Bill Text: NY A03946 | 2019-2020 | General Assembly | Introduced
Bill Title: Relates to authorizing cities to impose the earnings tax on nonresidents.
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Introduced - Dead) 2020-01-08 - referred to ways and means [A03946 Detail]
Download: New_York-2019-A03946-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 3946 2019-2020 Regular Sessions IN ASSEMBLY January 31, 2019 ___________ Introduced by M. of A. WEPRIN -- Multi-Sponsored by -- M. of A. BENEDET- TO, COOK, DenDEKKER, DINOWITZ, GOTTFRIED -- read once and referred to the Committee on Ways and Means AN ACT to amend the general city law and the tax law, in relation to imposing the earnings tax on nonresidents The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The general city law is amended by adding a new article 2 2-E to read as follows: 3 ARTICLE 2-E 4 CITY EARNINGS TAX ON NONRESIDENTS 5 Section 25-m. Authorization to impose tax. 6 25-n. Administrative provisions. 7 25-o. Deposit and disposition of revenues. 8 § 25-m. Authorization to impose tax. In addition to any other taxes, 9 now authorized by law, any city having a population of one million or 10 more is hereby authorized and empowered to adopt and amend local laws 11 imposing a tax on the earnings of nonresidents of such city to be admin- 12 istered in the manner provided for in this article by the administrator 13 as defined in section one of the model local law hereinafter set forth. 14 The tax authorized by this article may be imposed only if the city 15 imposing the tax authorized by this article also imposes a tax on the 16 personal income of its residents. The rates of such tax shall be the 17 rates contained in section two of the model local law and such rates may 18 be reduced and increased, provided that the rates shall not be fixed 19 higher than those contained in section two of such model local law. 20 The terms of such local law shall be substantially the same as the 21 following model local law except that the appendix and the supplement to 22 the appendix in such local law may be amended for the purpose of 23 conforming it with the United States internal revenue code or other EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD07518-01-9A. 3946 2 1 federal laws relating to taxation as presently in effect or as they may 2 be amended. 3 EARNINGS TAX ON NONRESIDENTS 4 Sec. 1. Meaning of terms.--As used in this local law, the following 5 terms shall mean and include: (a) "Administrator" means the state tax 6 commission. 7 (b) "City" means the city imposing the tax. 8 (c) "Payroll period" and "employer" shall mean the same as payroll 9 period and employer as defined in subsections (b) and (d) of section 10 thirty-four hundred one of the internal revenue code, and "employee" 11 shall also include all those included as employees in subsection (c) of 12 such section of such code. 13 (d) "Wages" shall mean wages as defined in subsection (a) of section 14 thirty-four hundred one of the internal revenue code, except that (1) 15 wages shall not include payments for active service as a member of the 16 armed forces of the United States and shall not include, in the case of 17 a nonresident individual or partner of a partnership doing an insurance 18 business as a member of the New York insurance exchange described in 19 section six thousand two hundred one of the insurance law, any item of 20 income, gain, loss or deduction of such business which is such individ- 21 ual's distributive or pro rata share for federal income tax purposes or 22 which such individual is required to take into account separately for 23 federal income tax purposes and (2) wages shall include (i) the amount 24 of member or employee contributions to a retirement system or pension 25 fund picked up by the employer pursuant to subdivision f of section five 26 hundred seventeen or subdivision d of section six hundred thirteen of 27 the retirement and social security law or section 13-225.1, 13-327.1, 28 13-125.1, 13-125.2 or 13-521.1 of the administrative code of the city of 29 New York or subdivision nineteen of section twenty-five hundred seven- 30 ty-five of the education law, (ii) the amount deducted or deferred from 31 an employee's salary under a flexible benefits program established 32 pursuant to section twenty-three of the general municipal law or section 33 twelve hundred ten-a of the public authorities law, (iii) the amount by 34 which an employee's salary is reduced pursuant to the provisions of 35 subdivision b of section 12-126.1 and subdivision b of section 12-126.2 36 of the administrative code of the city of New York, and (iv) the amount 37 of member or employee contributions to a retirement system or pension 38 fund picked up or paid by the employer for members of the Manhattan and 39 Bronx surface transportation authority pension plan and treated as 40 employer contributions in determining income tax treatment under section 41 414(h) of the internal revenue code. 42 (e) "Net earnings from self-employment" shall mean the same as net 43 earnings from self-employment as defined in subsection (a) of section 44 fourteen hundred two of the internal revenue code, except that the 45 deduction for wages and salaries paid or incurred for the taxable year 46 which is not allowed pursuant to section two hundred eighty-C of such 47 code shall be allowed, and except that an estate or trust shall be 48 deemed to have net earnings from self-employment determined in the same 49 manner as if it were an individual subject to the tax on self-employment 50 income imposed by section fourteen hundred one of the internal revenue 51 code diminished by (1) the amount of any deduction allowed by subsection 52 (c) of section six hundred forty-two of the internal revenue code and 53 (2) the deductions allowed by sections six hundred fifty-one and six 54 hundred sixty-one of said code to the extent that they represent 55 distributions or payments to a resident of the city. However, "trade or 56 business" as used in subsection (a) of section fourteen hundred two ofA. 3946 3 1 such code shall mean the same as trade or business as defined in 2 subsection (c) of section fourteen hundred two of such code, except that 3 paragraphs (4), (5) and (6) of such subsection shall not apply in deter- 4 mining net earnings from self-employment taxable under this local law. 5 Provided however, in the case of a nonresident individual or partner of 6 a partnership doing an insurance business described in section six thou- 7 sand two hundred one of the insurance law, any item of income, gain, 8 loss or deduction of such business which is the individual's distribu- 9 tive or pro rata share for federal income tax purposes or which the 10 individual is required to take into account separately for federal 11 income tax purposes shall not be considered to be "net earnings from 12 self-employment". 13 (f) "Taxable year" shall mean the taxpayer's taxable year for federal 14 income tax purposes. 15 (g) Resident individual.--A resident individual means an individual: 16 (1) who is domiciled in the city, unless (A) he or she maintains no 17 permanent place of abode in the city, maintains a permanent place of 18 abode elsewhere, and spends in the aggregate not more than thirty days 19 of the taxable year in the city, or (B) (i) within any period of five 20 hundred forty-eight consecutive days he or she is present in a foreign 21 country or countries for at least four hundred fifty days, and (ii) 22 during such period of five hundred forty-eight consecutive days he or 23 she is not present in the city for more than ninety days and does not 24 maintain a permanent place of abode in the city at which his spouse 25 (unless such spouse is legally separated) or minor children are present 26 for more than ninety days, and (iii) during any period of less than 27 twelve months, which would be treated as a separate taxable period based 28 on a change of resident status, and which period is contained within 29 such period of five hundred forty-eight consecutive days, he or she is 30 present in the city for a number of days which does not exceed an amount 31 which bears the same ratio to ninety as the number of days contained in 32 such period of less than twelve months bears to five hundred forty- 33 eight, or 34 (2) who is not domiciled in the city but maintains a permanent place 35 of abode in the city and spends in the aggregate more than one hundred 36 eighty-three days of the taxable year in the city, unless such individ- 37 ual is in active service in the armed forces of the United States. 38 (h) Nonresident individual.--A nonresident individual means an indi- 39 vidual who is not a resident. 40 (i) Resident estate or trust.--A resident estate or trust means: (1) 41 the estate of a decedent who at his or her death was domiciled in the 42 city, 43 (2) a trust, or a portion of a trust, consisting of property trans- 44 ferred by will of a decedent who at his or her death was domiciled in 45 the city, or 46 (3) a trust, or portion of a trust, consisting of the property of: 47 (A) a person domiciled in the city at the time such property was 48 transferred to the trust, if such trust or portion of a trust was then 49 irrevocable, or if it was then revocable and has not subsequently become 50 irrevocable; or 51 (B) a person domiciled in the city at the time such trust, or portion 52 of a trust, became irrevocable, if it was revocable when such property 53 was transferred to the trust but has subsequently become irrevocable. 54 For the purposes of the foregoing, a trust or portion of a trust is 55 revocable if it is subject to a power, exercisable immediately or at any 56 future time, to revest title in the person whose property constitutesA. 3946 4 1 such trust or portion of a trust, and a trust or portion of a trust 2 becomes irrevocable when the possibility that such power may be exer- 3 cised has been terminated. 4 (j) Nonresident estate or trust.--A nonresident estate or trust means 5 an estate or trust which is not a resident. 6 (k) Unless a different meaning is clearly required, any term used in 7 this local law shall have the same meaning as when used in a comparable 8 context in the laws of the United States relating to federal taxes but 9 such meaning shall be subject to the exceptions or modifications 10 prescribed in or pursuant to article two-E of the general city law or by 11 the laws of this state. Any reference in this local law to the internal 12 revenue code, the internal revenue code of nineteen hundred eighty-six 13 or to the laws of the United States shall mean the provisions of the 14 internal revenue code of nineteen hundred eighty-six (unless a reference 15 to the internal revenue code of nineteen hundred fifty-four is clearly 16 intended), and amendments thereto, and other provisions of the laws of 17 the United States relating to federal taxes, as the same are included in 18 this local law as an appendix and supplement to the appendix or as 19 included by reference to an appendix and supplement to the appendix of a 20 title enacted by the same local law as enacts this local law. (The 21 quotation of the aforesaid laws of the United States is intended to make 22 them a part of this local law and to avoid constitutional uncertainties 23 which might result if such laws were merely incorporated by reference. 24 The quotation of a provision of the federal internal revenue code or of 25 any other law of the United States shall not necessarily mean that it is 26 applicable to or has relevance to this local law.) 27 (l) The term "partnership" shall include, unless a different meaning 28 is clearly required, a subchapter K limited liability company. The term 29 "subchapter K limited liability company" shall mean a limited liability 30 company classified as a partnership for federal income tax purposes. 31 The term "limited liability company" means a domestic limited liabil- 32 ity company or a foreign limited liability company, as defined in 33 section one hundred two of the limited liability company law, a limited 34 liability investment company formed pursuant to section five hundred 35 seven of the banking law, or a limited liability trust company formed 36 pursuant to section one hundred two-a of the banking law. 37 Sec. 2. Persons subject to tax.--(a) Imposition of tax.--A tax is 38 hereby imposed for each taxable year beginning after July first, two 39 thousand eighteen on the wages earned, and net earnings from self-em- 40 ployment, within the city, of every nonresident individual, estate and 41 trust which shall comprise a tax at the rate of one percent on all wages 42 and all net earnings from self-employment. 43 (b) Exclusion.--(1) In computing the amount of wages and net earn- 44 ings from self-employment taxable under subsection (a), there shall be 45 allowed an exclusion against the total of wages and net earnings from 46 self-employment in accordance with the following table: 47 Total of Wages and Net Earnings 48 From Self-Employment Exclusion Allowable 49 Not Over $10,000 $3,000 50 Over $10,000 But Not Over $20,000 $2,000 51 Over $20,000 But Not Over $30,000 $1,000 52 Over $30,000 NONE 53 (2) The exclusion allowable shall be applied pro rata against wages 54 and net earnings from self-employment. 55 (3) For taxable periods of less than one year, the exclusion allow- 56 able shall be prorated pursuant to regulations of the administrator.A. 3946 5 1 (c) Limitation.--In no event shall a taxpayer be subject to the tax 2 under this local law in an amount greater than he or she would be 3 required to pay if he or she were a resident of the city and subject to 4 a tax on personal income of residents of the city adopted by the city 5 pursuant to authority granted by the general city law. 6 Sec. 3. Taxable years to which the tax imposed by this local law 7 applies; tax for taxable years beginning after July first, two thousand 8 twenty.--The tax imposed by this local law is imposed for each taxable 9 year beginning on or after July first, two thousand twenty. 10 Sec. 4. Accounting periods and methods.--(a) Accounting periods.-- A 11 taxpayer's taxable year under this local law shall be the same as his 12 taxable year for federal income tax purposes. 13 (b) Change of accounting periods.--If a taxpayer's taxable year is 14 changed for federal income tax purposes, his or her taxable year for 15 purposes of this local law shall be similarly changed. If a taxable 16 period of less than twelve months results from a change of taxable year, 17 the exclusion allowable under section two of this local law shall be 18 prorated under regulations of the administrator. 19 (c) Accounting methods.--A taxpayer's method of accounting under this 20 section shall be the same as his or her method of accounting for federal 21 income tax purposes. In the absence of any method of accounting for 22 federal income tax purposes, net earnings from self-employment within 23 the city shall be computed under such method as in the opinion of the 24 administrator clearly reflects net earnings from self-employment within 25 the city. 26 (d) Change of accounting methods.--(1) If a taxpayer's method of 27 accounting is changed for federal income tax purposes, his or her method 28 of accounting for purposes of this local law shall be similarly changed. 29 (2) If a taxpayer's method of accounting is changed, other than from 30 an accrual to an installment method, any additional tax which results 31 from adjustments determined to be necessary solely by reason of the 32 change shall not be greater than if such adjustments were ratably allo- 33 cated and included for the taxable year of the change and the preceding 34 taxable years, beginning after July first, two thousand twenty, not in 35 excess of two, during which the taxpayer used the method of accounting 36 from which the change is made. 37 (3) If a taxpayer's method of accounting is changed from an accrual 38 to an installment method, any additional tax for the year of such change 39 of method and for any subsequent year which is attributable to the 40 receipt of installment payments properly accrued in a prior year, shall 41 be reduced by the portion of tax for any prior taxable year attributable 42 to the accrual of such installment payments, in accordance with regu- 43 lations of the administrator. 44 Sec. 5. Returns and payment of tax.--On or before the fifteenth day 45 of the fourth month following the close of the taxable year, every 46 person subject to the tax shall make and file a return and any balance 47 of the tax shown due on the face of such return shall be paid therewith. 48 The administrator may, by regulation, provide for the filing of returns 49 and payment of the tax at such other times as he or she deems necessary 50 for the proper enforcement of this local law. The administrator may 51 also provide by regulation that any return otherwise required to be made 52 and filed under this local law by any nonresident individual need not be 53 made and filed if such nonresident individual had, during the taxable 54 year to which the return would relate, no net earnings from self-employ- 55 ment within the city. Any regulation allowing such waiver of return mayA. 3946 6 1 provide for additional limitations on and conditions and prerequisites 2 to the privilege of not filing a return. 3 Sec. 6. Combined returns, employer's returns and payments.--The state 4 tax commission may require: 5 (1) The filing of any or all of the following: 6 (A) A combined return which in addition to the return provided for in 7 a local law authorized by this article may also include returns required 8 to be filed under a local law authorized by article thirty of the tax 9 law and under article twenty-two of the tax law. 10 (B) A combined employer's return which in addition to the employer's 11 return provided for in a local law authorized by this article may also 12 include employer's returns required to be filed under a local law 13 authorized by article thirty of the tax law and under article twenty-two 14 of the tax law. 15 (2) Where a combined return or employer's return is required, and with 16 respect to the payment of estimated tax, the state tax commission may 17 also require payment of a single amount which shall be the total of the 18 amounts (total taxes less any credits or refunds) required to be paid 19 with the returns or employer's returns or in payment of estimated tax 20 pursuant to the provisions of local laws imposed under the authority of 21 article two-E of the general city law, article thirty of the tax law and 22 pursuant to the provisions of article twenty-two of the tax law. 23 Sec. 7. Effect of invalidity in part; inconsistencies with other 24 laws.--(a) If any clause, sentence, paragraph, subsection, section, 25 provision or other portion of this local law or the application thereof 26 to any person or circumstances shall be held to be invalid, such holding 27 shall not affect, impair or invalidate the remainder of this local law 28 or the application of such portion held invalid, to any other person or 29 circumstances, but shall be confined in its operation to the clause, 30 sentence, paragraph, subsection, section, provision or other portion 31 thereof directly involved in such holding or to the person and circum- 32 stances therein involved. 33 (b) If any provision of this local law is inconsistent with, in 34 conflict with, or contrary to any other provision of law, such provision 35 of this local law shall prevail over such other provision and such other 36 provision shall be deemed to have been amended, superseded or repealed 37 to the extent of such inconsistency, conflict or contrariety. 38 § 25-n. Administrative provisions. (a) General. Any local law adopted 39 pursuant to this article shall also contain provisions necessary and 40 appropriate for the collection and the administration of the tax herein 41 authorized. 42 (b) Methods of review.--Such local law shall also contain provisions 43 substantially the same as the following: 44 (i) Any final determination of the amount of any tax payable hereunder 45 shall be reviewable for error, illegality or unconstitutionality or any 46 other reason whatsoever by a proceeding under article seventy-eight of 47 the civil practice law and rules if application therefor is made to the 48 supreme court within four months after the giving of the notice of such 49 final determination, provided, however, that any such proceeding under 50 article seventy-eight of the civil practice law and rules shall not be 51 instituted unless (A) the amount of any tax sought to be reviewed, with 52 such interest and penalties thereon as may be provided for by local law 53 or regulation, shall be first deposited and there is filed an undertak- 54 ing, issued by a surety company authorized to transact business in this 55 state and approved by the superintendent of financial services of this 56 state as to solvency and responsibility, in such amount as a justice ofA. 3946 7 1 the supreme court shall approve to the effect that if such proceeding be 2 dismissed or the tax confirmed the petitioner will pay all costs and 3 charges which may accrue in the prosecution of such proceeding or (B) at 4 the option of the petitioner such undertaking may be in a sum sufficient 5 to cover the taxes, interest and penalties stated in such determination 6 plus the costs and charges which may accrue against it in the prose- 7 cution of the proceeding, in which event the petitioner shall not be 8 required to pay such taxes, interest or penalties as a condition prece- 9 dent to the application. 10 (ii) Where any tax imposed hereunder shall have been erroneously, 11 illegally or unconstitutionally collected and application for the refund 12 thereof duly made to the proper fiscal officer or officers, and such 13 officer or officers shall have made a determination denying such refund, 14 such determination shall be reviewable by a proceeding under article 15 seventy-eight of the civil practice law and rules, provided, however, 16 that such proceeding is instituted within four months after the giving 17 of the notice of such denial, that a final determination of tax due was 18 not previously made, and that an undertaking is filed with the proper 19 fiscal officer or officers in such amount and with such sureties as a 20 justice of the supreme court shall approve to the effect that if such 21 proceeding be dismissed or the tax confirmed, the petitioner will pay 22 all costs and charges which may accrue in the prosecution of such 23 proceeding. 24 (iii) No assessment of additional tax shall be made after the expira- 25 tion of more than three years from the date of the filing of the return 26 except that where no return has been filed or, in the case of the filing 27 of a wilfully false or fraudulent return with intent to evade the tax, 28 the tax may be assessed at any time; provided, however, where a taxpayer 29 omits from his or her return an amount which should be properly included 30 therein which is in excess of twenty-five percent of the amount of the 31 gross income derived by him or her from any trade or business, no 32 assessment of additional tax shall be made after the expiration of more 33 than six years from the date of the filing of the return, except as 34 otherwise provided herein. 35 (c) Delegation of functions.--The local law may provide that the 36 administrator of the tax imposed, as defined in the local law, may dele- 37 gate his or her powers and functions under the local law to one of his 38 or her deputies or to any employee or employees of his or her department 39 and authorize banks or trust companies which are depositories or finan- 40 cial agents of the city to receive and give a receipt for any tax 41 imposed under the local law. 42 § 25-o. Deposit and disposition of revenues. One-half the revenues 43 resulting from the imposition of the tax authorized by this article 44 shall be: 45 (a) paid into the treasury of the city and shall be credited to and 46 deposited in the general fund of such city and shall be available for 47 any lawful city purpose; and 48 (b) deposited in the metropolitan transportation authority financial 49 assistance fund established pursuant to section ninety-two-ff of the 50 state finance law. 51 (c) Such revenues shall be deposited and disposed of in the same 52 manner as revenues resulting from the imposition of the taxes authorized 53 by article thirty of the tax law. 54 § 2. Section 1301 of the tax law is amended by adding a new subsection 55 (c) to read as follows:A. 3946 8 1 (c) The taxes authorized by this article may be imposed only if the 2 general city law authorizes the adoption of a city tax on the earnings 3 of nonresidents and the city imposing the tax authorized by this article 4 also imposes such tax on the earnings of nonresidents. 5 § 3. Subsection (b) of section 1305 of the tax law, as amended by 6 chapter 5 of the laws of 1999, is amended to read as follows: 7 (b) City nonresident individual. A city nonresident individual means 8 an individual who is not a resident of such city [or the state of New9York]. 10 § 4. Separability. If any clause, sentence, paragraph or part of this 11 act shall be adjudged to be unconstitutional or invalid, such judgment 12 shall not affect, impair, or invalidate, the remainder thereof, but 13 shall be confined in its operation to the clause, sentence, paragraph, 14 section or part thereof directly involved in the controversy in which 15 such judgment shall have been rendered. 16 § 5. This act shall take effect immediately. The commissioner of 17 taxation and finance is authorized to promulgate immediately and on an 18 emergency basis all necessary and reasonable rules and regulations for 19 the timely implementation of this act.
