the
election  of  the taxpayer and an affiliate thereof, be ascribed to such
affiliate. Where such affiliate, based on such  ascription,  is  allowed
such  credit  and  deducts from the tax otherwise due the amount of such
credit, such credit shall be deemed in all respects to have been allowed
to such affiliate, provided that any action or inaction by the  taxpayer
which  constitutes  an  event of recapture described in paragraph (e) of
this subdivision shall be ascribed to the affiliate and shall constitute
an event of recapture with respect to the credit allowed to  the  affil-
iate pursuant to this subdivision.
  (ii)  Notwithstanding  any  other provision of law to the contrary, in
the case of the credit provided for under this subdivision being allowed
to, or asserted to be allowed to, an affiliate, pursuant to subparagraph
(i) of this paragraph, the commissioner shall have the same powers  with
respect  to  examining  the  books and records of the taxpayer, and have
such other powers of investigation with respect to the taxpayer, as  are
afforded  under  this  chapter  with  respect  to  a  taxpayer which has
deducted the credit allowed under this section from tax  otherwise  due,
as  if  it  were  the  taxpayer  which had deducted such credit from tax
otherwise due.
  (iii) The term "affiliate" shall mean a corporation substantially  all
the  capital  stock  of  which is owned or controlled either directly or
indirectly by the taxpayer, or which owns or controls either directly or
indirectly substantially all the  capital  stock  of  the  taxpayer,  or
substantially  all  the  capital  stock  of which is owned or controlled
either directly or indirectly by interests which own or  control  either
directly  or  indirectly  substantially  all  the  capital  stock of the
taxpayer.]
  [(g)] (F) Termination. The credit allowed by  paragraph  (b)  of  this
subdivision  shall  not  apply in taxable years beginning after December
thirty-first, two thousand [ten] SEVENTEEN.
  S 3. Subsection (p) of section 606 of  the  tax  law,  as  amended  by
section 16 of part W-1 of chapter 109 of the laws of 2006, is amended to
read as follows:
  (p)  [Alternative  fuels] ELECTRIC VEHICLE RECHARGING PROPERTY credit.
(1) General. A taxpayer shall be allowed a credit,  to  be  computed  as
hereinafter  provided,  against  the  tax  imposed  by this article, for
[alternative fuel vehicle refueling] ELECTRIC VEHICLE RECHARGING proper-
ty placed in service during the taxable year.
  (2) [Alternative fuel vehicle  refueling  property]  ELECTRIC  VEHICLE
RECHARGING  PROPERTY.   The credit under this subsection for [clean-fuel
vehicle refueling] ELECTRIC VEHICLE RECHARGING property shall equal  FOR
EACH  INSTALLATION  OF  PROPERTY  THE LESSER OF FIVE THOUSAND DOLLARS OR
fifty percent of the cost of any such property
  (A) which is located in this state [and];
  (B) [for which a credit is allowed  under  section  thirty  C  of  the
internal revenue code but not including alternative fuel vehicle refuel-
ing  property  relating to a qualified hybrid vehicle as such vehicle is
defined in subparagraph (B) of paragraph three of this subsection] WHICH
IS ELECTRIC VEHICLE RECHARGING PROPERTY; AND

S. 2609--B                         47                         A. 3009--B

  (C) FOR WHICH NONE OF THE COST HAS BEEN PAID FOR FROM THE PROCEEDS  OF
GRANTS,  INCLUDING  GRANTS  FROM  THE NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY OR THE NEW YORK POWER AUTHORITY.
  (3)  Definitions.  [(A)] The term ["alternative fuel vehicle refueling
property"] "ELECTRIC VEHICLE RECHARGING PROPERTY" means [any such  prop-
erty  which  is  qualified within the meaning of section thirty C of the
internal revenue code, but such term shall not include alternative  fuel
vehicle  refueling  property  relating  to a qualified hybrid vehicle as
such vehicle is defined in subparagraph (B) of this paragraph]  ALL  THE
EQUIPMENT  NEEDED  TO  CONVEY  ELECTRIC  POWER FROM THE ELECTRIC GRID OR
ANOTHER POWER SOURCE TO AN ONBOARD VEHICLE ENERGY STORAGE SYSTEM.
  [(B) The term "qualified hybrid vehicle" means  a  motor  vehicle,  as
defined  in  section  one hundred twenty-five of the vehicle and traffic
law,, that:
  (i) draws propulsion energy from both
  (a) an internal combustion engine (or heat engine that uses  combusti-
ble fuel); and
  (b) an energy storage device; and
  (ii) employs a regenerative vehicle braking system that recovers waste
energy to charge such energy storage device.]
  (4)   Carryovers.  If  the  amount  of  credit  allowable  under  this
subsection shall exceed the taxpayer's tax for such year, the excess may
be carried over to the following year or years and may be deducted  from
the taxpayer's tax for such year or years.
  (5) Credit recapture. (A) [Vehicles.
  (i) If, within three full years from the date a qualified hybrid vehi-
cle or a vehicle of which alternative fuel vehicle property is a part is
placed  in  service,  such  qualified hybrid vehicle or vehicle of which
alternative fuel vehicle property is a part] IF, AT ANY TIME BEFORE  THE
END  OF ITS RECOVERY PERIOD, ELECTRIC VEHICLE RECHARGING PROPERTY ceases
to be qualified, a recapture amount must be added back in the  tax  year
in which such cessation occurs.
  [(ii)] (B) Cessation of qualification. [(I) A qualified hybrid vehicle
ceases to be qualified if
  (a)  it  is  modified  by  the taxpayer so that it no longer meets the
requirements of a qualified hybrid vehicle as  defined  in  subparagraph
(B) of paragraph three of this subsection.
  (b)  the  taxpayer receiving the credit under this subsection sells or
disposes of the vehicle and knows or has reason to know that the vehicle
will be so modified.
  (B) Alternative fuel vehicle refueling property. (i) If, at  any  time
before  the end of its recovery period, alternative fuel vehicle refuel-
ing property ceases to be qualified, a recapture amount  must  be  added
back in the year in which such cessation occurs.
  (ii)  Cessation  of qualification. Clean-fuel vehicle refueling] ELEC-
TRIC VEHICLE RECHARGING property ceases to be qualified if:
  [(I)] (I) the property no longer qualifies as [property  described  in
section thirty C of the internal revenue code] ELECTRIC VEHICLE RECHARG-
ING PROPERTY, or
  [(II)]  (II)  fifty  percent  or  more of the use of the property in a
taxable year is other than in a trade or business in this state, or
  [(III)] (III) the taxpayer receiving the credit under this  subsection
sells  or  disposes of the property and knows or has reason to know that
the property will be used in a manner described in [item (I)] CLAUSE (I)
or [(II)] (II) of this [clause] SUBPARAGRAPH.

S. 2609--B                         48                         A. 3009--B

  [(iii)] (C) Recapture amount. The recapture amount  is  equal  to  the
credit  allowable  under  this  subsection multiplied by a fraction, the
numerator of which is the total recovery period for the  property  minus
the  number of recovery years prior to, but not including, the recapture
year, and the denominator of which is the total recovery period.
  (6)  Termination.  The  credit  allowed  by  [paragraph  two  of] this
subsection shall not apply in taxable  years  beginning  after  December
thirty-first, two thousand [ten] SEVENTEEN.
  S  4. Clause (ix) of subparagraph (B) of paragraph