Business Development Spotlight - Empire Zones
Tax issues are important considerations for any business, particularly when there are tax incentives available that can work to significantly reduce the overall tax burden for businesses. With a little forethought and appropriate planning, businesses can take advantage of significant tax incentives offered in New York State. For example, the Empire Zones Program is a vital component of Governor Pataki's effort to revitalize and expand New York's economy. Empire Zones (formerly called Economic Development Zones) are geographically defined areas where businesses have access to vacant land, existing industrial and commercial infrastructure, a skilled workforce and abundant resources such as power and water supplies. The Empire Zones are particularly attractive in that they offer numerous tax incentives for qualifying businesses located within the zone.
Participating businesses are eligible to receive the following tax credits and exemptions:
QEZE Sales Tax Exemptions: Qualified Empire Zone Enterprises (QEZEs) are granted a 10-year exemption from State sales tax on purchases of goods and services (including utility services) used predominantly in an Empire Zone.
QEZE Credit for Real Property Taxes: Qualified Empire Zone Enterprises are allowed a refundable credit against business or income tax equal to a percentage of real property taxes paid in the zone (effective for taxable years beginning on or after January 1, 2001).
QEZE Tax Reduction Credit: Qualified Empire Zone Enterprises are allowed a credit against business or income tax equal to a percentage of taxes attributable to the zone enterprise (effective taxable years beginning on or after January 1, 2001).
EZ Wage Tax Credit: This credit is available for up to five consecutive years for companies hiring full-time employees in newly created jobs. For employees in special targeted groups, this credit equals $3,000 per year, with a credit of $1,500 per year effective 1/1/2001, for all other new hires.
EZ Investment Tax and Employment Incentive Credits: Businesses that create new jobs and make new investments in production, property and equipment may qualify for tax credits of up to 19% of the company's eligible investment.
New Business Refund: Businesses new to New York State are entitled to a 50% cash refund of unused EZ-WTC and ITC amounts. Other businesses may carry forward unused credits indefinitely.
Utility Rate Savings: Special reduced electric and gas rates may be available through investor-owned utilities in New York State. Businesses that locate or expand their operations in an EZ may receive significantly reduced rates.
Zone Capital Credit: A 25% tax credit against personal or corporate income taxes is available for contributing or purchasing shares in a zone capital corporation; or for a direct equity investment in a certified zone business; or for contributions to approved community development projects within an EZ.
Sales Tax Refund or Credit: Purchases of building materials to be used for commercial or industrial real property located in an EZ are eligible for a refund or credit of NYS sales taxes. A similar refund or credit of local sales tax may also be available from the locality.
Real Property Tax Abatement: EZs may offer tax abatements from an increased assessment, with the abatement value based on improvements to real property for up to 10 years. This holds true for up to seven years at 100%, decreasing over the last three years of the exemption.
Technical Assistance: Each local zone office is staffed with professionals qualified to assist businesses locating or expanding in an EZ.
The links below will take you to various resources relating to the State's Empire Zones Program.
TSB-M-03(4.1)C, TSB-M-03(3.1)I Correction to TSB-M-03(4)C, TSB-M-03(3)I, Qualified Empire Zone Enterprise (QEZE) Tax Credits
TSB-M-03(4)C, (3)I, Qualified Empire Zone Enterprise (QEZE) Tax Credits
TSB-M-02(5)S, Qualified Empire Zone Enterprise (QEZE) Exemptions (Articles 28 and 29)
TSB-M-01(1.1)C, (1.1)I, Qualified Empire Zone Enterprise (QEZE) Tax Credits
TSB-M-01(1)C, (1)I, Qualified Empire Zone Enterprise (QEZE) Tax Credits
Form DTF-80, Application for a Qualified Empire Zone Enterprise (QEZE) Certification
PUB-718-EZ, Empire Zones Sales and Compensating Use Tax Refund Rates
PUB-718Q, Local Sales and Use Tax Rates on Sales to a Qualified Empire Zone Enterprise (QEZE)
PUB-26, A Guide to Business Tax and Personal Income Tax Credits within Empire Zones
PUB-30, A Guide To Sales and Use Tax Incentives within Empire Zones
Empire State Development Corporation