NOTE: A QEZE is a Zone-certified business that has maintained or increased their employment over the “base period” (usually the average employment over the five years before certification).

QEZE Real Property Tax Credit

Eligibility Taxpayer – a QEZE, sole proprietor of a QEZE, member of a partnership that is a QEZE, or a shareholder of a QEZE S Corporation

Property Tax – taxes imposed on real property owned by the taxpayer and located in the Empire Zone

Benefits The QEZE taxpayer is also eligible for a percentage refund of property tax equal to the percentage the business has increased employment over the test year’s employment (the test year is usually the last fiscal year ending before certification).

Availability Available at the full amount for ten years starting with the first year they are claimed. After ten years, the benefits are reduced by 20% per year so that in Year 15 the benefit is zero.

Limitation Limited to the higher of $10,000 per additional employee over base period or 10% of the cost or basis of the facility.

Refund Will be used first to reduce income tax liability; excess credit can be refunded or carried over.

QEZE Tax Reduction Credit

Eligibility Taxpayer – a QEZE, sole proprietor of a QEZE, member of a partnership that is a QEZE, or a shareholder of a QEZE S Corporation

Benefits The QEZE taxpayer is eligible for a percentage reduction of their business’s income tax liability (generated by facilities within the Zone) equal to the percentage the business has increased employment over the test year’s employment (the test year is usually the last fiscal year ending before certification).

Limitation No limit if entire business is located within Zone; if not, then there is a fixed dollar minimum.

Refund Excess credit cannot be refunded or carried over.

Form Both tax credits use the same form. Depending on the organization of the business, these tax benefits can be claimed using forms IT-604 or CT-604.

Qualified Empire Zone Enterprise (QEZE)

Sales Tax Exemption

NOTE: A QEZE is a Zone-certified business that has maintained or increased their employment over the “base period” (usually the average employment over the five years before certification).

Eligibility Taxpayer – a QEZE business

Purchases – goods and services used by the QEZE primarily in the Zone

· Tangible Personal Property and Services – must be at least 50% used by the QEZE in the Zone where they are certified

· Utility Service (other than phone-related) – must be 100% used by the QEZE in the Zone where they are certified

· Phone Service – must be billed to the QEZE at the address in the Zone where they are certified

· Motor Vehicles and Property Related to Them – must be:

a) At least 50% used by the QEZE in the Zone where they are certified; or

b) Starting or ending in the Zone where they are certified at least 50% of the time; or

c) At least 50% of the time used in the Zone or starting/ending in the Zone (combination)

Process

1. Once the business has Empire Zone certification, they may apply for the sales tax exemption using the form DTF-80.

2. If the application is approved, the business will receive copies of the QEZE Exempt Purchase Certificate (ST-121.6).

3. The business completes copies of this certificate and gives them to their vendors, who will in turn not charge state sales tax to the business. New certificates can be used every time the business purchases something, or they can be kept on file with the vendor to be used on later purchases.

Benefits The QEZE business is eligible for exemption from being charged state sales tax (4.25%) for the above purchases. The business must apply for an exemption certificate in order to not pay sales tax.

Availability Available for ten years from the effective date on the exemption certificate. The effective date is usually the first day of the month after the postmark date of the application.

Limitation Timing – Businesses are not exempt from sales tax until the effective date of the exemption

Motor Fuel – Purchases of motor fuel and diesel motor fuel are also exempt, but the business must initially pay the tax and then apply for a refund using the Application for Refund of Sales Tax Paid on Automotive Fuels (FT-500)

NOTE!! This is an exemption for purchases for the business. The QEZE must still charge full sales tax to consumers who purchase the QEZE’s goods and services!

Wage Tax Credit

NOTE: In order to qualify for the Wage Tax Credit, a business must presently employ more people than they did in the prior four years both in the Zone and in all of NYS.

Eligibility Qualified employee – a full-time (at least 35 hours/week) employee that has been hired since the business was in the Empire Zone. All the employees of a business started in the Zone qualify. The employee must work for more than 6 months.

Qualified targeted employee – In addition to the above requirements, fulfills Department of Labor requirements as “targeted” and receives a wage that is at least 135% of minimum wage.

Benefits The Zone certified business is eligible to claim a credit on the business’s income tax equal to $3,000 per qualified targeted employee and $1,500 per other qualified employees.

Availability Available at the same amount for five years from the first year it is claimed. If additional employees are hired within the five-year period, the benefit will increase but will still be available only within the same five-year period.

Extra Excess credits can be carried forward indefinitely.

Form Depending on the organization of the business, this tax benefit can be claimed using forms IT-601 or CT-601.

Niagara Mohawk EZ Discounted Power Rate

Eligibility Business – an Empire Zone business that has received its certificate

Power –

· New business – if the business’s electricity consumption is completely new with NiMo, the entire power delivery cost is eligible

· Existing business – if the business has established a “baseline” by using power for the past 12 months and the business has grown their electricity consumption by 100 kilowatts or 25% more (whichever is less) than the baseline for that month, then all of the additional delivery cost over the baseline is eligible

Benefits The business is eligible for a lower delivery cost (about $.015/kwh) that results in about 50% savings (on average) on their power bill annually

Availability The EZ power discount is available for 10 years

To Apply Zone Coordinator can arrange a meeting between a NiMo representative and the business, or a form letter may be sent to NiMo

Investment Tax Credit and Employment Incentive Credit

Investment Tax Credit

Eligibility Taxpayer – an EZ certified corporation, partnership, or proprietorship

Property (Investment) –

· Purchased or constructed after the effective date of certification

· Located within the EZ

· Depreciable and has a useful life of 4 or more years

· Used in the production of goods, in industrial waste treatment or air pollution control, or in research and development

Benefits The taxpayer can claim a credit on the business’s income tax for eligible investments. The credit is equal to 10% of the investment for a corporation and 8% of the investment for individual taxpayers (partnership or proprietorship, etc.)

Availability Can be claimed each time eligible property is acquired or built.

Employment Incentive Credit

Eligibility An EZ certified business that has:

· Claimed the Investment Tax Credit (ITC) the year before

· Created new employment (employs more than the average employment from the year before the ITC was claimed)

Benefits The taxpayer can claim a credit on the business’s income tax for employing at least 101% of the average employment in the year before the ITC was claimed. The credit is equal to 30% of the ITC.

Availability The credit may be claimed the year after an Investment Tax Credit is claimed, and for two years after that (for a total of three years).

Carry Over For both tax credits, unused credits may be carried forward indefinitely.

Form Both tax credits use the same form. Depending on the organization of the business, these tax benefits can be claimed using forms IT-603 or CT-603.

Timing is Everything

Getting the most out of EZ benefits

Getting the most out of the benefits of the Empire Zone involves some work and planning. First, a businessperson must determine which tax credits their business is eligible for. To achieve this end, contact your accountant, the zone coordinator, members of the Zone Administrative Board, and refer to this manual. The job is not done, however, because to maximize the Zone’s benefits, attention must be paid to timing.

Getting Certified

Empire Zone certification lasts for 15 years. In order to ensure that you are getting the most out of those 15 years, your business should be certified in the year when you are planning an expansion (investment and/or job creation).

QEZE Real Property Tax Credit and Tax Reduction Credit

These credits are tied to employment and are claimed on your business’s tax return. To maximize these credits, your business should be certified with an effective date within the same calendar year or fiscal year (if appropriate) that new employees are hired.

QEZE Sales Tax Exemption

If you are planning to make major purchases, try getting the QEZE Sales Tax Exemption before you purchase. Applying for state sales tax exemption is a separate process after your business becomes Zone certified and usually takes 2-3 weeks. Since the application requires inclusion of a copy of your EZ Certificate of Eligibility, make sure that you apply for Zone certification at least 3 months before the major purchase to give the process plenty of time.

EZ Wage Tax Credit

This credit is only available for five years once it is claimed. If you are adding a few new employees this year, but will be adding a large amount of employees next year, wait until next year to claim the credit for the first time. That way, the wage tax credit will be calculated for the five years that your business had many new employees, rather than just a few.

Investment Tax Credit (for industrial and manufacturing)

VERY IMPORTANT: This credit can only be taken for investments made after the effective date of certification. Get the certification application signed locally BEFORE paying for any investment that you want eligible for this tax credit.

Utility Rate Savings through Niagara Mohawk

Niagara Mohawk offers utility rate savings to zone certified businesses that lead to more power usage because they are either a new business (new energy account) OR for businesses that expand by using either 100 kilowatts or 25% more power (whichever is less) than their established “baseline.” The baseline is the actual historical energy use from the previous 12 months, prior to receiving Empire Zone Certificate of Eligibility. The baseline is established once and would remain in effect for the term of the Empire Zone billing period, usually 10 years. A typical "new" business is one that has been in operation for less than 6 months.