About This Blog
Noonan’s Notes Blog is written by a team of Hodgson Russ tax attorneys led by the blog’s namesake, Tim Noonan. Noonan’s Notes Blog regularly provides analysis of and commentary on developments in the world of New York and multistate tax law. Noonan's Notes Blog is a winner of CreditDonkey's Best Tax Blogs Award 2017.
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Timothy Noonan
Brandon Bourg
Mario Caito
Ariele Doolittle
Joseph Endres
Daniel Kelly
Elizabeth Pascal
Emma Savino
Joseph Tantillo
Craig Reilly
Andrew Wright
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Mass Departure Caught Up to the Tax Department
Over the past few years, we’ve seen a mass exodus of taxpayers leaving New York. Why? Well, first there was the COVID-19 pandemic; that didn’t help. But in the middle of the pandemic, the State raised the personal income tax rates to some of the highest in the nation. That didn’t help either! And then we had issues around a declining standard of living in New York City, empty office buildings, remote work, and safety issues, all leading more New Yorkers to seek out more friendlier climates.
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An Empire Zone Case Strikes Back: Appellate Division Reverses Long-Time Tax Department Policy
A couple weeks ago, the Third Department of the New York Supreme Court, Appellate Division issued its decision in Matter of Schreiber, reversing a prior decision of the Tax Appeals Tribunal, finding that its interpretation of Tax Law § 16(f)(2)(C) and Matter of Purcell, both related to the calculation of qualified empire zone enterprise (QEZE) tax reduction credits, was irrational. We’ve been following this issue for almost a decade, dating back to our review and analysis of the Purcell case, which you can read about here. The Schreiber case presents an interesting new twist in the story, and the Court’s analysis could impact cases beyond the realm of QEZE credits.
Massachusetts v. Welch: Taxing a Nonresident on Intangible Stock Sales
As states continue to seek increased revenues, especially those high-tax states dealing with a dwindling tax base, we’re starting to see some states take unusual and fairly aggressive positions in tax cases. One recent example we covered involved New York and the enforcement of its “convenience rule” in the Zelinsky case. In November 2023, the Massachusetts Appellate Tax Board issued another doozy, holding in Welch v. Commissioner of Revenue that a nonresident could be taxed on the gain from the sale of stock. (Docket No. C339531 (November 29, 2023)).
Strike One in Zelinsky II: New York ALJ Upholds the Convenience Rule in Office Closure Case
Last month, we wrote about a recent ALJ Order dealing with New York’s application of the convenience rule to a situation where a taxpayer’s New York office was closed during COVID. In that piece, we noted that we expected a decision in February 2024 in the Zelinsky case, in which the petitioner was making similar arguments about the application of the convenience rule during COVID.
COVID and New York’s Convenience Rule: Litigation Update
As our regular readers know (all 7 of them), one of the bigger SALT issues to come out of COVID, especially in New York, relates to New York’s “Convenience of the Employer” rule. Under that rule, wages that a nonresident employee earns while working outside of New York State are treated as New York-sourced income if the employee is working from home for their New York employer for their own convenience. As we reported back in October 2020, several months into the pandemic the New York Tax Department announced its position that COVID-related telecommuting would have no impact on its application of the convenience rule. And as we experienced in a number of personal income tax audits after that, the Tax Department extended this position even to situations where an employer had closed its office in New York.
The Proposed New York Corp Tax Regs Are Out! And A First Look at the New Passive Investment Customer Rules
We’re seeing some progress in New York! It’s been nine long years since the Legislature adopted sweeping corporate tax reform, and today the New York Department officially released its proposed rulemaking (as opposed to the draft version of the rules that were kicking around for the last few years). Under New York rulemaking procedures, a mandatory 60-day comment period has commenced. During this time the public may submit comments to the Department on the proposal. After the comment period, the Department is permitted to adopt the proposed rules.
Fact-Free Residency Case at Tax Appeals Tribunal?
A few weeks ago, the Tax Appeals Tribunal issued a decision in a residency case, Matter of Glynn, holding that the Administrative Law Judge’s grant of summary determination was properly granted to the Division of Taxation. This is somewhat unusual for a residency case, as more extensive fact finding is usually necessary to resolve these disputes. And our fellow blogger at Taxes in New York (“TiNY”) had a lot to say about this opinion. A few other thoughts from this corner………
Changes to the MCTMT and Limited Partner Taxation in New York
Last month, New York State passed its 2023-24 Budget, better late than never. We highlighted a lot of the new provisions in a recent Tax Alert, but there are a couple of changes involving the Metropolitan Commuter Transportation Mobility Tax (the “MCTMT”) worthy of special note. The MCTMT functions somewhat like a payroll tax on employers in the Metropolitan Commuter Transportation District (which includes the counties of New York, Bronx, Kings, Queens, Richmond, Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester). And it also applies to self-employed individuals, including partners in partnerships.
An Inside Look at Zelinsky Part II
Edward Zelinsky, a Connecticut resident and professor at the Benjamin N. Cardozo School of Law in New York City, recently added another chapter to his New York tax chronicles, once again challenging New York’s convenience of the employer rule. Professor Zelinsky lost his previous battle with New York, Zelinsky v. Tax Appeals Tribunal, 1 N.Y.3d 85 (2003), cert. denied, 541 U.S. 1009 (2004), but this one has a bit of a different twist, as outlined in his 2019 and 2020 petitions for a hearing with the Division.
Alcohol and Taxes in New York
Pay taxes or lose your liquor license. When it comes to liquor licensing, it is important for license holders to remit taxes and all associated tax forms to New York State properly and timely, or your liquor license will quickly be in jeopardy.
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