New York 2013-2014 Budget Signed into Law

May 2, 2013

In late March 2013, New York Governor Cuomo signed into law the state’s 2013- 2014 budget. This is the third year in a row the state budget has been adopted on time, and that is no small accomplishment. The 2013-2014 General Fund budget gap, once projected to be $17.4 billion, has been eliminated in this budget. Additionally, state spending in the plan will increase by less than 2%. Many of the tax-related changes made in the budget are highlighted below.

INDIVIDUAL TAX

• Extend “millionaires tax” through 2017.
• Extend high-income (adjusted gross income over $10 million) charitable contribution deduction limitation for three years.
• Create middle-class family tax relief credits in the amount of $350 for tax years 2014-2016 for eligible individuals. Middle-class families with at least one child and a household income of $40,000 to $300,000 will be eligible. The “credits” will be “advanced” beginning in 2014 (election year) in the form of rebate checks.

CREDITS & INCENTIVES

• Establish tax-free zones with supportive environments for inventors and entrepreneurs.
• This program will designate five higher education/private sector high-tech innovation incubators for start-up companies each year for two years. The start-ups will be free of sales and business taxes for the first five years of their existence.
• Extend the Empire State film production tax credit of $420 million a year for an additional five years, beginning in calendar year 2015.
• Establish the “Charge NY Electric Vehicle Recharging Equipment Credit” of 50% of the taxpayer installation costs of up to $5,000 per charging station.
• Extend the “Historic Commercial Properties Rehabilitation Credit” by prolonging the existing $5 million per project tax credit for five years (2015-2019) and making the credit refundable beginning in tax year 2015.
• Establish new sales tax free facilities to promote the sale of New York agricultural products, alcoholic beverages, etc. in high traffic rest areas, train stations and airports

CORPORATE & BUSINESS TAXES

• Lower the corporation business tax rate for New York manufacturers from 3.25% to 2.4% by 2018.
• Close the royalty income loophole that allows New York companies that earn royalty income and avoid paying taxes on that income.
• Extend the MTA business tax surcharge for five years through tax year 2018.
• Limit the industries to which Industrial Development Authorities can offer state sales and use tax benefits to the key sectors (scientific research and development, software development, agriculture, back office operations, distribution centers, financial services data centers, and manufacturing) that are eligible to receive tax credits from New York’s Excelsior Job Program.
• Extend the temporary utility assessment on electric, gas, water and steam utilities for five years.

MISCELLANEOUS & ENFORCEMENT PROVISIONS

• Establish a statewide “STAR Anti-fraud Protection Program” to combat STAR fraud. The DTF will simplify and redesign the STAR application form.
• Provide the DTF the authority to refuse to issue a certificate of registration to cigarette retailers with unpaid tax delinquencies.
• Increase the penalty for possessing unstamped or illegally stamped cigarettes from $150 to $600.
• Suspend delinquent New York taxpayers’ driver’s licenses for individuals who owe taxes in excess of $10,000.
• Allow the Department of Taxation and Finance (DTF) to garnish wages of delinquent taxpayers without filing a warrant with the Department of State or County Clerks. This way wages can be garnished without a warrant appearing on a person’s credit report.
• Update criteria for refusal and revocation of a sales tax Certificate of Authority (CoA) to include all delinquent taxes, and increase penalties for operating without a CoA.
• Make permanent the $2.50 per new tire fee for waste management.
• Make permanent the tax modernization provisions enacted in 2011 and extended last year. These provisions, including mandatory e-filing and e-payment for preparers and taxpayers, sales tax payment requirements, and segregated accounts for non-complying vendors, would otherwise expire at the outset of the tax year 2013 filing season on December 31, 2013.
• Clarify that the sales and use tax exemption for natural gas used in motor vehicles also applies to natural gas purchased with the intention to compress it for use in vehicles.

The budget in its entirety can be found in Governor Cuomo’s website. View Budget.