Bill Text: NY S05708 | 2009-2010 | General Assembly | Introduced
Bill Title: Establishes rules pertaining to computation of tax for receipts from services provided by asset management corporations.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-01-06 - REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS [S05708 Detail]
Download: New_York-2009-S05708-Introduced.html
S T A T E O F N E W Y O R K ________________________________________________________________________ 5708 2009-2010 Regular Sessions I N S E N A T E May 28, 2009 ___________ Introduced by Sen. KRUEGER -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to establishing rules for receipts from services provided by asset management corporations THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. Subparagraph 2 of paragraph b of subdivision 2 of section 2 209-b of the tax law, as amended by section 3 of part K of chapter 63 of 3 the laws of 2000, is amended to read as follows: 4 (2) services performed within the metropolitan commuter transportation 5 district, provided, however, that (i) in the case of a taxpayer engaged 6 in the business of publishing newspapers or periodicals, receipts aris- 7 ing from sales of advertising contained in such newspapers and period- 8 icals shall be deemed to arise from services performed within the metro- 9 politan commuter transportation district to the extent that such 10 newspapers and periodicals are delivered to points within the metropol- 11 itan commuter transportation district, (ii) receipts from an investment 12 company from the sale of management, administration or distribution 13 services to such investment company shall be deemed to arise from 14 services performed within the metropolitan commuter transportation 15 district to the extent set forth in subparagraph six of paragraph (a) of 16 subdivision three of section two hundred ten of this chapter (except 17 that references in such subparagraph six to the state shall be deemed, 18 for purposes of application to this clause, to be references to the 19 metropolitan commuter transportation district), (iii) in the case of 20 taxpayers principally engaged in the activity of air freight forwarding 21 acting as principal and like indirect air carriage receipts arising from 22 such activity shall arise from services performed within the metropol- 23 itan commuter transportation district as follows: one hundred percent of 24 such receipts if both the pickup and delivery associated with such EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10388-03-9 S. 5708 2 1 receipts are made in the metropolitan commuter transportation district 2 and fifty percent of such receipts if either the pickup or delivery 3 associated with such receipts is made in the metropolitan commuter 4 transportation district, [and] (iv) in the case of a taxpayer which is a 5 registered securities or commodities broker or dealer, the receipts 6 specified in subparagraph nine of paragraph (a) of subdivision three of 7 section two hundred ten of this article shall be deemed to arise from 8 services performed within the metropolitan commuter transportation 9 district to the extent set forth in such subparagraph nine (except that 10 references in such subparagraph nine to the state shall be deemed, for 11 purposes of the application of this clause, to be references to the 12 metropolitan commuter transportation district), AND (V) RECEIPTS FROM 13 SERVICES PROVIDED BY AN ASSET MANAGEMENT CORPORATION SHALL BE DEEMED TO 14 ARISE FROM SERVICES PERFORMED WITHIN THE METROPOLITAN COMMUTER TRANSPOR- 15 TATION DISTRICT TO THE EXTENT SET FORTH IN SUBPARAGRAPH SIX-A OF PARA- 16 GRAPH (A) OF SUBDIVISION THREE OF SECTION TWO HUNDRED TEN OF THIS CHAP- 17 TER (EXCEPT THAT REFERENCES IN SUCH SUBPARAGRAPH SIX-A TO THE STATE 18 SHALL BE DEEMED, FOR PURPOSES OF APPLICATION TO THIS CLAUSE, TO BE 19 REFERENCES TO THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT), 20 S 2. Clause B of subparagraph 2 of paragraph a of subdivision 3 of 21 section 210 of the tax law, as separately amended by section 1 of part K 22 and section 13 of part Y of chapter 63 of the laws of 2000, is amended 23 to read as follows: 24 (B) services performed within the state, provided, however, that (i) 25 in the case of a taxpayer engaged in the business of publishing newspa- 26 pers or periodicals, receipts arising from sales of advertising 27 contained in such newspapers and periodicals shall be deemed to arise 28 from services performed within the state to the extent that such newspa- 29 pers and periodicals are delivered to points within the state, (ii) 30 receipts from an investment company arising from the sale of management, 31 administration or distribution services to such investment company shall 32 be deemed to arise from services performed within the state to the 33 extent set forth in subparagraph six of this paragraph, (iii) in the 34 case of taxpayers principally engaged in the activity of air freight 35 forwarding acting as principal and like indirect air carriage receipts 36 arising from such activity shall arise from services performed within 37 the state as follows: one hundred percent of such receipts if both the 38 pickup and delivery associated with such receipts are made in this state 39 and fifty percent of such receipts if either the pickup or delivery 40 associated with such receipts is made in this state [and], (iv) in the 41 case of a taxpayer which is a registered securities or commodities 42 broker or dealer, the receipts specified in subparagraph nine of this 43 paragraph shall be deemed to arise from services performed within the 44 state to the extent set forth in such subparagraph nine, [and (iv)] (V) 45 in the case of receipts arising from the transportation or transmission 46 of gas through pipes, the portion of such receipts which constitute 47 receipts from services performed within the state shall be the product 48 of (I) the total of such receipts and (II) a fraction, the numerator of 49 which is the taxpayer's transportation units within the state and the 50 denominator of which is the taxpayer's transportation units within and 51 without the state[. A] PROVIDED THAT FOR PURPOSES OF THIS SECTION A 52 transportation unit is the transportation of one cubic foot of gas over 53 a distance of one mile, AND (VI) RECEIPTS FROM SERVICES PROVIDED BY AN 54 ASSET MANAGEMENT CORPORATION SHALL BE DEEMED TO ARISE FROM SERVICES 55 PERFORMED WITHIN THIS STATE TO THE EXTENT SET FORTH IN SUBPARAGRAPH 56 SIX-A OF THIS PARAGRAPH, S. 5708 3 1 S 3. Paragraph a of subdivision 3 of section 210 of the tax law is 2 amended by adding a new subparagraph 6-a to read as follows: 3 (6-A) RULES FOR RECEIPTS FROM SERVICES PROVIDED BY ASSET MANAGEMENT 4 CORPORATIONS. (A) FOR PURPOSES OF SUBCLAUSE (VI) OF CLAUSE (B) OF 5 SUBPARAGRAPH TWO OF THIS PARAGRAPH, THE PORTION OF RECEIPTS RECEIVED BY 6 AN ASSET MANAGEMENT CORPORATION ARISING FROM THE PROVISION OF ASSET 7 MANAGEMENT SERVICES TO AN INDIVIDUAL, A REGULATED INVESTMENT COMPANY AS 8 DEFINED IN SECTION 851 OF THE INTERNAL REVENUE CODE, OR AN INSTITUTIONAL 9 INVESTOR HOLDING INVESTMENTS FOR THE BENEFIT OF OTHERS AS DETERMINED IN 10 ACCORDANCE WITH CLAUSE (B) OF THIS SUBPARAGRAPH SHALL BE DEEMED TO ARISE 11 FROM SERVICES PERFORMED WITHIN THE STATE, SUCH PORTION REFERRED TO HERE- 12 IN AS THE NEW YORK PORTION. 13 (B) THE ENTIRE NET INCOME OF AN ASSET MANAGEMENT CORPORATION SHALL BE 14 APPORTIONED TO THIS STATE ON THE BASIS OF THE RATIO OF GROSS RECEIPTS 15 FROM ASSET MANAGEMENT SERVICES FROM SOURCES WITHIN THIS STATE FOR THE 16 INCOME YEAR EXPRESSED AS A PERCENTAGE OF ALL SUCH GROSS RECEIPTS FROM 17 ASSET MANAGEMENT SERVICES BOTH WITHIN AND WITHOUT THE STATE FOR THE 18 INCOME YEAR. THE SOURCE OF GROSS RECEIPTS FROM ASSET MANAGEMENT SERVICES 19 SHALL BE DETERMINED AS FOLLOWS: 20 (A) IN THE CASE OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR 21 INDIRECTLY TO AN INDIVIDUAL, GROSS RECEIPTS WITH RESPECT TO SUCH 22 SERVICES SHALL BE SOURCED TO THE STATE OF THE INDIVIDUAL'S DOMICILE. 23 (B) IN THE CASE OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR 24 INDIRECTLY TO AN INSTITUTIONAL INVESTOR HOLDING INVESTMENTS FOR THE 25 BENEFIT OF OTHERS, SUCH AS A PENSION PLAN, RETIREMENT ACCOUNT OR POOL OF 26 INVESTMENTS, INCLUDING A FUND (OTHER THAN AN INVESTMENT COMPANY UNDER 27 THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR TO 28 AN INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S CORPORATION, A 29 DISREGARDED ENTITY UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE OR 30 ANY OTHER SIMILAR ENTITY ORGANIZED UNDER FOREIGN LAW, GROSS RECEIPTS 31 WITH RESPECT TO SUCH SERVICES SHALL BE SOURCED ACCORDING TO THE FOLLOW- 32 ING RULES IN THE FOLLOWING ORDER: 33 (I) IF INFORMATION REGARDING THE DOMICILE OF BENEFICIARIES, OWNERS OR 34 MEMBERS IS AVAILABLE TO THE ASSET MANAGEMENT CORPORATION PROVIDING ASSET 35 MANAGEMENT SERVICES TO A PENSION PLAN, RETIREMENT ACCOUNT OR POOL OF 36 INVESTMENTS, INCLUDING A FUND, (OTHER THAN AN INVESTMENT COMPANY UNDER 37 THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR TO 38 AN INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S CORPORATION, A 39 DISREGARDED ENTITY UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE OF 40 1986, OR ANY OTHER SIMILAR ENTITY ORGANIZED UNDER FOREIGN LAW THROUGH 41 THE EXERCISE OF REASONABLE DILIGENCE IN ASCERTAINING SUCH INFORMATION, 42 GROSS RECEIPTS WITH RESPECT TO SUCH SERVICES SHALL BE SOURCED TO THE 43 DOMICILE OF SUCH BENEFICIARIES, OWNERS OR MEMBERS; 44 (II) IF INFORMATION REGARDING THE DOMICILE OF BENEFICIARIES, OWNERS OR 45 MEMBERS IS NOT AVAILABLE TO THE ASSET MANAGEMENT CORPORATION PROVIDING 46 ASSET MANAGEMENT SERVICES TO A PENSION PLAN, RETIREMENT ACCOUNT OR POOL 47 OF INVESTMENTS, INCLUDING A FUND (OTHER THAN AN INVESTMENT COMPANY UNDER 48 THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S80A-1 ET SEQ.)), OR TO AN 49 INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S CORPORATION, A 50 DISREGARDED ENTITY UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE OF 51 1986, OR ANY OTHER SIMILAR ENTITY ORGANIZED UNDER FOREIGN LAW THROUGH 52 THE EXERCISE OF REASONABLE DILIGENCE IN ASCERTAINING SUCH INFORMATION, 53 ANY REASONABLE ALTERNATIVE METHOD BASED ON INFORMATION READILY AVAILABLE 54 TO THE ASSET MANAGEMENT CORPORATION MAY BE USED TO DETERMINE THE SOURCE 55 OF GROSS RECEIPTS WITH RESPECT TO SUCH SERVICES. BASED ON FACTS AND 56 CIRCUMSTANCES IN SPECIFIC CASES, REASONABLE ALTERNATIVE METHODS USED TO S. 5708 4 1 DETERMINE THE SOURCE OF GROSS RECEIPTS FROM ASSET MANAGEMENT SERVICES 2 MAY TAKE INTO ACCOUNT THE LATEST POPULATION CENSUS DATA AVAILABLE FROM 3 THE UNITED STATES CENSUS BUREAU, THE DOMICILE OF THE SPONSOR OF A 4 PENSION PLAN OR RETIREMENT ACCOUNT OR AN ACCOUNT OR POOL OF INVESTMENTS 5 (OTHER THAN AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 6 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR THE DOMICILE OF AN INSTITUTIONAL 7 INVESTOR ORGANIZED AS A PARTNERSHIP, S CORPORATION, A DISREGARDED ENTITY 8 UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE OF 1986, OR ANY OTHER 9 SIMILAR ENTITY ORGANIZED UNDER FOREIGN LAW; OR 10 (III) IF (I) THE DOMICILE OF BENEFICIARIES, OWNERS OR MEMBERS IS NOT 11 REASONABLY ASCERTAINABLE UNDER ITEM (I) OF SUBCLAUSE (B); OR (II) NO 12 REASONABLE ALTERNATIVE SOURCING METHOD EXISTS UNDER ITEM (II) OF 13 SUBCLAUSE (B), GROSS RECEIPTS WITH RESPECT TO SUCH SERVICES SHALL BE 14 SOURCED TO THE DOMICILE OF THE INSTITUTIONAL INVESTOR OR THE DOMICILE OF 15 THE SPONSOR OF A PENSION PLAN OR RETIREMENT ACCOUNT OR AN ACCOUNT OR 16 POOL OF INVESTMENTS, INCLUDING A FUND, OTHER THAN AN INVESTMENT COMPANY 17 UNDER THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.), TO 18 WHICH ASSET MANAGEMENT SERVICES ARE PROVIDED. 19 (C) IN THE CASE OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR 20 INDIRECTLY TO AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 21 1940 (15 U.S.C. S 80A-1 ET SEQ.), GROSS RECEIPTS WITH RESPECT TO SUCH 22 SERVICES SHALL BE SOURCED TO THE DOMICILE OF THE SHAREHOLDERS OF SUCH 23 INVESTMENT COMPANY IN ACCORDANCE WITH THE FOLLOWING PROCEDURE: THE 24 PORTION OF THE GROSS RECEIPTS WITH RESPECT TO SUCH SERVICES THAT ARE 25 SOURCED TO THIS STATE SHALL BE DETERMINED BY MULTIPLYING THE TOTAL OF 26 SUCH GROSS RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE 27 OF THE SUM OF THE BEGINNING OF YEAR AND THE END OF YEAR BALANCE OF 28 SHARES OWNED BY THE INVESTMENT COMPANY SHAREHOLDERS DOMICILED IN THIS 29 STATE FOR THE INVESTMENT COMPANY'S TAXABLE YEAR FOR FEDERAL INCOME TAX 30 PURPOSES AND THE DENOMINATOR OF WHICH IS THE AVERAGE OF THE SUM OF THE 31 BEGINNING OF YEAR AND THE END OF YEAR BALANCE OF SHARES OWNED BY ALL 32 INVESTMENT COMPANY SHAREHOLDERS. A SEPARATE COMPUTATION SHALL BE MADE 33 WITH RESPECT TO GROSS RECEIPTS FOR ASSET MANAGEMENT SERVICES PROVIDED 34 DIRECTLY OR INDIRECTLY TO EACH INVESTMENT COMPANY. 35 (D) IN THE CASE OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR 36 INDIRECTLY TO A PERSON OTHER THAN THOSE PERSONS DESCRIBED IN SUBCLAUSES 37 (A) THROUGH (C) OF THIS CLAUSE, TO THE DOMICILE OF SUCH PERSON. 38 (C) (A) FOR PURPOSES OF THIS SUBPARAGRAPH, "ADMINISTRATION SERVICES," 39 IN EACH CASE WITH RESPECT TO INVESTMENTS, MEANS THE DIRECT OR INDIRECT 40 PROVISION OF (I) CLERICAL, (II) ACCOUNTING, (III) BOOKKEEPING, (IV) DATA 41 PROCESSING, (V) INTERNAL AUDITING, (VI) LEGAL AND TAX SERVICES, (VII) 42 REGULATORY COMPLIANCE, OPERATIONS AND RELATED SERVICES, (VIII) RISK 43 ANALYTICS, (IX) TRADE PROCESSING, CLEARING AND EXECUTION SERVICES, (X) 44 TRANSFER AGENCY, AND (XI) CUSTODIAL SERVICES. 45 (B) "ASSET MANAGEMENT CORPORATION" MEANS A CORPORATION THAT (I) IS 46 PRINCIPALLY ENGAGED IN THE PERFORMANCE OF ASSET MANAGEMENT SERVICES; 47 (II) MAKES AN ELECTION FOR EACH TAXABLE YEAR TO BE TREATED AS AN ASSET 48 MANAGEMENT CORPORATION BY FILING THE APPROPRIATE FORM OF RETURN 49 PRESCRIBED BY THE COMMISSIONER TO MAKE SUCH ELECTION; AND (III) IS NOT 50 OTHERWISE A REGISTERED SECURITIES OR COMMODITIES BROKER OR DEALER UNDER 51 CLAUSE (A) OF SUBPARAGRAPH NINE OF THIS PARAGRAPH. 52 (C) FOR PURPOSES OF THIS SUBPARAGRAPH, "GROSS RECEIPTS" SHALL MEAN 53 GROSS RECEIPTS REPORTED BY THE CORPORATION FOR ITS TAXABLE YEAR FOR 54 PURPOSES OF THE FEDERAL INCOME TAX. 55 (D) FOR PURPOSES OF THIS SUBPARAGRAPH, "ASSET MANAGEMENT SERVICES" IN 56 EACH CASE WITH RESPECT TO INVESTMENTS, INCLUDES, BUT IS NOT LIMITED TO, S. 5708 5 1 DIRECTLY OR INDIRECTLY (I) RENDERING INVESTMENT ADVICE, INCLUDING 2 INVESTMENT ANALYSIS, (II) MAKING DETERMINATIONS AS TO WHEN SALES AND 3 PURCHASES ARE TO BE MADE, (III) SELLING OR PURCHASING OF INVESTMENTS, 4 (IV) RENDERING ADMINISTRATION SERVICES, (V) RENDERING DISTRIBUTION 5 SERVICES, OR (VI) MANAGING INVESTMENTS PURSUANT TO CONTRACTS FOR SUB-AD- 6 VISORY SERVICES. 7 (E) FOR PURPOSES OF THIS SUBPARAGRAPH, "DISTRIBUTION SERVICES" IN EACH 8 CASE WITH RESPECT TO INVESTMENTS, INCLUDES, BUT IS NOT LIMITED TO, 9 DIRECTLY OR INDIRECTLY (I) ADVERTISING, (II) SERVICING INVESTOR ACCOUNTS 10 (INCLUDING REDEMPTIONS), (III) MARKETING SHARES OR SELLING SHARES OF 11 CORPORATIONS OR BUSINESS TRUSTS REGISTERED AS INVESTMENT COMPANIES UNDER 12 THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.), OR (IV) 13 MARKETING ASSET MANAGEMENT SERVICES (INCLUDING SELLING INTERESTS IN A 14 POOL OF INVESTMENTS, SUCH AS A FUND). 15 (F) "DOMICILE", IN THE CASE OF AN INDIVIDUAL, SHALL HAVE THE MEANING 16 ASCRIBED TO IT UNDER ARTICLE TWENTY-TWO OF THIS CHAPTER; AN ESTATE OR 17 TRUST IS DOMICILED IN THE STATE IF IT IS A RESIDENT ESTATE OR TRUST AS 18 DEFINED IN PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE 19 OF THIS CHAPTER; A BUSINESS ENTITY IS DOMICILED IN THE STATE IF THE 20 LOCATION OF THE ACTUAL SEAT OF MANAGEMENT OR CONTROL IS IN THE STATE. IT 21 SHALL BE PRESUMED THAT THE DOMICILE OF A SHAREHOLDER, WITH RESPECT TO 22 ANY MONTH, IS HIS, HER OR ITS MAILING ADDRESS ON THE RECORDS OF THE 23 INVESTMENT COMPANY AS OF THE LAST DAY OF SUCH MONTH; OR IN THE CASE OF A 24 CORPORATION OR A PARTNERSHIP, S CORPORATION, A DISREGARDED ENTITY UNDER 25 SECTION 7701 OF THE INTERNAL REVENUE CODE OF 1986, OR ANY OTHER SIMILAR 26 ENTITY ORGANIZED UNDER FOREIGN LAW, ITS COMMERCIAL DOMICILE; PROVIDED, 27 HOWEVER, DOMICILE SHALL BE PRESUMED TO BE THE MAILING ADDRESS OF THE 28 BENEFICIARY OF A PENSION PLAN, OR THE OWNER OF AN ACCOUNT OR INTEREST IN 29 A POOL OF INVESTMENTS BASED ON THE RECORDS OF THE SPONSOR OF SUCH 30 PENSION PLAN, ACCOUNT OR POOL OF INVESTMENTS OR THE SHAREHOLDER'S MAIL- 31 ING ADDRESS ON THE RECORDS OF AN INVESTMENT COMPANY UNDER THE INVESTMENT 32 COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.) IF REASONABLY ASCERTAIN- 33 ABLE. 34 (G) FOR PURPOSES OF THIS SUBPARAGRAPH, "SPONSOR" MEANS THE PERSON THAT 35 HAS CONTRACTED DIRECTLY WITH THE BENEFICIARIES OF A PENSION PLAN OR 36 RETIREMENT ACCOUNT OR THE OWNER OF ANY ACCOUNT OR INTEREST IN A POOL OF 37 INVESTMENTS TO ADMINISTER AND MANAGE THE PENSION PLAN OR RETIREMENT 38 ACCOUNT, OTHER ACCOUNT OR POOL OF INVESTMENTS. 39 S 4. Subparagraphs (H) and (I) of paragraph 2 of subsection a of 40 section 1454 of the tax law, subparagraph (H) as relettered by section 2 41 of part AA of chapter 63 of the laws of 2000, are relettered subpara- 42 graphs (I) and (J), and a new subparagraph (H) is added to read as 43 follows: 44 (H) THE ENTIRE NET INCOME OF AN ASSET MANAGEMENT CORPORATION SHALL BE 45 APPORTIONED TO THIS STATE ON THE BASIS OF THE RATIO OF GROSS RECEIPTS 46 FROM ASSET MANAGEMENT SERVICES FROM SOURCES WITHIN THIS STATE FOR THE 47 INCOME YEAR EXPRESSED AS A PERCENTAGE OF ALL SUCH GROSS RECEIPTS FROM 48 ASSET MANAGEMENT SERVICES BOTH WITHIN AND WITHOUT THE STATE FOR THE 49 INCOME YEAR. THE SOURCE OF GROSS RECEIPTS FROM ASSET MANAGEMENT SERVICES 50 SHALL BE DETERMINED AS FOLLOWS: 51 (I) IN THE CASE OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR 52 INDIRECTLY TO AN INDIVIDUAL, GROSS RECEIPTS WITH RESPECT TO SUCH 53 SERVICES SHALL BE SOURCED TO THE STATE OF THE INDIVIDUAL'S DOMICILE. 54 (II) IN THE CASE OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR 55 INDIRECTLY TO AN INSTITUTIONAL INVESTOR HOLDING INVESTMENTS FOR THE 56 BENEFIT OF OTHERS, SUCH AS A PENSION PLAN, RETIREMENT ACCOUNT OR POOL OF S. 5708 6 1 INVESTMENTS, INCLUDING A FUND (OTHER THAN AN INVESTMENT COMPANY UNDER 2 THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR TO 3 AN INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S CORPORATION, A 4 DISREGARDED ENTITY UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE, OR 5 ANY OTHER SIMILAR ENTITY ORGANIZED UNDER FOREIGN LAW, GROSS RECEIPTS 6 WITH RESPECT TO SUCH SERVICES SHALL BE SOURCED ACCORDING TO THE FOLLOW- 7 ING RULES IN THE FOLLOWING ORDER: 8 (I) IF INFORMATION REGARDING THE DOMICILE OF BENEFICIARIES, OWNERS OR 9 MEMBERS IS AVAILABLE TO THE ASSET MANAGEMENT CORPORATION PROVIDING ASSET 10 MANAGEMENT SERVICES TO A PENSION PLAN, RETIREMENT ACCOUNT OR POOL OF 11 INVESTMENTS, INCLUDING A FUND (OTHER THAN AN INVESTMENT COMPANY UNDER 12 THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR TO 13 AN INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S CORPORATION, A 14 DISREGARDED ENTITY UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE OF 15 1986, AS AMENDED, AND THE REGULATIONS THEREUNDER, OR ANY OTHER SIMILAR 16 ENTITY ORGANIZED UNDER FOREIGN LAW THROUGH THE EXERCISE OF REASONABLE 17 DILIGENCE IN ASCERTAINING SUCH INFORMATION, GROSS RECEIPTS WITH RESPECT 18 TO SUCH SERVICES SHALL BE SOURCED TO THE DOMICILE OF SUCH BENEFICIARIES, 19 OWNERS OR MEMBERS; 20 (II) IF INFORMATION REGARDING THE DOMICILE OF BENEFICIARIES, OWNERS OR 21 MEMBERS IS NOT AVAILABLE TO THE ASSET MANAGEMENT CORPORATION PROVIDING 22 ASSET MANAGEMENT SERVICES TO A PENSION PLAN, RETIREMENT ACCOUNT OR POOL 23 OF INVESTMENTS, INCLUDING A FUND (OTHER THAN AN INVESTMENT COMPANY UNDER 24 THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.)), OR TO 25 AN INSTITUTIONAL INVESTOR ORGANIZED AS A PARTNERSHIP, S CORPORATION, A 26 DISREGARDED ENTITY UNDER SECTION 7701 OF THE INTERNAL REVENUE CODE, OR 27 ANY OTHER SIMILAR ENTITY ORGANIZED UNDER FOREIGN LAW THROUGH THE EXER- 28 CISE OF REASONABLE DILIGENCE IN ASCERTAINING SUCH INFORMATION, ANY 29 REASONABLE ALTERNATIVE METHOD BASED ON INFORMATION READILY AVAILABLE TO 30 THE ASSET MANAGEMENT CORPORATION MAY BE USED TO DETERMINE THE SOURCE OF 31 GROSS RECEIPTS WITH RESPECT TO SUCH SERVICES. BASED ON FACTS AND CIRCUM- 32 STANCES IN SPECIFIC CASES, REASONABLE ALTERNATIVE METHODS USED TO DETER- 33 MINE THE SOURCE OF GROSS RECEIPTS FROM ASSET MANAGEMENT SERVICES MAY 34 TAKE INTO ACCOUNT THE LATEST POPULATION CENSUS DATA AVAILABLE FROM THE 35 UNITED STATES CENSUS BUREAU, THE DOMICILE OF THE SPONSOR OF A PENSION 36 PLAN OR RETIREMENT ACCOUNT OR AN ACCOUNT OR POOL OF INVESTMENTS (OTHER 37 THAN AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940 (15 38 U.S.C. S 80A-1 ET SEQ.)), OR THE DOMICILE OF AN INSTITUTIONAL INVESTOR 39 ORGANIZED AS A PARTNERSHIP, S CORPORATION, OR DISREGARDED ENTITY UNDER 40 SECTION 7701 OF THE INTERNAL REVENUE CODE, OR ANY OTHER SIMILAR ENTITY 41 ORGANIZED UNDER FOREIGN LAW; OR 42 (III) IF (A) THE DOMICILE OF BENEFICIARIES, OWNERS OR MEMBERS IS NOT 43 ASCERTAINED UNDER SUBCLAUSE (I) OF CLAUSE (II) OF THIS SUBPARAGRAPH OR, 44 (B) NO REASONABLE ALTERNATIVE SOURCING METHOD EXISTS UNDER SUBCLAUSE 45 (II) OF CLAUSE (II) OF THIS SUBPARAGRAPH, GROSS RECEIPTS WITH RESPECT TO 46 SUCH SERVICES SHALL BE SOURCED TO THE DOMICILE OF THE INSTITUTIONAL 47 INVESTOR OR THE DOMICILE OF THE SPONSOR OF A PENSION PLAN OR RETIREMENT 48 ACCOUNT OR AN ACCOUNT OR POOL OF INVESTMENTS, INCLUDING A FUND (OTHER 49 THAN AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940 (15 50 U.S.C. S 80A-1 ET SEQ.)), TO WHICH ASSET MANAGEMENT SERVICES ARE 51 PROVIDED. 52 (III) IN THE CASE OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR 53 INDIRECTLY TO AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 54 1940 (15 U.S.C. S 80A-1 ET SEQ.), GROSS RECEIPTS WITH RESPECT TO SUCH 55 SERVICES SHALL BE SOURCED TO THE DOMICILE OF THE SHAREHOLDERS OF SUCH 56 INVESTMENT COMPANY IN ACCORDANCE WITH THE FOLLOWING PROCEDURE: THE S. 5708 7 1 PORTION OF THE GROSS RECEIPTS WITH RESPECT TO SUCH SERVICES THAT ARE 2 SOURCED TO THIS STATE SHALL BE DETERMINED BY MULTIPLYING THE TOTAL OF 3 SUCH GROSS RECEIPTS BY A FRACTION, THE NUMERATOR OF WHICH IS THE AVERAGE 4 OF THE SUM OF THE BEGINNING OF YEAR AND THE END OF YEAR BALANCE OF 5 SHARES OWNED BY THE INVESTMENT COMPANY SHAREHOLDERS DOMICILED IN THIS 6 STATE FOR THE INVESTMENT COMPANY'S TAXABLE YEAR FOR FEDERAL INCOME TAX 7 PURPOSES AND THE DENOMINATOR OF WHICH IS THE AVERAGE OF THE SUM OF THE 8 BEGINNING OF YEAR AND THE END OF YEAR BALANCE OF SHARES OWNED BY ALL 9 INVESTMENT COMPANY SHAREHOLDERS. A SEPARATE COMPUTATION SHALL BE MADE 10 WITH RESPECT TO GROSS RECEIPTS FOR ASSET MANAGEMENT SERVICES PROVIDED 11 DIRECTLY OR INDIRECTLY TO EACH INVESTMENT COMPANY. 12 (IV) IN THE CASE OF ASSET MANAGEMENT SERVICES PROVIDED DIRECTLY OR 13 INDIRECTLY TO A PERSON OTHER THAN THOSE PERSONS DESCRIBED IN CLAUSES (I) 14 THROUGH (III) OF THIS SUBPARAGRAPH, TO THE DOMICILE OF SUCH PERSON. 15 (V)(I) FOR PURPOSES OF THIS SUBPARAGRAPH, "ADMINISTRATION SERVICES", 16 IN EACH CASE WITH RESPECT TO INVESTMENTS, MEANS THE DIRECT OR INDIRECT 17 PROVISION OF (A) CLERICAL, (B) ACCOUNTING, (C) BOOKKEEPING, (D) DATA 18 PROCESSING, (E) INTERNAL AUDITING, (F) LEGAL AND TAX SERVICES, (G) REGU- 19 LATORY COMPLIANCE, OPERATIONS AND RELATED SERVICES, (H) RISK ANALYTICS, 20 (I) TRADE PROCESSING, CLEARING AND EXECUTION SERVICES, (J) TRANSFER 21 AGENCY, AND (K) CUSTODIAL SERVICES. 22 (II) "ASSET MANAGEMENT CORPORATION" MEANS A CORPORATION THAT (A) IS 23 PRINCIPALLY ENGAGED IN THE PERFORMANCE OF ASSET MANAGEMENT SERVICES; (B) 24 MAKES AN ELECTION FOR EACH TAXABLE YEAR TO BE TREATED AS AN ASSET 25 MANAGEMENT CORPORATION BY FILING THE APPROPRIATE FORM OF RETURN 26 PRESCRIBED BY THE COMMISSIONER TO MAKE SUCH ELECTION; AND (C) IS NOT 27 OTHERWISE A REGISTERED SECURITIES OR COMMODITIES BROKER OR DEALER PURSU- 28 ANT TO SECTION TWO HUNDRED TEN OF THIS CHAPTER. 29 (III) FOR PURPOSES OF THIS SUBPARAGRAPH, "GROSS RECEIPTS" SHALL MEAN 30 GROSS RECEIPTS REPORTED BY THE CORPORATION FOR ITS TAXABLE YEAR FOR 31 PURPOSES OF THE FEDERAL INCOME TAX. 32 (IV) FOR PURPOSES OF THIS SUBPARAGRAPH, "ASSET MANAGEMENT SERVICES", 33 IN EACH CASE WITH RESPECT TO INVESTMENTS, INCLUDES, BUT IS NOT LIMITED 34 TO, DIRECTLY OR INDIRECTLY (A) RENDERING INVESTMENT ADVICE, INCLUDING 35 INVESTMENT ANALYSIS, (B) MAKING DETERMINATIONS AS TO WHEN SALES AND 36 PURCHASES ARE TO BE MADE, (C) SELLING OR PURCHASING OF INVESTMENTS, (D) 37 RENDERING ADMINISTRATION SERVICES, (E) RENDERING DISTRIBUTION SERVICES, 38 OR (F) MANAGING INVESTMENTS PURSUANT TO CONTRACTS FOR SUB-ADVISORY 39 SERVICES. 40 (V) FOR PURPOSES OF THIS SUBPARAGRAPH, "DISTRIBUTION SERVICES", IN 41 EACH CASE WITH RESPECT TO INVESTMENTS, INCLUDES, BUT IS NOT LIMITED TO, 42 DIRECTLY OR INDIRECTLY, (A) ADVERTISING, (B) SERVICING INVESTOR ACCOUNTS 43 (INCLUDING REDEMPTIONS), (C) MARKETING SHARES OR SELLING SHARES OF 44 CORPORATIONS OR BUSINESS TRUSTS REGISTERED AS INVESTMENT COMPANIES UNDER 45 THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S 80A-1 ET SEQ.), OR (D) 46 MARKETING ASSET MANAGEMENT SERVICES (INCLUDING SELLING INTERESTS IN A 47 POOL OF INVESTMENTS, SUCH AS A FUND). 48 (VI) "DOMICILE", IN THE CASE OF AN INDIVIDUAL, SHALL HAVE THE MEANING 49 ASCRIBED TO IT UNDER ARTICLE TWENTY-TWO OF THIS CHAPTER; AN ESTATE OR 50 TRUST IS DOMICILED IN THE STATE IF IT IS A RESIDENT ESTATE OR TRUST AS 51 DEFINED IN PARAGRAPH THREE OF SUBSECTION (B) OF SECTION SIX HUNDRED FIVE 52 OF THIS CHAPTER; A BUSINESS ENTITY IS DOMICILED IN THE STATE IF THE 53 LOCATION OF THE ACTUAL SEAT OF MANAGEMENT OR CONTROL IS IN THE STATE. IT 54 SHALL BE PRESUMED THAT THE DOMICILE OF A SHAREHOLDER, WITH RESPECT TO 55 ANY MONTH, IS HIS, HER OR ITS MAILING ADDRESS ON THE RECORDS OF THE 56 INVESTMENT COMPANY AS OF THE LAST DAY OF SUCH MONTH; OR IN THE CASE OF A S. 5708 8 1 CORPORATION OR A PARTNERSHIP, S CORPORATION, A DISREGARDED ENTITY UNDER 2 SECTION 7701 OF THE INTERNAL REVENUE CODE, OR ANY OTHER SIMILAR ENTITY 3 ORGANIZED UNDER FOREIGN LAW, ITS COMMERCIAL DOMICILE; PROVIDED, HOWEVER, 4 DOMICILE SHALL BE PRESUMED TO BE THE MAILING ADDRESS OF THE BENEFICIARY 5 OF A PENSION PLAN, OR THE OWNER OF AN ACCOUNT OR INTEREST IN A POOL OF 6 INVESTMENTS BASED ON THE RECORDS OF THE SPONSOR OF SUCH PENSION PLAN, 7 ACCOUNT OR POOL OF INVESTMENTS OR THE SHAREHOLDER'S MAILING ADDRESS ON 8 THE RECORDS OF AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 9 1940 (15 U.S.C. S 80A-1 ET SEQ.). 10 (VII) FOR PURPOSES OF THIS SUBPARAGRAPH, "SPONSOR" MEANS THE PERSON 11 THAT HAS CONTRACTED DIRECTLY WITH THE BENEFICIARIES OF A PENSION PLAN OR 12 RETIREMENT ACCOUNT OR THE OWNER OF ANY ACCOUNT OR INTEREST IN A POOL OF 13 INVESTMENTS TO ADMINISTER AND MANAGE THE PENSION PLAN OR RETIREMENT 14 ACCOUNT, OTHER ACCOUNT OR POOL OF INVESTMENTS. 15 S 5. Paragraph 1-a of subsection b of section 1454 of the tax law, as 16 amended by section 1 of part A of chapter 63 of the laws of 2005, is 17 amended to read as follows: 18 [1-a.] (1-A) Notwithstanding the provisions of paragraph one of this 19 subsection, each banking corporation described in paragraph nine of 20 subsection (a) of section fourteen hundred fifty-two of this article, 21 EXCEPT FOR A BANKING CORPORATION THAT SUBSTANTIALLY PROVIDES ASSET 22 MANAGEMENT SERVICES AS SUCH TERMS ARE DEFINED IN SUBPARAGRAPH (H) OF 23 PARAGRAPH TWO OF SUBSECTION (A) OF THIS SECTION, subject to the tax 24 imposed by this article that substantially provides management, adminis- 25 trative or distribution services to an investment company, as such terms 26 are defined in subparagraph (G) of paragraph two of subsection (a) of 27 this section, shall determine the portion of its entire net income 28 derived from business carried on within the state by multiplying such 29 income by an income allocation percentage obtained as follows: 30 S 6. Paragraph 3 of subsection c of section 1454 of the tax law, as 31 added by chapter 161 of the laws of 2005, is amended to read as follows: 32 (3) For taxable years beginning on or after January first, two thou- 33 sand six, each banking corporation described in paragraph nine of 34 subsection (a) of section fourteen hundred fifty-two of this article, 35 EXCEPT FOR A BANKING CORPORATION THAT IS AN ASSET MANAGEMENT CORPORATION 36 AS DEFINED IN SUBPARAGRAPH (H) OF PARAGRAPH TWO OF SUBSECTION (A) OF 37 THIS SECTION, subject to the tax imposed by this article that substan- 38 tially provides management, administrative or distribution services to 39 an investment company, as such terms are defined in subparagraph (G) of 40 paragraph two of subsection (a) of this section, AND, FOR TAXABLE YEARS 41 BEGINNING ON JANUARY FIRST, TWO THOUSAND NINE AND THEREAFTER, EACH ASSET 42 MANAGEMENT CORPORATION AS DEFINED IN SUBPARAGRAPH (H) OF PARAGRAPH TWO 43 OF SUBSECTION (A) OF THIS SECTION, shall determine the portion of its 44 alternative entire net income derived from business carried on within 45 the state by multiplying such income by the percentage ascertained for 46 the taxable year under paragraph one-a of subsection (b) of this 47 section, except that in computing such percentage (A) for taxable years 48 beginning before January first, two thousand eight, no consideration 49 shall be given to the phrase "eighty percent of" in paragraph one of 50 subsection (a) of this section, (B) for taxable years beginning before 51 January first, two thousand eight, when an election has been made pursu- 52 ant to paragraph two of subsection (b) of this section (relating to an 53 international banking facility) the taxpayer shall make the modifica- 54 tions described in such paragraph, and (C) for taxable years beginning 55 on or after January first, two thousand eight, when an election has been 56 made pursuant to paragraph two of subsection (b) of this section (relat- S. 5708 9 1 ing to an international banking facility) the taxpayer shall make the 2 modifications described in clause (ii) of subparagraph (A) of such para- 3 graph. 4 S 7. This act shall take effect immediately and shall apply to taxable 5 years beginning on or after January 1, 2009.