Step 2: Cost Benefit Analysis
Once an application is finalized, the zone coordinator will run a cost benefit analysis to determine whether or not the company can be certified. The cost benefit analysis uses the information submitted on the Empire Zone application to project the amount of credits the company will receive over the next five years. A ratio is then calculated to determine the amount of amount of wages and investment the company is contributing to the state economy for every one dollar the state gives back in tax credits. For example, if a company projects to invest $2.4 million in wages and capital expenditures over 5 years, and the zone projects to award approximately $100,000 in credits, than the result of that company’s cost benefit analysis would be 24:1. Any company with a cost benefit analysis below 5:1 is ineligible to for the program.
Step 3: Local Zone Administration Board ZAB Review
After an application is signed and notarized, it will be submitted to the local Zone Administrative Board (ZAB) for review. ZAB Members are appointed by the Mayor and consist of representatives from City agencies, community groups, and educational and financial institutions. The ZAB reviews the business’ application, a statement of support submitted by EWVIDCO and the business’ cost benefit analysis. The ZAB then decides to either approve or deny the application.
Step 4: State Review
All applications approved by the ZAB are next sent to the state for final approval. The Empire State Development Corporation reviews the application, statement of support, and cost benefit analysis for accuracy and then forwards the application to the NYS Department of Labor to ensure all employment information is valid and up to date. If the state approves the application, than a final certificate of eligibility is sent to the business.
Back to Top
Empire Zone Tax Credits
Wage Tax Credit
Available to companies hiring full-time or full-time equivalent employees in the zone. Credits are available for up to five consecutive years. Credits are $1,500 per employee; for employees in special targeted groups the amount is raised to $3,000 per employee per year. In investment zones, this credit is increased by $500 for workers with wages over $40,000. Unused credits can be forwarded indefinitely and new businesses (those that have been taxable for five years or less) are eligible for a 50% refund of unused credits.
Investment Tax Credit
Available to companies making an investment in the zone for depreciable property and/or equipment which is principally used in manufacturing, processing, assembly, industrial waste treatment or air pollution-control facilities, R&D or financial institutions. 10% (8% for personal income tax filers) of the eligible investment can be taken for credit. Unused credits can be forwarded indefinitely and new businesses are eligible for a 50% refund of unused credits.
An additional Employment Incentive Credit equal to 30% of the investment tax credit is available for each of the three years after the Investment Tax Credit (ITC) is claimed if employment is increased when the investment is made. Unused credits can be forwarded indefinitely and new businesses (personal income tax only) are eligible for a 50% refund of unused credits.
Qualified Empire Zone Enterprises (QEZE) Benefits
To receive Qualified Empire Zone Enterprise (QEZE) enhanced zone benefits, a business must be zone certified under the requirements outlined in the eligibility and certification section and must pass additional tests based on a business’ employment history and operations. For more in depth information on the QEZE credits, please refer to the HYPERLINK "http://www.tax.state.ny.us/pdf/memos/multitax/m06_1c_2i.pdf" NYS Dept. of Tax and Finance’s publication on QEZE Benefits
Sales Tax Exemption
An exemption from the State portion of the sales tax (4.35%) at the point of purchase is available for most goods and services used directly and predominantly in the zone. Utility services qualify for the exemption if used or consumed directly and exclusively in the zone. Telephone services are exempt if delivered and billed to the business at an address in its zone. An exemption from any locally imposed sales tax may also be available. The exemption runs for 120 consecutive months from the effective date on the sales tax certification issued by the Department of Tax and Finance, provided the business continues to meet the employment test each year.
Real Property Tax Credit
A credit for real property taxes paid based on a formula that considers job creation, wages and benefits or investments made in the zone. Further calculations may apply depending on a business’ location in either an Investment Zone or Development Zone. This credit is available for 10 years and unused credits may be obtained as a cash refund in the year they were earned.
Tax Reduction Credit
A credit against tax equal to a percentage of income taxes attributable to the zone enterprise based on its employment growth in the zone. This credit is available for 10 years and can reduce a company’s tax liability to zero – eliminating the alternative minimum and fixed dollar minimum tax.
Zone Capital Credits
A 25% tax credit is available for personal or corporate income tax payers for eligible investments in certified zone businesses, or contributions to approved community development projects. There is a lifetime limit of $100,000 in zone capital credits per contributor for Community Development Projects and $100,000 lifetime limit in zone capital credits per investor in a Direct Equity Investment project.
NYS Sales Tax Refund
A refund of the State portion (4.375%) of the sales tax is available for the purchase of building materials used in the construction or renovation of industrial or commercial property located in a zone. Empire Zone certification is not a requirement to receive this benefit; however, the purchaser must be buying for a property in the zone.
EWVIDCO 11 Catherine Street Brooklyn, NY 11211 • T 718 388-7287 • F 718 963-1905