N.Y. Tax Law § 15 — QEZE credit for real property taxes

§ 15. QEZE credit for real property taxes. (a) Allowance of credit. A\ntaxpayer which is a qualified empire zone enterprise (QEZE), or which is\na sole proprietor of a QEZE or a member of a partnership which is a\nQEZE, and which is subject to tax under article nine-A, twenty-two or\nthirty-three of this chapter, shall be allowed a credit against such\ntax, pursuant to the provisions referenced in subdivision (h) of this\nsection, for eligible real property taxes.\n (b) Amount of credit. (1) In the case of a business enterprise which\nis first certified under article eighteen-B of the general municipal law\nbefore April first, two thousand five, the amount of the credit shall be\nequal to the product (or pro rata share of the product, in the case of a\nmember of a partnership) of (i) the benefit period factor, (ii) the\nemployment increase factor and (iii) the eligible real property taxes\npaid or incurred by the QEZE during the taxable year. However the amount\nof the credit may not exceed the credit limitation set forth in\nsubdivision (f) of this section.\n (2) (A) For a business enterprise which is first certified under\narticle eighteen-B of the general municipal law on or after April first,\ntwo 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 amount of the credit shall be equal to the product\n(or pro rata share of the product, in the case of a member of a\npartnership) of twenty-five percent of the total wages, health benefits\nand retirement benefits paid to or on behalf of net new employees during\nthe taxable year, provided however, that the total amount of the credit\nshall not exceed ten thousand dollars for each such employee. For\npurposes of computing total wages, health benefits and retirement\nbenefits, wages, health benefits and retirement benefits for each\nemployee in excess of forty thousand dollars shall be excluded from such\ncomputation. Provided however, the amount of the credit for a QEZE\ncertified in an empire zone designated under subdivision (b) or (c) of\nsection nine hundred fifty-eight of the general municipal law, except a\nmanufacturer certified in an empire zone designated under section nine\nhundred fifty-eight of the general municipal law, shall be further\nadjusted by the product of the amount determined above and the\ndevelopment zone employment increase factor under subparagraph (B) of\nthis paragraph. Provided further, in addition, the amount of the credit\nmay not exceed the credit amount set forth in subdivision (f-1) of this\nsection.\n (B) Development zone employment increase factor. The development zone\nemployment increase factors are set forth in the following table:\nNet New Employees: DZ Employment Increase Factor:\n1 to 10 0.25\n11 to 49 0.5\n50 to 75 0.75\n76 and above the amount, not to exceed 1.0,\n of new employees divided by 100\n Net new employees. The number of net new employees for a QEZE is equal\nto the excess of the QEZE's employment number in the empire zones with\nrespect to which the QEZE is certified pursuant to article eighteen-B of\nthe general municipal law for the taxable year, over the QEZE's\nemployment number in such zones for the base period.\n (3) For a business enterprise which is first certified under article\neighteen-B of the general municipal law on or after April first, two\nthousand nine, the credit allowed shall be seventy-five percent of the\namount calculated under paragraph two of this subdivision.\n (c) Benefit period factor. The benefit period factors are set forth\nin the following table:\nTaxable year of the benefit period: Benefit period factor:\n 1 - 10 1.0\n 11 .8\n 12 .6\n 13 .4\n 14 .2\n 15 0\n (d) Employment increase factor. The employment increase factor is the\namount, not to exceed 1.0, which is the greater of:\n (1) the excess of the QEZE's employment number in the empire zones\nwith respect to which the QEZE is certified pursuant to article\neighteen-B of the general municipal law for the taxable year, over the\nQEZE's test year employment number in such zones, divided by such test\nyear employment number in such zones; or\n (2) the excess of the QEZE's employment number in such zones for the\ntaxable year over the QEZE's test year employment number in such zones,\ndivided by 100.\n (3) For purposes of paragraph one of this subdivision, where there is\nan excess as described in such paragraph, and where the test year\nemployment number is zero, then the employment increase factor shall be\n1.0.\n (e) Eligible real property taxes. The term "eligible real property\ntaxes" means taxes imposed on real property which is owned by the QEZE\nand located in an empire zone with respect to which the QEZE is\ncertified pursuant to article eighteen-B of the general municipal law,\nprovided such taxes are paid by the QEZE which is the owner of the real\nproperty or are paid by a tenant which either (i) does not meet the\neligibility requirements under section fourteen of this article to be a\nQEZE or (ii) cannot treat such payment as eligible real property taxes\npursuant to this paragraph and such taxes become a lien on the real\nproperty during a taxable year in which the owner of the real property\nis both certified pursuant to article eighteen-B of the general\nmunicipal law and a qualified empire zone enterprise. For purposes of\nthis subdivision, the term "tax" means a charge imposed upon real\nproperty by or on behalf of a county, city, town, village or school\ndistrict for municipal or school district purposes, provided that the\ncharge is levied for the general public welfare by the proper taxing\nauthorities at a like rate against all property in the territory over\nwhich such authorities have jurisdiction, and provided that where taxes\nare levied pursuant to article eighteen or article nineteen of the real\nproperty tax law, the property must have been taxed at the rate\ndetermined for the class in which it is contained, as provided by such\narticle eighteen or nineteen, whichever is applicable. The term "tax"\ndoes not include a charge for local benefits, including any portion of\nthat charge that is properly allocated to the costs attributable to\nmaintenance or interest, when (1) the property subject to the charge is\nlimited to the property that benefits from the charge, or (2) the amount\nof the charge is determined by the benefit to the property assessed, or\n(3) the improvement for which the charge is assessed tends to increase\nthe property value. In addition, "eligible real property taxes" shall\ninclude taxes paid by a QEZE which is a lessee of real property if the\nfollowing conditions are satisfied: (1) the taxes must be paid by the\nlessee pursuant to explicit requirements in a written lease executed or\namended on or after June first, two thousand five, (2) such taxes become\na lien on the real property during a taxable year in which the lessee of\nthe real property is both certified pursuant to article eighteen-B of\nthe general municipal law and a qualified empire zone enterprise, and\n(3) the lessee has made direct payment of such taxes to the taxing\nauthority and has received a receipt for such payment of taxes from the\ntaxing authority. In addition, the term "eligible real property taxes"\nincludes payments in lieu of taxes made by the QEZE to the state, a\nmunicipal corporation or a public benefit corporation pursuant to a\nwritten agreement entered into between the QEZE and the state, municipal\ncorporation, or public benefit corporation. Provided, however, a payment\nin lieu of taxes made by the QEZE pursuant to a written agreement\nexecuted or amended on or after January first, two thousand one, shall\nnot constitute eligible real property taxes in any taxable year to the\nextent that such payment exceeds the product of (A) the greater of (i)\nthe basis for federal income tax purposes, calculated without regard to\ndepreciation, determined as of the effective date of the QEZE's\ncertification pursuant to article eighteen-B of the general municipal\nlaw of real property, including buildings and structural components of\nbuildings, owned by the QEZE and located in empire zones with respect to\nwhich the QEZE is certified pursuant to such article eighteen-B of the\ngeneral municipal law, and provided that if such basis is further\nadjusted or reduced pursuant to any provision of the internal revenue\ncode, the QEZE may petition the department and the department of\neconomic development to disregard such reduction or adjustment for the\npurpose of this subdivision or (ii) the basis for federal income tax\npurposes of such real property described in clause (i) of this\nsubparagraph, calculated without regard to depreciation, on the last day\nof the taxable year, and provided that if such basis is further adjusted\nor reduced pursuant to any provision of the internal revenue code, the\nQEZE may petition the department, the department of economic development\nand the office of real property services to disregard such reduction or\nadjustment for the purpose of this subdivision; and (B) the estimated\neffective full value tax rate within the county in which such property\nis located, as most recently calculated by the commissioner. The\ncommissioner shall annually calculate estimated effective full value tax\nrates within each county for this purpose based upon the most current\ninformation available to him or her in relation to county, city, town,\nvillage and school district taxes.\n (f) In the case of a business enterprise which is first certified\nunder article eighteen-B of the general municipal law on or after August\nfirst, two thousand two and before April first, two thousand five, the\ncredit limitation shall be the greater of the employment increase\nlimitation or the capital investment limitation.\n (1) The employment increase limitation shall be the product of (A) ten\nthousand dollars and (B) the excess of the QEZE's employment number in\nthe empire zones with respect to which the QEZE is certified pursuant to\narticle eighteen-B of the general municipal law for the taxable year,\nover the QEZE's test year employment number in such zones.\n (2) The capital investment limitation shall be the product of (A) ten\npercent of the greater of (i) the cost or other basis for federal income\ntax purposes, determined on the later of January first, two thousand one\nor the effective date of the QEZE's certification pursuant to article\neighteen-B of the general municipal law, of real property, including\nbuildings and structural components of buildings, owned by the QEZE and\nlocated in empire zones with respect to which the QEZE is certified\npursuant to such article eighteen-B of the general municipal law, or\n(ii) the cost or other basis for federal income tax purposes of such\nreal property described in clause (i) of this subparagraph on the last\nday of the taxable year, and (B) the greater of (i) the percentage of\nsuch real property described in clause (i) of subparagraph (A) of this\nparagraph which is physically occupied and used by the QEZE or by a\nrelated person to the QEZE, as the 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, or (ii) the percentage\nof such cost or other basis which is attributable to the construction,\nexpansion or rehabilitation of such property, rather than the\nacquisition of such real property, by the QEZE. Provided, however, if\nthe percentage of such cost or other basis, which is attributable to the\nconstruction, expansion or rehabilitation of such real property equals\nor exceeds fifty percent, then the percentage described in clause (ii)\nof subparagraph (B) of this paragraph shall be deemed to be one hundred\npercent.\n (f-1) 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 credit shall be the greater of the credit\namount as determined pursuant to paragraph two of subdivision (b) of\nthis section, or the capital investment amount determined under this\nsubdivision. Provided however, that in no case shall the amount of the\ncredit exceed the amount of the taxpayer's eligible real property taxes\nfor the taxable year.\n (1) For a QEZE certified in an empire zone designated under\nsubdivision (a) or (d) of section nine hundred fifty-eight of the\ngeneral municipal law and a manufacturer certified in an empire zone\ndesignated under section nine hundred fifty-eight of the general\nmunicipal law, the capital investment amount shall be the product of (A)\nten percent of the greater of (i) the cost or other basis for federal\nincome tax purposes, determined on the later of January first, two\nthousand one or the effective date of the QEZE's certification pursuant\nto article eighteen-B of the general municipal law, of real property,\nincluding buildings and structural components of buildings, owned by the\nQEZE and located in empire zones with respect to which the QEZE is\ncertified pursuant to such article eighteen-B of the general municipal\nlaw, or (ii) the cost or other basis for federal income tax purposes of\nsuch real property described in clause (i) of this subparagraph on the\nlast day of the taxable year, and (B) the greater of (i) the percentage\nof such real property described in clause (i) of subparagraph (A) of\nthis paragraph which is physically occupied and used by the QEZE or by a\nrelated person to the QEZE, as the 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, or (ii) the percentage\nof such cost or other basis which is attributable to the construction,\nexpansion or rehabilitation of such property, rather than the\nacquisition of such real property, by the QEZE. Provided, however, if\nthe percentage of such cost or other basis, which is attributable to the\nconstruction, expansion or rehabilitation of such real property equals\nor exceeds fifty percent, then the percentage described in clause (ii)\nof subparagraph (B) of this paragraph shall be deemed to be one hundred\npercent.\n (2) For a QEZE certified in an empire zone designated under\nsubdivision (b) or (c) of section nine hundred fifty-eight of the\ngeneral municipal law, which is not a manufacturer, the capital\ninvestment amount shall be the product of ten percent and the amount of\nsuch cost or other basis which is attributable to the construction,\nexpansion or rehabilitation of such property, rather than the\nacquisition of such real property, and the percentage of such real\nproperty described in clause (i) of subparagraph (A) of paragraph (1) of\nthis subdivision which is physically occupied and used by the QEZE or by\na related person to the QEZE, as the 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. Provided, however, if\nthe percentage of such cost or other basis, which is attributable to the\nconstruction, expansion or rehabilitation of such real property equals\nor exceeds fifty percent, then the percentage of physical occupation and\nuse described in the preceding sentence shall be deemed to be one\nhundred percent.\n (g) Credit recapture. Where a QEZE's eligible real property taxes\nwhich were the basis for the allowance of the credit provided for under\nthis section are subsequently reduced as a result of a final order in\nany proceeding under article seven of the real property tax law or other\nprovision of law, the taxpayer shall add back, in the taxable year in\nwhich such final order is issued, the excess of (1) the amount of credit\noriginally allowed for a taxable year over (2) the amount of credit\ndetermined based upon the reduced eligible real property taxes. If such\nfinal order reduces real property taxes for more than one year, the\ntaxpayer must determine how much of such reduction is attributable to\neach year covered by such final order and calculate the amount of credit\nwhich is required by this subdivision to be recaptured for each year\nbased on such reduction.\n (h) Definitions and cross-references. For definitions of terms used in\nthis section see section fourteen of this article. For application of\nthe credit provided for in this section, see the following provisions of\nthis chapter:\n (2) Article 9-A: Section 210-B: subdivision 5.\n (3) Article 22: Section 606: subsections (i) and (bb).\n (4) Article 33: Section 1511: subdivision (r).\n