The New York State Senate

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

                                   636

                       2019-2020 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 9, 2019
                               ___________

Introduced  by  M. of A. STIRPE, PALMESANO, SCHIMMINGER, WOERNER -- read
  once and referred to the Committee on Ways and Means

AN ACT to amend the tax law, in relation to tax  credits  for  qualified
  pass-through manufacturers

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

  Section 1. Subsection (b) of section 612 of the tax law is amended  by
adding a new paragraph 43 to read as follows:
  (43)  ANY  INCOME,  GAIN,  LOSS  AND  DEDUCTION,  TO  THE EXTENT IT IS
INCLUDED IN FEDERAL ADJUSTED GROSS INCOME AND IS,  COMBINED,  LESS  THAN
ZERO,  OF  AN INDIVIDUAL OR TRUST FROM A QUALIFIED PASS-THROUGH MANUFAC-
TURER, AS DEFINED IN PARAGRAPH FORTY-FOUR  OF  SUBSECTION  (C)  OF  THIS
SECTION.
  §  2. Paragraph 39 of subsection (c) of section 612 of the tax law, as
added by section 1 of part Y of chapter 59  of  the  laws  of  2013,  is
amended and a new paragraph 44 is added to read as follows:
  (39)  In  the case of a taxpayer who is a small business who has busi-
ness income and/or farm income as defined in  the  laws  of  the  United
States,  an  amount  equal  to three percent of the net items of income,
gain, loss and deduction attributable to such business or farm  entering
into  federal adjusted gross income, but not less than zero, for taxable
years beginning after two thousand thirteen, an amount  equal  to  three
and  three-quarters  percent  of the net items of income, gain, loss and
deduction attributable to such business or farm  entering  into  federal
adjusted  gross income, but not less than zero, for taxable years begin-
ning after two thousand fourteen, and an amount equal to five percent of
the net items of income, gain, loss and deduction attributable  to  such
business  or  farm  entering into federal adjusted gross income, but not
less than zero, for taxable years beginning after two thousand  fifteen.
For the purposes of this paragraph, the term small business shall mean a

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD00656-01-9

A. 636                              2

sole  proprietor  or  a  farm  business  who employs one or more persons
during the taxable year and who has net  business  income  or  net  farm
income of less than two hundred fifty thousand dollars. FOR THE PURPOSES
OF  THIS  PARAGRAPH,  THE TERM SMALL BUSINESS SHALL EXCLUDE ANY BUSINESS
THAT IS A QUALIFIED PASS-THROUGH MANUFACTURER, AS DEFINED  IN  PARAGRAPH
FORTY-FOUR OF THIS SUBSECTION FOR THE CURRENT TAX YEAR.
  (44)  (A) ANY INCOME, GAIN, LOSS AND DEDUCTION, TO THE EXTENT INCLUDED
FEDERAL ADJUSTED GROSS INCOME AND IS, COMBINED, GREATER THAN ZERO, OF AN
INDIVIDUAL OR TRUST FROM A QUALIFIED PASS-THROUGH  MANUFACTURER.  INCOME
FROM  A  QUALIFIED PASS-THROUGH MANUFACTURER SHALL NOT INCLUDE AN AMOUNT
REPRESENTING REASONABLE COMPENSATION FOR AN INDIVIDUAL  CONTROLLING  TEN
PERCENT OR MORE OF THE QUALIFIED BUSINESS OR ENTITY.
  (B) THE QUALIFIED PASS-THROUGH MANUFACTURER MAY BE ORGANIZED AS A SOLE
PROPRIETORSHIP,  A  PARTNERSHIP, A LIMITED LIABILITY COMPANY ELECTING TO
BE TREATED AS A PARTNERSHIP OR SOLE PROPRIETORSHIP, OR AN S CORPORATION.
  (C) FOR THE PURPOSES OF THIS  SUBSECTION,  THE  TERM  QUALIFIED  PASS-
THROUGH  MANUFACTURER SHALL MEAN A BUSINESS THAT IS A QUALIFIED NEW YORK
MANUFACTURER, AS DEFINED BY SUBPARAGRAPH (VI) OF PARAGRAPH (A) OF SUBDI-
VISION ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER, EXCEPT  THAT  THE
TERM "GROSS RECEIPTS" SHALL BE REPLACED BY "BUSINESS RECEIPTS" IN DETER-
MINING WHETHER THE BUSINESS IS "PRINCIPALLY ENGAGED" IN MANUFACTURING. A
QUALIFIED PASS-THROUGH MANUFACTURER SHALL NOT INCLUDE A BUSINESS THAT IS
CURRENTLY PARTICIPATING IN THE START-UP NY PROGRAM.
  §  3.  Paragraph  2 of subsection (a) of section 606 of the tax law is
amended by adding a new subparagraph (B-1) to read as follows:
  (B-1) PROPERTY PLACED IN SERVICE DURING THE TAX YEAR THAT IS OTHERWISE
ELIGIBLE FOR THE INVESTMENT TAX CREDIT DESCRIBED IN SUBPARAGRAPH (A)  OF
THIS  PARAGRAPH,  WILL  NOT BE ELIGIBLE FOR THE INVESTMENT TAX CREDIT IF
THE USE OF THE PROPERTY IS BY A QUALIFIED PASS-THROUGH MANUFACTURER,  AS
DEFINED IN PARAGRAPH FORTY-FOUR OF SUBSECTION (C) OF SECTION SIX HUNDRED
TWELVE OF THIS ARTICLE FOR THE CURRENT TAX YEAR.
  § 4. This act shall take effect immediately.

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

                                 636--A

                       2019-2020 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 9, 2019
                               ___________

Introduced by M. of A. STIRPE, PALMESANO, SCHIMMINGER, WOERNER, McDONALD
  --  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 pass-through manufacturers
  zero percent tax rate

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

  Section  1. Subsection (b) of section 612 of the tax law is amended by
adding a new paragraph 42 to read as follows:
  (42) ANY INCOME, GAIN,  LOSS  AND  DEDUCTION,  TO  THE  EXTENT  IT  IS
INCLUDED  IN  FEDERAL  ADJUSTED  GROSS  INCOME AND IS, WHEN COMBINED AND
COMBINED WITH ADDITIONS FOR FEDERAL DEPRECATION  REQUIRED  BY  PARAGRAPH
EIGHT  OF  THIS  SUBSECTION  AND  SUBTRACTIONS  FOR  NEW YORK ALLOWED BY
SUBSECTION (K) OF THIS SECTION, LESS THAN  ZERO,  OF  AN  INDIVIDUAL  OR
TRUST  FROM  A  QUALIFIED PASS-THROUGH MANUFACTURER, AS DEFINED IN PARA-
GRAPH FORTY-THREE OF SUBSECTION (C) OF THIS SECTION.
  § 2. Paragraph 39 of subsection (c) of section 612 of the tax law,  as
added  by  section  1  of  part  Y of chapter 59 of the laws of 2013, is
amended and a new paragraph 43 is added to read as follows:
  (39) In the case of a taxpayer who is a small business who  has  busi-
ness  income  and/or  farm  income  as defined in the laws of the United
States, an amount equal to three percent of the  net  items  of  income,
gain,  loss and deduction attributable to such business or farm entering
into federal adjusted gross income, but not less than zero, for  taxable
years  beginning  after  two thousand thirteen, an amount equal to three
and three-quarters percent of the net items of income,  gain,  loss  and
deduction  attributable  to  such business or farm entering into federal
adjusted gross income, but not less than zero, for taxable years  begin-
ning after two thousand fourteen, and an amount equal to five percent of

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD00656-02-9

A. 636--A                           2

the  net  items of income, gain, loss and deduction attributable to such
business or farm entering into federal adjusted gross  income,  but  not
less  than zero, for taxable years beginning after two thousand fifteen.
For the purposes of this paragraph, the term small business shall mean a
sole  proprietor  or  a  farm  business  who employs one or more persons
during the taxable year and who has net  business  income  or  net  farm
income  of  less  than  two  hundred  fifty  thousand dollars.   FOR THE
PURPOSES OF THIS PARAGRAPH, THE TERM SMALL BUSINESS  SHALL  EXCLUDE  ANY
BUSINESS  THAT  IS  A QUALIFIED PASS-THROUGH MANUFACTURER, AS DEFINED IN
PARAGRAPH FORTY-THREE OF THIS SUBSECTION FOR THE CURRENT TAX YEAR.
  (43) (A) ANY INCOME, GAIN, LOSS AND DEDUCTION, TO THE EXTENT  INCLUDED
IN FEDERAL ADJUSTED GROSS INCOME AND IS, WHEN COMBINED AND COMBINED WITH
ADDITIONS  FOR  FEDERAL  DEPRECATION REQUIRED BY PARAGRAPH EIGHT OF THIS
SUBSECTION AND SUBTRACTIONS FOR NEW YORK ALLOWED BY  SUBSECTION  (K)  OF
THIS SECTION, GREATER THAN ZERO, OF AN INDIVIDUAL OR TRUST FROM A QUALI-
FIED  PASS-THROUGH  MANUFACTURER.  INCOME  FROM A QUALIFIED PASS-THROUGH
MANUFACTURER SHALL  INCLUDE  WAGES  OF  AN  INDIVIDUAL  CONTROLLING  TEN
PERCENT OR MORE OF THE QUALIFIED BUSINESS OR ENTITY. INCOME OR LOSS FROM
A  QUALIFIED  PASS-THROUGH  MANUFACTURER  SHALL  NOT  INCLUDE  AN AMOUNT
REPRESENTING REASONABLE COMPENSATION FOR PERSONAL SERVICES,  AS  DEFINED
IN  THE INTERNAL REVENUE CODE SECTION ONE HUNDRED SIXTY-TWO REGULATIONS,
FOR AN INDIVIDUAL CONTROLLING TEN PERCENT OR MORE OF THE QUALIFIED BUSI-
NESS OR ENTITY.
  (B) THE QUALIFIED PASS-THROUGH MANUFACTURER MAY BE ORGANIZED AS A SOLE
PROPRIETORSHIP, A PARTNERSHIP, A LIMITED LIABILITY COMPANY  ELECTING  TO
BE TREATED AS A PARTNERSHIP OR SOLE PROPRIETORSHIP, OR AN S CORPORATION.
  (C)  FOR  THE  PURPOSES  OF  THIS SUBSECTION, THE TERM QUALIFIED PASS-
THROUGH MANUFACTURER SHALL MEAN A BUSINESS THAT IS A QUALIFIED NEW  YORK
MANUFACTURER, AS DEFINED BY SUBPARAGRAPH (VI) OF PARAGRAPH (A) OF SUBDI-
VISION  ONE  OF SECTION TWO HUNDRED TEN OF THIS CHAPTER, EXCEPT THAT THE
TERM "GROSS RECEIPTS" SHALL BE REPLACED BY "BUSINESS RECEIPTS" IN DETER-
MINING WHETHER THE BUSINESS IS "PRINCIPALLY ENGAGED" IN MANUFACTURING. A
QUALIFIED PASS-THROUGH MANUFACTURER SHALL NOT INCLUDE A BUSINESS THAT IS
CURRENTLY PARTICIPATING IN THE START-UP NY PROGRAM.
  § 3. Paragraph 2 of subsection (a) of section 606 of the  tax  law  is
amended by adding a new subparagraph (B-1) to read as follows:
  (B-1) PROPERTY PLACED IN SERVICE DURING THE TAX YEAR THAT IS OTHERWISE
ELIGIBLE  FOR THE INVESTMENT TAX CREDIT DESCRIBED IN SUBPARAGRAPH (A) OF
THIS PARAGRAPH, WILL NOT BE ELIGIBLE FOR THE INVESTMENT  TAX  CREDIT  IF
THE  USE OF THE PROPERTY IS BY A QUALIFIED PASS-THROUGH MANUFACTURER, AS
DEFINED IN PARAGRAPH  FORTY-THREE  OF  SUBSECTION  (C)  OF  SECTION  SIX
HUNDRED TWELVE OF THIS ARTICLE FOR THE CURRENT TAX YEAR.
  §  4.  Subdivision  1  of  section  210-B of the tax law is amended by
adding a new paragraph (g) to read as follows:
   (G) PROPERTY PLACED IN SERVICE DURING THE TAX YEAR THAT IS  OTHERWISE
ELIGIBLE  FOR  THE  INVESTMENT TAX CREDIT DESCRIBED IN THIS SUBDIVISION,
WILL NOT BE ELIGIBLE FOR THE INVESTMENT TAX CREDIT IF  THE  USE  OF  THE
PROPERTY IS BY A QUALIFIED NEW YORK MANUFACTURER, AS DEFINED IN SUBPARA-
GRAPH (VI) OF PARAGRAPH (A) OF SUBSECTION ONE OF SECTION TWO HUNDRED TEN
OF THIS ARTICLE FOR THE CURRENT TAX YEAR.
  §  5.  For  purposes of determining the modifications of paragraphs 39
and 43 of subsection (c) of section 612 of the tax law and  the  invest-
ment  tax  credit  disallowance  of subparagraph (B-1) of paragraph 2 of
subsection (a) of section 606 of the  tax  law,  the  amounts  shall  be
multiplied by the following percentages:  (a) for tax years beginning on
or  after January 1, 2020: forty percent; (b) for tax years beginning on

A. 636--A                           3

or after January 1, 2021: eighty percent; and (c) for tax  years  begin-
ning on or after January 1, 2022: one hundred percent.
  §  6.  This  act  shall take effect immediately and shall apply to tax
years beginning on or after January 1, 2020.