On January 21, 2020, the New York General Assembly introduced A. 9122, a companion bill to S. 6102 in the Senate, which would impose an additional 5% tax on the gross income of “every corporation which derives income from the data individuals of this state share with such corporations.” The language in the bill does not provide further detail or limitation on the scope of the proposed new tax, nor does it provide for an effective date.
There are many problems with the bill’s language as currently crafted that will hopefully be addressed as it moves through the legislature. For instance, the bill currently applies to all worldwide income of a corporation related to the use of data obtained from individuals in New York State. Since it would be difficult for a company to determine what data was derived solely from New York individuals, it is not clear how this 5% tax would be applied.
The bill is so broadly written that it would apply to every business that collects any information from customers in New York and uses that to generate revenue. Consider a company that sends out email blasts from customer lists or partners with other firms to cross-sell customers. How revenue generated from those customers would be tracked and/or treated as New York income is not addressed in the bill’s language.
This issue follows a trend by states enacting new taxes on digital companies that sell to customers within their borders, but A. 9122 extends that to brick-and-mortar companies that use digital information to generate revenue. The issue bears watching as it moves through the legislature. Hopefully, industry groups can help narrow the language to provide a more reasonable outcome.
The tax professionals at CBIZ are following this bill and will keep you updated. For questions as to how A. 9122 may affect your New York filing requirement, please contact your CBIZ State and Local Tax professional.
© Copyright CBIZ, Inc. All rights reserved. Use of the material contained herein without the express written consent of the firms is prohibited by law. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. Material contained in this publication is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their organization.
“CBIZ” is the brand name under which CBIZ CPAs P.C. and CBIZ, Inc. and its subsidiaries, including CBIZ Advisors, LLC, provide professional services. CBIZ CPAs P.C. and CBIZ, Inc. (and its subsidiaries) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations, and professional standards. CBIZ CPAs P.C. is a licensed independent CPA firm that provides attest services to its clients. CBIZ, Inc. and its subsidiary entities provide tax, advisory, and consulting services to their clients. CBIZ, Inc. and its subsidiary entities are not licensed CPA firms and, therefore, cannot provide attest services.