On June 4, 2013,
the New York Court of Appeals issued its decision in Matter of WL, LLC v.
Dep’t of Economic Development, et al., striking down retroactive
decertification of Empire Zone certified business enterprises. The case arises out of the June 2009
decertification by the Commissioner of Economic Development of hundreds of
Empire Zone enterprises. The
Commissioner made such decertifications effective as of January 1, 2008,
thereby attempting to deprive these business enterprises of certain Empire Zone
tax credits for the 2008 tax year. The
Court wrote, “[R]etroactively denying tax credits to plaintiffs did nothing to
spur investment, to create jobs, or to prevent prior shirt-changing. The retroactive application of the 2009
Amendments simply punished the Program participants more harshly for behavior
that already occurred and they could not alter.”
The decision
could have broad ramifications.
Decertified business enterprises that preserved their rights to seek
2008 Empire Zone benefits are likely to use the decision as a basis to claim
those benefits. Business enterprises
that did not challenge their decertification administratively or through
litigation may also seek to use the decision to claim 2008 benefits, provided
affected taxpayers have a procedural method under applicable tax rules to
assert their claims..
It is noteworthy
that the Court has not addressed the validity of the decertifications of the
alleged (and so-called) “shirt-changers” other than to indicate that those
decertifications could not be retroactive to 2008. Numerous pending cases challenge these
decertifications on grounds not addressed in the Court’s decision, and those
cases remain open and will likely continue to be litigated.
For further
information, contact:
Tim Lynn
(315) 701-6426
