New York Businesses May Qualify for COVID-19 Capital Costs Tax Credit Program by Luke Lucas, CPA
Posted on July 20, 2022
by
Luke Lucas
Included in New York’s 2022-2023 budget is a $250 million COVID-19 Capital Costs Tax Credit Program, offering financial assistance to help the state’s small businesses cover some of the operating costs they incurred adapting to the pandemic. The assistance comes in the form of tax credits equal to 50 percent of qualifying expenses and up to a maximum of $25,000 in tax credits based on qualifying expenses of up to $50,000. Here is what business owners need to know to qualify for the program.
Is my Business Eligible for COVID-19 Capital Costs Tax Credit?
The COVID-19 Capital Costs Tax Credit Program is available to independently owned and operated small businesses in New York State with less than 100 full-time equivalent employees and gross receipts of less than $2.5 million in fiscal 2021. Moreover, these entities must have incurred qualifying COVID-19 expenses of at least $2,000 between Jan. 1, 2021, and Dec. 31, 2022.
Eligible businesses are those structured as sole proprietorships, partnerships, limited liability companies, C corporations and S corporations, and that may have already received federal or state financial assistance aid in the form of a paycheck protection program (PPP) loan, a New York Forward loan. Recipients of New York Small Business Recovery Grants may also qualify for the new tax credits, provided they did not use previous grant proceeds to pay for certain COVID-19 expenses.
How Much is the Credit?
Eligible New York businesses may receive a COVID-19 Capital Costs Tax Credit equal to 50 percent of up to $50,000 in qualifying expenses they incurred to comply with public health and other emergency orders related to the COVID-19 pandemic, or to generally increase safety through infectious disease mitigation during 2021 and 2022. The maximum value of the tax credit available to each eligible business is $25,000.
What are Considered Qualifying COVID-19 Expenses?
Qualifying expenses are those a New York state business incurred between Jan. 1, 2021, and Dec. 31, 2022, and paid for before April 1, 2023, for adapting to public health orders and improve COVID-19 safety measures, including, but not limited to:
- supplies intended to disinfect and/or protect against COVID-19 transmission, including hand sanitizers, physical barriers and sneeze guards;
- respiratory devices, such as air purifier systems, installed at the business entity’s location;
- signage and materials related to the COVID-19 pandemic including, but not limited to, signs communicating vaccine and masking requirements and/or materials used to define or protect space for social distancing purposes
- new point-of-sale payment equipment and software to enable contactless sales and payments;
- 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;
- materials to accommodate increased outdoor activity such as heat lamps, outdoor lighting, and materials related to outdoor space expansions;
- equipment and technology purchased to support employees working remotely; 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.
How Do I Apply?
The COVID-19 Capital Costs Tax Credit Program is administered by Empire State Development (ESD) and requires business to first fill out an online form to determine their eligibility. When a business meets the eligibility requirements, they will receive via email a full application they must complete along with proof of claimed expenses.
We recommend businesses owners reach out to their accountants as soon as possible to determine program eligibility and gather supporting documentation. Tax credits are available on a first-come-first-serve basis.
About the Author: Luke Lucas, CPA, is an associate director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where he helps businesses and their owners throughout the country maintain compliance with a complex maze of state and local tax issues. He can be reached at (305) 960-9315 or via email at info@bpbcpa.com.
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