NY Gov. Kathy Hochul announced this week that applications are now being accepted from small businesses that have successfully completed the prescreening process to become certified for the COVID-19 Capital Costs Tax Credit Program, where small businesses are eligible for a tax credit of 50% of qualified expenses, up to a maximum of $50,000 of expenses and a $25,000 tax credit.
The COVID-19 Capital Costs Tax Credit Program offers $250 million of tax credits to small businesses that incurred costs to comply with public health or other emergency orders or regulations related to the COVID-19 pandemic, or to generally increase safety through infectious disease mitigation during 2021 and 2022. Like other New York State COVID-19 relief programs, this program is being administered by Empire State Development, which then offers tax credit certificates to eligible business entities whose applications are approved. Businesses that receive tax credits must then apply to the New York State Department of Taxation and Finance to claim their credit.
To be eligible, a business entity must be a small business who operates at a location or locations within NYS. For purposes of this Program, this means:
- an independently owned and operated business
- with less than 100 full time equivalents (FTEs) and
- gross receipts of less than $2.5 million.
The annual gross receipts figure should be gross receipts for the fiscal year that includes December 31, 2021 (i.e., calendar- year 2021 for most business entities).
In addition, to be eligible, a business must be a small business as defined above and have incurred qualified COVID-19 expenses of at least $2,000 between January 1, 2021 – December 31, 2022. (Qualified expenses must be paid on or before March 31, 2023)
“Qualified COVID-19 expenses” are costs for the following items:
- supplies to disinfect and/or protect against COVID-19 transmission;
- restocking of perishable goods to replace those lost during the COVID-19 pandemic;
- physical barriers and sneeze guards;
- hand sanitizer stations;
- respiratory devices such as air purifier systems installed at the business entity’s location;
- signage related to the COVID-19 pandemic including, but not limited to, signage detailing vaccine and masking requirements, and social distancing;
- materials required to define and/or protect space such as barriers;
- materials needed to block off certain seats to allow for social distancing;
- certain point of sale payment equipment to allow for contactless payment;
- equipment and/or materials and supplies for new product lines in response to the COVID-19 pandemic;
- software for online payment platforms to enable delivery or contactless purchases;
- building construction and retrofits to accommodate social distancing and installation of air purifying equipment but not for costs for non-COVID-19 pandemic related capital renovations or general “closed for renovations” upgrades;
- machinery and equipment to accommodate contactless sales;
- materials to accommodate increased outdoor activity such as heat lamps, outdoor lighting, and materials related to outdoor space expansions; and
- other costs as determined by the department to be eligible under this section; provided, however, that “qualified COVID-19 capital costs” do not include any cost paid for with other COVID-19 grant funds as determined by the commissioner.
Receiving prior Federal assistance in the form of a Paycheck Protection Program (PPP) loan, an Economic Injury Disaster Loan (EIDL) or a Restaurant Revitalization Fund (RRF) grant does not disqualify a business from participating in the NYS COVID-19 Capital Costs Tax Credit Program. However, businesses that participated in the NYS COVID-19 Pandemic Small Business Recovery Grant Program will need to attest that no qualified COVID-19 capital costs incurred between January 1, 2021 and March 31, 2021 were included in this Program if such costs were previously paid for with proceeds from the New York State COVID-19 Small Business Recovery Grant Program.
To apply for this Program a small business must:
- Fill out a required eligibility screening tool to determine if your business qualifies for the Program.
- Once the full application is available (which is now) you will be notified by email and will need to fill out and submit the completed application, including documentation to show proof of expenses.
You will also need to provide proof of expenses in a form and manner prescribed by ESD showing that qualified expenses claimed in the application were paid on or before March 31, 2023.
More information on the proof of expenses documentation requirements can be found in the FAQs: COVID-19 Capital Costs Tax Credit Program FAQ | Empire State Development (ny.gov) on ESD’s website, along with additional information on the Program.
The 2022-23 New York State budget allocated a maximum of $250 million in available tax credits. When this allocation is exhausted, business entities will no longer be able to receive tax credit certificates. Business entities are encouraged to apply to the Program as soon as possible. After receiving a tax credit certificate, you will submit it to the Department of Taxation and Finance when filing a tax return. The tax credit can be claimed in the taxable year in which the tax credit certificate is issued to your business.
If you have questions, please contact your Tronconi Segarra & Associates tax advisor or our COVID-19 Response team at 716-633-1373 or email@example.com.