Provides that the low income housing tax credits shall be treated as overpayments of the applicable tax, to be credited or refunded

BILL NUMBER:S4758C REVISED 2/14/12

Title of bill

An act to amend the tax law, in relation to providing that the low income housing credit shall be treated as an overpayment of taxes

Purpose

This bill would convert the state low income housing tax, credit to a refundable tax credit to help stimulate low income housing investment in the state.

Summary of provisions

This bill would amend subdivision 30 of section 210 of the tax law to provide that for allocations of housing tax credit made pursuant to law after January 1, 2012, the corporate franchise low income housing tax credit shall be treated as a refundable tax credit. Paragraph 3 of subsection(x) of section 606 of the tax law is amended to convert the existing low income housing tax credit to a refundable low income housing tax credit for allocations of housing tax credit made after taxable years beginning after January 1, 2012. Paragraph 3 of subsection (1) of section 1456 of the tax law is amended to convert the existing low income housing tax credit to a refundable low income housing tax credit for allocations of credit made subsequent to January 1, 2012. Paragraph 3 of subdivision (n) of section 1511 of the tax law is amended to convert the low income housing tax credit to a refundable tax credit for purposes of the Insurance Franchise Tax for allocations of tax credit made after January 1, 2012. Furthermore, in order to obtain treatment as a refundable credit for these taxes, a project must have received an eligibility statement from the commissioner of housing and community renewal pursuant to article two-A of the public housing law.

Justification

Tax credit programs are widely seen as the primary mechanism for successfully producing and preserving affordable rental housing. As a result of the recent financial crisis, state and federal tax credit programs have been disrupted, as is the case in New York. The problem has been further exacerbated in New York where the state tax credit is less marketable, unlike the case in many other states.

New York's low income housing credit tax program was established in 2000 pursuant to Article 2-A of the Public Housing Law and was designed to encourage the development of low income housing. Refundable housing tax credits are more desirable than non refundable credits and would work to create a greater demand in the marketplace. This bill would permit investors to obtain a broader class of investors including banks, corporations, and insurance companies and would create additional demand on the market for state tax credits. This demand would drive up pricing among investors as pricing as competition is increased. This would translate into greater private investment in affordable housing which will help drive housing development within the state.

Legislative history

S. 4758B-2011/Senate 3rd reading calendar.

Fiscal implications

This bill authorizes no additional tax credit authority and would result in no further reduction in tax receipts.

Effective date

This act shall take effect immediately.