The state of New York has launched new program offering a tax credit to small businesses that incurred operational costs to comply with public health or other emergency orders or regulations related to the COVID-19 pandemic, or to increase safety through infectious disease mitigation during 2021 and 2022. The credit is equal to 50% of qualified expenses. The maximum expenses allowed are $50,000, therefore the maximum credit is $25,000.

The program is open to small businesses operating in New York State with the following requirements:

  • Less than one hundred full-time employees
  • Gross receipts of less than $2.5 million for 2021
  • At least $2,000 of qualifying expenses between January 1, 2021, and December 31, 2022, which were paid by March 31, 2023
  • Operating at a location or locations within New York State
  • Independently owned and operated (companies that are publicly traded or owned 5% or more by a publicly traded entity and illegible).
  • The business could be a sole proprietor, partnership, limited liability company, or a corporation (C-Corp or S-Corp) with its own federal employer identification number (FEIN), or in the case of a sole proprietor, a social security number.
    • NOTE – A related business entity, with common ownership, but operating under a different FEIN, is considered a separate entity.

Qualifying Expenses

  • Supplies to disinfect and/or protect against COVID-19 transmission
  • Physical barriers and sneeze guards
  • Hand sanitizer stations  
  • Respiratory devices such as air purifier systems installed at the business entity’s location
  • Signage related to the COVID-19 pandemic
  • Materials required to define and/or protect space such as barriers 
  • Materials needed to block off certain seats to allow for social distancing
  • Certain point of sale payment equipment to allow for contactless payment 
  • Equipment, materials or supplies for new product lines in response to the COVID-19 pandemic
  • Software for online payment platforms to enable delivery or contactless purchases
  • Building construction and retrofits to accommodate social distancing
  • Installation of air purifying equipment
  • Machinery and equipment to accommodate contactless sales
  • Materials to accommodate increased outdoor activity such as heat lamps, outdoor lighting, and materials related to outdoor space expansions
  • Other costs as determined by the department to be eligible under this section; provided, however, that “qualified COVID-19 capital costs” do not include any cost paid for with other COVID-19 grant funds as determined by the Commissioner

How to Apply?

There is a two-step application process:

  • First, you need to fill out a required eligibility screening tool on the NYS website to determine if your business qualifies for the program
  • Second, if your business qualifies, you will be emailed a link to the application, which needs to be submitted along with documentation to show proof of expenses.

Other General Questions

Q: If my business received Federal assistance such as a U.S. Small Business Administration Payroll Protection Program (PPP) loan, Economic Injury Disaster Loan (EIDL), Restaurant Revitalization Fund (RRF), am I eligible to participate in this program?
A: Yes. Federal assistance from those programs does not disqualify a business from this program.

Q: If my business received State assistance such as a New York Forward loan or a COVID-19 Pandemic Small Business Recovery grant, am I eligible to participate in this program?
A: Yes, however, if your business received grant assistance from the COVID-19 Pandemic Small Business Recovery Grant Program and grant proceeds were used to pay for certain COVID-19 expenses, then those expenses would not qualify for this Program.

Businesses that participated in the COVID-19 Pandemic Small Business Recovery Grant Program will need to attest that no qualified COVID-19 capital costs incurred between January 1, 2021 and March 31, 2021 were included in this Program if such costs were previously paid for with proceeds from the New York State COVID-19 Small Business Recovery Grant Program.  

Q: If I meet all Program eligibility criteria, am I guaranteed to receive tax credits under this program?
A: No. The State budget allocated a maximum of $250 million in available tax credits. When this allocation is exhausted, business entities will no longer be able to receive tax credit certificates. Business entities are encouraged to apply to the program as soon as possible.

If you have any questions, please reach out to the SobelCo tax professionals for more information.

About the Authors

Giancarlo Revilla is an Accountant in the SobelCo Tax Practice. Giancarlo’s primary focus is tax services and compliance issues in the real estate and food & beverage industries.

For more information contact Giancarlo Revilla at giancarlo.revilla@sobelcollc.com.

Doug Finkle is a Director in the Tax Department at SobelCo. With a career spanning more than twenty years, Doug brings a depth of knowledge and experience to the firm. Over the years, he has developed strong competencies in handling tax compliance for corporations (including consolidations), partnerships, S corporations, and high net worth individuals. In addition, Doug is known for sharing his in-depth knowledge of tax laws and regulations, particularly by leveraging his broad involvement with tax planning and developing tax minimization strategies for clients. Drawing on this unique mix of knowledge of tax laws, Doug has proven to be an excellent problem solver who applies his strong analytical skills to help clients address their simple and complex issues. He also has expansive knowledge of preparing and reviewing tax provisions under ASC 740 Accounting for Income Taxes.