Noonan’s Notes Blog is written by a team of Hodgson Russ tax attorneys led by the blog’s namesake, Tim Noonan. Noonan’s Notes Blog regularly provides analysis of and commentary on developments in the world of New York tax law.

Posts from May 2017.

Last week the Tax Department published another advisory opinion on a “software as a service” issue, continuing the trend of rulings on software sales “in the cloud.” A few years ago, I wrote an article on sales tax issues in the cloud-computing context generally, and we have also covered New York cases where the issue has come up. In this most recent opinion, the taxpayer asked whether charges for its “video generating services” were subject to sales tax. And not surprisingly, the Department concluded that the sales were taxable, continuing its trend of taxing almost everything that moves in the cloud.

Many people experience sticker shock with respect to sales tax and other government-imposed fees (i.e., title fees) when it comes time to purchase or lease a new vehicle.

The New York State Department of Taxation and Finance has been drafting new Corporation Franchise Tax Regulations to incorporate the changes made by the corporate tax reform legislation that went into effect in 2015. 

The newest draft regulations address net operating losses carried forward from pre-2015 tax years. In order to preserve the value of unused NOLs that arose prior to 2015, New York has created a prior net operating loss conversion (PNOLC) subtraction pool that can be applied against apportioned income in post-2015 tax years.

During the past several years, we have seen a continuing trend in New York personal income tax audits involving the examination of federal tax issues. The New York State Tax Department, overall, has one of the more sophisticated and aggressive personal income tax audit groups in the country. For years, as I have outlined in numerous blogs and articles, the Tax Department’s residency audit program has been second to none. But as we have seen, the Tax Department focuses more on flow-through entity issues. We also have seen the expansion of an interesting phenomenon: federal tax audits being conducted by New York tax auditors.

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