QEZE Credits
New York State Tax Law Article 1
§ 15 — QEZE Credit for Real Property Taxes
§ 16 — QEZE Tax Reduction Credit Sales Tax Exemption
§ 14 — Empire Zones Program
(a) Qualified Empire Zone Enterprise - A business enterprise which is certified under article eighteen-B of the general municipal law prior to July first, two thousand five shall be a "qualified empire zone enterprise":
(1) for purposes of articles nine-A, twenty-two, thirty-two and thirty-three of this chapter, for each of the fifteen taxable years next following the test year (which fifteen year period shall constitute the "benefit period"), but only with respect to each of such fifteen years for which the employment test is met, and
(2) for purposes of articles twenty-eight and twenty-nine of this chapter, for each day falling within each of the ten taxable years next following the test year, but only with respect to each of such ten years if the taxable year immediately preceding such taxable year meets the employment test.
(3) for business enterprises with a test date falling within the year two thousand, the term "next following the test year" shall be read as "next following the taxable year following the test year".
(b) Employment test - The employment test shall be met with respect to a taxable year if the business enterprise's employment number in empire zones with respect to which such enterprise is certified pursuant to article eighteen-B of the general municipal law 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.
(c) Base period - 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.
(d) Test year - The term "test year" means the last taxable year of the business enterprise ending on or before the test date.
(e) Test date - The term "test date" means the later of July first, two thousand or the date prior to July first, two thousand five on which the business enterprise was 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 article nine-a, twenty-two, thirty-two or thirty-three of this chapter.
(g) Employment number - 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.
(h) Sales and use tax - (1) In addition to the other requirements of this section, in order for the exemptions described in subdivision (z) of section eleven hundred fifteen of this chapter or any like exemptions from taxes 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 exemption certificate, in the manner prescribed by such commissioner. If such commissioner grants such a certificate, its use shall be subject to conditions specified by such commissioner. An enterprise to which the commissioner issues such a certificate may furnish a qualified empire zone enterprise exempt purchase certification to a person required to collect sales and compensating use taxes imposed under or pursuant to the authority of article twenty-eight or twenty-nine of this chapter, which certification shall be deemed to be an exemption certificate under subdivision (c) of section eleven hundred thirty-two of this chapter. 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 enterprise certificates pursuant to this subdivision, those persons whose qualified empire zone enterprise certificates have been revoked or those persons whose qualified empire zone enterprise certificates have expired.
(2) During the period that a business enterprise is eligible to apply, or is qualified, for exemptions from 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 these subdivisions.
(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, thirty-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.
§ 15 - QEZE Credit for Real Property Taxes
(a) Allowance of credit - A taxpayer which is a qualified empire zone enterprise (QEZE), or which is a sole proprietor of a QEZE or a member of a partnership which is a QEZE, and which is subject to tax under article nine-A, twenty-two, thirty-two or thirty-three of this chapter, shall be allowed a credit against such tax, pursuant to the provisions referenced in subdivision (f) of this section, for eligible real property taxes.
(b) Amount of credit - The amount of the credit shall be the product (or pro rata share of the product, in the case of a member of a partnership) of (i) the benefit period factor, (ii) the employment increase factor and (iii) the eligible real property taxes paid or incurred by the QEZE during the taxable year.
(c) Benefit period factor - The benefit period factors are set forth in the following table:
(d) Employment increase factor - The employment increase factor is the amount, not to exceed 1.0, which is the greater of:
(1) the excess of the taxpayer's employment number in the empire zones with respect to which the taxpayer is certified pursuant to article eighteen-B of the general municipal law for the taxable year, over the taxpayer's test year employment number in such zones, divided by such test year employment number in such zones; or
(2) the excess of the taxpayer's employment number in such zones for the taxable year over the taxpayer's test year employment number in such zones, divided by 100.
(3) For purposes of paragraph one of this subdivision, where there is an excess as described in such paragraph, and where the test year employment number is zero, then the employment increase factor shall be 1.0.
(e) Eligible real property taxes - The term "eligible real property taxes" means taxes imposed on real property which is owned by the taxpayer and located in empire zones with respect to which the taxpayer is certified pursuant to article eighteen-B of the general municipal law for the taxable year.
(f) Definitions and cross-references - For definitions of terms used in this section see section fourteen of this article. For application of the credit provided for in this section, see the following provisions of this chapter:
- (1) Article 9-A: Section 210: subdivision 27
- (2) Article 22: Section 606: subsections (i) and (bb)
- (3) Article 32: Section 1456: subsection (o)
- (4) Article 33: Section 1511: subdivision (r)
§ 16 - QEZE Tax Reduction Credit
(a) Allowance of credit - A taxpayer which is a qualified empire zone enterprise (QEZE), or which is a sole proprietor of a QEZE or a member of a partnership which is a QEZE, and which is subject to tax under article nine-A, twenty-two, thirty-two or thirty-three of this chapter, shall be allowed a credit against such tax, pursuant to the provisions referenced in subdivision (g) of this section, to be computed as hereinafter provided.
(b) Amount of credit - The amount of the credit shall be the product (or pro rata share of the product, in the case of a member of a partnership) of (i) the benefit period factor, (ii) the employment increase factor, (iii) the zone allocation factor and (iv) the tax factor.
(c) Benefit period factor - The benefit period factor for the taxable year shall be as prescribed in subdivision (c) of section fifteen of this article.
(d) Employment increase factor - The employment increase factor for the taxable year shall be as prescribed in subdivision (d) of section fifteen of this article.
(e) Zone allocation factor - The zone allocation factor shall be the percentage representing the taxpayer's economic presence in empire zones with respect to which the taxpayer is certified under article eighteen-B of the general municipal law. This percentage shall be computed pursuant to the method prescribed in subdivision two of section two hundred nine-B of this chapter (without regard to paragraph (b) of such subdivision), except that references therein to the metropolitan commuter transportation district shall be deemed to be references to the areas of this state constituting such empire zones. For purposes of article twenty-two of this chapter, references in section two hundred nine-B of this chapter to property, wages, salaries and other personal service compensation shall be deemed to be references to such items connected with the conduct of a business.
(f) Tax factor - The tax factor shall be, in the case of article nine-A of this chapter, the larger of the amounts determined for the taxable year paragraphs (a) and (c) of subdivision one of section two hundred ten of such article. The tax factor shall be, in case twenty-two of this chapter, the tax determined for the taxable year under subsections (a) through (d) of section six hundred of such article. The tax factor shall be, in the case of article thirty-two of this chapter, the larger of the amounts determined for the taxable year under subsection (a) and paragraph two of subsection (b) of section fourteen hundred fifty-five of such article. The tax factor shall be, in the case of article thirty-three of this chapter, the larger of the amounts determined for the taxable year under paragraphs one and three of subdivision (a) of section fifteen hundred two of such article.
(g) Definitions and cross-references. For definitions of terms used in this section see sections fourteen and fifteen this article. For application of the credit provided for in this section, see the following provisions of this chapter:
- (1) Article 9-A: Section 210: subdivision 28
- (2) Article 22: Section 606: subsections (i) and (cc)
- (3) Article 32: Section 1456: subsection (p)
- (4) Article 33: Section 1511: subdivision (s)
QEZE Sales & Use Tax Exemption
This is an exemption from the 4% NYS sales and uses taxes for nearly all tangible personal property and services used in the building and operating a business. The exemption certificate is valid for a 10 year period commencing on March 1, 2001 and is eligible for an EZ businesses certified by July 1, 2005.
Local governments have the option to participate and may opt to do so on an annual basis. (At the current time, the County of Montgomery has not opted to relieve its 3% portion, but this will be reviewed in the coming year.)
The exemption is for all tangible personal property and services which are directly and predominately (50% or more) used or consumed by the QEZE qualified business in the EZ. All services must be used directly and exclusively in an EZ business, including utilities. Telephony and telegraphy services must be delivered and billed to the QEZE business in the Zone. The sales tax exemption extends to motor vehicles used at least 50% exclusively in an EZ or at least 50% of the vehicle's use is in activities originating or terminating in an EDZ, or a combination of the above at a rate of 50%. It is based on mileage or hours of use at the discretion of the business.
EZ-certified business which believes it is eligible for the above QEZE tax exemption may register with the NYS Department of Taxation and Finance for a certificate.
- To claim this incentive, a company must:
- 1) be EZ-certified prior to July 1, 2005, and
- 2) maintain or increase employment (determined by the Employment Test in section 14 (b) above) in the Zone and in the State in the year they are claiming benefits.
- Excluded from exemptions are: food and drink; hotel occupancy; and amusement charges.