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S07648 Summary:

BILL NOS07648A
 
SAME ASNo Same As
 
SPONSORVALESKY
 
COSPNSRKENNEDY, O'MARA, YOUNG
 
MLTSPNSR
 
Amd 606, 210-B & 1511, Tax L; amd 13.15, Pks & Rec L
 
Relates to removing dependence on federal law to receive the historic properties tax credit in New York state.
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S07648 Memo:

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S07648 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         7648--A
 
                    IN SENATE
 
                                    February 2, 2018
                                       ___________
 
        Introduced  by  Sens.  VALESKY, KENNEDY, O'MARA, YOUNG -- read twice and
          ordered printed, and when printed to be committed to the Committee  on
          Investigations and Government Operations -- committee discharged, bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee
 
        AN ACT to amend the tax law and the parks, recreation and historic pres-
          ervation law, in relation to the  tax  credit  for  rehabilitation  of
          historic properties
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Subsection (oo) of section 606 of the tax law,  as  amended
     2  by  chapter  239  of the laws of 2009, paragraph 1 as amended by chapter
     3  472 of the laws of 2010, subparagraph (A) of paragraph 1 and  paragraphs
     4  3  and 5 as amended by section 1 of part RR of chapter 59 of the laws of
     5  2018, paragraph 4 as amended by section 1 of part F of chapter 59 of the
     6  laws of 2013, is amended to read as follows:
     7    (oo) Credit for rehabilitation of historic  properties.  (1)  (A)  For
     8  taxable  years beginning on or after January first, two thousand ten and
     9  before January first, two thousand  twenty-five,  a  taxpayer  shall  be
    10  allowed  a  credit  as  hereinafter provided, against the tax imposed by
    11  this article, in an amount equal to [one hundred percent of  the  amount
    12  of  credit  allowed  the  taxpayer  with respect to a certified historic
    13  structure under internal revenue code section 47(c)(3), determined with-
    14  out regard to ratably allocating the credit over a five year  period  as
    15  required  by  subsection  (a) of such section 47,] twenty percent of the
    16  qualified  rehabilitation  expenditures  with  respect  to  a  certified
    17  historic  structure  located  within  the  state. Provided, however, the
    18  credit shall not exceed five million dollars. For taxable  years  begin-
    19  ning  on  or  after  January first, two thousand twenty-five, a taxpayer
    20  shall be allowed a credit  as  hereinafter  provided,  against  the  tax
    21  imposed  by  this  article, in an amount equal to thirty percent of [the
    22  amount of credit allowed  the  taxpayer  with  respect  to  a  certified
    23  historic  structure under internal revenue code section 47(c)(3), deter-
    24  mined without regard to ratably allocating the credit over a  five  year

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14636-03-8

        S. 7648--A                          2

     1  period  as  required  by  subsection  (a) of such section 47,] qualified
     2  rehabilitation expenditures with respect to a certified historic  struc-
     3  ture  located  within the state; provided, however, the credit shall not
     4  exceed one hundred thousand dollars. For purposes of this subsection the
     5  term  "qualified  rehabilitation  expenditure" means any amount properly
     6  chargeable to capital account in connection with the certified rehabili-
     7  tation of a qualified historic structure, and  for  property  for  which
     8  depreciation would be allowable under section 168 of the internal reven-
     9  ue  code and which is (i) nonresidential real property, (ii) residential
    10  rental property, or (iii) an addition or improvement  to  nonresidential
    11  real property or residential rental property.
    12    (B)  If the taxpayer is a partner in a partnership or a shareholder of
    13  a New York S corporation, then the credit cap  imposed  in  subparagraph
    14  (A)  of this paragraph shall be applied at the entity level, so that the
    15  aggregate credit allowed to all the partners  or  shareholders  of  each
    16  such  entity  in the taxable year does not exceed the credit cap that is
    17  applicable in that taxable year.
    18    (2) (A) Tax credits allowed  pursuant  to  this  subsection  shall  be
    19  allowed in the taxable year [that the qualified rehabilitation is placed
    20  in  service  under  section 167 of the federal internal revenue code] in
    21  which the final certification step of the  certified  rehabilitation  is
    22  completed as provided in subparagraph (C) of this paragraph.
    23    (B)  For  purposes  of  this  subsection the term "certified rehabili-
    24  tation" means any rehabilitation of a certified historic structure which
    25  has been approved and certified as being consistent with  the  standards
    26  established  by the commissioner of parks, recreation and historic pres-
    27  ervation for rehabilitation by  the  office  of  parks,  recreation  and
    28  historic  preservation, a local government certified pursuant to section
    29  101(c)(1) of the national historic preservation act or a local  landmark
    30  commission  established  pursuant  to  section ninety-six-a, as added by
    31  chapter five hundred thirteen of the laws  of  nineteen  hundred  sixty-
    32  eight, or one hundred nineteen-dd of the general municipal law.
    33    (C) A certified rehabilitation shall require:
    34    (i)  an  initial certification that the structure meets the definition
    35  of the term "certified historic structure";
    36    (ii) a second certification,  to  be  issued  prior  to  construction,
    37  certifying  that  the  proposed  rehabilitation  work is consistent with
    38  standards established by  the  commissioner  of  parks,  recreation  and
    39  historic preservation for rehabilitation; and
    40    (iii)  a  final  certification  issued when construction is completed,
    41  certifying that the work was completed as proposed and  that  the  costs
    42  are  consistent with the work completed.  Such final certification shall
    43  be  acceptable  as  proof  that  the  expenditures   related   to   such
    44  construction   qualify  as  qualified  rehabilitation  expenditures  for
    45  purposes of the credit allowed under either subparagraph (A) or  (B)  of
    46  paragraph one of this subsection.
    47    (D)  For  purposes  of  this  subsection  the term "qualified historic
    48  structure" means a certified historic structure located within New  York
    49  state  which  has been substantially rehabilitated. A certified historic
    50  structure shall be considered substantially rehabilitated if the  quali-
    51  fied  rehabilitation  expenditures  in  relation to such structure total
    52  five thousand dollars or more.
    53    (E) For purposes of  this  subsection  the  term  "certified  historic
    54  structure" means any building and its structural components which:
    55    (i) is listed in the state or national register of historic places, or

        S. 7648--A                          3
 
     1    (ii)  is  located  in a state or national registered historic district
     2  and is certified as being of historic significance in the district.
     3    (3) [If the taxpayer is allowed a credit pursuant to section 47 of the
     4  internal revenue code with respect to a qualified rehabilitation that is
     5  also the subject of the credit allowed by this subsection and that cred-
     6  it  pursuant to such section 47 is recaptured pursuant to subsection (a)
     7  of section 50 of the internal revenue code,  a  portion  of  the  credit
     8  allowed  under  this  subsection  must be added back in the same taxable
     9  year and in the same proportion  as  the  federal  recapture.]  (A)  If,
    10  before the end of the two-year period beginning on the date of the final
    11  certification  referred  to in subparagraph (C) of paragraph two of this
    12  subsection, the taxpayer disposes  of  such  taxpayer's  interest  in  a
    13  certified  historic  structure,  or  such  certified  historic structure
    14  otherwise ceases to be  eligible  for  the  credit  allowed  under  this
    15  subsection,  the  taxpayer's tax imposed by this article for the taxable
    16  year in which such disposition occurs shall be increased by  the  recap-
    17  ture  portion  of the credit allowed under this subsection for all prior
    18  taxable years with respect to such rehabilitation.
    19    (B) For purposes of subparagraph (A) of this paragraph, the  recapture
    20  portion  shall  be  the  product  of the amount of credit claimed by the
    21  taxpayer or transferee multiplied by a fraction, the numerator of  which
    22  is equal to twenty-four less the number of months before the disposition
    23  or cessation of the structure occurred. Only the taxpayer that initially
    24  received  the  credit, and no subsequent good faith transferee, shall be
    25  responsible in the event of a  recapture,  reduction,  disallowance,  or
    26  other failure related to such credit.
    27    (4)  If the amount of the credit allowed under this subsection for any
    28  taxable year shall exceed the taxpayer's tax for such year,  the  excess
    29  shall  be treated as an overpayment of tax to be credited or refunded in
    30  accordance with the provisions of section six hundred eighty-six of this
    31  article, provided, however, that no interest shall be paid thereon.
    32    (5) To be eligible for the credit allowable under this subsection  the
    33  rehabilitation  project  shall  be  in whole or in part located within a
    34  census tract which is identified  as  being  at  or  below  one  hundred
    35  percent  of  the  state  median  family income as calculated as of April
    36  first of each year using the most recent five  year  estimate  from  the
    37  American  community survey published by the United States Census bureau.
    38  If there is a change in the most recent five  year  estimate,  a  census
    39  tract  that  qualified  for  eligibility under this [program] subsection
    40  before information about the change was  released  [will]  shall  remain
    41  eligible  for  a  credit  under  this  subsection for an additional [two
    42  calendar years] eighteen months.
    43    (6) Nothing contained in this subsection shall be construed to  impose
    44  a  duty  on  a local landmark commission established pursuant to section
    45  ninety-six-a, as added by chapter five hundred thirteen of the  laws  of
    46  nineteen  hundred sixty-eight, or one hundred nineteen-dd of the general
    47  municipal law or  a  local  government  certified  pursuant  to  section
    48  101(c)(1)  of  the  national  historic preservation act to undertake any
    49  review or approval of an application for the certification of the  reha-
    50  bilitation  of  historic  structures  and of rehabilitation expenditures
    51  provided for in this subsection.
    52    (7)(A)(i) Any taxpayer, eligible for the credit  allowed  pursuant  to
    53  this  subsection  may  transfer such credit, in whole or in part, to any
    54  individual or entity, without the requirement of transferring any owner-
    55  ship interest in the certified historic structure or any interest in the
    56  entity which owns the  certified  historic  structure.  Transferees  are

        S. 7648--A                          4
 
     1  entitled to apply the credits against the tax with the same effect as if
     2  the  transferee  had incurred the qualified rehabilitation expenditures.
     3  Such credit may be transferred only on or after the final  certification
     4  step of the certified rehabilitation is completed as provided in subpar-
     5  agraph (C) of paragraph two of this subsection.
     6    (ii) A transferee shall use such credit in the year it is transferred.
     7  A transferee may subsequently transfer such credit, however, in no case,
     8  may  a credit be transferred more than one time after the initial trans-
     9  fer. A secondary transferee shall use such credit  in  the  year  it  is
    10  transferred to the secondary transferee. If the credit allowable for any
    11  tax  year  exceeds  the  transferee's  tax  liability for that year, the
    12  transferee may carry forward and apply in a subsequent taxable year, the
    13  portion, as reduced from year to year, of the credit which exceeds  such
    14  tax  for  the taxable year; provided, however, that the carryover period
    15  cannot exceed five taxable years after the close of the taxable year  in
    16  which  the  final  certification step of the certified rehabilitation is
    17  completed as provided in subparagraph  (C)  of  paragraph  two  of  this
    18  subsection.
    19    (iii) The provisions of paragraph three of this subsection relating to
    20  the  recapture  of  the credit allowed pursuant to this subsection shall
    21  not apply to the transfer of such credit as provided for in  this  para-
    22  graph.
    23    (B)  The  commissioner of parks, recreation and historic preservation,
    24  in consultation with the department, shall promulgate a form of transfer
    25  statement to be filed by the transferor of the credit  allowed  pursuant
    26  to  this  subsection. The transfer statement shall be in addition to the
    27  transfer contract provided in subparagraph (C) of this paragraph. Trans-
    28  fer statement forms may be obtained from the commissioner.  The transfe-
    29  ror shall file a transfer statement and a copy of the proposed  transfer
    30  contract  with  the  department  prior to the transfer and shall further
    31  file with the department the executed transfer  contract  within  thirty
    32  days  after the completed transfer. The transfer statement shall provide
    33  the name and federal taxpayer identification number of  each  transferor
    34  and transferee. Further, such statement shall indicate the amount of the
    35  credit  transferred to each transferee. The statement shall also contain
    36  such other information as the department or the commission may from time
    37  to time require.
    38    (C) Any taxpayer transferring his or her credit  allowed  pursuant  to
    39  this  subsection shall enter into a transfer contract with the transfer-
    40  ee. The transfer contract shall specify the following:
    41    (i) a description and address for the certified historic structure  or
    42  structures which qualified the taxpayer for such credit;
    43    (ii)  the  date in which the final certification step of the certified
    44  rehabilitation is completed as provided in subparagraph (C) of paragraph
    45  two of this subsection;
    46    (iii) the schedule of years during which the credit may be  taken  and
    47  the  amount of credit previously taken for the certified historic struc-
    48  ture including all previous transferees; and
    49    (iv) the amount of credit being transferred.
    50    (D) Any taxpayer who is a transferee of the credit allowed pursuant to
    51  this subsection may, provided all transfer  and  other  requirements  or
    52  limitations  are  met,  apply  such credit to the tax imposed under this
    53  article.
    54    § 2. Subdivision 26 of section 210-B of  the  tax  law,  as  added  by
    55  section  17 of part A of chapter 59 of the laws of 2014, paragraphs (a),

        S. 7648--A                          5
 
     1  (c) and (e) as amended by section 2 of part RR of chapter 59 of the laws
     2  of 2018, is amended to read as follows:
     3    26. Credit for rehabilitation of historic properties.  (a) Application
     4  of  credit.  (i)  For taxable years beginning on or after January first,
     5  two thousand ten, and before January first, two thousand twenty-five,  a
     6  taxpayer  shall be allowed a credit as hereinafter provided, against the
     7  tax imposed by this article, in an amount equal to [one hundred  percent
     8  of  the  amount of credit allowed the taxpayer for the same taxable year
     9  with respect to a certified historic structure  under  internal  revenue
    10  code  section  47(c)(3), determined without regard to ratably allocating
    11  the credit over a five year period as required by subsection (a) of such
    12  section 47,] twenty percent of the qualified rehabilitation expenditures
    13  with respect to a certified historic structure located within the state.
    14  Provided, however, the credit shall not exceed five million dollars.
    15    (ii) For taxable years beginning on or after January first, two  thou-
    16  sand  twenty-five,  a  taxpayer shall be allowed a credit as hereinafter
    17  provided, against the tax imposed by this article, in an amount equal to
    18  thirty percent of the [amount of credit allowed  the  taxpayer  for  the
    19  same  taxable  year  determined without regard to ratably allocating the
    20  credit over a five year period as required by subsection (a) of  section
    21  47  of the internal revenue code,] qualified rehabilitation expenditures
    22  with respect to a certified historic structure under  subsection  (c)(3)
    23  of  section  47 of the internal revenue code with respect to a certified
    24  historic structure located within  the  state.  Provided,  however,  the
    25  credit shall not exceed one hundred thousand dollars.
    26    [(B)]  (b)  If  the taxpayer is a partner in a partnership or a share-
    27  holder in a New York S corporation, then  the  credit  caps  imposed  in
    28  [subparagraph  (A)]  paragraph (a) of this [paragraph] subdivision shall
    29  be applied at the entity level, so that the aggregate credit allowed  to
    30  all the partners or shareholders of each such entity in the taxable year
    31  does not exceed the credit cap that is applicable in that taxable year.
    32    [(b)]  (c)  Tax  credits allowed pursuant to this subdivision shall be
    33  allowed in the taxable year [that the qualified rehabilitation is placed
    34  in service under section 167 of the federal internal  revenue  code]  in
    35  which  the  final  certification step of the certified rehabilitation is
    36  completed pursuant to subparagraph (C) of paragraph  two  of  subsection
    37  (oo) of section six hundred six of this chapter.
    38    [(c) If the taxpayer is allowed a credit pursuant to section 47 of the
    39  internal revenue code with respect to a qualified rehabilitation that is
    40  also  the  subject  of  the  credit allowed by this subdivision and that
    41  credit pursuant to such section 47 is recaptured pursuant to  subsection
    42  (a)  of section 50 of the internal revenue code, a portion of the credit
    43  allowed under this subdivision must be added back in  the  same  taxable
    44  year and in the same proportion as the federal credit] (d)(i) If, before
    45  the  end  of  the  two-year  period  beginning  on the date of the final
    46  certification referred to in paragraph  (b)  of  this  subdivision,  the
    47  taxpayer  disposes of such taxpayer's interest in a certified structure,
    48  or such certified historic structure otherwise ceases to be eligible for
    49  the credit allowed under this subdivision, the taxpayer's tax imposed by
    50  this article for the taxable year in which such disposition occurs shall
    51  be increased by the recapture portion of the credit allowed  under  this
    52  paragraph  for  all  prior  taxable years with respect to such rehabili-
    53  tation.
    54    (ii) For purposes of subparagraph (i) of this paragraph, the recapture
    55  portion shall be the product of the amount  of  credit  claimed  by  the
    56  taxpayer  multiplied  by  a fraction, the numerator of which is equal to

        S. 7648--A                          6
 
     1  twenty-four less the number of months before the disposition  or  cessa-
     2  tion of the structure occurred.
     3    [(d)]  (e)  The  credit allowed under this subdivision for any taxable
     4  year shall not reduce the tax due for such year to less than the  amount
     5  prescribed  in  paragraph  (d) of subdivision one of section two hundred
     6  ten of this article. However, if the amount of the credit allowed  under
     7  this  subdivision for any taxable year reduces the tax to such amount or
     8  if the taxpayer otherwise pays tax based on  the  fixed  dollar  minimum
     9  amount,  any  amount  of credit thus not deductible in such taxable year
    10  shall be treated as an overpayment of tax to be recredited  or  refunded
    11  in  accordance with the provisions of section one thousand eighty-six of
    12  this chapter. Provided, however, the provisions  of  subsection  (c)  of
    13  section  one  thousand  eighty-eight of this chapter notwithstanding, no
    14  interest shall be paid thereon.
    15    [(e)] (f) To be eligible for the credit allowable under this  subdivi-
    16  sion,  the  rehabilitation  project shall be in whole or in part located
    17  within a census tract which is identified  as  being  at  or  below  one
    18  hundred  percent  of  the state median family income as calculated as of
    19  April first of each year using the most recent five year  estimate  from
    20  the  American  community  survey  published  by the United States Census
    21  bureau.  If there is a change in the most recent five year  estimate,  a
    22  census  tract  that  qualified for eligibility under this program before
    23  information about the change was released will  remain  eligible  for  a
    24  credit under this subdivision for an additional two calendar years.
    25    §  3.  Paragraphs 1, 2 and 3 of subdivision (y) of section 1511 of the
    26  tax law, as added by chapter 472 of the laws of 2010,  subparagraph  (A)
    27  of  paragraph  1  and  paragraph 3 as amended by section 3 of part RR of
    28  chapter 59 of the laws of 2018, are amended to read as follows:
    29    (1) (A) For taxable years beginning on or  after  January  first,  two
    30  thousand  ten  and  before  January  first,  two thousand twenty-five, a
    31  taxpayer shall be allowed a credit as hereinafter provided, against  the
    32  tax  imposed by this article, in an amount equal to [one hundred percent
    33  of the amount of credit allowed the taxpayer with respect to a certified
    34  historic structure under internal revenue code section 47(c)(3),  deter-
    35  mined  without  regard to ratably allocating the credit over a five year
    36  period as required by subsection (a) of such section 47,] twenty percent
    37  of the qualified rehabilitation expenditures with respect to a certified
    38  historic structure located within  the  state.  Provided,  however,  the
    39  credit  shall  not exceed five million dollars. For taxable years begin-
    40  ning on or after January first, two  thousand  twenty-five,  a  taxpayer
    41  shall  be  allowed  a  credit  as  hereinafter provided, against the tax
    42  imposed by this article, in an amount equal to  thirty  percent  of  the
    43  [amount  of  credit  allowed  the  taxpayer  with respect to a certified
    44  historic structure under internal revenue code section 47(c)(3),  deter-
    45  mined  without  regard to ratably allocating the credit over a five year
    46  period as required by subsection (a) of such section 47] qualified reha-
    47  bilitation expenditure with respect to a  certified  historic  structure
    48  located  within  the  state.    Provided,  however, the credit shall not
    49  exceed one hundred thousand dollars.
    50    (B) If the taxpayer is a  partner  in  a  partnership,  then  the  cap
    51  imposed  in  subparagraph  (A) of this paragraph shall be applied at the
    52  entity level, so that the aggregate credit allowed to all  the  partners
    53  of  such  partnership in the taxable year does not exceed the credit cap
    54  that is applicable in that taxable year.
    55    (2) Tax credits allowed pursuant to this subsection shall  be  allowed
    56  in  the  taxable  year  [that  the qualified rehabilitation is placed in

        S. 7648--A                          7

     1  service under section 167 of the federal internal revenue code] in which
     2  the  final  certification  step  of  the  certified  rehabilitation   is
     3  completed  pursuant  to  subparagraph (C) of paragraph two of subsection
     4  (oo) of section six hundred six of this chapter.
     5    (3) [If the taxpayer is allowed a credit pursuant to section 47 of the
     6  internal revenue code with respect to a qualified rehabilitation that is
     7  also  the  subject  of  the  credit allowed by this subdivision and that
     8  credit pursuant to such section 47 is recaptured pursuant to  subsection
     9  (a)  of section 50 of the internal revenue code, a portion of the credit
    10  allowed under this subdivision  in  the  taxable  year  the  credit  was
    11  claimed  must  be  added  back  in the same taxable year and in the same
    12  proportion as the federal recapture.] (A) If,  before  the  end  of  the
    13  two-year  period  beginning  on  the  date  of  the  final certification
    14  referred to in paragraph two of this subdivision, the taxpayer  disposes
    15  of  such taxpayer's interest in a certified structure, or such certified
    16  historic structure otherwise  ceases  to  be  eligible  for  the  credit
    17  allowed under this subdivision, the taxpayer's tax imposed by this arti-
    18  cle  for  the  taxable  year  in  which such disposition occurs shall be
    19  increased by the recapture portion of  the  credit  allowed  under  this
    20  paragraph  for  all  prior  taxable years with respect to such rehabili-
    21  tation.
    22    (B) For purposes of subparagraph (A) of this paragraph, the  recapture
    23  portion  shall  be  the  product  of the amount of credit claimed by the
    24  taxpayer multiplied by a fraction, the numerator of which  is  equal  to
    25  twenty-four  less  the number of months before the disposition or cessa-
    26  tion of the structure occurred.
    27    § 4. Subdivision 6 of section  13.15  of  the  parks,  recreation  and
    28  historic  preservation law, as added by chapter 547 of the laws of 2006,
    29  is amended to read as follows:
    30    6. The office may establish a fee  or  fees  for  its  processing  and
    31  review  of  applications  for the certification of the rehabilitation of
    32  historic buildings and the approval of rehabilitation  expenditures  and
    33  related  work  pursuant  to  [subsection]  subsections  (oo) and (pp) of
    34  section six hundred six of the tax law. All  revenues  from  these  fees
    35  shall  be  deposited  by  the  comptroller  in the miscellaneous special
    36  revenue fund to be credited to the agency's patron services account  and
    37  shall  be  used  to  support the office's historic preservation program.
    38  Nothing in this subdivision shall be construed to limit the ability of a
    39  local landmark commission established pursuant to section  ninety-six-a,
    40  as  added  by  chapter  five  hundred  thirteen  of the laws of nineteen
    41  hundred sixty-eight, or one hundred nineteen-dd of the general municipal
    42  law or a local government certified pursuant to section 101(c)(1) of the
    43  national historic preservation act to establish and charge fees for  its
    44  processing and review of applications for the certification of the reha-
    45  bilitation  of  historic  buildings  and  the approval of rehabilitation
    46  expenditures.
    47    § 5. This act shall take effect immediately and shall apply to taxable
    48  years beginning on and after January 1, 2018.
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