NY TSB-A-10(6)C Corporation Tax 2010-06-03

New York Advisory Opinion TSB-A-10(6)C: Can a business claim the QEZE real property tax credit for a period when it was decertified, if the decertification was overturned on appeal?

Short answer: Yes. A business decertified from the Empire Zones Program in the 2009 reevaluation, but whose decertification was overturned on appeal and which received a retention certificate, keeps its eligibility for the QEZE real property tax credit for tax years beginning on or after January 1, 2008. Because the decertification was nullified, it has no effect; the business should re-file or amend its return with the retention certificate attached to obtain the credit or refund.

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

In 2009, Chapter 57 of the Laws of 2009 added new criteria for staying certified in New York's Empire Zones Program and required the Commissioner of Economic Development to reevaluate every certified business. This petitioner was found in violation, decertified retroactive to January 1, 2008, and so faced losing its Qualified Empire Zone Enterprise (QEZE) real property tax credit. It appealed. The Empire Zones Designation Board restored its certification and issued a retention certificate. The petitioner asked whether it is nevertheless ineligible for the credit for the decertified period.

The Department concluded the decertification, having been overturned on appeal, has no impact on credit eligibility for tax years beginning on or after January 1, 2008, as long as the program's other requirements are met. The mechanics: a business must be certified under GML Article 18-B to claim QEZE credits; a retention certificate signals to the Tax Department that the business is certified and eligible. The Department gave concrete next steps -- if the petitioner already filed claiming the credit but without the retention certificate, it should re-file with the certificate attached; if it filed without claiming the credit, it should file an amended return with the certificate (within two years of payment or three years of filing, whichever is later) to claim the refund.

What this means for you

Empire Zone / QEZE businesses caught in the 2009 reevaluation

If your 2009 decertification was reversed on appeal and you hold a retention certificate, your QEZE benefits are intact back to 2008. The credit is claimed by attaching the retention certificate to a (re-filed or amended) return.

Accountants and tax professionals

A nullified decertification is treated as if it never happened for Tax Law purposes. Mind the refund window on the amended return -- two years from payment or three years from filing, whichever is later -- and remember the Department of Economic Development controls certification while the Tax Department enforces the tax-law requirements.

Common questions

Q: Does a reversed Empire Zone decertification cost me the QEZE credit?
A: No. Once the decertification is overturned and a retention certificate issues, eligibility is restored for tax years beginning on or after January 1, 2008.

Q: How do I actually claim the credit after the appeal?
A: Re-file the return with the retention certificate attached, or file an amended return claiming the credit with the certificate, within the refund period.

Citations and references

Tax Law § 15(e) (QEZE real property tax credit; PILOT payments as eligible real property taxes)
General Municipal Law § 959(a) (Empire Zone decertification criteria, including new (v)(5)-(6))
General Municipal Law § 959(w) (2009 reevaluation of all certified businesses)
General Municipal Law Article 18-B (Empire Zones certification requirement); Part S-1 of Chapter 57 of the Laws of 2009

Source

Original ruling text

New York State Department of Taxation and Finance

TSB-A-10(6)C
Corporation Tax
June 3, 2010

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. C100427B

The petition asks whether Petitioner, name redacted is ineligible to claim the Qualified Empire Zone
Enterprise (QEZE) real property tax credit (RPTC) for the period of time during which it was decertified as
an empire zone business in 2009, pursuant to Part S-1 of Chapter 57 of the Laws of 2009, despite the
successful appeal of the decertification.
We conclude that Petitioner’s decertification, which was overturned on appeal, will have no impact
on its eligibility to claim the credit for taxable years beginning on or after January 1, 2008, so long as the
program requirements are met.
Facts
Petitioner is a party to a payment in lieu of tax agreement (“PILOT”) pursuant to which payments are
annually made to the involved tax jurisdictions for the name redacted located in county’s name redacted
County, New York. PILOT payments are considered eligible real property tax payments under section 15(e)
of the Tax Law.
In April 2009, Chapter 57 of the Laws of 2009 was enacted which, among other things, amended
section 959(a) of the General Municipal Law (GML) by adding two additional criteria for decertifying a
taxpayer from the Empire Zones Program.1 Following legislative passage of the changes, the Commissioner
of Economic Development revoked Petitioner’s certification under the Empire Zones Program and notified
Petitioner that such decertification would be retroactive to January 1, 2008 pursuant to the terms of the
amended section of the GML. Petitioner appealed that decertification decision to the Empire Zones
Designation Board.
On April 2, 2010, the Empire Zones Designation Board decided by resolution to restore the
certification of Petitioner under the Empire Zones Program. Shortly thereafter, Petitioner received a
“retention certificate” from the Department of Economic Development, indicating that Petitioner’s
certification under the Empire Zones Program was restored.
Analysis
An entity must be certified under Article 18-B of the GML to claim empire zones or QEZE tax
credits. Part S-1 of Chapter 57 of the Laws of 2009 amended section 959(w) of the GML to require the
Commissioner of Economic Development to reevaluate in 2009 all certified businesses in the program.
Businesses that had filed at least three business annual reports and failed to meet the new certification criteria
in sections 959(a)(v)(5) and (6) of the GML were required to be decertified for taxable years beginning on or
after January 1, 2008. Businesses that were not in violation of the new certification criteria were issued a
retention certificate to submit with their tax returns for taxable years beginning on or after January 1, 2008,

Part S-1 of Chapter 57 of the Laws of 2009.

-2-

TSB-A-10(6)C
Corporation Tax
June 3, 2010

signaling to the Department of Taxation and Finance (DTF) that the business was certified and thus eligible
to claim the empire zones credits if the other requirements of the statutes were met.
Upon review, Petitioner was found to be in violation of section 959(a)(v)(5) and subsequently
decertified on June 29, 2009. The decision was overturned on appeal by the Empire Zones Designation
Board and a retention certificate was issued to Petitioner. Because the decertification was nullified by the
appeal, the decertification did not affect Petitioner’s eligibility to claim the QEZE RPTC. However, in order
to claim the credit, Petitioner should follow the following steps to obtain the credit.
•

If the Petitioner filed a return claiming the credit without attaching a retention certificate, Petitioner
must re-file a signed copy of the return with the retention certificate attached. The Department of
Taxation and Finance will issue a refund and/or adjust the bill when the re-filed return is processed.

•

Alternatively, if Petitioner filed a return without claiming a credit, Petitioner should file an amended
return claiming the credit and submit that return along with the retention certificate. Petitioner has
two years from the date the tax was paid or three years from the date the return was filed, whichever
is later, to claim a refund on an amended return.

DATED: June 3, 2010

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel
An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion.