On January 18, 2022, Governor Kathy Hochul released the fiscal year 2023 budget Briefing Book. While we are still waiting for the public release of accompanying legislation (i.e., the Budget Bill) and memoranda, the Briefing Book indicates that the Budget Bill will propose a variety of tax cuts targeting middle-class individuals and small businesses. Other notable proposals include:
- Sales taxation of vacation rentals: Similar to a proposal in the fiscal year 2022 budget bill released by then-Governor Cuomo last year (see our prior legal alert), the Budget Bill will propose subjecting all “vacation rentals” to state and local sales taxes, as well as the daily NYC Convention Center hotel fee of $1.50 per unit. Under the proposal, any vacation rental marketplace provider that facilitates the occupancy of a vacation rental would be responsible for collecting and remitting the state and local sales taxes, in addition to the NYC hotel unit fee.
- Treating federal S corporations as S corporations for franchise tax purposes: Also similar to a proposal in last year’s executive budget, the Budget Bill will propose requiring all S corporations at the federal level to be treated as such for state franchise tax purposes.
- Make Local Sales Tax Rate Authorizations Permanent: Also similar to a proposal in last year’s executive budget, the Budget Bill will include a proposal to grant permanent local sales tax authority for all counties and cities at their existing rates or up to 4 percent. Under this proposal, local governments would no longer need to seek and receive the state’s approval as long as they want to extend their existing rates or increase their rate to no more than 4 percent. However, all local governments will still be required to seek and receive temporary approval by a majority vote of the local government’s governing body in order to impose additional sales tax above the current statutory 3 percent threshold.
The Briefing Book also indicates that the Budget Bill includes proposals to:
- Extend the real property tax telecommunications assessment ceiling programs for four years; and
- Establish a permanent rate for the franchise tax MTA Surcharge.
The Eversheds Sutherland SALT team is closely monitoring New York budget legislation and will keep you apprised when actual legislation is released in the coming hours or days.