N.Y. Tax Law § 14 — Empire zones program

§ 14. Empire zones program. (a) Qualified empire zone enterprise. A\nbusiness enterprise which is certified under article eighteen-B of the\ngeneral municipal law and meets the employment test shall be a\n"qualified empire zone enterprise":\n (1) except as provided in paragraphs one-a and one-b of this\nsubdivision, for purposes of articles nine-A, twenty-two and\nthirty-three of this chapter, for each of the taxable years within the\n"business tax benefit period," which period shall consist of (A) in the\ncase of a business enterprise with a test date occurring on or before\nDecember thirty-first, two thousand one, the first fifteen taxable years\nbeginning on or after January first, two thousand one, (B) in the case\nof a business enterprise with a test date occurring on or after January\nfirst, two thousand two, but prior to April first, two thousand five,\nthe fifteen taxable years next following the business enterprise's test\nyear, and (C) in the case of a business enterprise which is first\ncertified under article eighteen-B of the general municipal law on or\nafter April first, two thousand five, the ten taxable years starting\nwith the taxable year in which the business enterprise's first date of\ncertification under article eighteen-B of the general municipal law\noccurs, but only with respect to each of such business tax benefit\nperiod years for which the employment test is met,\n (1-a) With respect to a business enterprise approved by the\ncommissioner of economic development as the owner of a qualified\ninvestment project pursuant to subdivision (w) of section nine hundred\nfifty-nine of the general municipal law, the business tax benefit period\nshall mean the ten taxable years starting with the taxable year in which\nthe business enterprise's benefit period commencement date occurs, but\nonly with respect to each of such business tax benefit period years for\nwhich the employment test is met, as the term "benefit period\ncommencement date" is defined in this paragraph. The term "benefit\nperiod commencement date" shall mean either (i) the date of\ncertification pursuant to article eighteen-B of the general municipal\nlaw of the business enterprise at the location of the qualified\ninvestment project or (ii) the date when property constituting a\nqualified investment project is first placed in service. The benefit\nperiod commencement date shall be determined by an election made by the\nbusiness enterprise taxable year which includes the date of\ncertification of the business enterprise at the location of the\nqualified investment project pursuant to article eighteen-B of the\ngeneral municipal law,. In the event no such election is made by the\nbusiness enterprise, the business tax benefit period shall be deemed to\ncommence in the taxable year in which the business enterprise is\ncertified at the location of the qualified investment project pursuant\nto article eighteen-B of the general municipal law. The business tax\nbenefit period allowed under this paragraph shall be in addition to the\nbusiness tax benefit period allowed pursuant to paragraph one of this\nsubdivision.\n (1-b) With respect to a business enterprise approved by the\ncommissioner of economic development as the owner of a significant\ncapital investment project pursuant to subdivision (w) of section nine\nhundred fifty-nine of the general municipal law, the business tax\nbenefit period shall be increased to include the ten taxable years\nstarting with the taxable year in which property comprising the\nsignificant capital investment project is first placed in service,\nprovided that such property is placed in service during the business\nenterprise's business tax benefit period under paragraph one-a of this\nsubdivision. The business tax benefit period set forth in paragraph\none-a of this subdivision and any additional periods added to such\nbusiness tax benefit period pursuant to this paragraph shall constitute\none continuous business tax benefit period. During such entire business\ntax benefit period, the business enterprise shall be allowed to claim\nthe tax credits provided pursuant to sections fifteen and sixteen of\nthis article with respect to such qualified investment project and such\nsignificant capital investment project, provided the employment test is\nmet and the requirements of such credits are satisfied for each of those\ntaxable years, and provided further that, the benefit period factor as\nset forth in subdivision (c) of section fifteen of this article shall be\n1.0 during such entire business tax benefit period.\n (2) for purposes of articles twenty-eight and twenty-nine of this\nchapter, during the "sales and use tax benefit period." Such period\nshall consist of one hundred twenty consecutive months beginning on the\nlater of (A) March first, two thousand one, or (B) with regard to\nbusiness enterprises certified pursuant to article eighteen-B of the\ngeneral municipal law prior to April first, two thousand nine, the first\nday of the month next following the date of issuance of a qualified\nempire zone enterprise certification by the commissioner under\nsubdivision (h) of this section, or (C) with regard to business\nenterprises certified pursuant to such article eighteen-B on or after\nApril first, two thousand nine, the first day of the month next\nfollowing the date of certification under article eighteen-B as an\nempire zone business. Provided however, such period shall not include\nany month falling within a taxable year immediately preceded by a\ntaxable year with respect to which the business enterprise did not meet\nthe employment test.\n (b) Employment test.\n (1) General. In the case of a business enterprise which is first\ncertified under article eighteen-B of the general municipal law before\nApril first, two thousand five, the employment test shall be met with\nrespect to a taxable year if the business enterprise's employment number\nin the empire zones for such taxable year equals or exceeds its\nemployment number in such zones for the base period, and its employment\nnumber in the state outside of such zones for such taxable year equals\nor exceeds its employment number in the state outside of such zones for\nthe base period. For entities first certified between August first, two\nthousand two and March thirty-first, two thousand five, if the base\nperiod is zero years and the enterprise has an employment number in such\nzone of greater than zero with respect to a taxable year, then the\nemployment test will be met only if the enterprise qualifies as a new\nbusiness under subdivision (j) of this section. For entities first\ncertified prior to August first, two thousand two, if the entity had a\nbase period of zero years or zero employment in the base period, then\nthe employment test will be met only if the enterprise qualifies as a\nnew business under subdivision (j) of this section.\n (2) Change in zone boundaries or newly designated zones. Provided,\nhowever, where there has been one or more revisions of the boundaries of\nan empire zone that resulted in the inclusion of the business enterprise\nwithin such zone, the employment test shall be determined with respect\nto a taxable year as if the boundaries of the revised zone on the last\nday of the taxable year existed during the base period and test year and\nas if the enterprise had been located in the revised zone during its\nbase period and test year. In addition, where an area has been newly\ndesignated as an empire zone, the employment test shall be determined\nwith respect to a taxable year as if such newly designated zone existed\nduring the base period and test year and as if the enterprise had been\nlocated in the newly designated zone during its base period and test\nyear.\n (3) Relocation from a business incubator facility. Where a business\nenterprise relocates to an empire zone from a business incubator\nfacility operated by a municipality or by a public or private\nnot-for-profit entity which provides space or business support services\nor both space and business support services to newly established\nenterprises, the employment test shall be determined with respect to a\ntaxable year as if such business enterprise was located in the empire\nzone during the base period.\n (4) In the case of a business enterprise which is first certified\nunder article eighteen-B of the general municipal law on or after April\nfirst, two thousand five, and notwithstanding any other provision to the\ncontrary, in the case of a business enterprise which was first certified\nbetween August first, two thousand two and March thirty-first, two\nthousand five that conducts its operations on real property that it owns\nor leases that is both located within an empire zone and that is subject\nto a brownfield site cleanup agreement executed prior to January first,\ntwo thousand six in accordance with section 27-1409 of the environmental\nconservation law, the employment test shall be met with respect to a\ntaxable year if the business enterprise's employment number in the state\nand the empire zones for such taxable year exceeds its employment number\nin the state and the empire zones, respectively, for the base period. If\nthe base period is zero years or the base period employment is zero and\nthe enterprise has an employment number in such zone of greater than\nzero with respect to a taxable year, then the employment test will be\nmet only if the enterprise qualifies as a new business under subdivision\n(j) of this section.\n (5) For purposes of the sales and use tax benefit period, in the case\nof a business enterprise which is first certified under article\neighteen-B of the general municipal law on or after April first, two\nthousand five, and is so certified during its first taxable year, the\nemployment test shall be met with respect to such first taxable year in\nany month in which its employment number exceeds zero.\n (c) Base period. (1) Except as provided in paragraphs two and three of\nthis subdivision, in the case of a business enterprise which is first\ncertified under article eighteen-B of the general municipal law before\nApril first, two thousand five, the term "base period" means the five\ntaxable years immediately preceding the test year. If the business\nenterprise has fewer than five such years, then the term "base period"\nmeans such smaller set of years.\n (2) In the case of a business enterprise which is first certified\nunder article eighteen-B of the general municipal law on or after April\nfirst, two thousand five, the term "base period" means the four taxable\nyears immediately preceding the taxable year in which the business\nenterprise was first certified under article eighteen-B of the general\nmunicipal law. If the business enterprise has fewer than four such\nyears, then the term "base period" means such smaller set of years.\n (3) For purposes of the sales and use tax benefit period, in the case\nof a business enterprise which is first certified under article\neighteen-B of the general municipal law on or after April first, two\nthousand five, the term "base period" means the three taxable years\nimmediately preceding the business enterprise's test year. For this\npurpose, the definitions set forth in subdivisions (d) and (e) of this\nsection shall apply. However, the definition of the term "test date" in\nsubdivision (e) shall be read as if the words "prior to July first, two\nthousand five" were omitted from such definition.\n (d) Test year. The term "test year" means the last taxable year of the\nbusiness enterprise ending before the test date. If a business\nenterprise does not have a taxable year that ends on or before the test\ndate, such enterprise shall be deemed to have a test year which shall be\neither the last calendar year ending on or before its test date, or if\nthe enterprise has as its taxable year a fiscal year, the last such\nfiscal year ending on or before its test date (whether or not the\nenterprise in fact had a taxable year during that period).\n (e) Test date. The term "test date" means the later of July first, two\nthousand or the date prior to July first, two thousand eleven on which\nthe business enterprise was first certified under article eighteen-B of\nthe general municipal law.\n (f) Taxable year. The term "taxable year" means the taxable year of\nthe business enterprise under section one hundred eighty-three or one\nhundred eighty-four or former section one hundred eighty-six of article\nnine, or under article nine-A, twenty-two or thirty-three of this\nchapter. If a business enterprise does not have a taxable year because\nit is exempt from taxation or otherwise not required to file a return\nunder any of such sections of article nine or under article nine-A,\ntwenty-two or thirty-three, then the term "taxable year" means (i) the\nbusiness enterprise's federal taxable year, or, (ii) if the enterprise\ndoes not have a federal taxable year, the calendar year.\n (g) Employment number. (1) The term "employment number" shall mean the\naverage number of individuals, excluding general executive officers (in\nthe case of a corporation), employed full-time by the enterprise for at\nleast one-half of the taxable year. Such number shall be computed by\ndetermining the number of such individuals employed by the taxpayer on\nthe thirty-first day of March, the thirtieth day of June, the thirtieth\nday of September and the thirty-first day of December during the\napplicable taxable year, adding together the number of such individuals\ndetermined to be so employed on each of such dates and dividing the sum\nso obtained by the number of such dates occurring within such applicable\ntaxable year. Such number shall not include individuals employed within\nthe state within the immediately preceding sixty months by a related\nperson to the QEZE, as such term "related person" is defined in\nsubparagraph (c) of paragraph three of subsection (b) of section four\nhundred sixty-five of the internal revenue code. For this purpose, a\n"related person" shall include an entity which would have qualified as a\n"related person" to the QEZE if it had not been dissolved, liquidated,\nmerged with another entity or otherwise ceased to exist or operate.\n (2) For a business enterprise satisfying the criteria set forth in\nthis paragraph, the term "employment number" with respect to the\nenterprise's first taxable year shall be computed by taking into\nconsideration only the number of individuals, excluding general\nexecutive officers (in the case of a corporation), employed full-time by\nthe enterprise on the last day of such taxable year. Such business\nenterprise shall satisfy the following criteria: (A) such enterprise\nacquired real or tangible personal property during its first taxable\nyear from an entity which is not a related person (as such term is\ndefined in paragraph one of this subdivision); (B) the first taxable\nyear of such enterprise shall be a short taxable year of not more than\nseven months in duration; and (C) the number of individuals employed\nfull-time on the last day of such first taxable year shall be at least\none hundred ninety and substantially all of such individuals must have\nbeen previously employed by the entity from whom such enterprise\npurchased its assets.\n (h) Sales and use tax. (1) In addition to the other requirements of\nthis section, for business enterprises certified pursuant to article\neighteen-B of the general municipal law prior to April first, two\nthousand nine, in order for an exemption under subdivision (z) of\nsection eleven hundred fifteen of this chapter or the credit or refund\ndescribed in subdivision (d) of section eleven hundred nineteen of this\nchapter or any like exemption or credit or refund imposed pursuant to\nthe authority of article twenty-nine of this chapter to apply with\nrespect to a qualified empire zone enterprise, such enterprise shall\napply to the commissioner of taxation and finance for the issuance of a\nqualified empire zone enterprise certification in the manner prescribed\nby the commissioner. If such commissioner grants such certification,\nsuch certification shall be subject to conditions specified by such\ncommissioner. Nothing herein or in any other law shall be construed to\nprohibit the disclosure, in such manner as the commissioner of taxation\nand finance deems appropriate, of the names and other appropriate\nidentifying information of those persons holding qualified empire zone\ncertifications pursuant to this subdivision, those persons whose\nqualified empire zone enterprise certifications have been revoked or\npersons whose qualified empire zone enterprise certifications have\nexpired. The commissioner shall not grant any certifications pursuant to\nthis subdivision after June thirtieth, two thousand ten.\n (2) A business enterprise, certified as an empire zone business under\narticle eighteen-B of the general municipal law prior to April first,\ntwo thousand nine, and certified as a qualified empire zone enterprise\nby the commissioner of taxation and finance prior to August first, two\nthousand nine, is eligible to claim the exemption under subdivision (z)\nof section eleven hundred fifteen of this chapter or any like exemption\nfrom tax imposed pursuant to the authority of article twenty-nine of\nthis chapter until September first, two thousand nine, provided that the\nother requirements of the statute are met. A business enterprise\ncertified as an empire zone business under article eighteen-B of the\ngeneral municipal law prior to April first, two thousand nine, and\ncertified as a qualified empire zone enterprise by the commissioner of\ntaxation and finance as of or prior to June thirtieth, two thousand ten,\nis eligible to claim the credit or refund under subdivision (d) of\nsection eleven hundred nineteen of this chapter or any like credit or\nrefund imposed pursuant to the authority of article twenty-nine of this\nchapter, provided that the other requirements of the statute are met\nduring the term of its sales and use tax benefit period notwithstanding\nthe expiration of the empire zones program under article eighteen-B of\nthe general municipal law.\n (3) During the period that a business enterprise is eligible to apply,\nor is qualified, for an exemption or a credit or refund of the sales and\ncompensating use taxes under this section, the commissioner of economic\ndevelopment shall, at the time such commissioner certifies or\ndecertifies a business enterprise under article eighteen-B of the\ngeneral municipal law, notify the commissioner of taxation and finance\nof such certification or decertification, which notification shall\ninclude the full legal name, address and federal employer identification\nnumber of such enterprise. The commissioner of economic development\nshall, at the time of any such certification, also advise such\nenterprise of the requirements in paragraph one of this subdivision.\n (i) Cessation of status. A business enterprise shall cease to be a\nqualified empire zone enterprise:\n (1) for purposes of articles nine-A, twenty-two and thirty-three of\nthis chapter, on the first day of the taxable year during which\nrevocation of its certification under article eighteen-B of the general\nmunicipal law occurs, and\n (2) for purposes of articles twenty-eight and twenty-nine of this\nchapter, on the day such revocation occurs.\n (j) New business. (1) A new business shall include any corporation,\nexcept a corporation which is substantially similar in operation and in\nownership to a business entity (or entities) taxable, or previously\ntaxable, under section one hundred eighty-three, one hundred\neighty-four, former section one hundred eighty-five or former section\none hundred eighty-six of article nine; article nine-A or thirty-three\nof this chapter; article twenty-three of this chapter or which would\nhave been subject to tax under such article twenty-three (as such\narticle was in effect on January first, nineteen hundred eighty),\narticle thirty-two of this chapter or which would have been subject to\ntax under such article thirty-two (as such article was in effect on\nDecember thirty-first, two thousand fourteen) or the income (or losses)\nof which is (or was) includable under article twenty-two of this\nchapter.\n (2) For purposes of article twenty-two of this chapter, an individual\nwho is either a sole proprietor or a member of a partnership shall\nqualify as an owner of a new business unless the business of which the\nindividual is an owner is substantially similar in operation and in\nownership to a business entity taxable, or previously taxable, under\nsection one hundred eighty-three, one hundred eighty-four, former\nsection one hundred eighty-five or former section one hundred eighty-six\nof article nine; article nine-A or article thirty-three of this chapter;\narticle twenty-three of this chapter or which would have been subject to\ntax under such article twenty-three (as such article was in effect on\nJanuary first, nineteen hundred eighty); article thirty-two of this\nchapter or which would have been subject to tax under such article\nthirty-two as such article was in effect on December thirty-first, two\nthousand fourteen or the income (or losses) of which is (or was)\nincludable under article twenty-two.\n (3) For purposes of article twenty-two of this chapter, a shareholder\nof a New York S corporation shall be treated as the owner of a new\nbusiness with respect to such share if the corporation qualifies as a\nnew business pursuant to paragraph one of this subdivision.\n (4) (A)(i) Notwithstanding paragraphs one and two of this subdivision,\na new business shall include any corporation which is identical in\noperation and ownership to a business entity (or entities) taxable under\nsection one hundred eighty-three or one hundred eighty-four or former\nsection one hundred eighty-five of article nine; article nine-A or\nthirty-three of this chapter or the income (or losses) of which is\nincludable under article twenty-two of this chapter, provided such\ncorporation and such business entity or entities are operating in\ndifferent counties in the state.\n (ii) Notwithstanding paragraphs one and two of this subdivision, an\nindividual who is either a sole proprietor or a member of a partnership\nshall qualify as an owner of a new business if the business of which the\nindividual is an owner is identical in operation and in ownership to a\nbusiness entity (or entities) taxable under section one hundred\neighty-three or one hundred eighty-four or former section one hundred\neighty-five of article nine; article nine-A or thirty-three of this\nchapter or the income (or losses) of which is includable under article\ntwenty-two of this chapter, provided such business and such business\nentity or entities are operating in different counties in the state.\n (iii) Any corporation qualifying as a new business or any individual\nqualifying as an owner of a new business as a result of the provisions\nof this subparagraph shall have the same business tax benefit period and\nsales and use tax benefit period as the business entity to which it is\nidentical in operation and in ownership.\n (B) Notwithstanding any provisions of this subdivision to the contrary\nand notwithstanding subdivision c of section eighteen of part CC of\nchapter eighty-five of the laws of two thousand two, a corporation or\npartnership, which was first certified under article eighteen-B of the\ngeneral municipal law before August first, two thousand two, has a base\nperiod of zero years or zero employment for its base period, and is\nsimilar in operation and in ownership to a business entity or entities\ntaxable, or previously taxable, under sections specified in paragraph\none or two of this subdivision or which would have been subject to tax\nunder article twenty-three of this chapter (as such article was in\neffect on January first, nineteen hundred eighty) or which would have\nbeen subject to tax under article thirty-two of this chapter (as such\narticle was in effect on December thirty-first, two thousand fourteen)\nor the income or losses of which is or was includable under article\ntwenty-two of this chapter shall not be deemed a new business if it was\nnot formed for a valid business purpose, as such term is defined in\nclause (D) of subparagraph one of paragraph (o) of subdivision nine of\nsection two hundred eight of this chapter and was formed solely to gain\nempire zone benefits.\n (5) Notwithstanding any other provision of this section, a business\nenterprise which is approved by the commissioner of economic development\nas the owner of a qualified investment project or a significant capital\ninvestment project pursuant to subdivision (w) of section nine hundred\nfifty-nine of the general municipal law, has a base period of zero years\nand places in service property (or a project that includes such\nproperty) which comprises such qualified investment project or such\nsignificant capital investment project, shall be deemed to be a new\nbusiness under this section. Provided, however, to be deemed a new\nbusiness under this paragraph, such business enterprise shall have\nreceived certification under article eighteen-B of the general business\nlaw by December thirty-first, two thousand seven.\n (k) If the designation of an area as an empire zone is no longer in\neffect because section nine hundred sixty-nine of the general municipal\nlaw was not amended to extend the effective date of such designation so\nthat the designations of all empire zones pursuant to article eighteen-B\nof the general municipal law have expired, a business enterprise that\nwas certified pursuant to article eighteen-B of the general municipal\nlaw on the day immediately preceding the day on which such designation\nexpired shall be deemed to continue to be certified under such article\neighteen-B for purposes of this section, and sections fifteen, sixteen,\nsubdivisions five and six of section two hundred ten-B, subsections (bb)\nand (cc) of section six hundred six, subdivision (d) of section eleven\nhundred nineteen and subdivisions (r) and (s) of section fifteen hundred\neleven of this chapter. In addition, if the designation of an area as an\nempire zone is no longer in effect because section nine hundred\nsixty-nine of the general municipal law was not amended to extend the\neffective date of such designation so that the designations of all\nempire zones pursuant to article eighteen-B of the general municipal law\nhave expired, all references to empire zones in the provisions of this\nchapter listed in the previous sentence shall be read as meaning areas\ndesignated as empire zones on the day immediately preceding the day on\nwhich such designation expired.\n (1) Manufacturer. For the purposes of sections fifteen and sixteen of\nthis article, the term "manufacturer" shall mean a taxpayer which during\nthe taxable year is principally engaged in the production of goods by\nmanufacturing, processing, assembling, refining, mining, extracting,\nfarming, agriculture, horticulture, floriculture, viticulture, or\ncommercial fishing, or a business engaged in emerging technologies\npursuant to section thirty-one hundred two-e of the public authorities\nlaw.\n (n) Clean energy enterprises. In determining tax benefits under this\nchapter for clean energy enterprises certified under article eighteen-B\nof the general municipal law, references in this section and other\nsections in this chapter relating to qualified empire zone enterprises\nand empire zone benefits to "an empire zone", "the empire zone" and "the\nempire zones" shall be read as references to "New York State", and any\ntests or measurements relating to employment for purpose of empire zone\nbenefits under this chapter shall be calculated with respect to\nemployment within the entire state, and references to "QEZES" shall be\nread as including references to such clean energy enterprises that meet\nthe employment test in this section. For purposes of the tax reduction\ncredit allowed under section sixteen of this article, for a clean energy\nenterprise, the zone allocation factor shall be one hundred percent.\n