Tag

Article 9-A

Browsing

On April 7, 2021, the New York Legislature passed the New York Budget Bill for fiscal year 2022 (S2509–C/A3009-C) (the “Enacted Budget”), ushering in a slew of tax increases for businesses and high-income earners.  As of the time of publication of this post, New York Governor Andrew Cuomo had not yet signed the Enacted Budget, but has indicated that he will do so. The Enacted Budget is the result of a months-long negotiation process that…

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”).[1] 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.