On June 24, 2013, Governor Andrew Cuomo signed into effect SUNY Tax-free Areas to Revitalize and Transform Upstate New York, or “START-UP NY.” The purpose of START-UP NY is to provide economic incentives to new businesses in the form of tax-free zones throughout the state. The tax-free zones are aimed at attracting out of state businesses to New York and helping new or young companies founded in New York, with a focus on high-tech and startups, as a driver for net new job creation in-state.
Any business accepted into START-UP NY and located within one of the tax-free zones will not have to pay Tax Article 9 organization taxes or license & maintenance fees, Tax Article 9-A franchise taxes, Tax Article 22 personal income tax, and Tax Article 23 metropolitan commuter transportation district mobility taxes (if applicable). Additionally, accepted businesses located within the tax free zone are eligible for a refund or credit for Tax Article 28 sales and use tax and certain property tax exemptions.
The tax-free zones are located around sponsor universities, which have applied and been accepted by the Commissioner. The universities must provide designated spaces or lands on or off the university’s campus to serve as the tax-free zones.
For a business to qualify for the tax-free benefits, it must be a new (to New York) business, a successful graduate of a New York State Incubator, or have a determination from the Commissioner stating the business will contribute to new job growth for New York State. The business submits an application to the sponsoring university by December 31, 2020, granting the Department of Labor access to any relevant business data, including tax, employee, and payroll records. The application should include a statement of milestones in a 5 year forecast that demonstrates the anticipated job growth.
Additionally, the business’ mission and activities should generally relate to those of the sponsoring university. The business must have formed a legal entity and must be in compliance with worker protection, environmental, and regulatory laws. The most important factor considered in applying is that the business will be able to create new jobs within its first year. The sponsoring university will review the application based on pre-approved criteria. Certain businesses are not allowed to apply for START-UP NY including any sort of retailer or wholesaler, restaurants, real estate brokers, law firms, medical and dental practices, hospitality and personal service providers, and financial service providers.
Once accepted, the business must maintain any new jobs to keep their tax-free eligibility. The metric relied on for determining if new jobs are maintained is whether the average number of employees is equal to or greater than the previous year’s employee count, monitored through annual reporting to the Commissioner containing the number of new jobs created, wages of those employees, and the number of new jobs created in previous years that have been maintained through the current reporting year.
If you have any questions or are interested in learning more about how your business can benefit from START-UP NY, contact one of the attorneys here at the Wladis Law Firm by calling (315)445-1700 or by visiting our website.