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

                                  1502

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced  by  M. of A. WRIGHT, CAMARA -- read once and referred to the
  Committee on Cities

AN ACT to amend the administrative code of the  city  of  New  York,  in
  relation  to  tax  credits  for New York city businesses that hire new
  employees

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

  Section  1. Legislative intent. The legislature finds that the current
method of awarding property tax exemptions in New York city  to  promote
development  achieves  inconsistent and unreliable results. The legisla-
ture further finds that different commercial or industrial projects  are
likely  to  have different employment and income impacts under different
market conditions. Consequently, in awarding subsidies based on property
investment, there is no guarantee that local job or income creation will
result, especially during current exemption periods as long  as  twenty-
two  years.  Therefore, the legislature finds that the current method of
awarding property tax  exemptions  constitutes  an  excessively  costly,
risky,  and  speculative  approach to promoting job and income growth in
the city.
  To address this problem, the legislature finds it appropriate to enact
reforms that would directly link and continually adjust  the  amount  of
incentives  provided by the city to the number of new jobs a firm gener-
ates.  Therefore, the legislature finds it appropriate to  enact  legis-
lation  to change the basis of incentive awards from property investment
to new job creation in the city.
  S 2. Subchapter 2 of chapter 2 of title 11 of the administrative  code
of  the  city  of  New York is amended by adding a new part 6 to read as
follows:
                                  PART 6
               TAX CREDIT FOR PRIVATE SECTOR JOB CREATION

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

                                                           LBD00122-01-9

A. 1502                             2

  S 11-280 DEFINITIONS. WHEN USED IN THIS PART:
  A.  "CREDIT  AMOUNT" MEANS THE TAX CREDIT AMOUNT DETERMINED UNDER THIS
PART, BUT NOT TO EXCEED THE INCREMENTAL INCOME TAX WITHHOLDING ATTRIBUT-
ABLE TO THE APPLICANT'S PROJECT.
  B. "COMMISSIONER" MEANS THE COMMISSIONER OF FINANCE OF THE CITY OF NEW
YORK.
  C. "DEPARTMENT" MEANS THE NEW YORK CITY DEPARTMENT OF FINANCE.
  D. "ENHANCED CREDIT AREA" MEANS ANY AREA IN THE CITY NOT DESIGNATED AS
A REGULAR CREDIT AREA.
  E. "FULL-TIME EMPLOYEE"  MEANS  AN  INDIVIDUAL  WHO  IS  EMPLOYED  FOR
CONSIDERATION  FOR  AT  LEAST THIRTY-FIVE HOURS EACH WEEK OR WHO RENDERS
ANY OTHER STANDARD OF SERVICE GENERALLY ACCEPTED BY CUSTOM OR  SPECIFIED
BY CONTRACT AS FULL-TIME EMPLOYMENT.
  F. "INCREMENTAL INCOME TAX WITHHOLDINGS" MEANS THE TOTAL AMOUNT OF NEW
YORK  CITY PERSONAL INCOME TAX WITHHELD BY THE TAXPAYER DURING THE TAXA-
BLE YEAR FROM THE COMPENSATION OF NEW EMPLOYEES.
  G. "LOCAL TAX LIABILITY" MEANS A TAXPAYER'S TOTAL TAX  LIABILITY  THAT
IS  INCURRED  UNDER  ADMINISTRATIVE CODE SECTIONS 11-638 THROUGH 11-647,
THE BANKING CORPORATION TAX, 11-701 THROUGH 11-718, THE COMMERCIAL  RENT
TAX,  11-602 THROUGH 11-610, THE GENERAL CORPORATION TAX, 11-501 THROUGH
11-538, THE UNINCORPORATED BUSINESS TAX AS COMPUTED AFTER  THE  APPLICA-
TION OF OTHER CREDITS THAT MAY BE AVAILABLE TO THE TAXPAYER.
  H.  "NEW  EMPLOYEE"  MEANS  A  FULL-TIME  EMPLOYEE FIRST EMPLOYED BY A
TAXPAYER IN THE PROJECT THAT IS THE SUBJECT OF A  TAX  CREDIT  AGREEMENT
AND WHO IS EMPLOYED AFTER THE TAXPAYER ENTERS INTO THE TAX CREDIT AGREE-
MENT. THE TERM "NEW EMPLOYEE" DOES NOT INCLUDE:
  (1) AN EMPLOYEE OF THE TAXPAYER WHO PERFORMS A JOB THAT WAS PREVIOUSLY
PERFORMED  BY  ANOTHER  EMPLOYEE,  IF  THAT JOB EXISTED FOR AT LEAST SIX
MONTHS BEFORE HIRING THE NEW EMPLOYEE;
  (2) AN EMPLOYEE OF THE TAXPAYER WHO WAS  PREVIOUSLY  EMPLOYED  IN  NEW
YORK  CITY  BY A RELATED MEMBER OF THE TAXPAYER AND WHOSE EMPLOYMENT WAS
SHIFTED TO THE TAXPAYER AFTER THE TAXPAYER ENTERED INTO THE  TAX  CREDIT
AGREEMENT;
  (3) A CHILD, GRANDCHILD, PARENT, OR SPOUSE, OTHER THAN A SPOUSE WHO IS
LEGALLY  SEPARATED  FROM  THE  INDIVIDUAL,  OF  ANY INDIVIDUAL WHO IS AN
EMPLOYEE OF THE TAXPAYER AND WHO HAS  A  DIRECT  OR  INDIRECT  OWNERSHIP
INTEREST  OF  AT LEAST FIVE PERCENT IN THE PROFITS, CAPITAL, OR VALUE OF
THE TAXPAYER; SUCH OWNERSHIP INTEREST SHALL BE DETERMINED IN  ACCORDANCE
WITH   SECTION  1563  OF  THE  INTERNAL  REVENUE  CODE  AND  REGULATIONS
PRESCRIBED UNDER THAT SECTION.
  NOTWITHSTANDING ANY OTHER PROVISION OF  THIS  SUBDIVISION,  IF  A  NEW
EMPLOYEE PERFORMS A JOB THAT WAS PREVIOUSLY PERFORMED BY AN EMPLOYEE WHO
WAS  TREATED  UNDER  THE AGREEMENT AS A NEW EMPLOYEE AND PROMOTED BY THE
TAXPAYER TO ANOTHER JOB, THE EMPLOYEE MAY BE CONSIDERED A  NEW  EMPLOYEE
UNDER THE AGREEMENT.
  I.  "PASS  THROUGH ENTITY" MEANS A CORPORATION THAT IS EXEMPT FROM NEW
YORK STATE ADJUSTED GROSS INCOME TAX OR A PARTNERSHIP.
  J. "REGULAR CREDIT AREA" MEANS THE AREA OF NEW YORK CITY  LYING  SOUTH
OF THE NINETY-SIXTH STREET CENTERLINE IN THE BOROUGH OF MANHATTAN.
  K.  "RELATED  MEMBER"  MEANS A PERSON THAT, WITH RESPECT TO A TAXPAYER
DURING ALL OR ANY PORTION OF THE TAXABLE YEAR, IS ANY ONE OF THE FOLLOW-
ING:
  (1) AN INDIVIDUAL STOCKHOLDER, OR A MEMBER OF THE STOCKHOLDER'S FAMILY
ENUMERATED IN SECTION 318 OF THE INTERNAL REVENUE CODE,  IF  THE  STOCK-
HOLDER  AND  THE  MEMBER OF THE STOCKHOLDER'S FAMILY OWN DIRECTLY, INDI-

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RECTLY, BENEFICIALLY, OR CONSTRUCTIVELY,  IN  THE  AGGREGATE,  AT  LEAST
FIFTY PERCENT OF THE VALUE OF THE TAXPAYER'S OUTSTANDING STOCK;
  (2)  A  STOCKHOLDER, OR A STOCKHOLDER'S PARTNERSHIP, ESTATE, TRUST, OR
CORPORATION, IF  THE  STOCKHOLDER  AND  THE  STOCKHOLDER'S  PARTNERSHIP,
ESTATE,  TRUST,  OR CORPORATION OWNS DIRECTLY, INDIRECTLY, BENEFICIALLY,
OR CONSTRUCTIVELY, IN THE AGGREGATE, AT LEAST FIFTY PERCENT OF THE VALUE
OF THE TAXPAYER'S OUTSTANDING STOCK;
  (3) A CORPORATION, OR A PARTY RELATED TO THE CORPORATION IN  A  MANNER
THAT  WOULD  REQUIRE AN ATTRIBUTION OF STOCK FROM THE CORPORATION TO THE
PARTY OR FROM THE PARTY TO THE CORPORATION UNDER THE  ATTRIBUTION  RULES
OF  SECTION  318  OF  THE  INTERNAL  REVENUE  CODE, IF THE TAXPAYER OWNS
DIRECTLY, INDIRECTLY, BENEFICIALLY, OR  CONSTRUCTIVELY  AT  LEAST  FIFTY
PERCENT OF THE VALUE OF THE CORPORATION'S OUTSTANDING STOCK;
  (4)  A COMPONENT MEMBER, AS DEFINED IN SECTION 1563(B) OF THE INTERNAL
REVENUE CODE; OR
  (5) A PERSON TO OR FROM WHOM THERE IS ATTRIBUTION OF  STOCK  OWNERSHIP
IN  ACCORDANCE WITH SECTION 1563(E) OF THE INTERNAL REVENUE CODE EXCEPT,
FOR PURPOSES OF DETERMINING WHETHER A PERSON IS A RELATED  MEMBER  UNDER
THIS  SUBDIVISION,  TWENTY PERCENT SHALL BE SUBSTITUTED FOR FIVE PERCENT
WHEREVER FIVE PERCENT APPEARS IN SECTION 1563(E) OF THE INTERNAL REVENUE
CODE.
  1. "TAXPAYER" MEANS ANY PERSON,  CORPORATION,  PARTNERSHIP,  OR  OTHER
ENTITY THAT HAS ANY LOCAL TAX LIABILITY.
  S 11-281 CREDIT AGAINST LOCAL TAX LIABILITY. SUBJECT TO THE CONDITIONS
SET  FORTH  IN THIS PART, A TAXPAYER IS ENTITLED TO A CREDIT AGAINST ANY
LOCAL TAX LIABILITY THAT MAY BE IMPOSED ON THE TAXPAYER  FOR  A  TAXABLE
YEAR  AFTER  DECEMBER  THIRTY-FIRST,  TWO  THOUSAND,  IF THE TAXPAYER IS
AWARDED A CREDIT BY THE COMMISSIONER FOR THE TAXABLE YEAR.
  S 11-282 AGREEMENT FOR TAX CREDIT; JOB CREATION; APPLICATION  FORM.  A
TAXPAYER  THAT  PROPOSES A PROJECT TO CREATE NEW JOBS IN THE CITY OF NEW
YORK MAY APPLY TO THE COMMISSIONER TO ENTER INTO AN AGREEMENT FOR A  TAX
CREDIT. THE COMMISSIONER SHALL PRESCRIBE THE FORM OF THE APPLICATION.
  S  11-283 FOSTER JOB CREATION; CREDIT AWARDS; CLAIM OF CREDIT.  A. THE
COMMISSIONER SHALL MAKE CREDIT AWARDS UNDER THIS PART SOLELY  TO  FOSTER
JOB CREATION IN THE CITY OF NEW YORK.
  B.  THE  CREDIT SHALL BE CLAIMED FOR THE TAXABLE YEAR SPECIFIED IN THE
TAXPAYER'S TAX CREDIT AGREEMENT.
  S 11-284 AMOUNT OF CREDIT AWARDED. A. THE CREDIT SHALL BE STATED AS  A
PERCENTAGE  OF  THE  INCREMENTAL INCOME TAX WITHHOLDINGS ATTRIBUTABLE TO
THE APPLICANT'S PROJECT.
  B. IF THE CREDIT IS AWARDED TO A PROJECT LOCATED IN A  REGULAR  CREDIT
AREA, THE CREDIT AMOUNT SHALL BE SEVENTY-FIVE PERCENT OF THE INCREMENTAL
INCOME TAX WITHHOLDINGS ATTRIBUTABLE TO THE APPLICANT'S PROJECT.
  C. IF THE CREDIT IS AWARDED TO A PROJECT LOCATED IN AN ENHANCED CREDIT
AREA,  THE CREDIT AMOUNT SHALL BE ONE HUNDRED PERCENT OF THE INCREMENTAL
INCOME TAX WITHHOLDINGS ATTRIBUTABLE TO THE APPLICANT'S PROJECT.
  D. IF THE AMOUNT OF THE CREDIT  FOR  A  TAXPAYER  IN  A  TAXABLE  YEAR
EXCEEDS  THE  TAXPAYER'S  LOCAL TAX LIABILITY FOR THAT TAXABLE YEAR, THE
TAXPAYER MAY CARRY THE EXCESS OVER TO NOT MORE THAN TWO TAXABLE YEARS.
  S 11-285 AGREEMENT FOR TAX CREDIT; REQUIREMENTS. AFTER RECEIPT  OF  AN
APPLICATION,  THE  COMMISSIONER  SHALL  ENTER  INTO AN AGREEMENT WITH AN
APPLICANT FOR A CREDIT. THE AGREEMENT SHALL INCLUDE, BUT NOT BE  LIMITED
TO:
  A.  A  DETAILED  DESCRIPTION OF THE PROJECT THAT IS THE SUBJECT OF THE
AGREEMENT.

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  B. THE DURATION OF THE TAX CREDIT AND THE FIRST TAXABLE YEAR FOR WHICH
THE CREDIT MAY BE CLAIMED.
  C.  A REQUIREMENT THAT THE TAXPAYER MAINTAIN OPERATIONS AT THE PROJECT
LOCATION FOR THE TERM OF THE TAX CREDIT.
  D. A SPECIFIC METHOD FOR  DETERMINING  THE  NUMBER  OF  NEW  EMPLOYEES
EMPLOYED  DURING THE TAXABLE YEAR WHO ARE PERFORMING JOBS NOT PREVIOUSLY
PERFORMED BY EXISTING EMPLOYEES.
  E. A REQUIREMENT THAT  THE  TAXPAYER  SHALL  ANNUALLY  REPORT  TO  THE
COMMISSIONER  THE  NUMBER  OF  NEW EMPLOYEES WHO ARE PERFORMING JOBS NOT
PREVIOUSLY PERFORMED BY AN EMPLOYEE, THE NEW INCOME TAX REVENUE WITHHELD
IN CONNECTION WITH THE NEW EMPLOYEES,  AND  ANY  OTHER  INFORMATION  THE
COMMISSIONER DEEMS NECESSARY TO CARRY OUT THE PURPOSES OF THIS PART.
  F.  A  REQUIREMENT  THAT THE COMMISSIONER IS AUTHORIZED TO VERIFY WITH
THE APPROPRIATE STATE AND  CITY  AGENCIES  THE  AMOUNTS  REPORTED  UNDER
SUBDIVISION  E OF THIS SECTION, AND AFTER DOING SO SHALL ISSUE A CERTIF-
ICATE TO THE TAXPAYER STATING THAT THE AMOUNTS HAVE BEEN SO VERIFIED.
  G. A REQUIREMENT THAT THE TAXPAYER PROVIDE WRITTEN NOTIFICATION TO THE
COMMISSIONER NOT MORE THAN THIRTY  DAYS  AFTER  THE  TAXPAYER  MAKES  OR
RECEIVES A PROPOSAL THAT WOULD TRANSFER THE TAXPAYER'S LOCAL TAX LIABIL-
ITY OBLIGATIONS TO A SUCCESSOR TAXPAYER.
  H. ANY OTHER CONDITIONS THAT THE COMMISSIONER DETERMINES ARE APPROPRI-
ATE.
  S  11-286 DURATION OF TAX CREDITS; MAXIMUM CREDIT. THE DURATION OF THE
CREDIT SHALL BE TWELVE TAXABLE YEARS.
  S 11-287 RELOCATION OF JOBS FROM ONE  SITE  TO  ANOTHER  WITHIN  CITY;
CREDIT  PROHIBITED. A TAXPAYER IS NOT ENTITLED TO CLAIM A CREDIT FOR ANY
JOB RELOCATED FROM ONE SITE IN NEW YORK CITY TO ANOTHER SITE IN NEW YORK
CITY. DETERMINATIONS UNDER THIS SECTION SHALL BE MADE BY THE COMMISSION-
ER.
  S 11-288 PERIODS OF  RAPID  EMPLOYMENT  GROWTH  IN  THE  CITY;  CREDIT
PROHIBITED.  THE  COMMISSIONER  SHALL  NOT  AWARD ANY NEW CREDITS IF THE
UNEMPLOYMENT RATE IN THE CITY FALLS BELOW SIX PERCENT AS REPORTED BY THE
NEW YORK STATE DEPARTMENT OF LABOR.
  S 11-289 CERTIFICATE OF VERIFICATION; SUBMISSION TO DEPARTMENT;  FAIL-
URE  TO  SUBMIT  COPY.  A TAXPAYER CLAIMING A CREDIT SHALL SUBMIT TO THE
DEPARTMENT A COPY OF THE COMMISSIONER'S CERTIFICATE OF VERIFICATION  FOR
THE  TAXABLE  YEAR. HOWEVER, FAILURE TO SUBMIT A COPY OF THE CERTIFICATE
SHALL NOT INVALIDATE A CLAIM FOR A CREDIT.
   S 11-290 PASS THROUGH ENTITY; CALCULATION OF TAX CREDIT;  SHAREHOLDER
OR  PARTNER  CLAIMING  CREDIT. A. IF A PASS THROUGH ENTITY DOES NOT HAVE
LOCAL INCOME TAX LIABILITY AGAINST WHICH THE TAX CREDIT MAY BE  APPLIED,
A SHAREHOLDER OR PARTNER OF THE PASS THROUGH ENTITY IS ENTITLED TO A TAX
CREDIT  EQUAL TO THE TAX CREDIT DETERMINED FOR THE PASS THROUGH ENTITY'S
DISTRIBUTIVE INCOME TO WHICH THE SHAREHOLDER OR PARTNER IS ENTITLED.
  B. THE CREDIT PROVIDED HEREIN IS IN ADDITION  TO  ANY  TAX  CREDIT  TO
WHICH  A  SHAREHOLDER  OR  PARTNER OF A PASS THROUGH ENTITY IS OTHERWISE
ENTITLED UNDER A SEPARATE AGREEMENT UNDER  THIS  PART.  A  PASS  THROUGH
ENTITY  AND  A SHAREHOLDER OR PARTNER OF THE PASS THROUGH ENTITY MAY NOT
CLAIM MORE THAN ONE CREDIT UNDER THE SAME AGREEMENT.
  S 11-291 NONCOMPLIANCE WITH AGREEMENT; ASSESSMENTS. IF THE COMMISSION-
ER DETERMINES THAT A TAXPAYER WHO HAS RECEIVED A CREDIT IS NOT COMPLYING
WITH THE REQUIREMENTS OF THE TAX CREDIT AGREEMENT OR  ANY  PROVISION  OF
THIS PART, THE COMMISSIONER SHALL, AFTER GIVING THE TAXPAYER AN OPPORTU-
NITY TO REMEDY THE NONCOMPLIANCE, IMPOSE AN ASSESSMENT. THE COMMISSIONER
SHALL  STATE  THE AMOUNT OF THE ASSESSMENT, WHICH MAY NOT EXCEED THE SUM
OF ANY PREVIOUSLY ALLOWED CREDITS UNDER THIS PART.

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  S 11-292 ANNUAL REPORT. THE COMMISSIONER SHALL SUBMIT AN ANNUAL REPORT
TO THE COUNCIL, ON APRIL FIRST OF EACH YEAR, BEGINNING APRIL FIRST,  TWO
THOUSAND  TEN,  CONCERNING  THE STATUS OF THE PROGRAM ESTABLISHED HEREIN
AND ITS EFFECTS IN THE CITY, INCLUDING INFORMATION ON CREDITS ISSUED AND
JOBS  CREATED. THE REPORT SHALL INCLUDE, BUT NOT BE LIMITED TO, INFORMA-
TION ON THE NUMBER OF AGREEMENTS  THAT  WERE  ENTERED  INTO  DURING  THE
PRECEDING  CALENDAR  YEAR  AND  A DESCRIPTION OF THE PROJECT THAT IS THE
SUBJECT OF EACH AGREEMENT.
  S 3. This act shall take effect on the thirtieth day  after  it  shall
have become a law.