New York's application period for $250 million Capital Costs Tax Credit Program is now open, offering small businesses up to a $25k tax credit for qualified COVID-19 expenses

On October 25, 2022, New York Governor Kathy Hochul announced via press release that applications are now being accepted from small businesses that have successfully completed the prescreening process to become certified for the $250 million COVID-19 Capital Costs Tax Credit Program. Enacted as part of the State's FY'23 budget, the program aims to help minimize the financial impacts incurred by small businesses to comply with emergency orders and regulations or to increase public safety and stay safe and open during Covid-19.

Eligibility

Under the program, small independently owned and operated businesses can receive refundable tax credits that will cover 50 percent of qualifying expenses, up to $50,000, for a maximum tax credit award of $25,000. Tax credits will be awarded on a first come first serve basis until program funds are depleted. Eligible businesses, defined below, must operate in New York State, have 100 or fewer employees, $2.5 million or less of gross receipts in the 2021 tax year, and at least $2,000 in qualifying expenses between January 1, 2021 and December 31, 2022. Qualifying Covid-19-related expenses can be found here and include, but are not limited to:

• Supplies to disinfect or protect against COVID-19 transmission

• Costs associated with expanding, or defining space to accommodate social distancing

• HVAC equipment

• Expenses related to increased outdoor activity and outdoor space expansions

• Machinery and equipment to facilitate contactless sales

Eligible businesses include a sole proprietor, partnership, limited liability company, or a corporation (C-Corp or S-Corp) with its own federal employer identification number (FEIN), or in the case of a sole proprietor, a social security number. A related business entity, with common ownership, but operating under a different FEIN, is generally considered a separate business entity. To be eligible, businesses must also meet the following requirements: 

• Businesses must be in substantial compliance with State health laws and directives.

• Businesses must not owe past due state taxes or local property taxes unless the business is making payments and complying with an approved binding agreement with the taxing authority.

Supporting documentation of expenses incurred between January 1, 2021, and December 31, 2022, and paid for on or before March 31, 2023, are required to validate the expenses. 

Administration and Timing

The Program is administered by Empire State Development (ESD), New York's chief economic development agency, which offers tax credit certificates to eligible businesses. The tax credit certificate will include the ownership information provided by the business in the application. Businesses that receive tax credits from the ESD must then submit the tax credit certificate to the New York Department of Taxation and Finance (DTF) when filing a tax return to claim their credit.

Applications are being accepted through March 2023, with credits issued on a first come first serve basis until the funds for the program are depleted. The tax credit can be claimed in the taxable year in which the tax credit certificate is issued to the business. To claim a tax credit for their 2022 tax return, businesses must apply soon to receive a tax credit certificate from ESD on or before December 31, 2022. Otherwise, tax credits issued on or after January 1, 2023 can be claimed on a business's 2023 tax return. 

For assistance with any questions, please contact your Perelson Weiner partners.  

Perelson Weiner is a full service Certified Public Accounting and consulting firm dedicated to serving the needs of successful entrepreneurs, high net worth individuals and families and international companies doing business in the United States. The firm's award winning team and services have been acknowledged by formidable institutions in accounting and the general media including named to the Forbes list of America's Best Tax and Accounting Firms for 2022. Perelson Weiner LLP is a member of the Center for Public Company Audit Firms and the Private Company Practice Section of the American Institute of Certified Public Accountants (AICPA). The firm is a member of PrimeGlobal, the third largest association of independent accounting firms in the world, comprised of over 350 highly successful independent public accounting firms in 90 countries. 

Perelson Weiner is a full service Certified Public Accounting and consulting firm dedicated to serving the needs of successful entrepreneurs, high net worth individuals and families and international companies doing business in the United States. Perelson Weiner LLP is a member of the Center for Public Company Audit Firms and the Private Company Practice Section of the American Institute of Certified Public Accountants (AICPA). The firm is a member of PrimeGlobal, the third largest association of independent accounting firms in the world, comprised of over 350 highly successful independent public accounting firms in 90 countries.