Today, there are over 9000 certified businesses employing more than 300,000 people in 73 Empire Zones statewide. A map of the 73 zone locations may be found by reviewing the Empire Zones "NYS Zone Map" section of ESD's website. Twelve new additional zones (three per year over the next four years) have been authorized, resulting in a total of 85 zones (and a zone in every county) by 2010.

These Zones offer significantly enhanced tax benefits to companies that locate or expand there, undertake eligible investments and create jobs.

Eligibility & Certification

To be eligible to receive zone benefits, a company must be zone certified, a process that begins at the local level via the local zone coordinator. To qualify for certification, a business must be located in a zone or a business may be located outside of the zone if the business is engaged in manufacturing and will be creating 50 or more jobs. After zone boundaries are reconfigured in the winter of 2006, a company located outside of the zone that qualifies as a regionally significant project may also be considered for certification, subject to final approval by the statewide Empire Zone Designation Board. A business that may qualify as a regionally significant project would be an Agri-business, high tech or biotech business making a capital investment of $10M and creating twenty or more jobs; or a business in the financial or insurance services industry or distribution center creating 300 or more jobs. The business must show that they will create new jobs and/or make investments in the zone and pass a cost benefit analysis based on the job creation and/or investment amount predicted by the company verses anticipated tax credits. Additionally, the applicant's project must enhance the economic climate of the zone as defined by the criteria stated in the zone's local development plan & policies which are documents created by the local zone administrative board (ZAB) and serve as the zone community's business strategy. Once this criterion is met, applications approved on the local level by the ZAB & Zone Certifying Officer, will proceed through the joint certification process conducted by the Departments of Economic Development and Labor. The State review typically takes 6-8 weeks. Applications are available via the Empire Zones section of ESD's website.

To receive Qualified Empire Zone Enterprise (QEZE) enhanced zone benefits, a business must be zone certified under the requirements outlined above and must pass additional tests. The first test only applies to "zero" entities (i.e., those with a base period of zero years or zero base period employment) and provides that a business must pass the QEZE new business test. In order to pass, a business must not be similar in ownership AND operation to another taxable entity in NYS unless the business is identical in ownership and operation and is operating in a different county than the existing business. Where the existing business is a QEZE, the benefit period of the new company will be limited to the remainder of the benefit period of the existing business. Next, a business must pass the employment test. The employment test is passed with respect to a taxable year if the business enterprise's employment number in the State and the Empire Zones for such taxable year exceeds its employment number in the State and the Empire Zones, respectively, for the base period. A business must determine on an annual basis when filing their return with the Department of Tax and Finance whether it passes the employment test in order to continue to claim the sales tax QEZE exemption.

Once a business is certified they are eligible to claim tax credits subject to requirements and performance based formulas set in Tax Law. Further information on how to claim tax credits can be found on the Department of Taxation & Finance's website at www.nystax.gov.

Benefits for Empire Zone certified companies:

• Wage Tax Credit: Available to companies hiring full-time or full-time equivalent employees in the zone. Credits are available for up to five consecutive years. Credits are $1500 per employee; for employees in special targeted groups the amount is raised to $3000 per employee per year. In investment zones, this credit is increased by $500 for workers with wages over $40,000. Unused credits can be forwarded indefinitely and new businesses (those that have been taxable for five years or less) are eligible for a 50% refund of unused credits.
• Investment Tax Credit: Available to companies making an investment in the zone for depreciable property and/or equipment which is principally used in manufacturing, processing, assembly, industrial waste treatment or air pollution-control facilities, R&D or financial institutions. 10% (8% for personal income tax filers) of the eligible investment can be taken for credit. Unused credits can be forwarded indefinitely and new businesses are eligible for a 50% refund of unused credits.
• An additional Employment Incentive Credit equal to 30% of the investment tax credit is available for each of the three years after the Investment Tax Credit (ITC) is claimed if employment is increased when the investment is made. Unused credits can be forwarded indefinitely and new businesses (personal income tax only) are eligible for a 50% refund of unused credits.
• Zone Capital Credits: A 25% tax credit is available for personal or corporate income tax payers for eligible investments in certified zone businesses, or contributions to approved community development projects. There is a limit of $100,000 in zone capital credits per investor/contributor in each of the three categories for a total maximum credit of $300,000 per taxpayer.
• NYS Sales Tax Refund: A refund of the State portion [4%;4.375% in the MTA region] of the sales tax is available for the purchase of building materials used in the construction or renovation of industrial or commercial property located in a zone. Empire Zone certification is not a requirement to receive this benefit; however, the purchaser must be buying for a property in the zone.

Enhanced benefits for Qualified Empire Zone Enterprises (QEZE):

• Sales Tax Exemptions: An exemption from the State portion of the sales tax at the point of purchase is available for most goods and services used directly and predominantly (50%) in the zone. Utility services qualify for the exemption if used or consumed directly and exclusively (100%) in the zone. Telephone services are exempt if delivered and billed to the business at an address in its zone. An exemption from any locally imposed sales tax may also be available. The exemptions run for 120 consecutive months from the effective date on the sales tax certification issued by the Department of Tax and Finance, provided the business continues to meet the employment test each year. Once certified as a zone business by ESD, a business would fill out a DTF-80 - Application for a Qualified Enterprise Zone Enterprise (QEZE) Sales Tax Certification - issued by the Department of Tax and Finance. If approved, a business would receive a DTF-81, QEZE Sales Tax Certification. The business may begin to make exempt purchases using form ST-121.6, QEZE Exempt Purchase Certificate, as of the effective date shown on its DTF-81.
• Real Property Tax Credit: A credit for real property taxes paid based on a formula that considers job creation, wages and benefits or investments made in the zone. Further calculations may apply depending on a business' location in either an Investment Zone or Development Zone. This credit is available for 10 years and unused credits may be obtained as a cash refund in the year they were earned.
• Tax Reduction Credit: A credit against tax equal to a percentage of income taxes attributable to the zone enterprise based on its employment growth in the zone. This credit is available for 10 years and can reduce a company's tax liability to zero - eliminating the alternative minimum and fixed dollar minimum tax.

Local Benefits:

Municipalities designated as Empire Zones may also offer additional incentives including sales tax refunds, and property tax abatements for real property improvements in the Zone. Many utility companies (including gas, electric and telephone services) also offer rate reductions to certified Empire Zone businesses. Check with the local zone administrator to see what additional reductions are available in a municipality.

For more information and how to apply, visit www.tax.state.ny.us/sbc/empire_zone.htm