On the heels of its loss in Matter of TransCanada Facility USA, Inc. DTA NO. 827332, on May 14, the New York State Department of Taxation and Finance proposed draft regulations addressing the Article 9-A Franchise Tax treatment of Qualified New York Manufacturers (“QNYMs”). These draft regulations, which are not currently in effect but which do shed light on the Department’s current thinking, amplify a position that the Department has taken in prior informal guidance and on audit regarding contract manufacturing arrangements and the scope of activities that constitute “manufacturing” that is not in the statute. The position that a taxpayer that engages in contract manufacturing cannot qualify as a QNYM is contrary to prior New York authorities addressing “manufacturing” in the investment tax credit context and contrary to judicial authorities defining “manufacturing” under relevant federal tax law. In addition, the draft regulations set out a new position—again, one not found in the statute—that “digital manufacturing” is not manufacturing, and that only manufacturing that results in the production of “tangible” goods will qualify for QNYM treatment.
Numerous states have provided tax relief in response to the COVID-19 outbreak, often in the form of tax filing and payment deadline extensions. At this time, 41 states and Washington, D.C. have provided a corporate income tax filing and/or payment deadline extension. Most recently, Florida extended its May 1, 2020 corporate income tax deadlines to August 3, 2020 for filing and June 1, 2020 for payment. Since the payment deadline is sooner than the filing deadline, the Florida Department of Revenue advised corporate taxpayers to submit payments based on their best estimate of the tax that would be due with the return. Some states have also extended income tax deadlines for partnerships and other business entities and many states have extended individual income tax deadlines.
Numerous states have provided tax relief in response to the COVID-19 outbreak, often in the form of tax filing and payment deadline extensions. At this time, 40 states and Washington, D.C. have provided a corporate income tax filing and/or payment deadline extension. Some of these states have conformed to the July 15 federal corporate income tax extension date, while others have extended to an earlier or later date. Some states have also extended income tax…
States and local jurisdictions continue to grapple with novel tax issues in response to the COVID-19 outbreak. On Friday, March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), a $2 trillion federal stimulus package to provide fiscal relief in response to the COVID-19 outbreak. The CARES Act includes numerous tax relief provisions. States will need to consider whether, and how, they will conform to the federal provisions.