As a result of tax law provisions enacted as part of the latest New York State budget, participants in the New York State Brownfield Program who are eligible for tax credits will be required to defer credits over $2M. The Budget adopted late Tuesday (August 3, 2010) added sections 33 and 34 to the New York Tax Law, which provide for a deferral of numerous New York State tax credits, including those provided by the Brownfield Cleanup Program (“BCP”). Section 33 provides that cumulative tax credits in excess of $2 million dollars, taking into account all affected credits, will be subject to the deferral. The deferral will apply to credits that could otherwise have been claimed in tax years 2010, 2011, and 2012. While Section 34 provides that credits can be claimed beginning in tax year 2013, such payments will be without interest. Deferred refundable tax credits such as the BCP credits may be applied by claiming 50 percent of the deferred balance in tax year 2013, 75 percent of the remaining deferred refundable credit balance in tax year 2014, and the balance of the refundable credit balance in tax year 2015. The deferral affects all three categories of BCP tax credits: redevelopment, remediated brownfield real property, and environmental insurance.
Taxpayers who are subject to the deferral for multiple categories of tax credits—not just BCP credits—must allocate the $2 million not subject to deferral pro rata based on the relationship that each category of tax credit bears to the total credits that the taxpayer would otherwise have been entitled to claim.
The legislature did not act on any of the other pending proposals that had been advanced, including proposals to cap credits retroactively, restrict the eligibility to obtain qualified tangible property credits, and impose a 50% tax deferral on BCP and other tax credits.
