Bill Text: NY S05551 | 2023-2024 | General Assembly | Introduced

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Bill Title: Establishes a tax on annual gross revenue derived from digital ads.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Introduced) 2024-01-03 - REFERRED TO BUDGET AND REVENUE [S05551 Detail]

Download: New_York-2023-S05551-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          5551

                               2023-2024 Regular Sessions

                    IN SENATE

                                      March 8, 2023
                                       ___________

        Introduced  by  Sens.  GIANARIS, HOYLMAN-SIGAL -- read twice and ordered
          printed, and when printed to be committed to the Committee  on  Budget
          and Revenue

        AN  ACT  to  amend  the  tax  law,  in relation to establishing a tax on
          digital ads

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

     1    Section  1.  The tax law is amended by adding a new article 15 to read
     2  as follows:
     3                                 ARTICLE 15
     4                             TAX ON DIGITAL ADS
     5  Section 330. Findings and intent.
     6          331. Definitions.
     7          332. Imposition of tax.
     8          333. Returns.
     9          334. Tax payment.
    10    § 330. Findings and intent. The legislature  finds  and  declares  the
    11  following:
    12    1.  Many  goods  and  services that have been traditionally subject to
    13  state and local sales use taxes have avoided  taxation  in  the  digital
    14  era.    However,  many digital transactions are harder to bring into the
    15  sales tax base because instead of paying a monetary fee, customers some-
    16  times barter their personal information for access to digital platforms.
    17  This personal information is in turn sold for use in targeted advertise-
    18  ments on digital platforms. To tax this consumption, leading tax  econo-
    19  mists  have  suggested using the receipts earned from digital advertise-
    20  ments as a proxy for the value of the barter.
    21    2. As has been noted by many, including the Organization for  Economic
    22  Co-operation  and  Development, the value of the consumption provided by
    23  digital platforms is typically greater as the size  of  its  network  is
    24  greater.  The  legislature  finds that the consumption value provided by

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02522-02-3
        S. 5551                             2

     1  networks of a small size is negligible, especially when compared to  the
     2  compliance burden that would be imposed on smaller digital platforms.
     3    § 331. Definitions. As used in this article, the following terms shall
     4  have the following meanings:
     5    1.  The  term "annual gross revenues" means income or revenue from all
     6  sources in New York  state,  before  any  expenses  or  taxes,  computed
     7  according to generally accepted accounting principles.
     8    2.  The term "assessable base" means the annual gross revenues derived
     9  from digital advertising services in the state.
    10    3. The term  "digital  advertising  services"  includes  advertisement
    11  services on a digital interface, including advertisements in the form of
    12  banner advertising, search engine advertising, interstitial advertising,
    13  and other comparable advertising services, that use personal information
    14  about the people the ads are being served to.
    15    4.  The term "digital interface" means any type of software, including
    16  a website, part of a website, or application, that a  user  is  able  to
    17  access.
    18    5. (a) The term "person" means any natural individual, receiver, trus-
    19  tee,  guardian, personal representative, fiduciary, or representative of
    20  any kind and any partnership, firm, association, corporation,  or  other
    21  entity.
    22    (b)  The  term "person", unless expressly provided otherwise, does not
    23  include a governmental entity or a unit or instrumentality of a  govern-
    24  mental entity.
    25    6.  The  term  "user"  means  an  individual  or  any other person who
    26  accesses a digital interface with a device.
    27    § 332. Imposition of tax. 1. There is hereby imposed and shall be paid
    28  a tax on the annual gross  revenues  any  person  derives  from  digital
    29  advertising services in the state.
    30    2. The tax imposed shall be apportioned to the state by the apportion-
    31  ment  factor  determined  pursuant  to  this  section. The apportionment
    32  factor is a fraction, determined by including only those  receipts,  net
    33  income,  net  gains,  and other items described in this section that are
    34  included in the computation of the taxpayer's business  income  for  the
    35  taxable year. The numerator of the apportionment fraction shall be equal
    36  to  the  sum of all the amounts required to be included in the numerator
    37  pursuant to the provisions of this section and the  denominator  of  the
    38  apportionment  fraction  shall  be  equal  to the sum of all the amounts
    39  required to be included in the denominator pursuant to the provisions of
    40  this section.
    41    3. (a) The annual gross revenues of  a  person  derived  from  digital
    42  advertising  in  the  state  shall  be  included in the numerator of the
    43  apportionment fraction. The annual gross revenues of  a  person  derived
    44  from  digital  advertising in the United States shall be included in the
    45  denominator of the apportionment fraction.
    46    (b) The commissioner shall adopt regulations to determine  the  amount
    47  of revenue derived from each state in which digital advertising services
    48  are provided.
    49    4. The digital advertising gross revenues tax rate is seven percent of
    50  the assessable base for a person with annual gross revenues derived from
    51  digital advertising in the state exceeding one hundred million dollars.
    52    §  333.  Returns.  1. Each person that, in a calendar year, has annual
    53  gross revenues derived from digital advertising services in the state of
    54  at least one million dollars shall complete, under oath, and  file  with
    55  the commissioner a return, on or before April fifteenth the year follow-
    56  ing the effective date of this article.
        S. 5551                             3

     1    2.  (a)  Each person that reasonably expects the person's annual gross
     2  revenues derived from digital  advertising  services  in  the  state  to
     3  exceed one million dollars shall complete, under oath, and file with the
     4  commissioner  a  declaration  of  estimated  tax,  on  or  before  April
     5  fifteenth of that year.
     6    (b)  Any  person required to file a declaration of estimated tax for a
     7  taxable year pursuant  to  paragraph  (a)  of  this  subdivision,  shall
     8  complete and file with the commissioner a quarterly estimated tax return
     9  on or before June fifteenth, September fifteenth, and December fifteenth
    10  of such year.
    11    3. Any person required to file a return pursuant to this section shall
    12  file  with the return an attachment that states any information that the
    13  commissioner requires to determine annual gross  revenues  derived  from
    14  digital advertising services in the state.
    15    4.  Any person required to file a return under subdivision two of this
    16  section shall maintain records of digital advertising services  provided
    17  in  the state and the basis for the calculation of the digital advertis-
    18  ing gross revenues tax owed.
    19    § 334. Tax payment. 1. Except as provided in subdivision two  of  this
    20  section,  each  person  required  to  file  a return under section three
    21  hundred thirty-three of this article shall pay the  digital  advertising
    22  gross  revenues tax with the return that covers the period for which the
    23  tax is due.
    24    2. Any person required to file  estimated  digital  advertising  gross
    25  revenues  tax  returns under paragraph (b) of subdivision two of section
    26  three hundred thirty-three of this article shall pay:
    27    (a) at least twenty-five percent of the estimated digital  advertising
    28  gross revenues tax shown on the declaration or amended declaration for a
    29  taxable year:
    30    i.  With  the declaration or amended declaration that covers the year;
    31  and
    32    ii. With each quarterly return for that year; and
    33    (b) any unpaid digital advertising gross revenues  tax  for  the  year
    34  shown on the person's return that covers that year with the return.
    35    §  2.  The  tax law is amended by adding a new section 1816 to read as
    36  follows:
    37    § 1816. Digital ad tax. Any willful act  or  omission  by  any  person
    38  which  constitutes  a  violation  of any provision of article fifteen of
    39  this chapter shall constitute a misdemeanor.
    40    § 3. This act shall take effect immediately and shall apply to taxable
    41  years beginning on and after January 1, 2024.