§237-23.5  Related entities; commonpaymaster; certain exempt transactions.  (a)  This chapter shall not applyto amounts received, charged, or attributable to services furnished by onerelated entity to another related entity or to imputed or stated interestattributable to loans, advances, or use of capital between related entities.

As used in this subsection:

"Related entities" means:

(1)  An affiliated group of corporations within themeaning of section 1504 (with respect to affiliated group defined) of thefederal Internal Revenue Code of 1986, as amended;

(2)  A controlled group of corporations within themeaning of section 1563 (with respect to definitions and special rules) of thefederal Internal Revenue Code of 1986, as amended;

(3)  Those entities connected through ownership of atleast eighty per cent of the total value and at least eighty per cent of thetotal voting power of each such entity (or combination thereof), includingpartnerships, associations, trusts, S corporations, nonprofit corporations,limited liability partnerships, or limited liability companies; and

(4)  Any group or combination of the entitiesdescribed in paragraph (3) constituting a unitary business for income taxpurposes;

whether or not the entity is located within or withoutthe State or licensed under this chapter.

"Services" means legal and accountingservices, the use of computer software and hardware, information technologyservices, database management, and those managerial and administrative servicesperformed by an employee, officer, partner, trustee, sole proprietor, member,or manager in the person's capacity as an employee, officer, partner, trustee,sole proprietor, member, or manager of one of the related entities and shallinclude overhead costs attributable to those services.

(b)  This chapter shall not apply to amountsreceived by common paymasters which are disbursed as remuneration to employeesof two or more related corporations where the common paymaster is making suchremunerations on behalf of such corporations.  Such amounts received ordisbursed by the common paymaster shall include payments of payroll taxes andemployee benefits which the common paymaster is making on behalf of relatedcorporations and which payments are related to the employees beingremunerated.  The definitions of related corporations, common paymaster,multiple common paymasters, and concurrent employment contained in 26 Code ofFederal Regulations, section 31.3121(s)-1(b) are incorporated and made a partof this subsection.

To the extent not covered by subsection (a),the exemption allowed by this subsection shall not apply to the cost ofservices, or reimbursements of such cost by one corporation to anothercorporation, of an employee disbursing the amounts exempted under thissubsection.  Each related corporation using a common paymaster or multiplecommon paymaster shall keep separate payroll records and other documentationrequired to prove the existence of concurrent employment.  Such records anddocuments shall be available for inspection by the director of taxation duringnormal business hours. [L 1988, c 175, §1; am L 1997, c 178, §4; am L 1999, c165, §1; am L 2001, c 221, §12]