Yes, you read that right! The first employee win we have seen on the COVID-related telecommuting cases recently came out of Ohio. During the pandemic, many states came out with guidance on how to treat the income employees earned while working remotely, some of which was contrary to their existing rules. Ohio was one of those states that acted quickly, with HB 197 taking effect March 27, 2020. Backdating to March 9, 2020, and lasting until 30 days after the state of emergency ended, Section 29 of HB 197 stated, for municipal income tax purposes, employees were deemed to be performing services at the employee’s principal place of work, rather than where the employee was physically working. This notably applied to both resident and nonresident employees. The alleged intention of the bill was to lessen the burden on employers by not requiring them to change the municipal withholding of their employees. This rule looks a lot like the “convenience of the employer" rule that a few states, including New York, applied before Covid, and that many states migrated to during the pandemic.
Over the years, we have written on a variety of topics that involve professional athletes -- from how states handle signing bonuses to an overview of multistate tax issues. This past week, there was an interesting new development to add to the list. On September 21, 2022, the Court of Common Pleas of Allegheny County ruled Pittsburgh’s “jock tax” is unconstitutional in Francoeur v. City of Pittsburgh.
As we reported here several months ago, this year's New York State budget included a provision for a New York City Pass-Through Entity Tax, effective in 2023, that would allow New York City resident owners of pass-through entities to benefit from a local Pass-Through Entity Tax regime. Shortly after it was passed, many wondered why there was only a prospective effective date. Given that a change like this should be net neutral to the State and City government, why not make it retroactive to January 1, much like the State Pass-Through Entity Tax was made retroactive when it was put in place in 2021?
Big news on the residency front!
For years we’ve been battling the New York tax department on the scope of its statutory-residency test, and yesterday brought a huge victory in that fight. In Matter of Nelson Obus et al., v New York State Tax Appeals Tribunal, the court ruled that a seldom-used vacation home in New York cannot be considered a “permanent place of abode” for statutory residency purposes. Click here for the decision.
Last week we reported on the fast-paced legislative efforts to extend New York’s 2022 pass-through entity tax (PTET) election deadline. To read that article, click here. In record time, the bill we reported on was signed into law by Governor Hochul on May 6, 2022.
Since the enactment of New York State’s corporate tax reform legislation as part of the state’s 2014-2015 budget, the Tax Department has published several versions of proposed regulations, which provide additional draft guidance on the new law changes, including in the areas of nexus, net operating losses, income and capital definitions, and apportionment. On Friday, April 29, the Tax Department announced that it finally intends to begin the official State Administrative Procedure Act (SAPA) process to formally adopt a version of the amended regulations.
Last month we reported on recent legislative amendments to New York’s pass-through entity tax (“PTET”). To read that article, click here. It turns out the New York legislature is not done making amendments to the PTET.
In 2021, many New York residents did not receive the full benefit of New York’s SALT cap workaround, because New York took a unique approach to the computation of its new pass-through entity tax (“PTET”). We are happy to report that on April 8, 2022, the New York Assembly and Senate passed Fiscal Year 2023 budget legislation (the Budget Bill), and part of the new legislation addresses (and fixes) this issue.
Without even a hint of fanfare, the New York State Department of Taxation and Finance recently released a new version of its audit guidelines for nonresidents. Given that the last update was in 2014, we easily excited tax lawyers cracked them open to find out what had changed. But when we dug into the new guidelines, we were disappointed to see only minor stylistic edits.
The drip of Pass-Through Entity Tax (PTET) questions we’ve received has grown into a steady stream… there must be some due dates approaching! Here’s a quick reminder about two important due dates for New York’s PTET. Spoiler: They’re both March 15.