§ 606. Credits against tax. (a) Investment tax credit (ITC). (1) A taxpayer shall be allowed a credit, to be computed as hereinafter provided, against the tax imposed by this article. The amount of the credit shall be the per cent provided for hereinbelow of the investment credit base. The investment credit base is the cost or other basis, for federal income tax purposes, of tangible personal property and other tangible property, including buildings and structural components of buildings, described in paragraph two of this subsection, less the amount of the nonqualified nonrecourse financing with respect to such property to the extent such financing would be excludible from the credit base pursuant to section 46(c)(8) of the internal revenue code (treating such property as section thirty-eight property irrespective of whether or not it in fact constitutes section thirty-eight property). If, at the close of a taxable year following the taxable year in which such property was placed in service, there is a net decrease in the amount of nonqualified nonrecourse financing with respect to such property, such net decrease shall be treated as if it were the cost or other basis of property described in paragraph two of this subsection acquired, constructed, reconstructed or erected during the year of the decrease in the amount of nonqualified nonrecourse financing. The percentage to be used to compute the credit allowed pursuant to this subsection shall be that percentage appearing in column two which is opposite the appropriate period in column one in which the tangible personal property was acquired, constructed, reconstructed or erected, as the case may be: Column 1 Column 2 After December 31, 1968 and prior to January 1, 1974 one per cent After December 31, 1973 and prior to January 1, 1978 two per cent After December 31, 1977 and prior to January 1, 1979 three per cent After December 31, 1978 and prior to June 1, 1981 four per cent After May 31, 1981 and prior to July 1, 1982 five per cent After June 30, 1982 and before January 1, 1987 six per cent After December 31, 1986 four per cent, except that in the case of research and development property the applicable percentage shall be seven Provided, however, that in the case of an acquisition, construction, reconstruction or erection which was commenced in any one period and continued or completed in any subsequent period the credit shall be the sum of the portions of the investment credit base attributable to each such period, which portion with respect to each such period shall be ascertained by multiplying such investment credit base by a fraction the numerator of which shall be the expenditures paid or incurred during such period for such purposes and the denominator of which shall be the total of all expenditures paid or incurred for such acquisition, construction, reconstruction or erection, multiplied by the allowable percentage for each such period. (2)(A) A credit shall be allowed under this subsection with respect to tangible personal property and other tangible property, including buildings and structural components of buildings, which are: depreciablepursuant to section one hundred sixty-seven of the internal revenue code, have a useful life of four years or more, are acquired by purchase as defined in section one hundred seventy-nine (d) of the internal revenue code, have a situs in this state and are (i) principally used by the taxpayer in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture or commercial fishing, (ii) industrial waste treatment facilities or air pollution control facilities, used in the taxpayer's trade or business, (iii) research and development property, (iv) principally used in the ordinary course of the taxpayer's trade or business as a broker or dealer in connection with the purchase or sale (which shall include but not be limited to the issuance, entering into, assumption, offset, assignment, termination, or transfer) of stocks, bonds or other securities as defined in section four hundred seventy-five (c)(2) of the Internal Revenue Code, or of commodities as defined in section 475(e) of the Internal Revenue Code, (v) principally used in the ordinary course of the taxpayer's trade or business of providing investment advisory services for a regulated investment company as defined in section eight hundred fifty-one of the Internal Revenue Code, or lending, loan arrangement or loan origination services to customers in connection with the purchase or sale (which shall include but not be limited to the issuance, entering into, assumption, offset, assignment, termination, or transfer) of securities as defined in section four hundred seventy-five (c)(2) of the Internal Revenue Code, or (vi) principally used as a qualified film production facility including qualified film production facilities having a situs in an empire zone designated as such pursuant to article eighteen-B of the general municipal law, where the taxpayer is providing three or more services to any qualified film production company using the facility, including such services as a studio lighting grid, lighting and grip equipment, multi-line phone service, broadband information technology access, industrial scale electrical capacity, food services, security services, and heating, ventilation and air conditioning. For purposes of clauses (iv) and (v) of this subparagraph, property purchased by a taxpayer affiliated with a regulated broker, dealer, or registered investment adviser is allowed a credit under this subsection if the property is used by its affiliated regulated broker, dealer or registered investment adviser in accordance with this subsection. For purposes of determining if the property is principally used in qualifying uses, the uses by the taxpayer described in clauses (iv) and (v) of this subparagraph may be aggregated. In addition, the uses by the taxpayer, its affiliated regulated broker, dealer and registered investment adviser under either or both of those clauses may be aggregated. Provided, however, a taxpayer shall not be allowed the credit provided by clauses (iv) and (v) of this subparagraph unless (I) eighty percent or more of the employees performing the administrative and support functions resulting from or related to the qualifying uses of such equipment are located in this state, or (II) the average number of employees that perform the administrative and support functions resulting from or related to the qualifying uses of such equipment and are located in this state during the taxable year for which the credit is claimed is equal to or greater than ninety-five percent of the average number of employees that perform these functions and are located in this state during the thirty-six months immediately preceding the year for which the credit is claimed, or (III) the number of employees located in this state during the taxable year for which the credit is claimed is equal to or greater than ninety percent of the number of employees located in this state on December thirty-first, nineteenhundred ninety-eight or, if the taxpayer was not a calendar year taxpayer in nineteen hundred ninety-eight, the last day of its first taxable year ending after December thirty-first, nineteen hundred ninety-eight. If the taxpayer becomes subject to tax in this state after the taxable year beginning in nineteen hundred ninety-eight, then the taxpayer is not required to satisfy the employment test provided in the preceding sentence of this subparagraph for its first taxable year. For the purposes of clause (III) of this subparagraph the employment test will be based on the number of employees located in this state on the last day of the first taxable year the taxpayer is subject to tax in this state. If the uses of the property must be aggregated to determine whether the property is principally used in qualifying uses, then either each affiliate using the property must satisfy this employment test or this employment test must be satisfied through the aggregation of the employees of the taxpayer, its affiliated regulated broker, dealer, and registered investment adviser using the property. For purposes of this subsection, the term "goods" shall not include electricity. (B) For purposes of this paragraph, the following definitions shall apply: (i) Manufacturing shall mean the process of working raw materials into wares suitable for use or which gives new shapes, new quality or new combinations to matter which already has gone through some artificial process by the use of machinery, tools, appliances and other similar equipment. Property used in the production of goods shall include machinery, equipment or other tangible property which is principally used in the repair and service of other machinery, equipment or other tangible property used principally in the production of goods and shall include all facilities used in the production operation, including storage of material to be used in production and of the products that are produced. (ii) Research and development property shall mean property which is used for purposes of research and development in the experimental or laboratory sense. Such purposes shall not be deemed to include the ordinary testing or inspection of materials or products for quality control, efficiency surveys, management studies, consumer surveys, advertising, promotions, or research in connection with literary, historical or similar projects. (iii) Industrial waste treatment facilities shall mean property constituting facilities for the treatment, neutralization or stabilization of industrial waste and other wastes (as the terms "industrial waste" and "other wastes" are defined in section 17-0105 of the environmental conservation law) from a point immediately preceding the point of such treatment, neutralization or stabilization to the point of disposal, including the necessary pumping and transmitting facilities, but excluding such facilities installed for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable. (iv) Air pollution control facilities shall mean property constituting facilities which remove, reduce, or render less noxious air contaminants emitted from an air contamination source (as the terms "air contaminant" and "air contamination source" are defined in section 19-0107 of the environmental conservation law) from a point immediately preceding the point of such removal, reduction or rendering to the point of discharge of air, meeting emission standards as established by the department of environmental conservation, but excluding such facilities installed for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable and excluding those facilities which rely for their efficacy on dilution, dispersion or assimilation ofair contaminants in the ambient air after emission. Such term shall further include flue gas desulfurization equipment and attendant sludge disposal facilities, fluidized bed boilers, precombustion coal cleaning facilities or other facilities that conform with this subsection and which comply with the provisions of the State Acid Deposition Control Act set forth in title nine of article nineteen of the environmental conservation law. (v) For purposes of this paragraph, the terms "qualified film production facility" and "qualified film production company" shall have the same meaning as in section twenty-four of this chapter. (C) However, such credit shall be allowed with respect to industrial waste treatment facilities and air pollution control facilities only on condition that such facilities have been certified by the state commissioner of environmental conservation or his designated representative, pursuant to subdivision one of section 17-0707 or subdivision one of section 19-0309 of the environmental conservation law, as complying with applicable provisions of the environmental conservation law, the public health law, the state sanitary code and codes, rules, regulations, permits or orders issued pursuant thereto. (3) A taxpayer shall not be allowed a credit under this subsection with respect to any property described in clause (i) of subparagraph (B) of paragraph two hereof if such property qualifies for the modification allowed under either paragraph three or paragraph four of subsection (g) of section six hundred twelve whether or not such amount shall have been subtracted. Provided, however, with respect to property which qualifies for a modification under either clause (A), (B) or (C) of paragraph four of subsection (g) because such property was ordered on or before December thirty-first, nineteen hundred sixty-eight, but with respect to which no expenditure has been paid or incurred at such date, the taxpayer may elect to subtract the amount allowable under clauses (A), (B) or (C) or may take the credit provided by this subsection, but not both. (4) A taxpayer shall not be allowed a credit under this subsection with respect to tangible personal property and other tangible property, including buildings and structural components of buildings, which it leases to any other person or corporation except where a taxpayer leases property to an affiliated regulated broker, dealer, or registered investment adviser that uses such property in accordance with clause (iv) or (v) of subparagraph (A) of paragraph two of this subsection. For purposes of the preceding sentence, any contract or agreement to lease or rent or for a license to use such property shall be considered a lease. Provided, however, in determining whether a taxpayer shall be allowed a credit under this subsection with respect to such property, any election made with respect to such property pursuant to the provisions of paragraph eight of subsection (f) of section one hundred sixty-eight of the internal revenue code, as such paragraph was in effect for agreements entered into prior to January first, nineteen hundred eighty-four, shall be disregarded. For purposes of this paragraph, the use of a qualified film production facility by a qualified film production company shall not be considered a lease of such facility to such company. (5) If the amount of credit allowable under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess allowed for a taxable year commencing prior to January first, nineteen hundred eighty-seven may be carried over to the following year or years and may be deducted from the taxpayer's tax for such year or years, but in no event shall such credit be carried over to taxable years commencing on or after January first, nineteen hundred ninety-seven, andany amount of credit allowed for a taxable year commencing on or after January first, nineteen hundred eighty-seven and not deductible in such year may be carried over to the ten taxable years next following such taxable year and may be deducted from the taxpayer's tax for such year or years. In lieu of carrying over any such excess, a taxpayer who qualifies as an owner of a new business for purposes of paragraph ten of this subsection may, at his option, receive such excess as a refund. Any refund paid pursuant to this paragraph shall be deemed to be a refund of an overpayment of tax as provided in section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (6) At the option of the taxpayer for taxable years commencing prior to January first, nineteen hundred eighty-seven, air or water pollution control facilities which qualify for elective modifications under subsection (h) of section six hundred twelve, or research and development facilities which qualify for elective modifications under paragraphs two and four of subsection (g) of section six hundred twelve may be treated as property principally used by the taxpayer in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture or commercial fishing, provided the property otherwise qualifies under paragraph two of this subsection, in which event, a modification shall not be allowed under such subsection (h) and under such paragraphs two and four of subsection (g). (7) (A) With respect to property which is depreciable pursuant to section one hundred sixty-seven of the internal revenue code but is not subject to the provisions of section one hundred sixty-eight of such code and which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to the months of useful life. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of its useful life, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. Provided, however, if such property is disposed of or ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit as provided in this subparagraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the months of useful life. For purposes of this subparagraph, useful life of property shall be the same as the taxpayer uses for depreciation purposes when computing his federal income tax liability. (B) Except with respect to that property to which subparagraph (D) of this paragraph applies, with respect to three-year property, as defined in subsection (e) of section one hundred sixty-eight of the internal revenue code, which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to thirty-six. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of thirty-six months, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to thirty-six.(C) Except with respect to that property to which subparagraph (D) of this paragraph applies, with respect to property subject to the provisions of section one hundred sixty-eight of the internal revenue code, other than three-year property as defined in subsection (e) of such section one hundred sixty-eight which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to sixty. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of sixty months, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to sixty. (D) With respect to any property to which section one hundred sixty-eight of the internal revenue code applies, which is a building or a structural component of a building and which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to the total number of months over which the taxpayer chooses to deduct the property under the internal revenue code. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of the period over which the taxpayer chooses to deduct the property under the internal revenue code, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. Provided, however, if such property is disposed of or ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit as provided in this subparagraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the total number of months over which the taxpayer chooses to deduct the property under the internal revenue code. (E) For purposes of this paragraph, property (i) which is described in subparagraph (B), (C) or (D) of this paragraph, and (ii) which is subject to paragraph twenty-six of subsection (c) and paragraph twenty-five of subsection (b) of section six hundred twelve of this chapter, shall be treated as property which is depreciable pursuant to section one hundred sixty-seven of the internal revenue code but is not subject to section one hundred sixty-eight of such code. (F) For purposes of this paragraph, where a credit is allowed with respect to an air pollution control facility on the basis of a certificate of compliance issued pursuant to the environmental conservation law and the certificate is revoked pursuant to subdivision three of section 19-0309 of the environmental conservation law, such revocation shall constitute a disposal or cessation of qualified use, unless such facility is described in clause (i) or (iii) of subparagraph (A) of paragraph two of this subsection. Also for purposes of this subparagraph, the use of an air pollution control facility or an industrial waste treatment facility for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable shall constitute a cessation of qualified use, unless such facility is described in clause (i) or (iii) of subparagraph (A) of paragraph two of this subsection.(G) For taxable years commencing on or after January first, nineteen hundred eighty-seven, the amount required to be added back pursuant to this paragraph shall be augmented by an amount equal to the product of such amount and the underpayment rate of interest (without regard to compounding), set by the commissioner pursuant to subsection (j) of section six hundred ninety-seven, in effect on the last day of the taxable year. (H) If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of section 46(c) (8) of the internal revenue code) with respect to any property with respect to which the credit under this subsection was limited based on attributable nonqualified nonrecourse financing, then an amount equal to the decrease in such credit which would have resulted from reducing, by the amount of such net increase, the cost or other basis taken into account with respect to such property must be added back in such taxable year. The amount of nonqualified nonrecourse financing shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of an indebtedness if such transfer occurs (or such agreement is entered into) more than one year after the date such indebtedness was incurred. (10) For purposes of paragraph five of this subsection, an individual who is either a sole proprietor or a member of a partnership shall qualify as an owner of a new business unless: (A) the business of which the individual is an owner is substantially similar in operation and in ownership to a business entity taxable, or previously taxable, under section one hundred eighty-three, one hundred eighty-four, one hundred eighty-five or one hundred eighty-six of article nine; article nine-A, thirty-two or thirty-three of this chapter; article twenty-three of this chapter or which would have been subject to tax under such article twenty-three (as such article was in effect on January first, nineteen hundred eighty) or the income (or losses) of which is (or was) includable under article twenty-two of this chapter whereby the intent and purpose of this paragraph and paragraph five of this subsection with respect to refunding of credit to new business would be evaded; or (B) the individual has operated such new business entity in this state for more than five taxable years (excluding short years of the business). (11) Retail enterprise tax credit. A retail enterprise, not eligible to claim the credit under paragraph one of this subsection, but eligible to claim the credit allowable under section thirty-eight of the internal revenue code pursuant solely to the provisions of subparagraph (E) of paragraph one of subsection (a) of section forty-eight of such code, shall be allowed a credit as hereinafter computed. The amount of the credit shall be the percentage appearing in paragraph one of this subsection for the periods described therein for the amount of qualified rehabilitation expenditures, as defined in subsection (g) of section forty-eight of such code, paid or incurred with respect to a qualified rehabilitated building, as defined in such subsection (g), located in this state and such expenditures shall be further limited to only the portion thereof paid or incurred with respect to that part of a qualified rehabilitated building employed by such taxpayer in the retail sales activity of such retail enterprise. For the purposes of this subsection, the term "retail enterprise" means a taxpayer which is: (A) a registered vendor under article twenty-eight of this chapter, (B) primarily engaged in the retail sale, as the term "retail sale" is defined in subparagraph (i) of paragraph four of subdivision (b) ofsection eleven hundred one of this chapter, of tangible personal property, and (C) otherwise eligible for the credit allowed pursuant to section thirty-eight of the internal revenue code. (12) Rehabilitation credit for historic barns. A taxpayer shall be allowed a credit, to be computed as hereinafter provided, against the tax imposed by this article. The amount of the credit shall be twenty-five percent of the taxpayer's qualified rehabilitation expenditures, as defined in paragraph two of subsection (c) of section forty-seven of the internal revenue code, which qualify as the basis for the credit provided for under paragraph one of subsection (b) of section thirty-eight of such code by reason of subsection one of section forty-six of such code, paid or incurred with respect to any barn located in this state which is a qualified rehabilitated building, as such term is defined in paragraph one of subsection (c) of such section forty-seven. For purposes of this paragraph, the term "barn" means a building originally designed and used for storing farm equipment or agricultural products, or for housing livestock. Provided, however, such qualified rehabilitation expenditures shall not include any such expenditures which are included, directly or indirectly, in the computation of a credit claimed by the taxpayer pursuant to paragraph one of this subsection. Provided further that no rehabilitation credit shall be allowed for any rehabilitation of a barn which, immediately prior to the commencement of such rehabilitation, was used for residential purposes, or which converts a barn not suitable for residential purposes into one which is so suitable, nor shall a rehabilitation credit be allowed for any rehabilitation that materially alters the historic appearance of the barn. (13)(A)(i) If a taxpayer is required by paragraph seven of this subsection to add back a portion of the credit taken because property was destroyed or ceased to be in qualified use as a direct result of the September eleventh, two thousand one terrorist attacks, such taxpayer may elect to defer the amount to be recaptured for all such property to the taxable year next succeeding the taxable year in which the destruction or cessation of qualified use occurred. The taxable year in which the destruction or cessation of qualified use occurred shall be hereinafter referred to as the "recapture event taxable year". If the taxpayer's total employment number in the state on the last day of the taxable year next succeeding the recapture event taxable year is a significant percentage of the taxpayer's average total employment number in the state for the taxpayer's recapture event taxable year and the two taxable years immediately preceding the recapture event taxable year, then the taxpayer shall not be required to recapture any credit with respect to such property. If the taxpayer's total employment number in the state on the last day of the taxable year next succeeding the recapture event taxable year is not a significant percentage of the taxpayer's average total employment number in the state for the taxpayer's recapture event taxable year and the two taxable years immediately preceding the recapture event taxable year, the taxpayer shall be required to recapture the portion of the credit taken under this subsection, as required by paragraph seven of this subsection, for all of its property destroyed or which ceased to be in qualified use as a direct result of the September eleventh, two thousand one terrorist attacks. The amount required to be recaptured shall be augmented as required pursuant to subparagraph (G) of paragraph seven of this subsection by using an interest rate equal to two times the rate of interest specified in such subparagraph seven applicable for the taxable year in which the recapture occurs.(ii) The taxpayer's total employment number shall include all employees of the taxpayer employed full-time by the taxpayer in the state. The average total employment number for the recapture event taxable year and the two taxable years immediately preceding the recapture event taxable year shall be computed by determining the taxpayer's total employment number on the thirty-first day of March, the thirtieth day of June, the thirtieth day of September and the thirty-first day of December during the applicable taxable years, adding together the number of such individuals determined to be so employed on each of such dates and dividing the sum so obtained by the number of such dates occurring within such applicable taxable years. However, in the case of the taxable year which included September eleventh, two thousand one, the average total employment number for such taxable year shall be determined by using the total employment number on September first, two thousand one in lieu of September thirtieth, two thousand one and, if such taxable year included December thirty-first, two thousand one, by excluding the total employment number on December thirty-first, two thousand one. (B) In lieu of subparagraph (A) of this paragraph, a taxpayer may elect to recapture the portion of the credit taken under this subsection, as required by paragraph seven of this subsection, for all of its property destroyed or which ceased to be in qualified use as a direct result of the September eleventh, two thousand one terrorist attacks, in the taxable year in which the destruction or cessation of qualified use occurred. If the taxpayer makes such election and acquires property (hereinafter referred to as "replacement property") to replace any property destroyed as a direct result of the September eleventh, two thousand one terrorist attacks (regardless of when such property was placed in service and whether a credit was claimed on that property pursuant to this subsection), and such replacement property is similar or related in service or use to such destroyed property, the investment credit base of the replacement property shall be determined without regard to any basis reduction required pursuant to section 1033 of the internal revenue code. (C) The election made by the taxpayer under subparagraph (A) or (B) of this paragraph shall be made in the manner and form prescribed by the commissioner. (D) A taxpayer, over fifty percent of whose employees died as a direct result of the September eleventh, two thousand one terrorist attacks, may make the election provided for in subparagraph (A) of this paragraph, and shall not be required to recapture any credit with respect to property which was destroyed or which ceased to be in qualified use as a direct result of such attacks, whether or not it meets the employment test specified in clause (i) of subparagraph (A) of this paragraph. (a-1) Employment incentive credit (EIC). (1)(A) Where a taxpayer is allowed a credit under subsection (a) of this section, other than at the optional rate applicable to research and development property, the taxpayer shall be allowed a credit for each of the two years next succeeding the taxable year for which the credit under such subsection (a) is allowed with respect to such property, whether or not deductible in such taxable year or in subsequent taxable years pursuant to paragraph five of subsection (a) of this section. Provided, however, that the credit allowable under this subsection for any taxable year shall be allowed only if the average number of employees during such taxable year is at least one hundred one percent of the average number of employees during the employment base year. The employment base year shall be the taxable year immediately preceding the taxable year forwhich the credit under such subsection (a) is allowed except that in the case of a new business, the employment base year shall be the taxable year in which the credit under such subsection (a) is allowed. (B) The amount of the credit allowed under this subsection shall be as set forth in the following table: Average number of employees during Credit allowed under this the taxable year expressed as a subsection expressed as a percentage of average number of percentage of the applicable employees in employment base year: investment credit base: Less than 102% 1.5% at least 102% and less than 103% 2% at least 103% 2.5% (2) The average number of employees in a taxable year shall be computed by ascertaining the number of employees within the state employed by the taxpayer on the thirty-first day of March, the thirtieth day of June, the thirtieth day of September and the thirty-first day of December in the taxable year, by adding together the number of employees ascertained on each of such dates and dividing the sum so obtained by the number of such abovementioned dates occurring within the taxable year. For the purposes of this subsection, the term "employees within the state" shall not include, except with respect to the employment base year, any employee with respect to whom a credit provided for under subsection (k) of this section is claimed for the taxable year, based on employment within a zone equivalent area designated as such pursuant to article eighteen-B of the general municipal law. (3) If the amount of credit allowable under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess allowed for a taxable year may be carried over to the ten taxable years next following such taxable year and may be deducted from the taxpayer's tax for such year or years. In lieu of carrying over any such excess, a taxpayer who qualifies as an owner of a new business for purposes of paragraph ten of subsection (a) of this section may, at his or her option, receive such excess as a refund. Any refund paid pursuant to this paragraph shall be deemed to be a refund of an overpayment of tax as provided in section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (b) Household credit. (1) A household credit shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one of this article. The credit, computed as described in paragraph two of this subsection, shall not exceed the tax determined under subsections (a) through (d) of section six hundred one for the taxable year, reduced by the credits permitted under sections six hundred twenty and six hundred twenty-one of this article. (2) (A) For any individual who is not married nor the head of a household nor a surviving spouse, the amount of the credit allowed pursuant to this subsection for taxable years beginning on or after January first, nineteen hundred eighty-six shall be determined in accordance with the following table: If household gross income is The credit shall be Not over $5,000 $75.00 Over $5,000 but not over $6,000 60.00 Over $6,000 but not over $7,000 50.00 Over $7,000 but not over $20,000 45.00 Over $20,000 but not over $25,000 40.00 Over $25,000 but not over $28,000 20.00(B) For any husband and wife, head of a household, or surviving spouse, the amount of the credit allowed pursuant to this subsection for taxable years beginning on or after January first, nineteen hundred eighty-six shall be determined in accordance with the following table: If household gross income is The credit shall be Not over $5,000 $90.00 plus an amount equal to $15.00 multiplied by a number which is one less than the number of exemptions for which the taxpayer (or in the case of a husband and wife, taxpayers) is entitled to a deduction for the taxable year for federal income tax purposes under subsections (b) and (c) of section one hundred fifty-one of the internal revenue code Over $5,000 but not over $6,000 $75.00 plus such an amount Over $6,000 but not over $7,000 $65.00 plus such an amount Over $7,000 but not over $20,000 $60.00 plus such an amount Over $20,000 but not over $22,000 $60.00 plus an amount equal to $10.00 multiplied by a number which is one less than the number of exemptions for which the taxpayer (or in the case of a husband and wife, taxpayers) is entitled to a deduction for the taxable year for federal income tax purposes under subsections (b) and (c) of section one hundred fifty-one of the internal revenue code Over $22,000 but not over $25,000 $50.00 plus such an amount Over $25,000 but not over $28,000 $40.00 plus an amount equal to $5.00 multiplied by a number which is one less than the number of exemptions for which the taxpayer (or in the case of a husband and wife, taxpayers) is entitled to a deduction for the taxable year for federal income tax purposes under subsections (b) and (c) of section one hundred fifty-one of the internal revenue code Over $28,000 but not over $32,000 $20.00 plus such an amount (3) For the purposes of this subsection: (A) "Household gross income" shall mean the aggregate federal adjusted gross income of a household, as the term household is defined in subparagraph (B) of this paragraph, for the taxable year. (B) "Household" means a husband and wife, a head of household, a surviving spouse, or an individual who is not married nor the head of a household nor a surviving spouse nor a taxpayer with respect to whom a deduction under subsection (c) of section one hundred fifty-one of the internal revenue code is allowable to another taxpayer for the taxable year. (C) "Household gross income of a husband and wife" shall be the aggregate of their federal adjusted gross incomes for the taxable year irrespective of whether joint or separate New York income tax returnsare filed. Provided, however, that a husband or wife who is required to file a separate New York income tax return shall be permitted one-half the credit otherwise allowed his or her household, except as limited by paragraph one of this subsection. (c) Credit for certain household and dependent care services necessary for gainful employment. (1) A taxpayer shall be allowed a credit as provided herein equal to the applicable percentage of the credit allowable under section twenty-one of the internal revenue code for the same taxable year (without regard to whether the taxpayer in fact claimed the credit under such section twenty-one for such taxable year). The applicable percentage shall be the sum of (i) twenty percent and (ii) a multiplier multiplied by a fraction. For taxable years beginning in nineteen hundred ninety-six and nineteen hundred ninety-seven, the numerator of such fraction shall be the lesser of (i) four thousand dollars or (ii) fourteen thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. For the taxable year beginning in nineteen hundred ninety-eight, the numerator of such fraction shall be the lesser of (i) thirteen thousand dollars or (ii) thirty thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. For taxable years beginning in nineteen hundred ninety-nine, the numerator of such fraction shall be the lesser of (i) fifteen thousand dollars or (ii) fifty thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. For taxable years beginning after nineteen hundred ninety-nine, the numerator of such fraction shall be the lesser of (i) fifteen thousand dollars or (ii) sixty-five thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. The denominator of such fraction shall be four thousand dollars for taxable years beginning in nineteen hundred ninety-six and nineteen hundred ninety-seven, thirteen thousand dollars for the taxable year beginning in nineteen hundred ninety-eight, and fifteen thousand dollars for taxable years beginning after nineteen hundred ninety-eight. The multiplier shall be ten percent for taxable years beginning in nineteen hundred ninety-six, forty percent for taxable years beginning in nineteen hundred ninety-seven, and eighty percent for taxable years beginning after nineteen hundred ninety-seven. Provided, however, for taxable years beginning after nineteen hundred ninety-nine, for a person whose New York adjusted gross income is less than forty thousand dollars, such applicable percentage shall be equal to (i) one hundred percent, plus (ii) ten percent multiplied by a fraction whose numerator shall be the lesser of (i) fifteen thousand dollars or (ii) forty thousand dollars less the New York adjusted gross income for the taxable year, provided such numerator shall not be less than zero, and whose denominator shall be fifteen thousand dollars. Provided, further, that if the reversion event, as defined in this paragraph, occurs, the applicable percentage shall, for taxable years ending on or after the date on which the reversion event occurred, be determined using the rules specified in this paragraph applicable to taxable years beginning in nineteen hundred ninety-nine. The reversion event shall be deemed to have occurred on the date on which federal action, including but not limited to, administrative, statutory or regulatory changes, materially reduces or eliminates New York state's allocation of the federal temporary assistance for needy families block grant, or materially reduces the ability of the state to spend federal temporary assistance for needy families block grant funds for the creditfor certain household and dependent care services necessary for gainful employment or to apply state general fund spending on the credit for certain household and dependent care services necessary for gainful employment toward the temporary assistance for needy families block grant maintenance of effort requirement, and the commissioner of the office of temporary and disability assistance shall certify the date of such event to the commissioner, the director of the division of the budget, the speaker of the assembly and the temporary president of the senate. (2) Residents. In the case of a resident taxpayer, the credit under this subsection shall be allowed against the taxes imposed by this article for the taxable year reduced by the credits permitted by this article. If the credit exceeds the tax as so reduced, the taxpayer may receive, and the comptroller, subject to a certificate of the commissioner, shall pay as an overpayment, without interest, the amount of such excess. (3) Nonresidents. In the case of a nonresident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one. The amount of the credit shall not exceed the tax determined under such subsections for the taxable year reduced by the credit permitted under subsection (b) of this section. (4) Part-year residents. In the case of a part-year resident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one reduced by the credit permitted under subsection (b) of this section, and any excess credit after such application shall be allowed against the taxes imposed by sections six hundred two and six hundred three. Any remaining excess, after such application, shall be refunded as provided in paragraph two hereof, provided, however, that any overpayment under such paragraph shall be limited to the amount of the remaining excess multiplied by a fraction, the numerator of which is federal adjusted gross income for the period of residence, computed as if the taxable year for federal income tax purposes were limited to the period of residence, and the denominator of which is federal adjusted gross income for the taxable year. (5) In the case of a husband and wife who file a joint federal return, but who are required to determine their New York taxes separately, the credit allowed pursuant to this subsection may only be applied against the tax imposed on the spouse with the lower taxable income, computed without regard to such credit. In the case of a husband and wife who are not required to file a federal return, the credit under this subsection shall be allowed only if such taxpayers file a joint New York income tax return. (c-1) Empire state child credit. (1) A resident taxpayer shall be allowed a credit as provided herein equal to the greater of one hundred dollars times the number of qualifying children of the taxpayer or the applicable percentage of the child tax credit allowed the taxpayer under section twenty-four of the internal revenue code for the same taxable year for each qualifying child. Provided, however, in the case of a taxpayer whose federal adjusted gross income exceeds the applicable threshold amount set forth by section 24(b)(2) of the Internal Revenue Code, the credit shall only be equal to the applicable percentage of the child tax credit allowed the taxpayer under section 24 of the Internal Revenue Code for each qualifying child. For the purposes of this subsection, a qualifying child shall be a child who meets the definition of qualified child under section 24(c) of the internal revenue code andis at least four years of age. The applicable percentage shall be thirty-three percent. (2) If the amount of the credit allowed under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (3) In the case of a husband and wife who file a joint federal return, but who are required to determine their New York taxes separately, the credit allowed pursuant to this subsection may be applied against the tax imposed of either or divided between them as they may elect. (d) Earned income credit. (1) General. A taxpayer shall be allowed a credit as provided herein equal to (i) the applicable percentage of the earned income credit allowed under section thirty-two of the internal revenue code for the same taxable year, (ii) reduced by the credit permitted under subsection (b) of this section. The applicable percentage shall be (i) seven and one-half percent for taxable years beginning in nineteen hundred ninety-four, (ii) ten percent for taxable years beginning in nineteen hundred ninety-five, (iii) twenty percent for taxable years beginning after nineteen hundred ninety-five and before two thousand, (iv) twenty-two and one-half percent for taxable years beginning in two thousand, (v) twenty-five percent for taxable years beginning in two thousand one, (vi) twenty-seven and one-half percent for taxable years beginning in two thousand two, and (vii) thirty percent for taxable years beginning in two thousand three and thereafter. Provided, however, that if the reversion event, as defined in this paragraph, occurs, the applicable percentage shall be twenty percent for taxable years ending on or after the date on which the reversion event occurred. The reversion event shall be deemed to have occurred on the date on which federal action, including but not limited to, administrative, statutory or regulatory changes, materially reduces or eliminates New York state's allocation of the federal temporary assistance for needy families block grant, or materially reduces the ability of the state to spend federal temporary assistance for needy families block grant funds for the earned income credit or to apply state general fund spending on the earned income credit toward the temporary assistance for needy families block grant maintenance of effort requirement, and the commissioner of the office of temporary and disability assistance shall certify the date of such event to the commissioner of taxation and finance, the director of the division of the budget, the speaker of the assembly and the temporary president of the senate. (2) Residents. In the case of a resident taxpayer, the credit under this subsection shall be allowed against the taxes imposed by this article for the taxable year reduced by the credits permitted by this article. If the credit exceeds the tax as so reduced, the taxpayer may receive, and the comptroller, subject to a certificate of the commissioner, shall pay as an overpayment, without interest, the amount of such excess. (3) Nonresidents. In the case of a nonresident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one. The amount of the credit shall not exceed the tax determined under such subsections for the taxable year reduced by the credits permitted under subsections (b), (c) and (m) of this section. (4) Part-year residents. In the case of a part-year resident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred onereduced by the credits permitted under subsections (b), (c) and (m) of this section, and any excess credit after such application shall be allowed against the taxes imposed by sections six hundred two and six hundred three. Any remaining excess, after such application, shall be refunded as provided in paragraph two hereof, provided, however, that any overpayment under such paragraph shall be limited to the amount of the remaining excess multiplied by a fraction, the numerator of which is federal adjusted gross income for the period of residence, computed as if the taxable year for federal income tax purposes were limited to the period of residence, and the denominator of which is federal adjusted gross income for the taxable year. (5) Husband and wife. In the case of a husband and wife who file a joint federal return but who are required to determine their New York taxes separately, the credit allowed pursuant to this subsection may be applied against the tax of either or divided between them as they may elect. (6) Notification. The commissioner shall periodically, but not less than every three years, make efforts to alert taxpayers that may be currently eligible to receive the credit provided under this subsection, and the credit provided under any local law enacted pursuant to subsection (f) of section thirteen hundred ten of this chapter, as to their potential eligibility. In making the determination of whether a taxpayer may be eligible for such credit, the commissioner shall use such data as may be appropriate and available, including, but not limited to, data available from the United States Department of Treasury, Internal Revenue Service and New York state income tax returns for preceding tax years. (7) Reports. The commissioner shall prepare a preliminary written report after July thirty-first and a final written report after December thirty-first of each calendar year, which shall contain statistical information regarding the credits granted on or before such dates under this subsection, and under any local law enacted pursuant to subsection (f) of section thirteen hundred ten of this chapter, during such calendar year. Copies of these reports shall be submitted by such commissioner to the governor, the temporary president of the senate, the speaker of the assembly, the chairman of the senate finance committee and the chairman of the assembly ways and means committee within sixty days of July thirty-first with respect to the preliminary report, and within forty-five days of December thirty-first with respect to the final report, and copies of such reports with respect to credits under any local law enacted pursuant to subsection (f) of section thirteen hundred ten of this chapter shall be submitted in addition to the mayor and the speaker of the council of the city where such a local law is in effect. Such reports shall contain, but need not be limited to, the number of credits and the average amount of such credits allowed; and of those, the number of credits and the average amount of such credits allowed to taxpayers in each county; and of those, the number of credits and the average amount of such credits allowed to taxpayers whose earned income falls within ranges, determined by the commissioner, of not more than four thousand dollars; and of those, the number of credits and the average amount of such credits allowed to taxpayers who file under the different statuses set forth in subsections (a), (b) and (c) of section six hundred one of this part; and of those, the number of credits and the average amount of such credits allowed to taxpayers whose number of qualifying children falls within the categories set forth in such section thirty-two of the internal revenue code.(d-1) Enhanced earned income tax credit. (1) A taxpayer described in paragraph two of this subsection shall be allowed a credit equal to the greater of: (A) twenty percent of the amount of the earned income tax credit that would have been allowed to the taxpayer under section 32 of the internal revenue code, absent the application of section 32(b)(2)(B) of such code, if the child or children described in subparagraph (C) of paragraph two of this subsection satisfied the requirements for a qualifying child set forth in section 32(c)(3) of such code, provided however, that the credit shall be calculated as if the taxpayer had only one child; or (B) the product of two and one-half and the amount of the earned income tax credit that would have been allowed to the taxpayer under section 32 of the internal revenue code, if the taxpayer satisfied the eligibility requirements set forth in section 32(c)(1)(A)(ii) of such code. (2) To be allowed a credit under this subsection, a taxpayer must satisfy all of the following qualifications. (A) The taxpayer must be a resident taxpayer. (B) The taxpayer must have attained the age of eighteen. (C) The taxpayer must be the parent of a minor child or children with whom the taxpayer does not reside. (D) The taxpayer must have an order requiring him or her to make child support payments, which are payable through a support collection unit established pursuant to section one hundred eleven-h of the social services law, which order must have been in effect for at least one-half of the taxable year. (E) The taxpayer must have paid an amount in child support in the taxable year at least equal to the amount of current child support due during the taxable year for every order requiring him or her to make child support payments. (3) If the amount of the credit allowed under this subsection shall exceed the taxpayer's tax for such year, the excess shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (4) No claim for credit under this subsection shall be allowed unless the department has verified, from information provided by the office of temporary and disability assistance, that a taxpayer has satisfied the qualifications set forth in subparagraphs (C), (D) and (E) of paragraph two of this subsection. The office of temporary and disability assistance shall provide to the department by January fifteenth of each year information applicable for the immediately preceding tax year necessary for the department to make such verification. Such information shall be provided in the manner and form agreed upon by the department and such office. If a taxpayer's claim for a credit under this subsection is disallowed because the taxpayer has not satisfied the qualifications set forth in subparagraphs (C), (D) and (E) of paragraph two of this subsection, the taxpayer may request a review of those qualifications by the support collection unit established pursuant to section one hundred eleven-h of the social services law through which the child support payments were payable. The support collection unit shall transmit the result of that review to the office of temporary and disability assistance on a form developed by such office. Such office shall then transmit such result to the department in a manner agreed upon by the department and such office. (5) A taxpayer shall not be allowed multiple credits under this subsection for a taxable year even if such taxpayer has more than onechild or has more than one order requiring him or her to make child support payments. (6) If a credit is allowed under this subsection and the taxpayer is also allowed a credit under subsection (d) of this section, the taxpayer shall only be allowed to claim one credit. (7) In the report prepared pursuant to paragraph seven of subsection (d) of this section, the commissioner shall include statistical information concerning the credit allowed pursuant to this subsection. Such information shall be limited to the number of credits and the average amount of such credits allowed; and of those, the number of credits and the average amounts of such credits allowed to taxpayers in each county. (8) In a report prepared by the commissioner and submitted to the office of temporary and disability assistance, the department shall include information concerning the credit allowed pursuant to this subsection indicating whether or not taxpayers identified by the office of temporary and disability assistance pursuant to paragraph
§ 606. Credits against tax. (a) Investment tax credit (ITC). (1) A taxpayer shall be allowed a credit, to be computed as hereinafter provided, against the tax imposed by this article. The amount of the credit shall be the per cent provided for hereinbelow of the investment credit base. The investment credit base is the cost or other basis, for federal income tax purposes, of tangible personal property and other tangible property, including buildings and structural components of buildings, described in paragraph two of this subsection, less the amount of the nonqualified nonrecourse financing with respect to such property to the extent such financing would be excludible from the credit base pursuant to section 46(c)(8) of the internal revenue code (treating such property as section thirty-eight property irrespective of whether or not it in fact constitutes section thirty-eight property). If, at the close of a taxable year following the taxable year in which such property was placed in service, there is a net decrease in the amount of nonqualified nonrecourse financing with respect to such property, such net decrease shall be treated as if it were the cost or other basis of property described in paragraph two of this subsection acquired, constructed, reconstructed or erected during the year of the decrease in the amount of nonqualified nonrecourse financing. The percentage to be used to compute the credit allowed pursuant to this subsection shall be that percentage appearing in column two which is opposite the appropriate period in column one in which the tangible personal property was acquired, constructed, reconstructed or erected, as the case may be: Column 1 Column 2 After December 31, 1968 and prior to January 1, 1974 one per cent After December 31, 1973 and prior to January 1, 1978 two per cent After December 31, 1977 and prior to January 1, 1979 three per cent After December 31, 1978 and prior to June 1, 1981 four per cent After May 31, 1981 and prior to July 1, 1982 five per cent After June 30, 1982 and before January 1, 1987 six per cent After December 31, 1986 four per cent, except that in the case of research and development property the applicable percentage shall be seven Provided, however, that in the case of an acquisition, construction, reconstruction or erection which was commenced in any one period and continued or completed in any subsequent period the credit shall be the sum of the portions of the investment credit base attributable to each such period, which portion with respect to each such period shall be ascertained by multiplying such investment credit base by a fraction the numerator of which shall be the expenditures paid or incurred during such period for such purposes and the denominator of which shall be the total of all expenditures paid or incurred for such acquisition, construction, reconstruction or erection, multiplied by the allowable percentage for each such period. (2)(A) A credit shall be allowed under this subsection with respect to tangible personal property and other tangible property, including buildings and structural components of buildings, which are: depreciablepursuant to section one hundred sixty-seven of the internal revenue code, have a useful life of four years or more, are acquired by purchase as defined in section one hundred seventy-nine (d) of the internal revenue code, have a situs in this state and are (i) principally used by the taxpayer in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture or commercial fishing, (ii) industrial waste treatment facilities or air pollution control facilities, used in the taxpayer's trade or business, (iii) research and development property, (iv) principally used in the ordinary course of the taxpayer's trade or business as a broker or dealer in connection with the purchase or sale (which shall include but not be limited to the issuance, entering into, assumption, offset, assignment, termination, or transfer) of stocks, bonds or other securities as defined in section four hundred seventy-five (c)(2) of the Internal Revenue Code, or of commodities as defined in section 475(e) of the Internal Revenue Code, (v) principally used in the ordinary course of the taxpayer's trade or business of providing investment advisory services for a regulated investment company as defined in section eight hundred fifty-one of the Internal Revenue Code, or lending, loan arrangement or loan origination services to customers in connection with the purchase or sale (which shall include but not be limited to the issuance, entering into, assumption, offset, assignment, termination, or transfer) of securities as defined in section four hundred seventy-five (c)(2) of the Internal Revenue Code, or (vi) principally used as a qualified film production facility including qualified film production facilities having a situs in an empire zone designated as such pursuant to article eighteen-B of the general municipal law, where the taxpayer is providing three or more services to any qualified film production company using the facility, including such services as a studio lighting grid, lighting and grip equipment, multi-line phone service, broadband information technology access, industrial scale electrical capacity, food services, security services, and heating, ventilation and air conditioning. For purposes of clauses (iv) and (v) of this subparagraph, property purchased by a taxpayer affiliated with a regulated broker, dealer, or registered investment adviser is allowed a credit under this subsection if the property is used by its affiliated regulated broker, dealer or registered investment adviser in accordance with this subsection. For purposes of determining if the property is principally used in qualifying uses, the uses by the taxpayer described in clauses (iv) and (v) of this subparagraph may be aggregated. In addition, the uses by the taxpayer, its affiliated regulated broker, dealer and registered investment adviser under either or both of those clauses may be aggregated. Provided, however, a taxpayer shall not be allowed the credit provided by clauses (iv) and (v) of this subparagraph unless (I) eighty percent or more of the employees performing the administrative and support functions resulting from or related to the qualifying uses of such equipment are located in this state, or (II) the average number of employees that perform the administrative and support functions resulting from or related to the qualifying uses of such equipment and are located in this state during the taxable year for which the credit is claimed is equal to or greater than ninety-five percent of the average number of employees that perform these functions and are located in this state during the thirty-six months immediately preceding the year for which the credit is claimed, or (III) the number of employees located in this state during the taxable year for which the credit is claimed is equal to or greater than ninety percent of the number of employees located in this state on December thirty-first, nineteenhundred ninety-eight or, if the taxpayer was not a calendar year taxpayer in nineteen hundred ninety-eight, the last day of its first taxable year ending after December thirty-first, nineteen hundred ninety-eight. If the taxpayer becomes subject to tax in this state after the taxable year beginning in nineteen hundred ninety-eight, then the taxpayer is not required to satisfy the employment test provided in the preceding sentence of this subparagraph for its first taxable year. For the purposes of clause (III) of this subparagraph the employment test will be based on the number of employees located in this state on the last day of the first taxable year the taxpayer is subject to tax in this state. If the uses of the property must be aggregated to determine whether the property is principally used in qualifying uses, then either each affiliate using the property must satisfy this employment test or this employment test must be satisfied through the aggregation of the employees of the taxpayer, its affiliated regulated broker, dealer, and registered investment adviser using the property. For purposes of this subsection, the term "goods" shall not include electricity. (B) For purposes of this paragraph, the following definitions shall apply: (i) Manufacturing shall mean the process of working raw materials into wares suitable for use or which gives new shapes, new quality or new combinations to matter which already has gone through some artificial process by the use of machinery, tools, appliances and other similar equipment. Property used in the production of goods shall include machinery, equipment or other tangible property which is principally used in the repair and service of other machinery, equipment or other tangible property used principally in the production of goods and shall include all facilities used in the production operation, including storage of material to be used in production and of the products that are produced. (ii) Research and development property shall mean property which is used for purposes of research and development in the experimental or laboratory sense. Such purposes shall not be deemed to include the ordinary testing or inspection of materials or products for quality control, efficiency surveys, management studies, consumer surveys, advertising, promotions, or research in connection with literary, historical or similar projects. (iii) Industrial waste treatment facilities shall mean property constituting facilities for the treatment, neutralization or stabilization of industrial waste and other wastes (as the terms "industrial waste" and "other wastes" are defined in section 17-0105 of the environmental conservation law) from a point immediately preceding the point of such treatment, neutralization or stabilization to the point of disposal, including the necessary pumping and transmitting facilities, but excluding such facilities installed for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable. (iv) Air pollution control facilities shall mean property constituting facilities which remove, reduce, or render less noxious air contaminants emitted from an air contamination source (as the terms "air contaminant" and "air contamination source" are defined in section 19-0107 of the environmental conservation law) from a point immediately preceding the point of such removal, reduction or rendering to the point of discharge of air, meeting emission standards as established by the department of environmental conservation, but excluding such facilities installed for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable and excluding those facilities which rely for their efficacy on dilution, dispersion or assimilation ofair contaminants in the ambient air after emission. Such term shall further include flue gas desulfurization equipment and attendant sludge disposal facilities, fluidized bed boilers, precombustion coal cleaning facilities or other facilities that conform with this subsection and which comply with the provisions of the State Acid Deposition Control Act set forth in title nine of article nineteen of the environmental conservation law. (v) For purposes of this paragraph, the terms "qualified film production facility" and "qualified film production company" shall have the same meaning as in section twenty-four of this chapter. (C) However, such credit shall be allowed with respect to industrial waste treatment facilities and air pollution control facilities only on condition that such facilities have been certified by the state commissioner of environmental conservation or his designated representative, pursuant to subdivision one of section 17-0707 or subdivision one of section 19-0309 of the environmental conservation law, as complying with applicable provisions of the environmental conservation law, the public health law, the state sanitary code and codes, rules, regulations, permits or orders issued pursuant thereto. (3) A taxpayer shall not be allowed a credit under this subsection with respect to any property described in clause (i) of subparagraph (B) of paragraph two hereof if such property qualifies for the modification allowed under either paragraph three or paragraph four of subsection (g) of section six hundred twelve whether or not such amount shall have been subtracted. Provided, however, with respect to property which qualifies for a modification under either clause (A), (B) or (C) of paragraph four of subsection (g) because such property was ordered on or before December thirty-first, nineteen hundred sixty-eight, but with respect to which no expenditure has been paid or incurred at such date, the taxpayer may elect to subtract the amount allowable under clauses (A), (B) or (C) or may take the credit provided by this subsection, but not both. (4) A taxpayer shall not be allowed a credit under this subsection with respect to tangible personal property and other tangible property, including buildings and structural components of buildings, which it leases to any other person or corporation except where a taxpayer leases property to an affiliated regulated broker, dealer, or registered investment adviser that uses such property in accordance with clause (iv) or (v) of subparagraph (A) of paragraph two of this subsection. For purposes of the preceding sentence, any contract or agreement to lease or rent or for a license to use such property shall be considered a lease. Provided, however, in determining whether a taxpayer shall be allowed a credit under this subsection with respect to such property, any election made with respect to such property pursuant to the provisions of paragraph eight of subsection (f) of section one hundred sixty-eight of the internal revenue code, as such paragraph was in effect for agreements entered into prior to January first, nineteen hundred eighty-four, shall be disregarded. For purposes of this paragraph, the use of a qualified film production facility by a qualified film production company shall not be considered a lease of such facility to such company. (5) If the amount of credit allowable under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess allowed for a taxable year commencing prior to January first, nineteen hundred eighty-seven may be carried over to the following year or years and may be deducted from the taxpayer's tax for such year or years, but in no event shall such credit be carried over to taxable years commencing on or after January first, nineteen hundred ninety-seven, andany amount of credit allowed for a taxable year commencing on or after January first, nineteen hundred eighty-seven and not deductible in such year may be carried over to the ten taxable years next following such taxable year and may be deducted from the taxpayer's tax for such year or years. In lieu of carrying over any such excess, a taxpayer who qualifies as an owner of a new business for purposes of paragraph ten of this subsection may, at his option, receive such excess as a refund. Any refund paid pursuant to this paragraph shall be deemed to be a refund of an overpayment of tax as provided in section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (6) At the option of the taxpayer for taxable years commencing prior to January first, nineteen hundred eighty-seven, air or water pollution control facilities which qualify for elective modifications under subsection (h) of section six hundred twelve, or research and development facilities which qualify for elective modifications under paragraphs two and four of subsection (g) of section six hundred twelve may be treated as property principally used by the taxpayer in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture or commercial fishing, provided the property otherwise qualifies under paragraph two of this subsection, in which event, a modification shall not be allowed under such subsection (h) and under such paragraphs two and four of subsection (g). (7) (A) With respect to property which is depreciable pursuant to section one hundred sixty-seven of the internal revenue code but is not subject to the provisions of section one hundred sixty-eight of such code and which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to the months of useful life. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of its useful life, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. Provided, however, if such property is disposed of or ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit as provided in this subparagraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the months of useful life. For purposes of this subparagraph, useful life of property shall be the same as the taxpayer uses for depreciation purposes when computing his federal income tax liability. (B) Except with respect to that property to which subparagraph (D) of this paragraph applies, with respect to three-year property, as defined in subsection (e) of section one hundred sixty-eight of the internal revenue code, which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to thirty-six. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of thirty-six months, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to thirty-six.(C) Except with respect to that property to which subparagraph (D) of this paragraph applies, with respect to property subject to the provisions of section one hundred sixty-eight of the internal revenue code, other than three-year property as defined in subsection (e) of such section one hundred sixty-eight which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to sixty. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of sixty months, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to sixty. (D) With respect to any property to which section one hundred sixty-eight of the internal revenue code applies, which is a building or a structural component of a building and which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to the total number of months over which the taxpayer chooses to deduct the property under the internal revenue code. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of the period over which the taxpayer chooses to deduct the property under the internal revenue code, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. Provided, however, if such property is disposed of or ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit as provided in this subparagraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the total number of months over which the taxpayer chooses to deduct the property under the internal revenue code. (E) For purposes of this paragraph, property (i) which is described in subparagraph (B), (C) or (D) of this paragraph, and (ii) which is subject to paragraph twenty-six of subsection (c) and paragraph twenty-five of subsection (b) of section six hundred twelve of this chapter, shall be treated as property which is depreciable pursuant to section one hundred sixty-seven of the internal revenue code but is not subject to section one hundred sixty-eight of such code. (F) For purposes of this paragraph, where a credit is allowed with respect to an air pollution control facility on the basis of a certificate of compliance issued pursuant to the environmental conservation law and the certificate is revoked pursuant to subdivision three of section 19-0309 of the environmental conservation law, such revocation shall constitute a disposal or cessation of qualified use, unless such facility is described in clause (i) or (iii) of subparagraph (A) of paragraph two of this subsection. Also for purposes of this subparagraph, the use of an air pollution control facility or an industrial waste treatment facility for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable shall constitute a cessation of qualified use, unless such facility is described in clause (i) or (iii) of subparagraph (A) of paragraph two of this subsection.(G) For taxable years commencing on or after January first, nineteen hundred eighty-seven, the amount required to be added back pursuant to this paragraph shall be augmented by an amount equal to the product of such amount and the underpayment rate of interest (without regard to compounding), set by the commissioner pursuant to subsection (j) of section six hundred ninety-seven, in effect on the last day of the taxable year. (H) If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of section 46(c) (8) of the internal revenue code) with respect to any property with respect to which the credit under this subsection was limited based on attributable nonqualified nonrecourse financing, then an amount equal to the decrease in such credit which would have resulted from reducing, by the amount of such net increase, the cost or other basis taken into account with respect to such property must be added back in such taxable year. The amount of nonqualified nonrecourse financing shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of an indebtedness if such transfer occurs (or such agreement is entered into) more than one year after the date such indebtedness was incurred. (10) For purposes of paragraph five of this subsection, an individual who is either a sole proprietor or a member of a partnership shall qualify as an owner of a new business unless: (A) the business of which the individual is an owner is substantially similar in operation and in ownership to a business entity taxable, or previously taxable, under section one hundred eighty-three, one hundred eighty-four, one hundred eighty-five or one hundred eighty-six of article nine; article nine-A, thirty-two or thirty-three of this chapter; article twenty-three of this chapter or which would have been subject to tax under such article twenty-three (as such article was in effect on January first, nineteen hundred eighty) or the income (or losses) of which is (or was) includable under article twenty-two of this chapter whereby the intent and purpose of this paragraph and paragraph five of this subsection with respect to refunding of credit to new business would be evaded; or (B) the individual has operated such new business entity in this state for more than five taxable years (excluding short years of the business). (11) Retail enterprise tax credit. A retail enterprise, not eligible to claim the credit under paragraph one of this subsection, but eligible to claim the credit allowable under section thirty-eight of the internal revenue code pursuant solely to the provisions of subparagraph (E) of paragraph one of subsection (a) of section forty-eight of such code, shall be allowed a credit as hereinafter computed. The amount of the credit shall be the percentage appearing in paragraph one of this subsection for the periods described therein for the amount of qualified rehabilitation expenditures, as defined in subsection (g) of section forty-eight of such code, paid or incurred with respect to a qualified rehabilitated building, as defined in such subsection (g), located in this state and such expenditures shall be further limited to only the portion thereof paid or incurred with respect to that part of a qualified rehabilitated building employed by such taxpayer in the retail sales activity of such retail enterprise. For the purposes of this subsection, the term "retail enterprise" means a taxpayer which is: (A) a registered vendor under article twenty-eight of this chapter, (B) primarily engaged in the retail sale, as the term "retail sale" is defined in subparagraph (i) of paragraph four of subdivision (b) ofsection eleven hundred one of this chapter, of tangible personal property, and (C) otherwise eligible for the credit allowed pursuant to section thirty-eight of the internal revenue code. (12) Rehabilitation credit for historic barns. A taxpayer shall be allowed a credit, to be computed as hereinafter provided, against the tax imposed by this article. The amount of the credit shall be twenty-five percent of the taxpayer's qualified rehabilitation expenditures, as defined in paragraph two of subsection (c) of section forty-seven of the internal revenue code, which qualify as the basis for the credit provided for under paragraph one of subsection (b) of section thirty-eight of such code by reason of subsection one of section forty-six of such code, paid or incurred with respect to any barn located in this state which is a qualified rehabilitated building, as such term is defined in paragraph one of subsection (c) of such section forty-seven. For purposes of this paragraph, the term "barn" means a building originally designed and used for storing farm equipment or agricultural products, or for housing livestock. Provided, however, such qualified rehabilitation expenditures shall not include any such expenditures which are included, directly or indirectly, in the computation of a credit claimed by the taxpayer pursuant to paragraph one of this subsection. Provided further that no rehabilitation credit shall be allowed for any rehabilitation of a barn which, immediately prior to the commencement of such rehabilitation, was used for residential purposes, or which converts a barn not suitable for residential purposes into one which is so suitable, nor shall a rehabilitation credit be allowed for any rehabilitation that materially alters the historic appearance of the barn. (13)(A)(i) If a taxpayer is required by paragraph seven of this subsection to add back a portion of the credit taken because property was destroyed or ceased to be in qualified use as a direct result of the September eleventh, two thousand one terrorist attacks, such taxpayer may elect to defer the amount to be recaptured for all such property to the taxable year next succeeding the taxable year in which the destruction or cessation of qualified use occurred. The taxable year in which the destruction or cessation of qualified use occurred shall be hereinafter referred to as the "recapture event taxable year". If the taxpayer's total employment number in the state on the last day of the taxable year next succeeding the recapture event taxable year is a significant percentage of the taxpayer's average total employment number in the state for the taxpayer's recapture event taxable year and the two taxable years immediately preceding the recapture event taxable year, then the taxpayer shall not be required to recapture any credit with respect to such property. If the taxpayer's total employment number in the state on the last day of the taxable year next succeeding the recapture event taxable year is not a significant percentage of the taxpayer's average total employment number in the state for the taxpayer's recapture event taxable year and the two taxable years immediately preceding the recapture event taxable year, the taxpayer shall be required to recapture the portion of the credit taken under this subsection, as required by paragraph seven of this subsection, for all of its property destroyed or which ceased to be in qualified use as a direct result of the September eleventh, two thousand one terrorist attacks. The amount required to be recaptured shall be augmented as required pursuant to subparagraph (G) of paragraph seven of this subsection by using an interest rate equal to two times the rate of interest specified in such subparagraph seven applicable for the taxable year in which the recapture occurs.(ii) The taxpayer's total employment number shall include all employees of the taxpayer employed full-time by the taxpayer in the state. The average total employment number for the recapture event taxable year and the two taxable years immediately preceding the recapture event taxable year shall be computed by determining the taxpayer's total employment number on the thirty-first day of March, the thirtieth day of June, the thirtieth day of September and the thirty-first day of December during the applicable taxable years, adding together the number of such individuals determined to be so employed on each of such dates and dividing the sum so obtained by the number of such dates occurring within such applicable taxable years. However, in the case of the taxable year which included September eleventh, two thousand one, the average total employment number for such taxable year shall be determined by using the total employment number on September first, two thousand one in lieu of September thirtieth, two thousand one and, if such taxable year included December thirty-first, two thousand one, by excluding the total employment number on December thirty-first, two thousand one. (B) In lieu of subparagraph (A) of this paragraph, a taxpayer may elect to recapture the portion of the credit taken under this subsection, as required by paragraph seven of this subsection, for all of its property destroyed or which ceased to be in qualified use as a direct result of the September eleventh, two thousand one terrorist attacks, in the taxable year in which the destruction or cessation of qualified use occurred. If the taxpayer makes such election and acquires property (hereinafter referred to as "replacement property") to replace any property destroyed as a direct result of the September eleventh, two thousand one terrorist attacks (regardless of when such property was placed in service and whether a credit was claimed on that property pursuant to this subsection), and such replacement property is similar or related in service or use to such destroyed property, the investment credit base of the replacement property shall be determined without regard to any basis reduction required pursuant to section 1033 of the internal revenue code. (C) The election made by the taxpayer under subparagraph (A) or (B) of this paragraph shall be made in the manner and form prescribed by the commissioner. (D) A taxpayer, over fifty percent of whose employees died as a direct result of the September eleventh, two thousand one terrorist attacks, may make the election provided for in subparagraph (A) of this paragraph, and shall not be required to recapture any credit with respect to property which was destroyed or which ceased to be in qualified use as a direct result of such attacks, whether or not it meets the employment test specified in clause (i) of subparagraph (A) of this paragraph. (a-1) Employment incentive credit (EIC). (1)(A) Where a taxpayer is allowed a credit under subsection (a) of this section, other than at the optional rate applicable to research and development property, the taxpayer shall be allowed a credit for each of the two years next succeeding the taxable year for which the credit under such subsection (a) is allowed with respect to such property, whether or not deductible in such taxable year or in subsequent taxable years pursuant to paragraph five of subsection (a) of this section. Provided, however, that the credit allowable under this subsection for any taxable year shall be allowed only if the average number of employees during such taxable year is at least one hundred one percent of the average number of employees during the employment base year. The employment base year shall be the taxable year immediately preceding the taxable year forwhich the credit under such subsection (a) is allowed except that in the case of a new business, the employment base year shall be the taxable year in which the credit under such subsection (a) is allowed. (B) The amount of the credit allowed under this subsection shall be as set forth in the following table: Average number of employees during Credit allowed under this the taxable year expressed as a subsection expressed as a percentage of average number of percentage of the applicable employees in employment base year: investment credit base: Less than 102% 1.5% at least 102% and less than 103% 2% at least 103% 2.5% (2) The average number of employees in a taxable year shall be computed by ascertaining the number of employees within the state employed by the taxpayer on the thirty-first day of March, the thirtieth day of June, the thirtieth day of September and the thirty-first day of December in the taxable year, by adding together the number of employees ascertained on each of such dates and dividing the sum so obtained by the number of such abovementioned dates occurring within the taxable year. For the purposes of this subsection, the term "employees within the state" shall not include, except with respect to the employment base year, any employee with respect to whom a credit provided for under subsection (k) of this section is claimed for the taxable year, based on employment within a zone equivalent area designated as such pursuant to article eighteen-B of the general municipal law. (3) If the amount of credit allowable under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess allowed for a taxable year may be carried over to the ten taxable years next following such taxable year and may be deducted from the taxpayer's tax for such year or years. In lieu of carrying over any such excess, a taxpayer who qualifies as an owner of a new business for purposes of paragraph ten of subsection (a) of this section may, at his or her option, receive such excess as a refund. Any refund paid pursuant to this paragraph shall be deemed to be a refund of an overpayment of tax as provided in section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (b) Household credit. (1) A household credit shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one of this article. The credit, computed as described in paragraph two of this subsection, shall not exceed the tax determined under subsections (a) through (d) of section six hundred one for the taxable year, reduced by the credits permitted under sections six hundred twenty and six hundred twenty-one of this article. (2) (A) For any individual who is not married nor the head of a household nor a surviving spouse, the amount of the credit allowed pursuant to this subsection for taxable years beginning on or after January first, nineteen hundred eighty-six shall be determined in accordance with the following table: If household gross income is The credit shall be Not over $5,000 $75.00 Over $5,000 but not over $6,000 60.00 Over $6,000 but not over $7,000 50.00 Over $7,000 but not over $20,000 45.00 Over $20,000 but not over $25,000 40.00 Over $25,000 but not over $28,000 20.00(B) For any husband and wife, head of a household, or surviving spouse, the amount of the credit allowed pursuant to this subsection for taxable years beginning on or after January first, nineteen hundred eighty-six shall be determined in accordance with the following table: If household gross income is The credit shall be Not over $5,000 $90.00 plus an amount equal to $15.00 multiplied by a number which is one less than the number of exemptions for which the taxpayer (or in the case of a husband and wife, taxpayers) is entitled to a deduction for the taxable year for federal income tax purposes under subsections (b) and (c) of section one hundred fifty-one of the internal revenue code Over $5,000 but not over $6,000 $75.00 plus such an amount Over $6,000 but not over $7,000 $65.00 plus such an amount Over $7,000 but not over $20,000 $60.00 plus such an amount Over $20,000 but not over $22,000 $60.00 plus an amount equal to $10.00 multiplied by a number which is one less than the number of exemptions for which the taxpayer (or in the case of a husband and wife, taxpayers) is entitled to a deduction for the taxable year for federal income tax purposes under subsections (b) and (c) of section one hundred fifty-one of the internal revenue code Over $22,000 but not over $25,000 $50.00 plus such an amount Over $25,000 but not over $28,000 $40.00 plus an amount equal to $5.00 multiplied by a number which is one less than the number of exemptions for which the taxpayer (or in the case of a husband and wife, taxpayers) is entitled to a deduction for the taxable year for federal income tax purposes under subsections (b) and (c) of section one hundred fifty-one of the internal revenue code Over $28,000 but not over $32,000 $20.00 plus such an amount (3) For the purposes of this subsection: (A) "Household gross income" shall mean the aggregate federal adjusted gross income of a household, as the term household is defined in subparagraph (B) of this paragraph, for the taxable year. (B) "Household" means a husband and wife, a head of household, a surviving spouse, or an individual who is not married nor the head of a household nor a surviving spouse nor a taxpayer with respect to whom a deduction under subsection (c) of section one hundred fifty-one of the internal revenue code is allowable to another taxpayer for the taxable year. (C) "Household gross income of a husband and wife" shall be the aggregate of their federal adjusted gross incomes for the taxable year irrespective of whether joint or separate New York income tax returnsare filed. Provided, however, that a husband or wife who is required to file a separate New York income tax return shall be permitted one-half the credit otherwise allowed his or her household, except as limited by paragraph one of this subsection. (c) Credit for certain household and dependent care services necessary for gainful employment. (1) A taxpayer shall be allowed a credit as provided herein equal to the applicable percentage of the credit allowable under section twenty-one of the internal revenue code for the same taxable year (without regard to whether the taxpayer in fact claimed the credit under such section twenty-one for such taxable year). The applicable percentage shall be the sum of (i) twenty percent and (ii) a multiplier multiplied by a fraction. For taxable years beginning in nineteen hundred ninety-six and nineteen hundred ninety-seven, the numerator of such fraction shall be the lesser of (i) four thousand dollars or (ii) fourteen thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. For the taxable year beginning in nineteen hundred ninety-eight, the numerator of such fraction shall be the lesser of (i) thirteen thousand dollars or (ii) thirty thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. For taxable years beginning in nineteen hundred ninety-nine, the numerator of such fraction shall be the lesser of (i) fifteen thousand dollars or (ii) fifty thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. For taxable years beginning after nineteen hundred ninety-nine, the numerator of such fraction shall be the lesser of (i) fifteen thousand dollars or (ii) sixty-five thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. The denominator of such fraction shall be four thousand dollars for taxable years beginning in nineteen hundred ninety-six and nineteen hundred ninety-seven, thirteen thousand dollars for the taxable year beginning in nineteen hundred ninety-eight, and fifteen thousand dollars for taxable years beginning after nineteen hundred ninety-eight. The multiplier shall be ten percent for taxable years beginning in nineteen hundred ninety-six, forty percent for taxable years beginning in nineteen hundred ninety-seven, and eighty percent for taxable years beginning after nineteen hundred ninety-seven. Provided, however, for taxable years beginning after nineteen hundred ninety-nine, for a person whose New York adjusted gross income is less than forty thousand dollars, such applicable percentage shall be equal to (i) one hundred percent, plus (ii) ten percent multiplied by a fraction whose numerator shall be the lesser of (i) fifteen thousand dollars or (ii) forty thousand dollars less the New York adjusted gross income for the taxable year, provided such numerator shall not be less than zero, and whose denominator shall be fifteen thousand dollars. Provided, further, that if the reversion event, as defined in this paragraph, occurs, the applicable percentage shall, for taxable years ending on or after the date on which the reversion event occurred, be determined using the rules specified in this paragraph applicable to taxable years beginning in nineteen hundred ninety-nine. The reversion event shall be deemed to have occurred on the date on which federal action, including but not limited to, administrative, statutory or regulatory changes, materially reduces or eliminates New York state's allocation of the federal temporary assistance for needy families block grant, or materially reduces the ability of the state to spend federal temporary assistance for needy families block grant funds for the creditfor certain household and dependent care services necessary for gainful employment or to apply state general fund spending on the credit for certain household and dependent care services necessary for gainful employment toward the temporary assistance for needy families block grant maintenance of effort requirement, and the commissioner of the office of temporary and disability assistance shall certify the date of such event to the commissioner, the director of the division of the budget, the speaker of the assembly and the temporary president of the senate. (2) Residents. In the case of a resident taxpayer, the credit under this subsection shall be allowed against the taxes imposed by this article for the taxable year reduced by the credits permitted by this article. If the credit exceeds the tax as so reduced, the taxpayer may receive, and the comptroller, subject to a certificate of the commissioner, shall pay as an overpayment, without interest, the amount of such excess. (3) Nonresidents. In the case of a nonresident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one. The amount of the credit shall not exceed the tax determined under such subsections for the taxable year reduced by the credit permitted under subsection (b) of this section. (4) Part-year residents. In the case of a part-year resident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one reduced by the credit permitted under subsection (b) of this section, and any excess credit after such application shall be allowed against the taxes imposed by sections six hundred two and six hundred three. Any remaining excess, after such application, shall be refunded as provided in paragraph two hereof, provided, however, that any overpayment under such paragraph shall be limited to the amount of the remaining excess multiplied by a fraction, the numerator of which is federal adjusted gross income for the period of residence, computed as if the taxable year for federal income tax purposes were limited to the period of residence, and the denominator of which is federal adjusted gross income for the taxable year. (5) In the case of a husband and wife who file a joint federal return, but who are required to determine their New York taxes separately, the credit allowed pursuant to this subsection may only be applied against the tax imposed on the spouse with the lower taxable income, computed without regard to such credit. In the case of a husband and wife who are not required to file a federal return, the credit under this subsection shall be allowed only if such taxpayers file a joint New York income tax return. (c-1) Empire state child credit. (1) A resident taxpayer shall be allowed a credit as provided herein equal to the greater of one hundred dollars times the number of qualifying children of the taxpayer or the applicable percentage of the child tax credit allowed the taxpayer under section twenty-four of the internal revenue code for the same taxable year for each qualifying child. Provided, however, in the case of a taxpayer whose federal adjusted gross income exceeds the applicable threshold amount set forth by section 24(b)(2) of the Internal Revenue Code, the credit shall only be equal to the applicable percentage of the child tax credit allowed the taxpayer under section 24 of the Internal Revenue Code for each qualifying child. For the purposes of this subsection, a qualifying child shall be a child who meets the definition of qualified child under section 24(c) of the internal revenue code andis at least four years of age. The applicable percentage shall be thirty-three percent. (2) If the amount of the credit allowed under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (3) In the case of a husband and wife who file a joint federal return, but who are required to determine their New York taxes separately, the credit allowed pursuant to this subsection may be applied against the tax imposed of either or divided between them as they may elect. (d) Earned income credit. (1) General. A taxpayer shall be allowed a credit as provided herein equal to (i) the applicable percentage of the earned income credit allowed under section thirty-two of the internal revenue code for the same taxable year, (ii) reduced by the credit permitted under subsection (b) of this section. The applicable percentage shall be (i) seven and one-half percent for taxable years beginning in nineteen hundred ninety-four, (ii) ten percent for taxable years beginning in nineteen hundred ninety-five, (iii) twenty percent for taxable years beginning after nineteen hundred ninety-five and before two thousand, (iv) twenty-two and one-half percent for taxable years beginning in two thousand, (v) twenty-five percent for taxable years beginning in two thousand one, (vi) twenty-seven and one-half percent for taxable years beginning in two thousand two, and (vii) thirty percent for taxable years beginning in two thousand three and thereafter. Provided, however, that if the reversion event, as defined in this paragraph, occurs, the applicable percentage shall be twenty percent for taxable years ending on or after the date on which the reversion event occurred. The reversion event shall be deemed to have occurred on the date on which federal action, including but not limited to, administrative, statutory or regulatory changes, materially reduces or eliminates New York state's allocation of the federal temporary assistance for needy families block grant, or materially reduces the ability of the state to spend federal temporary assistance for needy families block grant funds for the earned income credit or to apply state general fund spending on the earned income credit toward the temporary assistance for needy families block grant maintenance of effort requirement, and the commissioner of the office of temporary and disability assistance shall certify the date of such event to the commissioner of taxation and finance, the director of the division of the budget, the speaker of the assembly and the temporary president of the senate. (2) Residents. In the case of a resident taxpayer, the credit under this subsection shall be allowed against the taxes imposed by this article for the taxable year reduced by the credits permitted by this article. If the credit exceeds the tax as so reduced, the taxpayer may receive, and the comptroller, subject to a certificate of the commissioner, shall pay as an overpayment, without interest, the amount of such excess. (3) Nonresidents. In the case of a nonresident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one. The amount of the credit shall not exceed the tax determined under such subsections for the taxable year reduced by the credits permitted under subsections (b), (c) and (m) of this section. (4) Part-year residents. In the case of a part-year resident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred onereduced by the credits permitted under subsections (b), (c) and (m) of this section, and any excess credit after such application shall be allowed against the taxes imposed by sections six hundred two and six hundred three. Any remaining excess, after such application, shall be refunded as provided in paragraph two hereof, provided, however, that any overpayment under such paragraph shall be limited to the amount of the remaining excess multiplied by a fraction, the numerator of which is federal adjusted gross income for the period of residence, computed as if the taxable year for federal income tax purposes were limited to the period of residence, and the denominator of which is federal adjusted gross income for the taxable year. (5) Husband and wife. In the case of a husband and wife who file a joint federal return but who are required to determine their New York taxes separately, the credit allowed pursuant to this subsection may be applied against the tax of either or divided between them as they may elect. (6) Notification. The commissioner shall periodically, but not less than every three years, make efforts to alert taxpayers that may be currently eligible to receive the credit provided under this subsection, and the credit provided under any local law enacted pursuant to subsection (f) of section thirteen hundred ten of this chapter, as to their potential eligibility. In making the determination of whether a taxpayer may be eligible for such credit, the commissioner shall use such data as may be appropriate and available, including, but not limited to, data available from the United States Department of Treasury, Internal Revenue Service and New York state income tax returns for preceding tax years. (7) Reports. The commissioner shall prepare a preliminary written report after July thirty-first and a final written report after December thirty-first of each calendar year, which shall contain statistical information regarding the credits granted on or before such dates under this subsection, and under any local law enacted pursuant to subsection (f) of section thirteen hundred ten of this chapter, during such calendar year. Copies of these reports shall be submitted by such commissioner to the governor, the temporary president of the senate, the speaker of the assembly, the chairman of the senate finance committee and the chairman of the assembly ways and means committee within sixty days of July thirty-first with respect to the preliminary report, and within forty-five days of December thirty-first with respect to the final report, and copies of such reports with respect to credits under any local law enacted pursuant to subsection (f) of section thirteen hundred ten of this chapter shall be submitted in addition to the mayor and the speaker of the council of the city where such a local law is in effect. Such reports shall contain, but need not be limited to, the number of credits and the average amount of such credits allowed; and of those, the number of credits and the average amount of such credits allowed to taxpayers in each county; and of those, the number of credits and the average amount of such credits allowed to taxpayers whose earned income falls within ranges, determined by the commissioner, of not more than four thousand dollars; and of those, the number of credits and the average amount of such credits allowed to taxpayers who file under the different statuses set forth in subsections (a), (b) and (c) of section six hundred one of this part; and of those, the number of credits and the average amount of such credits allowed to taxpayers whose number of qualifying children falls within the categories set forth in such section thirty-two of the internal revenue code.(d-1) Enhanced earned income tax credit. (1) A taxpayer described in paragraph two of this subsection shall be allowed a credit equal to the greater of: (A) twenty percent of the amount of the earned income tax credit that would have been allowed to the taxpayer under section 32 of the internal revenue code, absent the application of section 32(b)(2)(B) of such code, if the child or children described in subparagraph (C) of paragraph two of this subsection satisfied the requirements for a qualifying child set forth in section 32(c)(3) of such code, provided however, that the credit shall be calculated as if the taxpayer had only one child; or (B) the product of two and one-half and the amount of the earned income tax credit that would have been allowed to the taxpayer under section 32 of the internal revenue code, if the taxpayer satisfied the eligibility requirements set forth in section 32(c)(1)(A)(ii) of such code. (2) To be allowed a credit under this subsection, a taxpayer must satisfy all of the following qualifications. (A) The taxpayer must be a resident taxpayer. (B) The taxpayer must have attained the age of eighteen. (C) The taxpayer must be the parent of a minor child or children with whom the taxpayer does not reside. (D) The taxpayer must have an order requiring him or her to make child support payments, which are payable through a support collection unit established pursuant to section one hundred eleven-h of the social services law, which order must have been in effect for at least one-half of the taxable year. (E) The taxpayer must have paid an amount in child support in the taxable year at least equal to the amount of current child support due during the taxable year for every order requiring him or her to make child support payments. (3) If the amount of the credit allowed under this subsection shall exceed the taxpayer's tax for such year, the excess shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (4) No claim for credit under this subsection shall be allowed unless the department has verified, from information provided by the office of temporary and disability assistance, that a taxpayer has satisfied the qualifications set forth in subparagraphs (C), (D) and (E) of paragraph two of this subsection. The office of temporary and disability assistance shall provide to the department by January fifteenth of each year information applicable for the immediately preceding tax year necessary for the department to make such verification. Such information shall be provided in the manner and form agreed upon by the department and such office. If a taxpayer's claim for a credit under this subsection is disallowed because the taxpayer has not satisfied the qualifications set forth in subparagraphs (C), (D) and (E) of paragraph two of this subsection, the taxpayer may request a review of those qualifications by the support collection unit established pursuant to section one hundred eleven-h of the social services law through which the child support payments were payable. The support collection unit shall transmit the result of that review to the office of temporary and disability assistance on a form developed by such office. Such office shall then transmit such result to the department in a manner agreed upon by the department and such office. (5) A taxpayer shall not be allowed multiple credits under this subsection for a taxable year even if such taxpayer has more than onechild or has more than one order requiring him or her to make child support payments. (6) If a credit is allowed under this subsection and the taxpayer is also allowed a credit under subsection (d) of this section, the taxpayer shall only be allowed to claim one credit. (7) In the report prepared pursuant to paragraph seven of subsection (d) of this section, the commissioner shall include statistical information concerning the credit allowed pursuant to this subsection. Such information shall be limited to the number of credits and the average amount of such credits allowed; and of those, the number of credits and the average amounts of such credits allowed to taxpayers in each county. (8) In a report prepared by the commissioner and submitted to the office of temporary and disability assistance, the department shall include information concerning the credit allowed pursuant to this subsection indicating whether or not taxpayers identified by the office of temporary and disability assistance pursuant to paragraph
§ 606. Credits against tax. (a) Investment tax credit (ITC). (1) A taxpayer shall be allowed a credit, to be computed as hereinafter provided, against the tax imposed by this article. The amount of the credit shall be the per cent provided for hereinbelow of the investment credit base. The investment credit base is the cost or other basis, for federal income tax purposes, of tangible personal property and other tangible property, including buildings and structural components of buildings, described in paragraph two of this subsection, less the amount of the nonqualified nonrecourse financing with respect to such property to the extent such financing would be excludible from the credit base pursuant to section 46(c)(8) of the internal revenue code (treating such property as section thirty-eight property irrespective of whether or not it in fact constitutes section thirty-eight property). If, at the close of a taxable year following the taxable year in which such property was placed in service, there is a net decrease in the amount of nonqualified nonrecourse financing with respect to such property, such net decrease shall be treated as if it were the cost or other basis of property described in paragraph two of this subsection acquired, constructed, reconstructed or erected during the year of the decrease in the amount of nonqualified nonrecourse financing. The percentage to be used to compute the credit allowed pursuant to this subsection shall be that percentage appearing in column two which is opposite the appropriate period in column one in which the tangible personal property was acquired, constructed, reconstructed or erected, as the case may be: Column 1 Column 2 After December 31, 1968 and prior to January 1, 1974 one per cent After December 31, 1973 and prior to January 1, 1978 two per cent After December 31, 1977 and prior to January 1, 1979 three per cent After December 31, 1978 and prior to June 1, 1981 four per cent After May 31, 1981 and prior to July 1, 1982 five per cent After June 30, 1982 and before January 1, 1987 six per cent After December 31, 1986 four per cent, except that in the case of research and development property the applicable percentage shall be seven Provided, however, that in the case of an acquisition, construction, reconstruction or erection which was commenced in any one period and continued or completed in any subsequent period the credit shall be the sum of the portions of the investment credit base attributable to each such period, which portion with respect to each such period shall be ascertained by multiplying such investment credit base by a fraction the numerator of which shall be the expenditures paid or incurred during such period for such purposes and the denominator of which shall be the total of all expenditures paid or incurred for such acquisition, construction, reconstruction or erection, multiplied by the allowable percentage for each such period. (2)(A) A credit shall be allowed under this subsection with respect to tangible personal property and other tangible property, including buildings and structural components of buildings, which are: depreciablepursuant to section one hundred sixty-seven of the internal revenue code, have a useful life of four years or more, are acquired by purchase as defined in section one hundred seventy-nine (d) of the internal revenue code, have a situs in this state and are (i) principally used by the taxpayer in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture or commercial fishing, (ii) industrial waste treatment facilities or air pollution control facilities, used in the taxpayer's trade or business, (iii) research and development property, (iv) principally used in the ordinary course of the taxpayer's trade or business as a broker or dealer in connection with the purchase or sale (which shall include but not be limited to the issuance, entering into, assumption, offset, assignment, termination, or transfer) of stocks, bonds or other securities as defined in section four hundred seventy-five (c)(2) of the Internal Revenue Code, or of commodities as defined in section 475(e) of the Internal Revenue Code, (v) principally used in the ordinary course of the taxpayer's trade or business of providing investment advisory services for a regulated investment company as defined in section eight hundred fifty-one of the Internal Revenue Code, or lending, loan arrangement or loan origination services to customers in connection with the purchase or sale (which shall include but not be limited to the issuance, entering into, assumption, offset, assignment, termination, or transfer) of securities as defined in section four hundred seventy-five (c)(2) of the Internal Revenue Code, or (vi) principally used as a qualified film production facility including qualified film production facilities having a situs in an empire zone designated as such pursuant to article eighteen-B of the general municipal law, where the taxpayer is providing three or more services to any qualified film production company using the facility, including such services as a studio lighting grid, lighting and grip equipment, multi-line phone service, broadband information technology access, industrial scale electrical capacity, food services, security services, and heating, ventilation and air conditioning. For purposes of clauses (iv) and (v) of this subparagraph, property purchased by a taxpayer affiliated with a regulated broker, dealer, or registered investment adviser is allowed a credit under this subsection if the property is used by its affiliated regulated broker, dealer or registered investment adviser in accordance with this subsection. For purposes of determining if the property is principally used in qualifying uses, the uses by the taxpayer described in clauses (iv) and (v) of this subparagraph may be aggregated. In addition, the uses by the taxpayer, its affiliated regulated broker, dealer and registered investment adviser under either or both of those clauses may be aggregated. Provided, however, a taxpayer shall not be allowed the credit provided by clauses (iv) and (v) of this subparagraph unless (I) eighty percent or more of the employees performing the administrative and support functions resulting from or related to the qualifying uses of such equipment are located in this state, or (II) the average number of employees that perform the administrative and support functions resulting from or related to the qualifying uses of such equipment and are located in this state during the taxable year for which the credit is claimed is equal to or greater than ninety-five percent of the average number of employees that perform these functions and are located in this state during the thirty-six months immediately preceding the year for which the credit is claimed, or (III) the number of employees located in this state during the taxable year for which the credit is claimed is equal to or greater than ninety percent of the number of employees located in this state on December thirty-first, nineteenhundred ninety-eight or, if the taxpayer was not a calendar year taxpayer in nineteen hundred ninety-eight, the last day of its first taxable year ending after December thirty-first, nineteen hundred ninety-eight. If the taxpayer becomes subject to tax in this state after the taxable year beginning in nineteen hundred ninety-eight, then the taxpayer is not required to satisfy the employment test provided in the preceding sentence of this subparagraph for its first taxable year. For the purposes of clause (III) of this subparagraph the employment test will be based on the number of employees located in this state on the last day of the first taxable year the taxpayer is subject to tax in this state. If the uses of the property must be aggregated to determine whether the property is principally used in qualifying uses, then either each affiliate using the property must satisfy this employment test or this employment test must be satisfied through the aggregation of the employees of the taxpayer, its affiliated regulated broker, dealer, and registered investment adviser using the property. For purposes of this subsection, the term "goods" shall not include electricity. (B) For purposes of this paragraph, the following definitions shall apply: (i) Manufacturing shall mean the process of working raw materials into wares suitable for use or which gives new shapes, new quality or new combinations to matter which already has gone through some artificial process by the use of machinery, tools, appliances and other similar equipment. Property used in the production of goods shall include machinery, equipment or other tangible property which is principally used in the repair and service of other machinery, equipment or other tangible property used principally in the production of goods and shall include all facilities used in the production operation, including storage of material to be used in production and of the products that are produced. (ii) Research and development property shall mean property which is used for purposes of research and development in the experimental or laboratory sense. Such purposes shall not be deemed to include the ordinary testing or inspection of materials or products for quality control, efficiency surveys, management studies, consumer surveys, advertising, promotions, or research in connection with literary, historical or similar projects. (iii) Industrial waste treatment facilities shall mean property constituting facilities for the treatment, neutralization or stabilization of industrial waste and other wastes (as the terms "industrial waste" and "other wastes" are defined in section 17-0105 of the environmental conservation law) from a point immediately preceding the point of such treatment, neutralization or stabilization to the point of disposal, including the necessary pumping and transmitting facilities, but excluding such facilities installed for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable. (iv) Air pollution control facilities shall mean property constituting facilities which remove, reduce, or render less noxious air contaminants emitted from an air contamination source (as the terms "air contaminant" and "air contamination source" are defined in section 19-0107 of the environmental conservation law) from a point immediately preceding the point of such removal, reduction or rendering to the point of discharge of air, meeting emission standards as established by the department of environmental conservation, but excluding such facilities installed for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable and excluding those facilities which rely for their efficacy on dilution, dispersion or assimilation ofair contaminants in the ambient air after emission. Such term shall further include flue gas desulfurization equipment and attendant sludge disposal facilities, fluidized bed boilers, precombustion coal cleaning facilities or other facilities that conform with this subsection and which comply with the provisions of the State Acid Deposition Control Act set forth in title nine of article nineteen of the environmental conservation law. (v) For purposes of this paragraph, the terms "qualified film production facility" and "qualified film production company" shall have the same meaning as in section twenty-four of this chapter. (C) However, such credit shall be allowed with respect to industrial waste treatment facilities and air pollution control facilities only on condition that such facilities have been certified by the state commissioner of environmental conservation or his designated representative, pursuant to subdivision one of section 17-0707 or subdivision one of section 19-0309 of the environmental conservation law, as complying with applicable provisions of the environmental conservation law, the public health law, the state sanitary code and codes, rules, regulations, permits or orders issued pursuant thereto. (3) A taxpayer shall not be allowed a credit under this subsection with respect to any property described in clause (i) of subparagraph (B) of paragraph two hereof if such property qualifies for the modification allowed under either paragraph three or paragraph four of subsection (g) of section six hundred twelve whether or not such amount shall have been subtracted. Provided, however, with respect to property which qualifies for a modification under either clause (A), (B) or (C) of paragraph four of subsection (g) because such property was ordered on or before December thirty-first, nineteen hundred sixty-eight, but with respect to which no expenditure has been paid or incurred at such date, the taxpayer may elect to subtract the amount allowable under clauses (A), (B) or (C) or may take the credit provided by this subsection, but not both. (4) A taxpayer shall not be allowed a credit under this subsection with respect to tangible personal property and other tangible property, including buildings and structural components of buildings, which it leases to any other person or corporation except where a taxpayer leases property to an affiliated regulated broker, dealer, or registered investment adviser that uses such property in accordance with clause (iv) or (v) of subparagraph (A) of paragraph two of this subsection. For purposes of the preceding sentence, any contract or agreement to lease or rent or for a license to use such property shall be considered a lease. Provided, however, in determining whether a taxpayer shall be allowed a credit under this subsection with respect to such property, any election made with respect to such property pursuant to the provisions of paragraph eight of subsection (f) of section one hundred sixty-eight of the internal revenue code, as such paragraph was in effect for agreements entered into prior to January first, nineteen hundred eighty-four, shall be disregarded. For purposes of this paragraph, the use of a qualified film production facility by a qualified film production company shall not be considered a lease of such facility to such company. (5) If the amount of credit allowable under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess allowed for a taxable year commencing prior to January first, nineteen hundred eighty-seven may be carried over to the following year or years and may be deducted from the taxpayer's tax for such year or years, but in no event shall such credit be carried over to taxable years commencing on or after January first, nineteen hundred ninety-seven, andany amount of credit allowed for a taxable year commencing on or after January first, nineteen hundred eighty-seven and not deductible in such year may be carried over to the ten taxable years next following such taxable year and may be deducted from the taxpayer's tax for such year or years. In lieu of carrying over any such excess, a taxpayer who qualifies as an owner of a new business for purposes of paragraph ten of this subsection may, at his option, receive such excess as a refund. Any refund paid pursuant to this paragraph shall be deemed to be a refund of an overpayment of tax as provided in section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (6) At the option of the taxpayer for taxable years commencing prior to January first, nineteen hundred eighty-seven, air or water pollution control facilities which qualify for elective modifications under subsection (h) of section six hundred twelve, or research and development facilities which qualify for elective modifications under paragraphs two and four of subsection (g) of section six hundred twelve may be treated as property principally used by the taxpayer in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture or commercial fishing, provided the property otherwise qualifies under paragraph two of this subsection, in which event, a modification shall not be allowed under such subsection (h) and under such paragraphs two and four of subsection (g). (7) (A) With respect to property which is depreciable pursuant to section one hundred sixty-seven of the internal revenue code but is not subject to the provisions of section one hundred sixty-eight of such code and which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to the months of useful life. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of its useful life, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. Provided, however, if such property is disposed of or ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit as provided in this subparagraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the months of useful life. For purposes of this subparagraph, useful life of property shall be the same as the taxpayer uses for depreciation purposes when computing his federal income tax liability. (B) Except with respect to that property to which subparagraph (D) of this paragraph applies, with respect to three-year property, as defined in subsection (e) of section one hundred sixty-eight of the internal revenue code, which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to thirty-six. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of thirty-six months, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to thirty-six.(C) Except with respect to that property to which subparagraph (D) of this paragraph applies, with respect to property subject to the provisions of section one hundred sixty-eight of the internal revenue code, other than three-year property as defined in subsection (e) of such section one hundred sixty-eight which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to sixty. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of sixty months, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to sixty. (D) With respect to any property to which section one hundred sixty-eight of the internal revenue code applies, which is a building or a structural component of a building and which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subsection which represents the ratio which the months of qualified use bear to the total number of months over which the taxpayer chooses to deduct the property under the internal revenue code. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of the period over which the taxpayer chooses to deduct the property under the internal revenue code, the difference between the credit taken and the credit allowed for actual use must be added back in the year of disposition. Provided, however, if such property is disposed of or ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit as provided in this subparagraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the total number of months over which the taxpayer chooses to deduct the property under the internal revenue code. (E) For purposes of this paragraph, property (i) which is described in subparagraph (B), (C) or (D) of this paragraph, and (ii) which is subject to paragraph twenty-six of subsection (c) and paragraph twenty-five of subsection (b) of section six hundred twelve of this chapter, shall be treated as property which is depreciable pursuant to section one hundred sixty-seven of the internal revenue code but is not subject to section one hundred sixty-eight of such code. (F) For purposes of this paragraph, where a credit is allowed with respect to an air pollution control facility on the basis of a certificate of compliance issued pursuant to the environmental conservation law and the certificate is revoked pursuant to subdivision three of section 19-0309 of the environmental conservation law, such revocation shall constitute a disposal or cessation of qualified use, unless such facility is described in clause (i) or (iii) of subparagraph (A) of paragraph two of this subsection. Also for purposes of this subparagraph, the use of an air pollution control facility or an industrial waste treatment facility for the primary purpose of salvaging materials which are usable in the manufacturing process or are marketable shall constitute a cessation of qualified use, unless such facility is described in clause (i) or (iii) of subparagraph (A) of paragraph two of this subsection.(G) For taxable years commencing on or after January first, nineteen hundred eighty-seven, the amount required to be added back pursuant to this paragraph shall be augmented by an amount equal to the product of such amount and the underpayment rate of interest (without regard to compounding), set by the commissioner pursuant to subsection (j) of section six hundred ninety-seven, in effect on the last day of the taxable year. (H) If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of section 46(c) (8) of the internal revenue code) with respect to any property with respect to which the credit under this subsection was limited based on attributable nonqualified nonrecourse financing, then an amount equal to the decrease in such credit which would have resulted from reducing, by the amount of such net increase, the cost or other basis taken into account with respect to such property must be added back in such taxable year. The amount of nonqualified nonrecourse financing shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of an indebtedness if such transfer occurs (or such agreement is entered into) more than one year after the date such indebtedness was incurred. (10) For purposes of paragraph five of this subsection, an individual who is either a sole proprietor or a member of a partnership shall qualify as an owner of a new business unless: (A) the business of which the individual is an owner is substantially similar in operation and in ownership to a business entity taxable, or previously taxable, under section one hundred eighty-three, one hundred eighty-four, one hundred eighty-five or one hundred eighty-six of article nine; article nine-A, thirty-two or thirty-three of this chapter; article twenty-three of this chapter or which would have been subject to tax under such article twenty-three (as such article was in effect on January first, nineteen hundred eighty) or the income (or losses) of which is (or was) includable under article twenty-two of this chapter whereby the intent and purpose of this paragraph and paragraph five of this subsection with respect to refunding of credit to new business would be evaded; or (B) the individual has operated such new business entity in this state for more than five taxable years (excluding short years of the business). (11) Retail enterprise tax credit. A retail enterprise, not eligible to claim the credit under paragraph one of this subsection, but eligible to claim the credit allowable under section thirty-eight of the internal revenue code pursuant solely to the provisions of subparagraph (E) of paragraph one of subsection (a) of section forty-eight of such code, shall be allowed a credit as hereinafter computed. The amount of the credit shall be the percentage appearing in paragraph one of this subsection for the periods described therein for the amount of qualified rehabilitation expenditures, as defined in subsection (g) of section forty-eight of such code, paid or incurred with respect to a qualified rehabilitated building, as defined in such subsection (g), located in this state and such expenditures shall be further limited to only the portion thereof paid or incurred with respect to that part of a qualified rehabilitated building employed by such taxpayer in the retail sales activity of such retail enterprise. For the purposes of this subsection, the term "retail enterprise" means a taxpayer which is: (A) a registered vendor under article twenty-eight of this chapter, (B) primarily engaged in the retail sale, as the term "retail sale" is defined in subparagraph (i) of paragraph four of subdivision (b) ofsection eleven hundred one of this chapter, of tangible personal property, and (C) otherwise eligible for the credit allowed pursuant to section thirty-eight of the internal revenue code. (12) Rehabilitation credit for historic barns. A taxpayer shall be allowed a credit, to be computed as hereinafter provided, against the tax imposed by this article. The amount of the credit shall be twenty-five percent of the taxpayer's qualified rehabilitation expenditures, as defined in paragraph two of subsection (c) of section forty-seven of the internal revenue code, which qualify as the basis for the credit provided for under paragraph one of subsection (b) of section thirty-eight of such code by reason of subsection one of section forty-six of such code, paid or incurred with respect to any barn located in this state which is a qualified rehabilitated building, as such term is defined in paragraph one of subsection (c) of such section forty-seven. For purposes of this paragraph, the term "barn" means a building originally designed and used for storing farm equipment or agricultural products, or for housing livestock. Provided, however, such qualified rehabilitation expenditures shall not include any such expenditures which are included, directly or indirectly, in the computation of a credit claimed by the taxpayer pursuant to paragraph one of this subsection. Provided further that no rehabilitation credit shall be allowed for any rehabilitation of a barn which, immediately prior to the commencement of such rehabilitation, was used for residential purposes, or which converts a barn not suitable for residential purposes into one which is so suitable, nor shall a rehabilitation credit be allowed for any rehabilitation that materially alters the historic appearance of the barn. (13)(A)(i) If a taxpayer is required by paragraph seven of this subsection to add back a portion of the credit taken because property was destroyed or ceased to be in qualified use as a direct result of the September eleventh, two thousand one terrorist attacks, such taxpayer may elect to defer the amount to be recaptured for all such property to the taxable year next succeeding the taxable year in which the destruction or cessation of qualified use occurred. The taxable year in which the destruction or cessation of qualified use occurred shall be hereinafter referred to as the "recapture event taxable year". If the taxpayer's total employment number in the state on the last day of the taxable year next succeeding the recapture event taxable year is a significant percentage of the taxpayer's average total employment number in the state for the taxpayer's recapture event taxable year and the two taxable years immediately preceding the recapture event taxable year, then the taxpayer shall not be required to recapture any credit with respect to such property. If the taxpayer's total employment number in the state on the last day of the taxable year next succeeding the recapture event taxable year is not a significant percentage of the taxpayer's average total employment number in the state for the taxpayer's recapture event taxable year and the two taxable years immediately preceding the recapture event taxable year, the taxpayer shall be required to recapture the portion of the credit taken under this subsection, as required by paragraph seven of this subsection, for all of its property destroyed or which ceased to be in qualified use as a direct result of the September eleventh, two thousand one terrorist attacks. The amount required to be recaptured shall be augmented as required pursuant to subparagraph (G) of paragraph seven of this subsection by using an interest rate equal to two times the rate of interest specified in such subparagraph seven applicable for the taxable year in which the recapture occurs.(ii) The taxpayer's total employment number shall include all employees of the taxpayer employed full-time by the taxpayer in the state. The average total employment number for the recapture event taxable year and the two taxable years immediately preceding the recapture event taxable year shall be computed by determining the taxpayer's total employment number on the thirty-first day of March, the thirtieth day of June, the thirtieth day of September and the thirty-first day of December during the applicable taxable years, adding together the number of such individuals determined to be so employed on each of such dates and dividing the sum so obtained by the number of such dates occurring within such applicable taxable years. However, in the case of the taxable year which included September eleventh, two thousand one, the average total employment number for such taxable year shall be determined by using the total employment number on September first, two thousand one in lieu of September thirtieth, two thousand one and, if such taxable year included December thirty-first, two thousand one, by excluding the total employment number on December thirty-first, two thousand one. (B) In lieu of subparagraph (A) of this paragraph, a taxpayer may elect to recapture the portion of the credit taken under this subsection, as required by paragraph seven of this subsection, for all of its property destroyed or which ceased to be in qualified use as a direct result of the September eleventh, two thousand one terrorist attacks, in the taxable year in which the destruction or cessation of qualified use occurred. If the taxpayer makes such election and acquires property (hereinafter referred to as "replacement property") to replace any property destroyed as a direct result of the September eleventh, two thousand one terrorist attacks (regardless of when such property was placed in service and whether a credit was claimed on that property pursuant to this subsection), and such replacement property is similar or related in service or use to such destroyed property, the investment credit base of the replacement property shall be determined without regard to any basis reduction required pursuant to section 1033 of the internal revenue code. (C) The election made by the taxpayer under subparagraph (A) or (B) of this paragraph shall be made in the manner and form prescribed by the commissioner. (D) A taxpayer, over fifty percent of whose employees died as a direct result of the September eleventh, two thousand one terrorist attacks, may make the election provided for in subparagraph (A) of this paragraph, and shall not be required to recapture any credit with respect to property which was destroyed or which ceased to be in qualified use as a direct result of such attacks, whether or not it meets the employment test specified in clause (i) of subparagraph (A) of this paragraph. (a-1) Employment incentive credit (EIC). (1)(A) Where a taxpayer is allowed a credit under subsection (a) of this section, other than at the optional rate applicable to research and development property, the taxpayer shall be allowed a credit for each of the two years next succeeding the taxable year for which the credit under such subsection (a) is allowed with respect to such property, whether or not deductible in such taxable year or in subsequent taxable years pursuant to paragraph five of subsection (a) of this section. Provided, however, that the credit allowable under this subsection for any taxable year shall be allowed only if the average number of employees during such taxable year is at least one hundred one percent of the average number of employees during the employment base year. The employment base year shall be the taxable year immediately preceding the taxable year forwhich the credit under such subsection (a) is allowed except that in the case of a new business, the employment base year shall be the taxable year in which the credit under such subsection (a) is allowed. (B) The amount of the credit allowed under this subsection shall be as set forth in the following table: Average number of employees during Credit allowed under this the taxable year expressed as a subsection expressed as a percentage of average number of percentage of the applicable employees in employment base year: investment credit base: Less than 102% 1.5% at least 102% and less than 103% 2% at least 103% 2.5% (2) The average number of employees in a taxable year shall be computed by ascertaining the number of employees within the state employed by the taxpayer on the thirty-first day of March, the thirtieth day of June, the thirtieth day of September and the thirty-first day of December in the taxable year, by adding together the number of employees ascertained on each of such dates and dividing the sum so obtained by the number of such abovementioned dates occurring within the taxable year. For the purposes of this subsection, the term "employees within the state" shall not include, except with respect to the employment base year, any employee with respect to whom a credit provided for under subsection (k) of this section is claimed for the taxable year, based on employment within a zone equivalent area designated as such pursuant to article eighteen-B of the general municipal law. (3) If the amount of credit allowable under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess allowed for a taxable year may be carried over to the ten taxable years next following such taxable year and may be deducted from the taxpayer's tax for such year or years. In lieu of carrying over any such excess, a taxpayer who qualifies as an owner of a new business for purposes of paragraph ten of subsection (a) of this section may, at his or her option, receive such excess as a refund. Any refund paid pursuant to this paragraph shall be deemed to be a refund of an overpayment of tax as provided in section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (b) Household credit. (1) A household credit shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one of this article. The credit, computed as described in paragraph two of this subsection, shall not exceed the tax determined under subsections (a) through (d) of section six hundred one for the taxable year, reduced by the credits permitted under sections six hundred twenty and six hundred twenty-one of this article. (2) (A) For any individual who is not married nor the head of a household nor a surviving spouse, the amount of the credit allowed pursuant to this subsection for taxable years beginning on or after January first, nineteen hundred eighty-six shall be determined in accordance with the following table: If household gross income is The credit shall be Not over $5,000 $75.00 Over $5,000 but not over $6,000 60.00 Over $6,000 but not over $7,000 50.00 Over $7,000 but not over $20,000 45.00 Over $20,000 but not over $25,000 40.00 Over $25,000 but not over $28,000 20.00(B) For any husband and wife, head of a household, or surviving spouse, the amount of the credit allowed pursuant to this subsection for taxable years beginning on or after January first, nineteen hundred eighty-six shall be determined in accordance with the following table: If household gross income is The credit shall be Not over $5,000 $90.00 plus an amount equal to $15.00 multiplied by a number which is one less than the number of exemptions for which the taxpayer (or in the case of a husband and wife, taxpayers) is entitled to a deduction for the taxable year for federal income tax purposes under subsections (b) and (c) of section one hundred fifty-one of the internal revenue code Over $5,000 but not over $6,000 $75.00 plus such an amount Over $6,000 but not over $7,000 $65.00 plus such an amount Over $7,000 but not over $20,000 $60.00 plus such an amount Over $20,000 but not over $22,000 $60.00 plus an amount equal to $10.00 multiplied by a number which is one less than the number of exemptions for which the taxpayer (or in the case of a husband and wife, taxpayers) is entitled to a deduction for the taxable year for federal income tax purposes under subsections (b) and (c) of section one hundred fifty-one of the internal revenue code Over $22,000 but not over $25,000 $50.00 plus such an amount Over $25,000 but not over $28,000 $40.00 plus an amount equal to $5.00 multiplied by a number which is one less than the number of exemptions for which the taxpayer (or in the case of a husband and wife, taxpayers) is entitled to a deduction for the taxable year for federal income tax purposes under subsections (b) and (c) of section one hundred fifty-one of the internal revenue code Over $28,000 but not over $32,000 $20.00 plus such an amount (3) For the purposes of this subsection: (A) "Household gross income" shall mean the aggregate federal adjusted gross income of a household, as the term household is defined in subparagraph (B) of this paragraph, for the taxable year. (B) "Household" means a husband and wife, a head of household, a surviving spouse, or an individual who is not married nor the head of a household nor a surviving spouse nor a taxpayer with respect to whom a deduction under subsection (c) of section one hundred fifty-one of the internal revenue code is allowable to another taxpayer for the taxable year. (C) "Household gross income of a husband and wife" shall be the aggregate of their federal adjusted gross incomes for the taxable year irrespective of whether joint or separate New York income tax returnsare filed. Provided, however, that a husband or wife who is required to file a separate New York income tax return shall be permitted one-half the credit otherwise allowed his or her household, except as limited by paragraph one of this subsection. (c) Credit for certain household and dependent care services necessary for gainful employment. (1) A taxpayer shall be allowed a credit as provided herein equal to the applicable percentage of the credit allowable under section twenty-one of the internal revenue code for the same taxable year (without regard to whether the taxpayer in fact claimed the credit under such section twenty-one for such taxable year). The applicable percentage shall be the sum of (i) twenty percent and (ii) a multiplier multiplied by a fraction. For taxable years beginning in nineteen hundred ninety-six and nineteen hundred ninety-seven, the numerator of such fraction shall be the lesser of (i) four thousand dollars or (ii) fourteen thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. For the taxable year beginning in nineteen hundred ninety-eight, the numerator of such fraction shall be the lesser of (i) thirteen thousand dollars or (ii) thirty thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. For taxable years beginning in nineteen hundred ninety-nine, the numerator of such fraction shall be the lesser of (i) fifteen thousand dollars or (ii) fifty thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. For taxable years beginning after nineteen hundred ninety-nine, the numerator of such fraction shall be the lesser of (i) fifteen thousand dollars or (ii) sixty-five thousand dollars less the New York adjusted gross income for the taxable year, provided, however, the numerator shall not be less than zero. The denominator of such fraction shall be four thousand dollars for taxable years beginning in nineteen hundred ninety-six and nineteen hundred ninety-seven, thirteen thousand dollars for the taxable year beginning in nineteen hundred ninety-eight, and fifteen thousand dollars for taxable years beginning after nineteen hundred ninety-eight. The multiplier shall be ten percent for taxable years beginning in nineteen hundred ninety-six, forty percent for taxable years beginning in nineteen hundred ninety-seven, and eighty percent for taxable years beginning after nineteen hundred ninety-seven. Provided, however, for taxable years beginning after nineteen hundred ninety-nine, for a person whose New York adjusted gross income is less than forty thousand dollars, such applicable percentage shall be equal to (i) one hundred percent, plus (ii) ten percent multiplied by a fraction whose numerator shall be the lesser of (i) fifteen thousand dollars or (ii) forty thousand dollars less the New York adjusted gross income for the taxable year, provided such numerator shall not be less than zero, and whose denominator shall be fifteen thousand dollars. Provided, further, that if the reversion event, as defined in this paragraph, occurs, the applicable percentage shall, for taxable years ending on or after the date on which the reversion event occurred, be determined using the rules specified in this paragraph applicable to taxable years beginning in nineteen hundred ninety-nine. The reversion event shall be deemed to have occurred on the date on which federal action, including but not limited to, administrative, statutory or regulatory changes, materially reduces or eliminates New York state's allocation of the federal temporary assistance for needy families block grant, or materially reduces the ability of the state to spend federal temporary assistance for needy families block grant funds for the creditfor certain household and dependent care services necessary for gainful employment or to apply state general fund spending on the credit for certain household and dependent care services necessary for gainful employment toward the temporary assistance for needy families block grant maintenance of effort requirement, and the commissioner of the office of temporary and disability assistance shall certify the date of such event to the commissioner, the director of the division of the budget, the speaker of the assembly and the temporary president of the senate. (2) Residents. In the case of a resident taxpayer, the credit under this subsection shall be allowed against the taxes imposed by this article for the taxable year reduced by the credits permitted by this article. If the credit exceeds the tax as so reduced, the taxpayer may receive, and the comptroller, subject to a certificate of the commissioner, shall pay as an overpayment, without interest, the amount of such excess. (3) Nonresidents. In the case of a nonresident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one. The amount of the credit shall not exceed the tax determined under such subsections for the taxable year reduced by the credit permitted under subsection (b) of this section. (4) Part-year residents. In the case of a part-year resident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one reduced by the credit permitted under subsection (b) of this section, and any excess credit after such application shall be allowed against the taxes imposed by sections six hundred two and six hundred three. Any remaining excess, after such application, shall be refunded as provided in paragraph two hereof, provided, however, that any overpayment under such paragraph shall be limited to the amount of the remaining excess multiplied by a fraction, the numerator of which is federal adjusted gross income for the period of residence, computed as if the taxable year for federal income tax purposes were limited to the period of residence, and the denominator of which is federal adjusted gross income for the taxable year. (5) In the case of a husband and wife who file a joint federal return, but who are required to determine their New York taxes separately, the credit allowed pursuant to this subsection may only be applied against the tax imposed on the spouse with the lower taxable income, computed without regard to such credit. In the case of a husband and wife who are not required to file a federal return, the credit under this subsection shall be allowed only if such taxpayers file a joint New York income tax return. (c-1) Empire state child credit. (1) A resident taxpayer shall be allowed a credit as provided herein equal to the greater of one hundred dollars times the number of qualifying children of the taxpayer or the applicable percentage of the child tax credit allowed the taxpayer under section twenty-four of the internal revenue code for the same taxable year for each qualifying child. Provided, however, in the case of a taxpayer whose federal adjusted gross income exceeds the applicable threshold amount set forth by section 24(b)(2) of the Internal Revenue Code, the credit shall only be equal to the applicable percentage of the child tax credit allowed the taxpayer under section 24 of the Internal Revenue Code for each qualifying child. For the purposes of this subsection, a qualifying child shall be a child who meets the definition of qualified child under section 24(c) of the internal revenue code andis at least four years of age. The applicable percentage shall be thirty-three percent. (2) If the amount of the credit allowed under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (3) In the case of a husband and wife who file a joint federal return, but who are required to determine their New York taxes separately, the credit allowed pursuant to this subsection may be applied against the tax imposed of either or divided between them as they may elect. (d) Earned income credit. (1) General. A taxpayer shall be allowed a credit as provided herein equal to (i) the applicable percentage of the earned income credit allowed under section thirty-two of the internal revenue code for the same taxable year, (ii) reduced by the credit permitted under subsection (b) of this section. The applicable percentage shall be (i) seven and one-half percent for taxable years beginning in nineteen hundred ninety-four, (ii) ten percent for taxable years beginning in nineteen hundred ninety-five, (iii) twenty percent for taxable years beginning after nineteen hundred ninety-five and before two thousand, (iv) twenty-two and one-half percent for taxable years beginning in two thousand, (v) twenty-five percent for taxable years beginning in two thousand one, (vi) twenty-seven and one-half percent for taxable years beginning in two thousand two, and (vii) thirty percent for taxable years beginning in two thousand three and thereafter. Provided, however, that if the reversion event, as defined in this paragraph, occurs, the applicable percentage shall be twenty percent for taxable years ending on or after the date on which the reversion event occurred. The reversion event shall be deemed to have occurred on the date on which federal action, including but not limited to, administrative, statutory or regulatory changes, materially reduces or eliminates New York state's allocation of the federal temporary assistance for needy families block grant, or materially reduces the ability of the state to spend federal temporary assistance for needy families block grant funds for the earned income credit or to apply state general fund spending on the earned income credit toward the temporary assistance for needy families block grant maintenance of effort requirement, and the commissioner of the office of temporary and disability assistance shall certify the date of such event to the commissioner of taxation and finance, the director of the division of the budget, the speaker of the assembly and the temporary president of the senate. (2) Residents. In the case of a resident taxpayer, the credit under this subsection shall be allowed against the taxes imposed by this article for the taxable year reduced by the credits permitted by this article. If the credit exceeds the tax as so reduced, the taxpayer may receive, and the comptroller, subject to a certificate of the commissioner, shall pay as an overpayment, without interest, the amount of such excess. (3) Nonresidents. In the case of a nonresident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred one. The amount of the credit shall not exceed the tax determined under such subsections for the taxable year reduced by the credits permitted under subsections (b), (c) and (m) of this section. (4) Part-year residents. In the case of a part-year resident taxpayer, the credit under this subsection shall be allowed against the tax determined under subsections (a) through (d) of section six hundred onereduced by the credits permitted under subsections (b), (c) and (m) of this section, and any excess credit after such application shall be allowed against the taxes imposed by sections six hundred two and six hundred three. Any remaining excess, after such application, shall be refunded as provided in paragraph two hereof, provided, however, that any overpayment under such paragraph shall be limited to the amount of the remaining excess multiplied by a fraction, the numerator of which is federal adjusted gross income for the period of residence, computed as if the taxable year for federal income tax purposes were limited to the period of residence, and the denominator of which is federal adjusted gross income for the taxable year. (5) Husband and wife. In the case of a husband and wife who file a joint federal return but who are required to determine their New York taxes separately, the credit allowed pursuant to this subsection may be applied against the tax of either or divided between them as they may elect. (6) Notification. The commissioner shall periodically, but not less than every three years, make efforts to alert taxpayers that may be currently eligible to receive the credit provided under this subsection, and the credit provided under any local law enacted pursuant to subsection (f) of section thirteen hundred ten of this chapter, as to their potential eligibility. In making the determination of whether a taxpayer may be eligible for such credit, the commissioner shall use such data as may be appropriate and available, including, but not limited to, data available from the United States Department of Treasury, Internal Revenue Service and New York state income tax returns for preceding tax years. (7) Reports. The commissioner shall prepare a preliminary written report after July thirty-first and a final written report after December thirty-first of each calendar year, which shall contain statistical information regarding the credits granted on or before such dates under this subsection, and under any local law enacted pursuant to subsection (f) of section thirteen hundred ten of this chapter, during such calendar year. Copies of these reports shall be submitted by such commissioner to the governor, the temporary president of the senate, the speaker of the assembly, the chairman of the senate finance committee and the chairman of the assembly ways and means committee within sixty days of July thirty-first with respect to the preliminary report, and within forty-five days of December thirty-first with respect to the final report, and copies of such reports with respect to credits under any local law enacted pursuant to subsection (f) of section thirteen hundred ten of this chapter shall be submitted in addition to the mayor and the speaker of the council of the city where such a local law is in effect. Such reports shall contain, but need not be limited to, the number of credits and the average amount of such credits allowed; and of those, the number of credits and the average amount of such credits allowed to taxpayers in each county; and of those, the number of credits and the average amount of such credits allowed to taxpayers whose earned income falls within ranges, determined by the commissioner, of not more than four thousand dollars; and of those, the number of credits and the average amount of such credits allowed to taxpayers who file under the different statuses set forth in subsections (a), (b) and (c) of section six hundred one of this part; and of those, the number of credits and the average amount of such credits allowed to taxpayers whose number of qualifying children falls within the categories set forth in such section thirty-two of the internal revenue code.(d-1) Enhanced earned income tax credit. (1) A taxpayer described in paragraph two of this subsection shall be allowed a credit equal to the greater of: (A) twenty percent of the amount of the earned income tax credit that would have been allowed to the taxpayer under section 32 of the internal revenue code, absent the application of section 32(b)(2)(B) of such code, if the child or children described in subparagraph (C) of paragraph two of this subsection satisfied the requirements for a qualifying child set forth in section 32(c)(3) of such code, provided however, that the credit shall be calculated as if the taxpayer had only one child; or (B) the product of two and one-half and the amount of the earned income tax credit that would have been allowed to the taxpayer under section 32 of the internal revenue code, if the taxpayer satisfied the eligibility requirements set forth in section 32(c)(1)(A)(ii) of such code. (2) To be allowed a credit under this subsection, a taxpayer must satisfy all of the following qualifications. (A) The taxpayer must be a resident taxpayer. (B) The taxpayer must have attained the age of eighteen. (C) The taxpayer must be the parent of a minor child or children with whom the taxpayer does not reside. (D) The taxpayer must have an order requiring him or her to make child support payments, which are payable through a support collection unit established pursuant to section one hundred eleven-h of the social services law, which order must have been in effect for at least one-half of the taxable year. (E) The taxpayer must have paid an amount in child support in the taxable year at least equal to the amount of current child support due during the taxable year for every order requiring him or her to make child support payments. (3) If the amount of the credit allowed under this subsection shall exceed the taxpayer's tax for such year, the excess shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon. (4) No claim for credit under this subsection shall be allowed unless the department has verified, from information provided by the office of temporary and disability assistance, that a taxpayer has satisfied the qualifications set forth in subparagraphs (C), (D) and (E) of paragraph two of this subsection. The office of temporary and disability assistance shall provide to the department by January fifteenth of each year information applicable for the immediately preceding tax year necessary for the department to make such verification. Such information shall be provided in the manner and form agreed upon by the department and such office. If a taxpayer's claim for a credit under this subsection is disallowed because the taxpayer has not satisfied the qualifications set forth in subparagraphs (C), (D) and (E) of paragraph two of this subsection, the taxpayer may request a review of those qualifications by the support collection unit established pursuant to section one hundred eleven-h of the social services law through which the child support payments were payable. The support collection unit shall transmit the result of that review to the office of temporary and disability assistance on a form developed by such office. Such office shall then transmit such result to the department in a manner agreed upon by the department and such office. (5) A taxpayer shall not be allowed multiple credits under this subsection for a taxable year even if such taxpayer has more than onechild or has more than one order requiring him or her to make child support payments. (6) If a credit is allowed under this subsection and the taxpayer is also allowed a credit under subsection (d) of this section, the taxpayer shall only be allowed to claim one credit. (7) In the report prepared pursuant to paragraph seven of subsection (d) of this section, the commissioner shall include statistical information concerning the credit allowed pursuant to this subsection. Such information shall be limited to the number of credits and the average amount of such credits allowed; and of those, the number of credits and the average amounts of such credits allowed to taxpayers in each county. (8) In a report prepared by the commissioner and submitted to the office of temporary and disability assistance, the department shall include information concerning the credit allowed pursuant to this subsection indicating whether or not taxpayers identified by the office of temporary and disability assistance pursuant to paragraph
