N.Y. Tax Law § 35*2 — Economic transformation and facility redevelopment program tax credit

* § 35. Economic transformation and facility redevelopment program tax\ncredit. (a) General. (1) A taxpayer which is a participant or the owner\nof a participant in the economic transformation and facility\nredevelopment program under article eighteen of the economic development\nlaw that is subject to tax under article nine-A, twenty-two or\nthirty-three of this chapter shall be allowed the sum of following\ncomponents against such tax, pursuant to the provisions referenced in\nsubdivision (f) of this section.\n (A) the economic transformation and facility redevelopment program\njobs tax credit component;\n (B) the economic transformation and facility redevelopment program\ninvestment tax credit component;\n (C) the economic transformation and facility redevelopment program job\ntraining credit component; and\n (D) the economic transformation and facility redevelopment program\nreal property tax credit component.\n (2) A taxpayer which is a participant in the economic transformation\nand facility redevelopment program under article eighteen of the\neconomic development law, or such participant's contractor, shall be\nallowed a sales tax refund as provided in subdivision (f) of section one\nthousand one hundred nineteen of this chapter.\n (3) To be eligible for the economic transformation and facility\nredevelopment program tax credit, the taxpayer must meet all the\nfollowing requirements.\n (A) The taxpayer must be a participant or the owner of a participant\nin the economic transformation and facility development program. The\ncommissioner of economic development must have issued a certificate of\neligibility pursuant to section four hundred two of the economic\ndevelopment law to the taxpayer or to an entity in which the taxpayer is\nan owner. A copy of the certificate shall be attached to the taxpayer's\nreport or return.\n (B) The taxpayer or the entity in which the taxpayer is an owner must\nbe a qualified new business as defined in subdivision (e) of this\nsection.\n (C) The taxpayer or the entity in which the taxpayer is an owner must\ncreate and maintain at least five net new jobs in the economic\ntransformation area.\n (4) The benefit period for the tax credits under articles nine,\nnine-A, twenty-two, thirty-two and thirty-three of this chapter is five\nconsecutive taxable years, beginning with the first taxable year in\nwhich the five net new jobs are created. However, in no event may that\nbenefit period start later than two years after the certificate of\neligibility is issued. If, in any year of the benefit period, the\ntaxpayer fails to maintain the required level of five net new jobs\n(measured quarterly), the taxpayer will not be allowed a credit for that\nyear. Such failure to be allowed a credit will not extend the taxpayer's\nbenefit period.\n (b) Election of credit. No cost or expense paid or incurred by the\ntaxpayer or the entity in which the taxpayer is an owner that is the\nbasis for any of the above named credits shall be the basis for any\nother tax credit under this chapter. If a taxpayer elects to claim an\neconomic transformation and facility redevelopment program tax credit,\nthe election is irrevocable.\n (c) Information sharing. (1) Notwithstanding any provision of this\nchapter, employees and officers of the department of economic\ndevelopment and the department shall be allowed and are directed to\nshare and exchange:\n (A) information derived from tax returns or reports that is relevant\nto a taxpayer's eligibility to participate in the economic\ntransformation and facility redevelopment program;\n (B) information regarding the credits applied for, allowed, or claimed\npursuant to this section and taxpayers who are applying for the credits\nor who are claiming the credits; and\n (C) information contained in or derived from credit claim forms\nsubmitted to the department and applications for admission into the\neconomic transformation and facility redevelopment program.\n (2) Other than the information required to be contained in the report\nissued pursuant to subdivision (d) of this section, all information\nexchanged between the department of economic development and the\ndepartment shall not be subject to disclosure or inspection under the\nstate's freedom of information law.\n (d) Economic transformation and facility redevelopment program tax\ncredits report. (1) The commissioner must publish an economic\ntransformation and facility redevelopment program tax credits report\nannually by July thirty-first. The first report shall be due July\nthirty-first, two thousand thirteen.\n (2) The credits report shall contain the following information about\nthe economic transformation program and facility redevelopment tax\ncredits claimed under this chapter during the previous calendar year:\n (A) the name of each taxpayer claiming a credit; provided however, if\nthe taxpayer claims a credit because the taxpayer is a member of a\nlimited liability company, a partner in a partnership or a shareholder\nin a New York subchapter S corporation, the name of each limited\nliability company, partnership or New York subchapter S corporation\nearning any of the credit must be included in the report instead of\ninformation about the taxpayer claiming the credit; and\n (B) the amount of each credit earned by each taxpayer; provided\nhowever, if the taxpayer claims a credit because the taxpayer is a\nmember of a limited liability company, a partner in a partnership or a\nshareholder in a New York subchapter S corporation, the amount of credit\nearned by each entity must be included in the report instead of\ninformation about the taxpayer claiming the credit.\n (3) The credit report may also contain any other information received\nby the commissioner with regard to the economic transformation and\nfacility redevelopment program tax credits that the commissioner deems\nto be useful in evaluating the use of the credits. The information\nincluded in the credit report will be based on the information filed\nwith the department during the previous calendar year, to the extent\nthat it is practicable to use that information.\n (e) Definitions. (1) The terms "participant", "net new jobs",\n"economic transformation area", "related person", "certificate of\neligibility", "benefit-cost ratio", and "qualified investment" shall\nhave the same meaning as those terms have in section four hundred of the\neconomic development law.\n (2) The term "qualified new business" means a business entity that\nsatisfies all of the following tests:\n (A) the business entity must not be currently operating or located\nwithin the economic transformation area in which it is applying for\ncertification under article eighteen of the economic development law;\n (B) the business entity must not be moving existing jobs into the\neconomic transformation area in which it is applying for certification\nunder article eighteen of the economic development law from another area\nof the state;\n (C) the business entity must not be substantially similar in ownership\nand operation to another taxpayer taxable or previously taxable under\nsection one hundred eighty-three or one hundred eighty-four or former\nsection one hundred eighty-five of article nine, former section one\nhundred eighty-six of this chapter or article nine-A, twenty-two or\nthirty-three of this chapter or former article thirty-two of this\nchapter or the income or losses of which is or was includable under\narticle twenty-two of this chapter;\n (D) the business entity must not have caused individuals to transfer\nfrom existing employment in New York with another business entity with\nsimilar ownership to similar employment with the business entity;\n (E) the business entity must not have acquired, purchased, leased, or\nhad transferred to it real property located in the economic\ntransformation area in which it is applying for certification if that\nreal property was previously owned by an entity with similar ownership,\nregardless of form of incorporation or organization; and\n (F) the business entity must not be substantially similar in operation\nto a business entity from which it has acquired real or tangible\npersonal property that is located in the economic transformation area in\nwhich it is applying for certification under article eighteen of the\neconomic development law.\n (3) The term "entity in which the taxpayer is an owner" shall mean a\nlimited liability company in which the taxpayer is a member, a\npartnership in which the taxpayer is a partner and a New York subchapter\nS corporation in which the taxpayer is a shareholder.\n (f) Cross-references. For application of the credits provided for in\nthis section, see the following provisions of this chapter:\n (2) article 9-A: section 210-B(35).\n (3) article 22: section 606 (ss).\n (4) article 33: section 1511 (aa).\n (g) Economic transformation and facility redevelopment program jobs\ntax credit. A taxpayer which meets the requirements in this section\nshall be eligible to claim a credit for each net new job that the\ntaxpayer creates in the economic transformation area with respect to the\nproject for which the certificate of eligibility is issued. The amount\nof such credit per job shall be equal to the product of the gross wages\npaid and 6.85 percent.\n (h) Economic transformation and facility redevelopment program\ninvestment tax credit. (1) A taxpayer which meets the requirements in\nthis section shall be eligible to claim a credit on qualified\ninvestments with respect to the project for which the certificate of\neligibility is issued. The credit shall be equal to ten percent of the\ncost or other basis for federal income tax purposes of the qualified\ninvestment at a closed facility. Provided however, for purposes of this\ncredit only, a taxpayer that is the owner of a closed facility described\nin paragraph (d) of subdivision eleven of section four hundred of the\neconomic development law, shall be allowed to include in its cost or\nother basis of the qualified investment at the closed facility, any\ndemolition costs incurred at such closed facility. Those demolition\ncosts shall be limited to the following costs: (i) asbestos removal\ncosts, (ii) rental of demolition equipment, (iii) personnel costs to\noperate the demolition equipment, (iv) costs to remove and dispose of\ndemolition debris, (v) the costs of any permits, licenses and insurance\nnecessary for the demolition. The total amount of investment tax credit\nallowed for all eligible participants under this subdivision for\nqualified investments located at each closed facility shall not exceed\neight million dollars. The credit shall be equal to six percent of the\ncost or other basis for federal income tax purposes for all other\nqualified investments, but the credit allowed to a taxpayer may not\nexceed four million dollars.\n (2) Costs incurred prior to the date the certificate of eligibility is\nissued are not eligible to be included in the calculation of the credit.\nA taxpayer which is a participant in the economic transformation and\nredevelopment program or is an owner of an entity that is a participant\nis not eligible for any other investment tax credit provided under this\nchapter.\n (3) If the taxpayer is a partner in a partnership, member of a limited\nliability company or shareholder of a New York S corporation, then the\nfour million dollar limit imposed above by the preceding sentences shall\nbe applied at the entity level, so that the aggregate credit allowed to\nall the partners, members or shareholders of each such entity in the\ntaxable year does not exceed the four million dollar limitation.\nFurther, in order to properly administer the limitation of investment\ntax credit at a closed facility, the department may disclose information\nabout the calculation and the amounts of the credits claimed under this\nsubdivision for qualified investments at a particular closed facility to\nother taxpayers claiming investment tax credits under this subdivision\nat that same closed facility.\n (i) Economic transformation and facility redevelopment program\ntraining tax credit. (1) A taxpayer which meets the requirements of this\nsection shall be allowed a credit for qualified training expenditures\npaid by the taxpayer with respect to the project for which the\ncertificate of eligibility is issued. The amount of the credit shall be\nfifty percent of the qualified training expenses paid during the taxable\nyear, subject to a limitation of no more than four thousand dollars per\nemployee per year for such training expenses. This credit applies only\nto qualified training provided to employees who were hired after they\nlost their jobs at a closed facility as a result of the closure of that\nfacility as described in subdivision eleven of section four hundred of\nthe economic development law.\n (2) Qualified training shall include a course or courses taken and\nsatisfactorily completed by an employee of the taxpayer at an\naccredited, degree granting, post-secondary college or university in New\nYork state that (A) directly relates to the duties that the employee\nperforms for the taxpayer within the economic transformation area; and\n(B) is intended to upgrade, retrain or improve the productivity or\ntheoretical awareness of the employee. Such course or courses shall not\ninclude classes in the disciplines of management, accounting or the law\nor any class designed to fulfill the discipline specific requirements of\na degree program at the associate, baccalaureate, graduate or\nprofessional level of these disciplines. Satisfactory completion of a\ncourse or courses shall mean the earning and granting of credit or\nequivalent unit, with the attainment of a grade of "B" or higher in a\ngraduate level course or courses, a grade of "C" or higher in an\nundergraduate level course or courses, or a similar measure of\ncompetency for a course that is not measured according to a standard\ngrade formula.\n (3) Qualified training expenditures shall include expenses for tuition\nand mandatory fees, software required by the institution, fees for\ntextbooks or other literature required by the institution offering the\ncourse or courses, minus applicable scholarships and tuition or fee\nwaivers not granted by the taxpayer or any related person, that are paid\nor reimbursed by the taxpayer. Qualified training expenditures do not\ninclude room and board, computer hardware or software not specifically\nassigned for such course or courses, late-charges, fines or membership\ndues and similar expenses. Such qualified training expenditures shall\nnot be eligible for the credit provided by this section unless the\nemployee for whom the expenditures are disbursed is continuously\nemployed by the taxpayer in a full-time, full-year position primarily\nlocated at a site in an economic transformation area during the period\nof such coursework and lasting through at least one hundred eighty days\nafter the satisfactory completion of the qualifying course-work.\nQualified training expenditures shall not include expenses for in-house\nor shared training outside of a New York state higher education\ninstitution or the use of consultants outside of credit granting\ncourses, whether such consultants function inside of such higher\neducation institution or not.\n (j) Economic transformation and facility redevelopment program real\nproperty tax credit. (1) A taxpayer which meets the requirements of this\nsection shall be allowed a credit measured by the real property taxes on\nthe real property located in the economic transformation area with\nrespect to the project for which the certificate of eligibility is\nissued. In the first taxable year that the taxpayer may claim this\ncredit, the credit shall be equal to twenty-five percent of the real\nproperty taxes assessed and paid during that year by the participant on\nthe real property located in the economic transformation area outside of\nthe closed facility. If the real property is located entirely within the\ngrounds of a closed facility, the credit in the first year of the\nbenefit period shall be equal to fifty percent of the real property\ntaxes assessed and paid by the participant during that year on that\nproperty. In the following years of the benefit period, the percentage\ndecreases by five percentage points each year for real property located\nin the economic transformation area outside of the closed facility, and\nten percentage points for real property located at the closed facility.\n (2) (A) For purposes of this credit, "real property taxes" means a\ncharge imposed upon real property by or on behalf of a county, city,\ntown, village or school district for municipal or school district\npurposes, provided that the charge is levied for the general public\nwelfare by the proper taxing authorities at a like rate against all\nproperty in the territory over which such authorities have jurisdiction,\nand provided that where taxes are levied pursuant to article eighteen or\narticle nineteen of the real property tax law, the property must have\nbeen taxed at the rate determined for the class in which it is\ncontained, as provided by such article eighteen or nineteen, whichever\nis applicable.\n (B) The term "real property taxes" does not include a charge for local\nbenefits, including any portion of that charge that is properly\nallocated to the costs attributable to maintenance or interest, when (i)\nthe property subject to the charge is limited to the property that\nbenefits from the charge, or (ii) the amount of the charge is determined\nby the benefit to the property assessed, or (iii) the improvement for\nwhich the charge is assessed tends to increase the property value.\n (C) The term "real property taxes" includes payments in lieu of taxes\nmade by the participant which is the beneficial owner of the real\nproperty to the state, a municipal corporation or a public benefit\ncorporation pursuant to a written agreement entered into between the\nparticipant and the state, municipal corporation, or public benefit\ncorporation. Provided, however, a payment in lieu of taxes made by the\nparticipant pursuant to a written agreement shall not constitute real\nproperty taxes in any taxable year to the extent that such payment\nexceeds the product of (i) the basis for federal income tax purposes of\nthe real property located in the economic transformation area and\nsubject to that agreement, calculated without regard to depreciation, on\nthe last day of the taxable year, and (ii) the estimated effective full\nvalue tax rate within the county in which such property is located, as\nmost recently calculated by the commissioner. The commissioner shall\nannually calculate estimated effective full value tax rates within each\ncounty for this purpose based upon the most current information\navailable to him or her in relation to county, city, town, village and\nschool district taxes.\n (k) Recapture of credits. If the participant at the end of its benefit\nperiod has not created sufficient net new jobs and made sufficient\nqualified investments to achieve a benefit-cost ratio of at least ten to\none, the taxpayer shall be required to add back as tax in the last year\nof its benefit period the portion of the economic transformation and\nfacility redevelopment tax credits claimed in the years of its benefit\nperiod necessary to achieve a cost benefit ratio of ten to one.\n * NB Repealed December 31, 2026\n * NB There are 2 § 35's\n