NY State Senate Bill 2019-S943

Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

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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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to investigations and government operations
Jan 09, 2019	referred to investigations and government operations

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2019-S943 (ACTIVE) - Details

Current Committee:: Senate Investigations And Government Operations
Law Section:: Tax Law
Laws Affected:: Amd §§210 & 612, Tax L; amd §11-1712, NYC Ad Cd
Versions Introduced in Other Legislative Sessions:: 2015-2016: S7235
2017-2018: S2120
2021-2022: S5441
2023-2024: S4236
2025-2026: S1487

2019-S943 (ACTIVE) - Summary

Relates to business income base and certain small business taxpayers.

2019-S943 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S943

SPONSOR: O'MARA
 
TITLE OF BILL:  An act to amend the tax law and the administrative
code of the city of New York, in relation to business income base and
certain small business taxpayers

 
PURPOSE OR GENERAL IDEA OF BILL:

Reduces the amount small businesses and farms must pay in taxes by
increasing the corporate tax threshold from $390,000 to $500,000 and
lowering the rate to 2.5%. Expands the small business exemption to all
PIT businesses regardless of whether they have employees, increases the
threshold to $500,000, increases the exemption to 15%, and increases the
exemption to 20% for farmers.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends article 9-A of the tax law to increase the threshold
for which corporations are considered small corporations from $290,000
to $400,000 while reducing the tax rate for small corporations from 6.5%

to 2.5%-. The transition threshold from the small business rate to the
full corporate rate will increase from $390,000 to $500,000. The phase
down of rates will occur over two years: to 4% in 2019 and to 2% in 2020
and beyond.

Section 2 amends article 22 of the tax law to expand the business tax
exemption to partnerships, LLCs, and S-corporations. The requirement
that the business have at least one employee is eliminated. The
exemption is increased from 5% to 10% for tax year 2021 and to 15% for
tax years beginning on or after 2021. The exemption for farm businesses
is increased from 5% to 20% for tax. years beginning on or after January
1, 2020. The threshold for eligibility is increased from $250,000 to
$500,000.

Section 3 makes corresponding changes to the New York City personal
income tax code.

 
JUSTIFICATION:

The FY 2014 Enacted Budget included a Senate sponsored Personal Income
Tax exemption for small businesses and small farms. The exemption is
equal to five percent of net income in 2018 and beyond. To qualify, the
business must be a sole proprietor or farm (regardless of how the busi-
ness is structured, sole proprietor, LLC, etc.), have less than $250,000
in net business income and employ at least one employee.  This bill
increases the exemption, expands on the taxpayers eligible for the
exemption, provides a rate cut for small businesses filing under the
Corporate Franchise Tax and will help New York's small businesses and
family farms remain an integral part of the State's economy for gener-
ations to come.

 
PRIOR LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:


SFY 2021: $302 million. When fully effective, the annual tax savings to
small businesses will be $464 million.

 
EFFECTIVE DATE:
This act shall take effect immediately and apply to tax years beginning
on or after January 1, 2021.

2019-S943 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    943
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                              January 9, 2019
                                ___________
 
 Introduced  by  Sens.  O'MARA,  BOYLE, GALLIVAN, YOUNG -- 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 and the administrative code of the city of
   New York, in relation to business income base and certain small  busi-
   ness taxpayers

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subparagraph (iv) of paragraph  (a)  of  subdivision  1  of
 section  210 of the tax law, as amended by section 12 of part A of chap-
 ter 59 of the laws of 2014, is amended to read as follows:
   (iv) (A) for taxable years beginning before January first,  two  thou-
 sand  sixteen,  if the business income base is not more than two hundred
 ninety thousand dollars the amount shall be six and one-half percent  of
 the  business  income base; if the business income base is more than two
 hundred ninety thousand dollars but not over three hundred ninety  thou-
 sand  dollars the amount shall be the sum of (1) eighteen thousand eight
 hundred fifty dollars, (2) seven and one-tenth percent of the excess  of
 the  business  income  base over two hundred ninety thousand dollars but
 not over three hundred ninety thousand dollars and (3) four and  thirty-
 five  hundredths  percent of the excess of the business income base over
 three hundred fifty thousand dollars but not over three  hundred  ninety
 thousand dollars;
   (B)  FOR  TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
 SAND TWENTY-ONE, IF THE BUSINESS INCOME  BASE  IS  NOT  MORE  THAN  FOUR
 HUNDRED  THOUSAND  DOLLARS THE AMOUNT SHALL BE FOUR PERCENT OF THE BUSI-
 NESS INCOME BASE; IF THE BUSINESS INCOME BASE IS MORE THAN FOUR  HUNDRED
 THOUSAND  DOLLARS  BUT NOT OVER FIVE HUNDRED THOUSAND DOLLARS THE AMOUNT
 SHALL BE THE SUM OF (1) SIXTEEN THOUSAND DOLLARS, (2) SIX  AND  ONE-HALF
 PERCENT  OF  THE  EXCESS  OF  THE BUSINESS INCOME BASE OVER FOUR HUNDRED
 THOUSAND DOLLARS BUT NOT OVER FIVE  HUNDRED  THOUSAND  DOLLARS  AND  (3)
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD05703-01-9

 S. 943                              2
 
 TWENTY  PERCENT  OF  THE  EXCESS  OF  THE BUSINESS INCOME BASE OVER FOUR
 HUNDRED FIFTY THOUSAND  DOLLARS  BUT  NOT  OVER  FIVE  HUNDRED  THOUSAND
 DOLLARS;
   (C)  FOR  TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
 SAND TWENTY-TWO, IF THE BUSINESS INCOME  BASE  IS  NOT  MORE  THAN  FOUR
 HUNDRED THOUSAND DOLLARS THE AMOUNT SHALL BE TWO AND ONE-HALF PERCENT OF
 THE  BUSINESS INCOME BASE; IF THE BUSINESS INCOME BASE IS MORE THAN FOUR
 HUNDRED THOUSAND DOLLARS BUT NOT OVER FIVE HUNDRED THOUSAND DOLLARS  THE
 AMOUNT  SHALL  BE  THE SUM OF (1) TEN THOUSAND DOLLARS, (2) SIX AND ONE-
 HALF PERCENT OF THE EXCESS OF THE BUSINESS INCOME BASE OVER FOUR HUNDRED
 THOUSAND DOLLARS BUT NOT OVER FIVE  HUNDRED  THOUSAND  DOLLARS  AND  (3)
 THIRTY-TWO  PERCENT  OF THE EXCESS OF THE BUSINESS INCOME BASE OVER FOUR
 HUNDRED FIFTY THOUSAND  DOLLARS  BUT  NOT  OVER  FIVE  HUNDRED  THOUSAND
 DOLLARS.
   §  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 to read as follows:
   (39)  (A)  In  the  case  of  a  taxpayer who is a small business OR A
 TAXPAYER WHO IS A MEMBER, PARTNER, OR SHAREHOLDER OF A LIMITED LIABILITY
 COMPANY, PARTNERSHIP, OR NEW YORK S CORPORATION, RESPECTIVELY, THAT IS A
 SMALL BUSINESS, who OR WHICH has business income [and/or farm income] as
 defined in the laws of the United States, an  amount  equal  to  [three]
 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 [thirteen] TWENTY, an amount equal  to  [three  and  three-
 quarters]  TEN  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] TWENTY-ONE, and an  amount  equal  to
 [five]  FIFTEEN  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 fifteen].
   (B) IN THE CASE OF A TAXPAYER WHO IS A FARM BUSINESS OR A TAXPAYER WHO
 IS  A  MEMBER,  PARTNER,  OR SHAREHOLDER OF A LIMITED LIABILITY COMPANY,
 PARTNERSHIP, OR NEW YORK S CORPORATION, RESPECTIVELY,  THAT  IS  A  FARM
 BUSINESS,  WHO  OR  WHICH  HAS FARM INCOME AS DEFINED BY THE LAWS OF THE
 UNITED STATES, AN AMOUNT EQUAL TO TWENTY PERCENT OF  THE  NET  ITEMS  OF
 INCOME,  GAIN,  LOSS  AND  DEDUCTION ATTRIBUTABLE TO SUCH FARM. THE TERM
 FARM BUSINESS SHALL MEAN A FARM BUSINESS THAT HAS  NET  FARM  INCOME  OF
 LESS THAN FIVE HUNDRED THOUSAND DOLLARS.
   (C)  (I)  For  the purposes of this paragraph, the term small business
 shall mean: (I) 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] FIVE HUNDRED thou-
 sand  dollars;  OR  (II) A LIMITED LIABILITY COMPANY, PARTNERSHIP OR NEW
 YORK S CORPORATION THAT DURING THE TAXABLE YEAR HAS NEW YORK GROSS BUSI-
 NESS INCOME ATTRIBUTABLE TO A NON-FARM BUSINESS  THAT  IS  GREATER  THAN
 ZERO BUT LESS THAN ONE MILLION FIVE HUNDRED THOUSAND DOLLARS OR NET FARM
 INCOME  ATTRIBUTABLE  TO  A  FARM BUSINESS THAT IS GREATER THAN ZERO BUT
 LESS THAN FIVE HUNDRED THOUSAND DOLLARS. (II) FOR PURPOSES OF THIS PARA-
 GRAPH, THE TERM NEW YORK GROSS BUSINESS INCOME SHALL MEAN:  (I)  IN  THE
 CASE  OF  A  LIMITED LIABILITY COMPANY OR A PARTNERSHIP, NEW YORK SOURCE
 GROSS INCOME AS DEFINED  IN  SUBPARAGRAPH  (B)  OF  PARAGRAPH  THREE  OF
 SUBSECTION  (C) OF SECTION SIX HUNDRED FIFTY-EIGHT OF THIS ARTICLE, AND,

 S. 943                              3
 
 (II) IN THE CASE OF A NEW YORK S CORPORATION, NEW YORK RECEIPTS INCLUDED
 IN THE NUMERATOR OF THE APPORTIONMENT FACTOR  DETERMINED  UNDER  SECTION
 TWO HUNDRED TEN-A OF THIS CHAPTER FOR THE TAXABLE YEAR.
   (D)  TO  QUALIFY FOR THIS MODIFICATION IN RELATION TO A NON-FARM SMALL
 BUSINESS THAT IS A LIMITED LIABILITY COMPANY, PARTNERSHIP OR NEW YORK  S
 CORPORATION,  THE  TAXPAYER'S  INCOME  ATTRIBUTABLE  TO THE NET BUSINESS
 INCOME FROM ITS OWNERSHIP INTERESTS IN NON-FARM LIMITED LIABILITY COMPA-
 NIES, PARTNERSHIPS OR NEW YORK S CORPORATIONS MUST  BE  LESS  THAN  FIVE
 HUNDRED THOUSAND DOLLARS.
   §  3. Paragraph 35 of subdivision (c) of section 11-1712 of the admin-
 istrative code of the city of New York, as added by section 2 of part  Y
 of chapter 59 of the laws of 2013, is amended to read as follows:
   (35)  (A)  In  the  case  of  a  taxpayer who is a small business OR A
 TAXPAYER WHO IS A MEMBER, PARTNER, OR SHAREHOLDER OF A LIMITED LIABILITY
 COMPANY, PARTNERSHIP, OR NEW YORK S CORPORATION, RESPECTIVELY, THAT IS A
 SMALL BUSINESS, who OR WHICH has business income [and/or farm income] as
 defined in the laws of the United States, an  amount  equal  to  [three]
 FIFTEEN  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  attribut-
 able  to  such  business  or  farm  entering into federal adjusted gross
 income, but not less than zero, for taxable years  beginning  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].
   (B) IN THE CASE OF A TAXPAYER WHO IS A FARM BUSINESS OR A TAXPAYER WHO
 IS A MEMBER, PARTNER, OR SHAREHOLDER OF  A  LIMITED  LIABILITY  COMPANY,
 PARTNERSHIP,  OR  NEW  YORK  S CORPORATION, RESPECTIVELY, THAT IS A FARM
 BUSINESS, WHO OR WHICH HAS FARM INCOME AS DEFINED BY  THE  LAWS  OF  THE
 UNITED  STATES,  AN  AMOUNT  EQUAL TO TWENTY PERCENT OF THE NET ITEMS OF
 INCOME, GAIN, LOSS AND DEDUCTION ATTRIBUTABLE TO  SUCH  FARM.  THE  TERM
 FARM  BUSINESS  SHALL  MEAN  A FARM BUSINESS THAT HAS NET FARM INCOME OF
 LESS THAN FIVE HUNDRED THOUSAND DOLLARS.
   (C) (I) For the purposes of this paragraph, the  term  small  business
 shall mean: (I) 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] FIVE HUNDRED thou-
 sand dollars; OR (II) A LIMITED LIABILITY COMPANY,  PARTNERSHIP  OR  NEW
 YORK S CORPORATION THAT DURING THE TAXABLE YEAR HAS NEW YORK GROSS BUSI-
 NESS  INCOME  ATTRIBUTABLE  TO  A NON-FARM BUSINESS THAT IS GREATER THAN
 ZERO BUT LESS THAN ONE MILLION FIVE HUNDRED THOUSAND DOLLARS OR NET FARM
 INCOME ATTRIBUTABLE TO A FARM BUSINESS THAT IS  GREATER  THAN  ZERO  BUT
 LESS THAN FIVE HUNDRED THOUSAND DOLLARS. (II) FOR PURPOSES OF THIS PARA-
 GRAPH,  THE  TERM  NEW YORK GROSS BUSINESS INCOME SHALL MEAN: (I) IN THE
 CASE OF A LIMITED LIABILITY COMPANY OR A PARTNERSHIP,  NEW  YORK  SOURCE
 GROSS  INCOME  AS  DEFINED  IN  SUBPARAGRAPH  (B)  OF PARAGRAPH THREE OF
 SUBSECTION (C) OF SECTION SIX HUNDRED FIFTY-EIGHT OF THE TAX  LAW,  AND,
 (II) IN THE CASE OF A NEW YORK S CORPORATION, NEW YORK RECEIPTS INCLUDED
 IN  THE  NUMERATOR  OF THE APPORTIONMENT FACTOR DETERMINED UNDER SECTION
 TWO HUNDRED TEN-A OF THE TAX LAW FOR THE TAXABLE YEAR.
   (D) TO QUALIFY FOR THIS MODIFICATION IN RELATION TO A  NON-FARM  SMALL
 BUSINESS  THAT IS A LIMITED LIABILITY COMPANY, PARTNERSHIP OR NEW YORK S
 CORPORATION, THE TAXPAYER'S INCOME  ATTRIBUTABLE  TO  THE  NET  BUSINESS

 S. 943                              4
 
 INCOME FROM ITS OWNERSHIP INTERESTS IN NON-FARM LIMITED LIABILITY COMPA-
 NIES,  PARTNERSHIPS  OR  NEW  YORK S CORPORATIONS MUST BE LESS THAN FIVE
 HUNDRED THOUSAND DOLLARS.
   § 4. This act shall take effect immediately and shall apply to taxable
 years beginning on or after January 1, 2021.

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Senate Bill S943

Sponsored By

Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

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co-Sponsors

2019-S943 (ACTIVE) - Details

2019-S943 (ACTIVE) - Summary

2019-S943 (ACTIVE) - Sponsor Memo

2019-S943 (ACTIVE) - Bill Text download pdf

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Sponsored By

Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

Actions

co-Sponsors

2019-S943 (ACTIVE) - Details

2019-S943 (ACTIVE) - Summary

2019-S943 (ACTIVE) - Sponsor Memo

2019-S943 (ACTIVE) - Bill Text download pdf

Comments