Recently, we’ve witnessed a mass exodus from New York State as a result of the COVID-19 pandemic. Some movers yearn for warmer weather, others for more reasonable Covid policies, and others simply seek a home-state that won’t tax their personal income. When we advise these moving individuals on their domicile change, a question we’re receiving with increasing frequency is “after I move, can I continue to make donations to my favorite local charities, or will New York State use that information against me in a determination of my domicile?” We understand why people are concerned at the possibility that their charitable contributions might be weaponized against them. After all, in a domicile audit, New York auditors are instructed to analyze the taxpayer’s lifestyle, using five primary factors: home, time, business activity, near & dear, and family.
Just when you thought you could relax because you met the October 15 deadline for the New York Pass-Through Entity tax (PTET) election, new questions about some of the practical aspects of making tax payments and return filing deadlines have come to light.
Back in August, the Department confirmed in TSB-M-21(1)C, (1) that, beginning this year, resident partners, members, or shareholders will be allowed a resident tax credit against their New York State personal income tax for any pass-through entity tax imposed by another state, local government, or the District of Columbia, that is substantially similar to the PTET. The question remaining was: “what does substantially similar mean?” Well, we have our answer. On Monday, the Department published a list, which specifically enumerated the states (and corresponding qualifying state taxes) that impose a pass-through entity tax that is substantially similar to New York’s PTET.