On August 31, 2022, New York Governor Kathy Hochul signed into law SB 9454, which adopts an economic nexus threshold for New York City general  corporation tax purposes of $1 million in New York City receipts.  The new New York City economic nexus threshold conforms New York City to the New York State corporation franchise tax.  Under the new law, corporations with less than $1 million, but at least $10,000, in New York City receipts also have nexus if they are part of a unitary group that has at least $1 million in New York City receipts.

The new law also modifies New York City’s nexus provisions for credit card issuers and processors to include certain members of unitary groups.  Under existing law, a corporation has nexus if (1) it has issued credit cards to at least 1,000 people with New York City mailing address on the last day of the tax year, (2) it has merchant customer contracts with merchants for at least 1,000 locations in New York City that the corporation remitted credit card payments for during the taxable year, or (3) the sum of a corporations’ customers in (1) and (2) above is at least 1,000.  A corporation also has nexus with New York City if it has at least 10 customers that meet the requirements of (1), (2), or (3) above, and it is part of a unitary group whose members that have at least 10 customers meeting the requirements of (1), (2), or (3) and have in the aggregate 1,000 customers that satisfy (1), (2), or (3).

Corporations that are filing in New York State, but not New York City, should review their New York City activity to determine whether they have nexus with New York City under the new requirements.  Corporate partners of partnerships who have nexus with New York City should also consider whether they may have new New York City filing requirements.

The new law is in effect for tax years beginning on or after January 1, 2022, and also moves up the effective date of New York City’s pass-through entity tax—originally slated to begin in 2023— to January 1, 2022.

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