Please Note: Recent legislation requires all taxpayers filing this form to attach a retention certificate issued by Empire State Development. See TSB-M-09(5)C, (4)I, Legislative Changes to the Empire Zones Program, for details. Form CT-603-I, Instructions for Form CT-603 Claim for EZ Investment Tax Credit and EZ Employment Incentive Credit, continues below.
New York State Department of Taxation and Finance
Instructions for Form CT-603
Claim for EZ Investment Tax Credit and EZ Employment Incentive Credit
Important reminder to file a complete return: You must complete all required schedules and forms that make up your return, and include all pages of those forms and schedules when you file. Returns that are missing required pages or that have pages with missing entries are considered incomplete and cannot be processed, and may subject taxpayers to penalty and interest.
Qualified property means tangible personal property and other tangible property, including buildings and structural components of buildings, that -- was acquired, constructed, reconstructed, or erected by the taxpayer on or after the date of designation of the EZ and before the expiration of such designation; -- is depreciable under Internal Revenue Code (IRC) section 167; -- has a useful life of four years or more; -- was acquired by the taxpayer by purchase under IRC section 179(d); -- is located in an EZ; and · isprincipallyusedbythetaxpayerintheproductionofgoods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing; or · isanindustrialwastetreatmentfacilityorairpollutioncontrol facility, used in the taxpayer's trade or business; or · isresearchanddevelopmentproperty.
The Tax Law allows an empire zone investment tax credit (EZITC) for New York corporations against the tax imposed under Article 9, section 185 (agricultural cooperatives); Article 9A (corporation franchise tax); and for shareholders of New York S corporations against the tax imposed under Article 22 (personal income tax). The credit is allowed for the tax year during which qualified property is placed in service in an empire zone (EZ) designated as such under General Municipal Law (GML) Article 18B. See Qualified property for a description of property eligible for this credit. The corporation claiming the credit must also be certified under GML Article 18-B. Include a copy of the Certificate of Eligibility with Form CT603. General business corporations compute their EZITC on Form CT603 by multiplying the cost (or other federal basis) of qualified property by 10%. A corporate partner may claim an EZITC for its allocable share of the cost or other basis of qualified property purchased by a certified partnership(s). New York S corporations compute their EZITC on Form CT603 by multiplying the cost (or other federal basis) of qualified property by 8%. Individual shareholders of a New York S corporation include their pro rata share of the EZITC on Form IT603, Claim for EZ Investment Tax Credit and EZ Employment Incentive Credit. In addition, an EZ employment incentive credit (EZEIC) for increasing employment is allowed. See the instructions for completing Schedule D, Parts 1 and 2. The EZITC used may not reduce the corporation franchise tax liability to an amount less than the higher of the tax on minimum taxable income or the fixed dollar minimum. The EZEIC used may reduce your franchise tax liability to the fixed dollar minimum. Any portion of EZITC or EZEIC that cannot be used to reduce the current year tax liability may be carried over to the following tax year or years until it is used up. However, a taxpayer who has been decertified may carry forward the EZITC for only seven years. A corporation that qualifies as a new business may receive a refund of 50% of the unused ITC. In addition, a taxpayer that is approved by the Commissioner of Economic Development as an owner of a qualified investment project or a significant capital investment project (as defined under GML sections 957(s) and 957(t)) may receive a refund of 50% of its unused EZITC and EZEIC for a maximum of 10 years for each project beginning with the first year such property comprising the project is placed in service. These credits may not be applied against the metropolitan transportation business tax (MTA surcharge).
Types of property that do not qualify for this EZITC are as follows: -- property leased to others -- retail equipment, office furniture and equipment -- excavating and road building equipment -- public warehouses used to store the taxpayer's goods -- electricity generating equipment Do not include in the investment credit base any amount that was expensed under IRC section 179(a). When an acquisition, construction, reconstruction, or erection is started during the period of designation and completed after the expiration of that period, the credit is computed based on the expenditures paid or incurred during the period of designation. Expenditures paid or incurred after the designated period may qualify for the ITC under Tax Law section 210.12. A recapture of EZITC and EZEIC previously allowed must be computed on Schedule E if the property is disposed of or ceases to be in qualified use prior to the end of its useful life. If qualified property is acquired to replace other insured property that was stolen or destroyed by fire, storm, shipwreck, or other casualty, the basis of the replacement property is its cost reduced by any amount of gain not recognized for federal income tax purposes because the insurance proceeds were invested in the replacement. You may elect to take the EZITC on qualified property in lieu of the ITC.
Manufacturing means the process of working raw materials into wares suitable for use or giving new shapes, new quality, or new combination to matter that already has gone through some artificial process by the use of machinery, tools, appliances, and other similar equipment.
Page 2 of 4 CT-603-I (2008) Property used in the production of goods includes machinery, equipment, or other tangible property that is principally used in the repair and service of other machinery; equipment or other tangible property used principally in the production of goods; and all facilities used in the production operation, including storage of material to be used in production and the products that are produced. Industrial waste treatment facilities are facilities for the treatment, neutralization, or stabilization of industrial waste and other wastes (as the terms industrial waste and other wastes are defined in Environmental Conservation Law (ECL) section 170105) from a point immediately preceding the treatment, neutralization, or stabilization to the point of disposal. This property includes the necessary pumping and transmitting facilities, but excludes facilities installed for the primary purpose of salvaging materials that are usable in the manufacturing process or are otherwise marketable. Attach the certificate of compliance concerning industrial waste treatment facilities and industrial waste treatment controlled process facilities (ECL section 170707). Air pollution control facilities are facilities that remove, reduce, or render less noxious air contaminants emitted from an air contamination source (as the terms air contaminant and air contamination source are defined in ECL section 190107) from a point immediately preceding the removal, reduction, or rendering to the point of discharge of air meeting emission standards as established by the Department of Environmental Conservation. The term also includes flue gas desulfurization equipment and attendant sludge disposal facilities, fluidized bed boilers, precombustion coal cleaning facilities or other facilities. It does not include facilities installed primarily to salvage materials that are usable in the manufacturing process or are marketable, or that rely for their efficacy on dilution, dispersion, or assimilation of air contaminants in the ambient air after emission. Attach the certificate of compliance concerning air pollution control facilities and air pollution controlled process facilities (ECL section 190309). Research and development property is property used for research and development in the experimental or laboratory sense, but not for the ordinary testing or inspection of materials or products for quality control, efficiency surveys, management studies, consumer surveys, advertising, promotions, or research in connection with literary, historical or similar projects.
Part 2 -- Computation of EZ employment incentive credit (EZ-EIC)
Line 6 -- New York S corporations: Transfer this amount to Form CT34SH. Skip lines 7 and 8. Line 9 -- New York S corporations: Transfer this amount to the EZEIC recapture line on Form CT34SH. Skip line 10. Line 10 -- New York C corporations: If the amount on line 8 is greater than the amount on line 9, subtract line 9 from line 8. This is the amount of your EZEIC. If the amount on line 9 is greater than the amount on line 8, you have a net recaptured EZEIC. Subtract line 8 from line 9 and enter the result as a negative number with a minus () sign in the appropriate box of the tax credits section of your franchise tax return.
Part 1 -- Computation of EZ-EIC and EZ-ITC used (New York C corporations only)
Use Column A to determine the amount of EZEIC that may be applied in the current period. Use Column B to determine the amount of EZITC that may be applied in the current period. Line 11 Column A -- Enter your franchise tax from Form CT3, General Business Corporation Franchise Tax Return, CT3A, General Business Corporation Combined Franchise Tax Return, or CT185, Cooperative Agricultural Corporation Franchise Tax Return, minus the total amount of any tax credits you are claiming before the EZEIC. If you wish to apply the EZITC before the EZEIC, be sure to also subtract the EZITC used this period (shown on line 15, column B). Certain credits must be applied before the EZEIC. Refer to the instructions of your franchise tax return to determine the order of credits that applies. Article 9A taxpayers may also refer to Form CT600I, Instructions for Form CT-600, for the order of credits that apply. Column B -- Enter your franchise tax from Form CT3, CT3A, or CT185, minus the total amount of any tax credits you are claiming before the EZITC. If you wish to apply the EZEIC before the EZITC, be sure to also subtract the EZEIC used this period (shown on line 15, column A). Certain credits must be applied before the EZITC. Refer to the instructions of your franchise tax return to determine the order of credits that applies. Article 9A taxpayers may also refer to Form CT600I, for the order of credits that apply.
New York C corporations: Complete all applicable schedules. New York S corporations: Do not complete Schedule B.
Part 1 -- Computation of EZ investment tax credit (EZ-ITC)
Line 1 -- New York S corporations: Transfer this amount to Form CT34SH, New York S Corporation Shareholder's Information Schedule. Skip lines 2 and 3. Line 4 -- New York S corporations: Transfer this amount to the EZITC recapture line on Form CT34SH. Skip line 5. Line 5 -- New York C corporations: If the amount on line 3 is greater than the amount on line 4, subtract line 4 from line 3. This is the amount of your EZITC. If the amount on line 4 is greater than the amount on line 3, you have a net recaptured EZITC. Subtract line 3 from line 4 and enter the result as a negative number with a minus () sign in the appropriate box of the tax credits section of your franchise tax return.
Part 2 -- Credits available for refund or carryforward (New York C corporations only)
If you are not a qualified business or a new business, skip lines 20a, 20b, and 20c. Enter your line 19 amount on line 21. Lines 20a, 20b, and 20c -- A qualified business or a new business, may elect to treat 50% (.5) of the current year EZITC available to be carried forward as an overpayment of tax to be refunded. The election applies to an EZITC computed for a tax year beginning on or after January 1, 1994. A qualified business is a corporation that is an owner of a qualified investment project or significant capital investment project (as those terms are defined in GML sections 957(s) and 957(t)).
CT-603-I (2008) Page 3 of 4 Under Article 9A, section 210.12(j), a new business is any corporation except for a corporation -- in which over 50% of the number of shares of stock entitling their holders to vote for the election of directors or trustees is owned or controlled either directly or indirectly by a taxpayer subject to tax under Tax Law Article 9A; Article 9, section 183, 184, 185 or 186; Article 32; or Article 33; or -- that is substantially similar in operation and in ownership to a business entity taxable, or previously taxable, under Article 9A; Article 9, section 183, 184, 185 or 186; Article 32; Article 33; or Article 23, or that would have been subject to tax under Article 23, as such article was in effect on January 1, 1980; or the income or losses are or were includable under Article 22, whereby the intent and purpose of section 210.12B concerning refunding of credit to new businesses would be evaded; or -- that has been subject to tax under Article 9A for more than five tax years, excluding short tax years (less than 12 months). Line 20a -- A qualified business as defined above, when determining the amount to be included on line 20a, may only include amounts attributable to the amount of credit allowed for property which is part of the qualified investment project or significant investment project. New businesses as defined above: enter the lesser of 50% of line 1 or 50% of line 19. Line 21 -- Qualified or new businesses: Subtract line 20a from line 19. All other businesses: Enter your line 19 amount on line 21. Line 24 -- If you are not a qualified business: Skip lines 25a, 25b, and 25c; enter your line 24 amount on line 25d. Lines 25a, 25b, and 25c -- Complete these lines only if you are a corporation that owns a qualified investment project or a significant capital investment project. You may elect to treat 50% of the current year unused EZEIC available to be carried forward as an overpayment of tax to be refunded. Line 25d -- Qualified businesses: Subtract line 25a from line 24. If you are not a qualified business: See line 24 instructions. Keep this amount in your records. You will need to refer to this figure when completing your Form CT603 for next year. If you did not have a tax year for New York State immediately preceding the year in which the EZITC was originally allowed, your average number of employees in the EZ in which the property is located in the tax year in which the EZEIC is claimed must be at least 101% of your average number of employees in the EZ in which the property is located in the tax year in which the EZITC was originally allowed, or in the case of a newly designated EZ, the area which was subsequently designated as the EZ. New York C corporations: The EZEIC can reduce the corporate tax liability to the fixed dollar minimum. Carry over any EZEIC that cannot be used to reduce the tax liability for the current year to the following year or years. Certain qualified corporations may claim a refund of the EZEIC. See lines 25a, 25b, and 25c.
Part 1 Eligibility for EZ-EIC
Complete Part 1 to determine if you are eligible for the credit. If you are eligible, complete Part 2. All references to current tax year mean the tax year covered by this claim. Column A -- Enter the current tax year and the base year. The base year is the year preceding the year you claimed the original EZITC. However, if your business was not in operation in New York State during that year, the base year is the year in which you claimed the EZITC. Columns B, C, D and E -- Enter the total number of employees employed within the EZ on each of the dates listed that occurred during your tax year. Example: A taxpayer filing a tax return for a fiscal year beginning September 1, 2007, and ending August 31, 2008, would enter the number of employees employed in the EZ on the following dates: September 30, 2007, December 31, 2007, March 31, 2008, and June 30, 2008. Column G -- Unless you have a short tax year, divide the amount in column F by four. If you have a short tax year, divide the amount in column F by the number of dates shown in columns B through E that occur during the short tax year. Column H -- Divide the average number of employees in the current tax year by the average number of employees in the base year (column G), and carry the result to two decimal places. If the percentage in column H is at least 101% (1.01), complete Part 2. If the percentage in column H is less than 101%, you do not qualify for the EIC for this year. Do not complete Schedule D, Part 2.
Schedule C -- EZ-ITC
Columns A and B -- List in these columns a clear description of qualified property placed in service during this tax period and the principal manufacturing or productive use of each item of property. Corporate partners include your allocable share of qualified property purchased by the certified partnership. List individual items of machinery and equipment separately; do not show them as one general category such as machinery. Describe the property in terms that a layman can understand. Attach additional pages if necessary.
Schedule D -- EZ-EIC
If you acquire, construct, reconstruct, or erect property for which an EZITC is allowed, an EZEIC may be allowed in the following three years. The amount of the EZEIC allowed is 30% of the original tax credit for each of the three years following the year for which the original EZITC was allowed. However, the credit is allowed only for those years during which your average number of employees (except general executive officers) in the EZ in which the property is located is at least 101% of the average number of employees (except general executive officers) in the EZ in which the property is located during the tax year immediately preceding the tax year for which the original EZITC was allowed, or in the case of a newly designated EZ, the average number of employees located in the area which was subsequently designated as the EZ.
Part 2 Computation of EZ-EIC
Use Schedule D, Part 2 to determine the amount of the EZEIC allowed for each year of eligibility listed in Part 1. Example: A corporation acquired qualified property in 2006 at a cost of $100,000.
Year Average number of EZ employees EZ -EIC available for use
2005 200 XXX 2006 not required XXX 2007 202 $ 3,000 (30% of $10,000) 2008 199 -0-* 2009 205 $ 3,000 (30% of $10,000) * In 2008, the average number of EZ employees was less than 101% of the number employed in 2005.
Page 4 of 4 CT-603-I (2008)
Schedule E -- Computation of recapture of EZ-ITC and EZ-EIC
When property on which an EZITC has been allowed is disposed of or ceases to be in qualified use before the end of its useful life, the difference between the credit taken and the credit allowed for actual use must be added back to the tax otherwise due in the year of disposition or disqualification. The decertification of a business enterprise in an EZ is a disposal or cessation of qualified use on the effective date of the decertification. If a business is decertified, any amount of credit not required to be recaptured may be carried forward for up to seven tax years after the tax year that the credit is allowed. The taxpayer may claim the regular ITC for property that ceases to qualify as a result of the decertification. The recapture provisions do not apply to a partner in a partnership with respect to manufacturing property, if the partner disposes of its partnership interest if: · thebasisforfederalincometaxpurposesofthemanufacturing property (or a project that includes such property) was $300 million or more at the time it was placed in service by the partnership in the EZ, and · thepartnerowneditspartnershipinterestforatleast3yearsfrom the date such property was placed in service by the partnership in the EZ However, if the property ceases to be in qualified use after it is placed in service, the recapture provisions would still apply to the partner in the year the property ceases to be in qualified use. Section 210.12B(f) provides different formulas to compute the recapture of EZITC. -- For property depreciated under IRC section 167, the formula is as follows: months of unused life months of useful life --
If qualified property has a useful life of more than 12 years, no addback is necessary if the property has been in use more than 12 consecutive years. For purposes of the recapture, the termination or expiration of an EZ's designation as an EZ will not be considered a disposal or cessation of qualified use. Attach additional pages if necessary. Column G -- Enter the total amount of EZITC allowed. Include the original EZITC, but not any EZEIC allowed. Column I -- Multiply 30% (.3) of the amount in column H by the number of years the EZEIC was allowed. Line 30 -- If an EZ business is decertified under GML, section 959(a), clauses (1), (2), or (5), the recapture amount must be augmented by an amount equal to the recapture multiplied by the interest rate in effect on the last day of the tax year. Note: A taxpayer that is approved by the Commissioner of Economic Development as an owner of a qualified investment project or a significant capital investment project (as defined under GML sections 957(s) and 957(t)) must recapture the total amount of credit allowed for all tax years for property which comprises the project if, by the last day of the fifth tax year following the tax year in which a credit is first allowed, the taxpayer fails to: ·Createaminimumnumberofjobsrequiredatsuchproject(see GML sections 957(s) and 957(t)); or · Placeinservicepropertycomprisingsuchqualified investment project or significant capital investment project with a federal basis equaling or exceeding the applicable minimum basis in GML section 957(s) or 957(t) (whichever is applicable).
× original EZITC allowed
Internet access: www.nystax.gov (for information, forms, and publications) Fax-on-demand forms: Forms are available 24 hours a day, 7 days a week. 1 800 7483676 Telephone assistance is available from 8:00 A.M. to 5:00 P.M. (eastern time), Monday through Friday. To order forms and publications: 1 800 4628100 Corporation Tax Information Center: 1 888 6982908 From areas outside the U.S. and outside Canada: (518) 4856800 Text Telephone (TTY) Hotline (for persons with hearing and speech disabilities using a TTY): If you have access to a TTY, contact us at 1 800 6342110. If you do not own a TTY, check with independent living centers or community action programs to find out where machines are available for public use. Persons with disabilities: In compliance with the Americans with Disabilities Act, we will ensure that our lobbies, offices, meeting rooms, and other facilities are accessible to persons with disabilities. If you have questions about special accommodations for persons with disabilities, please call 1 800 9721233.
For threeyear property depreciated under IRC section 168, the formula is as follows: 36 minus the number of months of qualified use 36 Recapture is only required if the property is disposed of or ceases to be in qualified use prior to the end of 36 months.
× original EZITC allowed
For other than threeyear property or buildings or structural components of buildings depreciated under IRC section 168, the formula is as follows: 60 minus the number of months of qualified use 60 Recapture is only required if the property is disposed of or ceases to be in qualified use prior to the end of 60 months.
× original EZITC allowed
For recovery property that is a building or a structural component of a building and depreciated under IRC section 168, the formula is as follows: months of unused life number of months allowed by IRC and used by taxpayer
× original EZITC allowed