Paychex Asks Court to Strike New York Apportionment Regulations

Recently adopted New York tax regulations on apportioning income to the state improperly discriminate against professional employer organizations, payroll services provider Paychex Inc. told a state trial court.

The New York Department of Taxation and Finance’s December 2023 regulations “arbitrarily exclude from receipts a portion of the service consideration received by” such companies, Paychex told the New York Supreme Court, Albany County, in a July 12 memorandum. State tax law “expressly requires that receipts—not net income or net gains or some other metric—be used as the input to calculate the apportionment factor,” the company said.

Professional employer organizations provide ...