Local Office Blogs

Feel free to peruse our blog or search for posts based on a specific term.

April 14, 2014

On March 31, 2014, Governor Andrew Cuomo signed the New York State fiscal year 2014-2015 budget bill. This tax reform includes a major overhaul of the New York Corporate income and franchise tax. The Governor cites simplification as the main driver for the changes, as he is determined to make New York more attractive to do business in.

With changes being phased in until 2020, the now complicated structure of the New York consolidated return will mean major changes for taxpayers. As the effective date of this legislation is March 31, these changes will need to be considered for first quarter provision calculations. The budget bill is expansive, as there will be changes outside of just income and franchise tax, such as other miscellaneous repeals, adjustments, and additions. However, for the purpose of this post, we will only cover those reforms made to income and franchise tax for corporate taxpayers.

The following highlights of the tax changes are effective for the 2015 tax year unless otherwise noted and will impact your organization if you do business in New York:

Income Tax

  • New York’s previous combined reporting method converts to a water’s edge unitary filing, largely following the federal return. The intercorporate rules for combined reporting have been repealed. Each entity of an entire group of entities is liable for the tax and franchise tax of said group and calculated on a combined basis.
  • Provisions establishing the Subsidiary Capital tax and modifications have been repealed. For all taxpayers, the income tax rate reduces from 7.1% to 6.5% starting in 2016.
  • MTA Surcharge tax rate increases to 25.6% for the 2015 tax year, and will then be adjusted by the Tax commissioner as necessary each year.
  • The Net Operating Loss (NOL) changes from pre-apportionment to post-apportionment and allows for an option of taking the NOL over 2 or 10 years as a subtraction. NOLs remaining after 2014 will have to be converted to post-apportionment NOLs.
  • Many receipts will now be sourced under Market-based sourcing instead of the historical cost of performance methodology.

Franchise Tax

  • Capital tax will be phased out between 2016 and 2020.
  • The cap on capital tax increases to $5 million beginning in 2015.
  • The fixed dollar minimum tax based on a taxpayer’s New York sourced receipts has been retained, but increases the tax incrementally up to $200,000 for taxpayer’s with over $1 billion of NY receipts (the maximum before was $5,000).

Keep in mind that both domestic and foreign corporations doing business, employing capital, owning or leasing property, or maintaining an office in New York State will be subject to New York’s Article 9-A Corporate Franchise Tax. The budget bill adds “deriving receipts from activity” in New York to this list, and a corporation will be considered active in this regard if it has $1 million or more in receipts within New York under the bill’s revised sourcing rules. Additional changes included in the budget bill will be important to take into consideration for taxpayers. At this point, New York City’s fiscal year ends June 30.

As New York City has a history of mirroring New York state tax policy, we could expect to see something pushed out in this year’s New York City budget. You can find detailed information on the 2014-2015 Budget Bill on New York State’s website.

If you have any further questions regarding this budget bill and its impending tax reform, contact Josh Littlejohn at jlittlejohn@cbiz.com or (901) 685.5575.


Phoenix tax Accounting affordable care act Alex Elliott anna howell Audit audit and assurance Award Awards awards and recognition BEPS Best Places to Work Betty Isler Bill Tapp BizJournals biztips bizwomen Blog Brad Hale brenda brigman bryan koch CBIZ CBIZ Kansas City CBIZ KC CBIZ MHM CBIZ MHM Memphis CBIZ MHM Tampa Bay cbiz security and advisory services CBIZ Women's Advantage CBIZBlog CBIZKC CBIZMHM CFO CFO & Controller Conference cfo conference CFO of the Year CFO of the year awards Charity Community Involvement Conference Construction Controller Conversation With country club plaza Craig Gilman cwa Dave Enick DOL EBP EBP Audits Ed Rataj Employee Benefit Plan Audits Employee Benefits employee engagement EmployeeBenefits entrepreneur EntreprenurialServicesGroup ESG Eustis Corrigan events Food Drive healthcare HR Human Resources Innovation International Tax Jenny Matasic Josh Finfrock Joyce Farris Kansas City KansasCity karen cassella KC CFO Breakfast Series KC Events KCEvents Linda Lauer Lloyd Grissinger Local Managing Director Manufacturing Mark Baricos MBJ Megan Murdock memphis Memphis Business Journal Memphis Daily News memphis super women in business mentoring monday mergers and acquisitions moira house Networking NFP Not-for-profit Paul Dunham pci compliance Phoenix promotions real estate Revenue Recognition SALT Service Social Committee sonya daniels Sponsorships Start Up Start Ups State and Local Tax steve dunavant Success Super Women in Business Tampa Bay Tampa Bay Business Journal tangible property regulations Tax Tax Incentives tax reform The Daily News Top Workplaces Tracey McDonald transaction advisory services Transfer Pricing UMB Bank University of Memphis Volunteer workplace award