NY TSB-A-03(6)C Corporation Tax 2003-06-11

Can a corporation claim the industrial or manufacturing business credit for energy taxes when all of its manufacturing is done outside New York but its headquarters are in New York?

Short answer: Yes, with a limit. Whether a corporation is principally engaged in manufacturing (and thus an industrial or manufacturing business) is tested by looking at its entire business inside and outside New York, so a company that manufactures only in Connecticut but is headquartered in New York can qualify. But the IMB credit under sections 14-a and 210.26-a covers only the section 186-a, 186-c, 189, and 189-a energy taxes paid or passed through on gas, electricity, steam, water, or refrigeration consumed or used in New York.

Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

Handy & Harman had two locations: all manufacturing in Connecticut and its corporate headquarters in New York. It asked whether it could claim the industrial or manufacturing business (IMB) credit for energy taxes under Tax Law sections 14-a and 210.26-a even though it does no manufacturing in New York.

The Department held:

To decide whether a taxpayer is "principally engaged" in manufacturing -- the test for being an IMB -- you consider the activities of the entire business, including facilities and divisions both within and without New York (citing N-00-19 and TSB-M-00(2)C). So Handy & Harman could be an IMB even though its plants are in Connecticut.
However, the credit only offsets the energy taxes under sections 186-a, 186-c, 189, and 189-a that were paid by or passed through to it on gas, electricity, steam, water, or refrigeration (or those services) consumed or used by the taxpayer in New York State.

What this means for you

"Principally engaged" looks at your whole company

The IMB test does not require your manufacturing to happen in New York. New York measures whether you are principally engaged in manufacturing by looking at your entire business, in and out of state. A New York-headquartered company whose plants are elsewhere can still be an IMB.

But the credit only covers New York energy use

The benefit is narrow: it offsets only the section 186-a, 186-c, 189, and 189-a energy taxes paid or passed through on utilities consumed or used in New York. Out-of-state energy use does not generate the credit.

Keep the utility-tax documentation

Because the credit ties to specific energy taxes passed through on New York utility usage, you need records showing those taxes and that the usage occurred in New York.

Common questions

Q: Can a company with no New York manufacturing claim the IMB credit?
A: Yes, if it is principally engaged in manufacturing measured across its entire business in and out of New York, and it is a New York Article 9-A taxpayer.

Q: What does the credit actually offset?
A: The section 186-a, 186-c, 189, and 189-a energy taxes paid or passed through on gas, electricity, steam, water, or refrigeration consumed or used in New York.

Q: Does out-of-state energy use count?
A: No. Only energy consumed or used in New York generates the credit.

Citations and references

Statutes, regulations, and authorities:
- Tax Law section 14-a (industrial or manufacturing business (IMB) credit for energy taxes)
- Tax Law section 210.26-a (IMB credit for energy taxes under Article 9-A)
- Tax Law section 210.12(b)(i) (manufacturing and other qualifying activities)
- Handy & Harman, TSB-A-03(6)C (June 11, 2003)

Source

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-03(6)C
Corporation Tax
June 11, 2003

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. C021210A

On December 10, 2002, a Petition for Advisory Opinion was received from Handy &
Harman, 555 Theodore Fremd Avenue, Rye, New York 10580.
The issue raised by Petitioner, Handy & Harman, is whether it is entitled to claim an
industrial or manufacturing business (IMB) credit for energy taxes under sections 14-a and 210.26-a
of the Tax Law against the tax imposed under Article 9-A of the Tax Law, where the manufacturing
operations are conducted outside of New York State.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner is a manufacturing corporation with two physical locations; one in Connecticut
where all manufacturing activity is performed and the other in New York State where the corporate
headquarters are located.
Applicable Law
Section 14-a of the Tax Law contains the provisions with respect to the IMB credit for
energy taxes, and provides, in part:
(a) Allowance of credit. A taxpayer which is an industrial or manufacturing
business (IMB) ... and which is subject to tax under article nine-A ... shall be allowed
a credit against such tax, pursuant to the provisions referenced in subdivision (d) of
this section. Such credit shall be equal to the sum ... of the taxes imposed under
sections one hundred eighty-six-a, one hundred eighty-six-c, one hundred eighty
nine and one hundred eighty-nine-a of this chapter which during the taxable year
were either paid by, or passed through to, the IMB, on or after January first, two
thousand, but only with regard to gas, electricity, steam, water or refrigeration, or
gas, electric, steam, water or refrigeration services, consumed or used by the IMB
in this state.
(b) Definitions. The term “industrial or manufacturing business” shall mean
a business which during the taxable year is principally engaged in activities
described in clause (A), (B) or (C), or any combination thereof, of subparagraph (i)
of paragraph (b) of subdivision twelve of section two hundred ten of this chapter.
*

-2
TSB-A-03(6)C
Corporation Tax
June 11, 2003
(d) Cross-references. For application of the credit provided for in this
section, see the following provisions of this chapter:
(1) Article 9-A: Section 210.26-a....
Section 210.12(b)(i)of the Tax Law provides, in part:
... (A) principally used by the taxpayer in the production of goods by
manufacturing, processing, assembling, refining, mining, extracting, farming,
agriculture, horticulture, floriculture, viticulture or commercial fishing, (B) industrial
waste treatment facilities or air pollution control facilities, used in the taxpayer’s
trade or business, (C) research and development property ....
Section 210.26-a(a) of the Tax Law contains provisions for the IMB credit for energy taxes
under Article 9-A of the Tax Law, and provides:
Allowance of credit. A taxpayer which is an industrial or manufacturing
business (IMB) shall be allowed a credit for energy taxes, to be computed as
provided in section fourteen-a of this chapter, against the tax imposed by this article.
Opinion
The term IMB includes a business that is principally engaged in manufacturing, an activity
described in section 210.12(b)(i)(A)of the Tax Law. In determining whether a taxpayer is
principally engaged in manufacturing, the activities of the entire business, including facilities,
branches or divisions both within and without New York State, are considered. (See New York State
Department of Taxation and Finance Important Notice, N-00-19, September 2000; and Technical
Services Memorandum entitled Summary of 2000 Corporation Tax Legislative Changes Taking
Effect in 2000, October 13, 2000, TSB-M-00(2)C.) Under sections 14-a and 210.26-a of the Tax
Law, a taxpayer that is principally engaged in an eligible industrial or manufacturing business is
allowed to claim the IMB credit for energy taxes imposed under sections 186-a, 186-c, 189, and
189-a of the Tax Law, which during the taxable year were either paid by or passed through to it with
regard to gas, electricity, steam, water or refrigeration, or gas, electric, steam, water or refrigeration
services consumed or used by the taxpayer in New York State.
In this case, Petitioner’s IMB eligible business is manufacturing. All of Petitioner’s
manufacturing activities are conducted in Connecticut, and its corporate headquarters are located
in New York. Assuming that Petitioner is principally engaged in manufacturing, Petitioner is
entitled to claim an IMB credit against Petitioner’s tax imposed under Article 9-A of the Tax Law,
as provided under sections 14-a and 210.26-a of the Tax Law, for the energy taxes imposed under
sections 186-a, 186-c, 189, and 189-a of the Tax Law, which during the taxable year were either paid

-3
TSB-A-03(6)C
Corporation Tax
June 11, 2003
by or passed through to it with regard to gas, electricity, steam, water or refrigeration, or gas,
electric, steam, water or refrigeration services consumed or used by Petitioner in New York State.

DATED: June 11, 2003

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.