The Department has formally proposed regulations corresponding to the sweeping reform of New York state’s corporate tax framework as a result of Part A of Chapter 59 of the Laws of 2014 (hereinafter referred to as the Proposed Regulations). The Notice of Proposed Rulemaking and the Department’s summary can be viewed in the August 9, 2023 issue of the New York State Register. The Proposed Regulations follow a series of draft versions of the regulations shared by the Department over the past several years, and like all of the draft versions, the Proposed Regulations include numerous substantive changes.
This alert provides a brief explanation of New York’s rulemaking process and summarizes the most noteworthy substantive updates in the Proposed Regulations. We encourage all New York corporate taxpayers that may be impacted by these changes to contact us directly to discuss how the Proposed Regulations may affect their New York corporate tax reporting.
Background on New York’s rulemaking process
On August 9, 2023, the Department published the Proposed Regulations in the New York State Register, seeking to repeal and wholly replace 20 NYCRR Chapter 1, Subchapter A, the Business Corporation Franchise Tax, Parts 1 through 9. The Proposed Regulations are the culmination of an almost decade-long rewrite of the corporate franchise tax regulations following the comprehensive corporate tax law changes enacted as part of the 2014 corporate tax reform. Since drafting began in 2015, the Department has released over 40 draft versions of the regulations. Since the first draft was released, we have participated in countless meetings with the Department, the New York State Bar Association, and taxpayers alike to contemplate the impact, legality, and administrability of each such version.
The clock is now running on a 60-day public comment period, expiring October 10, 2023, after which the Proposed Regulations may be formally adopted. However, adoption is not automatic after the 60-day comment period. Based on an assessment of public comments, the Department could further revise the Proposed Regulations. Any substantial revisions would require the Department to submit a Notice of Revised Rule Making and extend the public comment period. Accordingly, the tax community is strongly encouraged to use this time to provide any additional comments to the Proposed Regulations.