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New York Tax Law Section 14 - Empire Zones Program.Legal Research Home > New York Lawyer > Tax > New York Tax Law Section 14 - Empire Zones Program. Sponsored Links
§ 14. Empire zones program. (a) Qualified empire zone enterprise. A
business enterprise which is certified under article eighteen-B of the
general municipal law and meets the employment test shall be a
"qualified empire zone enterprise":
(1) for purposes of section one hundred eighty-seven-j and articles
nine-A, twenty-two, thirty-two and thirty-three of this chapter, for
each of the taxable years within the "business tax benefit period,"
which period shall consist of (A) in the case of a business enterprise
with a test date occurring on or before December thirty-first, two
thousand one, the first fifteen taxable years beginning on or after
January first, two thousand one, (B) in the case of a business
enterprise with a test date occurring on or after January first, two
thousand two, but prior to April first, two thousand five, the fifteen
taxable years next following the business enterprise's test year, and
(C) 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 ten taxable years starting with the taxable year
in which the business enterprise's first date of certification under
article eighteen-B of the general municipal law occurs, but only with
respect to each of such business tax benefit period years for which the
employment test is met,
(2) for purposes of articles twenty-eight and twenty-nine of this
chapter, during the "sales and use tax benefit period." Such period
shall consist of one hundred twenty consecutive months beginning on the
later of (A) March first, two thousand one, or (B) the first day of the
month next following the date of issuance of a qualified empire zone
enterprise certification by the commissioner under subdivision (h) of
this section. Provided however, such period shall not include any month
falling within a taxable year immediately preceded by a taxable year
with respect to which the business enterprise did not meet the
employment test.
(b) Employment test.
(1) General. 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 employment test shall be met with
respect to a taxable year if the business enterprise's employment number
in the empire zones for such taxable year equals or exceeds its
employment number in such zones for the base period, and its employment
number in the state outside of such zones for such taxable year equals
or exceeds its employment number in the state outside of such zones for
the base period. For entities first certified between August first, two
thousand two and March thirty-first, two thousand five, if the base
period is zero years and the enterprise has an employment number in such
zone of greater than zero with respect to a taxable year, then the
employment test will be met only if the enterprise qualifies as a new
business under subdivision (j) of this section. For entities first
certified prior to August first, two thousand two, if the entity had a
base period of zero years or zero employment in the base period, then
the employment test will be met only if the enterprise qualifies as a
new business under subdivision (j) of this section.
(2) Change in zone boundaries or newly designated zones. Provided,
however, where there has been one or more revisions of the boundaries of
an empire zone that resulted in the inclusion of the business enterprise
within such zone, the employment test shall be determined with respect
to a taxable year as if the boundaries of the revised zone on the last
day of the taxable year existed during the base period and test year and
as if the enterprise had been located in the revised zone during its
base period and test year. In addition, where an area has been newly
designated as an empire zone, the employment test shall be determined
with respect to a taxable year as if such newly designated zone existed
during the base period and test year and as if the enterprise had been
located in the newly designated zone during its base period and test
year.
(3) Relocation from a business incubator facility. Where a business
enterprise relocates to an empire zone from a business incubator
facility operated by a municipality or by a public or private
not-for-profit entity which provides space or business support services
or both space and business support services to newly established
enterprises, the employment test shall be determined with respect to a
taxable year as if such business enterprise was located in the empire
zone during the base period.
(4) 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 employment test shall be met with respect
to a taxable year if the business enterprise's employment number in the
state and the empire zones for such taxable year exceeds its employment
number in the state and the empire zones, respectively, for the base
period. If the base period is zero years or the base period employment
is zero and the enterprise has an employment number in such zone of
greater than zero with respect to a taxable year, then the employment
test will be met only if the enterprise qualifies as a new business
under subdivision (j) of this section.
(5) For purposes of the sales and use tax benefit period, 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, and is so certified during its first taxable year, the
employment test shall be met with respect to such first taxable year in
any month in which its employment number exceeds zero.
(c) Base period. (1) Except as provided in paragraphs two and three of
this subdivision, 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 term "base period" means the five
taxable years immediately preceding the test year. If the business
enterprise has fewer than five such years, then the term "base period"
means such smaller set of years.
(2) 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 term "base period" means the four taxable
years immediately preceding the taxable year in which the business
enterprise was first certified under article eighteen-B of the general
municipal law. If the business enterprise has fewer than four such
years, then the term "base period" means such smaller set of years.
(3) For purposes of the sales and use tax benefit period, 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 term "base period" means the three taxable years
immediately preceding the business enterprise's test year. For this
purpose, the definitions set forth in subdivisions (d) and (e) of this
section shall apply. However, the definition of the term "test date" in
subdivision (e) shall be read as if the words "prior to July first, two
thousand five" were omitted from such definition.
(d) Test year. The term "test year" means the last taxable year of the
business enterprise ending before the test date. If a business
enterprise does not have a taxable year that ends on or before the test
date, such enterprise shall be deemed to have a test year which shall be
either the last calendar year ending on or before its test date, or if
the enterprise has as its taxable year a fiscal year, the last such
fiscal year ending on or before its test date (whether or not the
enterprise in fact had a taxable year during that period).
(e) Test date. The term "test date" means the later of July first, two
thousand or the date prior to July first, two thousand eleven on which
the business enterprise was first certified under article eighteen-B of
the general municipal law.
(f) Taxable year. The term "taxable year" means the taxable year of
the business enterprise under section one hundred eighty-three, one
hundred eighty-four, one hundred eighty-five or former section one
hundred eighty-six of article nine, or under article nine-A, twenty-two,
thirty-two or thirty-three of this chapter. If a business enterprise
does not have a taxable year because it is exempt from taxation or
otherwise not required to file a return under any of such sections of
article nine or under article nine-A, twenty-two, thirty-two or
thirty-three, then the term "taxable year" means (i) the business
enterprise's federal taxable year, or, (ii) if the enterprise does not
have a federal taxable year, the calendar year.
(g) Employment number. The term "employment number" shall mean the
average number of individuals, excluding general executive officers (in
the case of a corporation), employed full-time by the enterprise for at
least one-half of the taxable year. Such number shall be computed by
determining the number of such individuals employed by the taxpayer on
the thirty-first day of March, the thirtieth day of June, the thirtieth
day of September and the thirty-first day of December during the
applicable taxable year, adding together the number of such individuals
determined to be so employed on each of such dates and dividing the sum
so obtained by the number of such dates occurring within such applicable
taxable year. Such number shall not include individuals employed within
the state within the immediately preceding sixty months by a related
person to the QEZE, as such 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. For this purpose, a
"related person" shall include an entity which would have qualified as a
"related person" to the QEZE if it had not been dissolved, liquidated,
merged with another entity or otherwise ceased to exist or operate.
(h) Sales and use tax. (1) In addition to the other requirements of
this section, in order for the exemptions described in subdivision (z)
of section eleven hundred fifteen of this chapter or any like exemptions
from taxes imposed pursuant to the authority of article twenty-nine of
this chapter to apply with respect to a qualified empire zone
enterprise, such enterprise shall apply to the commissioner of taxation
and finance for the issuance of a qualified empire zone enterprise
certification, in the manner prescribed by such commissioner. If such
commissioner grants such certification, such certification shall be
subject to conditions specified by such commissioner. An enterprise to
which the commissioner issues such certification may furnish a qualified
empire zone enterprise exempt purchase certificate to a person required
to collect sales and compensating use taxes imposed under or pursuant to
the authority of article twenty-eight or twenty-nine of this chapter,
which certificate shall be deemed to be an exemption certificate under
subdivision (c) of section eleven hundred thirty-two of this chapter.
Nothing herein or in any other law shall be construed to prohibit the
disclosure, in such manner as the commissioner of taxation and finance
deems appropriate, of the names and other appropriate identifying
information of those persons holding qualified empire zone enterprise
certifications pursuant to this subdivision, those persons whose
qualified empire zone enterprise certifications have been revoked or
those persons whose qualified empire zone enterprise certifications have
expired.
(2) During the period that a business enterprise is eligible to apply,
or is qualified, for exemptions from sales and compensating use taxes
under this section, the commissioner of economic development shall, at
the time such commissioner certifies or decertifies a business
enterprise under article eighteen-B of the general municipal law, notify
the commissioner of taxation and finance of such certification or
decertification, which notification shall include the full legal name,
address and federal employer identification number of such enterprise.
The commissioner of economic development shall, at the time of any such
certification, also advise such enterprise of the requirements in
paragraph one of this subdivision.
(i) Cessation of status. A business enterprise shall cease to be a
qualified empire zone enterprise:
(1) for purposes of section one hundred eighty-seven-j of article
nine, and articles nine-A, twenty-two, thirty-two and thirty-three of
this chapter, on the first day of the taxable year during which
revocation of its certification under article eighteen-B of the general
municipal law occurs, and
(2) for purposes of articles twenty-eight and twenty-nine of this
chapter, on the day such revocation occurs.
(j) New business. (1) A new business shall include any corporation,
except a corporation which is substantially similar in operation and in
ownership to a business entity (or entities) taxable, or previously
taxable, under section one hundred eighty-three, one hundred
eighty-four, one hundred eighty-five or one hundred eighty-six of
article nine; article nine-A, article thirty-two or thirty-three of this
chapter; article twenty-three of this chapter or which would have been
subject to tax under such article twenty-three (as such article was in
effect on January first, nineteen hundred eighty) or the income (or
losses) of which is (or was) includable under article twenty-two of this
chapter.
(2) For purposes of article twenty-two of this chapter, an individual
who is either a sole proprietor or a member of a partnership shall
qualify as an owner of a new business unless the business of which the
individual is an owner is substantially similar in operation and in
ownership to a business entity taxable, or previously taxable, under
section one hundred eighty-three, one hundred eighty-four, one hundred
eighty-five or one hundred eighty-six of article nine; article nine-A,
thirty-two or thirty-three of this chapter; article twenty-three of this
chapter or which would have been subject to tax under such article
twenty-three (as such article was in effect on January first, nineteen
hundred eighty) or the income (or losses) of which is (or was)
includable under article twenty-two.
(3) For purposes of article twenty-two of this chapter, a shareholder
of a New York S corporation shall be treated as the owner of a new
business with respect to such share if the corporation qualifies as a
new business pursuant to paragraph one of this subdivision.
(4) (A)(i) Notwithstanding paragraphs one and two of this subdivision,
a new business shall include any corporation which is identical in
operation and ownership to a business entity (or entities) taxable under
section one hundred eighty-three, one hundred eighty-four or one hundred
eighty-five of article nine; article nine-A, article thirty-two or
thirty-three of this chapter or the income (or losses) of which is
includable under article twenty-two of this chapter, provided such
corporation and such business entity or entities are operating in
different counties in the state.
(ii) Notwithstanding paragraphs one and two of this subdivision, an
individual who is either a sole proprietor or a member of a partnership
shall qualify as an owner of a new business if the business of which the
individual is an owner is identical in operation and in ownership to a
business entity (or entities) taxable under section one hundred
eighty-three, one hundred eighty-four or one hundred eighty-five of
article nine; article nine-A, article thirty-two or thirty-three of this
chapter or the income (or losses) of which is includable under article
twenty-two of this chapter, provided such business and such business
entity or entities are operating in different counties in the state.
(iii) Any corporation qualifying as a new business or any individual
qualifying as an owner of a new business as a result of the provisions
of this subparagraph shall have the same business tax benefit period and
sales and use tax benefit period as the business entity to which it is
identical in operation and in ownership.
(B) Notwithstanding any provisions of this subdivision to the contrary
and notwithstanding subdivision c of section eighteen of part CC of
chapter eighty-five of the laws of two thousand two, a corporation or
partnership, which was first certified under article eighteen-B of the
general municipal law before August first, two thousand two, has a base
period of zero years or zero employment for its base period, and is
similar in operation and in ownership to a business entity or entities
taxable, or previously taxable, under sections specified in paragraph
one or two of this subdivision or which would have been subject to tax
under article twenty-three of this chapter (as such article was in
effect on January first, nineteen hundred eighty) or the income or
losses of which is or was includable under article twenty-two of this
chapter shall not be deemed a new business if it was not formed for a
valid business purpose, as such term is defined in clause (D) of
subparagraph one of paragraph (o) of subdivision nine of section two
hundred eight of this chapter and was formed solely to gain empire zone
benefits.
(k) If the designation of an area as an empire zone is no longer in
effect because section nine hundred sixty-nine of the general municipal
law was not amended to extend the effective date of such designation so
that the designations of all empire zones pursuant to article eighteen-B
of the general municipal law have expired, a business enterprise that
was certified pursuant to article eighteen-B of the general municipal
law on the day immediately preceding the day on which such designation
expired shall be deemed to continue to be certified under such article
eighteen-B for purposes of this section, and sections fifteen, sixteen,
section one hundred eighty-seven-j, subdivisions twenty-seven and
twenty-eight of section two hundred ten, subsections (bb) and (cc) of
section six hundred six, subdivision (z) of section eleven hundred
fifteen, subsections (o) and (p) of section fourteen hundred fifty-six,
and subdivisions (r) and (s) of section fifteen hundred eleven of this
chapter. In addition, if the designation of an area as an empire zone is
no longer in effect because section nine hundred sixty-nine of the
general municipal law was not amended to extend the effective date of
such designation so that the designations of all empire zones pursuant
to article eighteen-B of the general municipal law have expired, all
references to empire zones in the provisions of this chapter listed in
the previous sentence shall be read as meaning areas designated as
empire zones on the day immediately preceding the day on which such
designation expired.
(1) Manufacturer. For the purposes of sections fifteen and sixteen of
this article, the term "manufacturer" shall mean a taxpayer which during
the taxable year is principally engaged in the production of goods by
manufacturing, processing, assembling, refining, mining, extracting,
farming, agriculture, horticulture, floriculture, viticulture, or
commercial fishing, or a business engaged in emerging technologies
pursuant to section thirty-one hundred two-e of the public authorities
law.
(m) Annual report. The commissioner shall prepare a written report
annually by December thirtieth. Such report shall contain statistical
information regarding the credits within an empire zone with respect to
the first prior taxable year and prior taxable years, to the extent
practicable, for which such information is available for, allowed to any
qualified empire zone enterprise, whether or not such enterprise was
certified for the entire taxable year. Copies of these reports shall be
submitted by the commissioner to the governor, the temporary president
of the senate, the speaker of the assembly, the chairman of the senate
finance committee, and the chairman of the assembly ways and means
committee immediately upon completion. Such reports shall contain, but
not be limited to, the number of taxpayers earning credits within an
empire zone and other tax benefits, and the average amount of such
credits allowed in each empire zone and for each qualified empire zone
enterprise by name the amount of such credits within each such zone; and
for each zone, the number of credits, the amount of such credits, and
the average amount of such credits allowed to qualified empire zone
enterprises whose employment and entire net income falls within ranges
determined by the commissioner. Such reports shall also contain both the
base year and taxable year employment levels, as reported for purposes
of calculating such credits, in each empire zone and for each qualified
empire zone enterprise.
Last modified: September 7, 2006 |