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Monday, June 6, 2016

The SUNY Tax-Free Areas to Revitalize and Transform Upstate New York program (START-UP) was enacted in 2013 to provide tax benefits to approved applicants that locate their business in designated tax-free New York areas. Tax-free areas include designated space available at approved New York State public and private colleges and universities, approved strategic state assets, and New York incubators affiliated with approved colleges and private universities.

In order to be eligible and participate in START-UP, a business must be a new business to New York State or an existing New York business relocating to or expanding within New York State. The program requires a commitment to create new jobs and contribute to the economic development of the local community. Additionally, the mission and the activities of the business must align with or further the academic mission of the college or university that sponsors the tax-free area where the business plans to locate.

A business should belong to a list of eligible industries that includes advanced materials and manufacturing, biotechnology and life sciences, technology and electronics, optics and imaging, clean technology and renewable energy, transportation equipment and food and beverage.

The program is administered by Empire State Development. The application and approval process is completed through their office. Empire State Development is responsible for facilitating a number of New York State economic development programs including the Excelsior Jobs Tax Credit Program, Regional Economic Development Council Funding Competitions  and the New York State Upstate Revitalization Initiative. Once certified, the approved business is issued a certificate of eligibility by the sponsoring campus, university or college.

Certified businesses that operate in a tax-free area are eligible for the following benefits for a period of ten years:

Sales Tax Refunds or Credits:

An approved business can claim a refund or credit for sales and use tax paid on their purchases of tangible property, utility services and certain taxable services.

Contractors and subcontractors can claim a refund or credit for the tax paid on purchases of tangible personal property used to build structures or buildings for approved businesses at their locations in the tax-free areas or improving, maintaining or servicing property of those approved businesses in the tax-free area.

Tax Elimination Credit:

An approved business (or the owners of an approved pass-through entity such as a limited liability company, partnership or S corporation) can have a portion or all of their New York income tax eliminated. The amount of income tax eliminated is a calculation of the New York tax attributable to the business’s economic presence in the tax-free New York area where the business was approved to locate.

Wage Exclusion Tax Benefit for Eligible Employees:

When an approved business creates new jobs, Empire State Development may allocate a number of these jobs as eligible for a New York State personal income tax wage exclusion. The eligible employees will be exempt from New York State personal income tax, New York City resident income tax, Yonkers resident income tax surcharge and Yonkers nonresident earnings tax for a period of up to ten years provided the employee is properly designated by Empire State Development and working exclusively at the approved business location in the tax-free New York area for at least 183 days during the calendar year.

START-UP is an exciting opportunity for a business that meets the profile and strategic objectives established by New York State for this program. If your business is considering expansion in or relocation to New York State, please call any one of our partners at 315-446-3600.  We can help you determine if START-UP is the right fit for your business, assist you with the application process and help you maximize the tax benefits involved with START-UP and other economic incentive programs.