March 2002

Zeroing in on Empire Zones

Your January 2002 cover story, "Empire Zones: Cultivating New York Businesses," incorrectly implies that the program is available only to businesses engaged in "manufacturing; refining; building construction and rehabilitation; investment advisory services; sales of stocks, bonds, or securities; and loan originating activities." Unfortunately, growing businesses that would be eligible for many of the Empire Zone Program credits and incentives may be advised by your readers that they are ineligible, and thereby fail to take advantage of the program's benefits.

By reinforcing a common misconception, that the Empire Zones Program benefits only a few taxpayers, the article discourages businesses that could enjoy the program's other benefits from expanding into New York's Empire Zones. These other benefits include the QEZE Tax Reduction Credit, which can eliminate all New York income tax attributable to the Empire Zone business (and is especially effective for owners of pass-through entities), the QEZE Credit for Real Property Taxes (for property owned in Empire Zones), the QEZE Sales Tax Exemption, and the Empire Zone Wage Tax Credit (EZ-WTC).

Only the Empire Zones Investment Tax Credit (EZ-ITC) is limited to specified classes of businesses (see Part I of NYS Publication 26 for a description of the businesses eligible to claim the EZ-ITC). The remaining credits and incentives are available to all Empire Zone businesses certified pursuant to Article 18-B of the New York General Municipal Law that also meet the applicable job growth tests and other criteria identified in your article.

The article also misstates the availability of the EZ-WTC, which is available for all full-time employees receiving Empire Zone wages for more than half the taxable year, not just "targeted employees." Also, the EZ-WTC is now $1,500 for each such employee, and $3,000 per targeted employee. (See Part III of NYS Publication 26.)

Please also note that the QEZE Credit for Real Property Taxes is a fully refundable credit, so that the amount not used by the taxpayer is treated as an overpayment of taxes and may be refunded to the taxpayer, without interest, with respect to the year claimed. [See, for example, N.Y. Tax Law section 210 (27) and (28) and section 606(bb).]

Finally, the sidebar on page 24 mistakenly states that "the New York State Assembly has passed new legislation" known as the Liberty and Resurgence Zones Program, effective for tax years beginning after December 31, 2001. As of January 30, 2002, this legislation (A.9466) had not been passed. However, the bill was delivered on January 9 to the Assembly's Committee on Economic Development for further consideration.

Thank you for the opportunity to set the record straight for the benefit of your readers and taxpayers of New York.

Philip S. Bousquet Green & Seifter, Attorneys, PLLC Syracuse, N.Y.