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

§ 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 or

thirty-three of this chapter, shall be allowed a credit against such

tax, pursuant to the provisions referenced in subdivision (h) of this

section, for eligible real property taxes.

(b) Amount of credit. (1) 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 amount of the credit shall be

equal to 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. However the amount

of the credit may not exceed the credit limitation set forth in

subdivision (f) of this section.

(2) (A) For 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 amount of the credit shall be equal to the product

(or pro rata share of the product, in the case of a member of a

partnership) of twenty-five percent of the total wages, health benefits

and retirement benefits paid to or on behalf of net new employees during

the taxable year, provided however, that the total amount of the credit

shall not exceed ten thousand dollars for each such employee. For

purposes of computing total wages, health benefits and retirement

benefits, wages, health benefits and retirement benefits for each

employee in excess of forty thousand dollars shall be excluded from such

computation. Provided however, the amount of the credit for a QEZE

certified in an empire zone designated under subdivision (b) or (c) of

section nine hundred fifty-eight of the general municipal law, except a

manufacturer certified in an empire zone designated under section nine

hundred fifty-eight of the general municipal law, shall be further

adjusted by the product of the amount determined above and the

development zone employment increase factor under subparagraph (B) of

this paragraph. Provided further, in addition, the amount of the credit

may not exceed the credit amount set forth in subdivision (f-1) of this

section.

(B) Development zone employment increase factor. The development zone

employment increase factors are set forth in the following table:

Net New Employees: DZ Employment Increase Factor:

1 to 10 0.25

11 to 49 0.5

50 to 75 0.75

76 and above the amount, not to exceed 1.0,

of new employees divided by 100

Net new employees. The number of net new employees for a QEZE is equal

to the excess of the QEZE's employment number in the empire zones with

respect to which the QEZE is certified pursuant to article eighteen-B of

the general municipal law for the taxable year, over the QEZE's

employment number in such zones for the base period.

(3) For a business enterprise which is first certified under article

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

thousand nine, the credit allowed shall be seventy-five percent of the

amount calculated under paragraph two of this subdivision.

(c) Benefit period factor. The benefit period factors are set forth

in the following table:

Taxable year of the benefit period: Benefit period factor:

1 - 10 1.0

11 .8

12 .6

13 .4

14 .2

15 0

(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 QEZE's employment number in the empire zones

with respect to which the QEZE is certified pursuant to article

eighteen-B of the general municipal law for the taxable year, over the

QEZE's test year employment number in such zones, divided by such test

year employment number in such zones; or

(2) the excess of the QEZE's employment number in such zones for the

taxable year over the QEZE'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 QEZE

and located in an empire zone with respect to which the QEZE is

certified pursuant to article eighteen-B of the general municipal law,

provided such taxes are paid by the QEZE which is the owner of the real

property or are paid by a tenant which either (i) does not meet the

eligibility requirements under section fourteen of this article to be a

QEZE or (ii) cannot treat such payment as eligible real property taxes

pursuant to this paragraph and such taxes become a lien on the real

property during a taxable year in which the owner of the real property

is both certified pursuant to article eighteen-B of the general

municipal law and a qualified empire zone enterprise. For purposes of

this subdivision, the term "tax" means a charge imposed upon real

property by or on behalf of a county, city, town, village or school

district for municipal or school district purposes, provided that the

charge is levied for the general public welfare by the proper taxing

authorities at a like rate against all property in the territory over

which such authorities have jurisdiction, and provided that where taxes

are levied pursuant to article eighteen or article nineteen of the real

property tax law, the property must have been taxed at the rate

determined for the class in which it is contained, as provided by such

article eighteen or nineteen, whichever is applicable. The term "tax"

does not include a charge for local benefits, including any portion of

that charge that is properly allocated to the costs attributable to

maintenance or interest, when (1) the property subject to the charge is

limited to the property that benefits from the charge, or (2) the amount

of the charge is determined by the benefit to the property assessed, or

(3) the improvement for which the charge is assessed tends to increase

the property value. In addition, "eligible real property taxes" shall

include taxes paid by a QEZE which is a lessee of real property if the

following conditions are satisfied: (1) the taxes must be paid by the

lessee pursuant to explicit requirements in a written lease executed or

amended on or after June first, two thousand five, (2) such taxes become

a lien on the real property during a taxable year in which the lessee of

the real property is both certified pursuant to article eighteen-B of

the general municipal law and a qualified empire zone enterprise, and

(3) the lessee has made direct payment of such taxes to the taxing

authority and has received a receipt for such payment of taxes from the

taxing authority. In addition, the term "eligible real property taxes"

includes payments in lieu of taxes made by the QEZE to the state, a

municipal corporation or a public benefit corporation pursuant to a

written agreement entered into between the QEZE and the state, municipal

corporation, or public benefit corporation. Provided, however, a payment

in lieu of taxes made by the QEZE pursuant to a written agreement

executed or amended on or after January first, two thousand one, shall

not constitute eligible real property taxes in any taxable year to the

extent that such payment exceeds the product of (A) the greater of (i)

the basis for federal income tax purposes, calculated without regard to

depreciation, determined as of the effective date of the QEZE's

certification pursuant to article eighteen-B of the general municipal

law of real property, including buildings and structural components of

buildings, owned by the QEZE and located in empire zones with respect to

which the QEZE is certified pursuant to such article eighteen-B of the

general municipal law, and provided that if such basis is further

adjusted or reduced pursuant to any provision of the internal revenue

code, the QEZE may petition the department and the department of

economic development to disregard such reduction or adjustment for the

purpose of this subdivision or (ii) the basis for federal income tax

purposes of such real property described in clause (i) of this

subparagraph, calculated without regard to depreciation, on the last day

of the taxable year, and provided that if such basis is further adjusted

or reduced pursuant to any provision of the internal revenue code, the

QEZE may petition the department, the department of economic development

and the office of real property services to disregard such reduction or

adjustment for the purpose of this subdivision; and (B) the estimated

effective full value tax rate within the county in which such property

is located, as most recently calculated by the commissioner. The

commissioner shall annually calculate estimated effective full value tax

rates within each county for this purpose based upon the most current

information available to him or her in relation to county, city, town,

village and school district taxes.

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

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

first, two thousand two and before April first, two thousand five, the

credit limitation shall be the greater of the employment increase

limitation or the capital investment limitation.

(1) The employment increase limitation shall be the product of (A) ten

thousand dollars and (B) the excess of the QEZE's employment number in

the empire zones with respect to which the QEZE is certified pursuant to

article eighteen-B of the general municipal law for the taxable year,

over the QEZE's test year employment number in such zones.

(2) The capital investment limitation shall be the product of (A) ten

percent of the greater of (i) the cost or other basis for federal income

tax purposes, determined on the later of January first, two thousand one

or the effective date of the QEZE's certification pursuant to article

eighteen-B of the general municipal law, of real property, including

buildings and structural components of buildings, owned by the QEZE and

located in empire zones with respect to which the QEZE is certified

pursuant to such article eighteen-B of the general municipal law, or

(ii) the cost or other basis for federal income tax purposes of such

real property described in clause (i) of this subparagraph on the last

day of the taxable year, and (B) the greater of (i) the percentage of

such real property described in clause (i) of subparagraph (A) of this

paragraph which is physically occupied and used by the QEZE or by a

related person to the QEZE, as the 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, or (ii) the percentage

of such cost or other basis which is attributable to the construction,

expansion or rehabilitation of such property, rather than the

acquisition of such real property, by the QEZE. Provided, however, if

the percentage of such cost or other basis, which is attributable to the

construction, expansion or rehabilitation of such real property equals

or exceeds fifty percent, then the percentage described in clause (ii)

of subparagraph (B) of this paragraph shall be deemed to be one hundred

percent.

(f-1) 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 credit shall be the greater of the credit

amount as determined pursuant to paragraph two of subdivision (b) of

this section, or the capital investment amount determined under this

subdivision. Provided however, that in no case shall the amount of the

credit exceed the amount of the taxpayer's eligible real property taxes

for the taxable year.

(1) For a QEZE certified in an empire zone designated under

subdivision (a) or (d) of section nine hundred fifty-eight of the

general municipal law and a manufacturer certified in an empire zone

designated under section nine hundred fifty-eight of the general

municipal law, the capital investment amount shall be the product of (A)

ten percent of the greater of (i) the cost or other basis for federal

income tax purposes, determined on the later of January first, two

thousand one or the effective date of the QEZE's certification pursuant

to article eighteen-B of the general municipal law, of real property,

including buildings and structural components of buildings, owned by the

QEZE and located in empire zones with respect to which the QEZE is

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

law, or (ii) the cost or other basis for federal income tax purposes of

such real property described in clause (i) of this subparagraph on the

last day of the taxable year, and (B) the greater of (i) the percentage

of such real property described in clause (i) of subparagraph (A) of

this paragraph which is physically occupied and used by the QEZE or by a

related person to the QEZE, as the 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, or (ii) the percentage

of such cost or other basis which is attributable to the construction,

expansion or rehabilitation of such property, rather than the

acquisition of such real property, by the QEZE. Provided, however, if

the percentage of such cost or other basis, which is attributable to the

construction, expansion or rehabilitation of such real property equals

or exceeds fifty percent, then the percentage described in clause (ii)

of subparagraph (B) of this paragraph shall be deemed to be one hundred

percent.

(2) For a QEZE certified in an empire zone designated under

subdivision (b) or (c) of section nine hundred fifty-eight of the

general municipal law, which is not a manufacturer, the capital

investment amount shall be the product of ten percent and the amount of

such cost or other basis which is attributable to the construction,

expansion or rehabilitation of such property, rather than the

acquisition of such real property, and the percentage of such real

property described in clause (i) of subparagraph (A) of paragraph (1) of

this subdivision which is physically occupied and used by the QEZE or by

a related person to the QEZE, as the 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. Provided, however, if

the percentage of such cost or other basis, which is attributable to the

construction, expansion or rehabilitation of such real property equals

or exceeds fifty percent, then the percentage of physical occupation and

use described in the preceding sentence shall be deemed to be one

hundred percent.

(g) Credit recapture. Where a QEZE's eligible real property taxes

which were the basis for the allowance of the credit provided for under

this section are subsequently reduced as a result of a final order in

any proceeding under article seven of the real property tax law or other

provision of law, the taxpayer shall add back, in the taxable year in

which such final order is issued, the excess of (1) the amount of credit

originally allowed for a taxable year over (2) the amount of credit

determined based upon the reduced eligible real property taxes. If such

final order reduces real property taxes for more than one year, the

taxpayer must determine how much of such reduction is attributable to

each year covered by such final order and calculate the amount of credit

which is required by this subdivision to be recaptured for each year

based on such reduction.

(h) 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:

(2) Article 9-A: Section 210-B: subdivision 5.

(3) Article 22: Section 606: subsections (i) and (bb).

(4) Article 33: Section 1511: subdivision (r).