OUR THOUGHTS ON:

New York State Combined Reporting

State and Local Tax

By Allen Wassel

The New York Department of Taxation and Finance is requiring combined reporting by taxpayers engaged in a unitary business for tax years beginning on or after January 1, 2007. Until recently, much of the guidance surrounding the combined reporting requirements was in the form of technical memoranda and other departmental interpretations. However, with the adoption of amendments to the corporation franchise tax regulations, taxpayers now have administrative authority to which they can refer when determining whether or not they are subject to combined reporting.

Although the regulations are in many ways very similar to and extensions of the original guidance, there are several notable changes that taxpayers should be aware of including, but not limited, to: 

  • Implementation of a unitary business requirement for mandatory combined reporting when substantial intercorporate transactions take place.
  • Inclusion of interest paid on intercompany loans in the determination of substantial intercorporate transactions.
  • Exclusion of taxes paid or reimbursed, by or for a related entity, in the determination of substantial intercorporate transactions.
  • Exclusion of allocated accounting, legal and similar services, in the determination of substantial intercorporate transactions.
  • Implementation of several tests with regard to asset transfers in the determination of substantial intercorporate transactions.
  • Exclusion of New York S corporations, non-New York taxpayer federal S corporations and corporations organized under the laws of a country other than the United States from the entities to be included in a combined report with entities that are treated as C corporations.
  • All corporations included in the combined report group need not have the same accounting period.

Navigating the New York State income and franchise tax filing requirements for out-of-state companies is a daunting task. For more information on the amended regulations, or if you find yourself questioning your current and/or past filing methodologies, please contact a member of our State And Local Tax (SALT) team for assistance.

© 2013 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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