STATE AND LOCAL TAXATION

The N.Y. Industrial or Manufacturing Business Credit

By Mark H. Levin, CPA, H.J. Behrman & Company, LLP

The industrial or manufacturing business (IMB) credit, enacted in the 2000 New York State Budget Act, is a refundable credit equal to the sum (or pro-rata share of the sum) of the gross receipt taxes under sections 186-a, 186-c, and 189-a of the N.Y. Tax Law, Article 9. Section 14-a of the N.Y. Tax Law allows an IMB to claim a tax credit for taxes imposed on gas, electricity, steam, water, and refrigeration (or on gas, electricity, steam, water, and refrigeration services) that it uses or consumes in New York State.

For the purposes of the tax credit, an IMB is a business that, during the taxable year, is—

If a business has facilities both in New York and other states or countries, the test of whether the business qualifies as an IMB applies to the entire business.

An entity must be engaged in one of the businesses described above in order to qualify for the IMB credit. In addition, the IMB credit can be claimed by taxpayers associated with an IMB. Such taxpayers can be—

The IMB credit applies to taxes paid on or after January 1, 2000, and expires for taxable years ending on or after January 1, 2007. The IMB credit may not reduce a corporation’s tax below the greater of the fixed-dollar minimum tax or the tax on minimum taxable income. Any portion of the IMB credit that cannot be applied to the current year cannot be carried back, but it may be either refunded without interest or applied as a payment against the next year’s tax. Eligible taxpayers may claim the IMB credit on Form DTF-623, which is filed with a corporation’s franchise tax return or with an individual’s income tax return.

All persons and entities that collect from or pass through to an IMB any taxes imposed under Article 9, sections 186-a, 186-c, and 189-a must provide a statement containing the information required to compute the credit. This statement may be requested from the IMB’s energy provider and must be attached to Form DTF-623. Qualifying IMBs that have already filed their tax returns may file amended returns in order to take advantage of the IMB credit.