The Legislature has now passed, and Governor Andrew Cuomo has signed into law, the 2012-2013 New York State Budget. S.6259-D, A.9059D. It contains several tax and tax credit provisions, with no tax increases. It is substantially similar, but not identical, to the Governor’s Executive Budget proposed in January 2012 (discussed in the February 2012 issue of New York Tax Insights).
Among the more significant tax changes are the following:
- Extends Gramm-Leach-Bliley Transitional Provisions. The transitional provisions under Article 32 and Article 9-A relating to the Federal Gramm-Leach-Bliley Act have been extended through December 31, 2014. Only corporations meeting the definition of a banking corporation under Tax Law § 1452(a) will be allowed to remain an Article 32 taxpayer under these provisions.
- Provides Lower Metropolitan Commuter Transportation Mobility Tax Rates to Professional Employer Organizations. In 2011, the Metropolitan Commuter Transportation Mobility Tax rates were reduced for small businesses. Effective for quarters beginning on or after April 1, 2012, the lower rates are also available to professional employer organizations. These organizations would not otherwise qualify for the lower rates because of their size, but typically furnish employer administrative services usually for employee benefits, to clients that are themselves small businesses.
- Modifies Sales Tax Compliance Methods for Hotel Room Remarketers. In connection with previously enacted sales tax legislation that applied to hotel room remarketers, the legislation contains several compliance provisions, effective September 1, 2012. They include: (i) providing a method for remarketers to compute the taxable portion of a bill when occupancy is provided together with other items for a single price; and (ii) allowing remarketers to report taxable occupancies for the filing period in which the occupancy ended, rather than in the sales tax period during which the consideration was collected.
- Suspends STAR Exemption Benefits for Taxpayers with Past-Due Tax Liabilities. The legislation suspends STAR property tax benefits to homeowners having past-due state tax obligations of at least $4,500. Beginning with the 2013- 2014 school year, taxpayers owing state taxes will be notified of the possible suspension, and will be given the opportunity to satisfy their past due liability in order to lift the suspension. Any suspended STAR benefits will be offset against the taxpayer’s past-due state tax obligations.
Extends Certain Electronic Filing and Sales Tax Compliance Provisions. The amendments extend, for one year through 2013, the requirement that individuals using tax software to prepare their State personal income tax returns file their returns electronically. However, it repeals the $25 penalty for failure to file a tax return for individuals who do not comply, as well as the provision denying interest on overpayments or refunds claimed on a return until properly e-filed. It also extends through December 31, 2013 (rather than makes permanent as previously proposed) the Department’s authority to require certain sales tax vendors to set up separate bank accounts, accessible to the Department, for depositing sales tax collections. Several tax items that the Governor proposed in January were not enacted into the new law:
- A provision that would have allowed the Department to deny to a vendor a certificate of authority for sales and use tax if the vendor owes any unpaid tax, not solely unpaid sales tax.
- A prohibition against banks deducting bank processing fees from proceeds from bank accounts levied to collect delinquent State taxes or child support obligations.A proposal to tax all loose tobacco at the higher cigarette tax rate, rather than the lower tobacco products excise tax rate.
- A proposal to expand the personal income tax and sales tax credits for residential solar energy installations.
As expected, the Department’s “corporate tax reform” proposal was also not part of the legislative enactment.