A parent corporation and two of its subsidiaries are each separately certified (or in the process of being certified) as eligible for the Article 9-A eligible business facilities credit. Can the parent compute and claim that credit on a combined basis across all three corporations, or must each corporation compute its own credit separately using its own certificate?

Plain-English summary

Corroon and Black Corporation, an insurance-brokerage parent company, had two subsidiaries also subject to New York's Article 9-A franchise tax: an insurance broker (Corroon and Black Company of New York) and a reinsurance broker (G. L. Hodson & Son). All three corporations wanted to know whether they could pool their eligibility for the Tax Law § 210.11 eligible business facilities credit and compute it on a combined basis, rather than each computing its own separately.

The credit itself is administered by the Job Incentive Board (Commerce Law Art. 4-A), which certifies which facilities qualify and issues a certificate of eligibility specifying the exact property values, wages, and other figures each certified taxpayer may use. At the time of this ruling, the parent had a full 1980 certificate; the insurance-broker subsidiary had only initial approval (a certificate hadn't yet issued); and the reinsurance-broker subsidiary had neither.

The Department held that the credit is inherently taxpayer-specific: only a corporation that is actually certified (or, once certified, whose subsidiary is also certified) can claim it, and each must use the figures on its own certificate. There is no general rule allowing a parent and its subsidiaries to pool their eligible-facility figures into one combined credit computation -- that would only be possible if the group were separately required or permitted to file a combined Article 9-A franchise tax return, which the State Tax Commission had not authorized here.

What this means for you

Certification is per-taxpayer, and so is the credit

If you operate an eligible business facility through a corporate group, each corporation that owns or operates a facility needs its own certificate of eligibility from the Job Incentive Board -- a parent's certificate does not extend to cover an uncertified subsidiary's operations, and an uncertified subsidiary gets no credit at all.

Combining the credit requires combined-filing authority, not just common ownership

Common ownership between a parent and its subsidiaries is not enough to let you pool eligible-facility figures into one credit computation. You need the State Tax Commission (now the Department) to have actually mandated or granted permission for the group to file a combined Article 9-A return -- absent that, each entity computes and claims its own credit on its own return using its own certificate.

Common questions

Q: If my subsidiary hasn't received its certificate of eligibility yet, can it still claim the credit while waiting?
A: Not according to this ruling -- the subsidiary here with neither a certificate nor initial approval could claim no credit at all.

Q: Does being part of the same corporate family let us pool our eligible-facility credits?
A: No, unless your group is required or permitted to file a combined New York franchise tax return; otherwise each certified corporation computes its own credit separately from its own certificate.

Citations and references

Statutes and guidance:

• Tax Law § 210.11 (eligible business facilities credit)
• Commerce Law § 120 / Article 4-A (Job Incentive Board certification)
• 5 NYCRR § 102

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/corporation_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/corporation/a81_8c.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-81 (8) C
Corporation Tax
December 8, 1981

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. C810417A

On April 17, 1981, a Petition for Advisory Opinion was received from Corroon and Black
Corporation, Wall Street Plaza, New York, New York 10005.
The issue raised by Petitioner is whether it may compute the eligible business facilities credit,
provided for under Article 9-A of the Tax Law, on a combined basis with two of its subsidiaries.
Petitioner is a corporation subject to the Franchise Tax on Business Corporations imposed
under Article 9-A of the Tax Law. Petitioner has two subsidiaries, both subject to tax under Article
9-A. These are Corroon and Black Company of New York, Inc. (hereinafter "C & B NY"), which
is engaged in business in New York as an insurance broker, and G. L. Hodson & Son, Inc.
(hereinafter "Hodson"), which is a reinsurance broker. Petitioner has received a certificate of
eligibility relating to its owning or operating an eligible business facility with respect to the year
1980, while C & B NY has received initial approval for such a certificate of eligibility. Hodson,
however, has received neither a certificate of eligibility nor initial approval therefor.
Section 210.11 of the Tax Law provides for a credit against tax available to "a taxpayer
owning or operating an eligible business facility." The responsibility for determining whether a
given facility qualifies as an eligible business facility, and whether a business concern which owns
or operates such a facility qualifies for a credit under the Tax Law, lies with the New York State Job
Incentive Board. Commerce Law, Art. 4-A. Where such a determination is made before or during
a year of such ownership or operation, and where that determination is favorable to the applicant,
the Job Incentive Board will grant initial approval of the application for a certificate of eligibility.
Subsequent to the close of the year with respect to which initial approval has been granted, and upon
satisfactory verification of an affidavit of compliance and any other information which the Board
deems pertinent, the Job Incentive Board will issue a certificate of eligibility which not only
establishes the applicant's eligibility for the credit but also certifies the amounts of eligible property
values and applicable wages, salaries and other personal service compensation to be utilized in
computing the credit with respect to the taxable period involved. Commerce Law, §120; Tax Law,
§210.II(b)(1) and (2);5N.Y.C.R.R. §102.
Inasmuch as Hodson has not been certified by the Job Incentive Board as eligible for the
credit provided for under Section 210.11 of the Tax Law it may not apply such credit against its
franchise tax. Inasmuch as Petitioner has been so certified, and upon C & B NY's being so certified,
each may apply such credit against its franchise tax. However, each must compute its credit
separately based on the figures set forth in its separate certificate of eligibility. Except where two or
more taxpayers are required or permitted to file their franchise tax returns on a combined basis, there
is no provision for computing the eligible business facilities credit on a combined basis.

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-81 (8) C
Corporation Tax
December 8, 1981

In the present instance, the State Tax Commission has not mandated such combined filing nor has
it granted permission therefor, with respect to the year 1980 or any subsequent year.

DATED: September 24, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau