Relates to tax credits for certain rehabilitation projects

Section 2 states the tax credit in section 210 (Franchise Tax on Business Corporations) shall be allowed to a partnership, LLC, subchapter S corp., or other business entity and shall be passed through to the partners, members, or shareholders respectively. Credits allowed to these entities shall be allocated among all partners without regard to their sharing of other tax or economic attributes of the entity.

Section 3 states the tax credit in section 1456 (Franchise Tax on Banking Corporations) shall be allowed to a partnership, LLC, subchapter S corp., or other business entity and shall be passed through to the partners, members, or shareholders respectively. Credits allowed to these entities shall be allocated among all partners without regard to their sharing of other tax or economic attributes of the entity.

Section 4 states the tax credit in section 1511 (Franchise Taxes on Insurance Corporations) shall be allowed to a partnership, LLC, subchapter S corp., or other business entity and shall be passed through to the partners, members, or shareholders respectively. Credits allowed to these entities shall be allocated among all partners without regard to their sharing of other tax or economic attributes of the entity.

Section 5 gives the effective date of the act.

Existing law

State historic tax credits cannot be allocated separately from the federal tax credit.

Justification

In 2006, New York State became the 28th state in the nation to enact a tax incentive (Chapter 547 of the laws of 2006) to encourage the rehabilitation of historic commercial and residential properties. While the legislature's establishment of this program was welcomed, enhancements were required to assure the program matched the notable economic stimulus impacts and community redevelopment successes achieved by effective programs in other states. However, there remains an inability for a partnership/LLC to allocate the state tax credit separately from the federal tax credit. As out-of-state investors are unable to realize the benefits of the state tax credit, coupling the state and federal tax credits leaves little incentive for out of state investors to participate in economic development projects. By allowing members of a partnership/LLC to allocate these tax credits as they see fit, additional out-of-state investors will be attracted to invest in historic rehabilitation projects here in New York.

Legislative history

2013-14: S.2221-A Referred to Investigations and Government Operations

Fiscal implications

No direct fiscal impact. Any increase in projects undertaken because of the larger pool of potential investors would be offset through new project development in aging historic properties statewide and the associated job creation and spin off sales tax and other revenues associated with these projects.

Effective date

This act shall take effect immediately and shall apply to taxable years beginning on and after January 1, 2017; this act shall expire and be deemed repealed December 31, 2021; provided, however, that the credit shall be applied to any rehabilitation project commenced on or before December 31, 2021.