Bill S4890-2011

Relates to the taxation of certain banking corporations

Relates to transitional provisions regarding the Gramm-Leach-Bliley act.

Details

Actions

  • Jan 4, 2012: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • Jun 24, 2011: COMMITTED TO RULES
  • Jun 14, 2011: ADVANCED TO THIRD READING
  • Jun 13, 2011: 2ND REPORT CAL.
  • Jun 7, 2011: 1ST REPORT CAL.1120
  • Apr 28, 2011: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Meetings

Votes

VOTE: COMMITTEE VOTE: - Investigations and Government Operations - Jun 7, 2011
Ayes (5): Marcellino, Alesi, Golden, Nozzolio, Diaz
Ayes W/R (3): Zeldin, Squadron, Peralta

Memo

BILL NUMBER:S4890

TITLE OF BILL: An act to amend the tax law and the administrative code of the city of New York, in relation to the taxation of certain banking corporations

PURPOSE OR GENERAL IDEA OF BILL: This bill extends for two additional years the provisions of the New York State and New York City bank taxes dealing with the taxation of banks and other financial services firms and the transitional provisions concerning the enactment and implementation of the Federal Gramm-Leach-Bliley Act (GLBA).

SUMMARY OF SPECIFIC PROVISIONS: These provisions state, among other things, that a corporation required to be taxable, or electing to be taxable as a banking corporation under the transitional provisions shall continue to he taxable as such for those taxable years in which the corporation still meets the definition of a banking corporation, or satisfies the requirements allowing it to elect to be taxed as a banking corporation.

JUSTIFICATION: Starting in 2000, transitional provisions relating to the Federal GLBA, which removed the prohibition against the affiliation of banks, securities firms and insurance companies, were added to both the Tax Law and the New York City Administrative Code. These transitional provisions were intended to provide banks and securities firms with some certainty about their taxable status under the New York State and New York City taxes when and if the firms exercised the expanded powers provided at the Federal level.

The provisions first enacted in 1985, as they relate to the taxation of commercial banks, have been effective in accomplishing their legislative goals. They have been extended many times without change. However, because these provisions have been extended, without change, for over 20 years, during that time some unintended consequences have occurred. Consequently, this extension is modeled to alleviate these unintended consequences, while still providing companies the certainty they need.

For the last decade, New York has been routinely extending, for two years at a time, provisions within New York's tax code to address the Federal Gramm Leach,-Bliley statute. A part of that bi-annual legislation requires that a company's tax status from 1999 (the year before Gramm-Leach-Bliley was enacted): "is and will continue to be" the company's tax status going forward.

Since then, however, some companies' status may have changed. For instance, companies previously 65% of more owned by a regulated bank may no longer be under such legal ownership and by extending Gramm-Leach-Bliley it statutorily locks in these companies now inappropriate classification as a bank. Ironically, if these provisions were allowed to sunset, such companies

would not need any clarification - they would automatically be appropriately classified as an Article 9-A corporation.

An important variable in a company's long-term planning and growth strategy is clarity and certainty in tax laws. This legislation very simply and directly clarifies, in law, that companies be taxed equitably and the same as competitors.

PRIOR LEGISLATIVE HISTORY: None.

FISCAL IMPLICATIONS: None to State.

EFFECTIVE DATE: Immediately, for taxable years starting on January 1, 2011.


Text

STATE OF NEW YORK ________________________________________________________________________ 4890 2011-2012 Regular Sessions IN SENATE April 28, 2011 ___________
Introduced by Sen. GOLDEN -- 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 and the administrative code of the city of New York, in relation to the taxation of certain banking corporations THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph 1 of subsection (m) of section 1452 of the tax law, as amended by section 4 of part J of chapter 61 of the laws of 2011, is amended to read as follows: (1) Notwithstanding anything to the contrary contained in this section other than subsection (n) of this section, a corporation that was in existence before January first, two thousand eleven and was subject to tax under article nine-A of this chapter for its last taxable year beginning before January first, two thousand eleven, shall continue to be taxable under such article for all taxable years beginning on or after January first, two thousand eleven and before January first, two thousand thirteen. The preceding sentence shall not apply to any taxable year during which such corporation is a banking corporation described in paragraphs one through eight of subsection (a) of this section. Notwithstanding anything to the contrary contained in this section other than subsection (n) of this section, a banking corporation or corpo- ration that was in existence before January first, two thousand eleven and was subject to tax under this article for its last taxable year beginning before January first, two thousand eleven, shall continue to be taxable under this article for all taxable years beginning on or after January first, two thousand eleven and before January first, two thousand thirteen [or in which] ONLY IF THE CORPORATION IS A BANKING CORPORATION AS DEFINED IN SUBSECTION (A) OF THIS SECTION OR the corpo- ration satisfies the requirements for a corporation to elect to be taxa- ble under this article. Provided further, that nothing in this
subsection shall prohibit a corporation that elected pursuant to subsection (d) of this section to be taxable under article nine-A of this chapter from revoking that election in accordance with such subsection (d). For purposes of this paragraph, a corporation shall be considered to be subject to tax under article nine-A of this chapter for a taxable year if such corporation was not a taxpayer but was properly included in a combined report filed pursuant to section two hundred eleven of this chapter for such taxable year and a corporation shall be considered to be subject to tax under this article for a taxable year if such corpo- ration was not a taxpayer but was properly included in a combined return filed pursuant to subsection (f) or (g) of section fourteen hundred sixty-two of this article for such taxable year. A corporation that was in existence before January first, two thousand eleven but first becomes a taxpayer in a taxable year beginning on or after January first, two thousand eleven and before January first, two thousand thirteen, shall be considered for purposes of this paragraph to have been subject to tax under article nine-A of this chapter for its last taxable year beginning before January first, two thousand eleven if such corporation would have been subject to tax under such article for such taxable year if it had been a taxpayer during such taxable year. A corporation that was in existence before January first, two thousand eleven but first becomes a taxpayer in a taxable year beginning on or after January first, two thousand eleven and before January first, two thousand thirteen, shall be considered for purposes of this paragraph to have been subject to tax under this article for its last taxable year beginning before January first, two thousand eleven if such corporation would have been subject to tax under this article for such taxable year if it had been a taxpay- er during such taxable year. S 2. Paragraph 1 of subdivision (l) of section 11-640 of the adminis- trative code of the city of New York, as amended by section 5 of part J of chapter 61 of the laws of 2011, is amended to read as follows: (1) Notwithstanding anything to the contrary contained in this section other than subdivision (m) of this section, a corporation that was in existence before January first, two thousand eleven and was subject to tax under subchapter two of this chapter for its last taxable year beginning before January first, two thousand eleven, shall continue to be taxable under such subchapter for all taxable years beginning on or after January first, two thousand eleven and before January first, two thousand thirteen. The preceding sentence shall not apply to any taxable year during which such corporation is a banking corporation described in paragraphs one through eight of subdivision (a) of this section. Notwithstanding anything to the contrary contained in this section other than subdivision (m) of this section, a banking corporation or corpo- ration that was in existence before January first, two thousand eleven and was subject to tax under this subchapter for its last taxable year beginning before January first, two thousand eleven, shall continue to be taxable under this subchapter for all taxable years beginning on or after January first, two thousand eleven and before January first, two thousand thirteen [or in which] ONLY IF THE CORPORATION IS A BANKING CORPORATION AS DEFINED IN SUBDIVISION (A) OF THIS SECTION OR the corpo- ration satisfies the requirements for a corporation to elect to be taxa- ble under this subchapter. Provided further, that nothing in this subdi- vision shall prohibit a corporation that elected pursuant to subdivision (d) of this section to be taxable under subchapter two of this chapter from revoking that election in accordance with subdivision (d) of this
section. For purposes of this paragraph, a corporation shall be consid- ered to be subject to tax under subchapter two of this chapter for a taxable year if such corporation was not a taxpayer but was properly included in a combined report filed pursuant to subdivision four of section 11-605 of this chapter for such taxable year and a corporation shall be considered to be subject to tax under this subchapter for a taxable year if such corporation was not a taxpayer but was properly included in a combined report filed pursuant to subdivision (f) or (g) of section 11-646 of this part for such taxable year. A corporation that was in existence before January first, two thousand eleven but first becomes a taxpayer in a taxable year beginning on or after January first, two thousand eleven and before January first, two thousand thir- teen, shall be considered for purposes of this paragraph to have been subject to tax under subchapter two of this chapter for its last taxable year beginning before January first, two thousand eleven if such corpo- ration would have been subject to tax under such subchapter for such taxable year if it had been a taxpayer during such taxable year. A corporation that was in existence before January first, two thousand eleven but first becomes a taxpayer in a taxable year beginning on or after January first, two thousand eleven and before January first, two thousand thirteen, shall be considered for purposes of this paragraph to have been subject to tax under this subchapter for its last taxable year beginning before January first, two thousand eleven if such corporation would have been subject to tax under this subchapter for such taxable year if it had been a taxpayer during such taxable year. S 3. This act shall take effect immediately.

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