| What is a "QEZE"? |
| 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. |
| |
| How are the QEZE sales and
use tax benefits different from the existing Empire Zone sales
and use tax provisions? |
| 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.
|
| |
| I am a new business to New
York. I have no previous employment history. What is my 5 year
base period? |
| 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. |
| |
| 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? |
| 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. |
| |
| I operate more than one
company in an Empire Zone. Can I certify each company? |
| 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). |
| |
| I operate two companies
and file NYS tax under one EIN. Do I certify each company? |
| 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. |
| |
| 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? |
| 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. |
| |
| Does the credit for real
property taxes reduce my real property tax bill? |
| 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. |
| |
| 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? |
| 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. |
| |
| 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? |
|
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…
- Tax Reduction Tax Credit
- Wage Tax Credit
- Investment Tax Credit
- Real Property Tax Credit
|
| What does the term "employment
number" mean? |
| 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. |
| |
| What is the difference between
the Sales and Use Tax Incentive and the new Sales Tax Exemption? |
| 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. |
| |
| What if I am a new business
in New York State in the year I become certified? Will I qualify
as a QEZE? |
| 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. |
| |
| Is a QEZE retailer eligible
for the QEZE sales tax exemption for building materials? |
| Yes, retailers previously were
not eligible for the zone sales tax refund, but now may be eligible
for a QEZE sales tax exemption. |
| |
| 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? |
| No, leased property does not
qualify for the credit for real property taxes paid. |
| |
| 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)? |
| No, because you will not meet
the WTC employment test without the creation of at leasat one
new job in the Zone. |
| |
| Can the QEZE credits "zero-out"
my New York State tax liability? |
| 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. |
| |
| Can I count part-time employees
in the calculation for the Wage Tax Credit (WTC)? |
| 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. |
| |
| If I am a certified zone
business, am I automatically a QEZE |
| No, to be a QEZE you must be
a zone certified business and pass the Employment Test. |
| |
| Is a QEZE exempt from local
real property taxes? |
| No, a QEZE must pay local property
taxes and may earn a State tax credit. |
| |
| Can the QEZE Real Property
Tax Credit alone reduce my state taxes to zero? |
| 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. |
| |
| I moved my entire company
from it's only location (non-zone) to a zone. Will I be eligible
for QEZE benefits? |
| No, because your statewide
employment outside the Empire Zone failed the employment test. |
| |
| What is the maximum allocation
of Zone Capital Credits available to each EZ? |
| $2.5 Million |
| |
| What is the maximum tax
credit an individual may claim for any one of the Zone Capital
Credits? |
| $100,000 |
| |
| 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? |
| 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. |
