New York State Final Corporate Tax Regs: A Sorites Paradox for NYC?

On December 27, 2023, the New York State Department of Taxation and Finance published final regulations implementing comprehensive franchise tax reform enacted in 2014 that targeted corporations, banks, and insurance companies. With the finalization of those regulations, New York City’s interpretation of its own corresponding corporate tax reform may create a sorites paradox in finding the right balance of discretion between the state regulations and the city’s existing and eventual regulations on its various tax types.

In this article, BDO’s Ted Tourian overviews the types of New York City taxes, as well the city’s conformity requirements with New York state rules. Tourian also discusses the different evidentiary standards for commissioner’s discretion in New York City, the application of the unusual events test, and the possible reintroduction of cost-of-performance sourcing. He concludes that finding the right balance when interpreting New York City’s myriad rules may be more art than science.

Originally published in TAX NOTES STATE, May 13, 2024.