Matter of Fidelity National Information Services Inc., New York State Division of Tax Appeals, Case No. 850502
An administrative law judge for the New York State Division of Tax Appeals determined that corporate franchise taxpayers could not meet the definition of a “qualified emerging technology company” (“QETC”) unless every member of their combined group independently met the definition of a “QETC.” For tax years 2015 through 2017, New York taxed QETCs at a reduced tax rate. The taxpayers in Fidelity were members of a combined group that collectively sold financial and banking services to customers located throughout the world, including New York. It was undisputed that the taxpayers’ combined group, when viewed in the aggregate, met the QETC requirements: it was “located in New York” and derived over 50% of its total receipts from emerging technologies. But the ALJ, relying on Charter Communications, an appellate court decision (summarized below), determined that because not every member of the combined group independently met the requirements of a QETC, no taxpayer in the combined group was a QETC entitled to compute its tax at a reduced rate. Although the years at issue in Fidelity were subsequent to the years at issue in Charter Communications, the ALJ concluded that no subsequent legislation, specifically New York’s 2015 corporate tax reform, warranted a departure from Charter Communications.