N.Y. Tax Law Section 39
Tax benefits for businesses located in tax-free NY areas and employees of such businesses

(a)

(1) Any business or owner of a business in the case of a business taxed as a sole proprietorship, partnership or New York S corporation, that is located in a tax-free NY area approved pursuant to article twenty-one of the economic development law is eligible for the tax benefits described in this section. Unless otherwise specified, such business or owner of such business shall be eligible for these tax benefits for a period of ten consecutive taxable years, commencing with the taxable year during which it locates in the tax-free NY area.

(2)

In order to be eligible for these tax benefits during any taxable year, calendar quarter or sales tax quarter, such business must be approved to participate in the START-UP NY program, must operate at the approved location in the tax-free NY area, and must satisfy the eligibility criteria specified in paragraph (b) of subdivision one of Economic Development Law § 433 (Eligibility criteria for businesses)section four hundred thirty-three of the economic development law.

(b)

Tax-free NY area elimination credit. Such business or the owner of such business shall be eligible for the tax-free NY area tax elimination credit described in § 40 (The tax-free NY area tax elimination credit)section forty of this article. (c-1) Excise tax on telecommunication services. Such business or owner of a business shall be eligible for a credit of the excise tax on telecommunication services imposed by § 186-E (Excise tax on telecommunication services)section one hundred eighty-six-e of this chapter that is passed through to such business, pursuant to the provisions referenced in subdivision (k) of this section.

(d)

Metropolitan commuter transportation district mobility tax. If the tax-free NY area at which such business is located is within the metropolitan commuter transportation district (MCTD), and such business is an employer engaged in business within the MCTD, the payroll expense of such business at such location within the tax-free NY area shall be exempt from the metropolitan commuter transportation district mobility tax imposed under article 23 (Metropolitan Commuter Transportation Mobility Tax)article twenty-three of this chapter for forty consecutive calendar quarters, commencing with the calendar quarter during which the employer locates in the tax-free NY area within the MCTD. If the tax-free NY area at which such business is located is within the MCTD and the owner of such business is an individual who has net earnings from self-employment at such location, such net earnings shall be exempt from the metropolitan commuter transportation district mobility tax imposed under article 23 (Metropolitan Commuter Transportation Mobility Tax)article twenty-three of this chapter for ten consecutive taxable years commencing with the taxable year during which the business locates in the tax-free NY area.

(e)

To the extent specified, the wages of an individual who is an employee of such business located within a tax-free NY area received from such business for employment in such tax-free NY area shall be eligible for the benefits as provided in article 22 (Personal Income Tax)article twenty-two of this chapter, the New York city personal income tax as provided in article 30 (City Personal Income Tax)article thirty of this chapter, the Yonkers city income tax as provided in article 30-A (City Income Tax Surcharge)article thirty-A of this chapter, and the Yonkers earnings tax on non-residents during the ten taxable year period for such business specified in subdivision (a) of this section, provided the requirements of this subdivision are satisfied.

(i)

The individual when employed by such business must be engaged in work performed exclusively at the location within the tax-free NY area during the taxable year.

(ii)

The individual when employed by such business must be engaged in work at the location of such business within the tax-free NY area for at least one-half of the taxable year.

(iii)

Such business must be in compliance with the requirements set forth in subdivision (a) of this section.

(iv)

The individual must be employed by such business in a net new job created by such business in the tax-free NY area.

(f)

Sales and use tax. Such business shall be eligible for a credit or refund for sales and use taxes imposed on the retail sale of tangible personal property or services under subdivisions (a), (b), and

(c)

of section eleven hundred five and section eleven hundred ten of this chapter and similar taxes imposed pursuant to the authority of article 29 (Taxes Authorized For Cities, Counties and School Districts)article twenty-nine of this chapter. The credit or refund shall be allowed for one hundred twenty consecutive months beginning with the month during which such business locates in the tax-free NY area.

(g)

Real estate transfer taxes. Any lease of property to such business shall be exempt from any state or local real estate transfer tax or real property transfer tax.

(h)

(A) Notwithstanding any provision of this chapter to the contrary, the commissioner, to the extent practicable, may disclose publicly the names and addresses of the businesses receiving any of the tax benefits specified in this section. In addition, the commissioner may disclose publicly the amounts of such benefits allowed to each such business, and whether or not a business created or maintained net new jobs during the taxable year. With regard to the income tax exemption specified in subdivision (e) of this section, the commissioner may publicly disclose the aggregate amounts of such tax exemption allowed to employees. In addition, the commissioner may publicly disclose the number of net new jobs such business reports on its tax return or report or any other information necessary for the commissioner of economic development or the campus, college or university sponsoring the tax-free NY area approved pursuant to article twenty-one of the economic development law to monitor and enforce compliance with the law, rules and regulations governing the START-UP NY program. (B) Notwithstanding any provision of this chapter to the contrary, the commissioner, in determining whether a business or any of its owners is entitled to the tax benefits described in this section, may utilize and if necessary, disclose to the commissioner of economic development, information derived from the tax returns of such business or related persons of such business and wage reporting information relating to any employees of such business or its related persons.

(i)

Such business shall not be allowed to claim any other tax credit allowed under this chapter with respect to its activities or employees in such tax-free NY area.

(j)

If the application of a business for participation in the START-UP NY program specifies that failure to meet the performance benchmarks specified in such application shall result in proportional recovery of tax benefits awarded under the START-UP NY program, the business shall be required to reduce the total amount of tax benefits described in this section that the business or its owners claimed or received during the taxable year by the percentage reduction in net new jobs promised by the performance benchmarks, and if the tax benefits are reduced to an amount less than zero, those negative amounts shall be added back as tax. The amount required to be added back shall be reported on such business’s corporate franchise tax report if such business is taxed as a corporation or on the corporate franchise tax reports or personal income tax returns of the owners of such business if such business is taxed as a sole proprietorship, partnership or New York S corporation.

(k)

Cross-references. For application of the tax benefits provided for in this section, see the following provisions of this chapter:

(1)

Section 40.

(4)

Article 9-A: section 210-B, subdivision 41 and subdivision 44.

(5)

Article 22: section 606, subsection (i), paragraph (1), subparagraph (B), clause (xxxvi).

(6)

Article 22: section 606, subsection (ww) and subsection (yy).

(7)

Article 22: section 612, subsection (c), paragraph (40).

(8)

Article 23: section 803.

(9)

Article 28: section 1119, subdivision (d).

(10)

Article 31: section 1405, subdivision (b), paragraph 11.

Source: Section 39 — Tax benefits for businesses located in tax-free NY areas and employees of such businesses, https://www.­nysenate.­gov/legislation/laws/TAX/39 (updated Jan. 9, 2015; accessed May 4, 2024).

1
Short title 2
Definitions 3
Exemption from certain taxes granted to certain corporations engaged in the operation of vessels in foreign commerce 4
Exemption from certain excise and sales taxes granted to the United Nations 5
Obtaining and furnishing taxpayer identification information 5‑A
Certification of registration to collect sales and compensating use taxes by certain contractors, affiliates and subcontractors 6
Filing of warrants in the department of state 7
Inapplicability of certain money judgment enforcement procedures 8
Exemption from taxes granted to REMICs 9
Electronic funds transfer by certain taxpayers remitting withholding taxes 10
Electronic funds transfer by certain taxpayers remitting sales and compensating use taxes, prepaid sales and compensating use taxes on mo... 11
Certified capital companies 12
Internet 13
Exemption from taxation for victims or targets of Nazi persecution 14
Empire zones program 14‑A
IMB credit for energy taxes 15
QEZE credit for real property taxes 16
QEZE tax reduction credit 17
Empire zones tax benefits report 18
Low-income housing credit 19
Green building credit 20
Credit for transportation improvement contributions 21
Brownfield redevelopment tax credit 21*2
Disclosure of taxpayer information in cases involving abandoned property 22
Tax credit for remediated brownfields 23
Environmental remediation insurance credit 24
Empire state film production credit 24‑A
Musical and theatrical production credit 24‑B
Television writers’ and directors’ fees and salaries credit 24‑C
New York city musical and theatrical production tax credit 25
Disclosure of certain transactions and related information 26
Security training tax credit 27
Suspension of tax-exempt status of terrorist organizations 28
Empire state commercial production credit 28*2
Biofuel production credit 29
Mandatory electronic filing and payment 30
Bad check or failed electronic funds withdrawal fee 31
Excelsior jobs program credit 31*2
Empire state film post production credit 32
Registration of tax return preparers 33
Correction periods for electronic tax documents and payments 33*2
Temporary deferral of certain tax credits 34
Tax return preparers and software companies not to charge separately for New York e-file services 34*2
Temporary deferral payout credits 35
Use of electronic means of communication 35*2
Economic transformation and facility redevelopment program tax credit 36
Empire state jobs retention program credit 37
Alcoholic beverage production credit 38
New York innovation hot spot program tax benefits 38*2
Minimum wage reimbursement credit 39
Tax benefits for businesses located in tax-free NY areas and employees of such businesses 39‑A
Penalties for fraud in the START-UP NY program 40
The tax-free NY area tax elimination credit 41
Limitations on tax credit eligibility 42
Farm workforce retention credit 42‑A
Farm employer overtime credit 43
Life sciences research and development tax credit 43*2
Single member limited liability companies and eligibility for tax credits 44
Employer-provided child care credit 45
Empire state digital gaming media production credit 46
Restaurant return-to-work tax credit 46‑A
Additional restaurant return-to-work tax credit 47
COVID-19 capital costs tax credit 47*2
Grade no 47*3
Suspension of certain taxes on motor fuel and Diesel motor fuel 48
Child care creation and expansion tax credit 49
Newspaper and broadcast media jobs tax credit 49*2
Commercial security tax credit
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Accessed:
May 4, 2024

Last modified:
Jan. 9, 2015

§ 39’s source at nysenate​.gov

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