New York Tax Law Update

The following article was submitted by Guest Author, Kathryn Rookes, as a follow up to her previously submitted article, New York State Tax Law, which was posted on this site on July 23, 2009.

Kathryn is an experienced franchise attorney and a member of FSB Legal, a virtual law firm. She is one of the very few franchise attorneys in the United States with experience in a government regulatory practice (Maryland Division of Securities), private practice, and as in-house counsel. With this diversity of experience, Kathryn understands the issues that franchisors face on a daily basis.

New York Tax Law Update
as submitted by Kathryn Rookes, Attorney, FSB Legal

The IFA has received a response from the New York State Department of Taxation and Finance to its July 20 letter.

Reporting Deadlines: The Department is creating an automatic 90-day extension process for the initial as well as all future reporting deadlines. Prior to the initial deadline (set by the Legislature for September 20) the Department will post on its website instructions to request an automatic 90-day extension to December 20, 2009. All future annual deadlines, which were to be due March 20, will be given similar treatment, meaning that if a franchisor requests the extension all annual reports will be due June 20. Permanently moving these deadlines, rather than creating an extension process, would have required an act of the New York State Legislature.

Forms: In the coming days, the Department will post on its website the standardized form franchisors must use to report the required information.

Supplier Sales: The Department has dropped the requirement that franchisors report to the state sales made by “designated” or approved suppliers to New York franchisees. However, sales of supplies from a franchisor or its affiliates directly to a New York franchisee must still be reported.

Franchisee Gross Sales: If the franchisee currently reports gross sales to the franchisor, this information must be supplied to the state in the required reports. If a different performance measure is used (such as room-nights in lodging or cents-per-gallon of product in food service) that calculation must be explained and, where possible, the quantitative data for the relevant reporting period supplied to the state.

Franchisee Identifying Information: The requirement that franchisors report to the state the name, address and New York certificate of authority or federal tax identification number of the franchise remains in effect.

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