Relates to the qualification of payments made by the taxpayer as eligible real property tax payments for purposes of the QEZE Tax Credit

BILL NUMBER:S5660 REVISED 01/31/12

Title of bill

An act relating to the qualification of payments made by the taxpayer as eligible real property tax payments for purposes of the QEZE Tax Credit

Purpose

To mitigate the reversal of a decision made by the NYS Department of Tax and Finance which negatively impacted a taxpayer.

Summary of provisions

Section 1. Any payment in lieu of taxes made by a QEZE to the state, municipal corporation, or public benefit corporation pursuant to a lease agreement with a landlord that is party to a payment in lieu of taxes agreement between the landlord and the state, municipal corporation, or public benefit corporation shall be deemed to have been made pursuant to a payment in lieu of taxes agreement and such QEZE shall be eligible to claim the real property tax credit provided that for each of such periods, the landlord has not filed a claim for the real property tax credit for such payments nor made a payment in lieu of taxes to the state, municipal corporation, or public benefit corporation pursuant to its agreement with the state, municipal corporation, or public benefit corporation for such payments. Section 2. Effective date.

Justification

Hammer Packaging Corporation's (HPC) facility at 230-234 Wallace Way, Gates, NY (Rochester Tech Park) was designated a Qualified Empire Zone Enterprise (QEZE) effective March 6, 2006. HPC increased/created jobs in the Zone and in New York State. HPC was recertified and received an Empire Zone Retention Certificate in the statewide review process in 2009, as it met all employment and investment criteria. HPC is a tenant at Rochester Tech Park. Per the term of its lease, HPC is responsible for payment of all property taxes. Under NYS tax law, a QEZE tenant that is responsible for property taxes under its lease is eligible for a tax incentive, a refund for property taxes it pays. Under NYS tax law, payments under a PILOT Program qualify as property taxes eligible for the refund. HPC's landlord at Rochester Tech Park has a PILOT Agreement with County Of Monroe Industrial Development Agency (COMIDA).

HPC filed a refund claim for property taxes paid at Rochester Tech Park in 2008 for $58,800 and in 2009 for $57,500. New York State Tax Department of Finance (NYSDTF) audited the 2008 claim in a desk audit and initially allowed the claim, refunding the $58,800. In late 2010, NYSTDF audited the 2009 claim, denied it, and filed an assessment for a return of the previous 2008 refund of $58,800, plus interest. The stated reason for denial of the claim is that HPC is not "party to" the existing

PILOT Agreement between the tax jurisdiction and the landlord. COMIDA Board has amended the PILOT Agreement t.o include HPC. Results of the NYSTDF policy is that HPC, a recertified QEZE, does not get the credit for property taxes it paid. The landlord does not claim the credit. The tax incentive for investing and increasing employment in the Rochester Tech Park location is being disallowed based on the form of this documentation.

Legislative history

New bill.

Fiscal implications

To be determined.

Effective date

This act shall take effect immediately and shall apply to taxable years beginning on and after January 1, 2008.