Provides a tax credit for businesses in heightened flood risk zones that purchase flood insurance

4 Co-sponsors

• David Carlucci
• Jeffrey D. Klein
• Malcolm A. Smith
• David J. Valesky

BILL NUMBER:S3850

Title of bill

An act to amend the tax law, in relation to providing a tax credit for businesses that purchase flood insurance; and providing for the repeal of such provisions upon expiration thereof

Purpose or general idea of bill

To provide state sponsored incentives through tax credits for businesses that currently do not have flood insurance, but would like to purchase these insurance coverages.

Summary of specific provisions

Section 1: Amend Tax Law § 210 to create a corporate franchise tax credit for affected businesses that purchase flood insurance. Provides that the credit shall be equal to: (i) seventy-five percent of the cost of flood insurance for the business on or after January 1, 2014; (ii) fifty percent of the cost of flood insurance for the business on or after January 1, 2015; and (iii) twenty-five percent of the cost of flood insurance for business on or after January 1, 2016. This annual tax credit will expire on December 31, 2016.

Sections 2 and 3: Amend Tax Law § 606 to create a personal income tax credit for affected businesses that purchase flood insurance. Provides that the credit shall be equal to: (i) seventy-five percent of the cost of flood insurance for the business on or after January 1, 2014; (ii) fifty percent of the cost of flood insurance for the business on or after January 1, 2015; and (iii) twenty-five percent of the cost of flood insurance for business on or after January 1, 2016. This annual tax credit will expire on December 31, 2016.

Justification

In October 2012, due to Superstorm Sandy, extensive flooding occurred across New York State and caused severe damage in many downstate communities. The widespread flooding led to many business structures being completely destroyed. Further, such businesses had to cease or curtail operations which led to job losses. The negative impacts of this disaster will be seen in New York for many years to come. This legislation provides corporate franchise tax and personal income tax credits for businesses that purchase flood insurance. The credit would be used as an incentive for businesses to purchase flood insurance to ensure that such business will be covered in the future in the event of another flooding disaster.

This legislation specifically targets businesses located in heightened flood risk zones and that do not currently have flood insurance. Heightened flood risk zones have been defined by the Federal Emergency Management Agency (FEMA) and are generally defined as geographic areas that FEMA has defined according to varying levels of flood risk. Each zone reflects the severity or type of flooding in the area.

Prior legislative history

None

Fiscal implications

To be determined.

Effective date

60 days after it shall become law, that any necessary rules and regulations necessary for implementation are authorized immediately.