Eager to grab no-tax status - Times Union

Eager to grab no-tax status - Times Union

Empire Zone lawyer raises questions about Cuomo's Tax-Free NY proposal | syracuse.com

From syracuse.com

Empire Zone lawyer raises questions about Cuomo's Tax-Free NY proposal | syracuse.com

Governor Cuomo Proposes Tax-Free Zones

On May 22, 2013, Governor Cuomo unveiled a new economic development proposal intended to create tax free zones for qualified new businesses operating near SUNY campuses, designated private colleges and certain state owned properties for a period of up to ten years.  The “Tax-Free NY” proposal is intended to transform SUNY campuses and university communities within New York State into tax-free communities to attract start-ups, venture capital, new business and investment.

Few details are available but the Governor’s Office has released highlights of the “Tax-Free NY” initiative that include:

1. Establishment of Tax-Free Communities: Under the proposed program, qualifying businesses in the designated zones will be tax free -- exempt from sales, property, and/or business/franchise/corporate taxes. According to the information released, the zones consist 120 million square feet of space on SUNY campuses, private colleges and certain designated state properties.  The tax-free communities include up to 200,000 square feet surrounding the campus at SUNY institutions.
2. Employees Exempt from Income Taxes: Employees of businesses that qualify as Tax-Free NY communities will be exempt from paying income taxes under the proposed program.
3. Businesses Eligible for Tax-Free NY: Eligible businesses include companies with a relationship to the academic mission of the university and companies creating new jobs, including new businesses, out-of-state businesses that relocate to New York and existing businesses that expand their New York operations while maintaining their existing jobs.

The proposal will need to pass the New York State Legislature, with only four weeks remaining in the current legislative session. 

bhlawpllc.com/resources/pdf/Governor Cuomo Proposes Tax Free Zones 5-13.pdf

bhlawpllc.com/resources/pdf/Governor Cuomo Proposes Tax Free Zones 5-13.pdf

Some initial thoughts on Tax-Free NY

Gov. Cuomo's somewhat dramatic announcement of Tax-Free NY today has added a new wrinkle to New York's economic development climate.  More information on Tax-Free NY.  While the program may have a significant impact in a few small areas of the state, it will not address most of the key problems facing Upstate New York.

The Proposal:

• The proposal would create "tax-free communities" at and around SUNY campuses, private colleges and certain state owned properties.
• Qualifying businesses located in these tax-free communities would be exempt from sales tax, property taxes and business/corporate taxes.
• Employees working at these businesses would not pay income tax.

Comments:

• While the overall footprint is large (an asserted 120 million square feet), with campus space often very limited, the available footprints may be limited, perhaps primarily the proposed 200,000 sf around SUNY campuses (of which there are 64) and one would expect a similarly limited scope around private colleges and the designated state properties.  Some important questions: (1) Who will decide what 200,000 sf will be designated? (2) Will this become a bonanza for certain strategically located real property owners? (3) Will 200,000 sf allocated to a campus surrounded by residential neighborhoods go to waste? (4) How will rural schools utilize 200,000 sf? (5) Will SUNY institutions and private colleges become the landlord of choice for businesses of all shapes and sizes?
• What impact will this have on the local property tax base?  A 200,000 sf development could have a significant impact on local services in some of the smaller college-towns.  Without property taxes from private enterprise, how will this burden be funded?
• What impact will this have on existing (but excluded) businesses?  Is it fair to subject a long-standing local business (that has been paying sales taxes, property taxes and income taxes and supporting the local community for years) to contrived competition from a business free of the hassle of paying taxes?
• How much of a say will local officials have in defining the designated areas and the types of businesses receiving the benefits?

Conclusions:

It is reassuring that state government is recognizing the economic development hurdles faced by Upstate New York.  Since 2005, economic development efforts Upstate have been, in general, under attack in Albany.  The tide may be turning.  However, the proposal seems to fall far short of what Upstate needs.  Since the demise of the Empire Zones Program, there has been little concerted, strategic effort invested in improving Upstate's distressed urban areas.

Tim Lynn
tim@bhlawpllc.com
(315) 701-6426

Deja vu - Pataki and Cuomo

Don't wanna pay taxes? Work near SUNY | Crain's New York Business

Don't wanna pay taxes? Work near SUNY | Crain's New York Business

Federal Interest Rates

It is a recurring shock when the IRS releases each month's applicable federal rates.  Rev. Rul. 2013-12 (May 20, 2013).  For June 2013, the annual short-term, mid-term and long-term AFRs are 0.18%, 0.95% and 2.47%.  WSJ prime rate continues its long stand at 3.25%.

New York's 548-day Rule for Persons Domiciled in New York But Living in a Foreign Country

The New York Department of Taxation and Finance has issued guidance providing that, with respect to a taxpayer, domiciled in New York but living in a foreign country,  legally separated from his spouse, the time such taxpayer's minor child spends in New York will not count towards such taxpayer's 90 days spent in New York, provided that the days in question are not days upon which taxpayer has custody or visitation rights.  TSB-A-12(3.1)I.

Tim Lynn
tim@bhlawpllc.com
(315) 701-6426

Proposed Changes for Public Charities in New York

A bill (S.5115/A.2118) pending in the New York legislature would make significant changes in the executive compensation rules for New York Not-For-Profit Corporations.  The stated purpose of the law is to provide clear rules that ensure executive compensation is "reasonable and not excessive."  While the changes are targeted towards executive compensation issues, the impact, if adopted, would touch on other operational issues for Not-For-Profit Corporations.

Summary of Key Points:

1. Employees of a "public charity" (as defined under the Internal Revenue Code) and relatives of the employee would be ineligible to serve as directors (with an exception for an employee serving in an ex officio capacity).
2. All Not-For-Profit Corporations that are required to obtain an audit and all Not-For-Profit Corporations with gross receipts of $250,000 or more would be required to have a board consisting of at least five directors.
3. The fixing of compensation for directors, officers and "key employees" would require action by the full board and could not be reserved to an executive committee or compensation committee.
4. The bill would prohibit the payment of compensation to directors, except reimbursement for reasonable expenses.
5. The bill would allow email notices and email consents with respect to board of directors' unanimous written consent approvals.

This bill would have a significant impact on many Not-For-Profit Corporations and would require a change in operating practices.  Directors, officers, executive directors and donors may wish to voice to the legislature their thoughts on the changes.

For more information, I can be contacted at tim@bhlawpllc.com or at (315) 701-6426.