N.Y.
Tax Law Section 16
QEZE tax reduction credit
(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 (g) of this section, to be computed as hereinafter provided.(b)
Amount of credit. The amount of the credit shall be the product of (i) the benefit period factor, (ii) the employment increase factor, (iii) the zone allocation factor and (iv) the tax factor.(c)
Benefit period factor. The benefit period factor for the taxable year shall be as prescribed in subdivision (c) of § 15 (QEZE credit for real property taxes)section fifteen of this article.(d)
Employment increase factor. The employment increase factor for the taxable year shall be as prescribed in subdivision (d) of § 15 (QEZE credit for real property taxes)section fifteen of this article.(e)
Zone allocation factor. The zone allocation factor shall be the percentage representing the QEZE’s economic presence in empire zones with respect to which the QEZE is certified under article eighteen-B of the general municipal law. This percentage shall be computed by:(1)
ascertaining the percentage which the average value of the QEZE’s real and tangible personal property, whether owned or rented to it, in empire zones with respect to which the QEZE is certified under article eighteen-B of the general municipal law during the period covered by the taxpayer’s report or return bears to the average value of the QEZE’s real and tangible personal property, whether owned or rented to it, within the state during such period; provided that the term “value of the QEZE’s real and tangible personal property” shall have the same meaning as such term has in subparagraph one of paragraph (a) of subdivision three of § 210 (Computation of tax)section two hundred ten of this chapter; and(2)
ascertaining the percentage of the total wages, salaries and other personal service compensation, similarly computed, during such period of employees, except general executive officers, of the QEZE in empire zones with respect to which the QEZE is certified under article eighteen-B of the general municipal law, to the total wages, salaries and other personal service compensation, similarly computed, during such period, of all the QEZE’s employees within the state, except general executive officers; and(3)
adding together the percentages so determined and dividing the result by the number of percentages. For purposes of article 22 (Personal Income Tax)article twenty-two of this chapter, references in this subdivision to property, wages, salaries and other personal service compensation shall be deemed to be references to such items connected with the conduct of a business.(f)
Tax factor.(1)
General. The tax factor shall be, in the case of article 9-A (Franchise Tax On Business Corporations)article nine-A of this chapter, the amount of tax determined for the taxable year under paragraph (a) of subdivision one of section two hundred ten of such article. The tax factor shall be, in the case of article 22 (Personal Income Tax)article twenty-two of this chapter, the tax determined for the taxable year under subsections (a) through (d) of section six hundred one of such article. The tax factor shall be, in the case of article 33 (Franchise Taxes On Insurance Corporations)article thirty-three of this chapter, the larger of the amounts of tax determined for the taxable year under paragraphs one and three of subdivision (a) of section fifteen hundred two of such article.(2)
Sole proprietors, partners and S corporation shareholders. (A) Where the taxpayer is a sole proprietor of a qualified empire zone enterprise, the taxpayer’s tax factor shall be that portion of the amount determined in paragraph one of this subdivision which is attributable to the income of the qualified empire zone enterprise. Such attribution shall be made in accordance with the ratio of the taxpayer’s income from the qualified empire zone enterprise allocated within the state, entering into New York adjusted gross income, to the taxpayer’s New York adjusted gross income, or in accordance with such other methods as the commissioner may prescribe as providing an apportionment which reasonably reflects the portion of the taxpayer’s tax attributable to the income of the qualified empire zone enterprise. In no event may the ratio so determined exceed 1.0. (B)(i) Where the taxpayer is a member of a partnership which is a qualified empire zone enterprise, the taxpayer’s tax factor shall be that portion of the amount determined in paragraph one of this subdivision which is attributable to the income of the partnership. Such attribution shall be made in accordance with the ratio of the partner’s income from the partnership allocated within the state to the partner’s entire income, or in accordance with such other methods as the commissioner may prescribe as providing an apportionment which reasonably reflects the portion of the partner’s tax attributable to the income of the partnership. In no event may the ratio so determined exceed 1.0.(ii)
For purposes of article 9-A (Franchise Tax On Business Corporations)article nine-A of this chapter, the term “partner’s income from the partnership” means partnership items of income, gain, loss and deduction, and New York modifications thereto, entering into business income and the term “partner’s entire income” means business income allocated within the state. For purposes of article 33 (Franchise Taxes On Insurance Corporations)article thirty-three of this chapter, the term “partner’s income from the partnership” means partnership items of income, gain, loss and deduction, and New York modifications thereto, entering into entire net income or entire net income plus compensation and the term “partner’s entire income” means entire net income, or entire net income plus compensation, allocated within the state. For purposes of article 22 (Personal Income Tax)article twenty-two of this chapter, the term “partner’s income from the partnership” means partnership items of income, gain, loss and deduction, and New York modifications thereto, entering into New York adjusted gross income, and the term “partner’s entire income” means New York adjusted gross income. (C) Where the taxpayer is a shareholder of a New York S corporation which is a qualified empire zone enterprise, the shareholder’s tax factor shall be that portion of the amount determined in paragraph one of this subdivision which is attributable to the income of the S corporation. Such attribution shall be made in accordance with the ratio of the shareholder’s income from the S corporation allocated within the state, entering into New York adjusted gross income, to the shareholder’s New York adjusted gross income, or in accordance with such other methods as the commissioner may prescribe as providing an apportionment which reasonably reflects the portion of the shareholder’s tax attributable to the income of the qualified empire zone enterprise. In no event may the ratio so determined exceed 1.0.(3)
Combined returns or reports. (A) Where the taxpayer is a qualified empire zone enterprise and is required or permitted to make a return or report on a combined basis under article nine-A or article thirty-three of this chapter, the taxpayer’s tax factor shall be the amount determined in paragraph one of this subdivision which is attributable to the income of the qualified empire zone enterprise. Such attribution shall be made in accordance with the ratio of the qualified empire zone enterprise’s income allocated within the state to the combined group’s income, or in accordance with such other methods as the commissioner may prescribe as providing an apportionment which reasonably reflects the portion of the combined group’s tax attributable to the income of the qualified empire zone enterprise. In no event may the ratio so determined exceed 1.0. (B) The term “income of the qualified empire zone enterprise” means entire net income, minimum taxable income, alternative entire net income or entire net income plus compensation calculated as if the taxpayer was filing separately and the term “combined group’s income” means entire net income, minimum taxable income, alternative entire net income or entire net income plus compensation as shown on the combined return or report, allocated within the state.(4)
If the amount determined in paragraph one of this subdivision is less than zero, a taxpayer shall not be allowed a credit under this section.(g)
Definitions and cross-references. For definitions of terms used in this section see sections fourteen and fifteen of this article. For application of the credit provided for in this section, see the following provisions of this chapter:(1)
Article 9-A: Section 210-B: subdivision 6.(2)
Article 22: Section 606: subsections (i) and (cc).(3)
Article 33: Section 1511: subdivision (s).
Source:
Section 16 — QEZE tax reduction credit, https://www.nysenate.gov/legislation/laws/TAX/16 (updated Jan. 9, 2015; accessed Apr. 27, 2024).
