S. 2915 2
AFFECTED PASS-THROUGH ENTITY HAS A DIRECT OR INDIRECT OWNERSHIP INTER-
EST.
(E) NEW YORK S CORPORATION. NEW YORK S CORPORATION MEANS, WITH RESPECT
TO ANY TAXABLE YEAR, ANY ENTITY FOR WHICH AN ELECTION IS IN EFFECT
PURSUANT TO SUBSECTION (A) OF SECTION SIX HUNDRED SIXTY OF THIS CHAPTER,
INCLUDING ANY CORPORATION FOR WHICH SUCH ELECTION HAS BEEN DEEMED TO
HAVE BEEN MADE PURSUANT TO THE PROVISIONS OF SUBSECTION (I) OF SECTION
SIX HUNDRED SIXTY OF THIS CHAPTER.
(F) PARTNERSHIP. PARTNERSHIP MEANS ANY PARTNERSHIP AS PROVIDED IN
SECTION 7701(A)(2) OF THE INTERNAL REVENUE CODE AND THE REGULATIONS
PROMULGATED THEREUNDER. A PARTNERSHIP INCLUDES ANY LIMITED LIABILITY
COMPANY OR OTHER ENTITY THAT IS TREATED AS A PARTNERSHIP FOR FEDERAL
INCOME TAX PURPOSES.
(G) PASS-THROUGH BUSINESS NET INCOME OR LOSS. PASS-THROUGH BUSINESS
NET INCOME OR LOSS OF AN AFFECTED PASS-THROUGH ENTITY MEANS THE SEPA-
RATELY AND NONSEPARATELY COMPUTED ITEMS, AS DESCRIBED IN SECTION 702(A)
OF THE INTERNAL REVENUE CODE WITH RESPECT TO A PARTNERSHIP OR SECTION
1366 OF THE INTERNAL REVENUE CODE WITH RESPECT TO AN S CORPORATION, OF
THE AFFECTED PASS-THROUGH ENTITY, ADJUSTED AS FOLLOWS:
(1) INCREASED OR DECREASED BY ANY MODIFICATION DESCRIBED IN
SUBSECTIONS (B), (C) OR (D) OF SECTION SIX HUNDRED TWELVE OF THIS CHAP-
TER, SUBSECTION (C) OR PARAGRAPHS TWO OR THREE OF SUBSECTION (D) OF
SECTION SIX HUNDRED FIFTEEN OF THIS CHAPTER;
(2) THE PORTION OF ANY OF THE AFFECTED PASS-THROUGH ENTITY'S SEPARATE-
LY AND NONSEPARATELY COMPUTED ITEMS THAT ARE ALLOCABLE TO NONRESIDENT
INDIVIDUALS, TRUSTS, OR ESTATES FOR PURPOSES OF ARTICLE TWENTY-TWO OF
THIS CHAPTER SHALL BE EXCLUDED TO THE EXTENT SUCH PORTION IS NOT DERIVED
FROM OR CONNECTED WITH NEW YORK SOURCES; AND
(3) THE AFFECTED PASS-THROUGH ENTITY'S SEPARATELY AND NONSEPARATELY
COMPUTED ITEMS THAT WOULD OTHERWISE BE PASSED THROUGH TO SUCH ENTITY
FROM ANY LOWER-TIER AFFECTED PASS-THROUGH ENTITY SHALL BE EXCLUDED TO
THE EXTENT SUCH ITEMS ARE TAKEN INTO ACCOUNT IN DETERMINING THE TAX PAID
BY A LOWER-TIER AFFECTED PASS-THROUGH ENTITY PURSUANT TO SECTION EIGHT
HUNDRED SIXTY-ONE OF THIS ARTICLE.
FOR PURPOSES OF THIS SUBSECTION, THE PORTION OF ANY SEPARATELY AND
NONSEPARATELY COMPUTED ITEM THAT IS NOT DERIVED FROM OR CONNECTED WITH
NEW YORK SOURCES SHALL BE DETERMINED UNDER REGULATIONS OR GUIDANCE
ISSUED BY THE TAX COMMISSION CONSISTENT WITH THE APPLICABLE RULES USED
TO DETERMINE THE PORTION OF A TAXPAYER'S DISTRIBUTIVE SHARE OF PARTNER-
SHIP INCOME OR PRO RATA SHARE OF NEW YORK S CORPORATION INCOME THAT IS
DERIVED FROM NEW YORK SOURCES PURSUANT TO THE RULES SET FORTH IN SECTION
SIX HUNDRED THIRTY-TWO OF THIS CHAPTER.
§ 861. IMPOSITION AND RATE OF TAX. (A) GENERAL. A TAX IS HEREBY
IMPOSED FOR EACH TAXABLE YEAR ON THE PASS-THROUGH BUSINESS NET INCOME OF
EVERY AFFECTED PASS-THROUGH ENTITY DOING BUSINESS WITHIN THIS STATE.
THIS TAX SHALL BE IN ADDITION TO ANY OTHER TAXES IMPOSED AND SHALL BE AT
THE RATE OF 6.85 PERCENT FOR EACH TAXABLE YEAR BEGINNING ON OR AFTER
JANUARY FIRST, TWO THOUSAND TWENTY-ONE. IN THE CASE OF AN AFFECTED PASS-
THROUGH ENTITY THAT IS A PARTNERSHIP OR A NEW YORK S CORPORATION FOR
ONLY A PORTION OF ITS TAXABLE YEAR, THE AFFECTED PARTNERSHIP OR AFFECTED
S CORPORATION SHALL BE SUBJECT TO THIS TAX ON ONLY THAT PORTION OF ITS
PASS-THROUGH BUSINESS NET INCOME ATTRIBUTABLE TO THE PORTION OF THE YEAR
FOR WHICH IT IS A PARTNERSHIP OR A NEW YORK S CORPORATION, AS DETERMINED
PURSUANT TO REGULATIONS AND GUIDANCE SET FORTH BY THE COMMISSIONER.
(B) ELECTION. ANY PARTNERSHIP OR NEW YORK S CORPORATION MAY ELECT TO
HAVE NEW YORK INCOME TAX IMPOSED AT THE ENTITY LEVEL UNDER SUBSECTION
S. 2915 3
(A) OF THIS SECTION. AN ELECTION UNDER THIS SUBSECTION SHALL BE MADE ON
THE PASS-THROUGH ENTITY BUSINESS TAX RETURN FOR THE AFFECTED PASS-
THROUGH ENTITY IN SUCH MANNER AS THE COMMISSIONER MAY PRESCRIBE BY REGU-
LATION OR INSTRUCTION. AN ELECTION UNDER THIS SUBSECTION MUST BE MADE ON
AN ANNUAL BASIS AND SHALL BE EFFECTIVE FOR THE AFFECTED PASS-THROUGH
ENTITY ONLY FOR THE TAXABLE YEAR FOR WHICH THE ELECTION IS MADE.
§ 862. CREDITS. (A) GENERAL. AN AFFECTED PASS-THROUGH ENTITY SHALL BE
ALLOWED A CREDIT AGAINST THE TAX OTHERWISE DUE UNDER THIS ARTICLE FOR
ANY INCOME TAX IMPOSED FOR THE TAXABLE YEAR BY ANOTHER STATE OF THE
UNITED STATES, A POLITICAL SUBDIVISION OF SUCH STATE, THE DISTRICT OF
COLUMBIA OR A PROVINCE OF CANADA, UPON INCOME BOTH DERIVED THEREFROM AND
INCLUDED IN THE AFFECTED PASS-THROUGH ENTITY'S PASS-THROUGH BUSINESS NET
INCOME OR LOSS UNDER THIS ARTICLE. THE TERM "INCOME TAX IMPOSED" IN THE
PREVIOUS SENTENCE SHALL INCLUDE: (1) ANY INCOME TAX IMPOSED UPON OR
PAYABLE BY THE AFFECTED PASS-THROUGH ENTITY ITSELF, PROVIDED SUCH TAX
IMPOSITION OR PAYMENT RESULTS FROM A TAX THAT THE COMMISSIONER DETER-
MINES IS SUBSTANTIALLY SIMILAR TO THE TAX IMPOSED BY THIS ARTICLE; AND
(2) ANY INCOME TAX IMPOSED UPON OR PAYABLE BY ANY DIRECT OR INDIRECT
PARTNER OR SHAREHOLDER OF THE AFFECTED PASS-THROUGH ENTITY WHO IS A
RESIDENT INDIVIDUAL, ESTATE, OR TRUST FOR PURPOSES OF ARTICLE TWENTY-TWO
OF THIS CHAPTER.
(B) LIMITATIONS. (1) THE CREDIT UNDER THIS SECTION SHALL NOT EXCEED
THE PERCENTAGE OF THE TAX OTHERWISE DUE UNDER THIS ARTICLE DETERMINED BY
DIVIDING THE PORTION OF THE TAXPAYER'S PASS-THROUGH BUSINESS NET INCOME
THAT IS SUBJECT TO TAXATION BY SUCH OTHER JURISDICTION BY THE TOTAL
AMOUNT OF THE TAXPAYER'S PASS-THROUGH BUSINESS NET INCOME.
(2) THE CREDIT UNDER THIS SECTION SHALL NOT REDUCE THE TAX OTHERWISE
DUE UNDER THIS ARTICLE TO AN AMOUNT LESS THAN WOULD HAVE BEEN DUE IF THE
INCOME SUBJECT TO TAXATION BY SUCH OTHER JURISDICTION WERE EXCLUDED FROM
THE TAXPAYER'S NEW YORK INCOME.
(3) IN THE CASE OF TAX PAID BY A DIRECT OR INDIRECT PARTNER OR SHARE-
HOLDER THAT ELECTS TO CLAIM THE FOREIGN TAX CREDIT FOR FEDERAL INCOME
TAX PURPOSES, THE CREDIT UNDER THIS SECTION FOR INCOME TAX IMPOSED BY A
PROVINCE OF CANADA SHALL BE ALLOWED FOR THAT PORTION OF THE PROVINCIAL
TAX NOT CLAIMED FOR FEDERAL PURPOSES FOR THE TAXABLE YEAR OR A PRECEDING
TAXABLE YEAR, PROVIDED HOWEVER, TO THE EXTENT THE PROVINCIAL TAX IS
CLAIMED FOR FEDERAL PURPOSES FOR A SUCCEEDING TAXABLE YEAR, THE CREDIT
UNDER THIS SECTION MUST BE ADDED BACK IN SUCH SUCCEEDING TAXABLE YEAR.
THE PROVINCIAL TAX SHALL BE DEEMED TO BE CLAIMED LAST FOR FEDERAL INCOME
TAX PURPOSES AND FOR PURPOSES OF THIS SUBSECTION.
§ 863. PAYMENT OF ESTIMATED TAX. (A) DEFINITION OF ESTIMATED TAX.
ESTIMATED TAX MEANS THE AMOUNT THAT AN AFFECTED PASS-THROUGH ENTITY
ESTIMATES TO BE THE TAX IMPOSED FOR THE CURRENT TAXABLE YEAR BY SECTION
EIGHT HUNDRED SIXTY-ONE OF THIS ARTICLE.
(B) ANNUAL ESTIMATED TAX PAYMENT. THE REQUIRED ANNUAL ESTIMATED TAX
PAYMENT IS THE LESSER OF (1) NINETY PERCENT OF THE ESTIMATED TAX FOR THE
YEAR OR (2) ONE HUNDRED TEN PERCENT OF THE TAX SHOWN ON THE RETURN OF
THE AFFECTED PASS-THROUGH ENTITY FOR THE PRECEDING TAXABLE YEAR. IF THE
AFFECTED PASS-THROUGH ENTITY WAS NOT IN EXISTENCE IN THE PREVIOUS YEAR
OR DID NOT ELECT TO BE SUBJECT TO THE TAX IMPOSED BY THIS ARTICLE IN THE
PRECEDING YEAR, THEN NO ESTIMATED TAX IS DUE FOR THE CURRENT TAXABLE
YEAR.
(C) GENERAL. THE ANNUAL ESTIMATED TAX PAYMENT SHALL BE PAID AS FOLLOWS
FOR AN AFFECTED PASS-THROUGH ENTITY THAT REPORTS ON A CALENDAR YEAR
BASIS:
S. 2915 4
(1) IF SUCH ANNUAL ESTIMATED TAX PAYMENT CAN REASONABLY BE EXPECTED TO
EXCEED ONE THOUSAND DOLLARS ON OR BEFORE MARCH FIFTEENTH OF THE TAXABLE
YEAR, THE ANNUAL ESTIMATED TAX PAYMENT SHALL BE PAID IN FOUR EQUAL
INSTALLMENTS ON MARCH FIFTEENTH, JUNE FIFTEENTH, SEPTEMBER FIFTEENTH AND
DECEMBER FIFTEENTH;
(2) IF SUCH ANNUAL ESTIMATED TAX PAYMENT CAN REASONABLY BE EXPECTED TO
EXCEED ONE THOUSAND DOLLARS AFTER MARCH FIFTEENTH AND NOT AFTER JUNE
FIFTEENTH OF THE TAXABLE YEAR, THE ANNUAL ESTIMATED TAX PAYMENT SHALL BE
PAID IN THREE EQUAL INSTALLMENTS ON JUNE FIFTEENTH, SEPTEMBER FIFTEENTH
AND DECEMBER FIFTEENTH;
(3) IF SUCH ANNUAL ESTIMATED TAX PAYMENT CAN REASONABLY BE EXPECTED TO
EXCEED ONE THOUSAND DOLLARS AFTER JUNE FIFTEENTH AND NOT AFTER SEPTEMBER
FIFTEENTH OF THE TAXABLE YEAR, THE ANNUAL ESTIMATED TAX PAYMENT SHALL BE
PAID IN TWO EQUAL INSTALLMENTS ON SEPTEMBER FIFTEENTH AND DECEMBER
FIFTEENTH; AND
(4) IF SUCH ANNUAL ESTIMATED TAX PAYMENT CAN REASONABLY BE EXPECTED TO
EXCEED ONE THOUSAND DOLLARS AFTER SEPTEMBER FIFTEENTH OF THE TAXABLE
YEAR, THE ANNUAL ESTIMATED TAX PAYMENT SHALL BE PAID ON DECEMBER
FIFTEENTH.
(D) THIS SECTION SHALL APPLY TO A TAXABLE YEAR OF LESS THAN TWELVE
MONTHS IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY THE COMMISSIONER.
(E) THIS SECTION SHALL APPLY TO A TAXABLE YEAR OTHER THAN A CALENDAR
YEAR BY THE SUBSTITUTION OF THE MONTHS OF SUCH FISCAL YEAR FOR THE
CORRESPONDING MONTHS SPECIFIED IN THIS SECTION.
(F) AN AFFECTED PASS-THROUGH ENTITY MAY ELECT TO PAY ANY INSTALLMENT
OF ITS ESTIMATED TAX PRIOR TO THE DATE PRESCRIBED FOR THE PAYMENT THERE-
OF.
§ 864. FILING OF RETURN AND PAYMENT OF TAX. (A) GENERAL. ON OR BEFORE
THE FIFTEENTH DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF THE TAXABLE
YEAR, EACH AFFECTED PASS-THROUGH ENTITY SHALL BE REQUIRED TO TRANSMIT TO
THE COMMISSIONER A RETURN IN A FORM PRESCRIBED BY THE COMMISSIONER.
(B) INFORMATION ON RETURN. EACH AFFECTED PASS-THROUGH ENTITY SHALL
REPORT ANY TAX DUE UNDER THIS ARTICLE ON THE FACE OF SUCH RETURN AND
SUCH OTHER PERTINENT INFORMATION AS THE COMMISSIONER MAY BY REGULATIONS
AND INSTRUCTIONS PRESCRIBE. THE BALANCE OF ANY TAX SHOWN ON THE FACE OF
SUCH RETURN, NOT PREVIOUSLY PAID AS INSTALLMENTS OF ESTIMATED TAX, SHALL
BE PAID WITH SUCH RETURN.
§ 865. ACCOUNTING PERIODS AND METHODS. (A) ACCOUNTING PERIODS. AN
AFFECTED PASS-THROUGH ENTITY'S TAXABLE YEAR UNDER THIS ARTICLE SHALL BE
THE SAME AS THE AFFECTED PASS-THROUGH ENTITY'S TAXABLE YEAR FOR FEDERAL
INCOME TAX PURPOSES.
(B) ACCOUNTING METHODS. AN AFFECTED PASS-THROUGH ENTITY'S METHOD OF
ACCOUNTING UNDER THIS ARTICLE SHALL BE THE SAME AS THE AFFECTED PASS-
THROUGH ENTITY'S METHOD OF ACCOUNTING FOR FEDERAL INCOME TAX PURPOSES.
(C) CHANGE OF ACCOUNTING PERIOD OR METHOD. (1) IF AN AFFECTED PASS-
THROUGH ENTITY'S TAXABLE YEAR OR METHOD OF ACCOUNTING IS CHANGED FOR
FEDERAL INCOME TAX PURPOSES, THE TAXABLE YEAR OR METHOD OF ACCOUNTING
FOR PURPOSES OF THIS ARTICLE SHALL BE SIMILARLY CHANGED.
(2) IF AN AFFECTED PASS-THROUGH ENTITY'S METHOD OF ACCOUNTING IS
CHANGED, ANY ADDITIONAL TAX THAT RESULTS FROM ADJUSTMENTS DETERMINED TO
BE NECESSARY SOLELY BY REASON OF SUCH CHANGE SHALL NOT BE GREATER THAN
IF SUCH ADJUSTMENTS WERE RATABLY ALLOCATED AND INCLUDED FOR THE TAXABLE
YEAR OF THE CHANGE AND THE PRECEDING TAXABLE YEARS, NOT IN EXCESS OF
TWO, DURING WHICH THE AFFECTED PARTNERSHIP USED THE METHOD OF ACCOUNTING
FROM WHICH THE CHANGE IS MADE.
S. 2915 5
§ 866. PROCEDURAL PROVISIONS. (A) GENERAL. ALL PROCEDURAL PROVISIONS
OF ARTICLE TWENTY-TWO OF THIS CHAPTER WILL APPLY TO THE PROVISIONS OF
THIS ARTICLE IN THE SAME MANNER AND WITH THE SAME FORCE AND EFFECT AS IF
THE LANGUAGE OF ARTICLE TWENTY-TWO OF THIS CHAPTER HAD BEEN INCORPORATED
IN FULL INTO THIS ARTICLE AND HAD BEEN SPECIFICALLY ADJUSTED FOR AND
EXPRESSLY REFERRED TO THE TAX IMPOSED BY THIS ARTICLE, EXCEPT TO THE
EXTENT THAT ANY PROVISION IS EITHER INCONSISTENT WITH A PROVISION OF
THIS ARTICLE OR IS NOT RELEVANT TO THIS ARTICLE.
(B) LIABILITY FOR TAX. ONLY THE AFFECTED PASS-THROUGH ENTITY SHALL BE
LIABLE FOR THE TAX UNDER THIS ARTICLE, AND NO PARTNER OR SHAREHOLDER
THAT HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST IN THE AFFECTED PASS-
THROUGH ENTITY SHALL BE PERSONALLY LIABLE FOR SUCH TAX.
(C) DEPOSIT AND DISPOSITION OF REVENUE. ALL TAXES, INTEREST, PENAL-
TIES, AND FEES COLLECTED OR RECEIVED BY THE COMMISSIONER UNDER THIS
ARTICLE SHALL BE DEPOSITED AND DISPOSED OF PURSUANT TO THE PROVISIONS OF
SECTION ONE HUNDRED SEVENTY-ONE-A OF THIS CHAPTER.
(D) SECRECY PROVISION. ALL THE PROVISIONS OF SUBSECTION (A) OF SECTION
SIX HUNDRED NINETY-SEVEN OF THIS CHAPTER WILL BE APPLIED TO THE
PROVISIONS OF THIS ARTICLE. NOTWITHSTANDING ANY PROVISIONS OF THIS CHAP-
TER TO THE CONTRARY, THE COMMISSIONER MAY DISCLOSE INFORMATION AND
RETURNS REGARDING THE CALCULATION AND PAYMENT OF THE TAX IMPOSED BY THIS
ARTICLE TO AN AFFECTED PASS-THROUGH ENTITY, TO ITS LOWER-TIERED AFFECTED
PASS-THROUGH ENTITY OR ENTITIES, AND TO ANY PARTNER OR SHAREHOLDER THAT
HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST IN THE AFFECTED PASS-THROUGH
ENTITY AND TO WHICH IS ALLOCABLE ANY SEPARATELY OR NONSEPARATELY
COMPUTED ITEMS, AS DESCRIBED IN SECTION 702(A) OF THE INTERNAL REVENUE
CODE WITH RESPECT TO A PARTNERSHIP OR SECTION 1366 OF THE INTERNAL
REVENUE CODE WITH RESPECT TO AN S CORPORATION.
§ 2. The opening paragraph of paragraph (a) of subdivision 1 of
section 210 of the tax law, as amended by section 10 of part T of chap-
ter 59 of the laws of 2015, is amended to read as follows:
For taxable years beginning before January first, two thousand
sixteen, the amount prescribed by this paragraph shall be computed at
the rate of seven and one-tenth percent of the taxpayer's business
income base. For taxable years beginning on or after January first, two
thousand sixteen, the amount prescribed by this paragraph shall be six
and one-half percent of the taxpayer's business income base. The taxpay-
er's business income base shall mean the portion of the taxpayer's busi-
ness income apportioned within the state as hereinafter provided. Howev-
er, in the case of a small business taxpayer, as defined in paragraph
(f) of this subdivision, the amount prescribed by this paragraph shall
be computed pursuant to subparagraph (iv) of this paragraph and in the
case of a manufacturer, as defined in subparagraph (vi) of this para-
graph, the amount prescribed by this paragraph shall be computed pursu-
ant to subparagraph (vi) of this paragraph, and, in the case of a quali-
fied emerging technology company, as defined in subparagraph (vii) of
this paragraph, the amount prescribed by this paragraph shall be
computed pursuant to subparagraph (vii) of this paragraph. NOTWITH-
STANDING THE PROVISIONS OF THIS PARAGRAPH, WITH RESPECT TO ANY TAXPAYER
THAT HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST IN ONE OR MORE PASS-
THROUGH ENTITIES THAT HAS ELECTED TO BE SUBJECT TO TAX PURSUANT TO
SUBSECTION (A) OF SECTION EIGHT HUNDRED SIXTY-ONE OF THIS CHAPTER,
INCLUDING ANY TAXPAYER THAT IS A SMALL BUSINESS TAXPAYER, A MANUFACTUR-
ER, OR A QUALIFIED EMERGING TECHNOLOGY COMPANY, THE TAXPAYER'S BUSINESS
INCOME BASE WILL BE DECREASED BY AN AMOUNT EQUAL TO THE PRODUCT OF (1)
THE SUM OF THE PORTIONS OF THE TAXPAYER'S DISTRIBUTIVE OR PRO RATA SHARE
S. 2915 6
OF EACH SEPARATELY AND NONSEPARATELY COMPUTED ITEM AS DESCRIBED IN
SECTION 702(A) OR SECTION 1366 OF THE INTERNAL REVENUE CODE THAT IS
DERIVED FROM OR CONNECTED WITH NEW YORK SOURCES AS COMPUTED PURSUANT TO
SUBSECTION (G) OF SECTION EIGHT HUNDRED SIXTY OF THIS CHAPTER THAT IS
BEING TAKEN INTO ACCOUNT IN DETERMINING THE TAX PAID BY AN AFFECTED
PASS-THROUGH ENTITY PURSUANT TO SUBSECTION (A) OF SECTION EIGHT HUNDRED
SIXTY-ONE OF THIS CHAPTER AND (2) A FRACTION, THE NUMERATOR OF WHICH IS
THE TAX RATE IMPOSED ON AFFECTED PASS-THROUGH ENTITIES BY SUBSECTION (A)
OF SECTION EIGHT HUNDRED SIXTY-ONE OF THIS CHAPTER AND THE DENOMINATOR
OF WHICH IS THE TAX RATE IMPOSED ON THE BUSINESS INCOME BASE OF THE
TAXPAYER PURSUANT TO THIS PARAGRAPH. IF THE AMOUNT OF THE REDUCTION
ALLOWABLE TO THE TAXPAYER UNDER THE PREVIOUS SENTENCE FOR ANY TAXABLE
YEAR SHALL EXCEED THE TAXPAYER'S TAX BASE FOR SUCH YEAR, THE EXCESS
ALLOWED FOR THE TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING YEAR
OR YEARS AND MAY BE USED TO REDUCE THE TAXPAYER'S TAX BASE IN SUCH
SUBSEQUENT YEAR OR YEARS.
§ 3. Section 209-B of the tax law is amended by adding a new subdivi-
sion 7 to read as follows:
7. IN DETERMINING THE AMOUNT OF THE SURCHARGE TO BE IMPOSED ON A
TAXPAYER PURSUANT TO THIS SECTION, THE AMOUNT OF SUCH SURCHARGE WILL BE
DETERMINED WITHOUT TAKING INTO ACCOUNT ANY AFFECTED PASS-THROUGH ENTITY
REDUCTION COMPUTED PURSUANT TO PARAGRAPH (A) OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS CHAPTER.
§ 4. Subsection (a) of section 611 of the tax law, as amended by chap-
ter 28 of the laws of 1987, is amended to read as follows:
(a) General. The New York taxable income of a resident individual
shall be his New York adjusted gross income less his New York deduction
and New York exemptions, as determined under this part. NOTWITHSTANDING
THE FOREGOING PROVISION, WITH RESPECT TO ANY RESIDENT INDIVIDUAL THAT
HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST IN ONE OR MORE AFFECTED
PASS-THROUGH ENTITIES SUBJECT TO THE TAX IMPOSED PURSUANT TO ARTICLE
TWENTY-FOUR-A OF THIS CHAPTER, THE RESIDENT INDIVIDUAL'S NEW YORK TAXA-
BLE INCOME SHALL BE ADJUSTED TO EXCLUDE SUCH INDIVIDUAL'S DISTRIBUTIVE
OR PRO RATA SHARES OF EACH SEPARATELY AND NONSEPARATELY COMPUTED ITEM,
AS DESCRIBED IN SECTION 702(A) OF THE INTERNAL REVENUE CODE WITH RESPECT
TO A PARTNERSHIP OR SECTION 1366 OF THE INTERNAL REVENUE CODE WITH
RESPECT TO AN S CORPORATION, FROM ALL AFFECTED PASS-THROUGH ENTITIES IN
WHICH THE TAXPAYER HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST. IF THE
AMOUNT OF THE ADJUSTMENT MADE PURSUANT TO THE PREVIOUS SENTENCE SHALL
EXCEED THE RESIDENT INDIVIDUAL'S NEW YORK TAXABLE INCOME FOR SUCH YEAR,
THE EXCESS ALLOWED FOR THE TAXABLE YEAR MAY BE CARRIED OVER TO THE
FOLLOWING YEAR OR YEARS AND MAY BE USED TO REDUCE THE RESIDENT INDIVID-
UAL'S NEW YORK TAXABLE INCOME IN SUCH SUBSEQUENT YEAR OR YEARS.
§ 5. Section 618 of the tax law is amended by adding a new subsection
6 to read as follows:
(6) WITH RESPECT TO A RESIDENT ESTATE OR TRUST THAT HAS A DIRECT OR
INDIRECT OWNERSHIP INTEREST IN ONE OR MORE AFFECTED PASS-THROUGH ENTI-
TIES SUBJECT TO THE TAX IMPOSED PURSUANT TO ARTICLE TWENTY-FOUR-A OF
THIS CHAPTER, THE RESIDENT ESTATE'S OR TRUST'S NEW YORK TAXABLE INCOME
SHALL BE ADJUSTED TO EXCLUDE SUCH ESTATE'S OR TRUST'S DISTRIBUTIVE OR
PRO RATA SHARES OF EACH SEPARATELY AND NONSEPARATELY COMPUTED ITEM, AS
DESCRIBED IN SECTION 702(A) OF THE INTERNAL REVENUE CODE WITH RESPECT TO
A PARTNERSHIP OR SECTION 1366 OF THE INTERNAL REVENUE CODE WITH RESPECT
TO AN S CORPORATION, FROM ALL AFFECTED PASS-THROUGH ENTITIES IN WHICH
THE TAXPAYER HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST. IF THE AMOUNT
OF THE ADJUSTMENT MADE PURSUANT TO THE PREVIOUS SENTENCE SHALL EXCEED
S. 2915 7
THE ESTATE'S OR THE TRUST'S NEW YORK TAXABLE INCOME FOR SUCH YEAR, THE
EXCESS ALLOWED FOR THE TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING
YEAR OR YEARS AND MAY BE USED TO REDUCE THE ESTATE'S OR TRUST'S NEW YORK
TAXABLE INCOME IN SUCH SUBSEQUENT YEAR OR YEARS.
§ 6. Subsection (e) of section 601 of the tax law is amended by adding
a new paragraph 5 to read as follows:
(5) NONRESIDENT PARTNERS AND SHAREHOLDERS IN AFFECTED PASS-THROUGH
ENTITIES. NOTWITHSTANDING ANY OTHER PROVISION OF THIS SUBSECTION, WITH
RESPECT TO EVERY NONRESIDENT AND PART-YEAR RESIDENT INDIVIDUAL AND TRUST
AND EVERY NONRESIDENT ESTATE THAT HAS A DIRECT OR INDIRECT OWNERSHIP
INTEREST IN ONE OR MORE AFFECTED PASS-THROUGH ENTITIES SUBJECT TO THE
TAX IMPOSED PURSUANT TO ARTICLE TWENTY-FOUR-A OF THIS CHAPTER, THE TAX
IMPOSED PURSUANT TO PARAGRAPH ONE OF THIS SUBSECTION SHALL BE AN AMOUNT
EQUAL TO THE SUM OF THE MODIFIED TAX BASE AND THE SURTAX TAX BASE MULTI-
PLIED BY THEIR RESPECTIVE APPLICABLE NEW YORK SOURCE FRACTIONS.
(A) MODIFIED TAX BASE. THE MODIFIED TAX BASE OF A TAXPAYER UNDER THIS
PARAGRAPH SHALL BE CALCULATED IN THE SAME MANNER AS THE TAX BASE IN
PARAGRAPH TWO OF THIS SUBSECTION, EXCEPT THAT, NOTWITHSTANDING
SUBSECTION (A) OF SECTION SIX HUNDRED ELEVEN OR SUBDIVISION SIX OF
SECTION SIX HUNDRED EIGHTEEN OF THIS ARTICLE, SEPARATELY AND NONSEPA-
RATELY COMPUTED ITEMS WITH RESPECT TO SUCH AFFECTED PASS-THROUGH ENTI-
TIES SHALL NOT BE EXCLUDED, AND THE RATE TABLES UNDER SUBSECTIONS (A),
(B) AND (C) AND THE SUPPLEMENTAL TAX UNDER SUBSECTION (D-1) OF THIS
SECTION SHALL BE APPLIED BY REDUCING EACH TAX RATE IN EXCESS OF 6.85% TO
6.85%, AND ADJUSTING EACH TAX TABLE ACCORDINGLY. THE APPLICABLE NEW YORK
SOURCE FRACTION FOR THE MODIFIED TAX BASE SHALL BE CALCULATED IN THE
SAME MANNER AS THE NEW YORK SOURCE FRACTION UNDER PARAGRAPH THREE OF
THIS SUBSECTION, INCLUDING THE EXCLUSION OF SEPARATELY AND NONSEPARATELY
COMPUTED ITEMS WITH RESPECT TO SUCH AFFECTED PASS-THROUGH ENTITIES UNDER
SUBSECTION (A) OF SECTION SIX HUNDRED ELEVEN OR SUBDIVISION SIX OF
SECTION SIX HUNDRED EIGHTEEN OF THIS ARTICLE, AS APPLICABLE, IN CALCU-
LATING THE NUMERATOR OF SUCH FRACTION. IF THE AMOUNT OF SUCH SEPARATELY
AND NONSEPARATELY COMPUTED ITEMS SO EXCLUDED EXCEEDS THE NUMERATOR OF
THE NEW YORK SOURCE FRACTION FOR SUCH YEAR BEFORE SUCH EXCLUSION, THE
EXCESS MAY BE CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE
USED TO REDUCE THE NUMERATOR OF THE TAXPAYER'S APPLICABLE NEW YORK
SOURCE FRACTION UNDER THIS SUBPARAGRAPH FOR SUCH TAXABLE YEARS.
(B) SURTAX TAX BASE. THE SURTAX TAX BASE OF A TAXPAYER UNDER THIS
PARAGRAPH SHALL BE EQUAL TO THE PORTION OF THE TAXPAYER'S NEW YORK TAXA-
BLE INCOME TO WHICH THE 8.82% RATE WOULD HAVE APPLIED IN COMPUTING THE
TAXPAYER'S MODIFIED TAX BASE UNDER THE PRECEDING SUBPARAGRAPH (AFTER
TAKING INTO ACCOUNT THE TAX TABLE BENEFIT RECAPTURE PROVISIONS UNDER
SUBSECTION (D-1) OF THIS SECTION) IF THE TAX RATE HAD NOT BEEN CAPPED AT
6.85% UNDER THAT SUBPARAGRAPH MULTIPLIED BY A FACTOR OF 1.97%. THE
APPLICABLE NEW YORK SOURCE FRACTION FOR THE SURTAX TAX BASE SHALL BE
CALCULATED IN THE SAME MANNER AS THE NEW YORK SOURCE FRACTION UNDER
PARAGRAPH THREE OF THIS SUBSECTION, EXCEPT THAT SEPARATELY AND NONSEPA-
RATELY COMPUTED ITEMS WITH RESPECT TO SUCH AFFECTED PASS-THROUGH ENTI-
TIES SHALL NOT BE EXCLUDED IN CALCULATING THE NUMERATOR OF SUCH FRAC-
TION.
§ 7. Section 606 of the tax law is amended by adding a new subsection
(kkk) to read as follows:
(KKK) TAXPAYERS WITH DIRECT OR INDIRECT OWNERSHIP INTERESTS IN
AFFECTED PASS-THROUGH ENTITIES. NOTWITHSTANDING THE OTHER PROVISIONS OF
THIS SUBSECTION, A TAXPAYER THAT HAS A DIRECT OR INDIRECT OWNERSHIP
INTEREST IN AN AFFECTED PASS-THROUGH ENTITY THAT IS SUBJECT TO TAX
S. 2915 8
PURSUANT TO ARTICLE TWENTY-FOUR-A OF THIS CHAPTER IS NOT ENTITLED TO
CLAIM A CREDIT OTHERWISE PROVIDED BY THIS SECTION TO THE EXTENT THAT THE
CREDIT WAS CLAIMED BY THE AFFECTED PASS-THROUGH ENTITY FOR PURPOSES OF
DETERMINING ITS TAX LIABILITY UNDER ARTICLE TWENTY-FOUR-A OF THIS CHAP-
TER.
§ 8. Subsection (d) of section 620 of the tax law, as added by chapter
166 of the laws of 1991, is amended to read as follows:
(d) S corporation shareholders AND PARTNERS. In the case of a share-
holder of an S corporation, the term "income tax" in subsection (a) of
this section shall [not] include (1) any such tax imposed upon or paya-
ble by the [corporation, but shall include any such tax] SHAREHOLDER
with respect to the income of the corporation [imposed upon or payable
by the shareholder], without regard to whether an election independent
of the federal S election was required to effect such imposition upon
the shareholder OF SUCH S CORPORATION AND (2) SUCH SHAREHOLDER'S PRO
RATA SHARE OF ANY SUCH TAX IMPOSED UPON OR PAYABLE BY THE CORPORATION,
PROVIDED SUCH TAX IMPOSITION OR PAYMENT RESULTS FROM A TAX THAT THE
COMMISSIONER DETERMINES IS SUBSTANTIALLY SIMILAR TO THE TAX IMPOSED BY
ARTICLE TWENTY-FOUR-A OF THIS CHAPTER. IN THE CASE OF A PARTNER IN A
PARTNERSHIP, THE TERM "INCOME TAX" IN SUBSECTION (A) OF THIS SECTION
SHALL (1) INCLUDE ANY SUCH TAX IMPOSED UPON OR PAYABLE BY THE PARTNER
WITH RESPECT TO THE INCOME OF THE PARTNERSHIP AND (2) SUCH PARTNER'S
DISTRIBUTIVE SHARE OF ANY SUCH TAX IMPOSED UPON OR PAYABLE BY THE PART-
NERSHIP, PROVIDED SUCH TAX IMPOSITION OR PAYMENT RESULTS FROM A TAX THAT
THE COMMISSIONER DETERMINES IS SUBSTANTIALLY SIMILAR TO THE TAX IMPOSED
BY ARTICLE TWENTY-FOUR-A OF THIS CHAPTER.
§ 9. Section 620 of the tax law is amended by adding a new subsection
(e) to read as follows:
(E) TAXPAYERS WITH DIRECT OR INDIRECT OWNERSHIP INTERESTS IN AFFECTED
PASS-THROUGH ENTITIES. NOTWITHSTANDING THE OTHER PROVISIONS OF THIS
SECTION, A TAXPAYER THAT HAS A DIRECT OR INDIRECT OWNERSHIP INTEREST IN
AN AFFECTED PASS-THROUGH ENTITY THAT IS SUBJECT TO TAX PURSUANT TO ARTI-
CLE TWENTY-FOUR-A OF THIS CHAPTER IS NOT ENTITLED TO CLAIM A CREDIT
OTHERWISE PROVIDED BY THIS SECTION TO THE EXTENT THAT ANY INCOME TAX IS
CLAIMED AS A CREDIT PURSUANT TO SECTION EIGHT HUNDRED SIXTY-TWO OF THIS
CHAPTER BY THE AFFECTED PASS-THROUGH ENTITY FOR PURPOSES OF DETERMINING
ITS TAX LIABILITY UNDER ARTICLE TWENTY-FOUR-A OF THIS CHAPTER.
§ 10. Subparagraph (A) of paragraph 4 of subsection (c) of section 658
of the tax law, as amended by section 72 of part A of chapter 59 of the
laws of 2014, is amended to read as follows:
(A) General. Every entity OTHER THAN AN ENTITY SUBJECT TO TAX UNDER
ARTICLE TWENTY-FOUR-A OF THIS CHAPTER, which is a partnership, other
than a publicly traded partnership as defined in section 7704 of the
federal Internal Revenue Code, subchapter K limited liability company or
an S corporation for which the election provided for in subsection (a)
of section six hundred sixty of this part is in effect, which has part-
ners, members or shareholders who are nonresident individuals, as
defined under subsection (b) of section six hundred five of this arti-
cle, or C corporations, and which has any income derived from New York
sources, determined in accordance with the applicable rules of section
six hundred thirty-one of this article as in the case of a nonresident
individual, shall pay estimated tax on such income on behalf of such
partners, members or shareholders in the manner and at the times
prescribed by subsection (c) of section six hundred eighty-five of this
article. For purposes of this paragraph, the term "estimated tax" shall
mean a partner's, member's or shareholder's distributive share or pro
S. 2915 9
rata share of the entity income derived from New York sources, multi-
plied by the highest rate of tax prescribed by section six hundred one
of this article for the taxable year of any partner, member or share-
holder who is an individual taxpayer, or paragraph (a) of subdivision
one of section two hundred ten of this chapter for the taxable year of
any partner, member or shareholder which is a C corporation, whether or
not such C corporation is subject to tax under article nine, nine-A or
thirty-three of this chapter, and reduced by the distributive share or
pro rata share of any credits determined under section one hundred
eighty-seven, one hundred eighty-seven-a, six hundred six or fifteen
hundred eleven of this chapter, whichever is applicable, derived from
the entity.
§ 11. Section 612 of the tax law is amended by adding a new subsection
(y) to read as follows:
(Y) THE ELECTION BY A PARTNERSHIP OR S CORPORATION PURSUANT TO
SUBSECTION (B) OF SECTION EIGHT HUNDRED SIXTY-ONE OF THIS CHAPTER SHALL
HAVE NO IMPACT ON THE ADDITIONS AND SUBTRACTIONS TO BE TAKEN INTO
ACCOUNT UNDER SUBSECTION (N) OF THIS SECTION AND SUCH ELECTION SHALL
HAVE NO IMPACT ON THE DETERMINATION OF THE BASIS OF A PARTNER OR SHARE-
HOLDER IN AN INTEREST IN THE PARTNERSHIP OR IN THE STOCK OR INDEBTEDNESS
OF THE S CORPORATION.
§ 12. Subdivision 1 of section 171-a of the tax law, as amended by
section 3 of part XX of chapter 59 of the laws of 2019, is amended to
read as follows:
1. All taxes, interest, penalties and fees collected or received by
the commissioner or the commissioner's duly authorized agent under arti-
cles nine (except section one hundred eighty-two-a thereof and except as
otherwise provided in section two hundred five thereof), nine-A,
twelve-A (except as otherwise provided in section two hundred eighty-
four-d thereof), thirteen, thirteen-A (except as otherwise provided in
section three hundred twelve thereof), eighteen, nineteen, twenty
(except as otherwise provided in section four hundred eighty-two there-
of), twenty-B, twenty-D, twenty-one, twenty-two, [twenty-four] TWENTY-
FOUR-A, twenty-six, twenty-eight (except as otherwise provided in
section eleven hundred two or eleven hundred three thereof),
twenty-eight-A, twenty-nine-B, thirty-one (except as otherwise provided
in section fourteen hundred twenty-one thereof), thirty-three and thir-
ty-three-A of this chapter shall be deposited daily in one account with
such responsible banks, banking houses or trust companies as may be
designated by the comptroller, to the credit of the comptroller. Such an
account may be established in one or more of such depositories. Such
deposits shall be kept separate and apart from all other money in the
possession of the comptroller. The comptroller shall require adequate
security from all such depositories. Of the total revenue collected or
received under such articles of this chapter, the comptroller shall
retain in the comptroller's hands such amount as the commissioner may
determine to be necessary for refunds or reimbursements under such arti-
cles of this chapter out of which amount the comptroller shall pay any
refunds or reimbursements to which taxpayers shall be entitled under the
provisions of such articles of this chapter. The commissioner and the
comptroller shall maintain a system of accounts showing the amount of
revenue collected or received from each of the taxes imposed by such
articles. The comptroller, after reserving the amount to pay such
refunds or reimbursements, shall, on or before the tenth day of each
month, pay into the state treasury to the credit of the general fund all
revenue deposited under this section during the preceding calendar month
S. 2915 10
and remaining to the comptroller's credit on the last day of such
preceding month, (i) except that the comptroller shall pay to the state
department of social services that amount of overpayments of tax imposed
by article twenty-two of this chapter and the interest on such amount
which is certified to the comptroller by the commissioner as the amount
to be credited against past-due support pursuant to subdivision six of
section one hundred seventy-one-c of this article, (ii) and except that
the comptroller shall pay to the New York state higher education
services corporation and the state university of New York or the city
university of New York respectively that amount of overpayments of tax
imposed by article twenty-two of this chapter and the interest on such
amount which is certified to the comptroller by the commissioner as the
amount to be credited against the amount of defaults in repayment of
guaranteed student loans and state university loans or city university
loans pursuant to subdivision five of section one hundred seventy-one-d
and subdivision six of section one hundred seventy-one-e of this arti-
cle, (iii) and except further that, notwithstanding any law, the comp-
troller shall credit to the revenue arrearage account, pursuant to
section ninety-one-a of the state finance law, that amount of overpay-
ment of tax imposed by article nine, nine-A, twenty-two, thirty, thir-
ty-A, thirty-B or thirty-three of this chapter, and any interest there-
on, which is certified to the comptroller by the commissioner as the
amount to be credited against a past-due legally enforceable debt owed
to a state agency pursuant to paragraph (a) of subdivision six of
section one hundred seventy-one-f of this article, provided, however, he
shall credit to the special offset fiduciary account, pursuant to
section ninety-one-c of the state finance law, any such amount credita-
ble as a liability as set forth in paragraph (b) of subdivision six of
section one hundred seventy-one-f of this article, (iv) and except
further that the comptroller shall pay to the city of New York that
amount of overpayment of tax imposed by article nine, nine-A, twenty-
two, thirty, thirty-A, thirty-B or thirty-three of this chapter and any
interest thereon that is certified to the comptroller by the commission-
er as the amount to be credited against city of New York tax warrant
judgment debt pursuant to section one hundred seventy-one-l of this
article, (v) and except further that the comptroller shall pay to a
non-obligated spouse that amount of overpayment of tax imposed by arti-
cle twenty-two of this chapter and the interest on such amount which has
been credited pursuant to section one hundred seventy-one-c, one hundred
seventy-one-d, one hundred seventy-one-e, one hundred seventy-one-f or
one hundred seventy-one-l of this article and which is certified to the
comptroller by the commissioner as the amount due such non-obligated
spouse pursuant to paragraph six of subsection (b) of section six
hundred fifty-one of this chapter; and (vi) the comptroller shall deduct
a like amount which the comptroller shall pay into the treasury to the
credit of the general fund from amounts subsequently payable to the
department of social services, the state university of New York, the
city university of New York, or the higher education services corpo-
ration, or the revenue arrearage account or special offset fiduciary
account pursuant to section ninety-one-a or ninety-one-c of the state
finance law, as the case may be, whichever had been credited the amount
originally withheld from such overpayment, and (vii) with respect to
amounts originally withheld from such overpayment pursuant to section
one hundred seventy-one-l of this article and paid to the city of New
York, the comptroller shall collect a like amount from the city of New
York.
S. 2915 11
§ 13. Section 601 of the tax law is amended by adding a new subsection
(j) to read as follows:
(J) FOR EVERY RESIDENT INDIVIDUAL, ESTATE OR TRUST THAT HAS A DIRECT
OR INDIRECT OWNERSHIP INTEREST IN ONE OR MORE PASS-THROUGH ENTITIES THAT
HAS ELECTED TO BE SUBJECT TO TAX PURSUANT TO SUBSECTION (A) OF SECTION
EIGHT HUNDRED SIXTY-ONE OF THIS CHAPTER, THERE IS HEREBY IMPOSED FOR
EACH TAXABLE YEAR A SURTAX AT THE RATE OF 1.97% ON THE AMOUNT BY WHICH
THE PORTION OF SUCH INDIVIDUAL'S, ESTATE'S OR TRUST'S NEW YORK TAXABLE
INCOME SUBJECT TO TAX AT THE RATE OF 8.82% WOULD INCREASE IF THE RESI-
DENT INDIVIDUAL'S, ESTATE'S OR TRUST'S NEW YORK TAXABLE INCOME WAS
ADJUSTED TO ADD BACK SUCH INDIVIDUAL'S, ESTATE'S OR TRUST'S DISTRIBUTIVE
OR PRO RATA SHARES OF SEPARATELY OR NONSEPARATELY COMPUTED ITEMS FROM
SUCH PASS-THROUGH ENTITIES.
§ 14. Paragraph 1 of subsection (e) of section 601 of the tax law, as
amended by chapter 170 of the laws of 1994, is amended to read as
follows:
(1) General. [There] EXCEPT AS PROVIDED IN PARAGRAPH FIVE OF THIS
SUBSECTION, THERE is hereby imposed for each taxable year on the taxable
income which is derived from sources in this state of every nonresident
and part-year resident individual and trust and every nonresident estate
a tax which shall be equal to the tax base multiplied by the New York
source fraction.
§ 15. This act shall take effect immediately and shall apply for
taxable years beginning on or after January 1, 2021; provided, however
that the amendments to subdivision 1 of section 171-a of the tax law
made by section twelve of this act shall not affect the expiration of
such subdivision and shall be deemed to expire therewith.
