S T A T E O F N E W Y O R K
________________________________________________________________________
4168
2023-2024 Regular Sessions
I N A S S E M B L Y
February 10, 2023
___________
Introduced by M. of A. STIRPE, WALLACE, WOERNER, CONRAD, LUPARDO,
PALMESANO -- read once and referred to the Committee on Ways and Means
AN ACT to amend the tax law, in relation to pass-through manufacturers
zero percent tax rate
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subsection (b) of section 612 of the tax law is amended by
adding a new paragraph 44 to read as follows:
(44) ANY INCOME, GAIN, LOSS AND DEDUCTION, TO THE EXTENT IT IS
INCLUDED IN FEDERAL ADJUSTED GROSS INCOME AND IS, WHEN COMBINED AND
COMBINED WITH ADDITIONS FOR FEDERAL DEPRECATION REQUIRED BY PARAGRAPH
EIGHT OF THIS SUBSECTION AND SUBTRACTIONS FOR NEW YORK ALLOWED BY
SUBSECTION (K) OF THIS SECTION, LESS THAN ZERO, OF AN INDIVIDUAL OR
TRUST FROM A QUALIFIED PASS-THROUGH MANUFACTURER, AS DEFINED IN PARA-
GRAPH FORTY-SEVEN OF SUBSECTION (C) OF THIS SECTION.
§ 2. Paragraph 39 of subsection (c) of section 612 of the tax law, as
amended by section 1 of part C of chapter 59 of the laws of 2022, is
amended and a new paragraph 47 is added 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 fifteen
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.
(B) (i) For the purposes of this paragraph, the term small business
shall mean: (I) a sole proprietor who employs one or more persons during
the taxable year and who has net business income or net farm income of
greater than zero but less than two hundred fifty thousand dollars;
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02164-01-3
A. 4168 2
(II) a limited liability company, partnership, or New York S corpo-
ration that during the taxable year employs one or more persons and has
net farm income attributable to a farm business that is greater than
zero but less than two hundred fifty thousand dollars;[or]
(III) a limited liability company, partnership, or New York S corpo-
ration that during the taxable year employs one or more persons and has
New York gross business income attributable to a non-farm business that
is greater than zero but less than one million five hundred thousand
dollars[.]; OR
(IV) 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-SEVEN OF THIS SUBSECTION FOR THE CURRENT TAX
YEAR.
(ii) For purposes of this paragraph, 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 (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 taxa-
ble year.
(C) 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 two
hundred fifty thousand dollars.
(47) (A) ANY INCOME, GAIN, LOSS AND DEDUCTION, TO THE EXTENT INCLUDED
IN FEDERAL ADJUSTED GROSS INCOME AND IS, WHEN COMBINED AND COMBINED WITH
ADDITIONS FOR FEDERAL DEPRECIATION REQUIRED BY PARAGRAPH EIGHT OF THIS
SUBSECTION AND SUBTRACTIONS FOR NEW YORK ALLOWED BY SUBSECTION (K) OF
THIS SECTION, GREATER THAN ZERO, OF AN INDIVIDUAL OR TRUST FROM A QUALI-
FIED PASS-THROUGH MANUFACTURER. INCOME FROM A QUALIFIED PASS-THROUGH
MANUFACTURER SHALL INCLUDE WAGES OF AN INDIVIDUAL CONTROLLING TEN
PERCENT OR MORE OF THE QUALIFIED BUSINESS OR ENTITY. INCOME OR LOSS FROM
A QUALIFIED PASS-THROUGH MANUFACTURER SHALL NOT INCLUDE AN AMOUNT
REPRESENTING REASONABLE COMPENSATION FOR PERSONAL SERVICES, AS DEFINED
IN THE INTERNAL REVENUE CODE SECTION ONE HUNDRED SIXTY-TWO REGULATIONS,
FOR AN INDIVIDUAL CONTROLLING TEN PERCENT OR MORE OF THE QUALIFIED BUSI-
NESS OR ENTITY.
(B) THE QUALIFIED PASS-THROUGH MANUFACTURER MAY BE ORGANIZED AS A SOLE
PROPRIETORSHIP, A PARTNERSHIP, A LIMITED LIABILITY COMPANY ELECTING TO
BE TREATED AS A PARTNERSHIP OR SOLE PROPRIETORSHIP, OR AN S CORPORATION.
(C) FOR THE PURPOSES OF THIS SUBSECTION, THE TERM QUALIFIED PASS-
THROUGH MANUFACTURER SHALL MEAN A BUSINESS THAT IS A QUALIFIED NEW YORK
MANUFACTURER, AS DEFINED BY SUBPARAGRAPH (VI) OF PARAGRAPH (A) OF SUBDI-
VISION ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER, EXCEPT THAT THE
TERM "GROSS RECEIPTS" SHALL BE REPLACED BY "BUSINESS RECEIPTS" IN DETER-
MINING WHETHER THE BUSINESS IS "PRINCIPALLY ENGAGED" IN MANUFACTURING. A
QUALIFIED PASS-THROUGH MANUFACTURER SHALL NOT INCLUDE A BUSINESS THAT IS
CURRENTLY PARTICIPATING IN THE START-UP NY PROGRAM.
§ 3. Paragraph 2 of subsection (a) of section 606 of the tax law is
amended by adding a new subparagraph (B-1) to read as follows:
(B-1) PROPERTY PLACED IN SERVICE DURING THE TAX YEAR THAT IS OTHERWISE
ELIGIBLE FOR THE INVESTMENT TAX CREDIT DESCRIBED IN SUBPARAGRAPH (A) OF
THIS PARAGRAPH, WILL NOT BE ELIGIBLE FOR THE INVESTMENT TAX CREDIT IF
A. 4168 3
THE USE OF THE PROPERTY IS BY A QUALIFIED PASS-THROUGH MANUFACTURER, AS
DEFINED IN PARAGRAPH FORTY-SEVEN OF SUBSECTION (C) OF SECTION SIX
HUNDRED TWELVE OF THIS ARTICLE FOR THE CURRENT TAX YEAR.
§ 4. Subdivision 1 of section 210-B of the tax law is amended by
adding a new paragraph (g) to read as follows:
(G) PROPERTY PLACED IN SERVICE DURING THE TAX YEAR THAT IS OTHERWISE
ELIGIBLE FOR THE INVESTMENT TAX CREDIT DESCRIBED IN THIS SUBDIVISION,
WILL NOT BE ELIGIBLE FOR THE INVESTMENT TAX CREDIT IF THE USE OF THE
PROPERTY IS BY A QUALIFIED NEW YORK MANUFACTURER, AS DEFINED IN SUBPARA-
GRAPH (VI) OF PARAGRAPH (A) OF SUBSECTION ONE OF SECTION TWO HUNDRED TEN
OF THIS ARTICLE FOR THE CURRENT TAX YEAR.
§ 5. For purposes of determining the modifications of paragraphs 39
and 47 of subsection (c) of section 612 of the tax law and the invest-
ment tax credit disallowance of subparagraph (B-1) of paragraph 2 of
subsection (a) of section 606 of the tax law, the amounts shall be
multiplied by the following percentages: (a) for tax years beginning on
or after January 1, 2025: forty percent; (b) for tax years beginning on
or after January 1, 2026: eighty percent; and (c) for tax years begin-
ning on or after January 1, 2027: one hundred percent.
§ 6. This act shall take effect immediately and shall apply to tax
years beginning on or after January 1, 2025.