Bill S7728-2011

Establishes a beer production tax credit for beer produced within the state by a taxpayer that is registered as a distributor; repealer

Establishes a beer production tax credit for beer produced within the state by a taxpayer that is registered as a distributor.

Details

Actions

  • Jul 18, 2012: SIGNED CHAP.109
  • Jul 17, 2012: DELIVERED TO GOVERNOR
  • Jun 19, 2012: returned to senate
  • Jun 19, 2012: passed assembly
  • Jun 19, 2012: ordered to third reading rules cal.375
  • Jun 19, 2012: substituted for a10695
  • Jun 18, 2012: referred to ways and means
  • Jun 18, 2012: DELIVERED TO ASSEMBLY
  • Jun 18, 2012: PASSED SENATE
  • Jun 18, 2012: ORDERED TO THIRD READING CAL.1300
  • Jun 15, 2012: REFERRED TO RULES

Votes

Memo

BILL NUMBER:S7728

TITLE OF BILL:

An act to amend the tax law, in relation to establishing a credit under articles 9-A and 22 of such law for beer produced within the state by a taxpayer that is registered as a distributor under article 18 of the tax law; to amend the alcoholic beverage control law, in relation to the exemption from the beer label registration fee; and to repeal subdivision 6 of section 424 of the tax law, relating to the exemption for beer produced and sold within the state by certain distributors under article 18 of the tax law

PURPOSE:

This bill would encourage the growth of so-called "craft breweries" and small breweries in New York and would create an incentive for brewers located outside New York to build production facilities and create jobs within the State.

SUMMARY OF PROVISIONS:

Sections 1 through 4 of the bill would provide refundable corporate franchise and personal income tax credits for beer produced within the State by registered distributors that produce 60 million or fewer gallons of beer in a taxable year. For the first 500,000 gallons of beer so produced, the amount of the credit would be 14 cents per gallon. For each gallon of beer produced in New York in the taxable year in excess of 500,000 gallons, the credit would be four and one-half cents per gallon. No credit would be allowed for any beer produced in excess of 15.5 million gallons in the taxable year. If the amount of the credit exceeds the taxpayer's tax for the year, the excess credit would be credited or refunded to the taxpayer.

Section 5 of the bill would repeal the excise tax exemption in Tax Law section 424(6) for beer brewed and sold in New York State by certain brewers.

Section 6 of the bill would amend the exemption from the beer label registration fee in ABC Law § 107-a(4)(g). As amended, the exemption would apply to beer produced in small batches by both in-state and outof-state brewers.

Section 7 of the bill provides the effective date.

EXISTING LAW:

Until recently, Tax Law § 424(6) exempted from the excise tax on alcoholic beverages, the first 200,000 barrels of beer brewed in New York, and then sold or used in New York by a distributor who is also a brewer and whose principal executive office is located in New York. This

exemption also applied to New York City's alcoholic beverage tax. On March 28, 2012, this exemption was declared unconstitutional in Shelton v. NYS Liquor Authority and NYS Department of Taxation and Finance as was ABC Law section 107-a(4)(g), which exempted all beer produced in small batches in New York State from the beer label registration fee which is $150 per brand label.

STATEMENT IN SUPPORT:

This bill would replace the State excise tax exemption (but not the New York City excise tax exemption) with a refundable credit under the corporate franchise and personal income taxes. A registered distributor that produces 60 million or fewer gallons of beer in New York would be allowed a tax credit of 14 cents per gallon (the current excise tax rate on beer) for the first 500,000 gallons of beer produced, and 4.5 cents per gallon on the remaining gallons, up to the cap of 15.5 million gallons. Unlike the former excise tax exemption, this bill would not restrict the credit to gallons produced by New York State brewers.

This bill would also extend the exemption from the beer label registration fee to all beer produced in batches of 1,500 barrels or less, regardless of where produced, to avoid discriminating against beer produced outside of New York. The exemption is particularly important to craft brewers, many of whom produce many artisanal brands in small quantities each year.

BUDGET IMPLICATIONS:

This bill is not expected to have a significant impact on the State's budget.

EFFECTIVE DATE:

This bill would take effect immediately and apply to taxable years beginning on or after January 1,2012; provided, however, that Sections 5 and 6 shall be deemed to have been in full force and effect as of March 28, 2012.


Text

STATE OF NEW YORK ________________________________________________________________________ S. 7728 A. 10695 S E N A T E - A S S E M B L Y June 15, 2012 ___________
IN SENATE -- Introduced by Sens. ZELDIN, GRIFFO, SEWARD, YOUNG, ROBACH, NOZZOLIO -- (at request of the Governor) -- read twice and ordered printed, and when printed to be committed to the Committee on Rules IN ASSEMBLY -- Introduced by COMMITTEE ON RULES -- (at request of M. of A. Brindisi, Lentol, Barrett, Bronson, Cymbrowitz, Gabryszak, Lifton, Lupardo, Magee, Millman, Morelle, Roberts, Russell, Schimminger, Skar- tados, Zebrowski) -- (at request of the Governor) -- read once and referred to the Committee on Ways and Means AN ACT to amend the tax law, in relation to establishing a credit under articles 9-A and 22 of such law for beer produced within the state by a taxpayer that is registered as a distributor under article 18 of the tax law; to amend the alcoholic beverage control law, in relation to the exemption from the beer label registration fee; and to repeal subdivision 6 of section 424 of the tax law, relating to the exemption for beer produced and sold within the state by certain distributors under article 18 of the tax law 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 37 to read as follows: S 37. BEER PRODUCTION CREDIT. (A) GENERAL. A TAXPAYER SUBJECT TO TAX UNDER ARTICLE NINE-A OR TWENTY-TWO OF THIS CHAPTER, THAT IS REGISTERED AS A DISTRIBUTOR UNDER ARTICLE EIGHTEEN OF THIS CHAPTER, AND THAT PRODUCES SIXTY MILLION OR FEWER GALLONS OF BEER IN THIS STATE IN THE TAXABLE YEAR, SHALL BE ALLOWED A CREDIT AGAINST SUCH TAXES IN THE AMOUNT SPECIFIED IN SUBDIVISION (B) OF THIS SECTION AND PURSUANT TO THE PROVISIONS REFERENCED IN SUBDIVISION (C) OF THIS SECTION. PROVIDED, HOWEVER, THAT NO CREDIT SHALL BE ALLOWED FOR ANY BEER PRODUCED IN EXCESS OF FIFTEEN MILLION FIVE HUNDRED THOUSAND GALLONS IN THE TAXABLE YEAR. IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP OR SHAREHOLDER OF A NEW YORK S CORPORATION, THEN THE CAP IMPOSED BY THE PRECEDING SENTENCE SHALL BE APPLIED AT THE ENTITY LEVEL, SO THAT THE AGGREGATE CREDIT ALLOWED TO ALL
THE PARTNERS OR SHAREHOLDERS OF EACH SUCH ENTITY IN THE TAXABLE YEAR DOES NOT EXCEED THAT CAP. (B) THE AMOUNT OF THE CREDIT PER TAXPAYER PER TAXABLE YEAR (OR PRO RATA SHARE OF EARNED CREDIT IN THE CASE OF A PARTNERSHIP) FOR EACH GALLON OF BEER PRODUCED IN THIS STATE ON OR AFTER APRIL FIRST, TWO THOU- SAND TWELVE SHALL BE DETERMINED AS FOLLOWS: (1) FOR THE FIRST FIVE HUNDRED THOUSAND GALLONS OF BEER PRODUCED IN THIS STATE IN THE TAXABLE YEAR, THE CREDIT SHALL EQUAL FOURTEEN CENTS PER GALLON; AND (2) FOR EACH GALLON OF BEER PRODUCED IN THIS STATE IN THE TAXABLE YEAR IN EXCESS OF FIVE HUNDRED THOUSAND GALLONS, THE CREDIT SHALL EQUAL FOUR AND ONE-HALF CENTS PER GALLON. (C) CROSS-REFERENCES. FOR APPLICATION OF THE CREDIT PROVIDED FOR IN THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER: (1) ARTICLE 9-A: SECTION 210, SUBDIVISION 45. (2) ARTICLE 22: SECTION 606, SUBSECTIONS (I) AND (UU). S 2. Section 210 of the tax law is amended by adding a new subdivision 45 to read as follows: 45. BEER PRODUCTION CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION THIRTY-SEVEN OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. IN NO EVENT SHALL THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORD- ANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law is amended by adding a new clause (xxxiv) to read as follows: (XXXIV) BEER PRODUCTION CREDIT AMOUNT OF CREDIT UNDER SUBDIVISION UNDER SUBSECTION (UU) SUBDIVISION FORTY-FIVE OF SECTION TWO HUNDRED TEN S 4. Section 606 of the tax law is amended by adding a new subsection (uu) to read as follows: (UU) BEER PRODUCTION CREDIT. A TAXPAYER SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS PROVIDED IN SECTION THIRTY-SEVEN OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTICLE. IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON. S 5. Subdivision 6 of section 424 of the tax law is REPEALED. S 6. Paragraph (g) of subdivision 4 of section 107-a of the alcoholic beverage control law, as amended by chapter 535 of the laws of 2005, is amended to read as follows: (g) The authority shall exempt from such fee provisions the registra- tion of each brand label used for beer that is produced in small size batches [on the licensed premises in batches] totaling fifteen hundred barrels of beer or less annually.
S 7. This act shall take effect immediately, and shall apply to taxa- ble years beginning on or after January 1, 2012; provided, however that sections five and six of this act shall be deemed to have been in full force and effect on and after March 28, 2012.

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