ON April 3, 2020, Governor Andrew M. Cuomo signed into law the New York State 2020/21 Budget, which contains several key tax measures related to the impact of the coronavirus (COVID-19) pandemic.
Decoupling from Recent Tax Legislation
One of the major provisions in the budget includes decoupling from the Internal Revenue Code (IRC) changes made by the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. Specifically, New York is decoupling from an increase to the limitation on the business interest deduction contained in IRC section 163(j)(10)(A)(i) and from personal income tax changes to the IRC enacted after March 1, 2020, for taxable years beginning before 2022.
New York State 2020/21 Legislative Changes
Long-term insurance credit.
For tax years beginning on or after January 1, 2020, the long-term care insurance credit amount has been reduced to $1,500. Only taxpayers with a New York adjusted gross income (AGI) of less than $250,000 are eligible.
Excelsior Jobs Program.
A new category has been added to the Excelsior Jobs Program for “green” projects, as defined. The refundable credits provide a higher benefit for qualifying green projects:
- The Excelsior Jobs credit is available up to 7.5%, instead of 6.85% of gross wages paid per new job.
- The investment credit is equal to 5%, instead of 2% of the cost or other basis for federal income tax purposes of the qualifying investment.
- The research and development credit on qualifying expenditures attributable to activities conducted in New York is 8%, instead of 6%.
Financial institution data match program.
The financial institution data match program for state tax collection purposes has been extended to April 1, 2025 (formerly April 1, 2020). These limitations are effective immediately and apply to taxable years beginning on or after January 1, 2020.
Service of income executions with respect to individual income tax debtors without filing a warrant.
The Department of Taxation and Finance’s (DTF) ability to serve an income execution with respect to individual income tax debtors without filing a warrant has been extended to April 1, 2025 (formerly April 1, 2020).
Earned income credit.
If the DTF determines that a taxpayer is eligible to receive New York’s earned income credit and has not claimed the credit, the DTF shall compute the taxpayer’s tax liability utilizing the credit and refund the amount of the allowable credit.
If the DTF determines that a taxpayer has elected to itemize his deductions, but the standard deduction produces a lower tax liability, the DTF shall compute the taxpayer’s tax liability utilizing the standard deduction and notify the taxpayer.
New York City 2020/21 Legislative Changes
New York City.
The DOF announced that it will waive penalties for DOF-administered business and excise taxes due this spring as a result of the pandemic. Taxpayers and return preparers affected by the pandemic may request to have the penalties waived on a late-filed extension or return, or in a separate request, for taxes due between March 16 and April 25, 2020.
The DOF also announced that the deadline for filing Form NYC-1127 (return for nonresident employees of the City of New York hired on or after January 1973) has been extended to July 30, 2020, in response to the pandemic.
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By Corey L. Rosenthal