This bill has been amended

Bill S6737-2013

Establishes corporate, business franchise, personal, insurance and banking tax credits for the provision of employee federal qualified transportation fringe benefits

Establishes corporate, business franchise, personal, insurance and banking tax credits for the provision of employee federal qualified transportation fringe benefits.

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  • Mar 5, 2014: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Memo

BILL NUMBER:S6737

TITLE OF BILL: An act to amend the tax law, in relation to establishing tax credits for taxpayers which provide their employees with access to federal qualified transportation fringe benefits

PURPOSE:

To provide businesses with a tax credit as an incentive to offer their employees federal qualified transportation benefits.

SUMMARY OF PROVISIONS:

Section 1 adds a new section 41 to the tax law. This section gives filers who file under articles nine, nine-A, twenty-two, thirty-two, or thirty-three of the tax law a credit against such taxes in tax year 2014. The credit is equal to $50 for each employee who elects to participate in a qualified fringe transportation benefit program offered by the employer, as defined by section 132(f) of the Internal Revenue Code. This credit can be claimed only by an employer who establishes such a program on the tax year they claimed the credit for without having offered such a program previously. The maximum credit any tax payer can claim is $50,000. The maximum amount which can be claimed for this credit by all filers is $5 million.

Section 2 adds a new section 187-t of the tax law to establish the credit explained above in article nine of the tax law.

Section 3 amends section 210 of the tax law by adding a new subdivision 48 to establish the credit explained above in article nine-A of the tax law.

Section 4 amends subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law to establish the credit explained above to article 22 of the tax law.

Section 5 amends section 606 of the tax law by adding a new subsection (u) to add this credit to the list of credits that can be claimed under this section of the law.

Section 6 amends section 1456 of the tax law by adding a new subsection (aa) to establish the credit explained above to article thirty-two of the tax law.

Section 7 amends section 1511 of the tax law by adding a new subdivision (dd) to establish the credit explained above to article thirty-three of the tax law.

Section 8 establishes an immediate effective date.

JUSTIFICATION:

Every day over 8.9 million New Yorkers commute to work. Commuting costs can quickly add up and eat up an important chunk of an individual's annual budget. New York state is unique in the number of employees who commute using public transportation. According to the Bureau of Labor, in the 2011-2012 period the average expenditure in

transportation in the New York Metropolitan statistical region was around $8,000 a year, with the expense on mass transit being an average of $1,142.

In order to help pay for commuting expenses, federal tax law allows employers to offer a benefit that sets aside pre-taxable income with which employees can pay for eligible commuting expenses. Each year the IRS sets the limit for how much income an employee can set aside to pay for qualifying transportation expenses. For tax year 2014, employees can set aside up to $250 a month in income to pay for qualifying parking expenses related to an individual's parking expenses at work, and up to $130 a month to pay for transit expenses like paying for mass transit or commuter van service. An employee may also receive a $20 a month for qualified bicycling expenses. The income that is set aside each month is exempt from all taxation, including payroll taxes and federal, state, and local income taxes. This means that the employees tax bill is lowered by hundreds of dollars, with the specific savings determined by how much income is set aside and the income tax status of the employee. The employer also saves money, since the salary put side is exempted from the employer share of payroll taxes. Unfortunately, even though employers can save money as well, according to the Bureau of Labor survey of employee benefits only 8% of employees in the Northeast region have access to this benefit. This declines to only 3% of employers with under 100 employees offer this benefit.

Businesses provide this fringe benefit by working with third party program administrators who administrate the program. There are some minor administrative fees that employers pay, as well as paperwork to be filed in order to begin offering the benefit. While these administrative costs would be easily recouped in the vast majority of cases just from the tax benefit the employers get plus ancillary benefits such as improving employee satisfaction, they can lead to some employers choosing not to offer these benefits. The tax credit proposed is meant to give businesses an incentive to establish these programs and offer them to their employees by more than covering whatever up-front costs they would have to deal with in establishing the program. If employers in New York make full use of this credit, 100,000 workers in New York would gain access to this benefit, and see their commuting costs cut. Those businesses who establish these Programs would then reap the benefits in following years.

LEGISLATIVE HISTORY:

This is new legislation.

FISCAL IMPLICATIONS:

The credit amount to be offered is capped at $5 million. Since the benefit allows employees to deduct income set aside income used for qualified expenses from taxes, there would be an additional associated cost to the state in the form of lost income tax revenue. If the program is fully utilized, we estimate there could be a concurrent loss of $14 million in income tax revenue to the state.

EFFECTIVE DATE:

This act takes effect immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 6737 IN SENATE March 5, 2014 ___________
Introduced by Sens. CARLUCCI, KLEIN, SAVINO, VALESKY -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations AN ACT to amend the tax law, in relation to establishing tax credits for taxpayers which provide their employees with access to federal quali- fied transportation fringe benefits THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The tax law is amended by adding a new section 41 to read as follows: S 41. CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPORTA- TION FRINGE BENEFITS. (A) ALLOWANCE OF CREDIT. FOR THE TAXABLE YEAR COMMENCING ON JANUARY FIRST, TWO THOUSAND FOURTEEN, A TAXPAYER SUBJECT TO TAX UNDER ARTICLE NINE, NINE-A, TWENTY-TWO, THIRTY-TWO OR THIRTY-THREE OF THIS CHAPTER SHALL BE ALLOWED A CREDIT AGAINST SUCH TAX, PURSUANT TO THE PROVISIONS REFERENCED IN SUBDIVISION (D) OF THIS SECTION. THE CREDIT SHALL BE ALLOWED WHERE A TAXPAYER HAS ESTABLISHED AND IMPLEMENTED FEDERAL QUALIFIED TRANSPORTATION FRINGE BENEFITS FOR ITS EMPLOYEES DURING THE TAXABLE YEAR IN WHICH SUCH CREDIT IS CLAIMED, AND THE TAXPAYER HAS NOT PROVIDED SUCH BENEFITS TO ITS EMPLOYEES DURING ANY PRIOR TAXABLE YEAR. THE CREDIT SHALL BE EQUAL TO FIFTY DOLLARS FOR EACH EMPLOYEE OF THE TAXPAYER WHO ELECTED TO PARTICIPATE IN THE TAXPAYER'S FEDERAL QUALIFIED TRANSPORTATION FRINGE BENEFITS PROGRAM DURING THE TAXABLE YEAR IN WHICH SUCH PROGRAM IS ESTABLISHED BY THE TAXPAYER. THE AMOUNT OF THE CREDIT GRANTED TO ANY TAXPAYER PURSUANT TO THIS SECTION SHALL NOT EXCEED FIFTY THOUSAND DOLLARS. (B) DEFINITION. AS USED IN THIS SECTION, "FEDERAL QUALIFIED TRANSPOR- TATION FRINGE BENEFITS" MEANS A QUALIFIED FEDERAL TRANSPORTATION FRINGE BENEFITS PROGRAM ESTABLISHED AND IMPLEMENTED BY A TAXPAYER IN ACCORDANCE WITH SECTION 132(F) OF THE INTERNAL REVENUE CODE AND THE REGULATIONS ADOPTED PURSUANT THERETO. EVERY SUCH PROGRAM SHALL BE ADMINISTERED BY A THIRD PARTY PROGRAM ADMINISTRATOR. (C) CROSS REFERENCES. FOR APPLICATION OF THE CREDIT PROVIDED FOR IN THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
(1) ARTICLE 9: SECTION 187-T, (2) ARTICLE 9-A: SECTION 210, SUBDIVISION 48, (3) ARTICLE 22: SECTION 606, SUBSECTIONS (I) AND (U), (4) ARTICLE 32: SECTION 1456, SUBSECTION (AA), (5) ARTICLE 33: SECTION 1511, SUBDIVISION (DD). (D) ALLOCATION OF CREDIT. THE AGGREGATE OF TAX CREDITS ALLOWED UNDER THIS SECTION, SECTION ONE HUNDRED EIGHTY-SEVEN-T, SUBDIVISION FORTY-EIGHT OF SECTION TWO HUNDRED TEN, CLAUSE (XXXVII) OF SUBPARAGRAPH (B) OF PARAGRAPH ONE OF SUBSECTION (I) AND SUBSECTION (U) OF SECTION SIX HUNDRED SIX, SUBSECTION (AA) OF SECTION FOURTEEN HUNDRED FIFTY-SIX AND SUBDIVISION (DD) OF SECTION FIFTEEN HUNDRED ELEVEN OF THIS CHAPTER SHALL NOT EXCEED FIVE MILLION DOLLARS. S 2. The tax law is amended by adding a new section 187-t to read as follows: S 187-T. CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPOR- TATION FRINGE BENEFITS. 1. ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF THIS CHAPTER, AGAINST THE TAXES IMPOSED BY SECTIONS ONE HUNDRED EIGHTY- THREE, ONE HUNDRED EIGHTY-FOUR AND ONE HUNDRED EIGHTY-FIVE OF THIS ARTI- CLE. PROVIDED, HOWEVER, THAT THE AMOUNT OF SUCH CREDIT ALLOWABLE AGAINST THE TAX IMPOSED BY SECTION ONE HUNDRED EIGHTY-FOUR OF THIS ARTI- CLE SHALL BE THE EXCESS OF THE AMOUNT OF SUCH CREDIT OVER THE AMOUNT OF ANY CREDIT ALLOWED BY THIS SECTION AGAINST THE TAX IMPOSED BY SECTION ONE HUNDRED EIGHTY-THREE OF THIS ARTICLE. 2. APPLICATION OF CREDIT. IN NO EVENT SHALL THE CREDIT UNDER THIS SECTION BE ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE APPLICABLE MINIMUM TAX FIXED BY SECTION ONE HUNDRED EIGHT- Y-THREE OR ONE HUNDRED EIGHTY-FIVE OF THIS ARTICLE. S 3. Section 210 of the tax law is amended by adding a new subdivision 48 to read as follows: 48. CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPORTATION FRINGE BENEFITS. (A) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION SHALL NOT REDUCE THE TAX DUE TO LESS THAN THE HIGHER OF THE AMOUNTS PRESCRIBED IN PARAGRAPHS (C) AND (D) OF SUBDIVISION ONE OF THIS SECTION. S 4. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law is amended by adding a new clause (xxxvii) to read as follows: (XXXVII) CREDIT FOR PROVISION OF AMOUNT OF CREDIT UNDER SUBDIVISION EMPLOYEE FEDERAL QUALIFIED FORTY-EIGHT OF SECTION TWO HUNDRED TRANSPORTATION FRINGE BENEFITS TEN, SUBSECTION (AA) OF SECTION UNDER SUBSECTION (U) FOURTEEN HUNDRED FIFTY-SIX OR SUBDIVISION (DD) OF SECTION FIFTEEN HUNDRED ELEVEN S 5. Section 606 of the tax law is amended by adding a new subsection (u) to read as follows: (U) CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPORTATION FRINGE BENEFITS. ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. S 6. Section 1456 of the tax law is amended by adding a new subsection (aa) to read as follows: (AA) CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPORTATION FRINGE BENEFITS. (1) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED A
CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. (2) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBSECTION SHALL NOT REDUCE THE TAX DUE TO LESS THAN THE MINIMUM TAX FIXED BY SUBSECTION (B) OF SECTION FOURTEEN HUNDRED FIFTY-FIVE OF THIS ARTICLE. S 7. Section 1511 of the tax law is amended by adding a new subdivi- sion (dd) to read as follows: (DD) CREDIT FOR PROVISION OF EMPLOYEE FEDERAL QUALIFIED TRANSPORTATION FRINGE BENEFITS. (1) ALLOWANCE OF CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION FORTY-ONE OF THIS CHAPTER, AGAINST THE TAXES IMPOSED BY THIS ARTICLE. (2) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION SHALL NOT REDUCE THE TAX DUE TO LESS THAN THE MINIMUM TAX FIXED BY PARA- GRAPH FOUR OF SUBDIVISION (A) OF SECTION FIFTEEN HUNDRED TWO OF THIS ARTICLE OR BY SECTION FIFTEEN HUNDRED TWO-A OF THIS ARTICLE, WHICHEVER IS APPLICABLE. S 8. This act shall take effect immediately.

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