Franchisor Alert—Be on the Lookout for NY State Dept. of Taxation and Finance Information Requests

Posted in Franchising on June 27, 2009

As a result of recently enacted legislation in New York, franchisors will be required to submit annual transaction information electronically to the NY State Department of Taxation and Finance pertaining to their New York franchisees.  The required information includes:  (i) gross sales of franchisees as reported by franchisees to the franchisor; (ii) total amount of sales by the franchisor to the franchisees; (iii) any income reported to the franchisor by each franchisee; (iv) the franchisee's name, address, certificate of authority, or federal identification number; and (v) any other information required by the state tax commissioner.

Last month, franchisors began receiving initial requests from New York Dept. of Taxation and Finance officials for franchisee name and address information.  Generally speaking, the new franchisor information returns will be due annually on March 20, but the first wave of returns under this new law (for the period from March 1, 2009 through August 31, 2009) are due on September 20, 2009.

Grumblings within the franchise community have already started to emerge.  Concerns range from the obvious--increased compliance costs and audit risk--to "bigger picture" concerns such as the potential impact of this new law on state sales tax nexus arguments detrimental to franchisors.

For franchisors with franchised locations in the state of New York, check your mailbox for a letter from the NY State Department of Taxation and Finance.  For new franchisors considering where to expand, take note that the cost of franchising in New York appears to have just gone up. 

Stay tuned for further developments.

See Eric Perkins quoted today…

Posted in Closely Held Businesses and Business Start-Ups on June 25, 2009

in an article discussing the SBA's America's Recovery Capital (ARC) Loan Program.  Here's the link:

http://www.richmondbizsense.com/2009/06/25/arc-to-the-rescue-probably-not/