A Local Law to amend the administrative code of the city of New York, in relation to the commercial rent tax

Int. No. 799-B

By Council Members Garodnick, Rosenthal, Chin, Mendez, Johnson, Kallos, Levine, Ferreras-Copeland, Cornegy, Rodriguez, Constantinides, Koo, Koslowitz, Mealy, Rose, Cabrera, Cumbo, Deutsch, Espinal, Gentile, Greenfield, Grodenchik, King, Lancman, Maisel, Miller, Salamanca, Torres, Treyger, Vallone, Van Bramer, Williams, Menchaca, Dromm, Levin, Richards, Perkins, Reynoso, Lander, Gibson, Borelli, Ulrich and Matteo

A Local Law to amend the administrative code of the city of New York, in relation to the commercial rent tax

Be it enacted by the Council as follows:

Section 1. The administrative code of the city of New York is amended by adding a new section 11-704.4 to read as follows:

11-704.4. Small business tax credit. a. Definitions. As used in this section, the following terms have the following meanings:

Base rent. The term “base rent” shall mean the base rent calculated without regard to any reduction in base rent allowed by paragraph two of subdivision h of section 11-704.

Income factor. The term “income factor” shall mean:

1. for a tenant with total income of not more than five million dollars, one;

2. for a tenant with total income of more than five million dollars but not more than ten million dollars, a fraction the numerator of which is ten million dollars minus the amount of total income and the denominator of which is five million dollars; and

3. for a tenant with total income of more than ten million dollars, zero.

Rent factor. The term “rent factor” shall mean:

1. for a tenant whose base rent is less than five hundred thousand dollars, one; and

2. for a tenant whose base rent is at least five hundred thousand dollars but not more than five hundred and fifty thousand dollars, a fraction the numerator of which is five hundred and fifty thousand dollars minus the amount of base rent and the denominator of which is fifty thousand dollars.

Total income. The term “total income” shall mean the amount reported by a person, as defined by section 7701 of the internal revenue code, to the internal revenue service for the purpose of the federal income tax in the tax year immediately preceding the period for which the tenant is applying for the credit set forth in subdivision b that is equal to the gross receipts or sales of the person minus any returns and allowances, minus the cost of goods plus the amount of any dividends, interest, gross rents, gross royalties, capital gain net income, net gain or loss from the sale of business property, net farm profit or loss, ordinary income or loss from other partnerships, estates or trusts or other income or loss.

b. Beginning on July 1, 2018 and for each tax year beginning thereafter, a credit shall be allowed against the tax imposed by this chapter as follows: a tenant whose base rent is at least two hundred and fifty thousand dollars but not more than five hundred and fifty thousand dollars shall be allowed a credit in the amount determined by multiplying the tax imposed on the tenant pursuant to section 11-702 minus any allowable credits or exemptions set forth outside this section by the income factor and by the rent factor. If the tenant's base rent is over five hundred and fifty thousand dollars, no credit shall be allowed under this section.

c. The department of finance may promulgate any rules necessary to implement the provisions of this section, including, but not limited to, rules that prevent abuse of this section by related parties.

§ 2. This local law takes effect immediately.

RKC 05-21-15 11:15am, amended 03-25-16 9:58am, amended 11-22-17 5:48pm

LS #3355