Wednesday, May 16, 2012
Sunday, May 13, 2012
Friday, May 11, 2012
Thursday, May 10, 2012
Empire Zone Cases at the Court of Appeals
Paladino vs. Cuomo, the rematch: Election opponents fight in court over Empire Zone money | syracuse.com
"The state’s highest court has been asked to decide whether Gov. Andrew Cuomo’s administration should return about $200,000 a year in Empire Zone tax breaks to his old adversary, Carl Paladino.
***
At stake for Paladino is about $200,000 a year in lost tax breaks, dating back to 2008 and covering the next seven years.
At stake for Paladino is about $200,000 a year in lost tax breaks, dating back to 2008 and covering the next seven years.
But the issue could have bigger consequences.
The case could open the door for other businesses to reclaim tax breaks the state took away when it kicked them out of the program in 2009.
Paladino is one of only two cases, so far, to reach the state’s highest court. The other case includes James Square Associates, the real estate company that owns the James Square Health and Rehabilitation Center in Syracuse. The cases are expected to be heard together in November at the earliest, a court spokesman said.
Paladino was booted because the state decided his tax breaks exceeded his investment.
***
Dozens of other businesses are watching.
Dozens of other businesses are watching.
If Paladino wins, it could mean that the state must repay 2008 tax credits to other businesses that were kicked out yet preserved their rights to claim the credits, said Tim Lynn, an attorney with Bousquet Holstein in Syracuse.
The court could also go beyond the question of that one tax year to address the bigger picture. Was it proper for the state to change the rules for entry eight years after companies had been accepted?"
Sunday, May 6, 2012
Thursday, September 29, 2011
Thursday, September 15, 2011
Friday, August 19, 2011
Foreign Dividends Qualifying for Capital Gains Treatment
The IRS has updated the list of countries with which the U.S. has a tax treaty allowing for the treatment of dividends to be treated as qualifying dividends taxed at capital gains rates. The qualifying countries are: Australia, Austria, Bangladesh, Barbados, Belgium, Canada, China, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea, Latvia, Lithuania, Luxembourg, Mexico, Morocco, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom and Venezuela. IRS Notice 2003-69
Thursday, July 28, 2011
Tuesday, June 21, 2011
Monday, June 20, 2011
Symphony Syracuse
Below is a link to the homepage for Symphony Syracuse, a new not-for-profit created to provide a vehicle for continued symphony presentations by the musicians formerly employed by the defunct Syracuse Symphony Orchestra. The success of this endeavor is key to the arts and economic development in Central New York and the support of all in Central New York is needed to ensure its success.
Thursday, June 16, 2011
Wednesday, June 15, 2011
Economic Transformation and Facility Redevelopment Program
As part of the FY2013 New York State budget, the Economic Transformation and Facility Redevelopment Program ("ETFR Program") has been created. The ETFR Program is intended to aid communities affected by the upcoming round of prison and juvenile justice facility closures. This program may provide a useful economic development tool for local communities negatively impacted by facility closures.
The benefits provided to businesses under the ETFR Program are refundable tax credits (including both capital investment, job creation and property tax-relief components) and a refund of certain sales taxes paid on improvements to facilities located at the site of a closed facility or surrounding areas. If used in conjunction with an adaptive reuse plan adopted for the closed facility, these tax credits could be an important incentive to replace jobs lost due to the closures.
The information in this article is divided into the following parts:
Part 1 - Designation of Economic Transformation Areas
Part 2 - Qualification and Certification of Businesses
Part 3 - Tax Credits
Part 4 - Sales Tax Refund
Part 5 - Property Tax Exemption
Monday, June 13, 2011
New York Adds To Requirements for Sales Tax Withholding and Reporting for Prior Violators
In the New York FY2013 budget, changes were made to the Tax Law that added potential new obligations on persons who have failed to (1) collect sales tax, (2) remit collected sales tax, or (3) file timely sales tax returns.
Pursuant to these new provisions, the Department of Taxation and Finance may require collected sales tax to be deposited in a segregated bank account on a weekly basis with the Department authorized to debit such account, and, in the case of quarterly filers, the Department may require monthly sales tax returns to be filed.
Pursuant to these new provisions, the Department of Taxation and Finance may require collected sales tax to be deposited in a segregated bank account on a weekly basis with the Department authorized to debit such account, and, in the case of quarterly filers, the Department may require monthly sales tax returns to be filed.
Friday, June 10, 2011
NYSERDA seeks retail developer for Malta tech park
A new effort at retail development at NYSERDA's STEP in Saratoga.
Wednesday, June 8, 2011
Court rules against Seneca Nation (2011-06-08)
A loss for the Seneca Nation on cigarette taxes.
Tuesday, June 7, 2011
The Barker Decision – A Threat to New York's Tourism Industry and Workforce - UPDATED
In the Matter of the Petition of John J. and Laura Barker (the "Barker Case"), New York Tax Tribunal was presented with a Connecticut resident (a family of five living in New Canaan), Mr. Barker working full-time in New York, Mrs. Barker a homemaker in Connecticut, who happened to own a seldom used, 1,100 sf vacation property on Long Island. The vacation property was used only a few days per year by the Barkers and was not used by Mr. Barker in connection with his employment in New York New York , which, combined with Mr. Barker's full-time employment in New York , is sufficient to establish the Barkers as New York
This decision marks a significant extension of the artifice of New York
By reason of this decision, the many Connecticut, New Jersey and Pennsylvania residents commuting to work in New York will find themselves taxed as New York residents solely by reason of owning or controlling vacation property in New York – even if such property cannot be used as a residence associated with the person's employment. For example, a New Jersey couple, one spouse employed in New York City , the other spouse employed in New Jersey , owning a vacation home in the Finger Lakes or Adirondacks, would be treated as New York
This decision will impact the well-being of New York Adirondacks . The additional tax burden (on top of already excessive real property taxation) will result in owners and buyers departing the market, further depressing an already challenged tourism industry.
A bill has been introduced in the New York Assembly and Senate (A6266 and S3998 - http://assembly.state.ny.us/leg/?default_fld=&bn=A06266&term=2011&Summary=Y&Memo=Y) that would exempt an abode that is more than 50 miles from the taxpayer's place of employment in New York and the taxpayers spends no more than 90 days at the abode during the taxable year. This change is sensible and should be supported by all tourism organizations across the state.
The bill appears to be moving quickly towards passage in the Senate -- it advanced to third reading today, June 7, 2011. It is not clear where it is heading in the Assembly.
The bill appears to be moving quickly towards passage in the Senate -- it advanced to third reading today, June 7, 2011. It is not clear where it is heading in the Assembly.
Wednesday, June 1, 2011
Wednesday, May 18, 2011
Some thoughts on New York's assessor and property assessment problems
Much has been made lately, thanks to the efforts of the Comptroller, of the number of property tax assessing units in New York State. While having attention to this issue is a positive development, the focus is on the wrong problem. The problem with property tax assessments in New York is not with the number of assessing units. There are two core problems with our system: (1) there is no requirement that property be assessed at full value; and (2) there are no consistent rules and standards used by all assessors statewide.
Until New York decides to adopt an assessing system that is fair and applied equally to all property owners, it does not matter whether there is one assessor or one thousand. With the elimination or limitation of many of the economic development incentives relating to real property taxes, New York's assessment system will continue to be a drag on economic development and job creation in the state.
Until New York decides to adopt an assessing system that is fair and applied equally to all property owners, it does not matter whether there is one assessor or one thousand. With the elimination or limitation of many of the economic development incentives relating to real property taxes, New York's assessment system will continue to be a drag on economic development and job creation in the state.
Tuesday, May 17, 2011
NYS Business Council Tax Conference
Real property tax reform panel from DTF.
Interesting that local property taxes generated more revenues than the personal income tax in FY2009.
NYS Business Council Tax Conference
Interesting keynote address from the new commissioner of DTF, Thomas Mattox. He touched on some broad stroke issues the Governor is pushing, the operational changes going on in the Department, and real property tax reform.
NYS Business Council Tax Conference
Nonie Manion from DTF presented on the Department's efforts to improve the audit system. Beginning with the information requests, the Department is trying to implement a system that will better focus information demands.
The Department will be using work plans that will track open issues and ensure consistency within an industry. The work plans will try to impose deadlines for resolving each open issue.
Expedited audits - by agreement between taxpayer and Department. Implements a plan with deadlines for production and response.
NYS Business Council Tax Conference
Robert Megna started the conference with a discussion of the budget. He noted there were no changes to the Tax Law in the budget.
On the budget, Mr Megna noted that 85% of the budget gap was closed through spending cuts.
Division of Budget estimates Wall Street bonuses will hit 2008 highs in 2012, almost back to those levels in 2011.
On a 5 year outlook, the 2012 budget reduced the gap from $60b to $10b.
Mr. Megna focussed much of his comments on structural curbs instituted for school aid and Medicaid.
On job creation, he discussed the impact of the lapse of the income tax surcharge. For the future, the property tax cap will be an important assistance for business. Incentives will come in future years through the regional councils. He utilized the words "targeted incentives"
On Art 9-A and 32 reform - Mr. Megna had no prediction on whether this would show up in next year's budget.
Monday, April 11, 2011
Tuesday, April 5, 2011
Friday, January 21, 2011
Municipal Bond Market - Shrinking Capital
With money flowing out of the municipal bond market rapidly and with (overstated) warnings of municipal and state defaults, will there be money available for municipalities and projects in the coming year?
http://www.bondbuyer.com/issues/120_11/-1022195-1.html?ET=bondbuyer:e2757:2057592a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=BB_Daily_Briefing_011411
http://www.bondbuyer.com/issues/120_11/-1022195-1.html?ET=bondbuyer:e2757:2057592a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=BB_Daily_Briefing_011411
Thursday, January 13, 2011
Waiting on a $15M promise
Too much attention paid to "who" and not enough to getting the project done. Let the local people that brought this from contaminated vacant land to success story finish the job. Luther Forest Technology Campus is more likely to be a success without threats and litigation.
Waiting on a $15M promise
Waiting on a $15M promise
April 18th in New York -
New York has followed the feds and announced that 2010 personal income tax returns/extensions are due April 18, 2011. Returns on extension will be due October 17, 2011.
Information Reporting for Rental Real Estate Activities – Individuals Engaged in Passive Activities
The Small Business Jobs Act of 2010 added new reporting requirements relating to rental property expenses. Pursuant to Section 6041(a) of the Internal Revenue Code, all persons engaged in a trade or business are required to report certain payments made of $600 or more, providing information regarding the recipient of such payment.
Pursuant to new Section 6041(h), a person receiving rental income from real estate is deemed to be engaged in a trade or business for purposes of Section 6041(a). The reporting burden is therefore imposed upon individuals engaged in passive real estate rental activities. This new provision will impose the reporting obligation upon significant numbers of individuals not currently subject to the requirements. Persons engaged in real estate rental activities should consult with their tax advisers to ensure compliance.
Wednesday, January 12, 2011
NY hopes incentive will help blow the whistle on tax cheats
NY hopes incentive will help blow the whistle on tax cheats
http://www.syracuse.com/news/index.ssf/2011/01/ny_hopes_new_law_wets_your_whi.html
http://www.syracuse.com/news/index.ssf/2011/01/ny_hopes_new_law_wets_your_whi.html
NY Department of Taxation and Finance Issues Guidance With Respect to Sales Tax Owed On Aircraft Use
Effective June 1, 2009, New York State limited an exemption from sales tax affecting non-resident taxpayers and use of aircraft in the situation where the non-resident taxpayer is related to a New York resident. Guidance issued determines that, with respect to an aircraft acquired prior to the effective date of the new law (June 1, 2009), the new law will not apply and the imposition of sales tax will be determined based upon prior law.
TSB-A-11(1)S
TSB-A-11(1)S
Legal Alert: 2009 Business Annual Reports
Empire Zone certified businesses should have received, or will be receiving in the near future, their 2009 Business Annual Report (“BAR”) and a supplemental form for certain Zone locations. For most Zones, the due date for filing the BAR is December 17, 2010. However, a Zone may choose an earlier date to accommodate their processing time, so be sure to review the letter from your local Zone to confirm when your BAR is due.
For assistance, please contact one of our Economic Development Practice Group representatives: Tim Lynn (tim@gslaw.com, 315.701.6426), Phil Bousquet (phil@gslaw.com, 315.701.6309), Katie Centolella (katie@gslaw.com, 315.701.6468), Marj Pepe (mpepe@gslaw.com, 315.701.6423).
For assistance, please contact one of our Economic Development Practice Group representatives: Tim Lynn (tim@gslaw.com, 315.701.6426), Phil Bousquet (phil@gslaw.com, 315.701.6309), Katie Centolella (katie@gslaw.com, 315.701.6468), Marj Pepe (mpepe@gslaw.com, 315.701.6423).
NYS Issues Guidance on Historic Rehabilitation Credit
On December 15, 2010, the New York State Department of Taxation and Finance issued a guidance memorandum regarding treatment of the enhanced historic rehabilitation credit available to taxpayers for tax years beginning between January 1, 2010, and December 31, 2014, including:
• treatment of the credit with respect to banks and insurance companies;
• treatment of the credit allocated through partnerships to individuals;
• credit limitations for banks, insurance companies and corporations taxed under Article 9-A;
• credit for tax years beginning on or after January 1, 2015.
For further information, please contact:
Tim Lynn (tim@gslaw.com, or call 315.701.6426)
or Katie Centolella (katie@gslaw.com, or call 315.701.6468).
• treatment of the credit with respect to banks and insurance companies;
• treatment of the credit allocated through partnerships to individuals;
• credit limitations for banks, insurance companies and corporations taxed under Article 9-A;
• credit for tax years beginning on or after January 1, 2015.
For further information, please contact:
Tim Lynn (tim@gslaw.com, or call 315.701.6426)
or Katie Centolella (katie@gslaw.com, or call 315.701.6468).
Monday, May 10, 2010
Governor’s Proposed 50% Deferral of Empire Zone Tax Credits
Earlier this week the Governor released a “fact sheet” for a proposal to generate
$620M in “additional savings actions” (gap fillers) designed to supplement the Governor’s
Executive Budget. One of the proposed “gap fillers” would defer 50% of businessrelated
tax credits for three tax years, 2010, 2011, and 2012. The proposal would affect
credits that “would otherwise be used or refunded” in those years, which would include
credits earned in prior years and carried forward into tax years 2010-2012, as well as
credits generated (earned) in those tax years. In all, thirty-three tax credits would be
subject to this provision. It is important to note that this is a proposed bill and has not
been acted upon by the legislature.
The tax credits available under the Empire Zones Program are included in the list of
deferred credits (Tax Reduction Credit, Real Property Tax Credit, Empire Zone Investment
Tax Credit, the Empire Zone Employment Incentive Credit and the Empire Zone
Wage Tax Credit). With respect to these credits, the deferred portion of the credits
would be allowed (i.e., could be claimed) in taxable years beginning in 2013 and ending
with taxable years beginning in 2015.
Taxpayers would be required to make quarterly estimated tax payments
(beginning June 15th for most taxpayers) as if the credit deferral had been in
effect for the taxpayer’s entire taxable year. Therefore, taxpayers claiming Empire
Zone tax credits should closely monitor this proposed bill to be prepared for making
such estimated payments.
In its current form, the proposal is not detailed in its treatment of the various credits,
how it will be applied to various types of taxpayers, or when the deferred credits could
be claimed (leaving much of the detail to regulatory action by the Commissioner of Taxation
& Finance). It would be advisable for Empire Zone Enterprises to track any progress
the bill makes in the legislature.
This alert was prepared by our Economic Development Incentives Practice Group.
Please contact Tim Lynn at (315) 701-6426 or tim@gslaw.com if you would like further
information or if you have any questions regarding this Alert.
Friday, May 29, 2009
Thursday, May 28, 2009
Empire Zone Decertification
If you are a certified Empire Zone Enterprise (a/k/a QEZE), and received a notice of likely decertification from Empire State Development, you should reply with supplemental information. If you do not, there will likely be a final order of decertification issued and your only recourse will be litigation.
Wednesday, May 20, 2009
Empire Zones: Update - Decertification and Retention Certificates
ALERT
Empire Zones: Update - Decertification and Retention Certificates
As noted in our previous alert, the FY 2010 NYS budget significantly changed New York's Empire Zones (EZ) program. This alert brings you an update about the certification review process to be conducted by the Commissioner of Economic Development, and focuses more closely on the tax treatment of 2008 EZ credit claims. As noted in our prior email, the new law requires the immediate attention of all EZ businesses and EZ business owners to any correspondence from the Department of Economic Development (Empire State Development Corporation) or the Department of Taxation and Finance ("DTF") regarding the Empire Zones program or tax benefits.
1. ESD Certification Update
A great majority of the 9,000+ Empire Zone businesses are likely to receive word from the Commissioner in the next three to five weeks as to the status of their EZ certification. Many will simply receive notice that their Empire Zone Retention Certificates are being processed and will be issued in June or July. Others may receive a request for additional information in connection with the Commissioner's review. Still others may receive notice that their EZ certification will be revoked.
Businesses receiving notice that their EZ certificates will be revoked (or that they will be "decertified") will have just 15 business days from the date of the notice to appeal the Commissioner's determination. Businesses receiving requests for additional information will likely be given a timetable to respond. In either case, a prompt and complete response will be necessary.
2. Tax Impact.
The budget law also addressed the impact of decertification on the Empire Zone tax incentives. On April 15, DTF issued a memorandum advising taxpayers about the procedures necessitated by the new law. DTF has since publicly clarified its interpretation of the new law, particularly with respect to the impact of the law on 2008 tax returns filed by EZ businesses and their owners. The following points summarize the current interpretation of the law by DTF:
• The budget law disallows carryovers into 2008 (and later years) of the EZ Wage Tax Credit, EZ Investment Tax Credit, and EZ Capital Tax Credit, if the entity that generated the credit does not receive a Retention Certificate. DTF has stated that no EZ credits (new or carryforward) can be claimed for 2008 without a Retention Certificate.
• 2008 tax returns claiming EZ credits (other than the EZ Zone Capital Credit for donations to non-profit "community development" projects) are being held by DTF until issuance of the EZ Retention Certificates. Taxpayers claiming only the EZ Zone Capital Credit for contributions to non-profit "community development" projects will not need to re-submit their returns.
• Businesses that receive EZ Retention Certificates will be asked to re-submit a copy of their 2008 return with the Retention Certificate attached. Businesses that "pass through" income to owners (S corporations, partnerships, and most LLCs) will have to provide their owners with a copy of the Retention Certificate. The owners, in turn, must also re-submit a copy of their 2008 returns with the Retention Certificate attached.
• For businesses not receiving a retention certificate, it appears that DTF will process those 2008 returns by disallowing the EZ credits, and calculate interest (at the rate of 7.5% annually, compounded daily) on any underpayment of the recalculated tax, with interest accruing from April 15th. No penalties will be assessed for EZ credits disallowed because the Retention Certificate is not issued.
Although DTF's April 15 memorandum also described procedures for businesses (and their owners) who do not receive Retention Certificates by the due date (including extension) for the 2008 returns, it appears that these procedures will be delayed for a period of time to allow the Commissioner of Economic Development to complete her retention/decertification review.
Based upon recent information, there is a general expectation that Empire State Development will complete its retention/decertification review process by the end of July. Therefore, DTF intends to wait until late July or August before issuing notice of underpayment to taxpayers whose EZ businesses do not receive a Retention Certificate.
Because the EZ retention/decertification reviews are expect to occur in the next two months (perhaps sooner), taxpayers concerned with the 7.5% interest accrual (which would be charged if a Retention Certificate is not received) should consider whether to simply wait for the initial review process to be completed before deciding whether to start making additional tax deposits. Similarly, taxpayers whose 2008 returns have been extended should wait at least until the end of July to file, to allow time for the completion of the process for their EZ business.
3. Additional EZ Program Changes.
The new law made other changes to the EZ program, summarized below.
• No businesses will be certified after June 30, 2010. Businesses certified before that date will retain their original 10 or 15 year benefit period (unless decertified).
• For businesses certified on or after April 1, 2009, the QEZE credit for real property taxes will be calculated as before, and then multiplied by 75%. Applicants will have to pass a 20:1 cost/benefit test (10:1 for manufacturers), based on estimates for the first three years of EZ certification. The Commissioner adopted regulations in March 2008 setting forth the 20:1 test; in our experience based on the 2008 regulations, very few businesses will pass this test.
• The QEZE Sales Tax Exemption has been eliminated as of August 31, 2009. Instead, Empire Zone businesses will have to pay the full sales and use tax on purchase of taxable goods or services, and then claim a credit (and refund) when filing their sales and use tax returns (the credit/refund can be claimed on a quarterly basis). Businesses certified after March 31, 2009 will be allowed the credit/refund only if their municipality has approved the local portion. Under current law only six jurisdictions (out of more than 80) adopted a local exemption; these jurisdictions are deemed by law to have also adopted the new credit/refund. Except for businesses in these jurisdictions and in jurisdictions that adopt the local exemption, the Empire Zone sales tax benefit will be effectively eliminated for business certified after March 31, 2009.
• Effective immediately, the Commissioner will have sole responsibility for EZ certification decisions - the local EZ administrative boards will recommend certification.
Finally, word has been circulating that the New York State Senate will be proposing legislation to address some of the technical aspects of the Empire Zone law changes. We will keep you apprised of these changes in future alerts.
This alert was prepared by our Economic Development Incentives Practice Group. For further information, please contact Tim Lynn at (315) 701-6426 or tim@gslaw.com, or Phil Bousquet at (315) 701-6309 or phil@gslaw.com.
Empire Zones: Update - Decertification and Retention Certificates
As noted in our previous alert, the FY 2010 NYS budget significantly changed New York's Empire Zones (EZ) program. This alert brings you an update about the certification review process to be conducted by the Commissioner of Economic Development, and focuses more closely on the tax treatment of 2008 EZ credit claims. As noted in our prior email, the new law requires the immediate attention of all EZ businesses and EZ business owners to any correspondence from the Department of Economic Development (Empire State Development Corporation) or the Department of Taxation and Finance ("DTF") regarding the Empire Zones program or tax benefits.
1. ESD Certification Update
A great majority of the 9,000+ Empire Zone businesses are likely to receive word from the Commissioner in the next three to five weeks as to the status of their EZ certification. Many will simply receive notice that their Empire Zone Retention Certificates are being processed and will be issued in June or July. Others may receive a request for additional information in connection with the Commissioner's review. Still others may receive notice that their EZ certification will be revoked.
Businesses receiving notice that their EZ certificates will be revoked (or that they will be "decertified") will have just 15 business days from the date of the notice to appeal the Commissioner's determination. Businesses receiving requests for additional information will likely be given a timetable to respond. In either case, a prompt and complete response will be necessary.
2. Tax Impact.
The budget law also addressed the impact of decertification on the Empire Zone tax incentives. On April 15, DTF issued a memorandum advising taxpayers about the procedures necessitated by the new law. DTF has since publicly clarified its interpretation of the new law, particularly with respect to the impact of the law on 2008 tax returns filed by EZ businesses and their owners. The following points summarize the current interpretation of the law by DTF:
• The budget law disallows carryovers into 2008 (and later years) of the EZ Wage Tax Credit, EZ Investment Tax Credit, and EZ Capital Tax Credit, if the entity that generated the credit does not receive a Retention Certificate. DTF has stated that no EZ credits (new or carryforward) can be claimed for 2008 without a Retention Certificate.
• 2008 tax returns claiming EZ credits (other than the EZ Zone Capital Credit for donations to non-profit "community development" projects) are being held by DTF until issuance of the EZ Retention Certificates. Taxpayers claiming only the EZ Zone Capital Credit for contributions to non-profit "community development" projects will not need to re-submit their returns.
• Businesses that receive EZ Retention Certificates will be asked to re-submit a copy of their 2008 return with the Retention Certificate attached. Businesses that "pass through" income to owners (S corporations, partnerships, and most LLCs) will have to provide their owners with a copy of the Retention Certificate. The owners, in turn, must also re-submit a copy of their 2008 returns with the Retention Certificate attached.
• For businesses not receiving a retention certificate, it appears that DTF will process those 2008 returns by disallowing the EZ credits, and calculate interest (at the rate of 7.5% annually, compounded daily) on any underpayment of the recalculated tax, with interest accruing from April 15th. No penalties will be assessed for EZ credits disallowed because the Retention Certificate is not issued.
Although DTF's April 15 memorandum also described procedures for businesses (and their owners) who do not receive Retention Certificates by the due date (including extension) for the 2008 returns, it appears that these procedures will be delayed for a period of time to allow the Commissioner of Economic Development to complete her retention/decertification review.
Based upon recent information, there is a general expectation that Empire State Development will complete its retention/decertification review process by the end of July. Therefore, DTF intends to wait until late July or August before issuing notice of underpayment to taxpayers whose EZ businesses do not receive a Retention Certificate.
Because the EZ retention/decertification reviews are expect to occur in the next two months (perhaps sooner), taxpayers concerned with the 7.5% interest accrual (which would be charged if a Retention Certificate is not received) should consider whether to simply wait for the initial review process to be completed before deciding whether to start making additional tax deposits. Similarly, taxpayers whose 2008 returns have been extended should wait at least until the end of July to file, to allow time for the completion of the process for their EZ business.
3. Additional EZ Program Changes.
The new law made other changes to the EZ program, summarized below.
• No businesses will be certified after June 30, 2010. Businesses certified before that date will retain their original 10 or 15 year benefit period (unless decertified).
• For businesses certified on or after April 1, 2009, the QEZE credit for real property taxes will be calculated as before, and then multiplied by 75%. Applicants will have to pass a 20:1 cost/benefit test (10:1 for manufacturers), based on estimates for the first three years of EZ certification. The Commissioner adopted regulations in March 2008 setting forth the 20:1 test; in our experience based on the 2008 regulations, very few businesses will pass this test.
• The QEZE Sales Tax Exemption has been eliminated as of August 31, 2009. Instead, Empire Zone businesses will have to pay the full sales and use tax on purchase of taxable goods or services, and then claim a credit (and refund) when filing their sales and use tax returns (the credit/refund can be claimed on a quarterly basis). Businesses certified after March 31, 2009 will be allowed the credit/refund only if their municipality has approved the local portion. Under current law only six jurisdictions (out of more than 80) adopted a local exemption; these jurisdictions are deemed by law to have also adopted the new credit/refund. Except for businesses in these jurisdictions and in jurisdictions that adopt the local exemption, the Empire Zone sales tax benefit will be effectively eliminated for business certified after March 31, 2009.
• Effective immediately, the Commissioner will have sole responsibility for EZ certification decisions - the local EZ administrative boards will recommend certification.
Finally, word has been circulating that the New York State Senate will be proposing legislation to address some of the technical aspects of the Empire Zone law changes. We will keep you apprised of these changes in future alerts.
This alert was prepared by our Economic Development Incentives Practice Group. For further information, please contact Tim Lynn at (315) 701-6426 or tim@gslaw.com, or Phil Bousquet at (315) 701-6309 or phil@gslaw.com.
Upstate Blueprint Program
ALERT
UPSTATE BLUEPRINT PROGRAM AND
DOWNSTATE REVITALIZATION PROGRAM
On May 11, 2009, the New York State Urban Development Corporation released the guidelines and application for the Upstate Regional Blueprint Program ("Upstate Blueprint Program") and the Downstate Revitalization Program ("Downstate Revitalization Program"). The Upstate Blueprint Program has $120 million in funding and the Downstate Revitalization Program has $35 million in funding.
The programs will be competitive in nature, with a scoring system applied in the awarding of program benefits. Available funding falls into three categories – Business Investment, Infrastructure Investment, and Downtown Redevelopment. It is expected that available funding will be allocated approximately equally among the three types of projects, i.e., approximately $40 million would available under the Upstate Blueprint Program for Business Investment.
Eligible applicants include for-profit businesses, not-for-profit corporations, business improvement districts, local development corporations, public benefit corporations (including IDAs), economic development organizations, research and academic institutions, municipalities, counties and community facilities.
Funding awards will be in the form of subsidized loans, convertible loans and grants. Subsidized loans will consist of subordinate, asset-backed loans bearing 2% interest. Convertible loans are interest-only loans (interest at 3%) with the principal forgiven over a 5 year period if job commitments are satisfied.
Business Investment projects are capital projects that create or retain jobs in New York. Commitments will be required of award recipients with respect to jobs retained, jobs created, and compensation paid to employees.
Infrastructure Investment projects are projects designed to attract new businesses and encourage expansion of existing businesses. These types of projects may include transportation, parking garages, water and sewer, communications, and energy generation and distribution.
Downtown Redevelopment funds are available for rehabilitation and new construction in downtown areas, cities and villages. A variety of commercial uses are eligible, including retail and office space. Funding is available for tourism (including hotels), cultural resources, entertainment facilities and streetscape improvements.
The funding parameters are: minimum assistance is $100,000; maximum assistance is $5 million. Funding is capped at 20% of the project budget and a minimum 10% equity contribution. There are a variety of restrictions on the use of funds depending upon the category.
For further information, contact Tim Lynn at (315) 701-6426 or tim@gslaw.com
UPSTATE BLUEPRINT PROGRAM AND
DOWNSTATE REVITALIZATION PROGRAM
On May 11, 2009, the New York State Urban Development Corporation released the guidelines and application for the Upstate Regional Blueprint Program ("Upstate Blueprint Program") and the Downstate Revitalization Program ("Downstate Revitalization Program"). The Upstate Blueprint Program has $120 million in funding and the Downstate Revitalization Program has $35 million in funding.
The programs will be competitive in nature, with a scoring system applied in the awarding of program benefits. Available funding falls into three categories – Business Investment, Infrastructure Investment, and Downtown Redevelopment. It is expected that available funding will be allocated approximately equally among the three types of projects, i.e., approximately $40 million would available under the Upstate Blueprint Program for Business Investment.
Eligible applicants include for-profit businesses, not-for-profit corporations, business improvement districts, local development corporations, public benefit corporations (including IDAs), economic development organizations, research and academic institutions, municipalities, counties and community facilities.
Funding awards will be in the form of subsidized loans, convertible loans and grants. Subsidized loans will consist of subordinate, asset-backed loans bearing 2% interest. Convertible loans are interest-only loans (interest at 3%) with the principal forgiven over a 5 year period if job commitments are satisfied.
Business Investment projects are capital projects that create or retain jobs in New York. Commitments will be required of award recipients with respect to jobs retained, jobs created, and compensation paid to employees.
Infrastructure Investment projects are projects designed to attract new businesses and encourage expansion of existing businesses. These types of projects may include transportation, parking garages, water and sewer, communications, and energy generation and distribution.
Downtown Redevelopment funds are available for rehabilitation and new construction in downtown areas, cities and villages. A variety of commercial uses are eligible, including retail and office space. Funding is available for tourism (including hotels), cultural resources, entertainment facilities and streetscape improvements.
The funding parameters are: minimum assistance is $100,000; maximum assistance is $5 million. Funding is capped at 20% of the project budget and a minimum 10% equity contribution. There are a variety of restrictions on the use of funds depending upon the category.
For further information, contact Tim Lynn at (315) 701-6426 or tim@gslaw.com
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