Market-Based Sourcing and Beyond: Be on the Lookout for New State Tax Issues in the Corporate Tax World

Just when you thought you knew everything there was to know about multistate corporate income tax apportionment, the states start switching up the rules!

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Gaied Legislation Proposed for NYS Statutory Residency

Last Friday, members of the NYS Legislature introduced a bill aimed at clarifying the definition of “permanent place of abode” under Tax Law § 605(b)(1)(B) for statutory residency purposes. Under that statute, a person is generally taxable as a resident if they meet a two-pronged test: (1) maintain a “permanent place of abode” in New York and (2) spend more than 183 days in New York.  

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Regarding Hurricanes Harvey and Irma and their Impact on New York Residency

Clients who are domiciled in Texas, Florida, and US Virgin Islands may end up spending additional time in New York this year, due to Hurricanes Harvey or Irma. Those affected might be concerned about the impact of that additional New York time on their New York residency situation. Clients should be aware that the New York State Department of Taxation of Finance has not put out any information to taxpayers affected, or potentially affected, by these storms. To our knowledge, the Department has never issued an official policy regarding the treatment of days spent in New York due to a mandatory evacuation from a primary residence in another state, or damage to that residence.

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New York Tax Powers of Attorney: There’s an App for That…and a New Form

For years, practitioners and taxpayers have struggled with the cumbersome, four-page power-of-attorney form that the New York Tax Department has required taxpayers to use when they wanted to appoint a representative to help them with their tax matter.

But this week, the NYS Tax Department rolled out a new web application where POAs can be filed online.

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Love Conquers All in New York Domicile Case

Last week, another great domicile case was issued by New York’s Division of Tax Appeals. The case, entitled Matter of Patrick, chronicled a movie-esque love affair between long-lost high school sweethearts and—more importantly for our purposes—another win for a taxpayer in a change-of-domicile case. We also covered this case in our TiNY Blog.

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New Tax Department Sales Tax Ruling Issued on Club Dues and Sports Activities

The New York State Department of Taxation and Finance has issued a new sales tax ruling on the taxability of club dues at a social club. In an advisory opinion released May 24, tax department held that fees charged to nonmembers for club-sponsored activities are not subject to tax merely as a result of the club’s relationship to its members and that the nature of each activity should determine its taxability. The ruling was also written up in a recent Tax Notes article, in which yours truly was quoted.

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Another Cloud-Computing Ruling Descends from the Tax Department

Last week the Tax Department published another advisory opinion on a “software as a service” issue, continuing the trend of rulings on software sales “in the cloud.” A few years ago, I wrote an article on sales tax issues in the cloud-computing context generally, and we have also covered New York cases where the issue has come up. In this most recent opinion, the taxpayer asked whether charges for its “video generating services” were subject to sales tax. And not surprisingly, the Department concluded that the sales were taxable, continuing its trend of taxing almost everything that moves in the cloud.

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Partner Objects to Volkswagen Class Action Settlement in Letter

Many people experience sticker shock with respect to sales tax and other government-imposed fees (i.e., title fees) when it comes time to purchase or lease a new vehicle.

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Give your feedback on draft of new Corporation Franchise Tax Regulations

The New York State Department of Taxation and Finance has been drafting new Corporation Franchise Tax Regulations to incorporate the changes made by the corporate tax reform legislation that went into effect in 2015. 

The newest draft regulations address net operating losses carried forward from pre-2015 tax years. In order to preserve the value of unused NOLs that arose prior to 2015, New York has created a prior net operating loss conversion (PNOLC) subtraction pool that can be applied against apportioned income in post-2015 tax years.

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New York State Tax Department Again Tries to Tackle Federal Issues

During the past several years, we have seen a continuing trend in New York personal income tax audits involving the examination of federal tax issues. The New York State Tax Department, overall, has one of the more sophisticated and aggressive personal income tax audit groups in the country. For years, as I have outlined in numerous blogs and articles, the Tax Department’s residency audit program has been second to none. But as we have seen, the Tax Department focuses more on flow-through entity issues. We also have seen the expansion of an interesting phenomenon: federal tax audits being conducted by New York tax auditors.

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