2023 was another busy year for New York taxes.  Highlights included: a Budget with new appeal rights for the Tax Department, enhanced disaster relief, and important—but narrow—tax increases; final and adopted regulations, tracking updates and various changes brought about by New York’s 2014 corporate tax reform; continued pressure on the allocation of wage income from remote work and a recent nonresident wage allocation decision; new tools on the New York Tax Department’s website for taxpayers and tax practitioners; and numerous other updates.

If you’ve been too busy to catch up with the New York State highlights, or you want to see the trickle of 2023 New York tax developments dammed into one reservoir, this article provides one-stop access to many of the key 2023 New York tax changes as we head to 2024.

2023–2024 Budget Bill^[1]

New York State’s Fiscal Year 2023–2024 Budget, signed into law on May 3, 2023 (more than one month past the Budget’s April 1 deadline), was impactful.  Here are some of the Budget highlights:

The Department of Taxation and Finance now has the right to appeal certain tax appeals tribunal decisions. Taxpayers have always had the right to appeal adverse Tribunal decisions; but until now, the Tax Department was not permitted appeal rights. The Budget, under Part V, allows the Tax Department to appeal Tax Appeals Tribunal decisions by petitioning the Appellate Division of the Supreme Court, Third Department. For the Tax Department to appeal a decision, however, the judicial review must be “premised on interpretation of the state or federal constitution, international law, federal law, the law of other states, or other legal matters that are beyond the purview of the state legislature.” When the Tax Department petitions for judicial review, the accrual of any interest and penalty that would otherwise continue to accrue is paused until 15 days after the issuance of a judicial decision that is not appealable.

Corporate tax rate extensions. Part I of the Budget extends the temporary 7.25% business income tax rate through tax year 2026 for corporate taxpayers with business income bases more than $5 million, and it also extends the temporary 0.1875% capital base tax rate through 2026.  The business income tax rate increase and the capital base tax increase were scheduled to sunset at the end of 2023.

Disaster relief. The Budget gives the Commissioner of the Tax Department the discretion to award disaster relief to taxpayers on multiple fronts. In Part A, the Budget expands the Commissioner’s authority to provide relief to taxpayers affected by a presidentially declared disaster or by a disaster emergency declared by the Governor, allowing the Commissioner to abate any interest that accrued in a period during which taxpayers were unable to meet a tax deadline due to impacts of the disasters, regardless of whether the filing deadline was extended.  Prior to the Budget, if the filing deadline was not extended, the Tax Department could only abate penalties in this situation, but not interest. Further, Part E of the Budget allows the Commissioner to abate the penalty for a corporation’s underpayment of estimated tax, where the corporation was impacted by casualty, disaster, or other unusual circumstances and “the imposition of such addition to tax would be against equity and good conscience.” This provision creates parity in this respect between the corporate and personal income tax underpayment penalties.

Real estate investment taxes (REITs). The Budget, pursuant to Part U, extends reduced rates for conveyances to REITs under the New York State real estate transfer tax and the New York City real property transfer tax until September 1, 2026.

False Claims Act. Part DD of the Budget amends the New York False Claims Act to permit actions in cases where the taxpayer is alleged to have “knowingly concealed or knowingly and improperly avoided an obligation to pay taxes to the state or local government.” The expansion of the New York False Claims Act took effect immediately and in “any pending case” applies to any tax obligations knowingly concealed or knowingly avoided on or after the effective date. For actions filed after the effective date, the new provision only applies to tax obligations knowingly concealed or avoided on or after May 1, 2020. This provision is intended to close a perceived loophole that arguably avoided whistleblower complaints when no tax return was filed by the taxpayer, thus there was no “false statement” by the taxpayer upon which a whistleblower complaint might be premised.

MTA corporate tax surcharge. At Part GG, the Budget establishes the rate of the Metropolitan Transportation Authority (MTA) surcharge on corporate franchise tax liability as 30% of the state tax paid on income corporations earn within the Metropolitan Commuter Transportation District (MCTD).

MCT mobility tax (MCTMT) applicability. The MCTMT has been a tax imposed on certain employers and self-employed individuals engaging in business within the MCTD, a transportation district that includes the counties of New York, Bronx, Kings, Queens, Richmond, Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester. Prior to the Budget, the MCTMT applied to employers paying wages to employees working in the MCTD and to self-employed individuals (including non-limited partners) with net earnings from self-employment within the MCTD that exceed $50,000.

In Part B, the Budget amends the definition of “net earnings from self-employment” in the New York Tax Law so that limited partners who are actively engaged in the operations of their partnerships are now deemed to have net earnings from self-employment subject to the MCTMT. Prior to the Budget, the definition of net earnings from self-employment relied on the Internal Revenue Code (IRC) definition, which excluded amounts earned by limited partners.  The language of the Budget’s amendment states, “an individual shall not be considered a limited partner if the individual, directly or indirectly, takes part in the control, or participates in the management or operations of the partnership such that the individual is not a passive investor, regardless of the individual’s title or characterization in a partnership or operating agreement.”  This change took effect immediately, which raised the specter of retroactive application. But since the provision is a change in pre-existing law, the retroactive application of it would be considered by many as a Due Process violation.

MCTMT Rate. A Budget-related enactment increased the top MCTMT rate from 0.34% to 0.60% for employers with quarterly payrolls over $437,500 in the counties of Bronx, Kings, New York, Queens, and Richmond (effective July 1, 2023). For taxpayers with MCTD-source earnings from self-employment, the MCTMT rate increased from 0.34% to 0.47% for the 2023 tax year, and to 0.60% for the 2024 tax year, for MCTD income attributable to the counties of Bronx, Kings, New York, Queens, and Richmond. After this adjustment, there are now different rates of tax depending on where in the MCTD the business is located.

Pass-Through Entity Tax. The Budget, in Part J, amends the State Pass-Through Entity Tax (PTET) and the City PTET.  The definitions of “pass-through entity taxable income” and “city pass-through entity taxable income” in Tax Law §§ 860(h) and 867(b) are amended to require entities to exclude deductions for PTET taxes paid when computing their state and city PTET incomes. This change corrects an unintended “circular” mathematical computation requiring entities to deduct PTET taxes from their PTET income that forms the basis for the PTET tax being deducted. In addition, the Budget amends the definition of “city taxpayer” to correct the unintentional omission of city resident trusts and estates from participating in the NYC PTET.  Part J also clarified when an entity must elect into/revoke their election into the PTET and NYC PTET.

NYC Recovery Incentives. In another Budget-related bill (S.4005-C/A.3005-C, Part AA), various property and sales tax incentives in New York City would be extended, including the Lower Manhattan sales and use tax exemption for furnishing commercial office space, the Energy Cost Savings Program Credit, the Lower Manhattan Energy Program, the Commercial Expansion Program, and the Commercial Revitalization Program (including the Commercial Rent Tax Special Reduction).

Credits: Similar to the 2022–2023 Budget, the 2023–2024 Budget offered substantial modifications to various New York tax credits, including:

• New York City Musical and Theatrical Production Tax Credit. Part I of the Budget extended the New York City Musical and Theatrical Production Tax Credit through tax year 2027 and established a $350,000 maximum credit amount for each “qualified New York city musical and theatrical production in a Level Two qualified New York City production facility.” The Budget defines a Level Two qualified New York City production facility to be facilities located in Manhattan that meet certain amenity and income specifications.
  
• Film Production Tax Credit. The Budget amended the Film Production Tax Credit at Part D. The Budget increased the Film Production Tax Credit rate to 30%, increased the annual credit cap to $700 million, extended the program’s duration to 2034, and allowed an additional credit for non-wage production costs, among other modifications.
  
• Investment Tax Credit. Part C of the Budget amends the Investment Tax Credit to make it refundable for eligible farmers through tax year 2027.
  
• Brownfield Tax Credit. After an extension and major updates to New York’s Brownfield Tax Credit program in the 2022–2023 Budget,[2] Part J of the 2023–2024 Budget and Part HHH of a different enactment (2023 NY Laws Ch. 58) expanded the period in which the Brownfield Tax Credit can be claimed for certain projects, based on the location of the project and when the taxpayer purchased the project site.
  
• Child Care Creation and Expansion Tax Credit Program Act. In Part G, the Budget creates the Child Care Creation and Expansion Tax Credit Program Act for businesses creating or expanding their childcare capacity for the children of their employees, whether directly or via a third party. Businesses that meet the eligibility requirements may claim a credit equal to 20% of the costs of creating or expanding their program’s available infant and toddler seats, capped at 25 seats. The aggregate amount of credit that a business may claim is $25 million each year, from 2023 through 2025, to be allocated on a pro rata basis.
  
• Potential for a New York City Biotechnology Credit. Part H of the Budget allows New York City to adopt a biotechnology credit for tax years 2023 through 2026.  Governor Hochul’s original budget proposal allowed the credit to be claimed under the New York City general corporation tax, unincorporated business tax, and banking corporation tax.  The Budget, however, limits the credit to the New York City general corporation tax and the unincorporated business tax.
  
• Repealed Corporate Franchise Tax credit transfers. The Budget, under Part EE, repealed a provision of the New York Corporate Franchise Tax that previously allowed for the transfer of unused investment tax credits in “qualified transactions” (i.e., IRC §§ 351/355 reorganizations).
  
• Other Notable Credit Adjustments. Additionally, the Budget extended or slightly modified the following credits: the COVID-19 Capital Costs Tax Credit Program (Part F); the Rehabilitation of Historic Properties Tax Credit (Part I); the Empire State Commercial Production Tax Credit (Part I); and the No. 6 Heating Oil Conversion Tax Credit (Part I).

Several other adjustments and changes to the New York Tax Law and New York tax landscape were raised in the Budget negotiation and consideration process, but ultimately did not make the final signed bill. These provisions included an amendment making federal S corporations taxable as New York S corporations (with minor exceptions). This potential amendment requiring New York S corporation conformity seems to come up every year, but so far it has not made it through. There were also proposals to increase New York’s personal income tax rates for high-income earners (including raising rates to 10.8% for income levels between $5 million and $25 million and raising rates to 11.4% for income levels over $25 million), but Governor Hochul was vocally opposed to these increased rates, and they did not pass. A new sales tax on streaming entertainment and digital products was also proposed but did not pass amid concerns regarding the proposal’s constitutionality and legality.

New York Corporate Tax Reform Regulations Adopted and Published as Final

New York Tax Law Article 9-A, which imposes tax on business corporations, underwent a major overhaul in 2014. Several passages of the New York Tax Department’s regulations required updating or expansion following the 2014 corporate tax reform (and following corrections and clarifications in the years that followed). The first set of draft regulations was published by the Tax Department later in 2015, and the draft regulations have undergone changes and adjustments in the eight years since then.

After all the Tax Department’s years of work preparing, publishing, and revising the draft regulations, along with practitioner and taxpayer comments and feedback, final draft regulations were proposed in August 2023. The August 2023 proposed regulations included some material revisions from prior versions, including receipts sourcing adjustments for passive investment customers and the codification of the Tax Department’s new approach to implementing the protections offered by federal Public Law 86-272.[3]

On December 27, 2023, the proposed regulations were adopted and published as final.[4] The adopted regulations total 417 pages, and replace the existing relevant New York corporate tax regulations. Despite being adopted in late December 2023, the final regulations will have a retroactive effective date back to January 1, 2015, when the 2014 corporate tax reform provisions first took effect. The Tax Department published a useful report outlining the “substance” of the adopted regulations, and another report replying to specific public comments received following the Tax Department’s August 2023 proposed regulations.[5] In the report replying to public comment, the Tax Department addressed concerns raised over the January 1, 2015 effective date for the adopted regulations. After listing some of the comments and concerns raised over the potential effective date of the adopted regulations, the Tax Department states:

The Tax Reform legislation specifically provided that the amendments contained therein generally apply to taxable years beginning on or after January 1, 2015. The proposed rule interprets the statutory amendments of Tax Reform and, therefore, will be applied to the same periods. Matter of Varrington Corp. v. City of New York Department of Finance, 201 AD2d 282, aff’d 85 NY2d 28 (“…regulations interpreting tax statutes are retroactive to the effective date of the statute to which they relate unless the taxing authority limits such retroactive limitation…”). However, the department, based on a totality of the circumstances, may choose not to apply penalties in cases where taxpayers took a position in their tax filings prior to adoption of the proposed rule in reliance upon prior article 9-A regulations or prior drafts of the proposed rule (emphasis added).

The Tax Department suggests penalty abatement may be available in select situations, likely including situations where the adopted regulations changed or varied—sometimes materially and unpredictably—in the various draft regulations since 2015. 

One such issue when considering the regulations’ January 1, 2015 effective date is the elimination of the “unusual events rule.”  Existing Tax Department regulations at the time of the 2014 corporate tax reform (and included in valid Tax Department regulations until they were replaced on December 27, 2023), and the first draft of post-2014 corporate tax reform regulations both included an “unusual events rule.” Under the former unusual events rule, a taxpayer’s receipts from unusual sale events—including gain from the sale of an entire operating business—were generally excluded from the apportionment receipts factor, as the unusual event income was potentially distortive of the taxpayer’s true receipts factor. In subsequent versions of the draft regulations, and in the adopted regulations, the unusual events rule was repealed and replaced with the general rule that all receipts—including gain from unusual events—are included in the receipts factor.

The adopted regulations contain dozens of new and updated New York corporate tax provisions.  The new and updated regulations bear on a broad range of issues, from the computation of tax to the determination of which corporations are taxable and beyond. Two key, and more recent, adjustments to the Tax Department’s new corporate regulations are the treatment of a business’s receipts from passive investment customers for market sourcing purposes, and the Tax Department’s codification of its revised approach to the protections offered to foreign taxpayers under Public Law 86-272.

• Passive investment customer apportionment rules.[6] Before the August 2023 proposed regulations, the prior draft regulations sourced a business’s receipts from “passive investment customers” to the location where the contract between the passive investment customer and the service business was managed. This proposed sourcing methodology was questioned and criticized, as it could lead to a circular apportionment result where the business rendering services to a passive investment customer could also be viewed as the business managing the contract on behalf of the passive investment customer. Thus, receipts from qualifying services to passive investment customers could be sourced to the location where the services were performed. [7] 
  
  

  New York specifically moved away from place-of-performance receipts sourcing for service businesses, including financial and investment advisory services, through the 2014 corporate tax reform. In a significant shift from the prior version, in the adopted regulations passive investment customers are presumed to receive the benefit of management, distribution, and administration services at the “location of the investors in such passive investment customer,” or at the location of the beneficial owner of the passive investment customer.[8] So, the adopted regulations shifted away from the location where the contract is managed (a rule that may have been difficult to determine and manage, regardless of the potential for place-of-performance service receipt sourcing), to a market-based approach based on the location of the passive investment customer’s investors/beneficial owners.

• Shrinking protection of Public Law 86-272. The protections offered to foreign corporations under Public Law 86-272 have been under pressure across the country, including in New York. I wrote about New York’s plan to curtail the protections of Public Law 86-272 in the 2022 year-in-review article, including background on the benefits and limitations of Public Law 86-272.[9]
  
  

  Fast-forward one year, and the plan proposed in the Tax Department’s 2022 draft regulation is now part of the final, adopted regulations. The adopted regulations note that a foreign corporation that limits its New York activities to the solicitation of sales of tangible personal property will remain protected by Public Law 86-272. The adopted regulations then go on to note that: “Solicitation activities do not include those activities that the corporation would have reason to engage in apart from the solicitation of orders, but chooses to allocate to its New York State sales force, or to engage in via the Internet, including interacting with customers or potential customers through the corporation’s website or computer applications. However, a corporation will not be made taxable solely by presenting static text or images on its website.” 

  So, engaging a New York resident individual or business over the internet in a non– sales-related capacity from a foreign destination (i.e., another U.S. state or territory) could give rise to New York tax nexus—but what specific activities go beyond the protections of Public Law 86-272? The adopted regulations answer this question through 11 examples of situations where a foreign taxpayer’s digital or internet-based activities would either be protected or exceed protected sales solicitation, including each of the following:

• Example 6. A foreign corporation solicits sales of tangible personal property on its website and provides assistance to customers by posting a list of static frequently asked questions (FAQs) and answers on the corporation’s website. Since this activity is de minimis under this section, the corporation is exempt from tax under article 9-A (emphasis added).
  
• Example 7. A foreign corporation regularly provides assistance to its customers after its products have been delivered, either by email or electronic “chat” that customers initiate by clicking on an icon on the corporation’s website. For example, the corporation regularly advises customers on how to use products after the products have been delivered. Since this activity does not constitute, and is not entirely ancillary to, the solicitation of orders for sales of tangible personal property, the corporation is not exempt from tax under this section (emphasis added).
  
• Example 8. A foreign corporation solicits and receives online applications for its branded credit card via the corporation’s website. The issued cards will generate interest income and fees for the corporation. Since this activity does not constitute, and is not entirely ancillary to, the solicitation of orders for sales of tangible personal property, the corporation is not exempt from tax under this section (emphasis added).
  
• Example 9. A foreign corporation’s website invites viewers in New York State to apply for non-sales positions with the corporation. The website enables viewers to fill out and submit an electronic application, as well as to upload a cover letter and résumé. Since this activity does not constitute, and is not entirely ancillary to, the solicitation of orders for sales of tangible personal property, the corporation is not exempt from tax under this section (emphasis added).
  
• Example 10. A foreign corporation places internet “cookies” onto the computers or other electronic devices of its customers. These cookies gather customer search information that will be used to adjust production schedules and inventory amounts, develop new products, or identify new items to offer for sale. Since this activity does not constitute, and is not entirely ancillary to, the solicitation of orders for sales of tangible personal property, the corporation is not exempt from tax under this section (emphasis added).
  
• Example 11. The same facts as Example 10, except that the cookies gather customer information that is used only for purposes entirely ancillary to the solicitation of orders for tangible personal property, such as to remember items that customers have placed in their shopping cart during a current web session, to store personal information customers have provided to avoid the need for the customers to re-input the information when they return to the corporation’s website, and to remind customers what products they have considered during previous sessions. The cookies perform no other function, and these are the only types of cookies delivered by the corporation to the computers or other devices of its customers. Since this activity is entirely ancillary to the solicitation of orders for sales of tangible personal property, the corporation, under the facts of this example, is exempt from tax under this section (emphasis added).
  
• Example 12. A foreign corporation remotely fixes or upgrades products previously purchased by its customers by transmitting code or other electronic instructions to those products via the internet. Since this does not constitute, and is not entirely ancillary to, the solicitation of orders for sales of tangible personal property, the corporation is not exempt from tax under this section (emphasis added).
  
• Example 13. A foreign corporation offers and sells extended warranty plans through its website to New York State customers who purchase the corporation’s products. Since   this activity involves selling, or offering to sell, a service that is not entirely ancillary to the solicitation of orders for sales of tangible personal property, the corporation is not exempt from tax under this section (emphasis added).
  
• Example 14. A foreign corporation contracts with a marketplace provider that facilitates the sale of the corporation’s products on the provider’s online marketplace. The marketplace provider maintains inventory, including some of the corporation’s products, at fulfillment centers in New York State. Since this activity involves the maintenance of the corporation’s products in New York State, the corporation is not exempt from tax under this section (emphasis added).
  
• Example 15. A foreign corporation that sells tangible personal property via the internet also contracts with New York State customers to stream videos and music to electronic devices for a fee.  Since this activity involves streaming, which does not constitute the sale of tangible personal property, the corporation is not exempt from tax under this section (emphasis added).
  
• Example 16. A foreign corporation offers for sale only items of tangible personal property on its website. The website enables customers to search for items, read product descriptions, select items for purchase, choose among delivery options, and pay for the items.  The corporation does not engage in any activities in New York State that are not described in this example. Since the corporation engages exclusively in activities in New York State that either constitute solicitation of orders for sales of tangible personal property or are entirely ancillary to solicitation, the corporation is exempt from tax under this section (emphasis added).[10]

New York moved quickly to propose and approve these regulations with its revised interpretation of Public Law 86-272. The 11 examples demonstrate that the Tax Department will take a narrow view of Internet, digital, and app-based connections that a foreign business can have with New York while remaining within the protections of Public Law 86-272. If the Internet, digital, or app-based activity is limited to the solicitation of sales (Example 16), only includes the posting of non-sales-related static text (Example 6), or leaves cookies that only track sales-related information (Example 11) the foreign taxpayer may still be still covered by Public Law 86-272. In every other example, relatively limited remote or indirect connections with New York removed the foreign taxpayer from the protections of Public Law 86-272. We will see how these rules and examples apply on tax returns, in audits, and appeals in the future.

Matter of Zelinsky and Pandemic-Era Remote Work Challenges

One consequence of the COVID-19 pandemic has been an explosion in remote work arrangements. In the several months and, in some cases, years after the March 2020 onset of the COVID-19 pandemic, employees were sent away from New York to complete their duties, as the employer closed the former/regular New York office location. Even after New York offices began re-opening, many employers allowed their employees to remain working from home all or part of the time.

If a New York nonresident performs services partly within and partly without New York, his or her income must be allocated to New York based on a ratio of the days worked in New York to the total number of days worked within and without New York.[11] Any allocation claimed by a nonresident employee for days worked outside New York must be based on “[t]he performance of services which of necessity, as distinguished from convenience, obligate the employee to out-of-state duties in the service of his employer. (emphasis added)”[12] This quoted passage is New York’s “convenience test,” which triggers when a New York-based employee works outside of New York for his or her own convenience, as opposed to employer necessity.  When the “convenience test” is implicated, days the employee spends working from home for his or her convenience (with some exceptions) are still subject to New York nonresident wage allocation.

We believe that when employees were sent away from New York because of office closures during the COVID-19 pandemic, from a decision made by the employer and/or a decision required by New York State, the employee’s remote work outside of New York was not for the employee’s own “convenience” as contemplated by the Tax Department’s regulation. In our view days the employee spent working from home outside of New York while there was no assigned office available to the nonresident employee in New York should not result in an allocation of wage income back to New York. We have been waiting for a New York Administrative Law Judge (ALJ) ruling in a matter raised by Professor Edward Zelinksy dealing with this, and other similar issues. If the name sounds familiar—that’s no surprise!  Professor Zelinsky challenged New York’s “convenience test” more than 20 years ago, and while he lost back then his case made it to New York’s highest court and has been cited on a regular basis ever since.[13]

During 2020, Professor Zelinksy taught law at Cardozo Law School in New York City. In March 2020 Cardozo Law School closed its doors on account of the COVID-19 pandemic. From March 2020 through the end of 2020, Professor Zelinsky worked remotely from his home in Connecticut, while his employer closed its New York work location, and New York State also either strongly discouraged or prohibited in-person legal education in New York City. From the middle of March 2020 through the end of the year, Professor Zelinksy had no employer-provided work location in New York.

Professor Zelinsky initially paid New York tax on his 2020 wage income, including on the days worked from home in Connecticut when Cardozo Law School was closed. He then filed a refund claim for the 2020 tax year, allocating the days he spent working in Connecticut after the onset of the COVID-19 pandemic and his New York office closure away from New York, arguing that the New York “convenience test” did not apply to his wage income.

On November 30, 2023, an administrative law judge (ALJ) issued a Determination in Professor Zelinksy’s matter, ruling in the Tax Department’s favor.[14] The ALJ found that Professor Zelinsky’s work from home in Connecticut—while Cardoza Law School was closed, while he was precluded by his employer and the State of New York from working at his former assigned location—was for his convenience, and not his employer’s necessity.

In my view this result is just flat wrong, legally and equitably.  Fortunately, the ALJ’s decision in Zelinsky is not precedential, and other ALJs, the Tax Appeals Tribunal, and potentially other New York courts will need to interpret this issue as well. Professor Zelinsky’s initial 2003 Court of Appeals decision still stands for the proposition that the convenience test is constitutional and an allocation methodology New York nonresident taxpayers must contend with. The convenience test has limits, and we believe it should not extend to days a taxpayer spent working outside of New York, when the taxpayer could not have worked at a New York office location of his employer.

Interest Rates and Updates to Tax Department Information and Contact Tools

“The New York State Department of Taxation and Finance welcomes your questions.” The Tax Department rolled out a few new or enhanced online tools for tax practitioners and taxpayers during 2023, and the new tools have the potential to be useful. The most interesting tool is an online feature allowing tax practitioners and taxpayers to submit questions to the Tax Department. The online question system is informal, and the Tax Department’s answers will not carry the weight or analysis of an Advisory Opinion. However, the system should allow taxpayers and practitioners an option for rapid answers to a broad range of questions. (Currently, the Tax Department suggests a three-business-day response period.) Occasionally, when a taxpayer or practitioner attempts to call the Tax Department with a question, the hold time can last hours. Submitting a question, receiving an answer in writing, and skipping the hold queue may be a useful tool. The scope and confidence of the Tax Department’s answers will be important to consider and monitor.[15]

The Tax Department also published a tax filing calendar showing key tax return deadlines,[16] and the Tax Department published a link to important 2023 tax law changes and updates.[17]  Give the Tax Department credit for taking these and other steps to connect with taxpayers and practitioners, as the New York tax landscape continues to evolve as it did in 2023.

Finally, interest rates imposed by the Tax Department are currently high, skyrocketing across tax types from late 2022 through 2023. The current income tax late payment and assessment interest rate for the first quarter of 2024 is 10.5%, withholding and corporation tax interest rates are 12%, and the sales tax interest rate is 14.5%. Now, the refund interest rate for these tax types also increased to 7%, but the late payment and assessment rates are as high as they’ve been in years.[18]

2023 was clearly another busy year for New York tax purposes. This article covers many of the important updates, but there was much more. Until next year, all the best in 2024.

Daniel Kelly is a member of Hodgson Russ’s Tax Practice. He is licensed to practice in New York, California, and Florida, and focuses on a variety of state and local tax matters in jurisdictions across the United States.  Dan has assisted clients with well over 1,000 tax and other legal matters, regularly advising individuals and businesses on different aspects of personal income tax, sales and use tax, corporate franchise tax, and several other lesser-known taxes. Dan’s clients frequently rely on his guidance for tax planning around significant liquidity events; changing or establishing state and local tax residency; income, franchise, and sales tax substantial nexus issues; complex business income and earnings allocation issues; and related matters. He has extensive experience representing taxpayers in audits conducted by several tax jurisdictions, and represents taxpayers at various levels of tax controversy dispute resolution and appeal.