N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 1-2.1

Current through Register Vol. 46, No. 36, September 4, 2024

Section 1-2.1 - Domestic corporations subject to tax

Tax Law, section 209(1) and (8)

(a) The tax is imposed on every domestic corporation, not specifically exempt as provided in section 1-2.11 of this Subpart, for the privilege of exercising its corporate franchise, that is to say, for the mere possession of the privilege. Accordingly, a domestic corporation is subject to tax for each fiscal or calendar year, or part thereof, during which it is in existence, regardless of whether it does any business, employs any capital, owns or leases any property, maintains any office, derives any receipts from any activity in this state or engages in any activity, within or without New York State. A domestic corporation is subject to tax even though it carries on its business or derives its receipts entirely outside New York State.

(1) Example.

A corporation is incorporated under the laws of New York State on July 1, 2021. It begins to do business on February 1, 2022, setting up its books on the basis of a calendar year. The corporation is subject to tax from July 1, 2021, to December 31, 2021, since it had the privilege of exercising its corporate franchise for that period. It is also subject to tax for the period beginning January 1, 2022.

(b)

(1) A domestic corporation that is no longer doing business, employing capital, owning or leasing property in a corporate or organized capacity, or deriving receipts from activity in this state, is exempt from the fixed dollar minimum tax for tax years following its final tax year, provided that the corporation:

(i) is not doing business in New York State;

(ii) is not employing capital in New York State;

(iii) does not own or lease property in New York State in a corporate or organized capacity;

(iv) does not derive receipts from activity in New York State;

(v) does not have any outstanding article 9-A franchise taxes for its final tax year or any prior tax year; and

(vi) has filed its final article 9-A franchise tax return.

(2) A domestic corporation that meets the requirements of paragraph (1) of this subdivision:

(i) will no longer need to file any additional article 9-A franchise tax returns for taxable years or periods occurring after the period covered by its final article 9-A tax return; and

(ii) after filing its final article 9-A tax return, may seek consent to be dissolved.

(3) A domestic corporation that meets the requirements of paragraph (1) of this subdivision but does not seek consent to be dissolved under subparagraph (ii) of paragraph (2) of this subdivision will be subject to dissolution by proclamation after it has not filed article 9-A franchise tax returns for at least two years.

(4) A domestic corporation that does not meet the requirements of paragraph (1) of this subdivision and that ceases to file article 9-A franchise tax returns:

(i) will not qualify for the exemption from the fixed dollar minimum tax; and

(ii) may be issued assessments, including penalties and interest for failure to file an article 9-A franchise tax return or to pay the article 9-A franchise tax, or for failure to do both.

(5) A domestic corporation that is no longer doing business, employing capital, owning or leasing property in a corporate or organized capacity, or deriving receipts from activity in this state, as described in paragraph (1) of this subdivision, but that wishes to retain its certificate of incorporation must:

(i) continue to file article 9-A franchise tax returns;

(ii) continue to pay all applicable tax; and

(iii) not file a final return, that is, not file a return marked final.

N.Y. Comp. Codes R. & Regs. Tit. 20 §§ 1-2.1

Adopted New York State Register December 27, 2023/Volume XLV, Issue 52, eff. 12/27/2023