All of the details are at www.startupny.com. The program aims to provide major incentives for businesses to relocate, startup or expand in New York State through affiliations with academic institutions (both private and public). Qualifying businesses will be able to operate without paying state or local taxes on or near academic campuses in so-called "tax-free" zones. What's more, the employees of these businesses will be exempt from paying state and local taxes.
Hard to believe! But it is true. It is, in fact, the reality, for already one whole month. So, here is how it should work.
According to startupny.com, in addition to the benefits that come with being affiliated with an academic institution, the participating businesses will get 10 years (!) of tax elimination credit for their state and local tax liabilities (to be pro rated for businesses that operate only partly out of NY tax-free areas). Additionally, the participating businesses will be exempt from paying certain other state and local taxes. The employees pay no NY state or local income tax on their wages for the first five years of enrollment in the program (it is pro rated among businesses and then gradually phases out after five years).
This sounds great. So, who is eligible? The eligible companies include those who are somehow align (or are affiliates with) academic institutions. This affiliation or alignment can take on different forms, such as offering internships, jobs, teaching, offering seminars or other company resources.
The businesses must also create "net new jobs" within their first year of operation. The business cannot be relocating or transferring jobs from another state.
Importantly, at the time of application, the business must be a new business in New York, an out-of-state business moving into NYS, an existing NYS business that is expanding and creating net new jobs, or an existing NYS business that has attended and graduated from a NYS incubator program. A new business is one that has not been operating or located in the state at the time of application, is not moving existing New York jobs into the tax-free NY area, and is not substantially similar in operation or ownership to a taxable or previously taxable business entity within the previous five years. Certain types of businesses are all together excluded from participation.
A company may still be granted permission to participate even if it does not meet all the eligibility requirements, at the discretion of the Commissioner of Economic Development and the NYS Department of Economic Development.
One of the conditions of participating in this program is that the business occupies property or land in NYS affiliated with public and private academic institutions or certain State-owned property, designated for use in the program as the tax-free NY area. There are currently three facilities that are in the process of being designated as tax-free NY areas in New York City: the Downstate Biotechnology Incubator, for startup and early-stage biotech companies, BioBAT at the Brooklyn Army Terminal, for second-stage and growth stage tech and biotech companies, and the Downstate Synthetic Chemistry Facility for mature companies.
Business that want to participate should apply with the specific academic institution. Their contact information is on the website. Once the institution has been accepted in the Start-Up NY program, it can begin accepting applications from different businesses. There is really no need to rush, - the program will go on until December 31, 2020. However, wouldn't you agree that first comers hold the advantage?
This article is not a legal advice, and was written for general informational purposes only. If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author, Arina Shulga. Ms. Shulga is the founder of Shulga Law Firm, P.C., a New York-based boutique law firm specializing in advising individual and corporate clients on aspects of business, corporate, securities, and intellectual property law.