Commencing in 2009, the credit that is applied to reduce an unincorporated business tax will apply if the annual tax totals less than $5,400

6 Co-sponsors

• Vivian Cook
• Micah Kellner
• Adriano Espaillat
• Keith L.T. Wright
• Adam Clayton Powell IV
• Jonathan Bing

1 Multi-sponsor

• Daniel O'Donnell

BILL NUMBER:A8615

Title of bill

An act to amend the administrative code of the city of New York, in relation to the unincorporated business tax

Summary of provisions

This bill would amend subdivision (b) of section 11-503 of the New York City Administrative Code by adding a new paragraph 3-a to provide that beginning with taxable years commencing in 2009, the credit that is applied to reduce an unincorporated business tax will apply if the annual tax totals less than $5,400. The credit will completely offset an annual unincorporated business tax that does not exceed $3,400. Bill sections three and four amend Sections 11-511 and 11-514 of the Administrative Code to simplify UBT filing requirements and modify requirements related to paying estimated unincorporated business taxes.

Justification

The proposal is a small-business tax-relief measure designed to encourage the expansion of entrepreneurial enterprises during the current economic downturn.

Although the Unincorporated Business Tax (UBT) provides rough parity by taxing entities regardless of business form, it is particularly burdensome on small businesses. Many of these small businesses are sole proprietorships run by individuals who are New York City residents, and are thus also subject to the New York City Personal Income Tax on the same income. A 2007 state law limited the tax and this legislation would end or further reduce the tax for small businesses - and save each of them up to $3,400. More than 80% of the firms benefiting from the bill are individual proprietors, many of them freelancers or other entrepreneurs starting their own businesses. Supporting their work can bolster the City's economy and help pull it through the current painful recession.

Currently, 32,500 firms in New York City pay the UBT. This bill would provide tax relief to half that population by effectively exempting nearly 11,000 firms with taxable incomes of$100,000 or less from the UBT and providing partial tax relief to an additional 6,000 with taxable incomes between $100,000 and $150,000.

The bill also simplifies UBT filing requirements, and provides relief from the obligation to file UBT returns and to pay estimated taxes for those taxpayers whose gross income is sufficiently low that they are certain to have no tax liability.

Fiscal implications

The total annual fiscal impact to New York City would be approximately $25 million. There is no state fiscal impact.

Effective date

This law would be effective for taxes filed in calendar year 2009.