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Yale and Towne Manufacturing Co. held that the provisions of the law

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in so far as they attempt to assess, lay and collect a tax upon citizens of the United States who are not residents of the State of New York, and who are citizens of other States, without according them the privileges and immunities afforded by said Act to Citizens of the United States who are citizens of the State of New York and resident therein, are unconstitutional and void.”

The case has been appealed and the decision of the Supreme Court of the United States is awaited. The Attorney General of New York State holds that until the Supreme Court sustains the decision of the District Court he will continue to regard the law in its present form as constitutional and in full effect.

The situation is accordingly very unsettled. It seems to be generally expected, however, that if the Supreme Court decision permits taxation of non-residents at all and it is generally expected it will so decide, the State Legislature will be asked to make any detail changes in the Statute which may be required to make it constituitional under the decision.

While as previously explained the law does not extend the personal exemption to a non-resident it does provide that returns need not be filed by individuals where the net income for the taxable year is less than $1,000 if single or $2,000 if married and living with husband or wife. This virtually constitutes an exemption where the net income of the individual does not equal these amounts.

Credit is allowed a non-resident for the amount of

Income Tax


income tax for which he may be liable to another state Credit for

of the United States or foreign country in which he paid another resides, upon his net income for the year, received from

sources within this State and subject to taxation under this law. This credit is based on the proportion which the net income subject to tax under this Act bears to the taxpayer's net income on which a tax was imposed by such other state or foreign country. Further, this credit shall be allowed only if such foreign state or country grants a substantially similar credit to residents of this State subject to income tax under the laws of such other state or foreign country.

Partnerships The requirements under this Act with respect to income received from partnerships are practically a duplication of the Federal Act, i. e., partnerships as such are not taxed. The income is reached through a tax on the individual's share in the partnership. Each partner is liable for his proportionate share, whether distributed or undistributed, and must include the same in computing his income for the taxable year.

The net income of a partnership is arrived at in the same manner as in the case of an individual, except that contributions are not an allowable deduction, nor is there any specific deduction allowed a partnership such as is allowed an individual. It is understood, however, that each partner may deduct from his personal return his proportionate share of the allowable contributions made by the partnership. The amount which may be so deducted is subject to the 15% limit. Also each resi dent partner is entitled to a credit in the form of personal exemption in computing his individual return. Every Partnership partnership is required to make a return for each tax- to make

Return able year either fiscal or calendar, showing specifically the amount of its gross income and the deductions allowed, including in the return the names and addresses of the partners and the amounts of the net income to which the partners would be entitled whether distributed or undistributed. The return is to be sworn to by one of the partners.

No provision is made for the class of corporation Personal which, under the Federal Act, is termed a "Personal

Corporation Service Corporation."


Estates and Trusts The provisions of the Act covering estates and trusts Fiduciary to are practically identical with corresponding provisions pay Tax of the Federal Income Tax Law. The fiduciary is called upon to file a return and pay the tax in the following instances :

(a) Income received by estates of deceased persons dur

ing the period of administration or settlement of the

(b) Income accumulated in trust for the benefit of un-

born or unascertained persons, or persons with con

tingent interests.
(c) Income held for future distribution under the terms

of the will or trust. The fiduciary in filing a return and paying the tax Exemption under the above circumstances is entitled to an exemption of $1,000 for the estate or trust. Also under the same circumstances, where the trust was created by a non-resident or when it is the estate of a non-resident, the income subject to tax would be the same income which is taxable when received by a non-resident in

Distribution of Income during period of Adminis. tration

Beneficiary to pay Tax

dividual. Presumably in such cases, the exemption of $1,000 would not be allowed as a credit.

Where the estate is in the course of administration or settlement and a portion of the income has been paid or credited to one or more of the beneficiaries, it is permissible for the fiduciary to deduct the amount of such payment or credit to any beneficiary in arriving at the net income of the estate for the purpose of this tax. The amount so received by a beneficiary shall be included in his individual return and the tax paid thereon.

Where the income of the estate or trust is either credited or distributed to the beneficiaries, the fiduciary shall file a return showing the income of the estate and to whom the net income was paid or credited. The tax, however, is not paid by the fiduciary but by the beneficiaries, who must include such income in their return and pay the tax thereon whether the income has been actually received or merely credited to them upon the records of the estate or trust.

According to the regulations issued by the Comptroller a fiduciary must make a return for each beneficiary where the fiduciary has charge of the entire income of the beneficiary and where such net income equals or exceeds either $1,000 or $2,000 depending upon the amount of personal exemption to which the beneficiary is entitled. If the beneficiary is a non-resident the return is to be made regardless of the amount of the taxable income. In such cases the fiduciary must pay the tax shown by the return to be due.

A fiduciary acting as guardian of a minor, resident of the State, whose net income, equals or exceeds $1,000 or $2,000 as the case may be, must make a return of

such income for such minor and pay the tax unless the minor himself makes the necessary return or causes it to be made. Under like conditions a fiduciary acting for an incompetent person who is a resident of the state must file a return of income for such incompetent person and pay the tax due, allowing, however, for the amount of personal exemption to which the individual is entitled. Presumably in similar cases where the minor or incompetent person is a non-resident of the State the return must be made for the full taxable income without credit for the $1,000 or $2,000 personal exemption.

Withholding at the Source
The Act defines "withholding agent" to include

“ *** all individuals, corporations, associations and part. Withholding
nerships in whatever capacity acting, including lessees, or Agent
mortgagors of real or personal property, fiduciaries, em-
ployers, and all officers and employees of the State, or of
any municipal corporation or political subdivision of the
State, having the control, receipt, custody, disposal or pay-
ment, of interest, rent, salaries, wages, premiums, annuities,
compensations, remunerations, emoluments or other fixed
or determinable annual or periodical gains, profits and in-

come taxable under this article."
While the law specifies the withholding of 2% under

Amount certain conditions the Comptroller, has ruled that every Withheld withholding agent shall deduct and withhold 1% of the first $10,000 paid to any individual where the total payment during the calendar year equals or exceeds $1,000 and 2% where such payment exceeds $10,000. This deduction is made in respect to payments in the form of:

*** salaries, wages, commissions, gratuities, emolu-
ments, perquisites and other fixed and determinable annual
or periodical compensation of whatever kind and in what-
ever form paid or received, earned for personal services

and taxable under this article, * * * "
It is required that the tax so withheld be paid to the

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