MEMORANDUM
To: Empire Zone Clients
From: Timothy M. Lynn, Esq.
Date: February 13, 2013
Re: Filing Amended 2009 Empire Zone Related Tax Returns
There are numerous lawsuits pending that challenge the 2009 Empire Zone decertifications, including challenges to (i) the constitutionality of the decertifications and (ii) the constitutionality of the requirement that a retention certificate be attached to the 2009 tax return (in addition to 2008 and all years after 2009). If the courts find either that the decertifications were unconstitutional or that the retention certificate requirement is unconstitutional, taxpayers may have the right to use these decisions even if the taxpayer did not challenge their decertification in court.
We cannot gauge the likelihood of success in these constitutional challenges. Nevertheless, in the event the courts ultimately deem the decertifications or the retention certificate requirement to be unconstitutional, taxpayers may face a statute of limitations problem in claiming their 2009 (or future years) Empire Zone credits. The statute of limitations to amend 2009 tax returns will run on March 15, 2013 or April 15, 2013 (possibly later if filed on extension).
Taxpayers wishing to preserve their rights should consider taking the following action:
1- File a timely amendment of the tax return of the certified entity or other business enterprise for 2009 attaching all Empire Zone forms (and, in the case of disregarded entities, sole proprietorships and C corporations, demanding a refund);
-and-
2- For pass-through entities, the ultimate taxpayer-owners would file timely amended 2009 returns attaching all Empire Zone forms and demanding a refund.
Please note:
· For future years (until all of the litigation is resolved) these steps would be repeated (i.e., 2010 amendments would be considered next year before the 2010 statute of limitations expires).
· In those circumstances where the Empire Zone forms were included in the original filings, analysis should be done of whether there is a more immediate statute of limitations issue and whether different action needs to be taken to preserve rights.
· The amended returns could serve to extend the statute of limitations for at least another two years. Specific statute of limitations analysis should be done for each taxpayer.
· Timely filing of the amended returns must be done for both the QEZE and the taxpayers claiming credits.
If a taxpayer chooses to file an amended return, an explanatory statement should be included to provide context to the Department of Taxation and Finance.
If you have any questions or comments, please contact me.
Timothy M. Lynn
(315) 701-6426
