Matter of Fidelity National Information Services Inc. and Subsidiaries

Fidelity National Information Services (FIS) and its combined subsidiaries, a global financial services technology company with software products spanning debit and credit card processing, core banking systems, risk-prediction tools, and equity trading platforms, sought the reduced Qualified Emerging Technology Company (QETC) franchise tax rate for the 2015 through 2017 tax years. Through detailed product-by-product revenue analyses, FIS demonstrated that more than 50% of its combined group's receipts derived from internally developed emerging technology products — a showing the Division of Taxation's own auditor did not dispute.

Combined-Basis Qualification Was Not Enough

The Division nonetheless denied QETC treatment because not every individual member corporation of the FIS combined group independently satisfied the QETC requirements — some had no New York business location and thus could not meet the 'located in New York' element. FIS argued that the Division's 'entity-by-entity' theory was inconsistent with New York's mandatory combined reporting regime, under which a combined group is generally treated as a single corporation, and separately argued that the Legislature's decision not to add express 'each corporation must qualify' language to the statute during a later reform showed no such requirement was intended.

Charter Communications Controlled

The Administrative Law Judge rejected both arguments, holding that the 2015 corporate tax reform did not redefine the statutory term 'taxpayer,' which remains each individual corporation subject to tax, and that legislative inaction on a proposed clarifying amendment could not override the plain statutory text as construed in the controlling Appellate Division precedent, Matter of Charter Communications, Inc. v. New York State Tax Appeals Tribunal, 244 A.D.3d 1634 (3d Dept 2025). The judge also rejected FIS's alternative request that the Division exercise discretionary authority to split the combined group into separately taxed QETC and non-QETC subgroups, finding no statutory basis for correcting the resulting distortion and that FIS's prior correspondence with the Division did not amount to a proper request for discretionary adjustment.

The Division's own motion for summary determination was denied because genuine factual disputes remained in the pleadings, but on the merits, FIS's petition was denied and the Division's notice of deficiency and notice of disallowance were sustained.

Significance: This decision confirms that Charter Communications is being applied as controlling precedent even for financial-technology companies whose emerging-technology, R&D-intensive character is undisputed — reinforcing that the QETC preferential rate turns entirely on each combined-group member's individual New York presence, not on the group's aggregate research and development activity.