LBD05436-01-1
S. 4318 2
REPORTING THE NAME, ADDRESS, SOCIAL SECURITY NUMBER OR FEDERAL EMPLOYER
IDENTIFICATION NUMBER AND SUCH OTHER INFORMATION REQUIRED BY THE COMMIS-
SIONER OF EACH UNITHOLDER WHOSE DISTRIBUTIVE SHARE OF INCOME DERIVED
FROM OR CONNECTED WITH SOURCES WITHIN THIS STATE WAS MORE THAN FIVE
HUNDRED DOLLARS.
(D) LOWER-TIER ENTITY. A LOWER-TIER BUSINESS ENTITY MEANS ANY PARTNER-
SHIP OR S CORPORATION IN WHICH AN AFFECTED BUSINESS ENTITY HAS A DIRECT
OWNERSHIP INTEREST.
(E) PASS-THROUGH BUSINESS TAX. PASS-THROUGH BUSINESS TAX MEANS THE
TOTAL TAX IMPOSED BY THIS ARTICLE WITHOUT REGARD TO THE PASS-THROUGH
BUSINESS CREDIT CALCULATED UNDER SUBDIVISION (A) OF SECTION EIGHT
HUNDRED SIXTY-TWO OF THIS ARTICLE.
(F) PASS-THROUGH BUSINESS CREDIT. PASS-THROUGH BUSINESS CREDIT MEANS
THE TOTAL CREDIT CALCULATED UNDER SUBDIVISION (A) OF SECTION EIGHT
HUNDRED SIXTY-TWO OF THIS ARTICLE WITHOUT REGARD TO ANY LIMITATION
IMPOSED BY PARAGRAPH THREE OF SUCH SUBDIVISION.
(G) OWNERSHIP PERCENTAGE. OWNERSHIP PERCENTAGE MEANS A FRACTION, THE
NUMERATOR OF WHICH IS THE NET TOTAL OF THE PARTNER'S OR SHAREHOLDER'S
DISTRIBUTIVE SHARE OF INCOME, GAIN, LOSS AND DEDUCTIONS OF, AND GUARAN-
TEED PAYMENTS FROM, THE AFFECTED BUSINESS ENTITY FOR SUCH TAXABLE YEAR,
AND THE DENOMINATOR OF WHICH IS THE SUM, FOR SUCH TAXABLE YEAR, OF THE
NET TOTAL DISTRIBUTIVE SHARES OF INCOME, GAIN, LOSS AND DEDUCTIONS OF,
AND GUARANTEED PAYMENTS TO, ALL PARTNERS IN THE AFFECTED PARTNERSHIP OR
SHAREHOLDERS OF AN S CORPORATION FOR WHOM OR WHICH SUCH NET TOTAL, AS
SEPARATELY DETERMINED FOR EACH PARTNER OR SHAREHOLDER, IS GREATER THAN
ZERO.
(H) PASS-THROUGH BUSINESS NET INCOME. PASS-THROUGH BUSINESS NET
INCOME MEANS THE SUM OF (1) FEDERAL ORDINARY BUSINESS INCOME, AS
DESCRIBED IN SECTION 702(A)(8) OF THE INTERNAL REVENUE CODE AND AS
APPLIED TO THE AFFECTED BUSINESS ENTITY BY SECTION 703 OF THE INTERNAL
REVENUE CODE; AND (2) TAXES PAID OR INCURRED DURING THE TAXABLE YEAR
PURSUANT TO THIS ARTICLE BY THE AFFECTED BUSINESS ENTITY TO THE EXTENT
DEDUCTED IN COMPUTING FEDERAL ORDINARY INCOME; AND (3) GUARANTEED
PAYMENTS PAID BY THE AFFECTED ENTITY TO ITS PARTNERS OR SHAREHOLDERS AS
DESCRIBED IN SECTION 707(C) OF THE INTERNAL REVENUE CODE.
(I) PASS-THROUGH BUSINESS TAXABLE INCOME. PASS-THROUGH BUSINESS TAXA-
BLE INCOME OF AN AFFECTED BUSINESS ENTITY MEANS THE SUM OF (1) THE
AFFECTED BUSINESS ENTITY'S PASS-THROUGH BUSINESS NET INCOME OR LOSS,
EXCLUDING THE AFFECTED BUSINESS ENTITY'S DISTRIBUTIVE SHARE OF ANY SUCH
AMOUNTS FROM A LOWER-TIER BUSINESS ENTITY INCLUDED IN PARAGRAPH TWO OF
THIS SUBDIVISION, ALLOCATED TO NEW YORK STATE PURSUANT TO SUBDIVISION
(B) OF SECTION EIGHT HUNDRED SIXTY-ONE OF THIS ARTICLE; AND (2) ANY
PASS-THROUGH BUSINESS NET INCOME OF A LOWER-TIER ENTITY TO THE EXTENT IT
WAS SOURCED TO NEW YORK BY SUCH LOWER-TIER ENTITY PURSUANT TO SUBDIVI-
SION (B) OF SECTION EIGHT HUNDRED SIXTY-ONE OF THIS ARTICLE.
(J) ESTIMATED TAX. ESTIMATED TAX MEANS THE AMOUNT THAT AN AFFECTED
BUSINESS ENTITY ESTIMATES TO BE THE TAX IMPOSED BY SECTION EIGHT HUNDRED
SIXTY-ONE OF THIS ARTICLE FOR THE CURRENT TAXABLE YEAR, LESS THE AMOUNT
THAT IT ESTIMATES TO BE THE SUM OF ANY CREDITS ALLOWABLE AGAINST THE
TAX.
§ 861. IMPOSITION AND RATE OF TAX. (A) GENERAL. A TAX IS HEREBY
IMPOSED FOR EACH TAXABLE YEAR ON THE PASS-THROUGH BUSINESS TAXABLE
INCOME OF EVERY AFFECTED BUSINESS ENTITY DOING BUSINESS WITHIN THIS
STATE. THIS TAX SHALL BE IN ADDITION TO ANY OTHER TAXES IMPOSED AND
SHALL BE AT THE RATE OF FIVE PERCENT FOR EACH TAXABLE YEAR BEGINNING ON
OR AFTER JANUARY FIRST, TWO THOUSAND TWENTY-ONE.
S. 4318 3
(B) ALLOCATION TO NEW YORK. IN DETERMINING THE AMOUNT OF PASS-THROUGH
BUSINESS TAXABLE INCOME, THE PASS-THROUGH BUSINESS NET INCOME OR LOSS OF
THE AFFECTED BUSINESS ENTITY SHALL BE ALLOCATED TO THIS STATE BY MULTI-
PLYING THE PASS-THROUGH BUSINESS NET INCOME OR LOSS OF THE AFFECTED
BUSINESS ENTITY BY THE AVERAGE OF THE FOLLOWING THREE PERCENTAGES:
(1) PROPERTY PERCENTAGE. THE PROPERTY PERCENTAGE IS COMPUTED BY DIVID-
ING (A) THE AVERAGE OF THE VALUES, AT THE BEGINNING AND END OF THE TAXA-
BLE YEAR, OF REAL AND TANGIBLE PERSONAL PROPERTY OWNED AND RENTED BY THE
AFFECTED BUSINESS ENTITY AND LOCATED WITHIN THE STATE, BY (B) THE AVER-
AGE OF THE VALUES, AT THE BEGINNING AND END OF THE TAXABLE YEAR, OF ALL
REAL AND TANGIBLE PERSONAL PROPERTY OWNED OR RENTED BY THE AFFECTED
BUSINESS ENTITY AND LOCATED BOTH WITHIN AND WITHOUT NEW YORK STATE.
(2) PAYROLL PERCENTAGE. THE PAYROLL PERCENTAGE IS COMPUTED BY DIVIDING
(A) THE TOTAL WAGES, SALARIES AND OTHER PERSONAL SERVICE COMPENSATION
PAID OR INCURRED DURING THE TAXABLE YEAR TO EMPLOYEES OF THE AFFECTED
BUSINESS ENTITY, IN CONNECTION WITH THE BUSINESS CARRIED ON WITHIN THIS
STATE, BY (B) THE TOTAL OF ALL WAGES, SALARIES AND OTHER PERSONAL
SERVICE COMPENSATION PAID OR INCURRED DURING THE TAXABLE YEAR TO EMPLOY-
EES OF THE AFFECTED BUSINESS ENTITY IN CONNECTION WITH THE BUSINESS
CARRIED ON BOTH WITHIN AND WITHOUT NEW YORK STATE.
(3) GROSS INCOME PERCENTAGE. THE GROSS INCOME PERCENTAGE IS COMPUTED
BY DIVIDING (A) THE GROSS SALES OR CHARGES FOR SERVICES PERFORMED BY OR
THROUGH AN OFFICE, BRANCH OR AGENCY OF THE AFFECTED BUSINESS ENTITY
LOCATED WITHIN NEW YORK STATE, BY (B) THE TOTAL OF ALL GROSS SALES OR
CHARGES FOR SERVICES PERFORMED WITHIN AND WITHOUT NEW YORK STATE. THE
SALES OR CHARGES TO BE ALLOCATED TO NEW YORK STATE INCLUDE ALL SALES
NEGOTIATED OR CONSUMMATED, AND CHARGES FOR SERVICES PERFORMED, BY AN
EMPLOYEE, AGENT, AGENCY, OR INDEPENDENT CONTRACTOR CHIEFLY SITUATED AT,
CONNECTED BY CONTRACT OR OTHERWISE WITH, OR SENT OUT FROM OFFICES,
BRANCHES OF THE AFFECTED BUSINESS ENTITY, OR OTHER AGENCIES, SITUATED
WITHIN NEW YORK STATE.
§ 862. TAX CREDITS. (A) PASS-THROUGH BUSINESS CREDIT. AN AFFECTED
BUSINESS ENTITY THAT IS A PARTNER OR SHAREHOLDER IN A LOWER-TIER BUSI-
NESS ENTITY SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED UNDER THIS
ARTICLE AS COMPUTED UNDER PARAGRAPHS ONE THROUGH THREE OF THIS SUBDIVI-
SION.
(1) CALCULATION OF CREDIT. THE PASS-THROUGH BUSINESS CREDIT SHALL BE
CALCULATED BY MULTIPLYING THE AFFECTED BUSINESS ENTITY'S OWNERSHIP
PERCENTAGE OF A LOWER-TIER BUSINESS ENTITY BY THE LARGER OF:
(A) THE PASS-THROUGH BUSINESS TAX OF THE LOWER-TIER BUSINESS ENTITY;
OR
(B) THE PASS-THROUGH BUSINESS CREDIT CALCULATED BY THE LOWER-TIER
BUSINESS ENTITY.
(2) CREDIT FROM MULTIPLE LOWER-TIER ENTITIES. IF AN AFFECTED BUSINESS
ENTITY HAS A DIRECT OWNERSHIP INTEREST IN MORE THAN ONE LOWER-TIER BUSI-
NESS ENTITY, THE PASS-THROUGH BUSINESS CREDIT SHALL BE THE SUM OF THE
CREDITS CALCULATED UNDER PARAGRAPH ONE OF THIS SUBDIVISION WITH REGARD
TO EACH LOWER-TIER BUSINESS ENTITY IN WHICH THE AFFECTED BUSINESS ENTITY
HAS A DIRECT OWNERSHIP INTEREST.
(3) LIMITATION ON CREDIT. IF THE PASS-THROUGH BUSINESS CREDIT CALCU-
LATED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR EXCEEDS THE AMOUNT OF
TAX DUE UNDER THIS ARTICLE FOR SUCH YEAR, SUCH CREDIT SHALL BE USED TO
REDUCE THE TAX DUE TO ZERO AND ANY EXCESS SHALL NOT BE CARRIED OVER TO
ANY SUCCEEDING TAXABLE YEAR.
(B) PERSONAL INCOME TAX CREDIT. A TAXPAYER SUBJECT TO TAX UNDER ARTI-
CLE TWENTY-TWO OF THIS CHAPTER THAT IS A PARTNER OR SHAREHOLDER IN AN
S. 4318 4
AFFECTED ENTITY SUBJECT TO TAX UNDER THIS ARTICLE SHALL BE ALLOWED A
CREDIT AGAINST THE TAX IMPOSED UNDER ARTICLE TWENTY-TWO OF THIS CHAPTER,
COMPUTED PURSUANT TO THE PROVISIONS OF SUBSECTION (KKK) OF SECTION SIX
HUNDRED SIX OF THIS CHAPTER.
(C) CORPORATION FRANCHISE TAX CREDIT. A TAXPAYER SUBJECT TO TAX UNDER
ARTICLE NINE-A OF THIS CHAPTER THAT IS A CORPORATE PARTNER IN AN
AFFECTED BUSINESS ENTITY SUBJECT TO TAX UNDER THIS ARTICLE SHALL BE
ALLOWED A CREDIT AGAINST THE TAX IMPOSED UNDER ARTICLE NINE-A OF THIS
CHAPTER, COMPUTED PURSUANT TO THE PROVISIONS OF SUBDIVISION FIFTY-FIVE
OF SECTION TWO HUNDRED TEN-B OF THIS CHAPTER.
§ 863. PAYMENT OF ESTIMATED TAX. (A) GENERAL. THE ESTIMATED TAX SHALL
BE PAID AS FOLLOWS FOR AN AFFECTED BUSINESS ENTITY THAT REPORTS ON A
CALENDAR YEAR BASIS:
(1) IF SUCH ESTIMATED TAX CAN REASONABLY BE EXPECTED TO EXCEED ONE
THOUSAND DOLLARS ON OR BEFORE MARCH FIFTEENTH OF THE TAXABLE YEAR, THE
ESTIMATED TAX SHALL BE PAID IN FOUR EQUAL INSTALLMENTS ON MARCH
FIFTEENTH, JUNE FIFTEENTH, SEPTEMBER FIFTEENTH, AND DECEMBER FIFTEENTH.
(2) IF SUCH ESTIMATED TAX CAN REASONABLY BE EXPECTED TO EXCEED ONE
THOUSAND DOLLARS AFTER MARCH FIFTEENTH AND NOT AFTER JUNE FIFTEENTH OF
THE TAXABLE YEAR, THE ESTIMATED TAX SHALL BE PAID IN THREE EQUAL
INSTALLMENTS ON JUNE FIFTEENTH, SEPTEMBER FIFTEENTH, AND DECEMBER
FIFTEENTH.
(3) IF SUCH ESTIMATED TAX CAN REASONABLY BE EXPECTED TO EXCEED ONE
THOUSAND DOLLARS AFTER JUNE FIFTEENTH AND NOT AFTER SEPTEMBER FIFTEENTH
OF THE TAXABLE YEAR, THE ESTIMATED TAX SHALL BE PAID IN TWO EQUAL
INSTALLMENTS ON SEPTEMBER FIFTEENTH AND DECEMBER FIFTEENTH.
(4) IF SUCH ESTIMATED TAX CAN REASONABLY BE EXPECTED TO EXCEED ONE
THOUSAND DOLLARS AFTER SEPTEMBER FIFTEENTH OF THE TAXABLE YEAR, THE
ESTIMATED TAX SHALL BE PAID ON DECEMBER FIFTEENTH.
(B) APPLICATION TO SHORT TAXABLE YEAR. THIS SECTION SHALL APPLY TO A
TAXABLE YEAR OF LESS THAN TWELVE MONTHS IN ACCORDANCE WITH PROCEDURES
ESTABLISHED BY THE COMMISSIONER.
(C) FISCAL YEAR. 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.
(D) INSTALLMENTS PAID IN ADVANCE. AN AFFECTED PARTNERSHIP MAY ELECT TO
PAY ANY INSTALLMENT OF ITS ESTIMATED TAX PRIOR TO THE DATE PRESCRIBED
FOR THE PAYMENT THEREOF.
§ 864. FILING OF RETURN AND PAYMENT OF TAX. (A) GENERAL. ON OR BEFORE
THE FIFTEENTH DAY OF THE THIRD MONTH FOLLOWING THE CLOSE OF THE TAXABLE
YEAR, EACH AFFECTED BUSINESS ENTITY REQUIRED TO FILE A RETURN UNDER
PARAGRAPH ONE OF SUBSECTION (C) OF SECTION SIX HUNDRED FIFTY-EIGHT OF
THIS CHAPTER, SHALL ALSO BE REQUIRED TO REPORT THE INFORMATION REQUIRED
UNDER THIS ARTICLE ON SUCH RETURN.
(B) INFORMATION ON RETURN. EACH AFFECTED BUSINESS ENTITY SHALL REPORT
ANY TAX DUE UNDER THIS ARTICLE ON THE FACE OF SUCH RETURN AND SUCH OTHER
PERTINENT INFORMATION AS PRESCRIBED BY THE COMMISSIONER. 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.
(C) INFORMATION PROVIDED TO PARTNERS OR SHAREHOLDERS. EACH AFFECTED
BUSINESS ENTITY SUBJECT TO TAX UNDER THIS ARTICLE SHALL REPORT TO EACH
PARTNER OR SHAREHOLDER ITS DISTRIBUTIVE SHARE OF:
(1) THE PASS-THROUGH BUSINESS NET INCOME OF THE AFFECTED BUSINESS
ENTITY;
(2) THE PASS-THROUGH BUSINESS TAXABLE INCOME OF THE AFFECTED BUSINESS
ENTITY;
S. 4318 5
(3) THE PASS-THROUGH BUSINESS TAX IMPOSED ON THE AFFECTED BUSINESS
ENTITY; AND
(4) THE TOTAL PASS-THROUGH BUSINESS CREDIT CALCULATED BY THE AFFECTED
BUSINESS ENTITY UNDER SUBDIVISION (A) OF SECTION EIGHT HUNDRED SIXTY-TWO
OF THIS ARTICLE, BEFORE APPLICATION OF THE LIMITATION ON SUCH CREDIT
UNDER PARAGRAPH THREE OF SUCH SUBDIVISION.
§ 865. ACCOUNTING PERIODS AND METHODS. (A) ACCOUNTING PERIODS. AN
AFFECTED BUSINESS ENTITY'S TAXABLE YEAR UNDER THIS ARTICLE SHALL BE THE
SAME AS THE AFFECTED BUSINESS ENTITY'S TAXABLE YEAR FOR FEDERAL INCOME
TAX PURPOSES.
(B) ACCOUNTING METHODS. AN AFFECTED BUSINESS ENTITY'S METHOD OF
ACCOUNTING UNDER THIS ARTICLE SHALL BE THE SAME AS THE AFFECTED BUSINESS
ENTITY'S METHOD OF ACCOUNTING FOR FEDERAL INCOME TAX PURPOSES.
(C) CHANGE OF ACCOUNTING PERIOD OR METHOD. (1) IF AN AFFECTED BUSINESS
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 BUSINESS ENTITY'S METHOD OF ACCOUNTING IS CHANGED,
ANY ADDITIONAL TAX THAT RESULTS FROM THE 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 BUSINESS ENTITY USED THE METHOD OF
ACCOUNTING FROM WHICH THE CHANGE IS MADE.
§ 866. PROCEDURAL PROVISIONS. (A) GENERAL. ALL PROVISIONS OF ARTICLE
TWENTY-TWO OF THIS CHAPTER SHALL 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 BUSINESS ENTITY SHALL BE
LIABLE FOR THE TAX UNDER THIS ARTICLE, AND NO PARTNER OR SHAREHOLDER
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, AS ADDED BY CHAPTER
SIXTY-NINE OF THE LAWS OF NINETEEN HUNDRED SEVENTY-EIGHT.
(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
CHAPTER TO THE CONTRARY, THE COMMISSIONER MAY DISCLOSE INFORMATION AND
RETURNS REGARDING THE CALCULATION AND PAYMENT OF THE TAX IMPOSED BY THIS
ARTICLE AND ANY CREDIT CALCULATED ON TAXES PAID DIRECTLY OR INDIRECTLY
UNDER THIS ARTICLE TO AN AFFECTED BUSINESS ENTITY, ITS LOWER-TIERED
ENTITY OR ENTITIES AND TO ANY TAXPAYER UNDER ARTICLE NINE-A OR TWENTY-
TWO OF THIS CHAPTER THAT OWNS, IN WHOLE OR IN PART, DIRECTLY OR INDI-
RECTLY, SUCH AFFECTED BUSINESS ENTITY.
§ 2. Section 606 of the tax law is amended by adding a new subsection
(kkk) to read as follows:
(KKK) CREDIT FOR PASS-THROUGH BUSINESS TAX. (1) A TAXPAYER PARTNER OR
SHAREHOLDER OF AN AFFECTED BUSINESS ENTITY SUBJECT TO TAX UNDER ARTICLE
TWENTY-FOUR-A OF THIS CHAPTER SHALL BE ENTITLED TO A CREDIT AGAINST THE
TAX IMPOSED BY THIS ARTICLE AS PROVIDED IN THIS SUBSECTION. FOR
S. 4318 6
PURPOSES OF THIS SUBSECTION, THE TERMS "AFFECTED BUSINESS ENTITY",
"OWNERSHIP PERCENTAGE", "PASS-THROUGH BUSINESS TAX", AND "PASS-THROUGH
BUSINESS CREDIT" SHALL HAVE THE SAME MEANINGS AS SET FORTH IN ARTICLE
TWENTY-FOUR-A OF THIS CHAPTER.
(2) THE CREDIT SHALL BE EQUAL TO THE PRODUCT OF:
(I) THE TAXPAYER'S OWNERSHIP PERCENTAGE OF THE AFFECTED BUSINESS ENTI-
TY;
(II) NINETY-THREE PERCENT; AND
(III) THE GREATER OF:
(A) THE PASS-THROUGH BUSINESS TAX OF THE AFFECTED BUSINESS ENTITY; OR
(B) THE PASS-THROUGH BUSINESS CREDIT OF THE AFFECTED BUSINESS ENTITY.
(3) IF A TAXPAYER HAS A DIRECT OWNERSHIP INTEREST IN MULTIPLE AFFECTED
BUSINESS ENTITIES SUBJECT TO TAX UNDER ARTICLE TWENTY-FOUR-A OF THIS
CHAPTER, THE TAXPAYER'S CREDIT SHALL BE THE SUM OF SUCH CREDITS CALCU-
LATED UNDER PARAGRAPH TWO OF THIS SUBSECTION WITH REGARD TO EACH
AFFECTED BUSINESS ENTITY IN WHICH THE TAXPAYER HAS A DIRECT OWNERSHIP
INTEREST.
(4) IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS SUBSECTION FOR
ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, THE
EXCESS ALLOWED FOR THE TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR
OR YEARS.
§ 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause (xlvi) to read as
follows:
(XLVI) CREDIT FOR PASS-THROUGH AMOUNT OF CREDIT UNDER
BUSINESS TAX UNDER SUBDIVISION FIFTY-FIVE OF
SUBSECTION (KKK) SECTION TWO HUNDRED TEN-B
§ 4. Section 210-B of the tax law is amended by adding a new subdivi-
sion 55 to read as follows:
55. CREDIT FOR PASS-THROUGH BUSINESS TAX. (A) A CORPORATE PARTNER OR
SHAREHOLDER OF AN AFFECTED BUSINESS ENTITY SUBJECT TO TAX UNDER ARTICLE
TWENTY-FOUR-A OF THIS CHAPTER SHALL BE ENTITLED TO A CREDIT AGAINST THE
TAX IMPOSED BY THIS ARTICLE AS PROVIDED IN THIS SUBDIVISION. FOR
PURPOSES OF THIS SUBDIVISION, THE TERMS "AFFECTED BUSINESS ENTITY",
"OWNERSHIP PERCENTAGE", "PASS-THROUGH BUSINESS TAX", AND "PASS-THROUGH
BUSINESS CREDIT" SHALL HAVE THE SAME MEANINGS AS SET FORTH IN ARTICLE
TWENTY-FOUR-A OF THIS CHAPTER.
(B) THE CREDIT SHALL BE EQUAL TO THE PRODUCT OF:
(I) THE TAXPAYER'S OWNERSHIP PERCENTAGE OF THE AFFECTED BUSINESS ENTI-
TY;
(II) NINETY-THREE PERCENT; AND
(III) THE GREATER OF:
(A) THE PASS-THROUGH BUSINESS TAX OF THE AFFECTED BUSINESS ENTITY; OR
(B) THE PASS-THROUGH BUSINESS CREDIT OF THE AFFECTED BUSINESS ENTITY.
(C) IF A CORPORATION HAS A DIRECT OWNERSHIP INTEREST IN MULTIPLE
AFFECTED BUSINESS ENTITIES SUBJECT TO TAX UNDER ARTICLE TWENTY-FOUR-A OF
THIS CHAPTER, THE CORPORATION'S CREDIT UNDER THIS SUBDIVISION SHALL BE
THE SUM OF SUCH CREDITS CALCULATED UNDER PARAGRAPH TWO OF THIS SUBDIVI-
SION WITH REGARD TO EACH AFFECTED BUSINESS ENTITY IN WHICH THE CORPO-
RATION HAS A DIRECT OWNERSHIP INTEREST.
(D) THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR
SHALL NOT REDUCE THE TAX FOR SUCH YEAR TO LESS THAN THE AMOUNT
PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED
S. 4318 7
TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS
SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT OR IF
THE TAXPAYER OTHERWISE PAYS TAX BASED ON THE FIXED DOLLAR MINIMUM
AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR
MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED
FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
§ 5. 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
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
S. 4318 8
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.
§ 6. Subdivision 1 of section 171-a of the tax law, as amended by
section 4 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-D, twenty-one, twenty-two, twenty-four, TWENTY-FOUR-A, twen-
ty-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
S. 4318 9
hundred twenty-one thereof), thirty-three and thirty-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 comp-
troller's hands such amount as the commissioner may determine to be
necessary for refunds or reimbursements under such articles 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 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 pursu-
ant to subdivision five of section one hundred seventy-one-d and subdi-
vision six of section one hundred seventy-one-e of this article, (iii)
and except further that, notwithstanding any law, the comptroller shall
credit to the revenue arrearage account, pursuant to section
ninety-one-a of the state finance law, 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, 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 cred-
it to the special offset fiduciary account, pursuant to section ninety-
one-c of the state finance law, any such amount creditable as a liabil-
ity 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 commissioner 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
S. 4318 10
amount of overpayment of tax imposed by article twenty-two of this chap-
ter 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 seven-
ty-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 corporation, 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.
§ 7. This act shall take effect immediately and shall apply to 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 five of this act, shall not affect the expiration and reversion
of such subdivision, when upon such date the provisions of section six
of this act shall take effect.