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
________________________________________________________________________
4844
2011-2012 Regular Sessions
IN ASSEMBLY
February 8, 2011
___________
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
24 § 11-280 Definitions. When used in this part:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD05654-01-1
A. 4844 2
1 a. "Credit amount" means the tax credit amount determined under this
2 part, but not to exceed the incremental income tax withholding attribut-
3 able to the applicant's project.
4 b. "Commissioner" means the commissioner of finance of the city of New
5 York.
6 c. "Department" means the New York city department of finance.
7 d. "Enhanced credit area" means any area in the city not designated as
8 a regular credit area.
9 e. "Full-time employee" means an individual who is employed for
10 consideration for at least thirty-five hours each week or who renders
11 any other standard of service generally accepted by custom or specified
12 by contract as full-time employment.
13 f. "Incremental income tax withholdings" means the total amount of New
14 York city personal income tax withheld by the taxpayer during the taxa-
15 ble year from the compensation of new employees.
16 g. "Local tax liability" means a taxpayer's total tax liability that
17 is incurred under sections 11-638 through 11-647 (the banking corpo-
18 ration tax), 11-701 through 11-718 (the commercial rent tax), 11-602
19 through 11-610 (the general corporation tax), 11-501 through 11-538 (the
20 unincorporated business tax) of this title as computed after the appli-
21 cation of other credits that may be available to the taxpayer.
22 h. "New employee" means a full-time employee first employed by a
23 taxpayer in the project that is the subject of a tax credit agreement
24 and who is employed after the taxpayer enters into the tax credit agree-
25 ment. The term "new employee" does not include:
26 (1) an employee of the taxpayer who performs a job that was previously
27 performed by another employee, if that job existed for at least six
28 months before hiring the new employee;
29 (2) an employee of the taxpayer who was previously employed in New
30 York city by a related member of the taxpayer and whose employment was
31 shifted to the taxpayer after the taxpayer entered into the tax credit
32 agreement;
33 (3) a child, grandchild, parent, or spouse, other than a spouse who is
34 legally separated from the individual, of any individual who is an
35 employee of the taxpayer and who has a direct or indirect ownership
36 interest of at least five percent in the profits, capital, or value of
37 the taxpayer; such ownership interest shall be determined in accordance
38 with section 1563 of the internal revenue code and regulations
39 prescribed under that section.
40 Notwithstanding any other provision of this subdivision, if a new
41 employee performs a job that was previously performed by an employee who
42 was treated under the agreement as a new employee and promoted by the
43 taxpayer to another job, the employee may be considered a new employee
44 under the agreement.
45 i. "Pass through entity" means a corporation that is exempt from New
46 York state adjusted gross income tax or a partnership.
47 j. "Regular credit area" means the area of New York city lying south
48 of the ninety-sixth street centerline in the borough of Manhattan.
49 k. "Related member" means a person that, with respect to a taxpayer
50 during all or any portion of the taxable year, is any one of the follow-
51 ing:
52 (1) an individual stockholder, or a member of the stockholder's family
53 enumerated in section 318 of the internal revenue code, if the stock-
54 holder and the member of the stockholder's family own directly, indi-
55 rectly, beneficially, or constructively, in the aggregate, at least
56 fifty percent of the value of the taxpayer's outstanding stock;
A. 4844 3
1 (2) a stockholder, or a stockholder's partnership, estate, trust, or
2 corporation, if the stockholder and the stockholder's partnership,
3 estate, trust, or corporation owns directly, indirectly, beneficially,
4 or constructively, in the aggregate, at least fifty percent of the value
5 of the taxpayer's outstanding stock;
6 (3) a corporation, or a party related to the corporation in a manner
7 that would require an attribution of stock from the corporation to the
8 party or from the party to the corporation under the attribution rules
9 of section 318 of the internal revenue code, if the taxpayer owns
10 directly, indirectly, beneficially, or constructively at least fifty
11 percent of the value of the corporation's outstanding stock;
12 (4) a component member, as defined in section 1563(b) of the internal
13 revenue code; or
14 (5) a person to or from whom there is attribution of stock ownership
15 in accordance with section 1563(e) of the internal revenue code except,
16 for purposes of determining whether a person is a related member under
17 this subdivision, twenty percent shall be substituted for five percent
18 wherever five percent appears in section 1563(e) of the internal revenue
19 code.
20 1. "Taxpayer" means any person, corporation, partnership, or other
21 entity that has any local tax liability.
22 § 11-281 Credit against local tax liability. Subject to the conditions
23 set forth in this part, a taxpayer is entitled to a credit against any
24 local tax liability that may be imposed on the taxpayer for a taxable
25 year after December thirty-first, two thousand, if the taxpayer is
26 awarded a credit by the commissioner for the taxable year.
27 § 11-282 Agreement for tax credit; job creation; application form. A
28 taxpayer that proposes a project to create new jobs in the city of New
29 York may apply to the commissioner to enter into an agreement for a tax
30 credit. The commissioner shall prescribe the form of the application.
31 § 11-283 Foster job creation; credit awards; claim of credit. a. The
32 commissioner shall make credit awards under this part solely to foster
33 job creation in the city of New York.
34 b. The credit shall be claimed for the taxable year specified in the
35 taxpayer's tax credit agreement.
36 § 11-284 Amount of credit awarded. a. The credit shall be stated as a
37 percentage of the incremental income tax withholdings attributable to
38 the applicant's project.
39 b. If the credit is awarded to a project located in a regular credit
40 area, the credit amount shall be seventy-five percent of the incremental
41 income tax withholdings attributable to the applicant's project.
42 c. If the credit is awarded to a project located in an enhanced credit
43 area, the credit amount shall be one hundred percent of the incremental
44 income tax withholdings attributable to the applicant's project.
45 d. If the amount of the credit for a taxpayer in a taxable year
46 exceeds the taxpayer's local tax liability for that taxable year, the
47 taxpayer may carry the excess over to not more than two taxable years.
48 § 11-285 Agreement for tax credit; requirements. After receipt of an
49 application, the commissioner shall enter into an agreement with an
50 applicant for a credit. The agreement shall include, but not be limited
51 to:
52 a. a detailed description of the project that is the subject of the
53 agreement.
54 b. the duration of the tax credit and the first taxable year for which
55 the credit may be claimed.
A. 4844 4
1 c. a requirement that the taxpayer maintain operations at the project
2 location for the term of the tax credit.
3 d. a specific method for determining the number of new employees
4 employed during the taxable year who are performing jobs not previously
5 performed by existing employees.
6 e. a requirement that the taxpayer shall annually report to the
7 commissioner the number of new employees who are performing jobs not
8 previously performed by an employee, the new income tax revenue withheld
9 in connection with the new employees, and any other information the
10 commissioner deems necessary to carry out the purposes of this part.
11 f. a requirement that the commissioner is authorized to verify with
12 the appropriate state and city agencies the amounts reported under
13 subdivision e of this section, and after doing so shall issue a certif-
14 icate to the taxpayer stating that the amounts have been so verified.
15 g. a requirement that the taxpayer provide written notification to the
16 commissioner not more than thirty days after the taxpayer makes or
17 receives a proposal that would transfer the taxpayer's local tax liabil-
18 ity obligations to a successor taxpayer.
19 h. any other conditions that the commissioner determines are appropri-
20 ate.
21 § 11-286 Duration of tax credits; maximum credit. The duration of the
22 credit shall be twelve taxable years.
23 § 11-287 Relocation of jobs from one site to another within city;
24 credit prohibited. A taxpayer is not entitled to claim a credit for any
25 job relocated from one site in New York city to another site in New York
26 city. Determinations under this section shall be made by the commission-
27 er.
28 § 11-288 Periods of rapid employment growth in the city; credit
29 prohibited. The commissioner shall not award any new credits if the
30 unemployment rate in the city falls below six percent as reported by the
31 New York state department of labor.
32 § 11-289 Certificate of verification; submission to department; fail-
33 ure to submit copy. A taxpayer claiming a credit shall submit to the
34 department a copy of the commissioner's certificate of verification for
35 the taxable year. However, failure to submit a copy of the certificate
36 shall not invalidate a claim for a credit.
37 § 11-290 Pass through entity; calculation of tax credit; shareholder
38 or partner claiming credit. a. If a pass through entity does not have
39 local income tax liability against which the tax credit may be applied,
40 a shareholder or partner of the pass through entity is entitled to a tax
41 credit equal to the tax credit determined for the pass through entity's
42 distributive income to which the shareholder or partner is entitled.
43 b. The credit provided herein is in addition to any tax credit to
44 which a shareholder or partner of a pass through entity is otherwise
45 entitled under a separate agreement under this part. A pass through
46 entity and a shareholder or partner of the pass through entity may not
47 claim more than one credit under the same agreement.
48 § 11-291 Noncompliance with agreement; assessments. If the commission-
49 er determines that a taxpayer who has received a credit is not complying
50 with the requirements of the tax credit agreement or any provision of
51 this part, the commissioner shall, after giving the taxpayer an opportu-
52 nity to remedy the noncompliance, impose an assessment. The commissioner
53 shall state the amount of the assessment, which may not exceed the sum
54 of any previously allowed credits under this part.
55 § 11-292 Annual report. The commissioner shall submit an annual report
56 to the council, on April first of each year, beginning April first, two
A. 4844 5
1 thousand twelve, concerning the status of the program established herein
2 and its effects in the city, including information on credits issued and
3 jobs created. The report shall include, but not be limited to, informa-
4 tion on the number of agreements that were entered into during the
5 preceding calendar year and a description of the project that is the
6 subject of each agreement.
7 § 3. This act shall take effect on the thirtieth day after it shall
8 have become a law.
