NY State Senate Bill 2019-S1596

Archive: Last Bill Status - Stricken

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 23, 2019	recommit, enacting clause stricken
Jan 15, 2019	referred to investigations and government operations

co-Sponsors

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2019-S1596 (ACTIVE) - Details

See Assembly Version of this Bill:: A636
Law Section:: Tax Law
Laws Affected:: Amd §§612 & 606, Tax L
Versions Introduced in Other Legislative Sessions:: 2017-2018: S7561, A10121
2021-2022: A3734
2023-2024: A4168

2019-S1596 (ACTIVE) - Summary

Relates to tax credits for qualified pass-through manufacturers; provides a definition for qualified pass-through manufacturers.

2019-S1596 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S1596

SPONSOR: O'MARA
 
TITLE OF BILL:

An act to amend the tax law, in relation to tax credits for qualified
pass-through manufacturers

 
PURPOSE OR GENERAL IDEA OF BILL:

To extend the corporate franchise tax zero percent rate to all manufac-
turers located in New York State.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one - amends subsection (b) of section 612 of the tax law by
adding a new paragraph 43 to extend the corporate franchise tax zero
percent rate to qualified pass-through manufacturers

Section two - amends 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, by adding a new paragraph 44 to define qualified pass-through
manufacturer

Section three - amends paragraph 2 of subsection (a) of section 606 of
the tax law by adding a new subparagraph (B-1) to disallow duplicity of
certain tax deductions and credits

Section four - contains the effective date

 
JUSTIFICATION:

In 2014, a zero percent corporate franchise tax rate was enacted for
manufacturers organized as C corps. This accounted for only 25% of
manufacturers in New York State. While this was a significant help to
those manufacturers, it left 75% of manufactures still paying the higher
rate, putting them at a competitive disadvantage with manufacturers
located in states with no income tax.

This legislation would extend the zero percent Corporate Franchise Tax
rate to all manufacturers in New York State regardless of how they are
organized. The proposed changes lower the income tax rate to zero for NY
pass-through manufacturers by: creating a "NY modification" that
subtracts the income, or adds back a loss (if any); disallowing any
Investment Tax Credits for affected entities/taxpayers; disallowing the
existing 5% subtraction modification for small businesses (for affected
entities/taxpayers); and disallowing a resident credit for taxes payable
to another state (not applicable if NY tax is zero)

According to a study conducted by The Beacon Hill Institute in November
2017, the elimination of the PIT for pass-through manufacturers would
increase private sector jobs by 3,455 the first full-year and by 4,850
in 2022. The increase in economic activity sparked by extending the
zero-percent tax rate to income from pass-through manufacturers would
mitigate the loss of revenue to New York State and boost local tax
collections.

Enacting this proposal could catapult New York's ranking as a manufac-
turing friendly state from 49th to one of the top-ranked states, estab-
lishing New York as a safe haven for manufacturers. This would allow
existing manufacturers to continue to invest in their operations and
workforce in New York as well as attract manufacturers from across the
country and worldwide.

 
PRIOR LEGISLATIVE HISTORY:

2018 - S7S61A

 
FISCAL IMPLICATIONS:

Approximately $140 million to the State.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2019-S1596 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1596
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 15, 2019
                                ___________
 
 Introduced  by  Sens. O'MARA, AKSHAR, AMEDORE, BOYLE, GALLIVAN, HELMING,
   JACOBS, ORTT, RITCHIE, SEWARD -- read twice and ordered  printed,  and
   when  printed  to  be committed to the Committee on Investigations and
   Government Operations
 
 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.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD00656-01-9

 S. 1596                             2
 
 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-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.

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Senate Bill S1596

Sponsored By

Archive: Last Bill Status - Stricken

co-Sponsors

2019-S1596 (ACTIVE) - Details

2019-S1596 (ACTIVE) - Summary

2019-S1596 (ACTIVE) - Sponsor Memo

2019-S1596 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S1596

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Sponsored By

Archive: Last Bill Status - Stricken

co-Sponsors

2019-S1596 (ACTIVE) - Details

2019-S1596 (ACTIVE) - Summary

2019-S1596 (ACTIVE) - Sponsor Memo

2019-S1596 (ACTIVE) - Bill Text download pdf

Comments