Wage Tax Credit
A wage tax credit is available for a business that creates new employment in its Zone facility. The credit is equal to $1,500 for each new job created that pays 135 percent of minimum wage, the credit doubles if the employee is a registered targeted employee through the Department of Labor. The credit may be taken for 5 consecutive years. Additional jobs created in the subsequent four year period are also eligible for credits for the balance of the years remaining.
Any unused credits may be carried forward until expired.
A new business may elect to treat 50 percent of the carryover as a tax overpayment and request a refund or have the overpayment credited against outstanding tax liability.
Investment Tax Credit
An investment Tax credit is available for businesses that purchase or build property in the Zone. The credit is equal to 10 percent for a corporation and 8 percent for a personal income tax filer. The credit may be claimed each time a qualified property is acquired or built.
To be eligible the property must:
- Be acquired, constructed or erected by the tax payer on or after the date of designation and prior to the expiration.
- Be used in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, or agriculture.
- Is an industrial waste treatment facility or air pollution control facility used in the tax payer's trade or business.
- Is a research or development property.
Any unused credits may be carried forward until expired.
A new business may elect to treat 50 percent of the carryover as a tax overpayment and request a refund or have the overpayment credited against outstanding tax liability.
Employment Incentive Credit
Must be in conjunction with claiming the Investment Tax Credit
Available for those businesses who are eligible for the Investment Tax Credit AND create new employment.
The credit equals 30 percent of the Investment Tax Credit for each of the 3 consecutive years following the year in which the investment tax credit was claimed.
To be eligible the business must:
- Claim the Investment Tax Credit and employ at least 101 percent of the average number of people employed in the year before the investment tax credit was claimed.
- Any unused credits may be carried forward until expired.
- A new business may elect to treat 50 percent of the carryover as a tax overpayment and request a refund or have the overpayment credited against outstanding tax liability.
Sales Tax Refund
A refund or credit of sales tax paid is allowed to the Zone business, owner of the property or the contractor hired to do new construction, rehabilitation or expansion of industrial or commercial property located within a Zone.
No need to be Zone certified, just need to be located in a Zone.
To claim credit submit an AU-11 form with a letter from the Zone Coordinator stating the property is in the Empire Zone along with a purchasing schedule to NYS Tax and Finance
Qualified Empire Zone Enterprise
- The QEZEs are enhanced Empire Zone Benefits.
To become QEZE eligible, a business must be located in the Zone, be Zone Certified, and pass an annual employment test.
This employment test will vary depending on when you a business is certified.
The Employment Test- certified prior 4/1/05
The business employment number of all the company's facilities in the Zone(s) equals or exceeds the employment number of its facilities in the Zone(s) during the base period, AND,
The employment number of all the company's NYS facilities outside the Zone(s) equals or exceeds its employment number of all its NYS facilities out side the Zone(s) during the base period.
Base Period - Five tax years immediately preceding the test year
Test Year - The business' last taxable year ending before the test date
Test Date - Date the business was certified
The Employment Test- certified after 4/1/05
The business employment number of all the company's facilities in the Zone(s) equals or exceeds the employment number of its facilities in the Zone(s) during the base period, AND, The employment number of all the company's NYS facilities outside the Zone(s) equals or exceeds its employment number of all its NYS facilities out side the Zone(s) during the base period.
Base Period - Five tax years immediately preceding the test year
Test Year - The business' last taxable year ending before the test date
Test Date - Date the business was certified
For the Tax Reduction and the real Property Tax Credit, a QEZE must also meet an employment increase factor.
Definitions -
Employment Increase Factor
There are two methods to calculate the employment increase factor. A business uses the greater of the two factors. The factor cannot exceed 1.
Method 1
(Tax Year Employment - Test Year Employment)
Test year employment = Employment Increase Factor
Method 2
(Tax Year Employment - Test Year Employment)
100 = Employment Increase Factor
Zone Allocation Factor
The Zone allocation factor is the percentage that represents the taxpayer's economic presence in Empire Zones in which the taxpayer is certified.
The percentage is calculated by adding the two percentages determined in (1) and (2) below and then dividing the result by 2. Where a taxpayer has only one percentage to determine from either (1) or (2) below, that percentage should be used as the Zone allocation factor.
(1) Determine the percentage of the taxpayer's real and tangible personal property in Empire Zones by dividing the average value of real and tangible personal property, whether owned or rented, in Empire Zones during the period covered by the average value of all the taxpayer's real and tangible personal property, whether owned or rented, within the state during that same period.
Value of the taxpayer's real and tangible personal property means the adjusted basis of properties for federal income tax purposes (except that the value of rental property will be 8 times the gross rents paid for the rental property for the taxable year). However, if a taxpayer has made a one-time, revocable election, which has not been revoked, to use fair market value as the value of all of the taxpayer's real and tangible personal property for purposes of the property factor of the business allocation percentage, the taxpayer may also use fair market value for purposes of this computation.
(2) Determine the percentage of the taxpayer's wages in Empire Zones by dividing the total wages and salaries of employees within Empire Zones, except general executive officers, by the total wages and salaries of all the taxpayer's employees within the state, except general executive officers.
For Article 22 (personal income tax) purposes, reference to property, wages and salaries are considered to be references to only those items connected with the conduct of a business. Therefore, the reference to entire net income in (2) above would be net profit (loss) or ordinary income (loss) for Article 22 purposes.
The Tax Factor is:
Article 9-A taxpayers:
The larger of the tax on the entire net income base or the minimum taxable income base.
For Article 9-A taxpayers, the credit deducted for each taxable year cannot reduce the to an amount less than the fixed dollar minimum. However, Article 9-A taxpayers that have a Zone allocation factor of 100 percent are not subject to this limitation and the credit deducted for each taxable year can reduce the tax to zero for these taxpayers.
Article 32 taxpayers:
The larger of the tax on entire net income or alternative entire net income.
For Article 32 taxpayers, the credit deducted for each taxable year cannot reduce the tax to an amount less than the fixed dollar minimum tax.
Article 33 taxpayers:
The larger of the tax on entire net income or the entire net income plus compensation alternative.
For Article 33 taxpayers, the credit deducted for each taxable year cannot reduce the tax to an amount less than the fixed dollar minimum tax.
Article 22 taxpayers:
The tax as determined under Article 22.
For Article 22 taxpayers, the credit deducted for each taxable year can reduce the tax to zero. The QEZE Tax Reduction Credit has been amended to codify the computation of the tax factor for sole proprietors, partners and S corporation shareholders of a QEZE.
Sole proprietors, New York S corporation shareholders and individual partners of a QEZE shall determine the tax factor used in the computation of the tax reduction credit by multiplying the New York State tax shown on their return by a ratio, the numerator of which is the income from the QEZE allocated within New York State and included in their New York adjusted gross income and the denominator of which is their New York adjusted gross income. In no event may the ratio exceed one. The commissioner of the Department of Taxation and Finance may prescribe other methods which reasonably reflect the portion of tax attributable to the QEZE.
These provisions are a codification of current Tax Department policy and are effective for tax years beginning on or after January 1, 2001.
http://www.tax.state.ny.us/Forms/
Tax Reduction Credit
The tax reduction credit is applied against business related NYS income tax, based on the businesses structure. This credit can reduce tax to fixed dollar minimum (A General Business Corp Article 9A can reduce tax to $0 if 100 percent in the Zone)
Tax Reduction Credit
Tax Factor X Zone Allocation Factor X Employment Increase Factor
Credits cannot be carried forward or refunded.
Please refer to TSB-M-01 for further information.
Real Property Tax Credit
The Real Property Tax Credit is applied against NY state business-related income taxes and is based on the number of jobs and the real property taxes paid on the property in the Zone.
Credit for Real Property Taxes = Real Property Tax Paid X Employment Increase Factor
The Real Property Tax limitation
Businesses Certified prior to 4/1/05 is the greater of:
$10,000 times each new employee, or
10 percent of the QEZE's federal basis multiplied by its percent of physical occupancy in the zone property, or
10 percent of the QEZE's federal basis multiplied by its percent of that basis attributable to construction, rehabilitation or the expansion of the zone property. (If the construction, et al percentage is 50 percent or greater, then the percent is deemed to be 100 percent)
Businesses Certified after 4/1/05
Wages/Benefit formula or capital investment amount not to exceed RP taxes:
Wages/Benefits formula -
25 percent of total wages and benefits to net new employees, capped at $10,000 per new job
(wages/ benefits over $40,000 excluded)
Capital Investment Amount -
10 percent of the federal basis of the real property and the greater of:
-- the percent of such property occupied and used by the QEZE or related person, or,
-- the percent of such cost or other basis attributable to construction, rehab, or expansion of zone property.
If more than 50 percent, then the percentage is deemed to be 100 percent
Includes cost of acquisitions
Sales Tax Exemption
The Sales Tax exemption applies to all tangible personal property and services which are directly and predominantly used by the QEZE. The exemption is ONLY for the New York State portion of 4.25 percent.
A business must apply for an exemption certificate using the DTF-80 application. NYS will then forward a ST-121 with your 7 digit tax exempt number and eligibility date.
The Sales Tax Exemption is available for 10 years.
Zone Capital Credit
A 25 percent tax credit against personal or corporate income taxes is available for contributing or purchasing shares in a zone capital corporation; for a direct equity investment in certain certified zone business; or for contributions to approved community development projects within the Franklin EZ.
Linked Deposit
A public-private partnership from Empire State Development that provides businesses with affordable capital based on bank loans at reduced interest rates. For more information: Linked Deposit Back to Empire Zone >>
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