NY Tax L § 14 (2021)
2021 New York Laws TAX - Tax Article 1 - Short Title; Definitions; Miscellaneous 14 - Empire Zones Program.

§  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)  except  as  provided  in  paragraphs  one-a  and  one-b  of  this subdivision,   for   purposes   of   articles   nine-A,  twenty-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,  (1-a)   With   respect  to  a  business  enterprise  approved  by  the commissioner of  economic  development  as  the  owner  of  a  qualified investment  project  pursuant to subdivision (w) of section nine hundred fifty-nine of the general municipal law, the business tax benefit period shall mean the ten taxable years starting with the taxable year in which the business enterprise's benefit period commencement date  occurs,  but only  with respect to each of such business tax benefit period years for which  the  employment  test  is  met,  as  the  term  "benefit   period commencement  date"  is  defined  in  this  paragraph. The term "benefit period  commencement  date"  shall  mean  either   (i)   the   date   of certification  pursuant  to  article eighteen-B of the general municipal law of  the  business  enterprise  at  the  location  of  the  qualified investment  project  or  (ii)  the  date  when  property  constituting a qualified investment project is first placed  in  service.  The  benefit period  commencement date shall be determined by an election made by the business  enterprise  taxable  year   which   includes   the   date   of certification  of  the  business  enterprise  at  the  location  of  the qualified investment project  pursuant  to  article  eighteen-B  of  the general  municipal  law,.  In  the event no such election is made by the business enterprise, the business tax benefit period shall be deemed  to commence  in  the  taxable  year  in  which  the  business enterprise is certified at the location of the qualified investment  project  pursuant to  article  eighteen-B  of  the general municipal law. The business tax benefit period allowed under this paragraph shall be in addition to  the business  tax  benefit  period allowed pursuant to paragraph one of this subdivision.  (1-b)  With  respect  to  a  business  enterprise  approved   by   the commissioner  of  economic  development  as  the  owner of a significant capital investment project pursuant to subdivision (w) of  section  nine hundred  fifty-nine  of  the  general  municipal  law,  the business tax benefit period shall be increased  to  include  the  ten  taxable  years starting  with  the  taxable  year  in  which  property  comprising  the significant capital investment  project  is  first  placed  in  service, provided  that  such  property  is placed in service during the business enterprise's business tax benefit period under paragraph one-a  of  this subdivision.  The  business  tax  benefit  period set forth in paragraph one-a of this subdivision and  any  additional  periods  added  to  such  business  tax benefit period pursuant to this paragraph shall constitute one continuous business tax benefit period. During such entire  business tax  benefit  period,  the business enterprise shall be allowed to claim the  tax  credits  provided  pursuant to sections fifteen and sixteen of this article with respect to such qualified investment project and  such significant  capital investment project, provided the employment test is met and the requirements of such credits are satisfied for each of those taxable years, and provided further that, the benefit period  factor  as set forth in subdivision (c) of section fifteen of this article shall be 1.0 during such entire business tax benefit period.  (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)  with  regard  to business  enterprises  certified  pursuant  to article eighteen-B of the general municipal law prior to April first, two thousand nine, 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,  or  (C)  with  regard  to  business enterprises  certified  pursuant  to such article eighteen-B on or after April first, two  thousand  nine,  the  first  day  of  the  month  next following  the  date  of  certification  under  article eighteen-B as an empire zone business. 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, and notwithstanding any other provision to the contrary, in the case of a business enterprise which was first certified between August first, two  thousand  two  and  March  thirty-first,  two thousand five that conducts its operations on real property that it owns or leases that is both located within an empire zone and that is subject to  a brownfield site cleanup agreement executed prior to January first, two thousand six in accordance with section 27-1409 of the environmental conservation law, 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 or one hundred eighty-four or former section one hundred eighty-six of  article nine,  or  under  article  nine-A,  twenty-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  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. (1) 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.  (2)  For  a  business  enterprise satisfying the criteria set forth in this paragraph,  the  term  "employment  number"  with  respect  to  the enterprise's  first  taxable  year  shall  be  computed  by  taking into consideration  only  the  number  of  individuals,   excluding   general executive officers (in the case of a corporation), employed full-time by the  enterprise  on  the  last  day  of such taxable year. Such business enterprise shall satisfy the following  criteria:  (A)  such  enterprise acquired  real  or  tangible  personal property during its first taxable year from an entity which is not a  related  person  (as  such  term  is defined  in  paragraph  one  of this subdivision); (B) the first taxable year of such enterprise shall be a short taxable year of not  more  than seven  months  in  duration;  and (C) the number of individuals employed full-time on the last day of such first taxable year shall be  at  least one  hundred  ninety and substantially all of such individuals must have been previously  employed  by  the  entity  from  whom  such  enterprise purchased its assets.  (h)  Sales  and  use tax. (1) In addition to the other requirements of this section, for business enterprises  certified  pursuant  to  article eighteen-B  of  the  general  municipal  law  prior  to April first, two thousand nine, in order  for  an  exemption  under  subdivision  (z)  of section  eleven  hundred fifteen of this chapter or the credit or refund  described in subdivision (d) of section eleven hundred nineteen of  this chapter  or  any  like exemption or credit or refund 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 the commissioner. If such  commissioner  grants  such  certification, such  certification  shall  be  subject  to conditions specified by such commissioner. 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 certifications  pursuant  to  this  subdivision,  those  persons   whose qualified  empire  zone  enterprise  certifications have been revoked or persons whose  qualified  empire  zone  enterprise  certifications  have expired. The commissioner shall not grant any certifications pursuant to this subdivision after June thirtieth, two thousand ten.  (2)  A business enterprise, certified as an empire zone business under article eighteen-B of the general municipal law prior  to  April  first, two  thousand  nine, and certified as a qualified empire zone enterprise by the commissioner of taxation and finance prior to August  first,  two thousand  nine, is eligible to claim the exemption under subdivision (z) of section eleven hundred fifteen of this chapter or any like  exemption from  tax  imposed  pursuant  to the authority of article twenty-nine of this chapter until September first, two thousand nine, provided that the other requirements  of  the  statute  are  met.  A  business  enterprise certified  as  an  empire  zone business under article eighteen-B of the general municipal law prior to  April  first,  two  thousand  nine,  and certified  as  a qualified empire zone enterprise by the commissioner of taxation and finance as of or prior to June thirtieth, two thousand ten, is eligible to claim the credit  or  refund  under  subdivision  (d)  of section  eleven  hundred  nineteen of this chapter or any like credit or refund imposed pursuant to the authority of article twenty-nine of  this chapter,  provided  that  the  other requirements of the statute are met during the term of its sales and use tax benefit period  notwithstanding the  expiration  of the empire zones program under article eighteen-B of the general municipal law.  (3) During the period that a business enterprise is eligible to apply, or is qualified, for an exemption or a credit or refund of the 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 articles nine-A, twenty-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, former section one hundred eighty-five  or  former  section one  hundred  eighty-six of article nine; article nine-A 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), article  thirty-two  of this chapter or which would have been subject to tax under such article thirty-two (as such  article  was  in  effect  on December  thirty-first, two thousand fourteen) 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,  former section one hundred eighty-five or former section one hundred eighty-six of article nine; article nine-A or article 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);  article  thirty-two  of  this chapter  or  which  would  have  been  subject to tax under such article thirty-two as such article was in effect on December  thirty-first,  two thousand  fourteen  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 or one hundred  eighty-four  or  former section  one  hundred  eighty-five  of  article  nine; article nine-A 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  or  one  hundred eighty-four or former section one hundred eighty-five of article nine; article  nine-A  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 which would have been subject to tax under article thirty-two of this  chapter  (as  such article  was  in effect on December thirty-first, two thousand fourteen) 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.  (5)  Notwithstanding  any  other provision of this section, a business enterprise which is approved by the commissioner of economic development as the owner of a qualified investment project or a significant  capital investment  project  pursuant to subdivision (w) of section nine hundred fifty-nine of the general municipal law, has a base period of zero years and places  in  service  property  (or  a  project  that  includes  such property)  which  comprises  such  qualified  investment project or such significant capital investment project, shall be  deemed  to  be  a  new business  under  this  section.  Provided,  however,  to be deemed a new business under this  paragraph,  such  business  enterprise  shall  have received  certification under article eighteen-B of the general business law by December thirty-first, two thousand seven.  (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, subdivisions five and six of section two hundred ten-B, subsections (bb) and (cc) of section six hundred six, subdivision (d) of  section  eleven hundred nineteen 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.  (n)  Clean  energy enterprises. In determining tax benefits under this chapter for clean energy enterprises certified under article  eighteen-B of  the  general  municipal  law,  references  in this section and other sections in this chapter relating to qualified empire  zone  enterprises and empire zone benefits to "an empire zone", "the empire zone" and "the empire  zones"  shall be read as references to "New York State", and any tests or measurements relating to employment for purpose of empire  zone benefits  under  this  chapter  shall  be  calculated  with  respect  to employment within the entire state, and references to "QEZES"  shall  be read  as including references to such clean energy enterprises that meet the employment test in this section. For purposes of the  tax  reduction credit allowed under section sixteen of this article, for a clean energy enterprise, the zone allocation factor shall be one hundred percent.