UPDATE: Can a New York Resident Claim a Resident Tax Credit for the Connecticut Pass-through Entity Tax? New Legislation Provides An Answer

In the blog I posted below, more than a year ago, we tried to answer what has been a pressing question about how far New York’s resident credit rules go, and specifically whether NY resident who pays the Connecticut pass-through entity tax (or really any other state’s PTE tax) could claim a resident tax credit in New York for such taxes. Sixteen months later, there still is no direct answer to this question, though I continue to believe there’s some authority under existing law to claim such a credit.  But earlier this week, as part of the Governor’s 2021 Budget Proposal and buried in provisions around a new PTS tax for New York (which we will cover in a separate blog post, don’t worry), there’s this amendment to Tax Law § 620: 

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New York Tax Rates Going Up, With a Twist

The day many expected has finally come: Governor Cuomo has officially proposed his 2021 Budget and, as expected, it includes higher personal income tax rates for high-income taxpayers. 

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Change on the Horizon? - New York Budget Bill Proposes Pass-Through Entity SALT Cap Workaround

On January 19, 2021, New York Governor Andrew Cuomo published his Fiscal Year 2022 Executive Budget and related legislation (the “Budget Proposal”).  While the Budget Proposal contains a variety of important provisions, this post will cover one of the most notable: the proposed pass-through entity (“PTE”) workaround to the $10,000 limitation on Federal state and local tax deductions (the “SALT cap”).

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New York Legislative Tracker: January 14, 2021 Update

We’re back with another update on recently-introduced tax legislation. As discussed last week, we continue to see bills reintroduced that expired at the end of the last session. Two of the more interesting proposals include a bill addressing the taxability of carried interest for investment management services and another proposing a new personal income surcharge on high-income residents of New York City.

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New York Legislative Tracker: January 7, 2021 Update

With the start of New York’s new Legislative Session for the 2021-22 term, we are eagerly anticipating the introduction of new tax legislation and we plan to cover those developments here. We’ll be tracking all noteworthy legislative developments on a weekly or bi-weekly basis, and this is our first installment of 2021.

As expected, we are already seeing bills reintroduced that expired at the end of the last session. Given the uptick in working remotely due to COVID-19, one of the more interesting proposals addresses the tax treatment of telecommuting employees. While some of these efforts may fail, New York is experiencing multibillion-dollar revenue shortfalls and will be increasingly looking to businesses and high earners to ease the revenue shortfalls being faced due to the COVID-19 pandemic.

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“Of Interest” Proposed Legislation In New York: What’s Pending and What It Could Mean

This blog post will cover several noteworthy, recently-introduced pieces of New York tax legislation. While these bills are set to expire today at the end of the current legislative session, these bills may be reintroduced when the new legislative session begins in January 2021. If ultimately passed, these new pieces of legislation could have a significant impact on New York taxpayers, so we plan to keep these bills on our radar and track their progression through the legislative process when the new session begins.

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Clarity at Last – IRS Indicates Forthcoming Approval of SALT Cap Pass-Through Entity Workarounds

On November 9, 2020, the IRS issued Notice 2020-75 (the “Notice”) informing taxpayers that forthcoming proposed regulations would clarify that state and local income taxes imposed on and paid by a partnership or S corporation (a “pass-through entity” or “PTE”) on its income are allowed as a deduction by the PTE in computing its non-separately stated taxable income or loss for the year of the payment, meaning that such payments are not taken into account in applying the State and local tax (“SALT”) cap limitation to any individual who is a partner of shareholder in the PTE.

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New Trend in Residency Audits?

Over the past few weeks, several of our clients have received letters from the New York Tax Department’s desk audit unit inquiring about their 2018 tax return. These have all been form letters, all asking the same questions, and looking something like this letter. From what we can tell, all of these letters have been issued to taxpayers who fall generally in the same circumstances: they either changed their residency during 2018 and thus filed a part-year resident return, or they filed as New York residents in 2017 and then as full-year nonresidents in 2018.

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New York Tax Department Finally Issues Guidance on COVID-19 Telecommuting

As we have chronicled in blog posts over the past several months, many states have issued guidance related to how state personal income taxes will be handled during the COVID-19 pandemic, with a specific focus on telecommuting employees. Last month we also published an article in Tax Notes State on the issue. The primary question has been whether an employee telecommuting from outside a state due to the pandemic owes personal income tax in their home state or in their employer’s state (or both!).

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State Guidance related to COVID-19: Telecommuting Issues

UPDATED OCTOBER 25, 2021

Due to the COVID-19 pandemic, millions of people have been telecommuting for over a year, either from their home state or elsewhere.  Even as some states open their economies back up, it does not change the fact that companies have been allowing employees to telecommute for a significant amount of time. And many companies are allowing employees to telecommute on a more indefinite basis.  Allowing employees to telecommute from states in which they do not normally work can create a host of issues for employers, but the two big tax issues relate to nexus and income tax.

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