N.Y.
Tax Law Section 15
QEZE credit for real property taxes
(a)
Allowance of credit. A taxpayer which is a qualified empire zone enterprise (QEZE), or which is a sole proprietor of a QEZE or a member of a partnership which is a QEZE, and which is subject to tax under article nine-A, twenty-two or thirty-three of this chapter, shall be allowed a credit against such tax, pursuant to the provisions referenced in subdivision (h) of this section, for eligible real property taxes.(b)
Amount of credit.(1)
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 amount of the credit shall be equal to the product (or pro rata share of the product, in the case of a member of a partnership) of (i) the benefit period factor, (ii) the employment increase factor and (iii) the eligible real property taxes paid or incurred by the QEZE during the taxable year. However the amount of the credit may not exceed the credit limitation set forth in subdivision (f) of this section.(2)
(A) For 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 amount of the credit shall be equal to the product (or pro rata share of the product, in the case of a member of a partnership) of twenty-five percent of the total wages, health benefits and retirement benefits paid to or on behalf of net new employees during the taxable year, provided however, that the total amount of the credit shall not exceed ten thousand dollars for each such employee. For purposes of computing total wages, health benefits and retirement benefits, wages, health benefits and retirement benefits for each employee in excess of forty thousand dollars shall be excluded from such computation. Provided however, the amount of the credit for a QEZE certified in an empire zone designated under subdivision (b) or (c) of General Municipal Law § 958 (Criteria for empire zone designation)section nine hundred fifty-eight of the general municipal law, except a manufacturer certified in an empire zone designated under General Municipal Law § 958 (Criteria for empire zone designation)section nine hundred fifty-eight of the general municipal law, shall be further adjusted by the product of the amount determined above and the development zone employment increase factor under subparagraph (B) of this paragraph. Provided further, in addition, the amount of the credit may not exceed the credit amount set forth in subdivision (f-1) of this section. (B) Development zone employment increase factor. The development zone employment increase factors are set forth in the following table: Net New Employees: DZ Employment Increase Factor: 1 to 10 0.25 11 to 49 0.5 50 to 75 0.75 76 and above the amount, not to exceed 1.0, of new employees divided by 100 Net new employees. The number of net new employees for a QEZE is equal to the excess of the QEZE’s employment number in the empire zones with respect to which the QEZE is certified pursuant to article eighteen-B of the general municipal law for the taxable year, over the QEZE’s employment number in such zones for the base period.(3)
For a business enterprise which is first certified under article eighteen-B of the general municipal law on or after April first, two thousand nine, the credit allowed shall be seventy-five percent of the amount calculated under paragraph two of this subdivision.(c)
Benefit period factor. The benefit period factors are set forth in the following table: Taxable year of the benefit period: Benefit period factor: 1 - 10 1.0 11 .8 12 .6 13 .4 14 .2 15 0 (d) Employment increase factor. The employment increase factor is the amount, not to exceed 1.0, which is the greater of:(1)
the excess of the QEZE’s employment number in the empire zones with respect to which the QEZE is certified pursuant to article eighteen-B of the general municipal law for the taxable year, over the QEZE’s test year employment number in such zones, divided by such test year employment number in such zones; or(2)
the excess of the QEZE’s employment number in such zones for the taxable year over the QEZE’s test year employment number in such zones, divided by 100.(3)
For purposes of paragraph one of this subdivision, where there is an excess as described in such paragraph, and where the test year employment number is zero, then the employment increase factor shall be 1.0.(e)
Eligible real property taxes. The term “eligible real property taxes” means taxes imposed on real property which is owned by the QEZE and located in an empire zone with respect to which the QEZE is certified pursuant to article eighteen-B of the general municipal law, provided such taxes are paid by the QEZE which is the owner of the real property or are paid by a tenant which either (i) does not meet the eligibility requirements under § 14 (Empire zones program)section fourteen of this article to be a QEZE or (ii) cannot treat such payment as eligible real property taxes pursuant to this paragraph and such taxes become a lien on the real property during a taxable year in which the owner of the real property is both certified pursuant to article eighteen-B of the general municipal law and a qualified empire zone enterprise. For purposes of this subdivision, the term “tax” means a charge imposed upon real property by or on behalf of a county, city, town, village or school district for municipal or school district purposes, provided that the charge is levied for the general public welfare by the proper taxing authorities at a like rate against all property in the territory over which such authorities have jurisdiction, and provided that where taxes are levied pursuant to article eighteen or article nineteen of the real property tax law, the property must have been taxed at the rate determined for the class in which it is contained, as provided by such article eighteen or nineteen, whichever is applicable. The term “tax” does not include a charge for local benefits, including any portion of that charge that is properly allocated to the costs attributable to maintenance or interest, when (1) the property subject to the charge is limited to the property that benefits from the charge, or(2)
the amount of the charge is determined by the benefit to the property assessed, or(3)
the improvement for which the charge is assessed tends to increase the property value. In addition, “eligible real property taxes” shall include taxes paid by a QEZE which is a lessee of real property if the following conditions are satisfied:(1)
the taxes must be paid by the lessee pursuant to explicit requirements in a written lease executed or amended on or after June first, two thousand five, (2) such taxes become a lien on the real property during a taxable year in which the lessee of the real property is both certified pursuant to article eighteen-B of the general municipal law and a qualified empire zone enterprise, and(3)
the lessee has made direct payment of such taxes to the taxing authority and has received a receipt for such payment of taxes from the taxing authority. In addition, the term “eligible real property taxes” includes payments in lieu of taxes made by the QEZE to the state, a municipal corporation or a public benefit corporation pursuant to a written agreement entered into between the QEZE and the state, municipal corporation, or public benefit corporation. Provided, however, a payment in lieu of taxes made by the QEZE pursuant to a written agreement executed or amended on or after January first, two thousand one, shall not constitute eligible real property taxes in any taxable year to the extent that such payment exceeds the product of (A) the greater of (i) the basis for federal income tax purposes, calculated without regard to depreciation, determined as of the effective date of the QEZE’s certification pursuant to article eighteen-B of the general municipal law of real property, including buildings and structural components of buildings, owned by the QEZE and located in empire zones with respect to which the QEZE is certified pursuant to such article eighteen-B of the general municipal law, and provided that if such basis is further adjusted or reduced pursuant to any provision of the internal revenue code, the QEZE may petition the department and the department of economic development to disregard such reduction or adjustment for the purpose of this subdivision or (ii) the basis for federal income tax purposes of such real property described in clause (i) of this subparagraph, calculated without regard to depreciation, on the last day of the taxable year, and provided that if such basis is further adjusted or reduced pursuant to any provision of the internal revenue code, the QEZE may petition the department, the department of economic development and the office of real property services to disregard such reduction or adjustment for the purpose of this subdivision; and (B) the estimated effective full value tax rate within the county in which such property is located, as most recently calculated by the commissioner. The commissioner shall annually calculate estimated effective full value tax rates within each county for this purpose based upon the most current information available to him or her in relation to county, city, town, village and school district taxes.(f)
In the case of a business enterprise which is first certified under article eighteen-B of the general municipal law on or after August first, two thousand two and before April first, two thousand five, the credit limitation shall be the greater of the employment increase limitation or the capital investment limitation.(1)
The employment increase limitation shall be the product of (A) ten thousand dollars and (B) the excess of the QEZE’s employment number in the empire zones with respect to which the QEZE is certified pursuant to article eighteen-B of the general municipal law for the taxable year, over the QEZE’s test year employment number in such zones.(2)
The capital investment limitation shall be the product of (A) ten percent of the greater of (i) the cost or other basis for federal income tax purposes, determined on the later of January first, two thousand one or the effective date of the QEZE’s certification pursuant to article eighteen-B of the general municipal law, of real property, including buildings and structural components of buildings, owned by the QEZE and located in empire zones with respect to which the QEZE is certified pursuant to such article eighteen-B of the general municipal law, or(ii)
the cost or other basis for federal income tax purposes of such real property described in clause (i) of this subparagraph on the last day of the taxable year, and (B) the greater of (i) the percentage of such real property described in clause (i) of subparagraph (A) of this paragraph which is physically occupied and used by the QEZE or by a related person to the QEZE, as the 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, or(ii)
the percentage of such cost or other basis which is attributable to the construction, expansion or rehabilitation of such property, rather than the acquisition of such real property, by the QEZE. Provided, however, if the percentage of such cost or other basis, which is attributable to the construction, expansion or rehabilitation of such real property equals or exceeds fifty percent, then the percentage described in clause (ii) of subparagraph (B) of this paragraph shall be deemed to be one hundred percent. (f-1) 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 credit shall be the greater of the credit amount as determined pursuant to paragraph two of subdivision (b) of this section, or the capital investment amount determined under this subdivision. Provided however, that in no case shall the amount of the credit exceed the amount of the taxpayer’s eligible real property taxes for the taxable year.(1)
For a QEZE certified in an empire zone designated under subdivision (a) or (d) of General Municipal Law § 958 (Criteria for empire zone designation)section nine hundred fifty-eight of the general municipal law and a manufacturer certified in an empire zone designated under General Municipal Law § 958 (Criteria for empire zone designation)section nine hundred fifty-eight of the general municipal law, the capital investment amount shall be the product of (A) ten percent of the greater of (i) the cost or other basis for federal income tax purposes, determined on the later of January first, two thousand one or the effective date of the QEZE’s certification pursuant to article eighteen-B of the general municipal law, of real property, including buildings and structural components of buildings, owned by the QEZE and located in empire zones with respect to which the QEZE is certified pursuant to such article eighteen-B of the general municipal law, or(ii)
the cost or other basis for federal income tax purposes of such real property described in clause (i) of this subparagraph on the last day of the taxable year, and (B) the greater of (i) the percentage of such real property described in clause (i) of subparagraph (A) of this paragraph which is physically occupied and used by the QEZE or by a related person to the QEZE, as the 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, or(ii)
the percentage of such cost or other basis which is attributable to the construction, expansion or rehabilitation of such property, rather than the acquisition of such real property, by the QEZE. Provided, however, if the percentage of such cost or other basis, which is attributable to the construction, expansion or rehabilitation of such real property equals or exceeds fifty percent, then the percentage described in clause (ii) of subparagraph (B) of this paragraph shall be deemed to be one hundred percent.(2)
For a QEZE certified in an empire zone designated under subdivision (b) or (c) of General Municipal Law § 958 (Criteria for empire zone designation)section nine hundred fifty-eight of the general municipal law, which is not a manufacturer, the capital investment amount shall be the product of ten percent and the amount of such cost or other basis which is attributable to the construction, expansion or rehabilitation of such property, rather than the acquisition of such real property, and the percentage of such real property described in clause (i) of subparagraph (A) of paragraph (1) of this subdivision which is physically occupied and used by the QEZE or by a related person to the QEZE, as the 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. Provided, however, if the percentage of such cost or other basis, which is attributable to the construction, expansion or rehabilitation of such real property equals or exceeds fifty percent, then the percentage of physical occupation and use described in the preceding sentence shall be deemed to be one hundred percent.(g)
Credit recapture. Where a QEZE’s eligible real property taxes which were the basis for the allowance of the credit provided for under this section are subsequently reduced as a result of a final order in any proceeding under article seven of the real property tax law or other provision of law, the taxpayer shall add back, in the taxable year in which such final order is issued, the excess of (1) the amount of credit originally allowed for a taxable year over (2) the amount of credit determined based upon the reduced eligible real property taxes. If such final order reduces real property taxes for more than one year, the taxpayer must determine how much of such reduction is attributable to each year covered by such final order and calculate the amount of credit which is required by this subdivision to be recaptured for each year based on such reduction.(h)
Definitions and cross-references. For definitions of terms used in this section see section fourteen of this article. For application of the credit provided for in this section, see the following provisions of this chapter:(2)
Article 9-A: Section 210-B: subdivision 5.(3)
Article 22: Section 606: subsections (i) and (bb).(4)
Article 33: Section 1511: subdivision (r).
Source:
Section 15 — QEZE credit for real property taxes, https://www.nysenate.gov/legislation/laws/TAX/15 (updated Jan. 5, 2018; accessed Apr. 27, 2024).
