Add Title 11 Chap 2 Subchap 2 Part 6 SS11-280 - 11-292, NYC Ad Cd
Provides income tax incentives in New York city for the creation of private sector jobs; provides for credits against an employer's local tax liability (banking corporation tax, commercial rent tax, general corporation tax, and unincorporated business tax) based upon the amount of incremental income tax withholding from new employees; provides for the administration of the program by the commissioner of finance of the city of New York; permits the credit to be claimed for a maximum of 12 taxable years; directs such commissioner to make an annual report on the program.
STATE OF NEW YORK
________________________________________________________________________
1502
2009-2010 Regular Sessions
IN ASSEMBLY(Prefiled)
January 7, 2009
___________
Introduced by M. of A. WRIGHT, CAMARA -- read once and referred to the
Committee on Cities
AN ACT to amend the administrative code of the city of New York, in
relation to tax credits for New York city businesses that hire new
employees
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative intent. The legislature finds that the current
2 method of awarding property tax exemptions in New York city to promote
3 development achieves inconsistent and unreliable results. The legisla-
4 ture further finds that different commercial or industrial projects are
5 likely to have different employment and income impacts under different
6 market conditions. Consequently, in awarding subsidies based on property
7 investment, there is no guarantee that local job or income creation will
8 result, especially during current exemption periods as long as twenty-
9 two years. Therefore, the legislature finds that the current method of
10 awarding property tax exemptions constitutes an excessively costly,
11 risky, and speculative approach to promoting job and income growth in
12 the city.
13 To address this problem, the legislature finds it appropriate to enact
14 reforms that would directly link and continually adjust the amount of
15 incentives provided by the city to the number of new jobs a firm gener-
16 ates. Therefore, the legislature finds it appropriate to enact legis-
17 lation to change the basis of incentive awards from property investment
18 to new job creation in the city.
19 § 2. Subchapter 2 of chapter 2 of title 11 of the administrative code
20 of the city of New York is amended by adding a new part 6 to read as
21 follows:
22 PART 6
23 TAX CREDIT FOR PRIVATE SECTOR JOB CREATION
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD00122-01-9
A. 1502 2
1 § 11-280 Definitions. When used in this part:
2 a. "Credit amount" means the tax credit amount determined under this
3 part, but not to exceed the incremental income tax withholding attribut-
4 able to the applicant's project.
5 b. "Commissioner" means the commissioner of finance of the city of New
6 York.
7 c. "Department" means the New York city department of finance.
8 d. "Enhanced credit area" means any area in the city not designated as
9 a regular credit area.
10 e. "Full-time employee" means an individual who is employed for
11 consideration for at least thirty-five hours each week or who renders
12 any other standard of service generally accepted by custom or specified
13 by contract as full-time employment.
14 f. "Incremental income tax withholdings" means the total amount of New
15 York city personal income tax withheld by the taxpayer during the taxa-
16 ble year from the compensation of new employees.
17 g. "Local tax liability" means a taxpayer's total tax liability that
18 is incurred under administrative code sections 11-638 through 11-647,
19 the banking corporation tax, 11-701 through 11-718, the commercial rent
20 tax, 11-602 through 11-610, the general corporation tax, 11-501 through
21 11-538, the unincorporated business tax as computed after the applica-
22 tion of other credits that may be available to the taxpayer.
23 h. "New employee" means a full-time employee first employed by a
24 taxpayer in the project that is the subject of a tax credit agreement
25 and who is employed after the taxpayer enters into the tax credit agree-
26 ment. The term "new employee" does not include:
27 (1) an employee of the taxpayer who performs a job that was previously
28 performed by another employee, if that job existed for at least six
29 months before hiring the new employee;
30 (2) an employee of the taxpayer who was previously employed in New
31 York city by a related member of the taxpayer and whose employment was
32 shifted to the taxpayer after the taxpayer entered into the tax credit
33 agreement;
34 (3) a child, grandchild, parent, or spouse, other than a spouse who is
35 legally separated from the individual, of any individual who is an
36 employee of the taxpayer and who has a direct or indirect ownership
37 interest of at least five percent in the profits, capital, or value of
38 the taxpayer; such ownership interest shall be determined in accordance
39 with section 1563 of the internal revenue code and regulations
40 prescribed under that section.
41 Notwithstanding any other provision of this subdivision, if a new
42 employee performs a job that was previously performed by an employee who
43 was treated under the agreement as a new employee and promoted by the
44 taxpayer to another job, the employee may be considered a new employee
45 under the agreement.
46 i. "Pass through entity" means a corporation that is exempt from New
47 York state adjusted gross income tax or a partnership.
48 j. "Regular credit area" means the area of New York city lying south
49 of the ninety-sixth street centerline in the borough of Manhattan.
50 k. "Related member" means a person that, with respect to a taxpayer
51 during all or any portion of the taxable year, is any one of the follow-
52 ing:
53 (1) an individual stockholder, or a member of the stockholder's family
54 enumerated in section 318 of the internal revenue code, if the stock-
55 holder and the member of the stockholder's family own directly, indi-
A. 1502 3
1 rectly, beneficially, or constructively, in the aggregate, at least
2 fifty percent of the value of the taxpayer's outstanding stock;
3 (2) a stockholder, or a stockholder's partnership, estate, trust, or
4 corporation, if the stockholder and the stockholder's partnership,
5 estate, trust, or corporation owns directly, indirectly, beneficially,
6 or constructively, in the aggregate, at least fifty percent of the value
7 of the taxpayer's outstanding stock;
8 (3) a corporation, or a party related to the corporation in a manner
9 that would require an attribution of stock from the corporation to the
10 party or from the party to the corporation under the attribution rules
11 of section 318 of the internal revenue code, if the taxpayer owns
12 directly, indirectly, beneficially, or constructively at least fifty
13 percent of the value of the corporation's outstanding stock;
14 (4) a component member, as defined in section 1563(b) of the internal
15 revenue code; or
16 (5) a person to or from whom there is attribution of stock ownership
17 in accordance with section 1563(e) of the internal revenue code except,
18 for purposes of determining whether a person is a related member under
19 this subdivision, twenty percent shall be substituted for five percent
20 wherever five percent appears in section 1563(e) of the internal revenue
21 code.
22 1. "Taxpayer" means any person, corporation, partnership, or other
23 entity that has any local tax liability.
24 § 11-281 Credit against local tax liability. Subject to the conditions
25 set forth in this part, a taxpayer is entitled to a credit against any
26 local tax liability that may be imposed on the taxpayer for a taxable
27 year after December thirty-first, two thousand, if the taxpayer is
28 awarded a credit by the commissioner for the taxable year.
29 § 11-282 Agreement for tax credit; job creation; application form. A
30 taxpayer that proposes a project to create new jobs in the city of New
31 York may apply to the commissioner to enter into an agreement for a tax
32 credit. The commissioner shall prescribe the form of the application.
33 § 11-283 Foster job creation; credit awards; claim of credit. a. The
34 commissioner shall make credit awards under this part solely to foster
35 job creation in the city of New York.
36 b. The credit shall be claimed for the taxable year specified in the
37 taxpayer's tax credit agreement.
38 § 11-284 Amount of credit awarded. a. The credit shall be stated as a
39 percentage of the incremental income tax withholdings attributable to
40 the applicant's project.
41 b. If the credit is awarded to a project located in a regular credit
42 area, the credit amount shall be seventy-five percent of the incremental
43 income tax withholdings attributable to the applicant's project.
44 c. If the credit is awarded to a project located in an enhanced credit
45 area, the credit amount shall be one hundred percent of the incremental
46 income tax withholdings attributable to the applicant's project.
47 d. If the amount of the credit for a taxpayer in a taxable year
48 exceeds the taxpayer's local tax liability for that taxable year, the
49 taxpayer may carry the excess over to not more than two taxable years.
50 § 11-285 Agreement for tax credit; requirements. After receipt of an
51 application, the commissioner shall enter into an agreement with an
52 applicant for a credit. The agreement shall include, but not be limited
53 to:
54 a. a detailed description of the project that is the subject of the
55 agreement.
A. 1502 4
1 b. the duration of the tax credit and the first taxable year for which
2 the credit may be claimed.
3 c. a requirement that the taxpayer maintain operations at the project
4 location for the term of the tax credit.
5 d. a specific method for determining the number of new employees
6 employed during the taxable year who are performing jobs not previously
7 performed by existing employees.
8 e. a requirement that the taxpayer shall annually report to the
9 commissioner the number of new employees who are performing jobs not
10 previously performed by an employee, the new income tax revenue withheld
11 in connection with the new employees, and any other information the
12 commissioner deems necessary to carry out the purposes of this part.
13 f. a requirement that the commissioner is authorized to verify with
14 the appropriate state and city agencies the amounts reported under
15 subdivision e of this section, and after doing so shall issue a certif-
16 icate to the taxpayer stating that the amounts have been so verified.
17 g. a requirement that the taxpayer provide written notification to the
18 commissioner not more than thirty days after the taxpayer makes or
19 receives a proposal that would transfer the taxpayer's local tax liabil-
20 ity obligations to a successor taxpayer.
21 h. any other conditions that the commissioner determines are appropri-
22 ate.
23 § 11-286 Duration of tax credits; maximum credit. The duration of the
24 credit shall be twelve taxable years.
25 § 11-287 Relocation of jobs from one site to another within city;
26 credit prohibited. A taxpayer is not entitled to claim a credit for any
27 job relocated from one site in New York city to another site in New York
28 city. Determinations under this section shall be made by the commission-
29 er.
30 § 11-288 Periods of rapid employment growth in the city; credit
31 prohibited. The commissioner shall not award any new credits if the
32 unemployment rate in the city falls below six percent as reported by the
33 New York state department of labor.
34 § 11-289 Certificate of verification; submission to department; fail-
35 ure to submit copy. A taxpayer claiming a credit shall submit to the
36 department a copy of the commissioner's certificate of verification for
37 the taxable year. However, failure to submit a copy of the certificate
38 shall not invalidate a claim for a credit.
39 § 11-290 Pass through entity; calculation of tax credit; shareholder
40 or partner claiming credit. a. If a pass through entity does not have
41 local income tax liability against which the tax credit may be applied,
42 a shareholder or partner of the pass through entity is entitled to a tax
43 credit equal to the tax credit determined for the pass through entity's
44 distributive income to which the shareholder or partner is entitled.
45 b. The credit provided herein is in addition to any tax credit to
46 which a shareholder or partner of a pass through entity is otherwise
47 entitled under a separate agreement under this part. A pass through
48 entity and a shareholder or partner of the pass through entity may not
49 claim more than one credit under the same agreement.
50 § 11-291 Noncompliance with agreement; assessments. If the commission-
51 er determines that a taxpayer who has received a credit is not complying
52 with the requirements of the tax credit agreement or any provision of
53 this part, the commissioner shall, after giving the taxpayer an opportu-
54 nity to remedy the noncompliance, impose an assessment. The commissioner
55 shall state the amount of the assessment, which may not exceed the sum
56 of any previously allowed credits under this part.
A. 1502 5
1 § 11-292 Annual report. The commissioner shall submit an annual report
2 to the council, on April first of each year, beginning April first, two
3 thousand ten, concerning the status of the program established herein
4 and its effects in the city, including information on credits issued and
5 jobs created. The report shall include, but not be limited to, informa-
6 tion on the number of agreements that were entered into during the
7 preceding calendar year and a description of the project that is the
8 subject of each agreement.
9 § 3. This act shall take effect on the thirtieth day after it shall
10 have become a law.
