Bill S497-2011

Establishes the economic resurgence initiative credit

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.

Details

Actions

  • Jan 4, 2012: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • Jan 5, 2011: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

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.


Text

STATE OF NEW YORK ________________________________________________________________________ 497 2011-2012 Regular Sessions IN SENATE (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:
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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