Bill Text: NY S04671 | 2019-2020 | General Assembly | Amended

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Bill Title: Relates to pass-through manufacturers zero percent tax rate.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2020-03-03 - REPORTED AND COMMITTED TO FINANCE [S04671 Detail]

Download: New_York-2019-S04671-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                         4671--A

                               2019-2020 Regular Sessions

                    IN SENATE

                                     March 20, 2019
                                       ___________

        Introduced  by  Sen.  KAPLAN -- read twice and ordered printed, and when
          printed to be committed to the Committee  on  Budget  and  Revenue  --
          recommitted  to the Committee on Budget and Revenue in accordance with
          Senate Rule 6, sec. 8 -- committee discharged, bill  amended,  ordered
          reprinted as amended and recommitted to said committee

        AN  ACT  to amend the tax law, in relation to pass-through manufacturers
          zero percent tax rate

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1. Subsection (b) of section 612 of the tax law is amended by
     2  adding a new paragraph 42 to read as follows:
     3    (42) Any income, gain,  loss  and  deduction,  to  the  extent  it  is
     4  included  in  federal  adjusted  gross  income and is, when combined and
     5  combined with additions for federal deprecation  required  by  paragraph
     6  eight  of  this  subsection  and  subtractions  for  New York allowed by
     7  subsection (k) of this section, less than  zero,  of  an  individual  or
     8  trust  from  a  qualified pass-through manufacturer, as defined in para-
     9  graph forty-three of subsection (c) of this section.
    10    § 2. Paragraph 39 of subsection (c) of section 612 of the tax law,  as
    11  added  by  section  1  of  part  Y of chapter 59 of the laws of 2013, is
    12  amended and a new paragraph 43 is added to read as follows:
    13    (39) In the case of a taxpayer who is a small business who  has  busi-
    14  ness  income  and/or  farm  income  as defined in the laws of the United
    15  States, an amount equal to three percent of the  net  items  of  income,
    16  gain,  loss and deduction attributable to such business or farm entering
    17  into federal adjusted gross income, but not less than zero, for  taxable
    18  years  beginning  after  two thousand thirteen, an amount equal to three
    19  and three-quarters percent of the net items of income,  gain,  loss  and
    20  deduction  attributable  to  such business or farm entering into federal
    21  adjusted gross income, but not less than zero, for taxable years  begin-
    22  ning after two thousand fourteen, and an amount equal to five percent of

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10804-02-9
        S. 4671--A                          2

     1  the  net  items of income, gain, loss and deduction attributable to such
     2  business or farm entering into federal adjusted gross  income,  but  not
     3  less  than zero, for taxable years beginning after two thousand fifteen.
     4  For the purposes of this paragraph, the term small business shall mean a
     5  sole  proprietor  or  a  farm  business  who employs one or more persons
     6  during the taxable year and who has net  business  income  or  net  farm
     7  income  of  less  than  two  hundred  fifty  thousand dollars.   For the
     8  purposes of this paragraph, the term small business  shall  exclude  any
     9  business  that  is  a qualified pass-through manufacturer, as defined in
    10  paragraph forty-three of this subsection for the current tax year.
    11    (43) (A) Any income, gain, loss and deduction, to the extent  included
    12  in federal adjusted gross income and is, when combined and combined with
    13  additions  for  federal  deprecation required by paragraph eight of this
    14  subsection and subtractions for New York allowed by  subsection  (k)  of
    15  this section, greater than zero, of an individual or trust from a quali-
    16  fied  pass-through  manufacturer.  Income  from a qualified pass-through
    17  manufacturer shall  include  wages  of  an  individual  controlling  ten
    18  percent or more of the qualified business or entity. Income or loss from
    19  a  qualified  pass-through  manufacturer  shall  not  include  an amount
    20  representing reasonable compensation for personal services,  as  defined
    21  in  the internal revenue code section one hundred sixty-two regulations,
    22  for an individual controlling ten percent or more of the qualified busi-
    23  ness or entity.
    24    (B) The qualified pass-through manufacturer may be organized as a sole
    25  proprietorship, a partnership, a limited liability company  electing  to
    26  be treated as a partnership or sole proprietorship, or an S corporation.
    27    (C)  For  the  purposes  of  this subsection, the term qualified pass-
    28  through manufacturer shall mean a business that is a qualified New  York
    29  manufacturer, as defined by subparagraph (vi) of paragraph (a) of subdi-
    30  vision  one  of section two hundred ten of this chapter, except that the
    31  term "gross receipts" shall be replaced by "business receipts" in deter-
    32  mining whether the business is "principally engaged" in manufacturing. A
    33  qualified pass-through manufacturer shall not include a business that is
    34  currently participating in the START-UP NY program.
    35    § 3. Paragraph 2 of subsection (a) of section 606 of the  tax  law  is
    36  amended by adding a new subparagraph (B-1) to read as follows:
    37    (B-1) Property placed in service during the tax year that is otherwise
    38  eligible  for the investment tax credit described in subparagraph (A) of
    39  this paragraph, will not be eligible for the investment  tax  credit  if
    40  the  use of the property is by a qualified pass-through manufacturer, as
    41  defined in paragraph  forty-three  of  subsection  (c)  of  section  six
    42  hundred twelve of this article for the current tax year.
    43    §  4.  Subdivision  1  of  section  210-B of the tax law is amended by
    44  adding a new paragraph (g) to read as follows:
    45     (g) Property placed in service during the tax year that is  otherwise
    46  eligible  for  the  investment tax credit described in this subdivision,
    47  will not be eligible for the investment tax credit if  the  use  of  the
    48  property is by a qualified New York manufacturer, as defined in subpara-
    49  graph (vi) of paragraph (a) of subsection one of section two hundred ten
    50  of this article for the current tax year.
    51    §  5.  For  purposes of determining the modifications of paragraphs 39
    52  and 43 of subsection (c) of section 612 of the tax law and  the  invest-
    53  ment  tax  credit  disallowance  of subparagraph (B-1) of paragraph 2 of
    54  subsection (a) of section 606 of the  tax  law,  the  amounts  shall  be
    55  multiplied  by the following percentages: (a) for tax years beginning on
    56  or after January 1, 2021: forty percent; (b) for tax years beginning  on
        S. 4671--A                          3

     1  or  after  January 1, 2022: eighty percent; and (c) for tax years begin-
     2  ning on or after January 1, 2023: one hundred percent.
     3    §  6.  This  act  shall take effect immediately and shall apply to tax
     4  years beginning on or after January 1, 2021.