Recent developments

Recent developments

Have there been any notable recent developments concerning state and local taxation in your state, including any regulatory changes or case law?

Notable recent developments include the following:

  • In April 2019 the New York legislature increased the rates of transfer tax on transfers of real property and “mansion tax” for transfers occurring after July 1, 2019.

  • In September 2019 New York State adopted a new law requiring the disclosure on a transfer tax return of all natural persons who own a membership interest, directly or indirectly, in a limited liability company that is a grantor or grantee of a residential real property.

General framework

Legislation

What primary and secondary legislation governs the collection and remittance of taxes in your state?

The primary and secondary legislation are:

  • New York State statutes: Tax Law;
  • New York State regulations: New York Codes, Rules and Regulations Title 20;
  • New York City statutes: Administrative Code Title 11; and
  • New York City regulations: Rules of the City of New York Title 19.

Government authorities

What government authorities (at both state and local level) are charged with the collection and administration of taxes, and what are the extent of their powers?

The New York State Department of Taxation and Finance and the New York City Department of Finance are responsible for the administration and collection of taxes. The powers of these bodies are broad and each has discretionary authority in certain circumstances to make adjustments when the apportioned income does not accurately reflect the taxpayer’s activities in New York.

State/local balance

How would you describe the balance between taxes collected at state and local level?

In general, most taxes are collected at the state level. However, New York City has its own tax authority and imposes significant amounts of tax (in many cases equal to, or more than, New York State).

Tax year and filing deadlines

What is the prescribed tax year in your state and what filing deadlines apply?

The tax year and filing deadlines depend on the type of tax involved.

Government policy

How competitive is your state in terms of taxation in relation to other states? What is the government’s general policy and approach to taxation?

New York is generally a high-tax jurisdiction in terms of tax rates, activities subject to tax, and reach of tax jurisdiction. Likewise, New York City is a significant tax jurisdiction in its own right and imposes taxes, in addition to New York State, that can be as high (and as broad) as many states. The general approach of New York State and New York City is to ensure that tax is fully reported and paid.

Corporate income and franchise taxes

Taxable income

How is taxable income determined in your state? To what extent is the state income tax base aligned with the federal income tax base?

Corporate taxpayers in New York State pay tax equal to the highest amount calculated under three alternative tax bases:

  • business income;
  • capital base; or
  • fixed dollar amount.

The starting point for the New York State business income is the federal income tax base. Certain additions are required, including:

  • income from non-New York bonds;
  • depreciation adjustments; and
  • royalty payments to related parties.

Subtractions include depreciation adjustments and interest income on U.S. bonds.

Business income is apportioned to New York based on the receipts sourced to New York.

New York City has a similar approach to New York State, apportioning the income based on receipts from New York City.

A separate election must be filed with New York State in order for a corporation to be treated as an S corporation. However, if no New York election is made for a federal S corporation and the corporation’s investment income is more than 50% of its federal gross income for that year, it will automatically be considered an S corporation for New York State purposes. New York State S corporations pay the fixed dollar minimum amount.

New York City does not recognize federal S corporation election, and S corporations are subject to general corporation tax.

In addition to corporate tax, New York City imposes unincorporated business income tax (U.B.T.) on unincorporated entities (e.g., partnerships, limited liability companies, fiduciaries, associations, estates, trusts, and individuals engaged in trades and professions) doing business in New York City. The starting point for the U.B.T. is the taxpayer’s federal taxable income, subject to certain modifications, including an addback of compensation paid to any owners of the entity. Certain income—including trading for one’s own account, and rental of property—is exempt.

How is in-state income apportioned for multi-state businesses? Does your state regulate transfer pricing?

New York State’s apportionment rules generally apportion all business income and capital using a single receipts factor that primarily sources receipts based on customer location (market-based sourcing).

Before 2015 market-based sourcing was limited, and most receipts were sourced based on the place of performance.

New York City also uses a single receipts factor—primarily, market-based sourcing. Historically, for New York City the income was apportioned using a three-factor formula for sales, property, and payroll, with differing weight assigned to each in a specific year. The single-factor formula is effective for years beginning on or after January 1 2018 (with an election for certain small taxpayers and manufacturers to continue using a three-factor formula).

The U.B.T. continues to use the three-factor formula, currently weighing receipts at 80% and property and payroll at 10% each, although it is also moving towards a single receipts factor (to be fully phased in by 2019).

Nexus

How is nexus determined for corporate income tax purposes?

Businesses that exercise a corporate franchise, do business, employ capital, own or lease property, maintain an office, or derive receipts (of $1 million or more in a tax year) from activity conducted in New York will be deemed to have nexus for state purposes. A corporate partner in a partnership that is doing business in New York will also be considered to be doing business in New York.

A foreign corporation will be deemed to have a New York corporate income tax nexus if it:

  • has issued cards (including bank, credit, travel, and entertainment cards) to at least 1,000 customers with a New York mailing address;
  • has 1,000 or more New York locations covered by merchant contracts to which the corporation has remitted payments for credit card transactions; or
  • has a combined total of 1,000 or more New York customers and merchant locations.

Affiliates engaged in a unitary business meeting a common ownership test (generally, 50% or more common ownership) may be required to file combined returns in New York State and New York City. Also, a corporation that meets no other nexus standards, but is engaged in a unitary business and meets a common ownership test will have nexus if:

  • it has at least $10,000 of receipts sourced to New York;
  • its affiliates have at least $10,000 of receipts sourced to New York; and
  • the members of the unitary group meet the $1 million threshold.

Similarly, a corporation that meets no other nexus standards and is engaged in a unitary activity and meets a common ownership test will have nexus if:

  • it has at least 10 customers or locations (or a combination thereof); and
  • the members of the unitary group that have such 10 customers or locations meet the nexus standards.

New York City has similar physical nexus standards, but has not adopted an economic nexus standard.

Nexus standards are a fact-intensive inquiry and the standards may be applied differently by New York State and New York City.

Is affiliate nexus recognized in your state? If so, to what extent? Has there been any notable case law in this area?

There is generally no statutory affiliate nexus in New York. However, affiliates engaged in a unitary business meeting a common ownership test (generally, 50% or more common ownership) may be required to file combined returns in New York State and New York City. A corporation that meets no other nexus standards, but is engaged in a unitary business and meets a common ownership test will have nexus if:

  • it has at least $10,000 of receipts sourced to New York;
  • its affiliates have at least $10,000 of receipts sourced to New York; and
  • the members of the unitary group meet the $1 million threshold.

Similarly, a corporation that meets no other nexus standards and is engaged in a unitary activity and meets a common ownership test will have nexus if:

  • it has at least 10 customers or locations (or a combination thereof); and
  • the members of the unitary group that have such 10 customers or locations meet the nexus standards.

Rates

What are the applicable corporate income tax rates?

Corporate franchise tax is charged at the highest of:

  • the business income base—4.875% of income apportioned to New York for years beginning in 2018;
  • the capital base—0.04% of the capital base, not exceeding $5 million; or
  • a fixed dollar amount based on the amount of New York receipts (ranging from $19 to $3,375 for 2018 onwards).

New York State also imposes a metropolitan transportation business tax surcharge, currently at the rate of 28.6% for 2018, on the portion of New York State franchise tax (before the deduction of credits) allocated to the metropolitan commuter transportation district.

New York City imposes general corporation tax at the highest of:

  • the business income (entire net income minus investment income)—8.85% of business income allocated to New York City in 2018;
  • the capital base—0.15% of business and investment capital allocated to New York City, not exceeding $1 million; or
  • a fixed dollar amount based on the amount of New York City gross receipts (ranging from $25 to $200,000 for 2018).

Unincorporated business tax is imposed at the rate of 4% on taxable income allocated to New York City. Credit is provided to owners of the unincorporated business, although the calculation and use of the credit may be complex.

Exemptions, deductions and credits

What exemptions, deductions, and credits are available?

A variety of credits are available for New York State and New York City, including for:

  • commercial production;
  • employee training incentives;
  • low-income housing; and
  • veteran employees.

Reduced tax rates are available for:

  • manufacturers;
  • specified technology businesses; and
  • small businesses.

Exemptions are available for publicly supervised utilities, and foreign corporations engaged in investing or trading securities for their own account.

Rental income or loss from real property located outside New York City, and gain or loss on the disposition of real property located outside New York City are not considered for the purposes of computing unincorporated business tax.

Filing requirements

What filing requirements and procedures apply? Are there special filing requirements for groups of company?

For New York State general corporation tax returns, the filing requirement is annually (on or before April 15 for calendar-year taxpayers, or 3.5 months after the end of the year for fiscal-year taxpayers). If the taxpayer expects to owe more than $1,000 in corporate franchise tax after credits, it must file quarterly and pay estimated tax. If a company satisfies the combined group test (generally, a 50% ownership or control test), it must file as part of a combined return.

For New York State S corporations, the filing requirement is annually (on or before March 15 for calendar-year taxpayers, or 2.5 months after the end of the year for fiscal-year taxpayers).

Corporate franchise tax

Does your state impose a corporate franchise tax? If so, is it imposed in lieu of or in addition to corporate income tax?

New York State imposes general corporation franchise tax, which incorporates corporate income tax. There is no separate franchise tax for New York City.

If your state imposes a corporate franchise tax, please stipulate:

(a) The applicable tax base.

N/A.

(b) Tax rates.

N/A.

(c) Any exemptions or deductions.

N/A.

(d) Filing formalities.

N/A.

Personal income taxes

Taxable income

How is taxable personal income determined in your state?

New York State imposes tax on resident individuals on income from all sources. Non-resident individuals are taxed with respect to income derived from or connected with New York sources only. Part-year residents are subject to tax on:

  • income received from all sources while a resident; and
  • the portion of income derived from or connected with New York sources while a non-resident.

In determining the New York source income of non-residents and part-year residents, New York will treat days worked outside New York as New York work days if the services were performed outside New York for the convenience of the employee, rather than the convenience of the employer. Similar to New York State, New York City imposes tax on income from all sources for resident individuals and part-year residents are subject to tax for the portion of the year that they were a resident. New York City currently imposes no income tax on non-residents.

Personal income tax in New York State starts with the determination of the individual’s federal adjusted gross income. New York requires additions of certain items to federal adjusted gross income, including:

  • state income taxes deducted in arriving at federal adjusted gross income; and
  • interest income on obligations of any state or local government other than New York or its political subdivisions.

New York allows subtractions of certain items from federal adjusted gross income, including certain pensions and social security benefits, and interest income on U.S. bonds. Further, unlike the federal income tax, New York does not tax income from capital gains and ordinary income differently. New York City taxable income for an individual taxpayer who is a resident of New York City is the same as New York State taxable income.

Tax residence

Under what circumstances is an individual deemed resident in your state for personal income tax purposes?

An individual is generally considered to be a New York resident for tax purposes if he or she:

  • is domiciled in New York; or
  • maintains a permanent place of abode in New York and spends more than 183 days of the taxable year in New York.

For this purpose, any part of a day spent in New York counts as a full day (e.g., less than one hour counts the same as 24 hours). 

The same general test applies for determining residency for New York City purposes (i.e., whether the individual is domiciled in New York City, or maintains a permanent place of abode and spends more than 183 days in New York City).

A taxpayer who is a domiciliary of New York will nonetheless be considered a non-resident in certain limited circumstances where he or she:

  • either does not maintain a permanent place of abode or spends 450 days during any 548-day period out of the country; and
  • is only in New York for a limited prescribed period of days during the tax year.

Rates

What are the applicable personal income tax rates?

In 2018 New York State marginal rates for personal income tax ranged from 4% to 8.82%.

In 2018 marginal rates for New York City personal income tax ranged from 2.907% to 3.876%.

Individuals who are residents of Yonkers, or have Yonkers source income, are subject to an extra tax surcharge.

New York State also imposes metropolitan commuter transportation mobility tax (M.C.T.M.T.) ranging from 0.11% to 0.34% on certain individuals who have net earnings from self-employment exceeding $50,000 allocated to the metropolitan commuter transportation district (M.C.T.D.). The M.C.T.D. includes:

  • New York City (the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island)); and
  • the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.

Exemptions, deductions and credits

What exemptions, deductions, and credits are available?

For 2018 the New York standard deduction amounts, subject to inflation adjustments, were:  

  • $3,100 for single individuals who can be claimed as dependents; 
  • $16,050 for married individuals filing a joint return;
  • $8,000 for single individuals or married individuals filing separately; and 
  • $11,200 for heads of household.

No personal exemption is available for the taxpayer or their spouse. A $1,000 exemption is allowed for each dependent. Generally, itemized deductions follow the federal treatment. However, New York itemized deductions are subject to limitation where a taxpayer’s adjusted gross income exceeds certain levels, depending on filing status. The phase out begins when adjusted gross income exceeds:

  • $200,000 for married taxpayers filing jointly;
  • $100,000 for single taxpayers; and
  • $150,000 for heads of household.

For taxable years beginning after 2009 and before 2020, for an individual whose adjusted gross income is between $1 million and $10 million, no itemized deductions are allowed other than an amount equal to 50% of the individual’s federal itemized deduction for charitable contributions. For a taxpayer whose New York adjusted gross income exceeds $10 million, no itemized deductions are allowed other than an amount equal to 25% of the individual’s federal itemized deduction for charitable contributions.

New York allows various credits, including for:

  • child and dependent care;
  • college tuition and earned income tax; and
  • taxes paid to other states.

Filing requirements

What filing requirements and procedures apply?

New York resident individuals must file a New York tax return if required to file a federal return, or if their federal adjusted gross income plus New York additions exceeds $4,000. Because New York City income tax filing obligations are based on those of New York State, the filing thresholds for New York City are the same as those of the state.

Non-residents with income from New York State sources with New York adjusted gross income that exceeds their New York standard deduction must file a New York tax return.

Employer obligations

What obligations are imposed on the employer in relation to the collection and remittance of state personal income taxes (eg, withholding)?

In New York, employers must withhold taxes from wages and certain non-wage items (e.g., unemployment compensation benefits, annuity payments, and lottery winnings). Failure to file a withholding tax return and pay a tax withheld is subject to a penalty of 5% per month, which may increase to 25% plus interest.

Employers engaged in business in the M.C.T.D. are also liable for M.C.T.M.T. (a state-imposed payroll tax) if:

  • they are required to withhold New York State income tax from wages paid to employees; and
  • their payroll expense for all covered employees exceeds $312,500 for that calendar quarter. 

The M.C.T.M.T. rate ranges from 0.11% to 0.34%.

Sales and use taxes

Taxable goods

What goods are subject to sales and use tax in your state (at both state and local level)?

New York imposes sales tax on receipts from:

  • every retail sale (including sales, rentals, and leases) of tangible personal property (unless an exemption applies);
  • certain enumerated services; and
  • certain other enumerated items, including hotel occupancy, admission charges, and dues.

New York State authorizes cities and counties to impose local sales and use tax.

Use tax is due in specific circumstances, including when a taxpayer purchases tangible property without payment of sales tax and uses such property in New York or uses property previously held for resale.

State rate

What is the state sales tax rate?

New York State’s sales tax rate is currently at 4% and there is generally an additional tax imposed by the local authorities. New York City’s current sales tax rate is 8.875% (inclusive of the state rate).

Local rates

What is the range of local sales tax rates levied in your state?

Local rates (including the 4% state tax rate) range from 7% to 8.875%.

Exemptions

What goods are exempt from sales and use tax?

Exempt goods include:

  • clothing sold for less than $110;
  • most food products, beverages, dietary foods, and health supplements sold for human consumption (excluding candy, soda, or alcoholic beverages); and
  • medicines and medical equipment and supplies.

In addition, certain purchasers are generally exempt from sales tax, including:

  • the United States and its agencies;
  • New York State and its agencies; and
  • exempt organizations.

Further, specific sales are excluded from the definition of a taxable sale, including:

  • purchases for resale;
  • sales of physical components that will be incorporated into other tangible personal property; and
  • property to be used in performing services by the purchaser.

Services

Are any services taxed?

The following enumerated services are taxed in New York:

  • furnishing information by printed, mimeographed, or multigraphed matter, or by duplicating written or printed matter in any other matter;
  • producing, fabricating, processing, printing, or imprinting tangible personal property for a person who directly or indirectly furnishes the property on which services are performed, except when the property is for resale;
  • installing (except for mobile homes), maintaining, servicing, or repairing tangible personal property not held for sale in the regular course of business;
  • storing tangible personal property not held for sale in the regular course of business;
  • renting safe deposit boxes or similar spaces;
  • maintaining, servicing, or repairing real property or land;
  • providing parking, garage space, or storage space for motor vehicles by persons operating a garage;
  • interior decorating and design services;
  • protective and detective services;
  • furnishing or providing entertainment or information services by means of telephone, telegraphy, telephone services, or telegraph services; and
  • transporting persons within New York state.

New York City sales tax is also imposed on the following services performed or delivered in the city:

  • written or oral credit rating services;
  • oral credit reporting services not delivered by telephone;
  • beautician, barber, and hair restoration services;
  • tattoo services;
  • tanning services;
  • manicure and pedicure services;
  • electrolysis services;
  • massage services;
  • sale of services transporting, transmitting, distributing, or delivering gas or electricity when purchased from someone other than the gas or electricity vendor; and
  • sale of services by, and every charge for the use of:
    • weight control and health salons;
    • gymnasiums; and
    • Turkish and sauna baths.

Filing requirements

What filing requirements and procedures apply?

A taxpayer that falls within the definition of a vendor must register and collect sales tax on its sales.  A ‘vendor’ is any party that sells tangible personal property or services that are subject to sales tax, and:

  • maintains a place of business in New York State;
  • solicits business in the state through:
    • employees;
    • independent contractors;
    • agents; or
    • other representatives;
  • solicits business through catalogs or other advertising material, and has some additional connection with the state; or
  • sells taxable products to customers in the state, and regularly (at least 12 times a year) delivers the products by vehicle. 

Further, if a corporation performs a unitary business with an affiliate that has nexus in New York and satisfies certain ownership requirements, it may have nexus in New York as well.

There are monthly, quarterly, or annual filing requirements depending on the amount of the taxpayer’s taxable sales during the relevant taxable period. Unless an exemption applies, most filers are required to file and pay their sales taxes online.

Property taxes

Taxable value

How is the value of property assessed for tax purposes in your state? Which types of property are subject to tax?

In New York, all real property is subject to:

  • real property tax;
  • special ad valorem levies; and
  • special assessments (unless exempt by statute).

Personal property is generally not subject to property tax. However, tangible personal property that is affixed or erected on real property is subject to property tax.

State rate

What is the state property tax rate?

There is no state property tax in New York. The property tax is a local tax, raised and spent locally to finance local governments and public schools.

Local rates

What is the range of local property tax rates levied in your state?

The property tax rates are determined annually based on the budget of the locality imposing such tax. The tax rate is imposed on the assessed value of the real property, which may be lower than the fair market value of the property. New York State imposes constitutional limits on the percentage of the tax and the allowance for inflation.

Exemptions and deductions

What exemptions and deductions are available?

New York State law provides various exemptions from property tax that are based on a variety of factors, including ownership, location, or use of property (or a combination thereof). Available exemptions include:

  • charitable organizations;
  • government-owned property;
  • educational organizations; and
  • housing programs.

Filing requirements

What filing requirements and procedures apply?

Property taxes are assessed by the local jurisdiction imposing such tax and furnishing a bill to the property owner. The deadlines for when assessments are finalized and payments are due varies by each assessing district. In New York City, property tax bills are finalized in June and the payments must be made quarterly, although prepayments are allowed.

Real estate transfer tax

How is the transfer of real estate taxed in your state (including tax base, rates, exemptions, and filing formalities)?

New York State and New York City impose transfer taxes on the transfer of real property or an interest therein (each jurisdiction has a complex definition of ‘interest in real property’, which includes the transfer of a controlling interest in an entity that owns real property in such jurisdiction—certain transfers of interest may be aggregated for this purpose). Transfer tax is also due on the creation of certain leasehold interests. In New York State, the rate is generally $2 for every $500 of consideration or fraction thereof. New York State imposes an additional 1% transfer tax (mansion tax) on the transfer of residential property where the consideration is $1 million or more.

Other local jurisdictions also impose real estate transfer tax. For example, in the Peconic Bay region, there is a 2% transfer tax (the basis of the tax varies depending on the township and whether the land has been improved).

In New York City, real property transfer tax applies when the consideration is greater than $25,000. Generally, for residential property, the rate is:

  • 1% if the consideration is $500,000 or less; and
  • 1.425% if the consideration is more than $500,000.

For all other types of property, the real property transfer tax is:

  • 1.425% if the consideration is $500,000 or less; and
  • 2.625% if the value is more than $500,000.

Excluding mansion tax—which is the primary obligation of the grantee—both New York State and New York City transfer taxes are primarily the responsibility of the grantor (although the grantee is secondary liable). Consideration for transfer tax purposes includes any obligations of the grantor (including transfer taxes) that are paid by the grantee.

New York State and New York City statutorily exempt certain entities from transfer tax, including the U.S. government and its agencies. However, if the other party is not exempt and the transaction is not exempt, the tax still applies and is paid by the other party. Further, both jurisdictions exempt certain transactions from transfer tax, including to the extent that the transfer represents a mere change in form with no change in the beneficial ownership and transfers to nominees. New York City also exempts transfers to and from charitable organizations.

Unclaimed and abandoned property

Reporting and remittance

Describe your state’s regime for reporting and remitting unclaimed and abandoned property. How is the value of such property calculated? How assertive is your state in enforcing its rights to unclaimed property?

New York State requires certain entities to transfer abandoned property to the New York State Comptroller’s Office of Unclaimed Funds. Entities that are required to remit and report abandoned property include:

  • banks;
  • insurance companies;
  • corporations; and
  • state agencies.

Various dormancy periods apply to unclaimed property. Many types of property, including bank accounts, bank checks, securities, and dividend/stock payments, have three-year dormancy periods, after which they will be deemed abandoned for the purposes of unclaimed property laws and must be reported and remitted to the Comptroller’s Office. New York requires any taxpayer wilfully failing to make a full and complete report to pay $100 for each day that the report is wilfully delayed or withheld. Although New York imposes no penalties for failure to deliver unclaimed property, the state requires any taxpayer who fails to deliver unclaimed property to pay interest on the value of the property at the rate of 10% per year.

Excise and other indirect taxes

Excise taxes

What excise taxes are levied in your state, including applicable goods, rates, and filing formalities?

New York State and New York City impose excise taxes on, among other things:

  • soda;
  • hotels;
  • alcoholic beverages (ranging from $0.0379 to $0.44 per gallon based on the type of beverage);
  • cigarettes and tobacco (generally, $4.35 per pack of 20 cigarettes and an additional $1.50 in New York City); and
  • motor and aviation fuel. 

Licensing and registration requirements apply to goods that are subject to excise taxes.

Other indirect taxes

Are any other indirect taxes levied in your state?

N/A.

Other taxes

Other taxes

Do any other taxes apply to businesses in your state? If so, please include applicable tax bases, rates, exemptions/deductions, and filing formalities.

New York City imposes commercial rent and occupancy tax on tenants of commercial property in Manhattan, south of 96th Street, excluding the World Trade Center area. Taxable premises also include spaces such as billboards and showrooms. This tax applies to annualized rent above $250,000. Rent is generally the amount paid or required to be paid for the use and occupancy of the space, and includes real estate taxes, water, sewer, and other charges that are generally paid by the landlord, if the tenant pays them. Quarterly and annual filings are required. Certain tenants, including exempt organizations, government bodies, and short-term lessees (less than 14 days) are exempt.

Taking into account the available base rent reduction, the effective tax rate is 3.9%.

New York State imposes mortgage recording tax on the privilege of recording a mortgage based on the amount of the debt secured. This comprises:

  • New York State basic mortgage recording tax (0.5%);
  • additional mortgage recording tax (0.25% or 0.3% if the property is located in the metropolitan commuter transportation district); and
  • special additional mortgage recording tax (0.25%).

In New York City, there is an additional mortgage recording tax. All mortgages with initial loan balances of less than $500,000 are subject to mortgage recording tax of 2.05% of the initial mortgage principal (including a 1% New York City tax). Mortgages of one-to-three family houses and individual residential condo units with initial loan balances of $500,000 or more are subject to mortgage recording tax of 2.175% of the initial mortgage principal (including a 1.125% New York City tax). All other mortgages with initial loan balances of $500,000 or more are subject to mortgage recording tax of 2.8% of the initial mortgage principal (including a 1.75% New York City tax).

Incentives

Incentive schemes

Does your state offer any tax incentive schemes to attract businesses and promote investment?

New York State offers various tax incentives designed to increase economic development and stimulate capital investment in the state. Available tax incentives include credits for, among other industries:

  • emerging technology companies;
  • farmers; and
  • the film and TV production industry.

Other incentives include job and revitalization programs for certain areas.

Planning considerations

Compliance

What tax compliance procedures and best practices should businesses operating in your state be aware of?

Because of the number of different taxes imposed at both the New York State and New York City levels, and the varying rules and complexities, local advisors should be consulted to ensure proper reporting.

Strategic planning

What strategic planning considerations should businesses operating in your state bear in mind to optimize tax efficiency?

Businesses should be aware that New York State and New York City are separate tax jurisdictions, each with its own taxes, rules, and administration. New York City has various unique taxes (e.g., commercial rent tax, unincorporated business tax, and metropolitan transportation mobility tax), and does not recognize S corporations. Business owners should bear in mind the interplay between New York State and New York City taxes, and consider organizational structure, taking into account applicable exemptions and taxes for different entities. Consideration should be given to the establishment of multiple companies in certain circumstances.