September 7, 2022

New York Governor Signs Bill with Updates to New York City Taxes

By Barry Halpern, Partner, Tax & Business Services & Lisa Haime, Senior Manager, Tax & Business Services

New York Governor Signs Bill with Updates to New York City Taxes State & Local Tax

On August 31, New York Governor Kathy Hochul signed into law a bill (S.B. 9454/A.10506) providing several updates to New York City taxes. Among its various provisions, the bill:

  • Incorporates a bright-line economic nexus standard to the New York City Business Corporation Tax (BCT). Under economic nexus standards, a corporation is subject to tax if it is deriving receipts from activity in New York.
  • Allows eligible taxpayers to elect into the newly created New York City Pass-Through Entity Tax (NYC PTET) in 2022. The Pass-through Entity Tax is an entity-level income tax that partnerships and subchapter S corporations may elect to pay.
  • Provides guidance for the exclusion from income (to the extent included in federal law) COVID-related grants for New York City tax purposes.

Effective for tax years beginning on or after January 1, 2022, a corporation deriving $1 million or more in New York City-sourced receipts will create nexus for BCT. The new law is similar to New York State’s “deriving receipts” language under the corporate tax reform legislation.

The legislation also allows for eligible taxpayers that have elected into the New York State PTET to elect into the NYC PTET for 2022. While the New York State PTET election is due by September 15, 2022, the deadline for the NYC PTET election is March 15, 2023.

We will continue to keep you apprised of new and related developments. For additional information, contact Lisa Haime at lisa.haime@marcumllp.com, Barry Halpern at barry.halpern@marcumllp.com, or your Marcum State and Local Tax professional.