By David Neuman, JD and Alan Wong, CPA
New York State has opened a “screening tool” for small businesses to determine if they qualify for the COVID-19 Capital Costs Tax Credit Program. This $250 million tax-credit program, which is being issued on a first come first serve basis, is designed to support small businesses that took on expenses to comply with emergency orders and regulations or to increase public safety in response to COVID-19.
The program is open to all small independently owned and operated businesses operating in New York State with 100 employees or less and gross receipts of less than $2.5 million during the fiscal year that includes December 31, 2021. In addition, a small business must have incurred at least $2,000 of qualifying expenses between January 1, 2021 and December 31, 2022. Eligible small businesses can receive a tax credit of 50% of qualifying expenses up to a maximum of $25,000 in tax credits based on qualifying expenses of $50,000.
Qualifying expenses include costs incurred for the following categories of items:
- supplies to disinfect and/or protect against COVID-19 transmission;
- restocking of perishable goods to replace those lost during the COVID-19 pandemic;
- physical barriers and sneeze guards;
- hand sanitizer stations;
- respiratory devices such as air purifier systems installed at the business entity’s location;
- signage related to the COVID-19 pandemic including, but not limited to, signage detailing vaccine and masking requirements, and social distancing;
- materials required to define and/or protect space such as barriers;
- materials needed to block off certain seats to allow for social distancing;
- certain point of sale payment equipment to allow for contactless payment;
- equipment and/or materials and supplies for new product lines in response to the COVID-19 pandemic;
- software for online payment platforms to enable delivery or contactless purchases;
- building construction and retrofits to accommodate social distancing and installation of air purifying equipment but not for costs for non-COVID-19 pandemic related capital renovations or general “closed for renovations” upgrades;
- machinery and equipment to accommodate contactless sales;
- materials to accommodate increased outdoor activity such as heat lamps, outdoor lighting, and materials related to outdoor space expansions; and
- other costs as determined by the department to be eligible under this section; provided, however, that “qualified COVID-19 capital costs” do not include any cost paid for with other COVID-19 grant funds as determined by the Commissioner
If your business is deemed eligible after completing the required questionnaire in the screening tool, you will be sent an email with a link to the application when the program application opens. The link to the screening tool is available here.
To receive a tax credit for their 2022 tax return, businesses must receive a tax credit certificate from New York State on or before Dec. 31, 2022. Potential applicants are urged to complete the screening tool and apply as soon as possible, as these tax credits are being issued on a first come first serve basis. In addition, any tax credits issued on or after Jan. 1, 2023 cannot be claimed until a business files its 2023 tax return.
If you have any questions please reach out to your LMC professional.