Nearly seven years after it began publishing proposed regulations regarding sweeping corporate tax reforms that went into effect in 2015, the New York State Department of Tax and Finance (Department) issued guidelines, stating that “the Department intends to commence State Administrative Procedure (SAPA) to formally propose and adopt” its proposed corporate tax regulations this fall.
Since September 2015, the Department has issued numerous versions of “draft” regulations regarding corporate tax reform. However, these draft regulations were introduced outside of the SAPA process, as the Department intended to propose and formally adopt all draft regulations at the same time. In the meantime, the department warned ratepayers that while the regulations remain in draft form, they will not be “final and should not be relied upon.”
Now, the ministry has given its first public signal that it is ready to formally adopt the proposed regulations later this year. On April 29, 2022, the Ministry released “final draft” regulations that address various topics, including nexus and net operating losses, and indicated that it will release final draft regulations addressing “the distribution, including rules for digital goods/services and services and other business revenue” this summer.
In particular, the draft regulations published on April 29 include new provisions, “largely modeled on the [Multistate Tax Commission (MTC)] standard status. . . to respond to PL 86-272 and activities conducted via the Internet. Like the MTC’s Model Law, the new proposed rule takes a broad view of Internet activity that would cause a business to lose PL 86-272 protection. In one example, the draft regulations state that providing customer support “either by email or electronic ‘chat’ that customers initiate by clicking an icon on the company’s website” would be beyond the scope. protections provided by PL 86-272.
As it intends to formally propose the draft regulations this fall, the Ministry “strongly” encourages “timely feedback” on all final draft regulations. With respect to the final draft regulations published on April 29, the Ministry is seeking comments by June 30, 2022.