As the new legislative session begins in New York for the 2021-22 term, we are eagerly awaiting the introduction of new tax laws and plan to address those developments here. We’ll be tracking any notable legislative developments weekly or bi-weekly, and this is our first installment from 2021.
As expected, invoices that expired at the end of the last session are already being reintroduced. Given the rise in remote working due to COVID-19, one of the more interesting proposals looks at the tax treatment of teleworkers. While some of these efforts may fail, New York is experiencing billions of dollars in lost revenue and will increasingly turn to businesses and high earners to help eradicate the lost revenue from the COVID-19 pandemic.
- SB 602 – Tax treatment of employees involved in COVID-19 telework
This bill, a reintroduction of SB 8386 from the previous session, would authorize companies to mark work done remotely due to COVID-19 as being done in their normal place of work “for state and local tax purposes”, which is believed to be the case Employee wage distribution would include for personal income tax purposes. The bill also empowers the tax authority’s agent to “enact any rules or regulations necessary to implement this law”. Oddly enough, the bill does not seem to propose any changes to the actual tax law, and given that it is unclear how the Commissioner could legislate to implement new rules. A number of other questions come to mind as well, but at this stage we’ll wait and see how the math plays out.
The rationale and rationale for the bill is: “Eliminate unnecessary confusion and complexity [for businesses] filing their taxes. “If passed, the law would apply retrospectively from March 7, 2020 for the duration of the state disaster emergency declared by Governor Cuomo in Executive Order 202.
- SB 917 – Increase in the highest state income tax rate
With the reintroduction of SB 8164 from the last session, which passed away on the committee, this bill would increase the income tax rate for those with taxable income in New York above $ 5,000,000. Currently, the tax rate for the highest bracket is 8.82%; However, this bill aims to create new parentheses with the highest parenthesis (income over $ 100 million) subject to a tax rate of 10.32%. According to the bill, the applicable tax rates would be increased as follows:
- SB 302 – Digital advertising tax
This bill would impose a sales tax on digital advertising and set tax revenues on digital advertising services that would be used to fund an interest-free refinancing program for education loans. In the bill, “digital advertising services” is defined as “advertising services on a digital interface”, including advertising in the form of banner advertising, search engine advertising, interstitial advertising and other similar advertising services that market or promote a particular good, service or policy, candidate or message. “According to a 2016 New York State Comptroller report, student loan debt has reached over $ 82 billion. The rationale explains that the estimated $ 330 billion in revenue generated annually with the proposed digital advertising tax that would help students pay off their debts and ease their financial burden.
- SB 83 – Tax on vacant commercial space on the ground floor
With this bill, reintroducing SB 686 from the previous session, New York City could collect business tax, a tax on vacant commercial space on the first floor. The tax would be imposed on owners of downstairs commercial space that has been vacant for six months or more. The bill would set both a minimum idle time (six months) before property tax liability and a maximum tax amount ($ 2,000 per square foot per year). The applicable vacancy period does not apply until at least thirty days after an owner of a commercial building on the first floor was required to register such premises in accordance with local requirements for job posting, subject to certain exceptions. The tax is intended to provide landlords with incentives for vacant space and options to rent the space to tenants in order to take advantage of these options and “restore the vibrancy of the city’s streetscapes”.
If these new laws are passed, they could have a significant impact on New York taxpayers. We therefore plan to keep these bills on our radar and track their progress as the new legislative session moves forward.