October 29, 2014

Additional Start-Up NY Tax Free Zones Announced in New York

A special thanks to article contributor Diane Giordano, Partner, Tax & Business Services.

Additional Start-Up NY Tax Free Zones Announced in New York Tax & Business

As mentioned in our prior News & Events Alerts, during June 2013, Governor Andrew Cuomo unveiled a START-UP NY program which aims to foster entrepreneurialism and job creation through the introduction of tax-free zones throughout the state. These zones are created through partnerships with New York colleges and universities.

The goals of the START-UP NY Program will be to create statewide tax-free zones to provide incentives for businesses to relocate, start up or expand in New York State. Businesses will have the opportunity to operate state and local tax-free for ten years on or near academic campuses, and their employees will pay no state or local personal income taxes.

Until recently, most of the Zones have been located in Upstate NY, an area that was specifically targeted by this plan. New York State has recently approved additional tax free zones in Long Island, one at Farmingdale State College and one at Long Island University in Brookville. Prior to naming the two additional locations, there was only one in Stony Brook University.

The START-UP NY program provides many incentives to companies that can contribute to the economic development of the area. The colleges have the students necessary to help the new tenants grow.

Many different types of businesses are eligible to apply to the program. In order to participate, businesses need to support the academic mission of the college or university. Every business must create new jobs in order to participate by:

  1. Being a new start-up company;
  2. Being a company from out-of-state relocating to New York State; or
  3. Expanding as an existing New York State company.

In New York City, Long Island and Westchester County, businesses must be start-ups or high-tech companies. Certain types of businesses are excluded from the program, including retail and wholesale businesses; restaurants and hospitality; professional practices like law firms and medical practices; and energy production and distribution companies.

The newly announced locations lend themselves to attracting high tech type companies as required by the plan. The START-UP NY program will continue to pave the way for additional university research and development and to expand in industries such as nanotechnology, software and information technology, solar energy, and lighting technologies.

R&D focused companies locating to these tax-free zones may also be eligible for Federal research and development tax credits. (A program that is expected to be extended past 2013.) Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent.

Should you have any questions related to the START UP program or how your business may be eligible for future or past R&D credits, contact your Marcum Tax Professional.

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