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

§ 14. Empire zones program. (a) Qualified empire zone enterprise. A

business enterprise which is certified under article eighteen-B of the

general municipal law and meets the employment test shall be a

"qualified empire zone enterprise":

(1) except as provided in paragraphs one-a and one-b of this

subdivision, for purposes of articles nine-A, twenty-two and

thirty-three of this chapter, for each of the taxable years within the

"business tax benefit period," which period shall consist of (A) in the

case of a business enterprise with a test date occurring on or before

December thirty-first, two thousand one, the first fifteen taxable years

beginning on or after January first, two thousand one, (B) in the case

of a business enterprise with a test date occurring on or after January

first, two thousand two, but prior to April first, two thousand five,

the fifteen taxable years next following the business enterprise's test

year, and (C) in the case of a business enterprise which is first

certified under article eighteen-B of the general municipal law on or

after April first, two thousand five, the ten taxable years starting

with the taxable year in which the business enterprise's first date of

certification under article eighteen-B of the general municipal law

occurs, but only with respect to each of such business tax benefit

period years for which the employment test is met,

(1-a) With respect to a business enterprise approved by the

commissioner of economic development as the owner of a qualified

investment project pursuant to subdivision (w) of section nine hundred

fifty-nine of the general municipal law, the business tax benefit period

shall mean the ten taxable years starting with the taxable year in which

the business enterprise's benefit period commencement date occurs, but

only with respect to each of such business tax benefit period years for

which the employment test is met, as the term "benefit period

commencement date" is defined in this paragraph. The term "benefit

period commencement date" shall mean either (i) the date of

certification pursuant to article eighteen-B of the general municipal

law of the business enterprise at the location of the qualified

investment project or (ii) the date when property constituting a

qualified investment project is first placed in service. The benefit

period commencement date shall be determined by an election made by the

business enterprise taxable year which includes the date of

certification of the business enterprise at the location of the

qualified investment project pursuant to article eighteen-B of the

general municipal law,. In the event no such election is made by the

business enterprise, the business tax benefit period shall be deemed to

commence in the taxable year in which the business enterprise is

certified at the location of the qualified investment project pursuant

to article eighteen-B of the general municipal law. The business tax

benefit period allowed under this paragraph shall be in addition to the

business tax benefit period allowed pursuant to paragraph one of this

subdivision.

(1-b) With respect to a business enterprise approved by the

commissioner of economic development as the owner of a significant

capital investment project pursuant to subdivision (w) of section nine

hundred fifty-nine of the general municipal law, the business tax

benefit period shall be increased to include the ten taxable years

starting with the taxable year in which property comprising the

significant capital investment project is first placed in service,

provided that such property is placed in service during the business

enterprise's business tax benefit period under paragraph one-a of this

subdivision. The business tax benefit period set forth in paragraph

one-a of this subdivision and any additional periods added to such

business tax benefit period pursuant to this paragraph shall constitute

one continuous business tax benefit period. During such entire business

tax benefit period, the business enterprise shall be allowed to claim

the tax credits provided pursuant to sections fifteen and sixteen of

this article with respect to such qualified investment project and such

significant capital investment project, provided the employment test is

met and the requirements of such credits are satisfied for each of those

taxable years, and provided further that, the benefit period factor as

set forth in subdivision (c) of section fifteen of this article shall be

1.0 during such entire business tax benefit period.

(2) for purposes of articles twenty-eight and twenty-nine of this

chapter, during the "sales and use tax benefit period." Such period

shall consist of one hundred twenty consecutive months beginning on the

later of (A) March first, two thousand one, or (B) with regard to

business enterprises certified pursuant to article eighteen-B of the

general municipal law prior to April first, two thousand nine, the first

day of the month next following the date of issuance of a qualified

empire zone enterprise certification by the commissioner under

subdivision (h) of this section, or (C) with regard to business

enterprises certified pursuant to such article eighteen-B on or after

April first, two thousand nine, the first day of the month next

following the date of certification under article eighteen-B as an

empire zone business. Provided however, such period shall not include

any month falling within a taxable year immediately preceded by a

taxable year with respect to which the business enterprise did not meet

the employment test.

(b) Employment test.

(1) General. In the case of a business enterprise which is first

certified under article eighteen-B of the general municipal law before

April first, two thousand five, the employment test shall be met with

respect to a taxable year if the business enterprise's employment number

in the empire zones 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. For entities first certified between August first, two

thousand two and March thirty-first, two thousand five, if the base

period is zero years and the enterprise has an employment number in such

zone of greater than zero with respect to a taxable year, then the

employment test will be met only if the enterprise qualifies as a new

business under subdivision (j) of this section. For entities first

certified prior to August first, two thousand two, if the entity had a

base period of zero years or zero employment in the base period, then

the employment test will be met only if the enterprise qualifies as a

new business under subdivision (j) of this section.

(2) Change in zone boundaries or newly designated zones. Provided,

however, where there has been one or more revisions of the boundaries of

an empire zone that resulted in the inclusion of the business enterprise

within such zone, the employment test shall be determined with respect

to a taxable year as if the boundaries of the revised zone on the last

day of the taxable year existed during the base period and test year and

as if the enterprise had been located in the revised zone during its

base period and test year. In addition, where an area has been newly

designated as an empire zone, the employment test shall be determined

with respect to a taxable year as if such newly designated zone existed

during the base period and test year and as if the enterprise had been

located in the newly designated zone during its base period and test

year.

(3) Relocation from a business incubator facility. Where a business

enterprise relocates to an empire zone from a business incubator

facility operated by a municipality or by a public or private

not-for-profit entity which provides space or business support services

or both space and business support services to newly established

enterprises, the employment test shall be determined with respect to a

taxable year as if such business enterprise was located in the empire

zone during the base period.

(4) In the case of a business enterprise which is first certified

under article eighteen-B of the general municipal law on or after April

first, two thousand five, and notwithstanding any other provision to the

contrary, in the case of a business enterprise which was first certified

between August first, two thousand two and March thirty-first, two

thousand five that conducts its operations on real property that it owns

or leases that is both located within an empire zone and that is subject

to a brownfield site cleanup agreement executed prior to January first,

two thousand six in accordance with section 27-1409 of the environmental

conservation law, the employment test shall be met with respect to a

taxable year if the business enterprise's employment number in the state

and the empire zones for such taxable year exceeds its employment number

in the state and the empire zones, respectively, for the base period. If

the base period is zero years or the base period employment is zero and

the enterprise has an employment number in such zone of greater than

zero with respect to a taxable year, then the employment test will be

met only if the enterprise qualifies as a new business under subdivision

(j) of this section.

(5) For purposes of the sales and use tax benefit period, in the case

of a business enterprise which is first certified under article

eighteen-B of the general municipal law on or after April first, two

thousand five, and is so certified during its first taxable year, the

employment test shall be met with respect to such first taxable year in

any month in which its employment number exceeds zero.

(c) Base period. (1) Except as provided in paragraphs two and three of

this subdivision, in the case of a business enterprise which is first

certified under article eighteen-B of the general municipal law before

April first, two thousand five, 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.

(2) In the case of a business enterprise which is first certified

under article eighteen-B of the general municipal law on or after April

first, two thousand five, the term "base period" means the four taxable

years immediately preceding the taxable year in which the business

enterprise was first certified under article eighteen-B of the general

municipal law. If the business enterprise has fewer than four such

years, then the term "base period" means such smaller set of years.

(3) For purposes of the sales and use tax benefit period, in the case

of a business enterprise which is first certified under article

eighteen-B of the general municipal law on or after April first, two

thousand five, the term "base period" means the three taxable years

immediately preceding the business enterprise's test year. For this

purpose, the definitions set forth in subdivisions (d) and (e) of this

section shall apply. However, the definition of the term "test date" in

subdivision (e) shall be read as if the words "prior to July first, two

thousand five" were omitted from such definition.

(d) Test year. The term "test year" means the last taxable year of the

business enterprise ending before the test date. If a business

enterprise does not have a taxable year that ends on or before the test

date, such enterprise shall be deemed to have a test year which shall be

either the last calendar year ending on or before its test date, or if

the enterprise has as its taxable year a fiscal year, the last such

fiscal year ending on or before its test date (whether or not the

enterprise in fact had a taxable year during that period).

(e) Test date. The term "test date" means the later of July first, two

thousand or the date prior to July first, two thousand eleven on which

the business enterprise was first 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 section one hundred eighty-three or one

hundred eighty-four or former section one hundred eighty-six of article

nine, or under article nine-A, twenty-two or thirty-three of this

chapter. If a business enterprise does not have a taxable year because

it is exempt from taxation or otherwise not required to file a return

under any of such sections of article nine or under article nine-A,

twenty-two or thirty-three, then the term "taxable year" means (i) the

business enterprise's federal taxable year, or, (ii) if the enterprise

does not have a federal taxable year, the calendar year.

(g) Employment number. (1) 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. Such number shall not include individuals employed within

the state within the immediately preceding sixty months by a related

person to the QEZE, as such term "related person" is defined in

subparagraph (c) of paragraph three of subsection (b) of section four

hundred sixty-five of the internal revenue code. For this purpose, a

"related person" shall include an entity which would have qualified as a

"related person" to the QEZE if it had not been dissolved, liquidated,

merged with another entity or otherwise ceased to exist or operate.

(2) For a business enterprise satisfying the criteria set forth in

this paragraph, the term "employment number" with respect to the

enterprise's first taxable year shall be computed by taking into

consideration only the number of individuals, excluding general

executive officers (in the case of a corporation), employed full-time by

the enterprise on the last day of such taxable year. Such business

enterprise shall satisfy the following criteria: (A) such enterprise

acquired real or tangible personal property during its first taxable

year from an entity which is not a related person (as such term is

defined in paragraph one of this subdivision); (B) the first taxable

year of such enterprise shall be a short taxable year of not more than

seven months in duration; and (C) the number of individuals employed

full-time on the last day of such first taxable year shall be at least

one hundred ninety and substantially all of such individuals must have

been previously employed by the entity from whom such enterprise

purchased its assets.

(h) Sales and use tax. (1) In addition to the other requirements of

this section, for business enterprises certified pursuant to article

eighteen-B of the general municipal law prior to April first, two

thousand nine, in order for an exemption under subdivision (z) of

section eleven hundred fifteen of this chapter or the credit or refund

described in subdivision (d) of section eleven hundred nineteen of this

chapter or any like exemption or credit or refund 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 certification in the manner prescribed

by the commissioner. If such commissioner grants such certification,

such certification shall be subject to conditions specified by such

commissioner. 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

certifications pursuant to this subdivision, those persons whose

qualified empire zone enterprise certifications have been revoked or

persons whose qualified empire zone enterprise certifications have

expired. The commissioner shall not grant any certifications pursuant to

this subdivision after June thirtieth, two thousand ten.

(2) A business enterprise, certified as an empire zone business under

article eighteen-B of the general municipal law prior to April first,

two thousand nine, and certified as a qualified empire zone enterprise

by the commissioner of taxation and finance prior to August first, two

thousand nine, is eligible to claim the exemption under subdivision (z)

of section eleven hundred fifteen of this chapter or any like exemption

from tax imposed pursuant to the authority of article twenty-nine of

this chapter until September first, two thousand nine, provided that the

other requirements of the statute are met. A business enterprise

certified as an empire zone business under article eighteen-B of the

general municipal law prior to April first, two thousand nine, and

certified as a qualified empire zone enterprise by the commissioner of

taxation and finance as of or prior to June thirtieth, two thousand ten,

is eligible to claim the credit or refund under subdivision (d) of

section eleven hundred nineteen of this chapter or any like credit or

refund imposed pursuant to the authority of article twenty-nine of this

chapter, provided that the other requirements of the statute are met

during the term of its sales and use tax benefit period notwithstanding

the expiration of the empire zones program under article eighteen-B of

the general municipal law.

(3) During the period that a business enterprise is eligible to apply,

or is qualified, for an exemption or a credit or refund of the 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 this subdivision.

(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 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.

(j) New business. (1) A new business shall include any corporation,

except a corporation which is substantially similar in operation and in

ownership to a business entity (or entities) taxable, or previously

taxable, under section one hundred eighty-three, one hundred

eighty-four, former section one hundred eighty-five or former section

one hundred eighty-six of article nine; article nine-A or thirty-three

of this chapter; article twenty-three of this chapter or which would

have been subject to tax under such article twenty-three (as such

article was in effect on January first, nineteen hundred eighty),

article thirty-two of this chapter or which would have been subject to

tax under such article thirty-two (as such article was in effect on

December thirty-first, two thousand fourteen) or the income (or losses)

of which is (or was) includable under article twenty-two of this

chapter.

(2) For purposes of article twenty-two of this chapter, an individual

who is either a sole proprietor or a member of a partnership shall

qualify as an owner of a new business unless the business of which the

individual is an owner is substantially similar in operation and in

ownership to a business entity taxable, or previously taxable, under

section one hundred eighty-three, one hundred eighty-four, former

section one hundred eighty-five or former section one hundred eighty-six

of article nine; article nine-A or article thirty-three of this chapter;

article twenty-three of this chapter or which would have been subject to

tax under such article twenty-three (as such article was in effect on

January first, nineteen hundred eighty); article thirty-two of this

chapter or which would have been subject to tax under such article

thirty-two as such article was in effect on December thirty-first, two

thousand fourteen or the income (or losses) of which is (or was)

includable under article twenty-two.

(3) For purposes of article twenty-two of this chapter, a shareholder

of a New York S corporation shall be treated as the owner of a new

business with respect to such share if the corporation qualifies as a

new business pursuant to paragraph one of this subdivision.

(4) (A)(i) Notwithstanding paragraphs one and two of this subdivision,

a new business shall include any corporation which is identical in

operation and ownership to a business entity (or entities) taxable under

section one hundred eighty-three or one hundred eighty-four or former

section one hundred eighty-five of article nine; article nine-A or

thirty-three of this chapter or the income (or losses) of which is

includable under article twenty-two of this chapter, provided such

corporation and such business entity or entities are operating in

different counties in the state.

(ii) Notwithstanding paragraphs one and two of this subdivision, an

individual who is either a sole proprietor or a member of a partnership

shall qualify as an owner of a new business if the business of which the

individual is an owner is identical in operation and in ownership to a

business entity (or entities) taxable under section one hundred

eighty-three or one hundred eighty-four or former section one hundred

eighty-five of article nine; article nine-A or thirty-three of this

chapter or the income (or losses) of which is includable under article

twenty-two of this chapter, provided such business and such business

entity or entities are operating in different counties in the state.

(iii) Any corporation qualifying as a new business or any individual

qualifying as an owner of a new business as a result of the provisions

of this subparagraph shall have the same business tax benefit period and

sales and use tax benefit period as the business entity to which it is

identical in operation and in ownership.

(B) Notwithstanding any provisions of this subdivision to the contrary

and notwithstanding subdivision c of section eighteen of part CC of

chapter eighty-five of the laws of two thousand two, a corporation or

partnership, which was first certified under article eighteen-B of the

general municipal law before August first, two thousand two, has a base

period of zero years or zero employment for its base period, and is

similar in operation and in ownership to a business entity or entities

taxable, or previously taxable, under sections specified in paragraph

one or two of this subdivision or which would have been subject to tax

under article twenty-three of this chapter (as such article was in

effect on January first, nineteen hundred eighty) or which would have

been subject to tax under article thirty-two of this chapter (as such

article was in effect on December thirty-first, two thousand fourteen)

or the income or losses of which is or was includable under article

twenty-two of this chapter shall not be deemed a new business if it was

not formed for a valid business purpose, as such term is defined in

clause (D) of subparagraph one of paragraph (o) of subdivision nine of

section two hundred eight of this chapter and was formed solely to gain

empire zone benefits.

(5) Notwithstanding any other provision of this section, a business

enterprise which is approved by the commissioner of economic development

as the owner of a qualified investment project or a significant capital

investment project pursuant to subdivision (w) of section nine hundred

fifty-nine of the general municipal law, has a base period of zero years

and places in service property (or a project that includes such

property) which comprises such qualified investment project or such

significant capital investment project, shall be deemed to be a new

business under this section. Provided, however, to be deemed a new

business under this paragraph, such business enterprise shall have

received certification under article eighteen-B of the general business

law by December thirty-first, two thousand seven.

(k) If the designation of an area as an empire zone is no longer in

effect because section nine hundred sixty-nine of the general municipal

law was not amended to extend the effective date of such designation so

that the designations of all empire zones pursuant to article eighteen-B

of the general municipal law have expired, a business enterprise that

was certified pursuant to article eighteen-B of the general municipal

law on the day immediately preceding the day on which such designation

expired shall be deemed to continue to be certified under such article

eighteen-B for purposes of this section, and sections fifteen, sixteen,

subdivisions five and six of section two hundred ten-B, subsections (bb)

and (cc) of section six hundred six, subdivision (d) of section eleven

hundred nineteen and subdivisions (r) and (s) of section fifteen hundred

eleven of this chapter. In addition, if the designation of an area as an

empire zone is no longer in effect because section nine hundred

sixty-nine of the general municipal law was not amended to extend the

effective date of such designation so that the designations of all

empire zones pursuant to article eighteen-B of the general municipal law

have expired, all references to empire zones in the provisions of this

chapter listed in the previous sentence shall be read as meaning areas

designated as empire zones on the day immediately preceding the day on

which such designation expired.

(1) Manufacturer. For the purposes of sections fifteen and sixteen of

this article, the term "manufacturer" shall mean a taxpayer which during

the taxable year is principally engaged in the production of goods by

manufacturing, processing, assembling, refining, mining, extracting,

farming, agriculture, horticulture, floriculture, viticulture, or

commercial fishing, or a business engaged in emerging technologies

pursuant to section thirty-one hundred two-e of the public authorities

law.

(n) Clean energy enterprises. In determining tax benefits under this

chapter for clean energy enterprises certified under article eighteen-B

of the general municipal law, references in this section and other

sections in this chapter relating to qualified empire zone enterprises

and empire zone benefits to "an empire zone", "the empire zone" and "the

empire zones" shall be read as references to "New York State", and any

tests or measurements relating to employment for purpose of empire zone

benefits under this chapter shall be calculated with respect to

employment within the entire state, and references to "QEZES" shall be

read as including references to such clean energy enterprises that meet

the employment test in this section. For purposes of the tax reduction

credit allowed under section sixteen of this article, for a clean energy

enterprise, the zone allocation factor shall be one hundred percent.