On December 27, 2023, the New York State Department of Taxation and Finance (Department) officially adopted the business corporation franchise tax regulations it submitted to the State Register on August 9, 2023 – marking the final step in the State Administrative Procedure Act (SAPA) process to implement regulations regarding the state’s corporate tax reform that was enacted nearly a decade ago.

The Department’s formal adoption of the regulations brings to a close a lengthy saga that began when New York significantly overhauled its corporate tax regime that generally became effective in 2015. After the publication of numerous sets of “draft” regulations over the years, and the posting of “final” sets of regulations in 2022, the Department announced on August 9, 2023 that it was initiating the formal SAPA process to officially finalize the regulations. Today’s formal adoption of the regulations brings the process to a close.

In its statement posted today, the Department indicated that the changes it made to the regulations that were published on August 9 are “not substantial,” and include only certain clarifying revisions and corrections of typographical errors.

Regarding the effective date of the regulations, the Department stated that they will apply to taxable years beginning on or after January 1, 2015. However, the Department stated that, “based on a totality of the circumstances, [the Department] may choose not to apply penalties in cases where taxpayers took a position in their tax filings prior to adoption of the proposed rule in reliance upon prior article 9-A [(corporation franchise tax)] regulations or prior drafts of the proposed rule.”

A copy of the December 27, 2023 edition of the State Register containing the Department’s Notice of Adoption can be found here (see page 44), and the text of the final regulations can be found here.

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