New York State’s 2022-2023 budget included up to $250 million for a COVID-19 Capital Costs Tax Credit Program, intended to provide financial assistance to qualifying small businesses in the state that incurred expenses while complying with COVID-related public health and emergency orders and regulations.

With applications officially open as of Oct. 25, interested taxpayers should move quickly: Credit will be allocated to qualifying taxpayers based on the date their completed application was submitted, and with the application period now well underway, those who have not yet started theirs should do so as soon as practical. (The final application deadline is March 31, 2023.)  

Taxpayers that qualify for the credit are those that meet the following criteria:

1. Be a small business, defined as “one which is resident in [New York state], independently owned and operated, not dominant in its field and employs 100 or less persons”;
2. Have $2,500,000 or less of gross receipts in the taxable year that includes Dec. 31, 2021;
3. Operate a business location in New York state;
4. Have at least $2,000 in qualifying COVID-19 capital costs; and
5. Be in compliance with any public health or other relevant emergency orders or regulations, and not owe past due state taxes or local property taxes, unless the taxpayer has entered into (and is in compliance with) a binding payment agreement related to the owed tax.

Each qualified taxpayer will be eligible to receive refundable credit for 50% of their qualifying costs, up to $25,000 of credit. Expenses that qualify must be incurred from Jan. 1, 2021, through Dec. 31, 2022. As listed in the governor’s release, qualifying expenses include, but are not limited to, the following; see the regulation for a more complete list.

• Supplies to disinfect or protect against COVID-19 transmission
• Costs associated with expanding, or defining space to accommodate social distancing
• HVAC equipment
• Expenses related to increased outdoor activity and outdoor space expansions
• Machinery and equipment to facilitate contactless sales

Interested small businesses should complete the pre-screening process to determine if they are eligible for the credit.

What does CohnReznick think?

For small businesses that incurred expenses in the process of complying with COVID-19 emergency orders and regulations, this credit is an opportunity to recoup a portion of that expense. Given the cap on total allocated credit and allocation of the credit based on the date the application is submitted, this is a time-sensitive matter; consult with your tax advisors immediately to determine your eligibility.

Contact

Arvinder Kaur, Senior Tax Manager, State and Local Tax

646.448.5466

Jamie Kelly, Tax Manager, State and Local Tax

312.788.6058

Corey L. Rosenthal, Partner, State and Local Tax

646.625.5729

^{Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.}