Small Businesses May be Eligible NY Tax Credits for COVID-19 Expenses
By John C. Gross
Enacted as part of New York’s 2022-2023 fiscal budget, a COVID-19 Capital Costs Tax Credit Program (Program) offers $250 million financial assistance to New York State “small businesses”, available on a first-come, first-served basis, which were burdened with a wide range of operational costs incurred due to the COVID-19 pandemic. This Program offers qualifying small businesses relief from the added economic burden by providing tax credits to reduce the pandemic-related financial impact.
Eligible small businesses can receive a tax credit of 50% of qualifying expenses up to a maximum of $25,000 in tax credits on qualifying expenses of $50,000.
Who is Eligible?
The Program is open to all small independently owned and operated businesses operating in New York State. A “small business” is defined as having less than 100 employees and gross receipts of less than $2.5 million. Further, the small business must have incurred at least $2,000 of qualifying expenses between January 1, 2021, and December 31, 2022, and which are paid no later than March 31, 2023. It is believed that documentation to prove these expenditures may be requested.
What are Qualifying Expenses?
The following categories of items are included in the definition of qualifying expenses:
- supplies to disinfect and/or protect against COVD-19 transmission
- restocking of perishable goods to replace those lost during the pandemic
- physical barriers and sneeze guards
- hand sanitizing stations
- respiratory devices such as air purifier systems installed at the business location
- COVID-19 related signage, including signage detailing vaccine, masking requirements, and social distancing
- materials used to define or protect space such as barriers
- materials used to block off seats to allow for social distancing
- equipment, materials and/or supplies for new product lines in response to the pandemic
- certain point of sale payment equipment and machinery to allow for contact-less payment
- software for online payment platforms enabling delivery or contact-less purchases
- building construction and retrofits to accommodate COVID-19 social distancing and installation of air purifying equipment (not including non-COVID related capital renovations or general “closed for business” upgrades/renovations)
- materials to accommodate increased outdoor activity, such as heat lamps, outdoor lighting, and materials for outdoor space expansion
- certain other COVID related costs not paid for with other COVID-19 grant funds and as determined by the Commissioner
The Program is administered by Empire State Development (ESD), the state’s chief economic development agency and there will be a multi-step application process, as follows:
- First fill out a required eligibility screening tool (https://formrouter.apps.esd.ny.gov/ccs@ESD/covid_cost_screening.html) to determine if your business qualifies for the Program.
- If your business qualifies, you will then be emailed a link to the application (once available) for completing and submitting together with documentation to show proof of expenses. The form and manner of providing this documentation is still being determined. ESD will offer tax credit certificates to eligible business entities whose applications are approved, and businesses will then apply to the State Department of Taxation and Finance to claim the credit. Additional information about the application process can be found at https://esd.ny.gov/covid-19-capital-costs-tax-credit-program-faq