Investment Tax Credit (ITC) for Manufacturers in New York: What You Need to Know

Investment Tax Credit (ITC) for Manufacturers in New York: What You Need to Know

Are you considering purchasing new manufacturing equipment for your business? Are you holding back on these purchases due to funding concerns?

If you are a manufacturer in New York State, you should be aware of the Investment Tax Credit (ITC) and how it can save your business money.

Businesses in New York that make investments in machinery, buildings, or equipment are eligible to receive a tax credit, called the Investment Tax Credit, for those purchases. This credit can be used to offset corporate income taxes for C corporations or offset individual income taxes for owners of S corporations, partnerships, or sole proprietorships.

The investment tax credit is especially impactful for manufacturers in New York State, where businesses face high taxes and production costs.

How much is the credit?

The investment tax credit rate differs for C corporations versus S corporations, partnerships, and sole proprietorships. The standard rate of credit for C corporations is 5% on the first $350 million invested, and 4% for any amount over $350 million. The credit for S corporations, partnerships, and sole proprietorships is a flat 4% rate. Any unused credit can be carried forward 15 years for C corporations, or 10 years for S corporations, partnerships, and sole proprietorships. A corporation that qualifies as a new business can elect to receive a refund for unused credit rather than carrying it forward.

How can you claim this credit?

Your business can claim this credit if you placed qualifying property (i.e., equipment, buildings, or machinery) into service during the tax year. C corporations and S corporations wishing to claim the credit will need to file Form CT-46, Claim for Investment Tax Credit. Partnerships and sole proprietorships will need to file Form IT-212.

To claim credits, business owners must prove that the property is located in New York State, has a useful life of at least four years, and that it is used for the purposes laid out in the credit’s conditions. Additional details on what kinds of property qualify for the ITC can be found in the Instructions for Form CT-46 and Instructions for Form IT-212 on New York State’s Department of Taxation and Finance website.

Accurate recordkeeping is important if you wish to claim this credit for your business. You will need documents detailing the property’s function in the manufacturing process, any utilization of the property for research and development (R and D) purposes, depreciation reports, and identifying business information. You may need to provide these records during an audit.

What else should you know?

If your investment in qualifying property creates additional jobs, your business may also be eligible for an Employment Incentive Credit (EIC) for the two years succeeding the investment. To qualify for this credit, your average number of employees in New York State must be at least 101% of the average number of employees during the employment base year (the year immediately preceding the ITC year). The Employment Incentive Credit rate is the same for C corporations, S corporations, partnerships, and sole proprietorships. The rate varies depending on the level of employment (See Rate Schedule 2 on page 4 of the Instructions for Form CT-46).

Key Takeaways:

  • The Investment Tax Credit (ITC) allows manufacturers to receive tax credit when investing in new property or equipment for their business.
  • The ITC lowers income taxes on investments in New York, where businesses contend with higher tax burdens and production costs compared to other states.
  • The standard rate of credit for C corporations is 5% on the first $350 million invested, and 4% for any amount over $350 million.
  • The credit for S corporations, partnerships, and sole proprietorships is a flat 4% rate.
  • Businesses wishing to claim investment tax credit must be able to provide detailed documentation describing the qualifying property.
  • If the investment creates jobs, businesses may also be eligible for the Employment Incentive Credit (EIC).

More information on the Investment Tax Credit and Employment Incentive Credit can be found on New York’s Department of Taxation and Finance website, in the Instructions for Form CT-46, and in the Instructions for Form IT-212.

Our experts at RBT CPAs are happy to help you navigate the process of claiming these credits for your business. Visit our website or call us at 845-567-9000 to speak with one of our professionals.

RBT CPA’s Carolyn Bell, CPA, Admitted to the Partnership

FOR IMMEDIATE RELEASE

RBT CPAs LLP takes great pleasure in announcing that Carolyn Bell, CPA, of Arlington, New York, has been admitted to the firm as a partner.

Carolyn graduated from Mount Saint Mary College in 2011, joining RBT’s Client Advisory team in the Newburgh office in 2013 after initially working as an administrative assistant for the firm. Since joining RBT, Carolyn has obtained her CPA and transitioned to the Poughkeepsie office. Carolyn serves as a board member for the Dutchess County Regional Chamber of Commerce and a committee member for the Women’s Leadership Alliance.

Carolyn was born and raised in New Windsor, New York, moving to Arlington in 2020. On becoming partner, she says “Being a trusted advisor to my clients is one of the most rewarding aspects of my career. I truly value each and every one of my client relationships. With our experience, knowledge and incredibly talented team, I look forward to RBT’s continued growth and success.”

Managing Partner, Michael Turturro adds, “We’re thrilled to welcome Carolyn to our partner group. Carolyn is an example of dedication to professional growth as well as commitment to clients. We look forward to seeing her thrive as a partner at RBT.”

RBT CPA’s Nicole Gilmartin, CPA, Admitted to the Partnership

FOR IMMEDIATE RELEASE

Nicole M. Gilmartin, CPA, MBARBT CPAs LLP takes great pleasure in announcing that Nicole Gilmartin, CPA, of Wappingers Falls, New York, has been admitted to the firm as a partner.

Nicole graduated from SUNY New Paltz in 2016 with a Bachelor of Science in Accounting. Nicole began at RBT as an intern, joining the Client Advisory team after graduation. Since joining RBT, Nicole has obtained her CPA and earned an MBA in Public Accountancy from SUNY New Paltz.

Nicole is passionate about engaging with her local community. She serves on a number of local committees including The Chamber Foundation Professional Development Programming Committee, the Hudson Valley Young Professionals Professional Development and Education Committee, the New York State Society of CPA’s Next Gen Committee, and the Angels of Light Angels of Rock Event Committee. She has also been a mentor for the Leadership Dutchess program ever since graduating from the program in 2020.

Nicole’s passion for community service started seven years ago when she first became involved with United Way of the Dutchess-Orange Region. Nicole has volunteered with United Way since that time, serving as the Employee Campaign Manager for the workplace campaign at RBT CPAs, a member of the Emerging Leaders Committee, and a member of the Women United Planning Committee.

Nicole is a lifelong resident of Dutchess County, New York. On her new role as partner, she says “I am excited to become a partner at RBT, where the values of high-quality service, strong relationships, and a deep commitment to the community align with my own. I look forward to growing alongside my team and clients and building lasting relationships.”

Managing Partner, Michael Turturro adds, “Nicole is a very welcome addition to our partner group. Nicole has been an integral member of our Client Advisory team, bringing with her a commitment to quality service and a passion for supporting the local community. We congratulate her on her new role as partner at RBT and look forward to all the amazing work she will do.”

RBT CPAs, LLP has offices located at 11 Racquet Road, Newburgh, NY; 2678 South Road Suite 101, Poughkeepsie, NY; 51 Sullivan Street PO Box 209, Wurtsboro, NY; 590 Madison Avenue 21st Floor, New York, NY; Lake Katrine 2215 Route 9W, Lake Katrine, NY; and Hudson 4071 Route 9, Hudson, NY. We provide accounting, auditing, tax, and business consulting services to clients in the greater Hudson Valley, as well as in other areas of New York State, Connecticut, and New Jersey.

New Legislation in Effect: New York State Department of Labor Contractor Registry

New Legislation in Effect: New York State Department of Labor Contractor Registry

The new year brings with it new legal requirements for contractors and subcontractors in New York State. On December 30, 2024, Section 220-I of the New York Labor Law went into effect. This new law requires registration with the Department of Labor for all contractors and subcontractors working on public projects, as well as private projects covered under Article 8 of the Labor Law.

The legislation has been enacted in an effort to increase compliance with New York’s prevailing wage laws and other laws protecting workers.

As of December 30, contractors must register before submitting any new bids or starting work on covered projects. Any contractor or subcontractor planning to bid on a covered project who has not yet done so should register immediately.

Review and processing time for applications is estimated to take three to four weeks. As such, the New York State Department of Labor (NYSDOL) encourages all contractors and subcontractors to register as soon as possible to avoid impacting project schedules or bidding periods. Please note that registration is not valid until an application has been reviewed and a certificate has been issued.

The NYSDOL lays out the steps for registering on their website. As part of the application process, contractors and subcontractors will need to provide details regarding their business and its officials, workers’ compensation and unemployment insurance, any previous labor law or employment tax law violations, previous violations of workplace safety laws or standards, and apprenticeship programs if applicable. Also, contractors who are in arrears on NYS State Unemployment Tax (NYS-45 SUTA) may be denied a certificate by the DOL until addressing past due amounts.  For a full list of required information and documents, see the NYSDOL website’s page titled “What You Need to Register for the Contractor and Subcontractor Registry.”

A $200 fee is due upon registration, reduced to $100 for New York State certified Minority or Woman-owned Business Enterprises (MWBEs).

Once registration is approved, a registration certificate will be available for download in the Contractor Registry Portal. The certificate is valid for two calendar years from the date of issuance. It is important to note that registration must be renewed at least ninety days before the current registration expires. Contractors and subcontractors can check the status of their registration at any time through the Contractor Registry Portal.

Contractors who do not register with the DOL run the risk of not being awarded public works jobs. Additionally, failing to comply with registration requirements may result in a penalty of up to $1000 and the issuance of a stop work order. Register now to avoid these risks.

Lastly, the burden of proof of registration for all subcontractors will fall on the prime contractor.  Prime contractors can initially review the NYS DOL website registry to see if a sub has applied and been approved. However, they should set a new standard of collecting a copy of the subcontractor’s registration certificate as part of a bid package or prequalification. Please note that registration under this new law does not replace or change other legal requirements for contractors and subcontractors, but stands in addition to previously existing requirements.

The Frequently Asked Questions page on NYSDOL’s website provides helpful information for registrants. The Bureau of Public Works and Prevailing Wage can also be contacted for additional information or assistance regarding the registration process at 518-457-5589.