Bill Text: NY A00636 | 2019-2020 | General Assembly | Amended

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

Spectrum: Slight Partisan Bill (Democrat 5-2)

Status: (Introduced - Dead) 2020-01-08 - referred to ways and means [A00636 Detail]

Download: New_York-2019-A00636-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                         636--B

                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                       (Prefiled)

                                     January 9, 2019
                                       ___________

        Introduced  by  M.  of A. STIRPE, PALMESANO, SCHIMMINGER, WOERNER, McDO-
          NALD, WALLACE -- Multi-Sponsored by -- M. of A. MANKTELOW -- 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 amend-
          ments, 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

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00656-03-9
        A. 636--B                           2

     1  adjusted  gross income, but not less than zero, for taxable years begin-
     2  ning after two thousand fourteen, and an amount equal to five percent of
     3  the net items of income, gain, loss and deduction attributable  to  such
     4  business  or  farm  entering into federal adjusted gross income, but not
     5  less than zero, for taxable years beginning after two thousand  fifteen.
     6  For the purposes of this paragraph, the term small business shall mean a
     7  sole  proprietor  or  a  farm  business  who employs one or more persons
     8  during the taxable year and who has net  business  income  or  net  farm
     9  income  of  less  than  two  hundred  fifty  thousand dollars.   For the
    10  purposes of this paragraph, the term small business  shall  exclude  any
    11  business  that  is  a qualified pass-through manufacturer, as defined in
    12  paragraph forty-three of this subsection for the current tax year.
    13    (43) (A) Any income, gain, loss and deduction, to the extent  included
    14  in federal adjusted gross income and is, when combined and combined with
    15  additions  for  federal  deprecation required by paragraph eight of this
    16  subsection and subtractions for New York allowed by  subsection  (k)  of
    17  this section, greater than zero, of an individual or trust from a quali-
    18  fied  pass-through  manufacturer.  Income  from a qualified pass-through
    19  manufacturer shall  include  wages  of  an  individual  controlling  ten
    20  percent or more of the qualified business or entity. Income or loss from
    21  a  qualified  pass-through  manufacturer  shall  not  include  an amount
    22  representing reasonable compensation for personal services,  as  defined
    23  in  the internal revenue code section one hundred sixty-two regulations,
    24  for an individual controlling ten percent or more of the qualified busi-
    25  ness or entity.
    26    (B) The qualified pass-through manufacturer may be organized as a sole
    27  proprietorship, a partnership, a limited liability company  electing  to
    28  be treated as a partnership or sole proprietorship, or an S corporation.
    29    (C)  For  the  purposes  of  this subsection, the term qualified pass-
    30  through manufacturer shall mean a business that is a qualified New  York
    31  manufacturer, as defined by subparagraph (vi) of paragraph (a) of subdi-
    32  vision  one  of section two hundred ten of this chapter, except that the
    33  term "gross receipts" shall be replaced by "business receipts" in deter-
    34  mining whether the business is "principally engaged" in manufacturing. A
    35  qualified pass-through manufacturer shall not include a business that is
    36  currently participating in the START-UP NY program.
    37    § 3. Paragraph 2 of subsection (a) of section 606 of the  tax  law  is
    38  amended by adding a new subparagraph (B-1) to read as follows:
    39    (B-1) Property placed in service during the tax year that is otherwise
    40  eligible  for the investment tax credit described in subparagraph (A) of
    41  this paragraph, will not be eligible for the investment  tax  credit  if
    42  the  use of the property is by a qualified pass-through manufacturer, as
    43  defined in paragraph  forty-three  of  subsection  (c)  of  section  six
    44  hundred twelve of this article for the current tax year.
    45    §  4.  Subdivision  1  of  section  210-B of the tax law is amended by
    46  adding a new paragraph (g) to read as follows:
    47     (g) Property placed in service during the tax year that is  otherwise
    48  eligible  for  the  investment tax credit described in this subdivision,
    49  will not be eligible for the investment tax credit if  the  use  of  the
    50  property is by a qualified New York manufacturer, as defined in subpara-
    51  graph (vi) of paragraph (a) of subsection one of section two hundred ten
    52  of this article for the current tax year.
    53    §  5.  For  purposes of determining the modifications of paragraphs 39
    54  and 43 of subsection (c) of section 612 of the tax law and  the  invest-
    55  ment  tax  credit  disallowance  of subparagraph (B-1) of paragraph 2 of
    56  subsection (a) of section 606 of the  tax  law,  the  amounts  shall  be
        A. 636--B                           3

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