19 RCNY § 30-01 Definitions.
§ 30-01 Definitions.
Aggregate employment shares. The term "aggregate employment shares" means the sum of all employment shares maintained by an eligible business in a taxable year.
(1) Determination of number of eligible aggregate employment shares.
(i) For purposes of the credit allowed by subdivision (i) of § 11-503, subdivision 17 of § 11-604 or § 11-643.7 of the Administrative Code of the City of New York and the reduction in base rent allowed by subdivision f of § 11-704 of such Code, the number of eligible aggregate employment shares of an eligible business is the amount, if any, by which the number of aggregate employment shares maintained by it in the eligible area in the taxable year in which it claims such credit or reduction exceeds the number of aggregate employment shares maintained by it in the eligible area in the taxable year immediately preceding the taxable year during which it first relocates. (Note: when used in these rules the term "relocate" has the meaning set forth in this definition section. Note also, the taxable year preceding the taxable year of an eligible business' first relocation shall hereafter be referred to as the "base year".)
(ii) The amount determined under subparagraph (i) of this paragraph shall not exceed whichever of the following is the least:
(A) the amount, if any, by which the number of aggregate employment shares maintained by the eligible business in particular to which it has relocated premises in the taxable year in which the credit or reduction is claimed exceeds the number of aggregate employment shares maintained in such premises in the taxable year immediately preceding the taxable year during which the eligible business relocates to such premises. (This amount shall hereafter be referred to as "Limitation 1".);
(B) for any taxable year following the third taxable year immediately succeeding the taxable year of relocation to particular eligible premises, the amount, if any, by which the highest number of aggregate employment shares maintained by the eligible business in the premises in the taxable year during which it relocates to such premises or in any of the three immediately succeeding taxable years exceeds the number of aggregate employment shares maintained in such premises in the taxable year immediately preceding the taxable year of the relocation. (This amount shall hereafter be referred to as "Limitation 2".);
(C) an amount equal to twice the number of aggregate employment shares maintained by the eligible business outside the eligible area in the base year. (This amount shall hereafter be referred to as "Limitation 3").
(iii) If an eligible business relocates to more than one particular premises, Limitations 1 and 2 must be calculated separately for each particular premises. In such case, the amount determined under subparagraph (i) of this paragraph shall not exceed the lesser of
(A) the sum of the lesser of Limitations 1 and 2 for each particular premises or
(B) Limitation 3.
(2) Calculation of shares. The calculation of eligible aggregate employment shares may be illustrated by the following examples (Assume that a year has exactly 52 weeks):
Example 1: During 1987 a calendar year taxpayer has 200 full time employees, 100 of whom work in Manhattan south of 96th Street and 100 of whom work in New Jersey. On January 1, 1988, taxpayer relocates all 200 employees to eligible premises in Brooklyn, and hires an additional 50 employees to work at the new location. All 250 employees work full time during the taxable year. Taxpayer has 250 eligible aggregate employment shares in 1988.
Example 2: Same facts as in example 1. For the commercial rent tax year ending May 31, 1988, the number of eligible aggregate employment shares is calculated by multiplying 250 workers by the number of weeks they worked ending within the period January 1, 1988 to May 31, 1988, then dividing by the number of weeks ending within the period of June 1, 1987 to May 31, 1988. From this amount, the number of aggregate employment shares in the base year would be subtracted (except that here the number is zero). The base year for the commercial rent tax is January 1, 1987 to December 31, 1987, the same as the base year for the general corporation tax, unincorporated business tax, or banking corporation tax, whichever is applicable.
Example 3: Same facts as in example 1, except that the relocation and hiring take place on the first day of the 27th week of 1988. Taxpayer has 125 eligible aggregate employment shares in 1988 (250 workers times 26 work weeks per worker divided by 52 weeks in the taxable year).
Example 4: Same facts as in example 1, except that, instead of having 100 employees in Manhattan, these employees were in non-eligible premises in Queens prior to relocation to Brooklyn. Taxpayer has 150 eligible aggregate employment shares in 1988 (250 shares in eligible area in 1988 less 100 shares in eligible area in 1987).
Example 5: Same facts as in example 1, except that, instead of hiring 50 new employees at the eligible premises, taxpayer hires 300 new employees for a total of 500 employees at the eligible premises. Taxpayer has 400 eligible aggregate employment shares in 1988 (Limitation 3 applies).
Example 6: Same facts as in example 1, except that 100 of the employees were moved to non-eligible premises in Queens so that only 150 employees were working at the eligible premises in Brooklyn. Taxpayer has 150 eligible aggregate employment shares in 1988 (Limitation 1 applies).
Example 7: Same facts as in example 1, with the following additional facts: The taxable year in question is 1991, the third taxable year after the year of relocation. On January 1, 1991, taxpayer hires 50 more employees for a total of 300 full-time employees working the entire year. Taxpayer has 300 eligible aggregate employment shares in 1991.
Example 8: Same facts as in example 7, except that the taxable year in question is 1992, the fourth taxable year after the year of the relocation. On January 1, 1992, taxpayer hires an additional 100 employees to work at the eligible premises, for a total of 400 full-time employees working the entire year. Taxpayer has 300 eligible aggregate employment shares in 1992 (Limitation 2 applies).
Example 9: Same facts as in example 1, with the following additional facts: On January 1, 1992, taxpayer hires 100 additional employees, 50 of whom work at the eligible premises in Brooklyn (P1) for a total of 300, and 50 of whom work at new eligible premises in the Bronx (P2). Taxpayer has 300 eligible aggregate employment shares in 1992. (Pursuant to Reg. § 13(c), the lesser of Limitations 1 and 2 for P1 is Limitation 2, or 250. This is added to 50 for P2 pursuant to limitation 1, resulting in a sum of 300.)
Example 10. Same facts as in example 1, except that on June 1, 1988, taxpayer hires an additional 50 workers who work full-time through May 31, 1989.
For the commercial rent tax year June 1, 1988 through May 31, 1989, taxpayer has 300 eligible aggregate employment shares. (Taxpayer has 300 aggregate employment shares in the year June 1, 1988 through May 31, 1989. Since there were no aggregate employment shares in the base year, which is calendar year 1987, no shares are subtracted.)
Base year. "Base year" shall mean the taxable year preceding the taxable year during which an eligible business first relocates.
Commencement date of improvements. For buildings receiving tax abatement benefits under the Industrial and Commercial Incentive Program, or from the Industrial and Commercial Incentive Board, commencement date shall mean the date a "Certificate of Eligibility" issued relating to such benefits is effective. For buildings owned by not-for-profit corporations, the Urban Development Corporation, or the City of New York, or for buildings financed with Industrial Development Agency bonds, commencement date shall mean the date of issuance of the first building permit which authorizes commencement of the work which involves the expenditures for improvements to real property which would qualify the premises for this program.
Eligible area. "Eligible area" means the area of the city excluding that area in the borough of Manhattan lying south of the center line of 96th Street.
Eligible business. "Eligible business" shall mean:
(1) Any person subject to the unincorporated business tax imposed under Chapter 5, the general corporation tax imposed under Subchapter 2 of Chapter 6, or the banking corporation tax imposed under Subchapter 3 of Chapter 6 of Title 11 of the Administrative Code, or for purposes of the reduction in base rent allowed by the subdivision f of § 11-704 of the Code, any person subject to one of such taxes or any insurance corporation as defined in § 1500 of the New York State Tax Law, which:
(i) has been conducting substantial business operations at one or more business locations outside the eligible area for at least 24 consecutive months immediately preceding the taxable year during which such eligible business relocates; and
(ii) on or after May 27, 1987 relocates all or part of such business operations; and
(iii) either:
(A) on or after May 27, 1987 first enters into a contract to purchase or lease the premises to which it relocates, or a parcel on which will be constructed such eligible premises, or
(B) as of May 27, 1987 owns such parcel or premises and has not prior to such date made application for benefits under the Industrial and Commercial Incentive Program pursuant to Part 4 of Subchapter 2 of Chapter 2 of Title 11 of the Administrative Code.
(2) A business shall not be rendered ineligible solely because it has entered into a contract prior to May 27, 1987 to purchase or lease other premises in the same building as those premises to which it relocates provided that:
(i) the premises to which it relocates are physically separate and distinct from the other premises;
(ii) no contract to purchase or lease the premises to which it relocates was entered into prior to May 27, 1987; and
(iii) if the premises to which it relocates are rented, the rent for such premises is separately stated in the lease for such premises. For purposes of these rules, an option to purchase or lease premises or a parcel of land will be considered a contract to purchase or lease such premises or parcel.
Eligible premises. "Eligible premises" shall mean:
(1) Non-residential premises which are wholly contained in real property which is certified as eligible to receive benefits pursuant to Part 3 or Part 4 of Subchapter 2 of Chapter 2 of Title 11 of the Administrative Code, provided, that such premises have been improved by construction or renovation, that expenditures have been made for improvements to such real property in excess of 50% of the value at which such real property was assessed for tax purposes for the tax year in which such improvements commenced and such expenditures have been made within 36 months or, in the case of expenditures for such improvements to such real property in excess of fifty million dollars, within 72 months from such commencement, that such real property is located in the eligible area, and provided further that no contract to purchase or lease such premises has been entered into prior to May 27 1987;
(2) Non-residential premises which are:
(i) wholly contained in or situated on real property which has been leased from the New York City Industrial Development Agency established pursuant to Article 18-A of the General Municipal Law, provided that such premises were constructed or renovated subsequent to the approval of such construction or renovation by such Agency; or
(ii) wholly contained or situated on real property owned by the city in accordance with the applicable provisions of the New York City Charter, a lease for which was approved, provided that such premises were constructed or renovated subsequent to such approval, or
(iii) wholly contained in or situated on real property which has been leased from the port authority of the State of New York and New Jersey or the New York State Urban Development Corporation, or a subsidiary thereof, provided that such premises were constructed or renovated subsequent to the execution of such lease, or
(iv) wholly contained in real property which would be eligible to receive benefits pursuant to Part 4 of Subchapter 2 of Chapter 2 of Title 11 of the Administrative Code except that such property is exempt from real property taxation; provided that expenditures have been made for improvements to such real property in excess of 50 percent of the value at which such real property was assessed for tax purposes for the tax year in which such improvements commenced and such expenditures have been made within 36 months or, in the case of expenditures for such improvements to such real property in excess of fifty million dollars, within 72 months from the date of such commencement, that such real property is located in the eligible area, and provided further that no contract to purchase or lease such premises has been entered into prior to May 27, 1987.
(3) The determination of whether premises meet the requirements for eligibility set forth in this definition shall be made as of the effective date of the initial certification of eligibility issued pursuant to 19 RCNY § 30-02(b). Notwithstanding the provisions of paragraphs (1) and (2) of this definition, if, subsequent to such date, the property in which such premises are contained ceases to meet the requirements of paragraphs (1) and (2) of this definition, such premises shall nonetheless remain eligible premises, provided that the eligible business continues to occupy such premises; provided however, that if after such property ceases to meet the requirements of paragraph (1) and (2), an eligible business first leases or purchases additional premises contained in such property, such additional premises shall not be considered eligible premises.
Employment share.
(1) The term "employment share" means, with respect to each employee, partner or sole proprietor of an eligible business, the sum of
(i) the number of full-time work weeks worked by such employee, partner or sole proprietor during the eligible business' taxable year, divided by the number of weeks in the taxable year, and
(ii) the number of part-time work weeks worked by such employee, partner or sole proprietor during the eligible business' taxable year divided by an amount equal to twice the number of weeks in the taxable year.
(2) An individual will be considered an employee for purposes of these rules if the relationship existing between the eligible business and the individual is that of employer and employee. Generally, the relationship of employer and employee exists when the eligible business has the right to control and direct the individual not only as to the result to be accomplished by him or her but also as to the means by which such result is to be accomplished. If the relationship of employer and employee exists, the designation or description of the relationship is immaterial. The directors of a corporation in their capacity as directors are not employees of an eligible business. Directors of a corporation may be considered employees if, in addition to serving in the capacity of directors, they serve in the capacity of employees.
(3) (i) As used in this definition, the term "work week" means a period of seven or fewer successive days, beginning with a specified day, which an eligible business has adopted and regularly utilizes as its work week. A full-time work week is a work week during which an employee, partner or sole proprietor has performed at least 35 hours of labor for compensation. A full time work week is attributable to the eligible area if at least 35 hours of labor for compensation are either performed in the eligible area or are attributable to particular premises in the eligible area. A part-time work week is a work week during which an employee, partner or sole proprietor has performed at least 15 but fewer than 35 hours of labor for compensation. A part time work week is attributable to the eligible area if at least 15 but fewer than 35 hours of labor for compensation are either performed in the eligible area or are attributable to particular premises in the eligible area. Hours in excess of 35 worked by an employee, partner or sole proprietor during a work week cannot be carried over and counted during any other work week provided, however, if an employee, partner or sole proprietor works on a regular compressed time schedule that requires an average of 35 or more hours of labor per week, hours from a week when such schedule provides for more than 35 hours of labor may be carried over and counted during an immediately preceding or succeeding week when such schedule provides for fewer than 35 hours of work.
(ii) In the case of an employee, partner or sole proprietor who works part of the week within and part of the week without a particular premises, hours are attributable to such particular premises as follows:
(A) If an employee, partner or sole proprietor spends substantially all of his or her time at a particular premises, all hours are attributable to such premises.
(B) If an employee, partner or sole proprietor does not spend substantially all of his or her time at a particular premises, all hours are nonetheless attributable to such premises if the employee, partner or sole proprietor is present at such premises at the beginning or end of each work day and all of the employee's, partner's or sole proprietor's time spent outside of such premises relates primarily to business operations carried on at such premises, provided that hours worked at a particular premises cannot be attributed by reason of this subparagraph to another particular premises maintained by the same eligible business. If an eligible business has both eligible and non-eligible premises in the same building, hours worked at the non-eligible premises cannot be attributed by reason of this subparagraph (ii)(B) to the eligible premises.
(C) If neither subparagraph (ii)(A) or (ii)(B) of this paragraph (3) applies, only hours worked at a particular premises are attributable to such premises.
(iii) Time not actually worked by an employee, partner or sole proprietor due to vacation, sick leave or other leave may nevertheless be counted as time worked by that employee, partner or sole proprietor provided
(A) such vacation, sick leave or other leave time is granted pursuant to an established policy of the eligible business which is applied uniformly to all employees, partners or sole proprietors of the business or to all employees, partners or sole proprietors within a specific class, and
(B) the employee, partner or sole proprietor continues to receive his or her regular rate of pay during such vacation, sick leave or other leave. Such time shall be attributed to the eligible area and the eligible premises in the same proportion as the number of work weeks actually worked by an employee, partner or sole proprietor attributable to the eligible area and eligible premises bears to the total number of work weeks actually worked by the employee, partner or sole proprietor in the taxable year in question. Terminal leave preceding the termination of an employee's, partner's or sole proprietor's employment may not be counted as time worked by the employee, partner or sole proprietor. A work week which begins in one taxable year and ends in the following taxable year shall be treated as a work week in the taxable year in which it ends.
(iv) The operation of this paragraph (3) is illustrated by the following examples:
Example 1: X, an employee of ABC Corporation, an eligible business having one eligible premises, works 40 hours a week driving a truck and making deliveries. X loads his truck every morning at ABC Corp.'s eligible premises and spends the rest of his time making deliveries outside the eligible area. Since X starts each day at the eligible premises and spends the rest of his time on deliveries from the eligible premises, all of his time will be attributable to the eligible premises. Thus, ABC Corp. may count a full time work week in the eligible area and at the eligible premises with respect to each week worked by X.
Example 2: Y, who also drives a truck and works 40 hours a week for ABC Corp., spends 10 hours each week loading at the eligible premises, 10 hours loading at premises maintained by the business outside of the eligible area, and 20 hours making deliveries outside of the eligible area. The 10 hours spent at the eligible premises are counted toward a work week at the eligible premises. The 10 hours spent at the non-eligible premises are counted toward the non-eligible premises and do not qualify. The 20 hours spent making deliveries cannot be counted toward either premises. Thus, Y does not have a full or part time work week in the eligible area or at the eligible premises.
Example 3: Z, a salesman, spends substantially all of his time in Alaska selling products manufactured at ABC Corp.'s eligible premises. Since Z does not start or end each day at the eligible premises, none of Z's time is attributable to the eligible premises.
Example 4: E, an executive of ABC Corp., spends 16 hours a week at ABC Corp.'s eligible premises and 25 hours at the premises outside the eligible area. Only 16 hours (i.e., a part-time work week) are attributable to the eligible premises.
(v) It shall be within the discretion of the Commissioner to determine whether hours worked by an employee, partner or sole proprietor outside of eligible premises maintained by the eligible business have been fairly apportioned within and without the eligible area, and within and without the eligible premises.
(4) In the case of an employee, partner or sole proprietor with work weeks both within and without the eligible area in a given taxable year, the employment shares maintained by the eligible business within the eligible area with respect to the employee shall be the sum of
(i) the number of full-time work weeks worked by the employee, partner or sole proprietor during the eligible business' taxable year attributable to the eligible area divided by the number of weeks in the taxable year, and
(ii) the number of part-time work weeks worked by such employee, partner or sole proprietor during the eligible business' taxable year attributable to the eligible area divided by an amount equal to twice the number of weeks in the taxable year.
(5) In the case of an employee, partner or sole proprietor with work weeks both within and without the eligible premises in a given taxable year, the employment shares maintained by the eligible business within the eligible premises with respect to the employee, partner or sole proprietor shall be the sum of
(i) the number of full-time work weeks worked by the employee, partner or sole proprietor during the eligible business' taxable year attributable to the eligible premises divided by the number of weeks in the taxable year and
(ii) the number of part-time work weeks worked by such employee, partner or sole proprietor during the eligible business' taxable year attributable to the eligible premises divided by an amount equal to twice the number of weeks in the taxable year.
Expenditure. "Expenditure" shall mean an amount actually paid, incurred, or provided in kind to improve the real property which in part improves the premises. Expenditures may include those made for: construction contracts, materials, labor, rental equipment, insurance, permit fees and other direct expenses of construction; installation of partitions and other tenant work by or for the first tenant or occupant of new or substantially renovated space; architectural, engineering, construction management, legal, accounting and other services rendered in connection with the construction work; marketing, brokerage, legal and other services rendered in connection with the initial leasing or sale of eligible property created or substantially renovated by eligible construction work; interest on construction loans, insurance and other fixed costs arising during the course of construction; and fees for connection to existing sewer, water or utility lines. Expenditures shall not include the costs of acquiring the site.
Hotel services. "Hotel services" shall mean:
(1) Any services which consist predominantly of the lodging of guests at a building or a portion thereof which is regularly used and kept open for such services. The term "hotel services" shall include the lodging of guests at an apartment hotel, a hotel, boarding house or club, whether or not meals are served.
(2) Services at any particular eligible premises shall be deemed to consist predominantly of hotel services if either 50 percent or more of total floor space at such premises is devoted to the lodging of guests as described in paragraph (1) of this definition, or if 50 percent or more of the work hours of employees of the eligible business at such premises are devoted to such lodging of guests.
Particular premises. "Particular premises" shall mean all premises occupied by an eligible business within a single building except that if there are eligible and non-eligible premises in the same building, such eligible and non-eligible premises constitute separate particular premises.
Person. "Person" shall mean any individual, partnership, association, joint-stock company, corporation, estate or trust, and any combination of the foregoing.
Relocate. "Relocate" shall mean to transfer pre-existing business operations which are not retail activities or hotel services to premises that are or will become eligible premises, or the establishment of new business operations which are not retail activities or hotel services at such premises, provided that a relocation will not be deemed to have taken place unless at least one employee, partner or sole proprietor of the eligible business is transferred to such premises from pre-existing business operations outside the eligible area. The date of relocation to any particular premises shall be any date elected by the eligible business is transferred to the particular premises from a pre-existing business location outside the eligible area and begins to work at such premises, provided that such date is subsequent to the date of the commencement of improvements to real property in which such premises are located, which improvements will meet the requirements in the definition of "eligible premises" of these rules relating to expenditures for improvements, and provided further that such date is prior to the date of issuance of an initial certification of eligibility pursuant to 19 RCNY § 30-02. No claim for credit or refund of an overpayment of tax shall be allowed under this definition which is otherwise barred by any statute of limitations. The election provided for in this section shall be irrevocable.
Retail activity. "Retail activity" shall mean:
(1) Any activity which consists predominantly of the sale, other than through the mail, of tangible personal property to any person, for any purpose unrelated to the trade or business of such person, or which consists predominantly of the selling of services to individuals which generally involve the physical care of the personal property of any person unrelated to the trade or business of such person, or which consists predominantly of the provision of retail banking services.
(2) Activity at any particular premises shall be deemed to be predominantly retail activity if either 50 percent or more of total floor space at such premises is utilized for such sales or services described in paragraph (1) of this definition, or if 50 percent or more of total employee work hours at such premises are devoted to such sales or services.
Taxable Year. "Taxable year" shall mean:
(1) For purposes of the reduction in base rent allowed by subdivision (i) of § 11-503, subdivision 17 of § 11-604 of § 11-643.7 of the Administrative Code, the term "taxable year" means the taxable year on the basis of which the taxpayer reports for purposes of banking corporation tax imposed by Chapter 5 and Subchapters 2 and 3 of Chapter 6 of Title 11 of the Code.
(2) For purposes of reduction in base rent allowed by subdivision f of § 11-704 of the Code, the term "taxable year" means the annual reporting period for commercial tax rent purposes, which is the period beginning on June 1 of a calendar year and ending on May 31, of the following calendar year; however, for taxpayers that are subject to the unincorporated business tax, the general corporation tax or the banking corporation tax, when the taxable year referred to is the base year, it shall mean the taxable year on the bases of which the taxpayer reports for purposes of the unincorporated business tax, the general corporation tax or the banking corporation tax.