Bill Text: NY A04663 | 2021-2022 | General Assembly | Amended
Bill Title: Establishes provisions related to imposing a pass-through entity tax.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-08-17 - enacting clause stricken [A04663 Detail]
Download: New_York-2021-A04663-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 4663--C 2021-2022 Regular Sessions IN ASSEMBLY February 4, 2021 ___________ Introduced by M. of A. PAULIN -- read once and referred to the Committee on Ways and Means -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- again reported from said committee with amendments, ordered reprinted as amended and recommitted to said committee -- again reported from said committee with amendments, ordered reprinted as amended and recommit- ted to said committee AN ACT to amend the tax law and the state finance law, in relation to the imposition of a pass-through entity tax The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The tax law is amended by adding a new article 24-A to read 2 as follows: 3 ARTICLE 24-A 4 PASS-THROUGH ENTITY TAX 5 Section 860. Definitions. 6 861. Pass-through entity tax election. 7 862. Imposition and rate of tax. 8 863. Pass-through entity tax credit. 9 864. Payment of estimated tax. 10 865. Filing of return and payment of tax. 11 866. Accounting periods and methods. 12 867. Procedural provisions. 13 § 860. Definitions. For purposes of this article: 14 (a) Eligible partnership. Eligible partnership means any partnership 15 as provided for in section 7701(a)(2) of the Internal Revenue Code. An 16 eligible partnership includes any limited liability company treated as a 17 partnership for federal income tax purposes that otherwise meets the 18 requirements of this subdivision. 19 (b) Eligible S corporation. Eligible S corporation means any New York 20 S corporation as defined pursuant to this chapter. An eligible S corpo- EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD08173-07-1A. 4663--C 2 1 ration includes any limited liability company treated as an S corpo- 2 ration for federal income tax purposes that otherwise meets the require- 3 ments of this subdivision. 4 (c) Electing partnership. Electing partnership means any eligible 5 partnership that made a valid, timely election pursuant to section eight 6 hundred sixty-one of this article. 7 (d) Electing S corporation. Electing S corporation means any eligible 8 S corporation that made a valid, timely election pursuant to section 9 eight hundred sixty-one of this article. 10 (e) Taxpayer. Taxpayer means any electing partnership or electing S 11 corporation. 12 (f) Pass-through entity tax. Pass-through entity tax means the total 13 tax imposed by this article on electing partnerships and electing S 14 corporations. 15 (g) Pass-through adjusted net income (not less than zero). Pass- 16 through adjusted net income (not less than zero) means: 17 (1) In the case of an electing partnership, the sum of (i) its sepa- 18 rately and non-separately computed items, as described in section 702(a) 19 of the Internal Revenue Code, to the extent earned directly by such 20 partnership; (ii) taxes paid or incurred during the taxable year pursu- 21 ant to this article by a partnership to the extent deducted in computing 22 federal taxable income; (iii) taxes substantially similar to the tax 23 imposed pursuant to this article paid or incurred during the taxable 24 year to another state of the United States, a political subdivision of 25 such state, or the District of Columbia to the extent deducted in 26 computing federal taxable income; (iv) guaranteed payments paid by the 27 partnership to its partners as described in section 707(c) of the Inter- 28 nal Revenue Code; and (v) the sum of any New York modifications under 29 subsection (e) of section six hundred fifteen and section six hundred 30 seventeen of this chapter. 31 (2) In the case of an electing S corporation, the sum of (i) its sepa- 32 rately and non-separately computed items, as described in section 33 1366(a) of the Internal Revenue Code, whether earned by such S corpo- 34 ration or by a partnership of which the S corporation is a partner; (ii) 35 taxes paid or incurred during the taxable year pursuant to this article 36 by an S corporation to the extent deducted in computing federal ordinary 37 income; (iii) taxes substantially similar to the tax imposed pursuant to 38 this article paid or incurred during the taxable year to another state 39 of the United States, a political subdivision of such state, or the 40 District of Columbia to the extent deducted in computing federal taxable 41 income; and (iv) the sum of any New York modifications under subsection 42 (e) of section six hundred fifteen and section six hundred seventeen of 43 this chapter. 44 (h) Partnership taxable income. Partnership taxable income of an 45 electing partnership means the sum of (1) the product of (i) the elect- 46 ing partnership's pass-through adjusted net income (not less than zero), 47 allocated to New York state pursuant to subdivision (b) of section eight 48 hundred sixty-two of this article, and (ii) multiplied by the percentage 49 of the profits interests of the electing partnership that are owned by 50 partners or members who are subject to tax pursuant to article twenty- 51 two of this chapter; and (2) the product of (i) the portion of the 52 electing partnership's pass-through adjusted net income (not less than 53 zero) that is not sourced or allocated to New York state, and (ii) 54 multiplied by the percentage of the profits interests of the electing 55 partnership that are owned by partners or members who are residents of 56 New York state as defined in article twenty-two of this chapter. ForA. 4663--C 3 1 purposes of determining partnership taxable income, an entity that is a 2 disregarded entity as described in section 301.7701-2(c)(2)(i) of inter- 3 nal revenue service regulations for federal income tax purposes is also 4 disregarded in determining the percentage of the profits interest of the 5 electing partnership that are owned by partners or members who are 6 subject to tax pursuant to article twenty-two of this chapter or that 7 are owned by partners or members who are residents of New York state. In 8 addition, for purposes of determining partnership taxable income, the 9 portion of a partnership interest treated as owned by the grantor of a 10 trust or by another person pursuant to section 671 of the Internal 11 Revenue Code shall be deemed owned by such grantor or other person for 12 the purpose of determining whether that portion of the partnership is 13 owned by a partner or member who is subject to tax pursuant to article 14 twenty-two or is owned by a partner or member who is a resident of New 15 York state as defined in article twenty-two of this chapter. 16 (i) S corporation taxable income. S corporation taxable income of an 17 electing S corporation means the sum of (1) the product of (i) the 18 electing S corporation's pass-through adjusted net income (not less than 19 zero) allocated to New York state pursuant to subdivision (c) of section 20 eight hundred sixty-two of this article, and (ii) multiplied by the 21 percentage of the pro rata shares of the electing S corporation that are 22 owned by individuals, trusts, and estates who are subject to tax pursu- 23 ant to article twenty-two of this chapter; and (2) the product of (i) 24 the portion of the electing S corporation's pass-through adjusted net 25 income (not less than zero) that is not allocated to New York state 26 pursuant to subdivision (c) of section eight hundred sixty-two of this 27 article, and (ii) multiplied by the percentage of the pro rata shares of 28 the electing S corporation that are owned by individuals, trusts, and 29 estates who are residents of New York state as defined in article twen- 30 ty-two of this chapter. For purposes of determining S corporation taxa- 31 ble income, an entity that is a disregarded entity as described in regu- 32 lation section 301.7701-2(c)(2)(i) for federal income tax purposes is 33 also disregarded in determining the percentage of the profits interest 34 of the electing S corporation that are owned by shareholders who are 35 subject to tax pursuant to article twenty-two of this chapter or that 36 are owned by shareholders who are residents of New York state pursuant 37 to the provisions of article twenty-two of this chapter. In addition, 38 for purposes of determining S corporation taxable income, the portion of 39 an S corporation interest treated as owned by the grantor of a trust or 40 by another person pursuant to section 671 of the Internal Revenue Code 41 shall be deemed owned by such grantor or other person for the purpose of 42 determining whether that portion of the S corporation is owned by a 43 shareholder who is subject to tax pursuant to article twenty-two or is 44 owned by a shareholder who is a resident of New York state as defined in 45 article twenty-two of this chapter. 46 § 861. Pass-through entity tax election. (a) Any eligible partnership 47 or eligible S corporation doing business within this state shall be 48 allowed to make an annual election to be taxed pursuant to this article. 49 (b) In order to be effective, the annual election must be made (1) if 50 the entity is an S corporation, by any officer, manager or shareholder 51 of the S corporation who is authorized under the law of the state where 52 the corporation is incorporated or under the S corporation's organiza- 53 tional documents to make the election and who represents to having such 54 authorization under penalty of perjury; or (2) if the entity is not an S 55 corporation, by any member, partner, owner, or other individual withA. 4663--C 4 1 authority to bind the entity or sign returns pursuant to section six 2 hundred fifty-three of this chapter. 3 (c) The annual election shall be made in such manner as the commis- 4 sioner may prescribe by regulation. An election pursuant to this 5 subsection shall be effective for the affected pass-through entity only 6 for the taxable year for which such election is made. An election under 7 subsection (a) of this section may be made at any time during the 8 preceding taxable year of the pass-through entity or at any time during 9 the taxable year of the pass-through entity and on or before the 10 fifteenth day of the third month of such taxable year. If an election 11 under subsection (a) of this section is made for any taxable year of the 12 pass-through entity and such election is made after the fifteenth day of 13 the third month of such taxable year and on or before the fifteenth day 14 of the third month of the following taxable year, such election shall be 15 treated as made for the following taxable year. Provided, however, in a 16 tax year beginning on or after January first, two thousand twenty-one 17 but before June fifteenth, two thousand twenty-one, the pass-through 18 entity may make such election at any time prior to June fifteenth, two 19 thousand twenty-one. 20 (d) (1) Termination of election. An election pursuant to this section 21 shall be terminated whenever, at any time during the taxable year, the 22 taxpayer ceases to be an eligible partnership or eligible S corporation. 23 (2) Effective date of termination. The termination of an election is 24 effective immediately upon the taxpayer ceasing to be an eligible part- 25 nership or eligible S corporation and no tax will be due pursuant to 26 this article for the taxable year. Provided, however, in a tax year 27 beginning on or after January first, two thousand twenty-one but before 28 June fifteenth, two thousand twenty-one, the pass-through entity may 29 make such election at any time prior to June fifteenth, two thousand 30 twenty-one. 31 (3) Abatement of penalties. If a termination occurs pursuant to this 32 subdivision solely because a partner, member or shareholder of an other- 33 wise eligible partnership or eligible S corporation died during the 34 taxable year and the successor to the decedent's interest in the part- 35 nership or S corporation is an entity that will result in the partner- 36 ship or the S corporation not being an eligible partnership or S corpo- 37 ration, no addition to tax will be imposed pursuant to subsection (c) of 38 section six hundred eighty-five of this chapter on the partners, members 39 and shareholders of such partnership or S corporation solely for under- 40 payment of estimated personal income tax as a result of the termination 41 of the election made pursuant to this article. 42 § 862. Imposition and rate of tax. (a) General. A tax is hereby 43 imposed for each taxable year on the partnership taxable income of every 44 electing partnership doing business within this state and on the S 45 corporation taxable income of every electing S corporation doing busi- 46 ness within this state. This tax shall be in addition to any other taxes 47 imposed and shall be at the rate of six and eighty-five hundredths 48 percent if the sum of an entity's partners, members or shareholders 49 share of distributive proceeds attributed to the pass-through entity is 50 less than five million dollars and eight and eighty-two hundredths 51 percent if the sum of an entity's partners, members or shareholders 52 share of distributive proceeds attributed to the pass-through entity is 53 five million dollars or more for each taxable year beginning on or after 54 January first, two thousand twenty-one. 55 (b) Allocation to New York by an electing partnership. In determining 56 the amount of partnership taxable income, the adjusted net income of theA. 4663--C 5 1 electing partnership shall be allocated to this state pursuant to the 2 principles of article twenty-two of this chapter. 3 (c) Allocation to New York by an electing S corporation. In determin- 4 ing the amount of S corporation taxable income, the adjusted net income 5 of the electing S corporation shall be allocated to this state by multi- 6 plying the adjusted net income of the electing S corporation by the 7 business apportionment factor of the electing S corporation as calcu- 8 lated pursuant to section two hundred ten-A of this chapter. 9 § 863. Pass-through entity tax credit. A partner or member in an 10 electing partnership or a shareholder of an electing S corporation, 11 which partner, member or shareholder's federal taxable income includes 12 separately and non-separately computed items from the electing partner- 13 ship as described in section 702(a) of the Internal Revenue Code or from 14 the electing S corporation as described in section 1366(a) of the Inter- 15 nal Revenue Code and is subject to tax under article twenty-two of this 16 chapter shall be allowed a credit against the tax imposed pursuant to 17 article twenty-two of this chapter, computed pursuant to the provisions 18 of subsection (kkk) of section six hundred six of this chapter. 19 § 864. Payment of estimated tax. (a) Definition of estimated tax. 20 Estimated tax means the amount that an electing partnership or electing 21 S corporation estimates to be the tax imposed by section eight hundred 22 sixty-two of this article for the current taxable year. 23 (b) General. The estimated tax shall be paid as follows for an elect- 24 ing partnership and an electing S corporation that reports on a calendar 25 year basis: 26 (1) The estimated tax shall be paid in four equal installments on 27 March fifteenth, June fifteenth, September fifteenth and December 28 fifteenth. 29 (2) The amount of any required installment shall be twenty-five 30 percent of the required annual payment. 31 (3) The required annual payment is the lesser of: (A) ninety percent 32 of the tax shown on the return for the taxable year; or (B) one hundred 33 percent of the tax shown on the return of the electing partnership or 34 electing S corporation for the preceding taxable year. 35 (c) Application to short taxable year. This section shall apply to a 36 taxable year of less than twelve months and to a taxable year for which 37 an election is made before June fifteenth, two thousand twenty-one, in 38 accordance with procedures established by the commissioner. 39 (d) Fiscal year. This section shall apply to a taxable year other than 40 a calendar year by the substitution of the months of such fiscal year 41 for the corresponding months specified in this section. 42 (e) Installments paid in advance. An electing partnership or electing 43 S corporation may elect to pay any installment of its estimated tax 44 prior to the date prescribed for the payment thereof. 45 § 865. Filing of return and payment of tax. (a) General. On or before 46 the fifteenth day of the third month following the close of the taxable 47 year, each electing partnership and each electing S corporation must 48 file a return for the taxable year reporting the information required 49 pursuant to this article. 50 (b) Certification of eligibility. Every return filed pursuant to 51 subdivision (a) of this section shall include, in a format as prescribed 52 by the commissioner, a certification by an individual authorized to act 53 on behalf of the electing partnership or electing S corporation that the 54 taxpayer: 55 (1) made a timely, valid election to be subject to tax pursuant to 56 this article;A. 4663--C 6 1 (2) was at all times during the taxable year eligible to make such an 2 election, unless such return includes a notification of termination as 3 provided for in subdivision (c) of this section; and 4 (3) that all statements contained therein are true. 5 (c) Notification of termination. If an election is terminated during 6 the taxable year pursuant to subdivision (e) of section eight hundred 7 sixty-one of this article, the electing partnership or electing S corpo- 8 ration is required to file a return pursuant to subdivision (a) of this 9 section notifying the commissioner of such termination. Such notifica- 10 tion will be considered a claim for a credit or refund of an overpayment 11 of pass-through entity tax of any estimated payments made pursuant to 12 this article for the taxable year containing the date of termination. 13 (d) Information on return. Each electing partnership and electing S 14 corporation shall report on such return: 15 (1) The balance of any tax shown on such return, not previously paid 16 as installments of estimated tax, shall be paid with such return; 17 (2) Identifying information of all partners, members and/or sharehold- 18 ers eligible to receive a credit pursuant to section eight hundred 19 sixty-three of this article and such partner's, member's and/or share- 20 holder's distributive or pro rata share of the pass-through entity tax 21 imposed on the electing partnership or S corporation; and 22 (3) Any other information as required by the commissioner. 23 (e) Information provided to partners. Each electing partnership 24 subject to tax under this article shall report to each partner or member 25 its distributive share of: 26 (1) the partnership taxable income of the electing partnership; 27 (2) the pass-through entity tax imposed on the electing partnership; 28 and 29 (3) any other information as required by the commissioner. 30 (f) Information provided to shareholders. Each electing S corporation 31 subject to tax under this article shall report to each shareholder its 32 pro rata share of: 33 (1) the S corporation taxable income of the electing S corporation; 34 (2) the pass-through entity tax imposed on the electing S corporation; 35 and 36 (3) any other information as required by the commissioner. 37 § 866. Accounting periods and methods. (a) Accounting periods. An 38 electing partnership's or electing S corporation's taxable year pursuant 39 to this article shall be the same as the electing partnership's or 40 electing S corporation's taxable year for federal income tax purposes. 41 (b) Accounting methods. An electing partnership's or electing S corpo- 42 ration's method of accounting pursuant to this article shall be the same 43 as the electing partnership's or electing S corporation's method of 44 accounting for federal income tax purposes. 45 (c) Change of accounting period or method. (1) If an electing partner- 46 ship's or electing S corporation's taxable year or method of accounting 47 is changed for federal income tax purposes, the taxable year or method 48 of accounting for purposes of this article shall be similarly changed. 49 (2) If an electing partnership's or electing S corporation's method of 50 accounting is changed, any additional tax that results from adjustments 51 determined to be necessary solely by reason of such change shall not be 52 greater than if such adjustments were ratably allocated and included for 53 the taxable year of the change and the preceding taxable years, not in 54 excess of two, during which the entity used the method of accounting 55 from which the change is made.A. 4663--C 7 1 § 867. Procedural provisions. (a) General. All provisions of article 2 twenty-two of this chapter will apply to the provisions of this article 3 in the same manner and with the same force and effect as if the language 4 of article twenty-two of this chapter had been incorporated in full into 5 this article and had been specifically adjusted for and expressly 6 referred to the tax imposed by this article, except to the extent that 7 any provision is either inconsistent with a provision of this article or 8 is not relevant to this article. Notwithstanding the preceding sentence, 9 no credit against tax in article twenty-two of this chapter can be used 10 to offset the tax due pursuant to this article. 11 (b) Cross Article filings. Notwithstanding any other provisions of 12 this article: 13 (1) The commissioner may require the filing of one return which, in 14 addition to the return provided for in section eight hundred sixty-five 15 of this article, may also include any of the returns required to be 16 filed by a taxpayer pursuant to the provisions of subsection (c) of 17 section six hundred fifty-eight or article nine-A of this chapter. 18 (2) Where such return is required, the commissioner may also require 19 the payment with it of a single amount which shall equal the total of 20 the amounts (total taxes less any credits or refunds) that would have 21 been required to be paid with the returns pursuant to the provisions of 22 this article and the provisions of article twenty-two of this chapter or 23 the provisions of article nine-A of this chapter, whichever is applica- 24 ble. 25 (3) Notwithstanding any other law to the contrary, the commissioner 26 may require that all forms or returns pursuant to this article must be 27 filed electronically and all payments of tax must be paid electron- 28 ically. 29 (c) Deposit and disposition of revenue. All taxes, interest, penal- 30 ties, and fees collected or received by the commissioner pursuant to 31 this article shall be deposited and disposed of pursuant to the 32 provisions of section one hundred seventy-one-a of this chapter. 33 (d) Secrecy provision. All the provisions of paragraphs one and two of 34 subsection (e) of section six hundred ninety-seven of this chapter will 35 apply to the provisions of this article. Notwithstanding any provisions 36 of this chapter to the contrary, the commissioner may disclose informa- 37 tion and returns regarding the calculation and payment of the tax 38 imposed by this article and any credit calculated on taxes paid pursuant 39 to this article by an electing partnership or electing S corporation to 40 a partner, member or shareholder of such entity. 41 § 2. Section 606 of the tax law is amended by adding a new subsection 42 (kkk) to read as follows: 43 (kkk) Credit for pass-through entity tax. (1) A taxpayer partner or 44 member of an electing partnership and a taxpayer shareholder of an 45 electing S corporation subject to tax under article twenty-four-A of 46 this chapter shall be entitled to a credit against the tax imposed by 47 this article as provided in this subsection. For purposes of this 48 subsection, the terms "electing partnership," "electing S corporation," 49 and "pass-through entity tax" shall have the same meanings as used in 50 article twenty-four-A of this chapter. 51 (2) The credit shall be equal to (A) the product of: 52 (i) the taxpayer's percentage of the interest in the electing partner- 53 ship or pro rata share of the electing S corporation that are owned by 54 partners, members or shareholders who are subject to the tax imposed by 55 this article as determined pursuant to the provisions of subsections (h) 56 and (i) of section eight hundred sixty of this chapter;A. 4663--C 8 1 (ii) ninety-two percent; and 2 (iii) the pass-through entity tax paid with respect to income that is 3 sourced or allocated to New York state by the electing partnership or 4 electing S corporation for the taxable year; and 5 (B) for a taxpayer that is a resident, the product of: (i) the taxpay- 6 er's percentage of the interests in the electing S corporation or elect- 7 ing partnership that are owned by residents of New York state as deter- 8 mined pursuant to the provisions of subdivisions (h) and (i) of section 9 eight hundred sixty of this chapter; (ii) ninety-two percent; and (iii) 10 the pass-through entity tax paid with respect to income that is not 11 sourced or allocated to New York state by the electing partnership or 12 the electing S corporation. 13 (3) If a taxpayer is a partner, member or shareholder in multiple 14 electing partnerships and/or electing S corporations subject to tax 15 pursuant to article twenty-four-A of this chapter, the taxpayer's credit 16 shall be the sum of such credits calculated pursuant to paragraph two of 17 this subsection with regard to each entity in which the taxpayer has a 18 direct ownership interest. 19 (4) If the amount of the credit allowable pursuant to this subsection 20 for any taxable year exceeds the tax due for such year pursuant to this 21 article, the excess shall be treated as an overpayment, to be credited 22 or refunded, without interest. 23 § 3. Section 620 of the tax law, as amended by chapter 2 of the laws 24 of 1962, subsection (a) as amended and paragraph 3 of subsection (b) as 25 added by chapter 274 of the laws of 1987, and subsection (d) as added by 26 chapter 166 of the laws of 1991, is amended to read as follows: 27 § 620. Credit for income tax of another state. (a) General. A resident 28 shall be allowed a credit against the tax otherwise due under this arti- 29 cle for any income tax imposed on such resident for the taxable year by 30 another state of the United States, a political subdivision of such 31 state, the District of Columbia or a province of Canada, upon income 32 both derived therefrom and subject to tax under this article. The term 33 "income tax imposed" in the previous sentence shall not include the 34 portion of such tax (determined in the manner provided for in section 35 six hundred twenty-A) which is imposed upon the ordinary income portion 36 (or part thereof) of a lump sum distribution which is subject to the 37 separate tax imposed by section [six hundred one-C] six hundred three. 38 (b) Pass-through entity taxes. (1) A resident shall be allowed a cred- 39 it against the tax otherwise due pursuant to this article for any pass- 40 through entity tax substantially similar to the tax imposed pursuant to 41 article twenty-four-A of this chapter imposed on the income of a part- 42 nership or S corporation of which the resident is a partner, member or 43 shareholder for the taxable year by another state of the United States, 44 a political subdivision of such state, or the District of Columbia upon 45 income both derived therefrom and subject to tax under this article. 46 (2) Such credit shall be equal to the product of: 47 (A) the taxpayer's profit percentage of the partnership or pro rata 48 share of the S corporation; 49 (B) ninety-two percent; and 50 (C) the pass-through entity tax paid by the partnership or S corpo- 51 ration to such other state, political subdivision of such other state or 52 the District of Columbia. 53 (3) However, such credit will be allowed on tax paid only if: 54 (A) the state of the United States, political subdivision of such 55 state, or the District of Columbia imposing such tax also imposes anA. 4663--C 9 1 income tax substantially similar to the tax imposed under article twen- 2 ty-four-A of this chapter; and 3 (B) in the case of taxes paid by an S corporation, such S corporation 4 was treated as a New York S corporation. 5 (c) Limitations. (1) The credit under this section shall not exceed 6 the percentage of the tax otherwise due under this article determined by 7 dividing the portion of the taxpayer's New York income subject to taxa- 8 tion by such other jurisdiction by the total amount of the taxpayer's 9 New York income. 10 (2) The credit under this section shall not reduce the tax otherwise 11 due under this article to an amount less than would have been due if the 12 income subject to taxation by such other jurisdiction were excluded from 13 the taxpayer's New York income. 14 (3) In the case of a taxpayer who elects to claim the foreign tax 15 credit for federal income tax purposes, the credit under this section 16 for income tax imposed by a province of Canada shall be allowed for that 17 portion of the provincial tax not claimed for federal purposes for the 18 taxable year or a preceding taxable year, provided however, to the 19 extent the provincial tax is claimed for federal purposes for a succeed- 20 ing taxable year, the credit under this section must be added back in 21 such succeeding taxable year. The provincial tax shall be deemed to be 22 claimed last for federal income tax purposes and for purposes of this 23 subsection. 24 [(c)] (d) Definition. For purposes of this section New York income 25 means: 26 (1) the New York adjusted gross income of an individual, or 27 (2) the amount of the income of an estate or trust, determined as if 28 the estate or trust were an individual computing his New York adjusted 29 gross income under section six hundred twelve. 30 [(d) S corporation shareholders. In the case of a shareholder of an S31corporation, the term "income tax" in subsection (a) of this section32shall not include any such tax imposed upon or payable by the corpo-33ration, but shall include any such tax with respect to the income of the34corporation imposed upon or payable by the shareholder, without regard35to whether an election independent of the federal S election was36required to effect such imposition upon the shareholder.] 37 § 4. Subdivision 1 of section 171-a of the tax law, as amended by 38 chapter 92 of the laws of 2021, is amended to read as follows: 39 1. All taxes, interest, penalties and fees collected or received by 40 the commissioner or the commissioner's duly authorized agent under arti- 41 cles nine (except section one hundred eighty-two-a thereof and except as 42 otherwise provided in section two hundred five thereof), nine-A, 43 twelve-A (except as otherwise provided in section two hundred eighty- 44 four-d thereof), thirteen, thirteen-A (except as otherwise provided in 45 section three hundred twelve thereof), eighteen, nineteen, twenty 46 (except as otherwise provided in section four hundred eighty-two there- 47 of), twenty-B, twenty-D, twenty-one, twenty-two, twenty-four, twenty- 48 four-a, twenty-six, twenty-eight (except as otherwise provided in 49 section eleven hundred two or eleven hundred three thereof), 50 twenty-eight-A, twenty-nine-B, thirty-one (except as otherwise provided 51 in section fourteen hundred twenty-one thereof), thirty-three and thir- 52 ty-three-A of this chapter shall be deposited daily in one account with 53 such responsible banks, banking houses or trust companies as may be 54 designated by the comptroller, to the credit of the comptroller. Such an 55 account may be established in one or more of such depositories. Such 56 deposits shall be kept separate and apart from all other money in theA. 4663--C 10 1 possession of the comptroller. The comptroller shall require adequate 2 security from all such depositories. Of the total revenue collected or 3 received under such articles of this chapter, the comptroller shall 4 retain in the comptroller's hands such amount as the commissioner may 5 determine to be necessary for refunds or reimbursements under such arti- 6 cles of this chapter out of which amount the comptroller shall pay any 7 refunds or reimbursements to which taxpayers shall be entitled under the 8 provisions of such articles of this chapter. The commissioner and the 9 comptroller shall maintain a system of accounts showing the amount of 10 revenue collected or received from each of the taxes imposed by such 11 articles. The comptroller, after reserving the amount to pay such 12 refunds or reimbursements, shall, on or before the tenth day of each 13 month, pay into the state treasury to the credit of the general fund all 14 revenue deposited under this section during the preceding calendar month 15 and remaining to the comptroller's credit on the last day of such 16 preceding month, (i) except that the comptroller shall pay to the state 17 department of social services that amount of overpayments of tax imposed 18 by article twenty-two of this chapter and the interest on such amount 19 which is certified to the comptroller by the commissioner as the amount 20 to be credited against past-due support pursuant to subdivision six of 21 section one hundred seventy-one-c of this article, (ii) and except that 22 the comptroller shall pay to the New York state higher education 23 services corporation and the state university of New York or the city 24 university of New York respectively that amount of overpayments of tax 25 imposed by article twenty-two of this chapter and the interest on such 26 amount which is certified to the comptroller by the commissioner as the 27 amount to be credited against the amount of defaults in repayment of 28 guaranteed student loans and state university loans or city university 29 loans pursuant to subdivision five of section one hundred seventy-one-d 30 and subdivision six of section one hundred seventy-one-e of this arti- 31 cle, (iii) and except further that, notwithstanding any law, the comp- 32 troller shall credit to the revenue arrearage account, pursuant to 33 section ninety-one-a of the state finance law, that amount of overpay- 34 ment of tax imposed by article nine, nine-A, twenty-two, thirty, thir- 35 ty-A, thirty-B or thirty-three of this chapter, and any interest there- 36 on, which is certified to the comptroller by the commissioner as the 37 amount to be credited against a past-due legally enforceable debt owed 38 to a state agency pursuant to paragraph (a) of subdivision six of 39 section one hundred seventy-one-f of this article, provided, however, he 40 shall credit to the special offset fiduciary account, pursuant to 41 section ninety-one-c of the state finance law, any such amount credita- 42 ble as a liability as set forth in paragraph (b) of subdivision six of 43 section one hundred seventy-one-f of this article, (iv) and except 44 further that the comptroller shall pay to the city of New York that 45 amount of overpayment of tax imposed by article nine, nine-A, twenty- 46 two, thirty, thirty-A, thirty-B or thirty-three of this chapter and any 47 interest thereon that is certified to the comptroller by the commission- 48 er as the amount to be credited against city of New York tax warrant 49 judgment debt pursuant to section one hundred seventy-one-l of this 50 article, (v) and except further that the comptroller shall pay to a 51 non-obligated spouse that amount of overpayment of tax imposed by arti- 52 cle twenty-two of this chapter and the interest on such amount which has 53 been credited pursuant to section one hundred seventy-one-c, one hundred 54 seventy-one-d, one hundred seventy-one-e, one hundred seventy-one-f or 55 one hundred seventy-one-l of this article and which is certified to the 56 comptroller by the commissioner as the amount due such non-obligatedA. 4663--C 11 1 spouse pursuant to paragraph six of subsection (b) of section six 2 hundred fifty-one of this chapter; and (vi) the comptroller shall deduct 3 a like amount which the comptroller shall pay into the treasury to the 4 credit of the general fund from amounts subsequently payable to the 5 department of social services, the state university of New York, the 6 city university of New York, or the higher education services corpo- 7 ration, or the revenue arrearage account or special offset fiduciary 8 account pursuant to section ninety-one-a or ninety-one-c of the state 9 finance law, as the case may be, whichever had been credited the amount 10 originally withheld from such overpayment, and (vii) with respect to 11 amounts originally withheld from such overpayment pursuant to section 12 one hundred seventy-one-l of this article and paid to the city of New 13 York, the comptroller shall collect a like amount from the city of New 14 York. 15 § 5. Subdivision 1 of section 171-a of the tax law, as amended by 16 section 4 of part XX of chapter 59 of the laws of 2019, is amended to 17 read as follows: 18 1. All taxes, interest, penalties and fees collected or received by 19 the commissioner or the commissioner's duly authorized agent under arti- 20 cles nine (except section one hundred eighty-two-a thereof and except as 21 otherwise provided in section two hundred five thereof), nine-A, 22 twelve-A (except as otherwise provided in section two hundred eighty- 23 four-d thereof), thirteen, thirteen-A (except as otherwise provided in 24 section three hundred twelve thereof), eighteen, nineteen, twenty 25 (except as otherwise provided in section four hundred eighty-two there- 26 of), twenty-D, twenty-one, twenty-two, twenty-four, twenty-four-a, twen- 27 ty-six, twenty-eight (except as otherwise provided in section eleven 28 hundred two or eleven hundred three thereof), twenty-eight-A, twenty- 29 nine-B, thirty-one (except as otherwise provided in section fourteen 30 hundred twenty-one thereof), thirty-three and thirty-three-A of this 31 chapter shall be deposited daily in one account with such responsible 32 banks, banking houses or trust companies as may be designated by the 33 comptroller, to the credit of the comptroller. Such an account may be 34 established in one or more of such depositories. Such deposits shall be 35 kept separate and apart from all other money in the possession of the 36 comptroller. The comptroller shall require adequate security from all 37 such depositories. Of the total revenue collected or received under such 38 articles of this chapter, the comptroller shall retain in the comp- 39 troller's hands such amount as the commissioner may determine to be 40 necessary for refunds or reimbursements under such articles of this 41 chapter out of which amount the comptroller shall pay any refunds or 42 reimbursements to which taxpayers shall be entitled under the provisions 43 of such articles of this chapter. The commissioner and the comptroller 44 shall maintain a system of accounts showing the amount of revenue 45 collected or received from each of the taxes imposed by such articles. 46 The comptroller, after reserving the amount to pay such refunds or 47 reimbursements, shall, on or before the tenth day of each month, pay 48 into the state treasury to the credit of the general fund all revenue 49 deposited under this section during the preceding calendar month and 50 remaining to the comptroller's credit on the last day of such preceding 51 month, (i) except that the comptroller shall pay to the state department 52 of social services that amount of overpayments of tax imposed by article 53 twenty-two of this chapter and the interest on such amount which is 54 certified to the comptroller by the commissioner as the amount to be 55 credited against past-due support pursuant to subdivision six of section 56 one hundred seventy-one-c of this article, (ii) and except that theA. 4663--C 12 1 comptroller shall pay to the New York state higher education services 2 corporation and the state university of New York or the city university 3 of New York respectively that amount of overpayments of tax imposed by 4 article twenty-two of this chapter and the interest on such amount which 5 is certified to the comptroller by the commissioner as the amount to be 6 credited against the amount of defaults in repayment of guaranteed 7 student loans and state university loans or city university loans pursu- 8 ant to subdivision five of section one hundred seventy-one-d and subdi- 9 vision six of section one hundred seventy-one-e of this article, (iii) 10 and except further that, notwithstanding any law, the comptroller shall 11 credit to the revenue arrearage account, pursuant to section 12 ninety-one-a of the state finance law, that amount of overpayment of tax 13 imposed by article nine, nine-A, twenty-two, thirty, thirty-A, thirty-B 14 or thirty-three of this chapter, and any interest thereon, which is 15 certified to the comptroller by the commissioner as the amount to be 16 credited against a past-due legally enforceable debt owed to a state 17 agency pursuant to paragraph (a) of subdivision six of section one 18 hundred seventy-one-f of this article, provided, however, he shall cred- 19 it to the special offset fiduciary account, pursuant to section ninety- 20 one-c of the state finance law, any such amount creditable as a liabil- 21 ity as set forth in paragraph (b) of subdivision six of section one 22 hundred seventy-one-f of this article, (iv) and except further that the 23 comptroller shall pay to the city of New York that amount of overpayment 24 of tax imposed by article nine, nine-A, twenty-two, thirty, thirty-A, 25 thirty-B or thirty-three of this chapter and any interest thereon that 26 is certified to the comptroller by the commissioner as the amount to be 27 credited against city of New York tax warrant judgment debt pursuant to 28 section one hundred seventy-one-l of this article, (v) and except 29 further that the comptroller shall pay to a non-obligated spouse that 30 amount of overpayment of tax imposed by article twenty-two of this chap- 31 ter and the interest on such amount which has been credited pursuant to 32 section one hundred seventy-one-c, one hundred seventy-one-d, one 33 hundred seventy-one-e, one hundred seventy-one-f or one hundred seven- 34 ty-one-l of this article and which is certified to the comptroller by 35 the commissioner as the amount due such non-obligated spouse pursuant to 36 paragraph six of subsection (b) of section six hundred fifty-one of this 37 chapter; and (vi) the comptroller shall deduct a like amount which the 38 comptroller shall pay into the treasury to the credit of the general 39 fund from amounts subsequently payable to the department of social 40 services, the state university of New York, the city university of New 41 York, or the higher education services corporation, or the revenue 42 arrearage account or special offset fiduciary account pursuant to 43 section ninety-one-a or ninety-one-c of the state finance law, as the 44 case may be, whichever had been credited the amount originally withheld 45 from such overpayment, and (vii) with respect to amounts originally 46 withheld from such overpayment pursuant to section one hundred seventy- 47 one-l of this article and paid to the city of New York, the comptroller 48 shall collect a like amount from the city of New York. 49 § 6. Subdivisions 2, 3 and paragraph (a) of subdivision 5 of section 50 92-z of the state finance law, as amended by section 5 of part MM of 51 chapter 59 of the laws of 2018, are amended to read as follows: 52 2. Such fund shall consist of (a) fifty percent of receipts from the 53 imposition of personal income taxes pursuant to article twenty-two of 54 the tax law, less such amounts as the commissioner of taxation and 55 finance may determine to be necessary for refunds, [and] (b) fifty 56 percent of receipts from the imposition of employer compensation expenseA. 4663--C 13 1 taxes pursuant to article twenty-four of the tax law, less such amounts 2 as the commissioner of taxation and finance may determine to be neces- 3 sary for refunds, and (c) fifty percent of receipts from the imposition 4 of the pass-through entity taxes pursuant to article twenty-four-A of 5 the tax law, less such amounts as the commission of taxation and finance 6 may determine to be necessary for refunds. 7 3. (a) Beginning on the first day of each month, the comptroller shall 8 deposit all of the receipts collected pursuant to section six hundred 9 seventy-one of the tax law in the revenue bond tax fund until the amount 10 of monthly receipts anticipated to be deposited pursuant to the certif- 11 icate required in paragraph (b) of subdivision five of this section are 12 met. On or before the twelfth day of each month, the commissioner of 13 taxation and finance shall certify to the state comptroller the amounts 14 specified in paragraph (a) of subdivision two of this section relating 15 to the preceding month and, in addition, no later than March thirty- 16 first of each fiscal year the commissioner of taxation and finance shall 17 certify such amounts relating to the last month of such fiscal year. The 18 amounts so certified shall be deposited by the state comptroller in the 19 revenue bond tax fund. 20 (b) Beginning on the first day of each month, the comptroller shall 21 deposit all of the receipts collected pursuant to section eight hundred 22 fifty-four of the tax law in the revenue bond tax fund until the amount 23 of monthly receipts anticipated to be deposited pursuant to the certif- 24 icate required in paragraph (b) of subdivision five of this section are 25 met. On or before the twelfth day of each month, the commissioner of 26 taxation and finance shall certify to the state comptroller the amounts 27 specified in paragraph (b) of subdivision two of this section relating 28 to the preceding month and, in addition, no later than March thirty- 29 first of each fiscal year the commissioner of taxation and finance shall 30 certify such amounts relating to the last month of such fiscal year. The 31 amounts so certified shall be deposited by the state comptroller in the 32 revenue bond tax fund. 33 (c) Beginning on the first day of each month, the comptroller shall 34 deposit all of the receipts collected pursuant to sections eight hundred 35 sixty-four and eight hundred sixty-five of the tax law in the revenue 36 bond tax fund until the amount of monthly receipts anticipated to be 37 deposited pursuant to the certificate required in paragraph (b) of 38 subdivision five of this section are met. On or before the twelfth day 39 of each month, the commissioner of taxation and finance shall certify to 40 the state comptroller the amounts specified in paragraph (c) of subdivi- 41 sion two of this section relating to the preceding month and, in addi- 42 tion, no later than March thirty-first of each fiscal year the commis- 43 sioner of taxation and finance shall certify such amounts relating to 44 the last month of such fiscal year. The amounts so certified shall be 45 deposited by the state comptroller in the revenue bond tax fund. 46 (a) The state comptroller shall from time to time, but in no event 47 later than the fifteenth day of each month (other than the last month of 48 the fiscal year) and no later than the thirty-first day of the last 49 month of each fiscal year, pay over and distribute to the credit of the 50 general fund of the state treasury all moneys in the revenue bond tax 51 fund, if any, in excess of the aggregate amount required to be set aside 52 for the payment of cash requirements pursuant to paragraph (b) of this 53 subdivision, provided that an appropriation has been made to pay all 54 amounts specified in any certificate or certificates delivered by the 55 director of the budget pursuant to paragraph (b) of this subdivision as 56 being required by each authorized issuer as such term is defined inA. 4663--C 14 1 section sixty-eight-a of this chapter for the payment of cash require- 2 ments of such issuers for such fiscal year. Subject to the rights of 3 holders of debt of the state, in no event shall the state comptroller 4 pay over and distribute any moneys on deposit in the revenue bond tax 5 fund to any person other than an authorized issuer pursuant to such 6 certificate or certificates (i) unless and until the aggregate of all 7 cash requirements certified to the state comptroller as required by such 8 authorized issuers to be set aside pursuant to paragraph (b) of this 9 subdivision for such fiscal year shall have been appropriated to such 10 authorized issuers in accordance with the schedule specified in the 11 certificate or certificates filed by the director of the budget or (ii) 12 if, after having been so certified and appropriated, any payment 13 required to be made pursuant to paragraph (b) of this subdivision has 14 not been made to the authorized issuers which was required to have been 15 made pursuant to such certificate or certificates; provided, however, 16 that no person, including such authorized issuers or the holders of 17 revenue bonds, shall have any lien on moneys on deposit in the revenue 18 bond tax fund. Any agreement entered into pursuant to section sixty- 19 eight-c of this chapter related to any payment authorized by this 20 section shall be executory only to the extent of such revenues available 21 to the state in such fund. Notwithstanding subdivisions two and three of 22 this section, in the event the aggregate of all cash requirements certi- 23 fied to the state comptroller as required by such authorized issuers to 24 be set aside pursuant to paragraph (b) of this subdivision for the 25 fiscal year beginning on April first shall not have been appropriated to 26 such authorized issuers in accordance with the schedule specified in the 27 certificate or certificates filed by the director of the budget or, (ii) 28 if, having been so certified and appropriated, any payment required to 29 be made pursuant to paragraph (b) of this subdivision has not been made 30 pursuant to such certificate or certificates, all receipts collected 31 pursuant to section six hundred seventy-one of the tax law, [and] 32 section eight hundred fifty-four of the tax law, section eight hundred 33 sixty-four of the tax law, and section eight hundred sixty-five of the 34 tax law shall be deposited in the revenue bond tax fund until the great- 35 er of forty percent of the aggregate of the receipts from the imposition 36 of (A) the personal income tax imposed by article twenty-two of the tax 37 law, [and] (B) the employer compensation expense tax imposed by article 38 twenty-four of the tax law, and (C) the pass-through entity tax imposed 39 by article twenty-four-A of the tax law for the fiscal year beginning on 40 April first and as specified in the certificate or certificates filed by 41 the director of the budget pursuant to this paragraph or a total of 42 twelve billion dollars has been deposited in the revenue bond tax fund. 43 Notwithstanding any other provision of law, if the state has appropri- 44 ated and paid to the authorized issuers the amounts necessary for the 45 authorized issuers to meet their requirements for the current fiscal 46 year pursuant to the certificate or certificates submitted by the direc- 47 tor of the budget pursuant to paragraph (b) of this section, the state 48 comptroller shall, on the last day of each fiscal year, pay to the 49 general fund of the state all sums remaining in the revenue bond tax 50 fund on such date except such amounts as the director of the budget may 51 certify are needed to meet the cash requirements of authorized issuers 52 during the subsequent fiscal year. 53 § 7. Subdivision 5 of section 68-c of the state finance law, as 54 amended by section 6 of part MM of chapter 59 of the laws of 2018, is 55 amended to read as follows:A. 4663--C 15 1 5. Nothing contained in this article shall be deemed to restrict the 2 right of the state to amend, repeal, modify or otherwise alter statutes 3 imposing or relating to the taxes imposed pursuant to article 4 twenty-two, [and] article twenty-four, and article twenty-four-A of the 5 tax law. The authorized issuers shall not include within any resolution, 6 contract or agreement with holders of the revenue bonds issued under 7 this article any provision which provides that a default occurs as a 8 result of the state exercising its right to amend, repeal, modify or 9 otherwise alter the taxes imposed pursuant to article twenty-two, [and] 10 article twenty-four, and article twenty-four-A of the tax law. 11 § 8. This act shall take effect immediately and shall apply to all 12 taxable years beginning on or after January 1, 2021; provided, however, 13 that the amendments to subdivision 1 of section 171-a of the tax law 14 made by section four of this act shall not affect the expiration and 15 reversion of such subdivision pursuant to chapter 90 of the laws of 16 2014, as amended, when upon such date the provisions of section five of 17 this act shall take effect.
