New York Proposes Tax Credits to Help Small Businesses Impacted by COVID-19

New York Proposes Tax Credits to Help Small Businesses Impacted by COVID-19

New York Governor Andrew Cuomo is calling for new tax credits to help small businesses significantly impacted by COVID-19. Gov. Cuomo announced the $130 million tax credit program — the Pandemic Recovery and Restart Program — as part of his FY 2022 Executive Budget.

"As we embark on our post-COVID reconstruction, it's critical that we not only jump-start our economic recovery, but also ensure we find ways to support highly impacted small businesses that have been among the hardest hit throughout this pandemic," Governor Cuomo said in a press statement. "The Executive Budget was crafted to do just that. Through the creation and expansion of $130 million in tax credits, we are working to lessen the burden on critical sectors - restaurants, the arts, and so many others - so those funds can be redirected back to the businesses themselves and get them back up and running."

New York Pandemic Recovery and Restart Program

The new tax credit program targets industries and businesses that have been particularly hard-hit by the pandemic, including hotels, restaurants, and theaters. Below is a brief summary of the proposal:

• Small Business Return-To-Work Tax Credit: The program would provide refundable tax credits to support certain small businesses highly impacted by COVID-19 in the hiring of additional workers through 2021. To qualify, small businesses must have experienced a minimum of 40 percent revenue or employment loss. The tax credit is $5,000 per employee and up to $50,000 per business. The amount of total credits available under the program would be capped at $50 million. The Small Business Return-To-Work Tax Credit would be administered by the Department of Economic Development (DED).
• Restaurant Return-To-Work Tax Credit: The program would provide $50 million in tax credits to support highly-impacted restaurants hard hit by the pandemic through 2021. Eligibility is expressly limited to small, independently-owned restaurants that are located within New York City that were subject to a ban on indoor dining for over six months; or are located outside of New York City in areas that were designated as a red or orange zone for at least 30 days. Restaurants would receive the credit immediately if they choose. The credit would be $5,000 per employee and up to $50,000 per business. The Restaurant Return-To-Work Tax Credit Program would also be administered by the DED.
• New York City Musical and Theatrical Production Tax Credit: The program would provide $25 million in tax credits to qualified musical and theatrical production companies, which are defined as businesses that produce a musical or theater production in New York City and spend at least $1 million dollars in qualified production expenditures. Eligible businesses could receive a refundable tax credit equal to 25 percent of the sum of their production expenditures incurred by December 31, 2021, with a maximum of $500,000 per production company. The New York City Musical and Theatrical Production Tax Credit Program would be administered by DED.
• Extend and Enhance the Musical and Theatrical Production Credit for Four Years: The program would extend the sunset date of the musical and theatrical production tax credit for four additional years – to January 1, 2026. The musical and theatrical production credit encourages touring musical and theatrical productions in New York theaters outside the City of New York. Eligible production companies taxable under Tax Law Articles 9-A and 22 can claim a refundable credit equal to 25 percent of qualified production costs and transportation expenditures. Under Gov. Cuomo’s proposal, the annual tax credit cap would increase from $4 million to $8 million effective immediately.

What’s Next?

At this point, the new tax credit programs are only proposals. The New York Legislature must approve legislation establishing the Pandemic Recovery and Restart Program. Gov. Cuomo could then sign the new tax credits into law.

At Scarinci Hollenbeck, our experienced team of attorneys remains committed to helping New York businesses navigate these uncertain times and take advantage of all available tools to come out stronger on the other side of the pandemic.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Michael Sheppeard, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.