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Legislation designed to create jobs and provide middle-class tax relief was signed by New York Gov. Andrew Cuomo on December 9, 2011. Specifically, the legislation reorganizes the individual income tax brackets, reduces tax rates for certain businesses, creates new income tax credits, and provides property tax relief for homeowners affected by Hurricane Irene and Tropical Storm Lee (see Ch. 56 (S.B. 50002), Laws 2011 ).


Personal Income Tax Brackets

The legislation reduces the New York personal income tax rates for the 2012 to 2014 tax years as follows for joint filers:


    • Taxpayers earning $40,000 to $150,000 will be taxed at 6.45% (currently 6.85%);

    • Taxpayers earning $150,000 to $300,000 will be taxed at 6.65% (currently 6.85%);

    • Taxpayers earning $300,000 to $2 million will be taxed at 6.85% (currently 7.85% to 8.97%); and

    • Taxpayers earning over $2 million will be taxed at 8.82% (currently 8.97%).

For taxpayers with other filing statuses, the top 8.82% rate will apply to head of household filers with New York taxable income over $1.5 million and to single filers with New York taxable income over $1 million. The legislation also provides for a cost of living adjustment to the brackets and the standard deduction.

*Manufacturers' Corporate Tax Rate Reduction

*The legislation also provides a 50% rate reduction (from 6.5% to 3.25%) under the corporate franchise tax for eligible qualified New York manufacturers for the 2012 to 2014 tax years. The Commissioner of Taxation and Finance is also required to establish guidelines and criteria specifying the requirements for a manufacturer to be classified as an "eligible qualified New York manufacturer." The criteria may include factors such as regional unemployment, the economic impact that manufacturing has on the surrounding community, population decline within the region, and median income within the region.

*New Income Tax Credits *

The legislation creates the Youth Works Tax Credit Program, under which credits are available for hiring at-risk youths between 16 and 24 years of age in part-time and full-time positions during the first six months of 2012. The credit is equal to equal to $500 per month for up to six months for each qualified full-time employee or $250 per month for up to six months for each qualified part-time employee, plus an additional $1,000 for each qualified full-time employee who is employed for at least an additional six months or an additional $500 for each qualified part-time employee who is employed for at least an additional six months.

In addition, beginning with the 2012 tax year, the legislation creates the Empire State Jobs Retention Program, which provides credits to targeted businesses harmed by a natural disaster. The credit will be available to firms with at least 100 employees that have retained or expanded their workers' roles following a natural disaster. The credit is equal 6.85% of the wages of retained jobs and is targeted towards employers in financial services, manufacturing, software development, new media, scientific development, agriculture, and other sectors.

*MTA Payroll Tax *

The Metropolitan Commuter Transportation Mobility Tax (known as the MCTMT) is imposed on certain employers and self-employed individuals engaging in business within the Metropolitan Commuter Transportation District (MCTD). Currently, the tax applies to (1) employers required to withhold New York state income tax from employee wages and whose payroll expense exceeds $2,500 in any calendar quarter, and (2) individuals with net earnings from self-employment allocated to the MCTD that exceed $10,000 for the tax year.


Beginning April 1, 2012, the legislation modifies the definition of "employer" to provide that payroll expense must exceed $312,500 (rather than $2,500) in any calendar quarter. The definition is also amended to exclude eligible educational institutions.


In addition, the MCTMT, which is currently imposed on employers at the rate of 0.34%, will be imposed at the following rates beginning April 1, 2012:


    1. 0.11% for employers with payroll expense no greater than $375,000 in any calendar quarter;

    2. 0.23% for employers with payroll expense no greater than $437,500 in any calendar quarter; and

    3. 0.34% for employers with payroll expense exceeding $437,500 in any calendar quarter.

For self-employed individuals, tax at the rate of 0.34% will apply if earnings attributable to the MCTD exceed $50,000 (rather than $10,000) for the tax year.

*Property Tax Relief *
The legislation also benefits homeowners affected by Hurricane Irene and Tropical Storm Lee in the form of adjusted property tax assessments of storm-damaged properties and installment payments in certain school districts affected by floods or natural disasters.

Eligible municipalities have the option to allow a reduction in the assessment of a property that has lost at least 50% of its value due to hurricane or storm damage. The assessment reductions range from 55% for property that has lost between 50% and less than 60% of its taxable assessed value to 95% for property that has lost between 90% and less than 100% of its value. If a property has lost all of its value due to storm-related damage, the taxable assessed value is reduced to zero.

Furthermore, a school district that is located in a declared federal disaster county may adopt, by resolution and within the six months preceding the due date for school taxes, an installment payment schedule, with amounts and dates specified in the resolution. A school district is authorized to refund any portion of taxes previously paid if the school board adopts an installment payment resolution.

The North Carolina Department of Revenue (DOR) has announced changes to its Voluntary Disclosure Program that will result in more taxpayers being able to participate. The program was created to promote compliance among taxpayers who discover that they have not filed necessary tax returns nor paid taxes due. In exchange for voluntarily coming forward, the DOR will waive penalties in certain circumstances and allow taxpayers an expedited filing process. The program applies to any tax administered by the DOR and to any type of domestic or foreign taxpayer that is subject to tax in North Carolina. In order to be eligible, the following criteria must be met:


· the taxpayer has no other tax liabilities other than those reported through voluntary disclosure;

· the taxpayer is not under audit for any tax;

· the taxpayer has not been contacted by the DOR, IRS, or Multistate Tax Commission with respect to a tax for which voluntary disclosure is requested;

· the taxpayer must make records available to verify the liability and the accuracy of the taxpayer’s representations; and

· the tax due plus accrued interest must be paid within 60 days from the date of acceptance of the voluntary disclosure agreement.


Effective November 1, 2011, taxpayers will only be required to file past due returns and pay taxes due for a back period of three years for taxes filed annually, or 36 months for those that do not have an annual filing frequency, unless they collected but failed to remit the tax. Prior to the changes, taxpayers were required to file and pay at least four years or 48 months of returns. Also, under the previous criteria, a taxpayer who had ever been registered or had filed a return for a particular tax would not be eligible for that tax type. However, the new changes will allow taxpayers who may have previously registered and submitted returns to participate.



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