NY Tax L § 35-2 (2021)
2021 New York Laws TAX - Tax Article 1 - Short Title; Definitions; Miscellaneous 35*2 - Economic Transformation and Facility Redevelopment Program Tax Credit.

* § 35. 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 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  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 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 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 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 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