The New York State Senate

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2915
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 26, 2021
                                ___________
 
 Introduced  by  Sen.  BROOKS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Budget and Revenue
 
 AN ACT to amend the tax law, in relation to the imposition  of  a  pass-
   through business tax
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The tax law is amended by adding a new article 24-A to read
 as follows:
                               ARTICLE 24-A
                         PASS-THROUGH BUSINESS TAX
 SECTION 860. DEFINITIONS.
         861. IMPOSITION AND RATE OF TAX.
         862. CREDITS.
         863. PAYMENT OF ESTIMATED TAX.
         864. FILING OF RETURN AND PAYMENT OF TAX.
         865. ACCOUNTING PERIODS AND METHODS.
         866. PROCEDURAL PROVISIONS.
   § 860. DEFINITIONS. FOR PURPOSES OF THIS ARTICLE:
   (A) AFFECTED PARTNERSHIP. AFFECTED PARTNERSHIP MEANS  ANY  PARTNERSHIP
 THAT  HAS  ELECTED  PURSUANT  TO SUBSECTION (B) OF SECTION EIGHT HUNDRED
 SIXTY-ONE OF THIS ARTICLE TO BE SUBJECT TO THE TAX IMPOSED BY THIS ARTI-
 CLE.
   (B) AFFECTED S CORPORATION. AFFECTED S CORPORATION MEANS ANY NEW  YORK
 S  CORPORATION  THAT  HAS  ELECTED PURSUANT TO SUBSECTION (B) OF SECTION
 EIGHT HUNDRED SIXTY-ONE OF THIS ARTICLE TO BE SUBJECT TO THE TAX IMPOSED
 BY THIS ARTICLE.
   (C) AFFECTED PASS-THROUGH ENTITY. AFFECTED PASS-THROUGH  ENTITY  MEANS
 ANY AFFECTED PARTNERSHIP OR ANY AFFECTED S CORPORATION.
   (D)  LOWER-TIER  AFFECTED  PASS-THROUGH  ENTITY. A LOWER-TIER AFFECTED
 PASS-THROUGH ENTITY MEANS ANY AFFECTED PASS-THROUGH ENTITY IN  WHICH  AN
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05510-02-1

 S. 2915                             2
 
 AFFECTED  PASS-THROUGH  ENTITY HAS A DIRECT OR INDIRECT OWNERSHIP INTER-
 EST.
   (E) NEW YORK S CORPORATION. NEW YORK S CORPORATION MEANS, WITH RESPECT
 TO  ANY  TAXABLE  YEAR,  ANY  ENTITY  FOR WHICH AN ELECTION IS IN EFFECT
 PURSUANT TO SUBSECTION (A) OF SECTION SIX HUNDRED SIXTY OF THIS CHAPTER,
 INCLUDING ANY CORPORATION FOR WHICH SUCH ELECTION  HAS  BEEN  DEEMED  TO
 HAVE  BEEN  MADE PURSUANT TO THE PROVISIONS OF SUBSECTION (I) OF SECTION
 SIX HUNDRED SIXTY OF THIS CHAPTER.
   (F) PARTNERSHIP. PARTNERSHIP MEANS  ANY  PARTNERSHIP  AS  PROVIDED  IN
 SECTION  7701(A)(2)  OF  THE  INTERNAL  REVENUE CODE AND THE REGULATIONS
 PROMULGATED THEREUNDER. A PARTNERSHIP  INCLUDES  ANY  LIMITED  LIABILITY
 COMPANY  OR  OTHER  ENTITY  THAT IS TREATED AS A PARTNERSHIP FOR FEDERAL
 INCOME TAX PURPOSES.
   (G) PASS-THROUGH BUSINESS NET INCOME OR  LOSS.  PASS-THROUGH  BUSINESS
 NET  INCOME  OR  LOSS OF AN AFFECTED PASS-THROUGH ENTITY MEANS THE SEPA-
 RATELY AND NONSEPARATELY COMPUTED ITEMS, AS DESCRIBED IN SECTION  702(A)
 OF  THE  INTERNAL  REVENUE CODE WITH RESPECT TO A PARTNERSHIP OR SECTION
 1366 OF THE INTERNAL REVENUE CODE WITH RESPECT TO AN S  CORPORATION,  OF
 THE AFFECTED PASS-THROUGH ENTITY, ADJUSTED AS FOLLOWS:
   (1)   INCREASED   OR   DECREASED  BY  ANY  MODIFICATION  DESCRIBED  IN
 SUBSECTIONS (B), (C) OR (D) OF SECTION SIX HUNDRED TWELVE OF THIS  CHAP-
 TER,  SUBSECTION  (C)  OR  PARAGRAPHS  TWO OR THREE OF SUBSECTION (D) OF
 SECTION SIX HUNDRED FIFTEEN OF THIS CHAPTER;
   (2) THE PORTION OF ANY OF THE AFFECTED PASS-THROUGH ENTITY'S SEPARATE-
 LY AND NONSEPARATELY COMPUTED ITEMS THAT ARE  ALLOCABLE  TO  NONRESIDENT
 INDIVIDUALS,  TRUSTS,  OR  ESTATES FOR PURPOSES OF ARTICLE TWENTY-TWO OF
 THIS CHAPTER SHALL BE EXCLUDED TO THE EXTENT SUCH PORTION IS NOT DERIVED
 FROM OR CONNECTED WITH NEW YORK SOURCES; AND
   (3) THE AFFECTED PASS-THROUGH ENTITY'S  SEPARATELY  AND  NONSEPARATELY
 COMPUTED  ITEMS  THAT  WOULD  OTHERWISE BE PASSED THROUGH TO SUCH ENTITY
 FROM ANY LOWER-TIER AFFECTED PASS-THROUGH ENTITY SHALL  BE  EXCLUDED  TO
 THE EXTENT SUCH ITEMS ARE TAKEN INTO ACCOUNT IN DETERMINING THE TAX PAID
 BY  A  LOWER-TIER AFFECTED PASS-THROUGH ENTITY PURSUANT TO SECTION EIGHT
 HUNDRED SIXTY-ONE OF THIS ARTICLE.
   FOR PURPOSES OF THIS SUBSECTION, THE PORTION  OF  ANY  SEPARATELY  AND
 NONSEPARATELY  COMPUTED  ITEM THAT IS NOT DERIVED FROM OR CONNECTED WITH
 NEW YORK SOURCES SHALL  BE  DETERMINED  UNDER  REGULATIONS  OR  GUIDANCE
 ISSUED  BY  THE TAX COMMISSION CONSISTENT WITH THE APPLICABLE RULES USED
 TO DETERMINE THE PORTION OF A TAXPAYER'S DISTRIBUTIVE SHARE OF  PARTNER-
 SHIP  INCOME  OR PRO RATA SHARE OF NEW YORK S CORPORATION INCOME THAT IS
 DERIVED FROM NEW YORK SOURCES PURSUANT TO THE RULES SET FORTH IN SECTION
 SIX HUNDRED THIRTY-TWO OF THIS CHAPTER.
   § 861. IMPOSITION AND RATE OF  TAX.  (A)  GENERAL.  A  TAX  IS  HEREBY
 IMPOSED FOR EACH TAXABLE YEAR ON THE PASS-THROUGH BUSINESS NET INCOME OF
 EVERY  AFFECTED  PASS-THROUGH  ENTITY  DOING BUSINESS WITHIN THIS STATE.
 THIS TAX SHALL BE IN ADDITION TO ANY OTHER TAXES IMPOSED AND SHALL BE AT
 THE RATE OF 6.85 PERCENT FOR EACH TAXABLE YEAR  BEGINNING  ON  OR  AFTER
 JANUARY FIRST, TWO THOUSAND TWENTY-ONE. IN THE CASE OF AN AFFECTED PASS-
 THROUGH  ENTITY  THAT  IS  A PARTNERSHIP OR A NEW YORK S CORPORATION FOR
 ONLY A PORTION OF ITS TAXABLE YEAR, THE AFFECTED PARTNERSHIP OR AFFECTED
 S CORPORATION SHALL BE SUBJECT TO THIS TAX ON ONLY THAT PORTION  OF  ITS
 PASS-THROUGH BUSINESS NET INCOME ATTRIBUTABLE TO THE PORTION OF THE YEAR
 FOR WHICH IT IS A PARTNERSHIP OR A NEW YORK S CORPORATION, AS DETERMINED
 PURSUANT TO REGULATIONS AND GUIDANCE SET FORTH BY THE COMMISSIONER.
   (B)  ELECTION.  ANY PARTNERSHIP OR NEW YORK S CORPORATION MAY ELECT TO
 HAVE NEW YORK INCOME TAX IMPOSED AT THE ENTITY  LEVEL  UNDER  SUBSECTION

 S. 2915                             3
 
 (A)  OF THIS SECTION. AN ELECTION UNDER THIS SUBSECTION SHALL BE MADE ON
 THE PASS-THROUGH ENTITY BUSINESS  TAX  RETURN  FOR  THE  AFFECTED  PASS-
 THROUGH ENTITY IN SUCH MANNER AS THE COMMISSIONER MAY PRESCRIBE BY REGU-
 LATION OR INSTRUCTION. AN ELECTION UNDER THIS SUBSECTION MUST BE MADE ON
 AN  ANNUAL  BASIS  AND  SHALL BE EFFECTIVE FOR THE AFFECTED PASS-THROUGH
 ENTITY ONLY FOR THE TAXABLE YEAR FOR WHICH THE ELECTION IS MADE.
   § 862. CREDITS. (A) GENERAL. AN AFFECTED PASS-THROUGH ENTITY SHALL  BE
 ALLOWED  A  CREDIT  AGAINST THE TAX OTHERWISE DUE UNDER THIS ARTICLE FOR
 ANY INCOME TAX IMPOSED FOR THE TAXABLE YEAR  BY  ANOTHER  STATE  OF  THE
 UNITED  STATES,  A  POLITICAL SUBDIVISION OF SUCH STATE, THE DISTRICT OF
 COLUMBIA OR A PROVINCE OF CANADA, UPON INCOME BOTH DERIVED THEREFROM AND
 INCLUDED IN THE AFFECTED PASS-THROUGH ENTITY'S PASS-THROUGH BUSINESS NET
 INCOME OR LOSS UNDER THIS ARTICLE. THE TERM "INCOME TAX IMPOSED" IN  THE
 PREVIOUS  SENTENCE  SHALL  INCLUDE:  (1)  ANY INCOME TAX IMPOSED UPON OR
 PAYABLE BY THE AFFECTED PASS-THROUGH ENTITY ITSELF,  PROVIDED  SUCH  TAX
 IMPOSITION  OR  PAYMENT  RESULTS FROM A TAX THAT THE COMMISSIONER DETER-
 MINES IS SUBSTANTIALLY SIMILAR TO THE TAX IMPOSED BY THIS  ARTICLE;  AND
 (2)  ANY  INCOME  TAX  IMPOSED UPON OR PAYABLE BY ANY DIRECT OR INDIRECT
 PARTNER OR SHAREHOLDER OF THE AFFECTED  PASS-THROUGH  ENTITY  WHO  IS  A
 RESIDENT INDIVIDUAL, ESTATE, OR TRUST FOR PURPOSES OF ARTICLE TWENTY-TWO
 OF THIS CHAPTER.
   (B)  LIMITATIONS.  (1)  THE CREDIT UNDER THIS SECTION SHALL NOT EXCEED
 THE PERCENTAGE OF THE TAX OTHERWISE DUE UNDER THIS ARTICLE DETERMINED BY
 DIVIDING THE PORTION OF THE TAXPAYER'S PASS-THROUGH BUSINESS NET  INCOME
 THAT  IS  SUBJECT  TO  TAXATION  BY SUCH OTHER JURISDICTION BY THE TOTAL
 AMOUNT OF THE TAXPAYER'S PASS-THROUGH BUSINESS NET INCOME.
   (2) THE CREDIT UNDER THIS SECTION SHALL NOT REDUCE THE  TAX  OTHERWISE
 DUE UNDER THIS ARTICLE TO AN AMOUNT LESS THAN WOULD HAVE BEEN DUE IF THE
 INCOME SUBJECT TO TAXATION BY SUCH OTHER JURISDICTION WERE EXCLUDED FROM
 THE TAXPAYER'S NEW YORK INCOME.
   (3)  IN THE CASE OF TAX PAID BY A DIRECT OR INDIRECT PARTNER OR SHARE-
 HOLDER THAT ELECTS TO CLAIM THE FOREIGN TAX CREDIT  FOR  FEDERAL  INCOME
 TAX  PURPOSES, THE CREDIT UNDER THIS SECTION FOR INCOME TAX IMPOSED BY A
 PROVINCE OF CANADA SHALL BE ALLOWED FOR THAT PORTION OF  THE  PROVINCIAL
 TAX NOT CLAIMED FOR FEDERAL PURPOSES FOR THE TAXABLE YEAR OR A PRECEDING
 TAXABLE  YEAR,  PROVIDED  HOWEVER,  TO  THE EXTENT THE PROVINCIAL TAX IS
 CLAIMED FOR FEDERAL PURPOSES FOR A SUCCEEDING TAXABLE YEAR,  THE  CREDIT
 UNDER  THIS  SECTION MUST BE ADDED BACK IN SUCH SUCCEEDING TAXABLE YEAR.
 THE PROVINCIAL TAX SHALL BE DEEMED TO BE CLAIMED LAST FOR FEDERAL INCOME
 TAX PURPOSES AND FOR PURPOSES OF THIS SUBSECTION.
   § 863. PAYMENT OF ESTIMATED TAX.  (A)  DEFINITION  OF  ESTIMATED  TAX.
 ESTIMATED  TAX  MEANS  THE  AMOUNT  THAT AN AFFECTED PASS-THROUGH ENTITY
 ESTIMATES TO BE THE TAX IMPOSED FOR THE CURRENT TAXABLE YEAR BY  SECTION
 EIGHT HUNDRED SIXTY-ONE OF THIS ARTICLE.
   (B)  ANNUAL  ESTIMATED  TAX PAYMENT. THE REQUIRED ANNUAL ESTIMATED TAX
 PAYMENT IS THE LESSER OF (1) NINETY PERCENT OF THE ESTIMATED TAX FOR THE
 YEAR OR (2) ONE HUNDRED TEN PERCENT OF THE TAX SHOWN ON  THE  RETURN  OF
 THE  AFFECTED PASS-THROUGH ENTITY FOR THE PRECEDING TAXABLE YEAR. IF THE
 AFFECTED PASS-THROUGH ENTITY WAS NOT IN EXISTENCE IN THE  PREVIOUS  YEAR
 OR DID NOT ELECT TO BE SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE IN THE
 PRECEDING  YEAR,  THEN  NO  ESTIMATED TAX IS DUE FOR THE CURRENT TAXABLE
 YEAR.
   (C) GENERAL. THE ANNUAL ESTIMATED TAX PAYMENT SHALL BE PAID AS FOLLOWS
 FOR AN AFFECTED PASS-THROUGH ENTITY THAT  REPORTS  ON  A  CALENDAR  YEAR
 BASIS:

 S. 2915                             4
 
   (1) IF SUCH ANNUAL ESTIMATED TAX PAYMENT CAN REASONABLY BE EXPECTED TO
 EXCEED  ONE THOUSAND DOLLARS ON OR BEFORE MARCH FIFTEENTH OF THE TAXABLE
 YEAR, THE ANNUAL ESTIMATED TAX PAYMENT  SHALL  BE  PAID  IN  FOUR  EQUAL
 INSTALLMENTS ON MARCH FIFTEENTH, JUNE FIFTEENTH, SEPTEMBER FIFTEENTH AND
 DECEMBER FIFTEENTH;
   (2) IF SUCH ANNUAL ESTIMATED TAX PAYMENT CAN REASONABLY BE EXPECTED TO
 EXCEED  ONE  THOUSAND  DOLLARS  AFTER MARCH FIFTEENTH AND NOT AFTER JUNE
 FIFTEENTH OF THE TAXABLE YEAR, THE ANNUAL ESTIMATED TAX PAYMENT SHALL BE
 PAID IN THREE EQUAL INSTALLMENTS ON JUNE FIFTEENTH, SEPTEMBER  FIFTEENTH
 AND DECEMBER FIFTEENTH;
   (3) IF SUCH ANNUAL ESTIMATED TAX PAYMENT CAN REASONABLY BE EXPECTED TO
 EXCEED ONE THOUSAND DOLLARS AFTER JUNE FIFTEENTH AND NOT AFTER SEPTEMBER
 FIFTEENTH OF THE TAXABLE YEAR, THE ANNUAL ESTIMATED TAX PAYMENT SHALL BE
 PAID  IN  TWO  EQUAL  INSTALLMENTS  ON  SEPTEMBER FIFTEENTH AND DECEMBER
 FIFTEENTH; AND
   (4) IF SUCH ANNUAL ESTIMATED TAX PAYMENT CAN REASONABLY BE EXPECTED TO
 EXCEED ONE THOUSAND DOLLARS AFTER SEPTEMBER  FIFTEENTH  OF  THE  TAXABLE
 YEAR,  THE  ANNUAL  ESTIMATED  TAX  PAYMENT  SHALL  BE  PAID ON DECEMBER
 FIFTEENTH.
   (D) THIS SECTION SHALL APPLY TO A TAXABLE YEAR  OF  LESS  THAN  TWELVE
 MONTHS IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY THE COMMISSIONER.
   (E)  THIS  SECTION SHALL APPLY TO A TAXABLE YEAR OTHER THAN A CALENDAR
 YEAR BY THE SUBSTITUTION OF THE MONTHS  OF  SUCH  FISCAL  YEAR  FOR  THE
 CORRESPONDING MONTHS SPECIFIED IN THIS SECTION.
   (F)  AN  AFFECTED PASS-THROUGH ENTITY MAY ELECT TO PAY ANY INSTALLMENT
 OF ITS ESTIMATED TAX PRIOR TO THE DATE PRESCRIBED FOR THE PAYMENT THERE-
 OF.
   § 864. FILING OF RETURN AND PAYMENT OF TAX. (A) GENERAL. ON OR  BEFORE
 THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF THE TAXABLE
 YEAR, EACH AFFECTED PASS-THROUGH ENTITY SHALL BE REQUIRED TO TRANSMIT TO
 THE COMMISSIONER A RETURN IN A FORM PRESCRIBED BY THE COMMISSIONER.
   (B)  INFORMATION  ON  RETURN.  EACH AFFECTED PASS-THROUGH ENTITY SHALL
 REPORT ANY TAX DUE UNDER THIS ARTICLE ON THE FACE  OF  SUCH  RETURN  AND
 SUCH  OTHER PERTINENT INFORMATION AS THE COMMISSIONER MAY BY REGULATIONS
 AND INSTRUCTIONS PRESCRIBE. THE BALANCE OF ANY TAX SHOWN ON THE FACE  OF
 SUCH RETURN, NOT PREVIOUSLY PAID AS INSTALLMENTS OF ESTIMATED TAX, SHALL
 BE PAID WITH SUCH RETURN.
   §  865.  ACCOUNTING  PERIODS  AND  METHODS. (A) ACCOUNTING PERIODS. AN
 AFFECTED PASS-THROUGH ENTITY'S TAXABLE YEAR UNDER THIS ARTICLE SHALL  BE
 THE  SAME AS THE AFFECTED PASS-THROUGH ENTITY'S TAXABLE YEAR FOR FEDERAL
 INCOME TAX PURPOSES.
   (B) ACCOUNTING METHODS. AN AFFECTED PASS-THROUGH  ENTITY'S  METHOD  OF
 ACCOUNTING  UNDER  THIS  ARTICLE SHALL BE THE SAME AS THE AFFECTED PASS-
 THROUGH ENTITY'S METHOD OF ACCOUNTING FOR FEDERAL INCOME TAX PURPOSES.
   (C) CHANGE OF ACCOUNTING PERIOD OR METHOD. (1) IF  AN  AFFECTED  PASS-
 THROUGH  ENTITY'S  TAXABLE  YEAR  OR METHOD OF ACCOUNTING IS CHANGED FOR
 FEDERAL INCOME TAX PURPOSES, THE TAXABLE YEAR OR  METHOD  OF  ACCOUNTING
 FOR PURPOSES OF THIS ARTICLE SHALL BE SIMILARLY CHANGED.
   (2)  IF  AN  AFFECTED  PASS-THROUGH  ENTITY'S  METHOD OF ACCOUNTING IS
 CHANGED, ANY ADDITIONAL TAX THAT RESULTS FROM ADJUSTMENTS DETERMINED  TO
 BE  NECESSARY  SOLELY BY REASON OF SUCH CHANGE SHALL NOT BE GREATER THAN
 IF SUCH ADJUSTMENTS WERE RATABLY ALLOCATED AND INCLUDED FOR THE  TAXABLE
 YEAR  OF  THE  CHANGE  AND THE PRECEDING TAXABLE YEARS, NOT IN EXCESS OF
 TWO, DURING WHICH THE AFFECTED PARTNERSHIP USED THE METHOD OF ACCOUNTING
 FROM WHICH THE CHANGE IS MADE.

 S. 2915                             5
 
   § 866. PROCEDURAL PROVISIONS. (A) GENERAL. ALL  PROCEDURAL  PROVISIONS
 OF  ARTICLE  TWENTY-TWO  OF THIS CHAPTER WILL APPLY TO THE PROVISIONS OF
 THIS ARTICLE IN THE SAME MANNER AND WITH THE SAME FORCE AND EFFECT AS IF
 THE LANGUAGE OF ARTICLE TWENTY-TWO OF THIS CHAPTER HAD BEEN INCORPORATED
 IN  FULL  INTO  THIS  ARTICLE AND HAD BEEN SPECIFICALLY ADJUSTED FOR AND
 EXPRESSLY REFERRED TO THE TAX IMPOSED BY THIS  ARTICLE,  EXCEPT  TO  THE
 EXTENT  THAT  ANY  PROVISION  IS EITHER INCONSISTENT WITH A PROVISION OF
 THIS ARTICLE OR IS NOT RELEVANT TO THIS ARTICLE.
   (B) LIABILITY FOR TAX. ONLY THE AFFECTED PASS-THROUGH ENTITY SHALL  BE
 LIABLE  FOR  THE  TAX  UNDER THIS ARTICLE, AND NO PARTNER OR SHAREHOLDER
 THAT HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST IN THE  AFFECTED  PASS-
 THROUGH ENTITY SHALL BE PERSONALLY LIABLE FOR SUCH TAX.
   (C)  DEPOSIT  AND  DISPOSITION OF REVENUE. ALL TAXES, INTEREST, PENAL-
 TIES, AND FEES COLLECTED OR RECEIVED  BY  THE  COMMISSIONER  UNDER  THIS
 ARTICLE SHALL BE DEPOSITED AND DISPOSED OF PURSUANT TO THE PROVISIONS OF
 SECTION ONE HUNDRED SEVENTY-ONE-A OF THIS CHAPTER.
   (D) SECRECY PROVISION. ALL THE PROVISIONS OF SUBSECTION (A) OF SECTION
 SIX  HUNDRED  NINETY-SEVEN  OF  THIS  CHAPTER  WILL  BE  APPLIED  TO THE
 PROVISIONS OF THIS ARTICLE. NOTWITHSTANDING ANY PROVISIONS OF THIS CHAP-
 TER TO THE CONTRARY,  THE  COMMISSIONER  MAY  DISCLOSE  INFORMATION  AND
 RETURNS REGARDING THE CALCULATION AND PAYMENT OF THE TAX IMPOSED BY THIS
 ARTICLE TO AN AFFECTED PASS-THROUGH ENTITY, TO ITS LOWER-TIERED AFFECTED
 PASS-THROUGH  ENTITY OR ENTITIES, AND TO ANY PARTNER OR SHAREHOLDER THAT
 HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST IN THE AFFECTED PASS-THROUGH
 ENTITY AND  TO  WHICH  IS  ALLOCABLE  ANY  SEPARATELY  OR  NONSEPARATELY
 COMPUTED  ITEMS,  AS DESCRIBED IN SECTION 702(A) OF THE INTERNAL REVENUE
 CODE WITH RESPECT TO A PARTNERSHIP  OR  SECTION  1366  OF  THE  INTERNAL
 REVENUE CODE WITH RESPECT TO AN S CORPORATION.
   §  2.  The  opening  paragraph  of  paragraph  (a) of subdivision 1 of
 section 210 of the tax law, as amended by section 10 of part T of  chap-
 ter 59 of the laws of 2015, is amended to read as follows:
   For  taxable  years  beginning  before  January  first,  two  thousand
 sixteen, the amount prescribed by this paragraph shall  be  computed  at
 the  rate  of  seven  and  one-tenth  percent of the taxpayer's business
 income base. For taxable years beginning on or after January first,  two
 thousand  sixteen,  the amount prescribed by this paragraph shall be six
 and one-half percent of the taxpayer's business income base. The taxpay-
 er's business income base shall mean the portion of the taxpayer's busi-
 ness income apportioned within the state as hereinafter provided. Howev-
 er, in the case of a small business taxpayer, as  defined  in  paragraph
 (f)  of  this subdivision, the amount prescribed by this paragraph shall
 be computed pursuant to subparagraph (iv) of this paragraph and  in  the
 case  of  a  manufacturer, as defined in subparagraph (vi) of this para-
 graph, the amount prescribed by this paragraph shall be computed  pursu-
 ant to subparagraph (vi) of this paragraph, and, in the case of a quali-
 fied  emerging  technology  company, as defined in subparagraph (vii) of
 this paragraph,  the  amount  prescribed  by  this  paragraph  shall  be
 computed  pursuant  to  subparagraph  (vii) of this paragraph.  NOTWITH-
 STANDING THE PROVISIONS OF THIS PARAGRAPH, WITH RESPECT TO ANY  TAXPAYER
 THAT  HAS  A  DIRECT OR INDIRECT OWNERSHIP INTEREST IN ONE OR MORE PASS-
 THROUGH ENTITIES THAT HAS ELECTED TO  BE  SUBJECT  TO  TAX  PURSUANT  TO
 SUBSECTION  (A)  OF  SECTION  EIGHT  HUNDRED  SIXTY-ONE OF THIS CHAPTER,
 INCLUDING ANY TAXPAYER THAT IS A SMALL BUSINESS TAXPAYER, A  MANUFACTUR-
 ER,  OR A QUALIFIED EMERGING TECHNOLOGY COMPANY, THE TAXPAYER'S BUSINESS
 INCOME BASE WILL BE DECREASED BY AN AMOUNT EQUAL TO THE PRODUCT  OF  (1)
 THE SUM OF THE PORTIONS OF THE TAXPAYER'S DISTRIBUTIVE OR PRO RATA SHARE

 S. 2915                             6
 
 OF  EACH  SEPARATELY  AND  NONSEPARATELY  COMPUTED  ITEM AS DESCRIBED IN
 SECTION 702(A) OR SECTION 1366 OF THE  INTERNAL  REVENUE  CODE  THAT  IS
 DERIVED  FROM OR CONNECTED WITH NEW YORK SOURCES AS COMPUTED PURSUANT TO
 SUBSECTION  (G)  OF  SECTION EIGHT HUNDRED SIXTY OF THIS CHAPTER THAT IS
 BEING TAKEN INTO ACCOUNT IN DETERMINING THE  TAX  PAID  BY  AN  AFFECTED
 PASS-THROUGH  ENTITY PURSUANT TO SUBSECTION (A) OF SECTION EIGHT HUNDRED
 SIXTY-ONE OF THIS CHAPTER AND (2) A FRACTION, THE NUMERATOR OF WHICH  IS
 THE TAX RATE IMPOSED ON AFFECTED PASS-THROUGH ENTITIES BY SUBSECTION (A)
 OF  SECTION  EIGHT HUNDRED SIXTY-ONE OF THIS CHAPTER AND THE DENOMINATOR
 OF WHICH IS THE TAX RATE IMPOSED ON THE  BUSINESS  INCOME  BASE  OF  THE
 TAXPAYER  PURSUANT  TO  THIS  PARAGRAPH.  IF THE AMOUNT OF THE REDUCTION
 ALLOWABLE TO THE TAXPAYER UNDER THE PREVIOUS SENTENCE  FOR  ANY  TAXABLE
 YEAR  SHALL  EXCEED  THE  TAXPAYER'S  TAX BASE FOR SUCH YEAR, THE EXCESS
 ALLOWED FOR THE TAXABLE YEAR MAY BE CARRIED OVER TO THE  FOLLOWING  YEAR
 OR  YEARS  AND  MAY  BE  USED  TO REDUCE THE TAXPAYER'S TAX BASE IN SUCH
 SUBSEQUENT YEAR OR YEARS.
   § 3. Section 209-B of the tax law is amended by adding a new  subdivi-
 sion 7 to read as follows:
   7.  IN  DETERMINING  THE  AMOUNT  OF  THE SURCHARGE TO BE IMPOSED ON A
 TAXPAYER PURSUANT TO THIS SECTION, THE AMOUNT OF SUCH SURCHARGE WILL  BE
 DETERMINED  WITHOUT TAKING INTO ACCOUNT ANY AFFECTED PASS-THROUGH ENTITY
 REDUCTION COMPUTED PURSUANT TO  PARAGRAPH  (A)  OF  SUBDIVISION  ONE  OF
 SECTION TWO HUNDRED TEN OF THIS CHAPTER.
   § 4. Subsection (a) of section 611 of the tax law, as amended by chap-
 ter 28 of the laws of 1987, is amended to read as follows:
   (a)  General.    The  New York taxable income of a resident individual
 shall be his New York adjusted gross income less his New York  deduction
 and New York exemptions, as determined under this part.  NOTWITHSTANDING
 THE  FOREGOING  PROVISION,  WITH RESPECT TO ANY RESIDENT INDIVIDUAL THAT
 HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST  IN  ONE  OR  MORE  AFFECTED
 PASS-THROUGH  ENTITIES  SUBJECT  TO  THE TAX IMPOSED PURSUANT TO ARTICLE
 TWENTY-FOUR-A OF THIS CHAPTER, THE RESIDENT INDIVIDUAL'S NEW YORK  TAXA-
 BLE  INCOME  SHALL BE ADJUSTED TO EXCLUDE SUCH INDIVIDUAL'S DISTRIBUTIVE
 OR PRO RATA SHARES OF EACH SEPARATELY AND NONSEPARATELY  COMPUTED  ITEM,
 AS DESCRIBED IN SECTION 702(A) OF THE INTERNAL REVENUE CODE WITH RESPECT
 TO  A  PARTNERSHIP  OR  SECTION  1366  OF THE INTERNAL REVENUE CODE WITH
 RESPECT TO AN S CORPORATION, FROM ALL AFFECTED PASS-THROUGH ENTITIES  IN
 WHICH  THE  TAXPAYER HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST. IF THE
 AMOUNT OF THE ADJUSTMENT MADE PURSUANT TO THE  PREVIOUS  SENTENCE  SHALL
 EXCEED  THE RESIDENT INDIVIDUAL'S NEW YORK TAXABLE INCOME FOR SUCH YEAR,
 THE EXCESS ALLOWED FOR THE TAXABLE YEAR  MAY  BE  CARRIED  OVER  TO  THE
 FOLLOWING  YEAR OR YEARS AND MAY BE USED TO REDUCE THE RESIDENT INDIVID-
 UAL'S NEW YORK TAXABLE INCOME IN SUCH SUBSEQUENT YEAR OR YEARS.
   § 5. Section 618 of the tax law is amended by adding a new  subsection
 6 to read as follows:
   (6)  WITH  RESPECT  TO A RESIDENT ESTATE OR TRUST THAT HAS A DIRECT OR
 INDIRECT OWNERSHIP INTEREST IN ONE OR MORE AFFECTED  PASS-THROUGH  ENTI-
 TIES  SUBJECT  TO  THE  TAX IMPOSED PURSUANT TO ARTICLE TWENTY-FOUR-A OF
 THIS CHAPTER, THE RESIDENT ESTATE'S OR TRUST'S NEW YORK  TAXABLE  INCOME
 SHALL  BE  ADJUSTED  TO EXCLUDE SUCH ESTATE'S OR TRUST'S DISTRIBUTIVE OR
 PRO RATA SHARES OF EACH SEPARATELY AND NONSEPARATELY COMPUTED  ITEM,  AS
 DESCRIBED IN SECTION 702(A) OF THE INTERNAL REVENUE CODE WITH RESPECT TO
 A  PARTNERSHIP OR SECTION 1366 OF THE INTERNAL REVENUE CODE WITH RESPECT
 TO AN S CORPORATION, FROM ALL AFFECTED PASS-THROUGH  ENTITIES  IN  WHICH
 THE  TAXPAYER HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST. IF THE AMOUNT
 OF THE ADJUSTMENT MADE PURSUANT TO THE PREVIOUS  SENTENCE  SHALL  EXCEED

 S. 2915                             7
 
 THE  ESTATE'S  OR THE TRUST'S NEW YORK TAXABLE INCOME FOR SUCH YEAR, THE
 EXCESS ALLOWED FOR THE TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING
 YEAR OR YEARS AND MAY BE USED TO REDUCE THE ESTATE'S OR TRUST'S NEW YORK
 TAXABLE INCOME IN SUCH SUBSEQUENT YEAR OR YEARS.
   § 6. Subsection (e) of section 601 of the tax law is amended by adding
 a new paragraph 5 to read as follows:
   (5)  NONRESIDENT  PARTNERS  AND  SHAREHOLDERS IN AFFECTED PASS-THROUGH
 ENTITIES. NOTWITHSTANDING ANY OTHER PROVISION OF THIS  SUBSECTION,  WITH
 RESPECT TO EVERY NONRESIDENT AND PART-YEAR RESIDENT INDIVIDUAL AND TRUST
 AND  EVERY  NONRESIDENT  ESTATE  THAT HAS A DIRECT OR INDIRECT OWNERSHIP
 INTEREST IN ONE OR MORE AFFECTED PASS-THROUGH ENTITIES  SUBJECT  TO  THE
 TAX  IMPOSED  PURSUANT TO ARTICLE TWENTY-FOUR-A OF THIS CHAPTER, THE TAX
 IMPOSED PURSUANT TO PARAGRAPH ONE OF THIS SUBSECTION SHALL BE AN  AMOUNT
 EQUAL TO THE SUM OF THE MODIFIED TAX BASE AND THE SURTAX TAX BASE MULTI-
 PLIED BY THEIR RESPECTIVE APPLICABLE NEW YORK SOURCE FRACTIONS.
   (A)  MODIFIED TAX BASE. THE MODIFIED TAX BASE OF A TAXPAYER UNDER THIS
 PARAGRAPH SHALL BE CALCULATED IN THE SAME MANNER  AS  THE  TAX  BASE  IN
 PARAGRAPH   TWO   OF   THIS  SUBSECTION,  EXCEPT  THAT,  NOTWITHSTANDING
 SUBSECTION (A) OF SECTION SIX  HUNDRED  ELEVEN  OR  SUBDIVISION  SIX  OF
 SECTION  SIX  HUNDRED  EIGHTEEN OF THIS ARTICLE, SEPARATELY AND NONSEPA-
 RATELY COMPUTED ITEMS WITH RESPECT TO SUCH AFFECTED  PASS-THROUGH  ENTI-
 TIES  SHALL  NOT BE EXCLUDED, AND THE RATE TABLES UNDER SUBSECTIONS (A),
 (B) AND (C) AND THE SUPPLEMENTAL TAX  UNDER  SUBSECTION  (D-1)  OF  THIS
 SECTION SHALL BE APPLIED BY REDUCING EACH TAX RATE IN EXCESS OF 6.85% TO
 6.85%, AND ADJUSTING EACH TAX TABLE ACCORDINGLY. THE APPLICABLE NEW YORK
 SOURCE  FRACTION  FOR  THE  MODIFIED TAX BASE SHALL BE CALCULATED IN THE
 SAME MANNER AS THE NEW YORK SOURCE FRACTION  UNDER  PARAGRAPH  THREE  OF
 THIS SUBSECTION, INCLUDING THE EXCLUSION OF SEPARATELY AND NONSEPARATELY
 COMPUTED ITEMS WITH RESPECT TO SUCH AFFECTED PASS-THROUGH ENTITIES UNDER
 SUBSECTION  (A)  OF  SECTION  SIX  HUNDRED  ELEVEN OR SUBDIVISION SIX OF
 SECTION SIX HUNDRED EIGHTEEN OF THIS ARTICLE, AS APPLICABLE,  IN  CALCU-
 LATING  THE NUMERATOR OF SUCH FRACTION. IF THE AMOUNT OF SUCH SEPARATELY
 AND NONSEPARATELY COMPUTED ITEMS SO EXCLUDED EXCEEDS  THE  NUMERATOR  OF
 THE  NEW  YORK  SOURCE FRACTION FOR SUCH YEAR BEFORE SUCH EXCLUSION, THE
 EXCESS MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR  YEARS  AND  MAY  BE
 USED  TO  REDUCE  THE  NUMERATOR  OF  THE TAXPAYER'S APPLICABLE NEW YORK
 SOURCE FRACTION UNDER THIS SUBPARAGRAPH FOR SUCH TAXABLE YEARS.
   (B) SURTAX TAX BASE. THE SURTAX TAX BASE  OF  A  TAXPAYER  UNDER  THIS
 PARAGRAPH SHALL BE EQUAL TO THE PORTION OF THE TAXPAYER'S NEW YORK TAXA-
 BLE  INCOME  TO WHICH THE 8.82% RATE WOULD HAVE APPLIED IN COMPUTING THE
 TAXPAYER'S MODIFIED TAX BASE UNDER  THE  PRECEDING  SUBPARAGRAPH  (AFTER
 TAKING  INTO  ACCOUNT  THE  TAX TABLE BENEFIT RECAPTURE PROVISIONS UNDER
 SUBSECTION (D-1) OF THIS SECTION) IF THE TAX RATE HAD NOT BEEN CAPPED AT
 6.85% UNDER THAT SUBPARAGRAPH MULTIPLIED  BY  A  FACTOR  OF  1.97%.  THE
 APPLICABLE  NEW  YORK  SOURCE  FRACTION FOR THE SURTAX TAX BASE SHALL BE
 CALCULATED IN THE SAME MANNER AS THE  NEW  YORK  SOURCE  FRACTION  UNDER
 PARAGRAPH  THREE OF THIS SUBSECTION, EXCEPT THAT SEPARATELY AND NONSEPA-
 RATELY COMPUTED ITEMS WITH RESPECT TO SUCH AFFECTED  PASS-THROUGH  ENTI-
 TIES  SHALL  NOT  BE EXCLUDED IN CALCULATING THE NUMERATOR OF SUCH FRAC-
 TION.
   § 7. Section 606 of the tax law is amended by adding a new  subsection
 (kkk) to read as follows:
   (KKK)  TAXPAYERS  WITH  DIRECT  OR  INDIRECT  OWNERSHIP  INTERESTS  IN
 AFFECTED PASS-THROUGH ENTITIES. NOTWITHSTANDING THE OTHER PROVISIONS  OF
 THIS  SUBSECTION,  A  TAXPAYER  THAT  HAS A DIRECT OR INDIRECT OWNERSHIP
 INTEREST IN AN AFFECTED PASS-THROUGH  ENTITY  THAT  IS  SUBJECT  TO  TAX

 S. 2915                             8
 
 PURSUANT  TO  ARTICLE  TWENTY-FOUR-A  OF THIS CHAPTER IS NOT ENTITLED TO
 CLAIM A CREDIT OTHERWISE PROVIDED BY THIS SECTION TO THE EXTENT THAT THE
 CREDIT WAS CLAIMED BY THE AFFECTED PASS-THROUGH ENTITY FOR  PURPOSES  OF
 DETERMINING  ITS TAX LIABILITY UNDER ARTICLE TWENTY-FOUR-A OF THIS CHAP-
 TER.
   § 8. Subsection (d) of section 620 of the tax law, as added by chapter
 166 of the laws of 1991, is amended to read as follows:
   (d) S corporation shareholders AND PARTNERS. In the case of  a  share-
 holder  of  an S corporation, the term "income tax" in subsection (a) of
 this section shall [not] include (1) any such tax imposed upon or  paya-
 ble  by  the  [corporation,  but shall include any such tax] SHAREHOLDER
 with respect to the income of the corporation [imposed upon  or  payable
 by  the  shareholder], without regard to whether an election independent
 of the federal S election was required to effect  such  imposition  upon
 the  shareholder  OF  SUCH  S CORPORATION AND (2) SUCH SHAREHOLDER'S PRO
 RATA SHARE OF ANY SUCH TAX IMPOSED UPON OR PAYABLE BY  THE  CORPORATION,
 PROVIDED  SUCH  TAX  IMPOSITION  OR  PAYMENT RESULTS FROM A TAX THAT THE
 COMMISSIONER DETERMINES IS SUBSTANTIALLY SIMILAR TO THE TAX  IMPOSED  BY
 ARTICLE  TWENTY-FOUR-A  OF  THIS  CHAPTER. IN THE CASE OF A PARTNER IN A
 PARTNERSHIP, THE TERM "INCOME TAX" IN SUBSECTION  (A)  OF  THIS  SECTION
 SHALL  (1)  INCLUDE  ANY SUCH TAX IMPOSED UPON OR PAYABLE BY THE PARTNER
 WITH RESPECT TO THE INCOME OF THE PARTNERSHIP  AND  (2)  SUCH  PARTNER'S
 DISTRIBUTIVE  SHARE OF ANY SUCH TAX IMPOSED UPON OR PAYABLE BY THE PART-
 NERSHIP, PROVIDED SUCH TAX IMPOSITION OR PAYMENT RESULTS FROM A TAX THAT
 THE COMMISSIONER DETERMINES IS SUBSTANTIALLY SIMILAR TO THE TAX  IMPOSED
 BY ARTICLE TWENTY-FOUR-A OF THIS CHAPTER.
   §  9. Section 620 of the tax law is amended by adding a new subsection
 (e) to read as follows:
   (E) TAXPAYERS WITH DIRECT OR INDIRECT OWNERSHIP INTERESTS IN  AFFECTED
 PASS-THROUGH  ENTITIES.  NOTWITHSTANDING  THE  OTHER  PROVISIONS OF THIS
 SECTION, A TAXPAYER THAT HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST  IN
 AN AFFECTED PASS-THROUGH ENTITY THAT IS SUBJECT TO TAX PURSUANT TO ARTI-
 CLE  TWENTY-FOUR-A  OF  THIS  CHAPTER  IS NOT ENTITLED TO CLAIM A CREDIT
 OTHERWISE PROVIDED BY THIS SECTION TO THE EXTENT THAT ANY INCOME TAX  IS
 CLAIMED  AS A CREDIT PURSUANT TO SECTION EIGHT HUNDRED SIXTY-TWO OF THIS
 CHAPTER BY THE AFFECTED PASS-THROUGH ENTITY FOR PURPOSES OF  DETERMINING
 ITS TAX LIABILITY UNDER ARTICLE TWENTY-FOUR-A OF THIS CHAPTER.
   § 10. Subparagraph (A) of paragraph 4 of subsection (c) of section 658
 of  the tax law, as amended by section 72 of part A of chapter 59 of the
 laws of 2014, is amended to read as follows:
   (A) General. Every entity OTHER THAN AN ENTITY SUBJECT  TO  TAX  UNDER
 ARTICLE  TWENTY-FOUR-A  OF  THIS  CHAPTER, which is a partnership, other
 than a publicly traded partnership as defined in  section  7704  of  the
 federal Internal Revenue Code, subchapter K limited liability company or
 an  S  corporation for which the election provided for in subsection (a)
 of section six hundred sixty of this part is in effect, which has  part-
 ners,  members  or  shareholders  who  are  nonresident  individuals, as
 defined under subsection (b) of section six hundred five of  this  arti-
 cle,  or  C corporations, and which has any income derived from New York
 sources, determined in accordance with the applicable rules  of  section
 six  hundred  thirty-one of this article as in the case of a nonresident
 individual, shall pay estimated tax on such income  on  behalf  of  such
 partners,  members  or  shareholders  in  the  manner  and  at the times
 prescribed by subsection (c) of section six hundred eighty-five of  this
 article.  For purposes of this paragraph, the term "estimated tax" shall
 mean a partner's, member's or shareholder's distributive  share  or  pro

 S. 2915                             9

 rata  share  of  the entity income derived from New York sources, multi-
 plied by the highest rate of tax prescribed by section six  hundred  one
 of  this  article  for the taxable year of any partner, member or share-
 holder  who  is  an individual taxpayer, or paragraph (a) of subdivision
 one of section two hundred ten of this chapter for the taxable  year  of
 any  partner, member or shareholder which is a C corporation, whether or
 not such C corporation is subject to tax under article nine,  nine-A  or
 thirty-three  of  this chapter, and reduced by the distributive share or
 pro rata share of any  credits  determined  under  section  one  hundred
 eighty-seven,  one  hundred  eighty-seven-a,  six hundred six or fifteen
 hundred eleven of this chapter, whichever is  applicable,  derived  from
 the entity.
   § 11. Section 612 of the tax law is amended by adding a new subsection
 (y) to read as follows:
   (Y)  THE  ELECTION  BY  A  PARTNERSHIP  OR  S  CORPORATION PURSUANT TO
 SUBSECTION (B) OF SECTION EIGHT HUNDRED SIXTY-ONE OF THIS CHAPTER  SHALL
 HAVE  NO  IMPACT  ON  THE  ADDITIONS  AND  SUBTRACTIONS TO BE TAKEN INTO
 ACCOUNT UNDER SUBSECTION (N) OF THIS SECTION  AND  SUCH  ELECTION  SHALL
 HAVE  NO IMPACT ON THE DETERMINATION OF THE BASIS OF A PARTNER OR SHARE-
 HOLDER IN AN INTEREST IN THE PARTNERSHIP OR IN THE STOCK OR INDEBTEDNESS
 OF THE S CORPORATION.
   § 12. Subdivision 1 of section 171-a of the tax  law,  as  amended  by
 section  3  of  part XX of chapter 59 of the laws of 2019, is amended to
 read as follows:
   1. All taxes, interest, penalties and fees collected  or  received  by
 the commissioner or the commissioner's duly authorized agent under arti-
 cles nine (except section one hundred eighty-two-a thereof and except as
 otherwise  provided  in  section  two  hundred  five  thereof),  nine-A,
 twelve-A (except as otherwise provided in section  two  hundred  eighty-
 four-d  thereof),  thirteen, thirteen-A (except as otherwise provided in
 section  three  hundred  twelve  thereof),  eighteen,  nineteen,  twenty
 (except  as otherwise provided in section four hundred eighty-two there-
 of), twenty-B, twenty-D, twenty-one, twenty-two,  [twenty-four]  TWENTY-
 FOUR-A,  twenty-six,  twenty-eight  (except  as  otherwise  provided  in
 section  eleven  hundred  two  or   eleven   hundred   three   thereof),
 twenty-eight-A,  twenty-nine-B, thirty-one (except as otherwise provided
 in section fourteen hundred twenty-one thereof), thirty-three and  thir-
 ty-three-A  of this chapter shall be deposited daily in one account with
 such responsible banks, banking houses or  trust  companies  as  may  be
 designated by the comptroller, to the credit of the comptroller. Such an
 account  may  be  established  in one or more of such depositories. Such
 deposits shall be kept separate and apart from all other  money  in  the
 possession  of  the  comptroller. The comptroller shall require adequate
 security from all such depositories. Of the total revenue  collected  or
 received  under  such  articles  of  this chapter, the comptroller shall
 retain in the comptroller's hands such amount as  the  commissioner  may
 determine to be necessary for refunds or reimbursements under such arti-
 cles  of  this chapter out of which amount the comptroller shall pay any
 refunds or reimbursements to which taxpayers shall be entitled under the
 provisions of such articles of this chapter. The  commissioner  and  the
 comptroller  shall  maintain  a system of accounts showing the amount of
 revenue collected or received from each of the  taxes  imposed  by  such
 articles.  The  comptroller,  after  reserving  the  amount  to pay such
 refunds or reimbursements, shall, on or before the  tenth  day  of  each
 month, pay into the state treasury to the credit of the general fund all
 revenue deposited under this section during the preceding calendar month

 S. 2915                            10
 
 and  remaining  to  the  comptroller's  credit  on  the last day of such
 preceding month, (i) except that the comptroller shall pay to the  state
 department of social services that amount of overpayments of tax imposed
 by  article  twenty-two  of this chapter and the interest on such amount
 which is certified to the comptroller by the commissioner as the  amount
 to  be  credited against past-due support pursuant to subdivision six of
 section one hundred seventy-one-c of this article, (ii) and except  that
 the  comptroller  shall  pay  to  the  New  York  state higher education
 services corporation and the state university of New York  or  the  city
 university  of  New York respectively that amount of overpayments of tax
 imposed by article twenty-two of this chapter and the interest  on  such
 amount  which is certified to the comptroller by the commissioner as the
 amount to be credited against the amount of  defaults  in  repayment  of
 guaranteed  student  loans and state university loans or city university
 loans pursuant to subdivision five of section one hundred  seventy-one-d
 and  subdivision  six of section one hundred seventy-one-e of this arti-
 cle, (iii) and except further that, notwithstanding any law,  the  comp-
 troller  shall  credit  to  the  revenue  arrearage account, pursuant to
 section ninety-one-a of the state finance law, that amount  of  overpay-
 ment  of  tax imposed by article nine, nine-A, twenty-two, thirty, thir-
 ty-A, thirty-B or thirty-three of this chapter, and any interest  there-
 on,  which  is  certified  to the comptroller by the commissioner as the
 amount to be credited against a past-due legally enforceable  debt  owed
 to  a  state  agency  pursuant  to  paragraph  (a) of subdivision six of
 section one hundred seventy-one-f of this article, provided, however, he
 shall credit to  the  special  offset  fiduciary  account,  pursuant  to
 section  ninety-one-c of the state finance law, any such amount credita-
 ble as a liability as set forth in paragraph (b) of subdivision  six  of
 section  one  hundred  seventy-one-f  of  this  article, (iv) and except
 further that the comptroller shall pay to the  city  of  New  York  that
 amount  of  overpayment  of tax imposed by article nine, nine-A, twenty-
 two, thirty, thirty-A, thirty-B or thirty-three of this chapter and  any
 interest thereon that is certified to the comptroller by the commission-
 er  as  the  amount  to be credited against city of New York tax warrant
 judgment debt pursuant to section  one  hundred  seventy-one-l  of  this
 article,  (v)  and  except  further  that the comptroller shall pay to a
 non-obligated spouse that amount of overpayment of tax imposed by  arti-
 cle twenty-two of this chapter and the interest on such amount which has
 been credited pursuant to section one hundred seventy-one-c, one hundred
 seventy-one-d,  one  hundred seventy-one-e, one hundred seventy-one-f or
 one hundred seventy-one-l of this article and which is certified to  the
 comptroller  by  the  commissioner  as the amount due such non-obligated
 spouse pursuant to paragraph  six  of  subsection  (b)  of  section  six
 hundred fifty-one of this chapter; and (vi) the comptroller shall deduct
 a  like  amount which the comptroller shall pay into the treasury to the
 credit of the general fund from  amounts  subsequently  payable  to  the
 department  of  social  services,  the state university of New York, the
 city university of New York, or the  higher  education  services  corpo-
 ration,  or  the  revenue  arrearage account or special offset fiduciary
 account pursuant to section ninety-one-a or ninety-one-c  of  the  state
 finance  law, as the case may be, whichever had been credited the amount
 originally withheld from such overpayment, and  (vii)  with  respect  to
 amounts  originally  withheld  from such overpayment pursuant to section
 one hundred seventy-one-l of this article and paid to the  city  of  New
 York,  the  comptroller shall collect a like amount from the city of New
 York.

 S. 2915                            11
 
   § 13. Section 601 of the tax law is amended by adding a new subsection
 (j) to read as follows:
   (J)  FOR  EVERY RESIDENT INDIVIDUAL, ESTATE OR TRUST THAT HAS A DIRECT
 OR INDIRECT OWNERSHIP INTEREST IN ONE OR MORE PASS-THROUGH ENTITIES THAT
 HAS ELECTED TO BE SUBJECT TO TAX PURSUANT TO SUBSECTION (A)  OF  SECTION
 EIGHT  HUNDRED  SIXTY-ONE  OF  THIS CHAPTER, THERE IS HEREBY IMPOSED FOR
 EACH TAXABLE YEAR A SURTAX AT THE RATE OF 1.97% ON THE AMOUNT  BY  WHICH
 THE  PORTION  OF SUCH INDIVIDUAL'S, ESTATE'S OR TRUST'S NEW YORK TAXABLE
 INCOME SUBJECT TO TAX AT THE RATE OF 8.82% WOULD INCREASE IF  THE  RESI-
 DENT  INDIVIDUAL'S,  ESTATE'S  OR  TRUST'S  NEW  YORK TAXABLE INCOME WAS
 ADJUSTED TO ADD BACK SUCH INDIVIDUAL'S, ESTATE'S OR TRUST'S DISTRIBUTIVE
 OR PRO RATA SHARES OF SEPARATELY OR NONSEPARATELY  COMPUTED  ITEMS  FROM
 SUCH PASS-THROUGH ENTITIES.
   §  14. Paragraph 1 of subsection (e) of section 601 of the tax law, as
 amended by chapter 170 of the laws  of  1994,  is  amended  to  read  as
 follows:
   (1)  General.  [There]  EXCEPT  AS  PROVIDED IN PARAGRAPH FIVE OF THIS
 SUBSECTION, THERE is hereby imposed for each taxable year on the taxable
 income which is derived from sources in this state of every  nonresident
 and part-year resident individual and trust and every nonresident estate
 a  tax  which  shall be equal to the tax base multiplied by the New York
 source fraction.
   §  15. This act shall take effect  immediately  and  shall  apply  for
 taxable  years  beginning on or after January 1, 2021; provided, however
 that the amendments to subdivision 1 of section 171-a  of  the  tax  law
 made  by  section  twelve of this act shall not affect the expiration of
 such subdivision and shall be deemed to expire therewith.