Phases out the franchise tax on business corporations that are manufacturers over a two-year period; defines terms "manufacturer" and "principally engaged".

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S3562-2013 Actions

• Feb 5, 2013: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

S3562-2013 Memo

BILL NUMBER:S3562

TITLE  OF BILL:  An act to amend the tax law, in relation to phasing out
the franchise tax on business corporations that are manufacturers

PURPOSE OF BILL: This bill would phase out the corporate  franchise  tax
over a two-year period on businesses which are manufacturers.

SUMMARY OF SPECIFIC PROVISIONS: Section 1- Amends section 208 of the Tax
Law  by  adding  two  new  subdivisions  20  and  21 to define the terms
"manufacturer" and "principally engaged."

Section 2 -Amends section 209 of the Tax Law by adding a new subdivision
11 to provide that (a) for any taxable year beginning on or after  Janu-
ary  1,  2014,  a manufacturer shall be exempt from 50% of the corporate
franchise tax and (b) for any taxable year beginning on or after January
1, 2015, a manufacturer shall be exempt from all of the corporate  fran-
chise tax.

Section 3 - Effective date.

JUSTIFICATION:  According to the most recent Economic Census information
from  the U S Census Bureau , in 2002 there were over 21,000 manufactur-
ers employing more than 541,000 employees in New York State.

The manufacturing industry is an important economic  engine  that  fuels
growth in the communities where manufacturers are located and throughout
the  state.  Manufacturing companies make goods which, when sold, return
wealth to the communities in which they are located.  Recent tax  incen-
tive  programs and opportunities provided by the State have been focused
on attracting new  businesses.  However,  there  are  tremendous  growth
opportunities  within the existing manufacturing base It is hence imper-
ative to implement incentives and tax reductions to continue to attract,
grow, and retain manufacturing business.

This measure would solidify New York State's commitment to its  manufac-
turers that have operated, invented, and employed workers in the State

PRIOR LEGISLATIVE HISTORY: 2011-2012 S.4172

FISCAL IMPLICATIONS: Yet to be determined.

EFFECTIVE  DATE:  This act shall take effect immediately and shall apply
to taxable years commencing on or after January 1, 2013, provided howev-
er that the commissioner  of  taxation  and  finance  is  authorized  to
promulgate any and all rules and regulations and take any other measures
necessary  for  the  timely  implementation of this act on its effective
date on or before such date.

S3562-2013 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    3562

                         2013-2014 Regular Sessions

                              I N  SENATE

                              February 5, 2013
                                 ___________

  Introduced  by  Sen.  O'MARA -- read twice and ordered printed, and when
    printed to be committed to the Committee on Investigations and Govern-
    ment Operations

  AN ACT to amend the tax law, in relation to phasing  out  the  franchise
    tax on business corporations that are manufacturers

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1. Section 208 of the tax law is amended  by  adding  two  new
  subdivisions 20 and 21 to read as follows:

    20.    THE  TERM "MANUFACTURER" SHALL MEAN A TAXPAYER WHICH DURING THE
  TAXABLE YEAR IS PRINCIPALLY ENGAGED IN THE PRODUCTION OF GOODS BY  MANU-
  FACTURING,  PROCESSING,  ASSEMBLING, REFINING, MINING, EXTRACTING, FARM-
  ING, AGRICULTURE, HORTICULTURE, FLORICULTURE, VITICULTURE OR  COMMERCIAL
  FISHING.  MOREOVER,  FOR  PURPOSES  OF  COMPUTING  THE CAPITAL BASE IN A
  COMBINED REPORT, THE GROUP SHALL  BE  CONSIDERED  A  "MANUFACTURER"  FOR
  PURPOSES  OF  THIS ARTICLE ONLY IF THE COMBINED GROUP DURING THE TAXABLE
  YEAR IS PRINCIPALLY ENGAGED IN THE ACTIVITIES SET FORTH  IN THIS  SUBDI-
  VISION, OR ANY COMBINATION THEREOF.
    21.    THE  TERM  "PRINCIPALLY  ENGAGED" SHALL INCLUDE A TAXPAYER OR A
  COMBINED GROUP IF, DURING THE TAXABLE YEAR, MORE THAN FIFTY  PERCENT  OF
  THE  GROSS RECEIPTS OF THE TAXPAYER OR COMBINED GROUP, RESPECTIVELY, ARE
  DERIVED FROM RECEIPTS FROM THE SALE OF GOODS PRODUCED BY  MANUFACTURING.
  IN  COMPUTING A COMBINED GROUP'S GROSS RECEIPTS, INTERCORPORATE RECEIPTS
  SHALL BE ELIMINATED.
    S 2. Section 209 of the tax law is amended by adding a new subdivision
  11 to read as follows:

    11. (A) FOR ANY TAXABLE YEAR BEGINNING ON OR AFTER JANUARY FIRST,  TWO
  THOUSAND FOURTEEN, A TAXPAYER WHO IS A MANUFACTURER SHALL BE EXEMPT FROM
  FIFTY PERCENT OF ALL TAXES IMPOSED BY THIS ARTICLE.

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD06767-01-3

 S. 3562                             2

    (B)  FOR  ANY  TAXABLE  YEAR  BEGINNING ON OR AFTER JANUARY FIRST, TWO
  THOUSAND FIFTEEN, A TAXPAYER WHO IS A MANUFACTURER SHALL BE EXEMPT  FROM
  ALL TAXES IMPOSED BY THIS ARTICLE.
    S 3. This act shall take effect immediately and shall apply to taxable
  years  commencing  on  or after January 1, 2013; provided, however, that
  the commissioner of taxation and finance is authorized to promulgate any
  and all rules and regulations and take any other measures necessary  for
  the timely implementation of this act on its effective date on or before
  such date.