Establishes rules for receipts from services provided by asset management corporations

Summary of specific provisions

Section 1 amends paragraph b of subdi- vision 2 of section 209-B of the Tax Law to provide for metropolitan transportation business tax surcharge of asset management corporations.

Section 2 of the bill amends clause B of subparagraph 2 of paragraph a of subdivision 3 of section 210 of the Tax Law to add asset management services to the computation of tax.

Section 3 amends Section 210 of the Tax Law is amended by adding a new subparagraph 6-a to subdivision 3 to provide rules for receipts from services provided by asset management corporations.

Section 4 of the bill amends paragraph 2 of subsection a of Section 1454 of the Tax Law to add a new subparagraph H and re-letter current subpar- agraphs H and I to provide for the franchise tax on banking corporations to apply appropriately to asset management corporations.

Sections 5 and 6 amend Paragraphs 1-a and 3 of subsection b of section 1454 of the Tax Law to apply the franchise tax on banking corporations to asset management corporations for future taxable years.

Sections 7 amends clause B of paragraph 2 of subparagraph (a) of subdi- vision three of section 11-604 of the New York City Administrative Code to add asset management services to the computation of general corpo- ration tax.

Section 8 amends subparagraph a of subdivision 3 of section 11-604 of the New York City Administrative Code by adding a new paragraph 5-a to provide rules for receipts from services provided by asset management corporations.

Section 9 amends section 11-642 of the New York City Administrative Code to add a new subparagraph H and re-letter current subparagraphs H and I to provide for the franchise tax on banking corporations to apply appro- priately to asset management corporations.

Section 10 amends section 11-642 of the New York City Administrative Code by adding a new subdivision e to apply the franchise tax on banking corporations to asset management corporations for future taxable years.

Justification

This legislation amends the state and city tax law to update it to reflect the current state of the money management industry. In 1988 the tax laws were amended to reflect the presence of mutual fund

managers and to afford them tax treatment that more accurately reflected the proper allocation of their business in New York. When the 1988 law was passed, its intention.was to make New York a more competitive place for these companies to grow and expand, especially since these companies were very mobile. Those reasons are just as true today. In the twenty years since the enactment of these provisions, these mutual fund manag- ers have grown to manage more than just mutual funds. These managers have become asset managers though, fundamentally, they perform the same services in a similar fashion as before. Now, there are very few mutual fund only managers. This bill seeks to reflect what has transpired over two decades in a business that the legislature saw fit to provide particular allocation rules for already. Other states, such as Delaware and California, have already updated their tax treatment of these enti- ties.

Prior legislative history

New bill.

Fiscal implications

EFFECTIVE DATE: The act shall tax effect immediately and shall apply to taxable years beginning on or after January 1, 2009.