The New York State Supreme Court, Appellate Division, affirmed a New York City Tax Appeals Tribunal decision regarding the proper method for calculating a corporation’s receipts factor for General Corporation Tax purposes. The corporation offered a subscription-based service that allowed its clients access to experts and consultants in a broad variety of disciplines, and access to a research database. Pursuant to New York City Administrative Code section 11-604.3(a)(2)(B), receipts from services performed within the City are allocated to the City. New York City Rule 19 RCNY 11-65(b)(3)(i) also provides that where a taxpayer receives payment for services within and without the City, the amount attributable to the City is determined based on the “relative values of, or the amounts of time spent in performance of, such services within and without” the City. The corporation argued that certain employees, including salespeople, consultant managers, and IT personnel, did not “perform” petitioner’s core consulting services, and that its tax liability should be based solely upon the location of and amounts paid to its consultants and research managers, who performed “the consulting services it provided to its clients.” The Appellate Division rejected the corporation’s argument, and held that the City Tax Appeals Tribunal correctly “focused its inquiry upon the nature of [the corporation’s] business and the personnel who contributed to the performance of the service [the corporation] provided, which included [the corporation’s] salespeople, IT staff, and consulting managers,” and that the compensation for those employees must be accounted for in determining the corporation’s receipts factor.
