N.Y. Comp. Codes R. & Regs. tit. 20 § 262.2

Current through Register Vol. 46, No. 18, May 1, 2024

Section 262.2 - Allocation of net earnings from self-employment to the City of Yonkers

Tax Law, § 4 of § 1340(c); Codes and Ordinances of the City of Yonkers, § 92-101

(a)General.

If a nonresident taxpayer derives net earnings from self-employment from services performed, or from sources both within and without the City of Yonkers, such earnings must be apportioned and allocated to the City of Yonkers on a fair and equitable basis in accordance with approved methods of accounting.

(b)Method of allocation.

(1) Place of business.

If a nonresident taxpayer has no regular place of business outside the City of Yonkers, all of such nonresident taxpayer's net earnings from self-employment must be allocated to the City of Yonkers.

(2) Allocation by taxpayer's books.

If the books of the business are so kept as regularly to disclose, to the satisfaction of the State Tax Commission, the proportion of the net earnings derived from or connected with the City of Yonkers sources, the portion of the net earnings from self-employment allocable to the City of Yonkers may be determined from such books. The City of Yonkers earnings tax return for the nonresident taxpayer must disclose the total amount of net earnings from self-employment, the net earnings allocated to the City of Yonkers and the basis upon which such allocation is made.

(3) Allocation by formula.

If the books and records of the business do not disclose to the satisfaction of the State Tax Commission the proportion of the net earnings from self-employment attributable to the activities of the business carried on in the City of Yonkers, such proportion must be determined by multiplying the net earnings of the business by the average of the following three percentages:

(i) Property percentage.

(a) General. The percentage computed by dividing (1) the average of the values, at the beginning and end of the taxable year, of real and tangible personal property owned or rented to the taxpayer, which is connected with net earnings from self-employment and located within the City of Yonkers, by (2) the average of the values, at the beginning and end of the taxable year, of all real and tangible personal property owned by or rented to the taxpayer, which is connected with the net earnings from self-employment and located both within and without the City of Yonkers. For this purpose, real property includes real property whether owned or rented to the taxpayer (also see section 262.3 of this Part). For this purpose, real and tangible personal property includes real and tangible personal property whether owned or rented to the taxpayer (also see section 262.3 of this Part).

(b) Rented real and tangible personal property.

(1) The fair market value of real and tangible personal property, both within and without the City of Yonkers, which is rented to the taxpayer, is determined by multiplying the gross rents payable during the taxable year by eight.

(2)Gross rents, as used in this clause, is the actual sum of money or other consideration payable directly or indirectly by the taxpayer or for the taxpayer's benefit for the use or possession of the property, and includes:

(i) any amount payable for the use or possession of real or tangible personal property, or any part thereof, whether designated as a fixed sum of money or as a percentage of sales, profit or otherwise;

(ii) any amount payable as additional rent or in lieu of rent, such as interest, taxes, insurance, repairs or any other amount required to be paid by the terms of a lease or other arrangement;

(iii) a proportionate part of the cost of any improvement to real or tangible personal property made by or on behalf of the taxpayer which reverts to the owner or lessor upon termination of a lease or other arrangement, based on the unexpired term of the lease commencing with the date the improvement is completed (or the life of the improvement if its life expectancy is less than the unexpired term of the lease); provided, however, that where a building is erected on leased land by or on behalf of the taxpayer, the value of the land is determined by multiplying the gross rent by eight, and the value of the building is determined in the same manner as if owned by the taxpayer.

(3) Gross rents do not include:

(i) any portion of a payment or credit to the proprietor of the business, or to a partner in the partnership conducting the business, for the use of real or tangible personal property;

(ii) amounts payable as separate charges for water and electric service furnished by the lessor;

(iii) amounts payable for storage where no designated space under the control of the taxpayer as a tenant is rented for storage purposes; or

(iv) that portion of any rental payment which, in the discretion of the commissioner, is applicable to property subleased by the taxpayer and not used by the taxpayer in the carrying on of the business.

(c) Other valuation methods. If the general method outlined in this subparagraph results in valuations which are inaccurate or which are not fair and equitable, any other method which will fairly and equitably reflect the value may be adopted by the commissioner, either on the commissioner's own motion or on request of a taxpayer. A request by a taxpayer for an alternative method may be made at the time the City of Yonkers earnings tax return to which the request relates is filed. A request is made by using the proposed method in the City of Yonkers earnings tax return. The proposed method must be fully explained in the City of Yonkers earnings tax return. Any request must contain all facts with respect to the property forming the basis for the proposed valuation, and also a computation of the value of the rented real or tangible personal property based on gross rents in accordance with clause (b) of this subparagraph. Once approved by the commissioner, such basis or such other method must be used for subsequent years until the facts upon which it is based are materially changed.

(ii) Payroll percentage. The payroll percentage is computed by dividing ( a) the total wages, salaries and other personal service compensation, paid or incurred during the taxable year to employees in connection with business carried on within the City of Yonkers, by (b) the total of all wages, salaries and other personal service compensation, paid or incurred during the taxable year to employees in connection with business carried on both within and without the City of Yonkers.

(iii) Gross income percentage. The gross income percentage is computed by dividing (a) the gross sales or charges for services performed by or through an office, branch or agency of the business located within the City of Yonkers, by (b) the total of all gross sales or charges for services performed within and without the City of Yonkers. The sales or charges to be allocated to the City of Yonkers include all sales negotiated or consummated, and charges for services performed by an employee, agent, agency or independent contractor chiefly situated at, connected by contract or otherwise with, or sent out from, offices, branches of the business, or other agencies, situated within the City of Yonkers.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 262.2

Amended New York State Register July 27, 2016/Volume XXXVIII, Issue 30, eff.7/27/2016