New York Governor Kathy Hochul and the New York State Legislature have reached an agreement on the state’s fiscal year 2024 budget legislation. Most surprisingly, the legislation grants the New York State Department of Taxation and Finance the right to petition for judicial review of New York State Tax Appeals Tribunal decisions that are “premised on interpretation of the state or federal constitution, international law, federal law, the law of other states, or other legal matters that are beyond the purview of the state legislature.” If the Department appeals a Tribunal decision, any interest and penalties that would otherwise accrue on the underlying tax liability would be stayed until 15 days after the issuance of a final judicial decision. This represents a significant change in law as currently, only taxpayers (and not the Department) may appeal Tribunal decisions.
Other notable provisions in the budget legislation include the following:
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The False Claims Act will now apply to a person who is alleged to have knowingly or improperly failed to file a tax return.
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The top metropolitan commuter transportation mobility tax rate on employers in New York City has been increased from 0.34% to 0.6% of payroll expense.
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The “temporary” top corporate franchise tax rate for taxpayers with a business income base of more than $5 million will stay at 7.25% through 2026 (rather than expiring in 2024), and the scheduled expiration of the franchise tax business capital base has been delayed from 2024 to 2027.
The budget legislation containing these changes in law passed both houses of the New York State Legislature on May 1, 2023, and is expected to be signed by Governor Hochul.
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