senate Bill S497

Establishes the economic resurgence initiative credit

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 05 / Jan / 2011
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 04 / Jan / 2012
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Summary

Establishes the economic resurgence initiative credit for taxpayers allowed a credit under the investment tax credit with respect to property, the acquisition, construction, reconstruction or erection of which commenced on or after January 1, 2011; allows the taxpayer to elect the economic resurgence initiative credit; sets forth calculation procedures.

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Bill Details

Versions:
S497
Legislative Cycle:
2011-2012
Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd ยง210, Tax L
Versions Introduced in 2009-2010 Legislative Cycle:
S938

Sponsor Memo

BILL NUMBER:S497

TITLE OF BILL:

An act to amend the tax law, in relation to establishing the economic
resurgence initiative credit

PURPOSE:

The legislation would create an elective provision permitting a
taxpayer to convert a portion of the taxpayer's previously earned --
but not used -- Investment Tax Credit into a new credit called the
Economic Resurgence Initiative Credit.

SUMMARY OF PROVISIONS:

The legislation would create an elective provision permitting a
taxpayer to convert a portion of the taxpayer's previously earned --
but not used -- Investment Tax Credit into a new credit called the
Economic Resurgence Initiative Credit. The amount of Investment Tax
Credit authorized for conversion would be limited on a sliding scale
basis; no conversion at all would be authorized for Investment Tax
credits that have been carried forward for nine or fewer taxable
years. Notwithstanding the amount of Investment Tax Credit eligible
for conversion under the sliding scale, that eligible amount would be
limited yet further to no more than the taxpayer's new expenditures in
the current taxable year which are eligible for newly earned
Investment Tax Credit status. In addition, the taxpayer would have to
waive (forego) the Investment Tax Credit on those new, eligible
expenditures. The legislation would also extend the carry forward
period for the Investment Tax Credit from fifteen to twenty years.

JUSTIFICATION:

There was 1.5 billion dollars in unused tax credits in New York as of
2003 (Analysis of Article 9-A General Business corporation Franchise
Tax Credit for 2002) that would be better of being reinvested in New
York Business to help stimulate the economy and job growth.

The proposed ERIC legislation is an incentive to encourage investment
in New York State, that will help increase both the retention and
creation of new jobs and career opportunities. Making New York State a
stronger and more viable place to do business.

The structure of the Investment Tax Credit -- New York's main economic
incentive -- severely limits its use. On the one hand, taxpayers who
make substantial investment expenditures earn their Investment Tax
Credits; on the other hand, taxpayers are denied use of the credits
through their non-applicability against the Minimum Taxable Income
base alternative. The earned Investment Tax Credit whose use is
disallowed is carried forward for potential use in the subsequent tax
year{s). If the taxpayer makes another significant investment
expenditure in the following year, the situation compounds itself,
and, in future years, the cycle continues. The problem is exacerbated
should the taxpayer suffer a downswing in income in a recessionary


time, for example, as use of the taxpayer's earned Investment Tax
Credit is further curtailed under the Tax Law.

The legislation's proposed Economic Resurgence Initiative Credit is
designed to put incentive back into New York's tax credit provisions
for taxpayers who take the initiative of both waiving their
carry-forward Investment Tax Credit that they bring into a taxable
year and foregoing Investment Tax Credit newly earned in the current
taxable year. Taxpayers can elect to convert a limited amount of their
carry-forward Investment Tax Credit into the new Economic Resurgence
Initiative Credit, but only up to the amount of the taxpayers' new
investment expenditures -- and then only if the taxpayers waive the
Investment Tax Credit that the new investment expenditures would have
earned in the current taxable year.

Taxpayers who take the initiative to invest anew in an economic
resurgence in New York and who relinquish their rights to both
previously earned and newly earned Investment Tax Credit would become
eligible for the economic resurgence initiative credit. The economic
resurgence initiative credit would provide taxpayers with an effective
incentive to encourage investment in our State -- that collectively
done would assist in an economic resurgence in New York, upstate and
downstate alike.

LEGISLATIVE HISTORY:

2007 Passes Senate
2008 REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

FISCAL IMPLICATIONS:

To be determined.

EFFECTIVE DATE:

This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2011.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   497

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen.  ROBACH -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law, in relation to  establishing  the  economic
  resurgence initiative credit

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 210 of the tax law  is  amended  by  adding  a  new
subdivision 12-H to read as follows:
  12-H.  ECONOMIC  RESURGENCE INITIATIVE CREDIT. (A) WHERE A TAXPAYER IS
ALLOWED A CREDIT UNDER THE  INVESTMENT  TAX  CREDIT  (ITC)  PURSUANT  TO
SUBDIVISION  TWELVE OF THIS SECTION WITH RESPECT TO PROPERTY, THE ACQUI-
SITION, CONSTRUCTION, RECONSTRUCTION, OR ERECTION OF WHICH COMMENCED  ON
OR AFTER THE FIRST DAY OF JANUARY, TWO THOUSAND ELEVEN, THE TAXPAYER MAY
WAIVE  THE  RIGHT  TO  USE  ALL OR A PORTION OF THE EXPENDITURE FOR SUCH
PROPERTY ELIGIBLE FOR THE INVESTMENT TAX CREDIT AND ELECT, TO THE EXTENT
OF THE AMOUNT OF SUCH PROPERTY EXPENDITURE FOR WHICH  THE  TAXPAYER  HAS
WAIVED  ELIGIBILITY  UNDER THE INVESTMENT TAX CREDIT, IN LIEU THEREOF, A
CREDIT DETERMINED UNDER THIS SUBDIVISION.
  (B) A TAXPAYER SHALL BE  ALLOWED  AN  ECONOMIC  RESURGENCE  INITIATIVE
CREDIT  TO  BE COMPUTED AS HEREINAFTER PROVIDED, AGAINST THE TAX IMPOSED
BY THIS ARTICLE. THE TAXPAYER MAY CONVERT, ON AN ELECTIVE SLIDING  SCALE
BASIS AS DELINEATED IN PARAGRAPH (C) OF THIS SUBDIVISION EARNED, BUT NOT
USED,  INVESTMENT  TAX  CREDIT  THAT HAS BEEN CARRIED-FORWARD FOR TEN OR
MORE YEARS INTO A NEW CREDIT, KNOWN AS THE  ECONOMIC  RESURGENCE  INITI-
ATIVE  CREDIT, UP TO THE AMOUNT EXPENDED IN THE SAME TAXABLE YEAR ON NEW
INVESTMENT IN THIS STATE WHICH OTHERWISE  IS  ELIGIBLE  FOR  THE  CREDIT
UNDER SUBDIVISION TWELVE OF THIS SECTION.
  (C) THE AMOUNT OF EARNED, BUT NOT USED, INVESTMENT TAX CREDIT ELIGIBLE
FOR CONVERSION SHALL BE CALCULATED AS FOLLOWS:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01982-01-1

S. 497                              2

NUMBER OF YEARS CARRIED FORWARD     PERCENTAGE
            10                        20%
            11                        40%
            12                        60%
            13                        80%
            14 OR MORE                100%

  (D)  THE NEW CURRENT YEAR INVESTMENT EXPENDITURE SHALL NOT QUALIFY FOR
OR GENERATE ITS OWN  INVESTMENT  TAX  CREDIT  IF  THE  TAXPAYER  ELECTED
CONVERSION.
  (E)  IN  THE EVENT THAT THE CREDITS ALLOWED UNDER THIS ARTICLE FOR ANY
TAXABLE YEAR REDUCES THE TAX DUE FOR SUCH YEAR TO LESS THAN  THE  HIGHER
OF  THE  AMOUNTS PRESCRIBED IN PARAGRAPHS (C) AND (D) OF SUBDIVISION ONE
OF THIS SECTION, THE TAXPAYER MAY ELECT  TO  TREAT  THE  AMOUNT  OF  THE
ECONOMIC  RESURGENCE  INITIATIVE CREDIT NOT USED IN REDUCING THE TAX DUE
TO THE HIGHER OF THE AMOUNTS PRESCRIBED IN PARAGRAPHS  (C)  AND  (D)  OF
SUBDIVISION  ONE OF THIS SECTION AS AN OVERPAYMENT OF TAX TO BE CREDITED
OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF  SECTION  ONE  THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER,  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
SUBSECTION (C) OF SECTION ONE  THOUSAND  EIGHTY-EIGHT  OF  THIS  CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
  S 2. Paragraph (e) of subdivision 12 of section 210 of the tax law, as
amended  by  section  9 of part M of chapter 407 of the laws of 1999, is
amended to read as follows:
  (e) Except as otherwise provided in this paragraph, the credit allowed
under this subdivision for any taxable year shall not reduce the tax due
for such year to less than the higher of the amounts prescribed in para-
graphs (c) and (d) of subdivision one of this section. However,  if  the
amount  of  credit allowable under this subdivision for any taxable year
reduces the tax to such amount, any amount of credit allowed for a taxa-
ble year commencing prior to January first, nineteen hundred eighty-sev-
en and not deductible in such taxable year may be carried  over  to  the
following  year or years and may be deducted from the taxpayer's tax for
such year or years but in no event shall such credit be carried over  to
taxable  years  commencing on or after January first, two thousand two[,
and any]. ANY amount of credit allowed for a taxable year commencing  on
or after January first, nineteen hundred eighty-seven and not deductible
in  such  year may be carried over to the [fifteen] TWENTY taxable years
next following such taxable year and may be deducted from the taxpayer's
tax for such year or years. In lieu of such carryover, any such taxpayer
which qualifies as a new business under paragraph (j) of  this  subdivi-
sion  may  elect to treat the amount of such carryover as an overpayment
of tax to be credited or refunded in accordance with the  provisions  of
section [ten hundred] ONE THOUSAND eighty-six of this chapter, provided,
however,  the  provisions of subsection (c) of section [ten hundred] ONE
THOUSAND eighty-eight of this chapter notwithstanding, no interest shall
be paid thereon.
  S 3. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2011.

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