Chinatown/Lower East Side Empire Zone

The Empire Zones (EZ) Program is one of the most effective, innovative and widely recognized economic development programs in the country. The program was created to make New York more competitive, and stimulate economic growth through a variety of state tax incentives designed to attract new businesses to New York State and to enable existing businesses to expand and create more jobs. Today, there are over 9,800 certified businesses employing more than 380,000 people in 82 Empire Zones statewide. The program is administered locally by the Renaissance Economic Development Corporation in Chinatown and the Lower East Side and by the New York City Department of Small Business Services, in partnership with Empire State Development (ESD), New York State's lead economic development agency, and the State Departments of Labor and Taxation and Finance.

To participate in the program, a company must become zone certified, a process that begins at the local level via the local zone coordinator. To qualify for certification, a business must demonstrate that it will create new jobs and/or make investments in the empire zone, and be consistent with the Chinatown/Lower East Side Zone Development Plan, including a cost-benefit analysis. Applications approved by local zone officials are then forwarded to the State for review and approval by the Departments of Economic Development and Labor. Contact Renaissance Economic Development Corporation (EDC) at 212-964-6022 to discuss whether your business qualifies for zone certification.

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 empire zone tax credits can be found on the Department of Taxation & Finance's website www.nystax.gov. Check Renaissance EDC's website www.renaissance-ny.org for more information on the program.

All Empire Zone certified businesses may be eligible for the following tax benefits:

• 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 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.

Businesses that meet the requirements of a Qualified Empire Zone Enterprise (QEZE) may be eligible for the following enhanced tax benefits:

• 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.
• 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.

Empire Zones will play a critical role in revitalizing business development throughout Chinatown and the Lower East Side. For more information about the Empire Zones program, contact the Renaissance Economic Development Corporation 212-964-6022, visit Empire State Development's website www.nylovesbiz.com or call 1 800 STATE NY.