1: Q: What is a "QEZE"?
A: Qualified Empire Zone Enterprise (QEZE) is a term used to represent a Zone Certified business that qualifies to apply the new enhanced tax credits: Sales Tax Exemption, Tax Reduction Tax Credit and the Real Property Tax Credit.
2: Q: How are the QEZE sales and use tax benefits different from the existing Empire Zone sales and use tax provisions?
A: The QEZE sales and use tax exemptions are an alternative to the Empire Zone refund/credit provisions. The QEZE exemptions provide an up-front exemption at the time of purchase rather than a refund or credit. In addition, they apply to a broad class of tangible personal property and to utility and other services, provided that the property or services are used by the QEZE in the Empire Zone.

The existing Empire Zone refund/credit provisions apply only to tangible personal property that is incorporated into industrial or commercial real property which is being constructed, expanded or rehabilitated within an Empire Zone and which becomes an integral component part of that real property.

The QEZE benefits may only be claimed by a certified business. The person claiming the existing sales and use tax refund or credit does not have to be a certified business.

3: Q: I am a new business to New York. I have no previous employment history. What is my 5 year base period?
A: New businesses that create jobs in New York State will have a base period employment equal to zero (0). Any new business that creates jobs would - in the first and future years - meet the employment test for maintaining or increasing employment.
4: Q: I have an existing business in an area of the State of New York that is not in an Empire Zone. I plan to move all my employees and business into an Empire Zone in another part of the State of New York. Will I qualify for the newly enhanced EZ benefits?
A: No. You must maintain your employment average in the area that is outside of an Empire Zone in order to qualify for enhanced Zone benefits inside the Zone. Additionally, you must apply for permission with your current location's municipal officer to access Zone credits prior to your move into the Zone because of your shift in operations. After a public hearing and written approval from the municipal authority where you are closing your operations, you may be eligible to claim the basic Zone benefits and not the enhanced benefits.
5: Q: I operate more than one company in an Empire Zone. Can I certify each company?
A: Yes, providing that each company is a separate tax paying entity and each company possesses a separate and distinct Taxpayer Identification Number or Employer Identification Number (EIN).
6: Q: I operate two companies and file NYS tax under one EIN. Do I certify each company?
A: No. You would be eligible to apply for certification for the company that is located within the Empire Zone. The Empire Zone tax credits and exemptions would only be applicable to business activities and tax liability to the business located within the Empire Zone.
7: Q: I am already a Zone Certified business. The new enhanced tax credits indicate that I must qualify on an annual basis to access these credits. Does "qualify" mean that I have to be certified again?
A: No. Certification is mostly a one-time occurrence that is expedited through a local Zone Coordinator. Qualify indicates that a Zone Certified business has calculated the employment comparative between the tax year that the company is applying for credits AND a base period or test year. If your accountant determines that your employment comparative equals or exceeds the base period or test year, you then qualify for the enhanced credits.
8: Q: Does the credit for real property taxes reduce my real property tax bill?
A: No. The credit for real property taxes is applied against your tax under the Tax Law. Business corporations would use the credit to reduce their corporation franchise tax and sole proprietors would use it to reduce their personal income tax.
9: Q: I am a certified Empire Zone business and will qualify under the 5 year base periof employment test. When can I start claiming my credits and sales tax exemptions?
A: Credits can be claimed for tax years beginning on or after January 1, 2001. The sales tax exemptions begin March 1, 2001. You must also meet an annual employment test to continue to claim the benefits.
10: Q: I qualify to claim the Investment Tax Credit, the Wage Tax Credit, the new Tax Reduction Tax Credit and the new Real Property Tax Credit. What is the ordering of credits on my tax return?

A: Credits that cannot be carried forward are applied first. Refundable credits are applied last. The ordering of the credits for your tax return would be…

  1. Tax Reduction Tax Credit
  2. Wage Tax Credit
  3. Investment Tax Credit
  4. Real Property Tax Credit
11: Q: What does the term "employment number" mean?
A: The "employment number" is the average number of people that the business enterprise employs full-time for at least half of the business' taxable years. For corporations, it does not include general executive officers. You compute that average by determining how many of those people were employed on March 31st, June 30th, September 30th, and December 31st and averaging those 4 numbers.
12: Q: What is the difference between the Sales and Use Tax Incentive and the new Sales Tax Exemption?
A: The Sales and Use Tax Incentive is a credit or refund of the sales and use tax paid on building materials incorporated into a qualifying commercial or industrial structure within an Empire Zone. The Sales Tax Exemption is not a refund. It is an exemption from the 4% NYS sales and uses taxes for tangible personal property and services sold to a qualified business. A company must register with the NYS Department of Taxation & Finance and be issued an exemption certificate. The certificate is valid for a 10-year period as long as the business meets or exceeds its base year employment number.
13: Q: What if I am a new business in New York State in the year I become certified? Will I qualify as a QEZE?
A: As a new business creating jobs in New York State, you would have a base period of 0. You would, in the first and future years, meet the employment test for maintaining or increasing employment.
14: Q: Is a QEZE retailer eligible for the QEZE sales tax exemption for building materials?
A: Yes, retailers previously were not eligible for the zone sales tax refund, but now may be eligible for a QEZE sales tax exemption.
15: Q: I am a Qualified Empire Zone Enterprise (QEZE) leasing property (not from an IDA) located in a Zone. I pay the property taxes on the Zone property. Can I get the credit for real property taxes paid?
A: No, leased property does not qualify for the credit for real property taxes paid.
16: Q: If I move my company from outside an Empire Zone to within a zone and become certified, but do not hire any new employees, will I be eligible for the EZ Wage Tax Credit (WTC)?
A: No, because you will not meet the WTC employment test without the creation of at leasat one new job in the Zone.
17: Q: Can the QEZE credits "zero-out" my New York State tax liability?
A: Yes, if your business' only NYS location is entirely within an EZ, the QEZE tax reduction credit may take your NYS tax liability to zero.
18: Q: Can I count part-time employees in the calculation for the Wage Tax Credit (WTC)?
A: Yes, two or more part-time employees working a total of 35 hours or more per week for half the taxable year are counted as one full-time equivalent employee.
19: Q: If I am a certified zone business, am I automatically a QEZE
A: No, to be a QEZE you must be a zone certified business and pass the Employment Test.
20: Q: Is a QEZE exempt from local real property taxes?
A: No, a QEZE must pay local property taxes and may earn a State tax credit.
21: Q: Can the QEZE Real Property Tax Credit alone reduce my state taxes to zero?
A: No, the QEZE Real Property Tax Credit may only reduce your tax liability to the greater of the Alternative Minimum Tax or the fixed dollar minimum.
22: Q: I moved my entire company from it's only location (non-zone) to a zone. Will I be eligible for QEZE benefits?
A: No, because your statewide employment outside the Empire Zone failed the employment test.
23: Q: What is the maximum allocation of Zone Capital Credits available to each EZ?
A: $2.5 Million
24: Q: What is the maximum tax credit an individual may claim for any one of the Zone Capital Credits?
A: $100,000
25: Q: I made a purchase at a vendor who refused to accept my QEZE Sales Tax Exemption Certificate. Can I still get the QEZE sales tax exemption on the products I bought for my business?
A: Yes, while the law does not require the vendor to accept your certificate, you may apply for a refund to NYS Department of Taxation & Finance on form AU-11.
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