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Frequently Asked Questions

Empire Zone Certification

What is a "QEZE?"

Qualified Empire Zone Enterprise (QEZE) is a term used to represent a Zone Certified business that qualifies to apply for the enhanced tax credits: Sales Tax Exemption, Tax Reduction Tax Credit and the Real Property Tax Credit.

I operate more than one company in an Empire Zone. Can I certify each company?

Yes, providing that each company is a separate tax paying entity and each company possesses a separate and distinct Taxpayer Identification Number or Employer Identification Number (EIN).

I operate two companies and file NYS tax under one EIN. Do I certify each company?

No. You would be eligible to apply for certification for the company that is located within the Empire Zone. The Empire Zone tax credits and exemptions would only be applicable to business activities and tax liability to the business located within the Empire Zone.

Qualifying & Eligibility

I am a new business to New York. I have no previous employment history.  What is my 5 year base period?

New businesses that create jobs in New York State will have a base period employment equal to zero (0). Any new business that creates jobs would - in the first and future years meet the employment test for maintaining or increasing employment.

I have an existing business in an area of the State of New York that is not in an Empire Zone. I plan to move all my employees and business into an Empire Zone in another part of the State of New York. Will I qualify for the newly enhanced EZ benefits?

No. You must maintain your employment average in the area that is outside of an Empire Zone in order to qualify for enhanced Zone benefits inside the Zone. Additionally, you must apply for permission with your current location's municipal officer to access Zone credits prior to your move into the Zone because of your shift in operations. After a public hearing and written approval from the municipal authority where you are closing your operations, you may be eligible to claim the basic Zone benefits and not the enhanced benefits.

The tax reduction tax credit can bring my tax liability down to $0.00. How do I qualify?

A single taxpaying Zone certified business must be located 100% within the Zone. It cannot have any other property or payroll outside the Zone.

I am a certified Zone business and currently claim the Investment Tax Credit. Will claiming other credits affect my eligibility for the enhanced QEZE credits?

Claiming other incentives, such as the Investment Tax Credit, or the Employment Incentive Tax Credit will not affect your eligibility to claim the enhanced QEZE credits.

How will I get my QEZE Sales Tax exemption certificate, DTF-81?

After receiving program certification, you will apply to the Department of Taxation & Finance to obtain your QEZE exemption certificate. You must first obtain and complete the Tax form DTF-80. You may obtain this form from the NYS Department of Tax & Finance WebSite at: www.tax.state.ny.us or apply directly to the Department for a copy to be sent by mail.

What if I am a new business in New York State in the year I become certified? Will I qualify as a QEZE?

As a new business creating jobs in New York State, you would have a base period of 0. You would, in the first and future years, meet the employment test for maintaining or increasing employment.

Claiming Tax Credits

I qualify to claim the Investment Tax Credit, the Wage Tax Credit, the new Tax Reduction Tax Credit and the new Real Property Tax Credit. What is the ordering of credits on my tax return?

Credits that cannot be carried forward are applied first. Refundable credits are applied last. The ordering of the credits for your tax return would be…

Is a QEZE for sales and use tax purposes the same as a QEZE for corporate and income tax purposes?

No, the tests are not identical. While both have to be businesses certified under Article 18-B of the General Municipal Law, a QEZE for sales tax purposes must satisfy the employment test for the taxable year immediately preceding the year in which the QEZE is seeking the sales and use tax exemptions. For an individual or a corporation seeking to claim the QEZE tax credits, it must satisfy the employment test for the year it intends to claim the credits.

NYS Sales Tax Exemption

What is the difference between the Sales and Use Tax Incentive and the Sales Tax Exemption?

The Sales and Use Tax Incentive is a credit or refund of the sales or use tax paid on building materials that are incorporated into a qualifying commercial or industrial structure within an Empire Zone. The Sales Tax Exemption is not a refund. It is an exemption from the 4.25% NYS sales and uses taxes for tangible personal property and services sold to a qualified business. A company must register with the NYS Department of Taxation & Finance and be issued an exemption certificate. The certificate is valid for a 10-year period as long as the business meets or exceeds its base year employment number.

How will I get my QEZE Sales Tax exemption certificate, DTF-81?

You will apply to the Department of Taxation & Finance to obtain your QEZE exemption certificate. You must first obtain and complete the Tax form DTF-80. You may obtain this form from the NYS Department of Tax & Finance WebSite at: www.tax.state.ny.us or apply directly to the Department for a copy to be sent by mail.

Will I have to apply for a QEZE Sales Tax exemption certificate annually?

No. The Department of Taxation & Finance will send you an annual reminder to self-test eligibility.  You do not need to respond to the department.

How do I use my Sales Tax exemption certificate?

The QEZE provides a copy of ST121.6 to each vendor at the time of purchase, as either a single use or blanket certificate.

Is a QEZE for sales and use tax purposes the same as a QEZE for corporate and income tax purposes?

No, the tests are not identical. While both have to be businesses certified under Article 18-B of the General Municipal Law, a QEZE for sales tax purposes must satisfy the employment test for the taxable year immediately preceding the year in which the QEZE is seeking the sales and use tax exemptions. For an individual or a corporation seeking to claim the QEZE tax credits, it must satisfy the employment test for the year it intends to claim the credits.

How are the QEZE sales and use tax benefits different from the Empire Zone sales and use refund on building materials?

The QEZE sales and use tax exemptions are an alternative to the Empire Zone refund/credit provisions. The QEZE exemptions provide an up-front exemption at the time of purchase rather than a refund or credit. In addition, they apply to a broad class of tangible personal property and to utility and other services, provided that the property or services are used by the QEZE in the Empire Zone.

The Empire Zone refund/credit provisions apply only to tangible personal property that is incorporated into industrial or commercial real property which is being constructed, expanded or rehabilitated within an Empire Zone and which becomes an integral component part of that real property.

The QEZE benefits may only be claimed by a certified business. The person claiming the existing sales and use tax refund or credit does not have to be a certified business.

The Tax Reduction Tax Credit

I have always paid tax under the capital base as applied to the corporate franchise tax. If I pay the capital tax in 2001, am I eligible for the tax reduction credit provided I meet the other qualifications?

The tax reduction tax credit is measured by a taxpayer's income base. For the corporation franchise tax, this is the entire net income base and the alternative minimum tax base. If you pay tax under the capital base, because it was higher that the income base, you would still be eligible to claim the tax reduction credit measured by that income base.

The tax reduction tax credit can bring my tax liability down to $0.00. How do I qualify?

A single taxpaying Zone certified business must be located 100% within the Zone. It cannot have any other property or payroll outside the Zone.

The Real Property Tax Credit

Does the credit for real property taxes reduce my real property tax bill?

No. The credit for real property taxes is applied against your tax under the Tax Law. Business corporations would use the credit to reduce their corporation franchise tax and sole proprietors would use it to reduce their personal income tax.

Company ABC has a payment in lieu of tax (PILOT) agreement with an Industrial Development Authority (IDA). Will PILOT payments qualify as real property taxes paid for the QEZE credit for real property?

If the QEZE transfers title to an IDA so as to receive financial assistance from the IDA and enters into a PILOT agreement with the IDA, the QEZE will be considered the owner of the property and the PILOT payments will be considered to be real property taxes paid by the QEZE.

Can I apply remaining Real Property Tax Credits to future tax years?