The New York Division of Tax Appeals determined that the taxpayer’s sale of a document management services was a taxable sale of software. While the taxpayer argued that its service was a nontaxable, cloud-based platform-as-a-service, the ALJ disagreed. Instead, the ALJ concluded that the taxpayer’s software was the “core element” of the platform, and customers
New York
Round two: New York upholds the convenience of the employer rule
The Tax Appeals Tribunal upheld an ALJ’s determination that a taxpayer’s wages earned from working remotely in Connecticut were sourced to New York and subject to tax. For decades, New York has adopted the convenience of the employer test (Rule), which deems a nonresident who teleworks outside the state to be working at its employer’s…
Under construction: NY Court allows Site Safety services to bypass Tribunal
The New York Appellate Division, Third Department recently held that a group of taxpayer-plaintiffs were not required to exhaust administrative remedies before commencing an action to declare their services were exempt from sales tax, even though they had not challenged their audit determinations before the New York State Tax Appeals Tribunal.
Ordinarily, taxpayers in New…
NY Tax Talk: Sourcing, retroactivity, information services
The last four months were active in New York tax law. In addition to numerous legislative proposals, decisions were issued in multiple court cases.
In this installment of NY Tax Talk, a quarterly column in Law360 focused on recent developments in New York tax law, Eversheds Sutherland attorneys Liz Cha and Chelsea Marmor discuss select…
New York Tax Appeals Tribunal upholds DTA ruling on deferred fees and appreciation allocation
The New York Tax Appeals Tribunal affirmed a Division of Tax Appeals (DTA) ruling, holding that deferred compensation earned by a partnership should be allocated to New York based on the business allocation percentage (BAP) from the year in which the services were performed, rather than the year in which the deferred income was recognized.…
Legal Alert: New York State releases Fiscal Year 2026 Executive Budget
On January 21, 2025, New York Governor Hochul released her Fiscal Year 2026 Executive Budget and accompanying legislation (the Budget Bill). The Budget Bill includes a middle-class tax cut, a temporary personal income tax high income surcharge extension, and addresses a number of new and existing credits. It does not contain any new taxes or…
New York State proposes changes to GILTI
On January 8, 2025, a group of New York State Senators introduced S953, which proposes to increase the gross amount of GILTI under IRC § 951A included in the New York State business income base from 5% to 50%. This increase to corporations’ tax base is done by reducing the amount of GILTI excluded…
New York Tax Appeals Tribunal denies sale treatment to oil swaps
On November 18, 2024, the New York Tax Appeals Tribunal (TAT) determined that Sunoco, Inc. (R&M) Combined Affiliates (Sunoco) was not entitled to include receipts from buy/sell agreements in its New York receipts factor because they were derived from inventory exchanges, not bona fide sales for monetary consideration.
Sunoco refined and marketed oil, and entered…
A long goodbye: New York taxes severance package received a year after taxpayer’s relocation to Hawaii
The New York Division of Tax Appeals (DTA) held that a taxpayer’s employment severance payment received over a year after her relocation out of the state was allocable to New York for personal income tax purposes.
The taxpayer worked for a school in New York for 11 years before going on sabbatical leave and moving…
NY Tax Talk: Questions in corporate franchise tax regs case
The first challenge to New York’s corporate franchise tax regulations is already in high gear: Paychex Inc. v. Department of Taxation and Finance. Although New York’s corporate tax reform took effect January 1, 2015, it took the department almost a decade to adopt the regulations. For many years, the draft regulations received comments and…