N.Y.
Tax Law Section 35*2
Economic transformation and facility redevelopment program tax credit
(a)
General.(1)
A taxpayer which is a participant or the owner of a participant in the economic transformation and facility redevelopment program under article eighteen of the economic development law that is subject to tax under article nine-A, twenty-two or thirty-three of this chapter shall be allowed the sum of following components against such tax, pursuant to the provisions referenced in subdivision (f) of this section. (A) the economic transformation and facility redevelopment program jobs tax credit component; (B) the economic transformation and facility redevelopment program investment tax credit component; (C) the economic transformation and facility redevelopment program job training credit component; and (D) the economic transformation and facility redevelopment program real property tax credit component.(2)
A taxpayer which is a participant in the economic transformation and facility redevelopment program under article eighteen of the economic development law, or such participant’s contractor, shall be allowed a sales tax refund as provided in subdivision (f) 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 one thousand one hundred nineteen of this chapter.(3)
To be eligible for the economic transformation and facility redevelopment program tax credit, the taxpayer must meet all the following requirements. (A) The taxpayer must be a participant or the owner of a participant in the economic transformation and facility development program. The commissioner of economic development must have issued a certificate of eligibility pursuant to Economic Development Law § 402 (Application and approval process)section four hundred two of the economic development law to the taxpayer or to an entity in which the taxpayer is an owner. A copy of the certificate shall be attached to the taxpayer’s report or return. (B) The taxpayer or the entity in which the taxpayer is an owner must be a qualified new business as defined in subdivision (e) of this section. (C) The taxpayer or the entity in which the taxpayer is an owner must create and maintain at least five net new jobs in the economic transformation area.(4)
The benefit period for the tax credits under articles nine, nine-A, twenty-two, thirty-two and thirty-three of this chapter is five consecutive taxable years, beginning with the first taxable year in which the five net new jobs are created. However, in no event may that benefit period start later than two years after the certificate of eligibility is issued. If, in any year of the benefit period, the taxpayer fails to maintain the required level of five net new jobs (measured quarterly), the taxpayer will not be allowed a credit for that year. Such failure to be allowed a credit will not extend the taxpayer’s benefit period.(b)
Election of credit. No cost or expense paid or incurred by the taxpayer or the entity in which the taxpayer is an owner that is the basis for any of the above named credits shall be the basis for any other tax credit under this chapter. If a taxpayer elects to claim an economic transformation and facility redevelopment program tax credit, the election is irrevocable.(c)
Information sharing.(1)
Notwithstanding any provision of this chapter, employees and officers of the department of economic development and the department shall be allowed and are directed to share and exchange: (A) information derived from tax returns or reports that is relevant to a taxpayer’s eligibility to participate in the economic transformation and facility redevelopment program; (B) information regarding the credits applied for, allowed, or claimed pursuant to this section and taxpayers who are applying for the credits or who are claiming the credits; and (C) information contained in or derived from credit claim forms submitted to the department and applications for admission into the economic transformation and facility redevelopment program.(2)
Other than the information required to be contained in the report issued pursuant to subdivision (d) of this section, all information exchanged between the department of economic development and the department shall not be subject to disclosure or inspection under the state’s freedom of information law.(d)
Economic transformation and facility redevelopment program tax credits report.(1)
The commissioner must publish an economic transformation and facility redevelopment program tax credits report annually by July thirty-first. The first report shall be due July thirty-first, two thousand thirteen.(2)
The credits report shall contain the following information about the economic transformation program and facility redevelopment tax credits claimed under this chapter during the previous calendar year: (A) the name of each taxpayer claiming a credit; provided however, if the taxpayer claims a credit because the taxpayer is a member of a limited liability company, a partner in a partnership or a shareholder in a New York subchapter S corporation, the name of each limited liability company, partnership or New York subchapter S corporation earning any of the credit must be included in the report instead of information about the taxpayer claiming the credit; and (B) the amount of each credit earned by each taxpayer; provided however, if the taxpayer claims a credit because the taxpayer is a member of a limited liability company, a partner in a partnership or a shareholder in a New York subchapter S corporation, the amount of credit earned by each entity must be included in the report instead of information about the taxpayer claiming the credit.(3)
The credit report may also contain any other information received by the commissioner with regard to the economic transformation and facility redevelopment program tax credits that the commissioner deems to be useful in evaluating the use of the credits. The information included in the credit report will be based on the information filed with the department during the previous calendar year, to the extent that it is practicable to use that information.(e)
Definitions.(1)
The terms “participant”, “net new jobs”, “economic transformation area”, “related person”, “certificate of eligibility”, “benefit-cost ratio”, and “qualified investment” shall have the same meaning as those terms have in Economic Development Law § 400 (Definitions)section four hundred of the economic development law.(2)
The term “qualified new business” means a business entity that satisfies all of the following tests: (A) the business entity must not be currently operating or located within the economic transformation area in which it is applying for certification under article eighteen of the economic development law; (B) the business entity must not be moving existing jobs into the economic transformation area in which it is applying for certification under article eighteen of the economic development law from another area of the state; (C) the business entity must not be substantially similar in ownership and operation to another taxpayer taxable or previously taxable under section one hundred eighty-three or one hundred eighty-four or former section one hundred eighty-five of article nine, former section one hundred eighty-six of this chapter or article nine-A, twenty-two or thirty-three of this chapter or former article thirty-two of this chapter or the income or losses of which is or was includable under article 22 (Personal Income Tax)article twenty-two of this chapter; (D) the business entity must not have caused individuals to transfer from existing employment in New York with another business entity with similar ownership to similar employment with the business entity; (E) the business entity must not have acquired, purchased, leased, or had transferred to it real property located in the economic transformation area in which it is applying for certification if that real property was previously owned by an entity with similar ownership, regardless of form of incorporation or organization; and (F) the business entity must not be substantially similar in operation to a business entity from which it has acquired real or tangible personal property that is located in the economic transformation area in which it is applying for certification under article eighteen of the economic development law.(3)
The term “entity in which the taxpayer is an owner” shall mean a limited liability company in which the taxpayer is a member, a partnership in which the taxpayer is a partner and a New York subchapter S corporation in which the taxpayer is a shareholder.(f)
Cross-references. For application of the credits provided for in this section, see the following provisions of this chapter:(2)
article 9-A: section 210-B(35).(3)
article 22: section 606 (ss).(4)
article 33: section 1511 (aa).(g)
Economic transformation and facility redevelopment program jobs tax credit. A taxpayer which meets the requirements in this section shall be eligible to claim a credit for each net new job that the taxpayer creates in the economic transformation area with respect to the project for which the certificate of eligibility is issued. The amount of such credit per job shall be equal to the product of the gross wages paid and 6.85 percent.(h)
Economic transformation and facility redevelopment program investment tax credit.(1)
A taxpayer which meets the requirements in this section shall be eligible to claim a credit on qualified investments with respect to the project for which the certificate of eligibility is issued. The credit shall be equal to ten percent of the cost or other basis for federal income tax purposes of the qualified investment at a closed facility. Provided however, for purposes of this credit only, a taxpayer that is the owner of a closed facility described in paragraph (d) of subdivision eleven of Economic Development Law § 400 (Definitions)section four hundred of the economic development law, shall be allowed to include in its cost or other basis of the qualified investment at the closed facility, any demolition costs incurred at such closed facility. Those demolition costs shall be limited to the following costs:(i)
asbestos removal costs, (ii) rental of demolition equipment, (iii) personnel costs to operate the demolition equipment, (iv) costs to remove and dispose of demolition debris, (v) the costs of any permits, licenses and insurance necessary for the demolition. The total amount of investment tax credit allowed for all eligible participants under this subdivision for qualified investments located at each closed facility shall not exceed eight million dollars. The credit shall be equal to six percent of the cost or other basis for federal income tax purposes for all other qualified investments, but the credit allowed to a taxpayer may not exceed four million dollars.(2)
Costs incurred prior to the date the certificate of eligibility is issued are not eligible to be included in the calculation of the credit. A taxpayer which is a participant in the economic transformation and redevelopment program or is an owner of an entity that is a participant is not eligible for any other investment tax credit provided under this chapter.(3)
If the taxpayer is a partner in a partnership, member of a limited liability company or shareholder of a New York S corporation, then the four million dollar limit imposed above by the preceding sentences shall be applied at the entity level, so that the aggregate credit allowed to all the partners, members or shareholders of each such entity in the taxable year does not exceed the four million dollar limitation. Further, in order to properly administer the limitation of investment tax credit at a closed facility, the department may disclose information about the calculation and the amounts of the credits claimed under this subdivision for qualified investments at a particular closed facility to other taxpayers claiming investment tax credits under this subdivision at that same closed facility.(i)
Economic transformation and facility redevelopment program training tax credit.(1)
A taxpayer which meets the requirements of this section shall be allowed a credit for qualified training expenditures paid by the taxpayer with respect to the project for which the certificate of eligibility is issued. The amount of the credit shall be fifty percent of the qualified training expenses paid during the taxable year, subject to a limitation of no more than four thousand dollars per employee per year for such training expenses. This credit applies only to qualified training provided to employees who were hired after they lost their jobs at a closed facility as a result of the closure of that facility as described in subdivision eleven of Economic Development Law § 400 (Definitions)section four hundred of the economic development law.(2)
Qualified training shall include a course or courses taken and satisfactorily completed by an employee of the taxpayer at an accredited, degree granting, post-secondary college or university in New York state that (A) directly relates to the duties that the employee performs for the taxpayer within the economic transformation area; and (B) is intended to upgrade, retrain or improve the productivity or theoretical awareness of the employee. Such course or courses shall not include classes in the disciplines of management, accounting or the law or any class designed to fulfill the discipline specific requirements of a degree program at the associate, baccalaureate, graduate or professional level of these disciplines. Satisfactory completion of a course or courses shall mean the earning and granting of credit or equivalent unit, with the attainment of a grade of “B” or higher in a graduate level course or courses, a grade of “C” or higher in an undergraduate level course or courses, or a similar measure of competency for a course that is not measured according to a standard grade formula.(3)
Qualified training expenditures shall include expenses for tuition and mandatory fees, software required by the institution, fees for textbooks or other literature required by the institution offering the course or courses, minus applicable scholarships and tuition or fee waivers not granted by the taxpayer or any related person, that are paid or reimbursed by the taxpayer. Qualified training expenditures do not include room and board, computer hardware or software not specifically assigned for such course or courses, late-charges, fines or membership dues and similar expenses. Such qualified training expenditures shall not be eligible for the credit provided by this section unless the employee for whom the expenditures are disbursed is continuously employed by the taxpayer in a full-time, full-year position primarily located at a site in an economic transformation area during the period of such coursework and lasting through at least one hundred eighty days after the satisfactory completion of the qualifying course-work. Qualified training expenditures shall not include expenses for in-house or shared training outside of a New York state higher education institution or the use of consultants outside of credit granting courses, whether such consultants function inside of such higher education institution or not.(j)
Economic transformation and facility redevelopment program real property tax credit.(1)
A taxpayer which meets the requirements of this section shall be allowed a credit measured by the real property taxes on the real property located in the economic transformation area with respect to the project for which the certificate of eligibility is issued. In the first taxable year that the taxpayer may claim this credit, the credit shall be equal to twenty-five percent of the real property taxes assessed and paid during that year by the participant on the real property located in the economic transformation area outside of the closed facility. If the real property is located entirely within the grounds of a closed facility, the credit in the first year of the benefit period shall be equal to fifty percent of the real property taxes assessed and paid by the participant during that year on that property. In the following years of the benefit period, the percentage decreases by five percentage points each year for real property located in the economic transformation area outside of the closed facility, and ten percentage points for real property located at the closed facility.(2)
(A) For purposes of this credit, “real property taxes” 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. (B) The term “real property taxes” 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 (i) the property subject to the charge is limited to the property that benefits from the charge, or(ii)
the amount of the charge is determined by the benefit to the property assessed, or(iii)
the improvement for which the charge is assessed tends to increase the property value. (C) The term “real property taxes” includes payments in lieu of taxes made by the participant which is the beneficial owner of the real property to the state, a municipal corporation or a public benefit corporation pursuant to a written agreement entered into between the participant and the state, municipal corporation, or public benefit corporation. Provided, however, a payment in lieu of taxes made by the participant pursuant to a written agreement shall not constitute real property taxes in any taxable year to the extent that such payment exceeds the product of (i) the basis for federal income tax purposes of the real property located in the economic transformation area and subject to that agreement, calculated without regard to depreciation, on the last day of the taxable year, and(ii)
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.(k)
Recapture of credits. If the participant at the end of its benefit period has not created sufficient net new jobs and made sufficient qualified investments to achieve a benefit-cost ratio of at least ten to one, the taxpayer shall be required to add back as tax in the last year of its benefit period the portion of the economic transformation and facility redevelopment tax credits claimed in the years of its benefit period necessary to achieve a cost benefit ratio of ten to one. * NB Repealed December 31, 2026 * NB There are 2 § 35’s
Source:
Section 35*2 — Economic transformation and facility redevelopment program tax credit, https://www.nysenate.gov/legislation/laws/TAX/35*2 (updated Apr. 23, 2021; accessed Oct. 26, 2024).
