N.Y.
Tax Law Section 14
Empire zones program
(a)
Qualified empire zone enterprise. A business enterprise which is certified under article eighteen-B of the general municipal law and meets the employment test shall be a “qualified empire zone enterprise”:(1)
except as provided in paragraphs one-a and one-b of this subdivision, for purposes of articles nine-A, twenty-two and thirty-three of this chapter, for each of the taxable years within the “business tax benefit period,” which period shall consist of (A) in the case of a business enterprise with a test date occurring on or before December thirty-first, two thousand one, the first fifteen taxable years beginning on or after January first, two thousand one, (B) in the case of a business enterprise with a test date occurring on or after January first, two thousand two, but prior to April first, two thousand five, the fifteen taxable years next following the business enterprise’s test year, and (C) in the case of a business enterprise which is first certified under article eighteen-B of the general municipal law on or after April first, two thousand five, the ten taxable years starting with the taxable year in which the business enterprise’s first date of certification under article eighteen-B of the general municipal law occurs, but only with respect to each of such business tax benefit period years for which the employment test is met, (1-a) With respect to a business enterprise approved by the commissioner of economic development as the owner of a qualified investment project pursuant to subdivision (w) of General Municipal Law § 959 (Responsibilities of the commissioner)section nine hundred fifty-nine of the general municipal law, the business tax benefit period shall mean the ten taxable years starting with the taxable year in which the business enterprise’s benefit period commencement date occurs, but only with respect to each of such business tax benefit period years for which the employment test is met, as the term “benefit period commencement date” is defined in this paragraph. The term “benefit period commencement date” shall mean either (i) the date of certification pursuant to article eighteen-B of the general municipal law of the business enterprise at the location of the qualified investment project or (ii) the date when property constituting a qualified investment project is first placed in service. The benefit period commencement date shall be determined by an election made by the business enterprise taxable year which includes the date of certification of the business enterprise at the location of the qualified investment project pursuant to article eighteen-B of the general municipal law,. In the event no such election is made by the business enterprise, the business tax benefit period shall be deemed to commence in the taxable year in which the business enterprise is certified at the location of the qualified investment project pursuant to article eighteen-B of the general municipal law. The business tax benefit period allowed under this paragraph shall be in addition to the business tax benefit period allowed pursuant to paragraph one of this subdivision. (1-b) With respect to a business enterprise approved by the commissioner of economic development as the owner of a significant capital investment project pursuant to subdivision (w) of General Municipal Law § 959 (Responsibilities of the commissioner)section nine hundred fifty-nine of the general municipal law, the business tax benefit period shall be increased to include the ten taxable years starting with the taxable year in which property comprising the significant capital investment project is first placed in service, provided that such property is placed in service during the business enterprise’s business tax benefit period under paragraph one-a of this subdivision. The business tax benefit period set forth in paragraph one-a of this subdivision and any additional periods added to such business tax benefit period pursuant to this paragraph shall constitute one continuous business tax benefit period. During such entire business tax benefit period, the business enterprise shall be allowed to claim the tax credits provided pursuant to sections fifteen and sixteen of this article with respect to such qualified investment project and such significant capital investment project, provided the employment test is met and the requirements of such credits are satisfied for each of those taxable years, and provided further that, the benefit period factor as set forth in subdivision (c) of § 15 (QEZE credit for real property taxes)section fifteen of this article shall be 1.0 during such entire business tax benefit period.(2)
for purposes of articles twenty-eight and twenty-nine of this chapter, during the “sales and use tax benefit period.” Such period shall consist of one hundred twenty consecutive months beginning on the later of (A) March first, two thousand one, or (B) with regard to business enterprises certified pursuant to article eighteen-B of the general municipal law prior to April first, two thousand nine, the first day of the month next following the date of issuance of a qualified empire zone enterprise certification by the commissioner under subdivision (h) of this section, or (C) with regard to business enterprises certified pursuant to such article eighteen-B on or after April first, two thousand nine, the first day of the month next following the date of certification under article eighteen-B as an empire zone business. Provided however, such period shall not include any month falling within a taxable year immediately preceded by a taxable year with respect to which the business enterprise did not meet the employment test.(b)
Employment test.(1)
General. In the case of a business enterprise which is first certified under article eighteen-B of the general municipal law before April first, two thousand five, the employment test shall be met with respect to a taxable year if the business enterprise’s employment number in the empire zones for such taxable year equals or exceeds its employment number in such zones for the base period, and its employment number in the state outside of such zones for such taxable year equals or exceeds its employment number in the state outside of such zones for the base period. For entities first certified between August first, two thousand two and March thirty-first, two thousand five, if the base period is zero years and the enterprise has an employment number in such zone of greater than zero with respect to a taxable year, then the employment test will be met only if the enterprise qualifies as a new business under subdivision (j) of this section. For entities first certified prior to August first, two thousand two, if the entity had a base period of zero years or zero employment in the base period, then the employment test will be met only if the enterprise qualifies as a new business under subdivision (j) of this section.(2)
Change in zone boundaries or newly designated zones. Provided, however, where there has been one or more revisions of the boundaries of an empire zone that resulted in the inclusion of the business enterprise within such zone, the employment test shall be determined with respect to a taxable year as if the boundaries of the revised zone on the last day of the taxable year existed during the base period and test year and as if the enterprise had been located in the revised zone during its base period and test year. In addition, where an area has been newly designated as an empire zone, the employment test shall be determined with respect to a taxable year as if such newly designated zone existed during the base period and test year and as if the enterprise had been located in the newly designated zone during its base period and test year.(3)
Relocation from a business incubator facility. Where a business enterprise relocates to an empire zone from a business incubator facility operated by a municipality or by a public or private not-for-profit entity which provides space or business support services or both space and business support services to newly established enterprises, the employment test shall be determined with respect to a taxable year as if such business enterprise was located in the empire zone during the base period.(4)
In the case of a business enterprise which is first certified under article eighteen-B of the general municipal law on or after April first, two thousand five, and notwithstanding any other provision to the contrary, in the case of a business enterprise which was first certified between August first, two thousand two and March thirty-first, two thousand five that conducts its operations on real property that it owns or leases that is both located within an empire zone and that is subject to a brownfield site cleanup agreement executed prior to January first, two thousand six in accordance with Environmental Conservation Law § 27-1409 (Brownfield site cleanup agreement)section 27-1409 of the environmental conservation law, the employment test shall be met with respect to a taxable year if the business enterprise’s employment number in the state and the empire zones for such taxable year exceeds its employment number in the state and the empire zones, respectively, for the base period. If the base period is zero years or the base period employment is zero and the enterprise has an employment number in such zone of greater than zero with respect to a taxable year, then the employment test will be met only if the enterprise qualifies as a new business under subdivision (j) of this section.(5)
For purposes of the sales and use tax benefit period, in the case of a business enterprise which is first certified under article eighteen-B of the general municipal law on or after April first, two thousand five, and is so certified during its first taxable year, the employment test shall be met with respect to such first taxable year in any month in which its employment number exceeds zero.(c)
Base period.(1)
Except as provided in paragraphs two and three of this subdivision, in the case of a business enterprise which is first certified under article eighteen-B of the general municipal law before April first, two thousand five, the term “base period” means the five taxable years immediately preceding the test year. If the business enterprise has fewer than five such years, then the term “base period” means such smaller set of years.(2)
In the case of a business enterprise which is first certified under article eighteen-B of the general municipal law on or after April first, two thousand five, the term “base period” means the four taxable years immediately preceding the taxable year in which the business enterprise was first certified under article eighteen-B of the general municipal law. If the business enterprise has fewer than four such years, then the term “base period” means such smaller set of years.(3)
For purposes of the sales and use tax benefit period, in the case of a business enterprise which is first certified under article eighteen-B of the general municipal law on or after April first, two thousand five, the term “base period” means the three taxable years immediately preceding the business enterprise’s test year. For this purpose, the definitions set forth in subdivisions (d) and (e) of this section shall apply. However, the definition of the term “test date” in subdivision (e) shall be read as if the words “prior to July first, two thousand five” were omitted from such definition.(d)
Test year. The term “test year” means the last taxable year of the business enterprise ending before the test date. If a business enterprise does not have a taxable year that ends on or before the test date, such enterprise shall be deemed to have a test year which shall be either the last calendar year ending on or before its test date, or if the enterprise has as its taxable year a fiscal year, the last such fiscal year ending on or before its test date (whether or not the enterprise in fact had a taxable year during that period).(e)
Test date. The term “test date” means the later of July first, two thousand or the date prior to July first, two thousand eleven on which the business enterprise was first certified under article eighteen-B of the general municipal law.(f)
Taxable year. The term “taxable year” means the taxable year of the business enterprise under section one hundred eighty-three or one hundred eighty-four or former section one hundred eighty-six of article nine, or under article nine-A, twenty-two or thirty-three of this chapter. If a business enterprise does not have a taxable year because it is exempt from taxation or otherwise not required to file a return under any of such sections of article nine or under article nine-A, twenty-two or thirty-three, then the term “taxable year” means (i) the business enterprise’s federal taxable year, or, (ii) if the enterprise does not have a federal taxable year, the calendar year.(g)
Employment number.(1)
The term “employment number” shall mean the average number of individuals, excluding general executive officers (in the case of a corporation), employed full-time by the enterprise for at least one-half of the taxable year. Such number shall be computed by determining the number of such individuals employed by the taxpayer on the thirty-first day of March, the thirtieth day of June, the thirtieth day of September and the thirty-first day of December during the applicable taxable year, adding together the number of such individuals determined to be so employed on each of such dates and dividing the sum so obtained by the number of such dates occurring within such applicable taxable year. Such number shall not include individuals employed within the state within the immediately preceding sixty months by a related person to the QEZE, as such term “related person” is defined in subparagraph (c) of paragraph three of subsection (b) of section four hundred sixty-five of the internal revenue code. For this purpose, a “related person” shall include an entity which would have qualified as a “related person” to the QEZE if it had not been dissolved, liquidated, merged with another entity or otherwise ceased to exist or operate.(2)
For a business enterprise satisfying the criteria set forth in this paragraph, the term “employment number” with respect to the enterprise’s first taxable year shall be computed by taking into consideration only the number of individuals, excluding general executive officers (in the case of a corporation), employed full-time by the enterprise on the last day of such taxable year. Such business enterprise shall satisfy the following criteria: (A) such enterprise acquired real or tangible personal property during its first taxable year from an entity which is not a related person (as such term is defined in paragraph one of this subdivision); (B) the first taxable year of such enterprise shall be a short taxable year of not more than seven months in duration; and (C) the number of individuals employed full-time on the last day of such first taxable year shall be at least one hundred ninety and substantially all of such individuals must have been previously employed by the entity from whom such enterprise purchased its assets.(h)
Sales and use tax.(1)
In addition to the other requirements of this section, for business enterprises certified pursuant to article eighteen-B of the general municipal law prior to April first, two thousand nine, in order for an exemption under subdivision (z) of § 1115 (Exemptions from sales and use taxes)section eleven hundred fifteen of this chapter or the credit or refund described in subdivision (d) of § 1119 (Subject to the conditions and limitations provided for herein, a refund or credit shall be allowed for a tax paid pursuant to subdivision...)section eleven hundred nineteen of this chapter or any like exemption or credit or refund imposed pursuant to the authority of article 29 (Taxes Authorized For Cities, Counties and School Districts)article twenty-nine of this chapter to apply with respect to a qualified empire zone enterprise, such enterprise shall apply to the commissioner of taxation and finance for the issuance of a qualified empire zone enterprise certification in the manner prescribed by the commissioner. If such commissioner grants such certification, such certification shall be subject to conditions specified by such commissioner. Nothing herein or in any other law shall be construed to prohibit the disclosure, in such manner as the commissioner of taxation and finance deems appropriate, of the names and other appropriate identifying information of those persons holding qualified empire zone certifications pursuant to this subdivision, those persons whose qualified empire zone enterprise certifications have been revoked or persons whose qualified empire zone enterprise certifications have expired. The commissioner shall not grant any certifications pursuant to this subdivision after June thirtieth, two thousand ten.(2)
A business enterprise, certified as an empire zone business under article eighteen-B of the general municipal law prior to April first, two thousand nine, and certified as a qualified empire zone enterprise by the commissioner of taxation and finance prior to August first, two thousand nine, is eligible to claim the exemption under subdivision (z) of § 1115 (Exemptions from sales and use taxes)section eleven hundred fifteen of this chapter or any like exemption from tax imposed pursuant to the authority of article 29 (Taxes Authorized For Cities, Counties and School Districts)article twenty-nine of this chapter until September first, two thousand nine, provided that the other requirements of the statute are met. A business enterprise certified as an empire zone business under article eighteen-B of the general municipal law prior to April first, two thousand nine, and certified as a qualified empire zone enterprise by the commissioner of taxation and finance as of or prior to June thirtieth, two thousand ten, is eligible to claim the credit or refund under subdivision (d) of § 1119 (Subject to the conditions and limitations provided for herein, a refund or credit shall be allowed for a tax paid pursuant to subdivision...)section eleven hundred nineteen of this chapter or any like credit or refund imposed pursuant to the authority of article 29 (Taxes Authorized For Cities, Counties and School Districts)article twenty-nine of this chapter, provided that the other requirements of the statute are met during the term of its sales and use tax benefit period notwithstanding the expiration of the empire zones program under article eighteen-B of the general municipal law.(3)
During the period that a business enterprise is eligible to apply, or is qualified, for an exemption or a credit or refund of the sales and compensating use taxes under this section, the commissioner of economic development shall, at the time such commissioner certifies or decertifies a business enterprise under article eighteen-B of the general municipal law, notify the commissioner of taxation and finance of such certification or decertification, which notification shall include the full legal name, address and federal employer identification number of such enterprise. The commissioner of economic development shall, at the time of any such certification, also advise such enterprise of the requirements in paragraph one of this subdivision.(i)
Cessation of status. A business enterprise shall cease to be a qualified empire zone enterprise:(1)
for purposes of articles nine-A, twenty-two and thirty-three of this chapter, on the first day of the taxable year during which revocation of its certification under article eighteen-B of the general municipal law occurs, and(2)
for purposes of articles twenty-eight and twenty-nine of this chapter, on the day such revocation occurs.(j)
New business.(1)
A new business shall include any corporation, except a corporation which is substantially similar in operation and in ownership to a business entity (or entities) taxable, or previously taxable, under section one hundred eighty-three, one hundred eighty-four, former section one hundred eighty-five or former section one hundred eighty-six of article nine; article nine-A or thirty-three of this chapter; article 23 (Metropolitan Commuter Transportation Mobility Tax)article twenty-three of this chapter or which would have been subject to tax under such article twenty-three (as such article was in effect on January first, nineteen hundred eighty), article thirty-two of this chapter or which would have been subject to tax under such article thirty-two (as such article was in effect on December thirty-first, two thousand fourteen) or the income (or losses) of which is (or was) includable under article 22 (Personal Income Tax)article twenty-two of this chapter.(2)
For purposes of article 22 (Personal Income Tax)article twenty-two of this chapter, an individual who is either a sole proprietor or a member of a partnership shall qualify as an owner of a new business unless the business of which the individual is an owner is substantially similar in operation and in ownership to a business entity taxable, or previously taxable, under section one hundred eighty-three, one hundred eighty-four, former section one hundred eighty-five or former section one hundred eighty-six of article nine; article nine-A or article thirty-three of this chapter; article 23 (Metropolitan Commuter Transportation Mobility Tax)article twenty-three of this chapter or which would have been subject to tax under such article twenty-three (as such article was in effect on January first, nineteen hundred eighty); article thirty-two of this chapter or which would have been subject to tax under such article thirty-two as such article was in effect on December thirty-first, two thousand fourteen or the income (or losses) of which is (or was) includable under article twenty-two.(3)
For purposes of article 22 (Personal Income Tax)article twenty-two of this chapter, a shareholder of a New York S corporation shall be treated as the owner of a new business with respect to such share if the corporation qualifies as a new business pursuant to paragraph one of this subdivision.(4)
(A)(i) Notwithstanding paragraphs one and two of this subdivision, a new business shall include any corporation which is identical in operation and ownership to a business entity (or entities) taxable under section one hundred eighty-three or one hundred eighty-four or former section one hundred eighty-five of article nine; article nine-A or thirty-three of this chapter or the income (or losses) of which is includable under article 22 (Personal Income Tax)article twenty-two of this chapter, provided such corporation and such business entity or entities are operating in different counties in the state.(ii)
Notwithstanding paragraphs one and two of this subdivision, an individual who is either a sole proprietor or a member of a partnership shall qualify as an owner of a new business if the business of which the individual is an owner is identical in operation and in ownership to a business entity (or entities) taxable under section one hundred eighty-three or one hundred eighty-four or former section one hundred eighty-five of article nine; article nine-A or thirty-three of this chapter or the income (or losses) of which is includable under article 22 (Personal Income Tax)article twenty-two of this chapter, provided such business and such business entity or entities are operating in different counties in the state.(iii)
Any corporation qualifying as a new business or any individual qualifying as an owner of a new business as a result of the provisions of this subparagraph shall have the same business tax benefit period and sales and use tax benefit period as the business entity to which it is identical in operation and in ownership. (B) Notwithstanding any provisions of this subdivision to the contrary and notwithstanding subdivision c of section eighteen of part CC of chapter eighty-five of the laws of two thousand two, a corporation or partnership, which was first certified under article eighteen-B of the general municipal law before August first, two thousand two, has a base period of zero years or zero employment for its base period, and is similar in operation and in ownership to a business entity or entities taxable, or previously taxable, under sections specified in paragraph one or two of this subdivision or which would have been subject to tax under article 23 (Metropolitan Commuter Transportation Mobility Tax)article twenty-three of this chapter (as such article was in effect on January first, nineteen hundred eighty) or which would have been subject to tax under article thirty-two of this chapter (as such article was in effect on December thirty-first, two thousand fourteen) or the income or losses of which is or was includable under article 22 (Personal Income Tax)article twenty-two of this chapter shall not be deemed a new business if it was not formed for a valid business purpose, as such term is defined in clause (D) of subparagraph one of paragraph (o) of subdivision nine of § 208 (Definitions)section two hundred eight of this chapter and was formed solely to gain empire zone benefits.(5)
Notwithstanding any other provision of this section, a business enterprise which is approved by the commissioner of economic development as the owner of a qualified investment project or a significant capital investment project pursuant to subdivision (w) of General Municipal Law § 959 (Responsibilities of the commissioner)section nine hundred fifty-nine of the general municipal law, has a base period of zero years and places in service property (or a project that includes such property) which comprises such qualified investment project or such significant capital investment project, shall be deemed to be a new business under this section. Provided, however, to be deemed a new business under this paragraph, such business enterprise shall have received certification under article eighteen-B of the general business law by December thirty-first, two thousand seven.(k)
If the designation of an area as an empire zone is no longer in effect because General Municipal Law § 969 (Termination or revision of an empire zone)section nine hundred sixty-nine of the general municipal law was not amended to extend the effective date of such designation so that the designations of all empire zones pursuant to article eighteen-B of the general municipal law have expired, a business enterprise that was certified pursuant to article eighteen-B of the general municipal law on the day immediately preceding the day on which such designation expired shall be deemed to continue to be certified under such article eighteen-B for purposes of this section, and sections fifteen, sixteen, subdivisions five and six of section two hundred ten-B, subsections (bb) and (cc) of section six hundred six, subdivision (d) of section eleven hundred nineteen and subdivisions (r) and (s) of § 1511 (Credits)section fifteen hundred eleven of this chapter. In addition, if the designation of an area as an empire zone is no longer in effect because General Municipal Law § 969 (Termination or revision of an empire zone)section nine hundred sixty-nine of the general municipal law was not amended to extend the effective date of such designation so that the designations of all empire zones pursuant to article eighteen-B of the general municipal law have expired, all references to empire zones in the provisions of this chapter listed in the previous sentence shall be read as meaning areas designated as empire zones on the day immediately preceding the day on which such designation expired.(1)
Manufacturer. For the purposes of sections fifteen and sixteen of this article, the term “manufacturer” shall mean a taxpayer which during the taxable year is principally engaged in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing, or a business engaged in emerging technologies pursuant to Public Authorities Law § 3102-E (Emerging technology industrial classifications)section thirty-one hundred two-e of the public authorities law.(n)
Clean energy enterprises. In determining tax benefits under this chapter for clean energy enterprises certified under article eighteen-B of the general municipal law, references in this section and other sections in this chapter relating to qualified empire zone enterprises and empire zone benefits to “an empire zone”, “the empire zone” and “the empire zones” shall be read as references to “New York State”, and any tests or measurements relating to employment for purpose of empire zone benefits under this chapter shall be calculated with respect to employment within the entire state, and references to “QEZES” shall be read as including references to such clean energy enterprises that meet the employment test in this section. For purposes of the tax reduction credit allowed under § 16 (QEZE tax reduction credit)section sixteen of this article, for a clean energy enterprise, the zone allocation factor shall be one hundred percent.
Source:
Section 14 — Empire zones program, https://www.nysenate.gov/legislation/laws/TAX/14 (updated Jan. 5, 2018; accessed Oct. 26, 2024).
