senate Bill S3473A

2013-2014 Legislative Session

Relates to the imposition of the personal income tax upon foreign partnerships

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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Feb 06, 2014 print number 3473a
amend and recommit to investigations and government operations
Jan 08, 2014 referred to investigations and government operations
returned to senate
died in assembly
May 30, 2013 referred to ways and means
May 29, 2013 delivered to assembly
passed senate
May 06, 2013 advanced to third reading
May 01, 2013 2nd report cal.
Apr 30, 2013 1st report cal.525
Apr 16, 2013 reported and committed to finance
Feb 04, 2013 referred to investigations and government operations

Bill Amendments

Original
A (Active)
Original
A (Active)

S3473 - Bill Details

Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd §601, Tax L
Versions Introduced in 2011-2012 Legislative Session:
S7542

S3473 - Bill Texts

view summary

Relates to the imposition of the personal income tax upon foreign limited partnerships.

view sponsor memo
BILL NUMBER:S3473 REVISED 2/4/13

TITLE OF BILL: An act to amend the tax law, in relation to the imposi-
tion of the personal income tax upon foreign partnerships

PURPOSE OF THE BILL: Under current law, foreign partnerships and out-of-
state limited liability companies taxed as a partnership are discouraged
from doing business with New York fulfillment service providers because
of the potentially adverse tax consequences they may face. The concern
is that an LLC or partnership that would not otherwise be subject to New
York State taxes will become subject to taxation in New York because of
its purchase of services from a New York fulfillment service provider.
The purpose of this bill is to grant the same exemptions to partnerships
and LLCs that are taxed as partnerships that are granted to corporations
under Article 9-A of the Tax law.

SUMMARY OF PROVISIONS: Section 1: Amends subsection (f) of section 601
of the tax law by designating subdivision (1) and adding a new subdivi-
sion (2) to provide that foreign partnerships and non-resident partners
of foreign partnerships will not have nexus with the state because they
use fulfillment services of an entity or person of the state.

Section 2: Provides that this act shall take effect immediately and
shall apply to taxable years beginning on or after January 1, 2014.

JUSTIFICATION: The purpose of this bill is to provide a level playing
field for partnerships and LLCs with the same advantages currently
granted to 9-A corporations This legislation assures out-of-state busi-
nesses that their use of New York fulfillment services will not result
in adverse tax consequences, regardless of whether the business is
formed as a corporation, partnership, or LLC. This encourages out-of-
state businesses in New York and demonstrates the commitment that New
York is truly "Open for Business."

PRIOR LEGISLATIVE HISTORY: 2012 - S.7542.

BUDGET IMPLICATIONS AND LOCAL IMPACT: Minimal

EFFECTIVE DATE: The bill would take effect immediately.

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

                                  3473

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            February 4, 2013
                               ___________

Introduced  by  Sen.  O'MARA -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law,  in  relation  to  the  imposition  of  the
  personal income tax upon foreign partnerships

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

  Section 1. Subsection (f) of section 601 of the tax law, as amended by
chapter 248 of the laws of 1997, is amended to read as follows:
  (f) Partners and partnerships. (1) A partnership as such shall not  be
subject to tax under this article. Persons carrying on business as part-
ners  shall  be liable for tax under this article only in their separate
or individual capacities. As used in this article,  the  term  "partner-
ship"  shall  include, unless a different meaning is clearly required, a
subchapter K limited liability company. The term "subchapter  K  limited
liability  company" shall mean a limited liability company classified as
a partnership for federal income tax purposes. The term "limited liabil-
ity company" means a domestic limited liability  company  or  a  foreign
limited  liability company, as defined in section one hundred two of the
limited liability company law, a limited  liability  investment  company
formed  pursuant  to section five hundred seven of the banking law, or a
limited liability trust company formed pursuant to section  one  hundred
two-a of the banking law.
  (2)  A  FOREIGN  PARTNERSHIP SHALL NOT BE DEEMED TO HAVE NEXUS IN THIS
STATE, AND THE NON-RESIDENT PARTNERS OF SUCH FOREIGN  PARTNERSHIP  SHALL
NOT  BE DEEMED TO HAVE NEW YORK-SOURCE INCOME, BY REASON OF SUCH FOREIGN
PARTNERSHIP USING FULFILLMENT SERVICES OF A PERSON OR ENTITY AND  OWNING
PROPERTY  STORED ON THE PREMISES OF SUCH PERSON OR ENTITY IN CONJUNCTION
WITH SUCH SERVICES. THE TERM "FULFILLMENT SERVICES" SHALL  MEAN  ANY  OF
THE  FOLLOWING SERVICES PERFORMED BY AN ENTITY ON ITS PREMISES ON BEHALF
OF A PURCHASER: (I) THE ACCEPTANCE OF ORDERS ELECTRONICALLY OR BY  MAIL,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08544-01-3

S. 3473                             2

TELEPHONE,  TELEFAX  OR INTERNET; (II) RESPONSES TO CONSUMER CORRESPOND-
ENCE OR INQUIRIES ELECTRONICALLY  OR  BY  MAIL,  TELEPHONE,  TELEFAX  OR
INTERNET;  (III) BILLING AND COLLECTION ACTIVITIES; OR (IV) THE SHIPMENT
OF ORDERS FROM AN INVENTORY OF PRODUCTS OFFERED FOR SALE BY THE PURCHAS-
ER.
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.

S3473A (ACTIVE) - Bill Details

Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd §601, Tax L
Versions Introduced in 2011-2012 Legislative Session:
S7542

S3473A (ACTIVE) - Bill Texts

view summary

Relates to the imposition of the personal income tax upon foreign limited partnerships.

view sponsor memo
BILL NUMBER:S3473A

TITLE OF BILL: An act to amend the tax law, in relation to the imposi-
tion of the personal income tax upon foreign partnerships

PURPOSE OF THE BILL: Under current law, foreign partnerships and out-of-
state limited liability companies taxed as a partnership are discouraged
from doing business with New York fulfillment service providers because
of the potentially adverse tax consequences they may face. The concern
is that an LLC or partnership that would not otherwise be subject to New
York State taxes will become subject to taxation in New York because of
its purchase of services from a New York fulfillment service provider.
The purpose of this bill is to grant the same exemptions to partnerships
and LLCs that are taxed as partnerships that are granted to corporations
under Article 9-A of the Tax law.

SUMMARY OF PROVISIONS: Section 1: Amends subsection (f) of section 601
of the tax law by designating subdivision (1) and adding a new subdivi-
sion (2) to provide that foreign partnerships and non-resident partners
of foreign partnerships will not have nexus with the state because they
use fulfillment services of an entity or person of the state.

Section 2: Provides that this act shall take effect immediately and
shall apply to taxable years beginning on or after January 1, 2015.

JUSTIFICATION: The purpose of this bill is to provide a level playing
field for partnerships and LLCs with the same advantages currently
granted to 9-A corporations. This legislation assures out-of-state busi-
nesses that their use of New York fulfillment services will not result
in adverse tax consequences, regardless of whether the business is
formed as a corporation, partnership, or LLC. This encourages out-of-
state businesses in New York and demonstrates the commitment that New
York is truly "Open for Business."

PRIOR LEGISLATIVE HISTORY: 2012 - S.7542.

BUDGET IMPLICATIONS AND LOCAL IMPACT: Fiscal Note attached.

EFFECTIVE DATE: The bill would take effect immediately.

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

                                 3473--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            February 4, 2013
                               ___________

Introduced  by  Sen.  O'MARA -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations -- recommitted to the Committee on Investigations  and
  Government  Operations  in  accordance  with  Senate Rule 6, sec. 8 --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

AN  ACT  to  amend  the  tax  law,  in relation to the imposition of the
  personal income tax upon foreign partnerships

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

  Section 1. Subsection (f) of section 601 of the tax law, as amended by
chapter 248 of the laws of 1997, is amended to read as follows:
  (f)  Partners and partnerships. (1) A partnership as such shall not be
subject to tax under this article. Persons carrying on business as part-
ners shall be liable for tax under this article only in  their  separate
or  individual  capacities.  As used in this article, the term "partner-
ship" shall include, unless a different meaning is clearly  required,  a
subchapter  K  limited liability company. The term "subchapter K limited
liability company" shall mean a limited liability company classified  as
a partnership for federal income tax purposes. The term "limited liabil-
ity  company"  means  a  domestic limited liability company or a foreign
limited liability company, as defined in section one hundred two of  the
limited  liability  company  law, a limited liability investment company
formed pursuant to section five hundred seven of the banking law,  or  a
limited  liability  trust company formed pursuant to section one hundred
two-a of the banking law.
  (2) A FOREIGN PARTNERSHIP SHALL NOT BE DEEMED TO HAVE  NEXUS  IN  THIS
STATE,  AND  THE NON-RESIDENT PARTNERS OF SUCH FOREIGN PARTNERSHIP SHALL
NOT BE DEEMED TO HAVE NEW YORK-SOURCE INCOME, BY REASON OF SUCH  FOREIGN
PARTNERSHIP  USING FULFILLMENT SERVICES OF A PERSON OR ENTITY AND OWNING
PROPERTY STORED ON THE PREMISES OF SUCH PERSON OR ENTITY IN  CONJUNCTION

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08544-02-4

S. 3473--A                          2

WITH  SUCH  SERVICES.  THE TERM "FULFILLMENT SERVICES" SHALL MEAN ANY OF
THE FOLLOWING SERVICES PERFORMED BY AN ENTITY ON ITS PREMISES ON  BEHALF
OF  A PURCHASER: (I) THE ACCEPTANCE OF ORDERS ELECTRONICALLY OR BY MAIL,
TELEPHONE,  TELEFAX  OR INTERNET; (II) RESPONSES TO CONSUMER CORRESPOND-
ENCE OR INQUIRIES ELECTRONICALLY  OR  BY  MAIL,  TELEPHONE,  TELEFAX  OR
INTERNET;  (III) BILLING AND COLLECTION ACTIVITIES; OR (IV) THE SHIPMENT
OF ORDERS FROM AN INVENTORY OF PRODUCTS OFFERED FOR SALE BY THE PURCHAS-
ER.
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2015.
  FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
  This bill would provide that  foreign  partnerships  and  non-resident
partners  of  foreign  partnerships  will  not have nexus with the State
because they use fulfillment services of an  entity  or  person  in  the
State and own property stored on the premises of such person or entity.
  We  estimate  that this bill would result in an annual revenue loss of
$10 million beginning in SFY 2016-17.
  This estimate, dated January 30, 2014 and intended only for use during
the 2014 legislative session, was prepared by Scott Palladino, Assistant
Deputy Commissioner, Department of Taxation and Finance.

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