Assistance and Incentives

Sales and Use Tax Exemption

The Town of Bethlehem IDA has the ability to provide a Sales and Use Tax Exemption to eligible projects. This exemption ensures that all purchases made by the IDA or its agent are exempt from sales and use taxes. The exemption covers the acquisition or lease of construction material, machinery and equipment and is not to be applied to cover operational costs. In New York State, sales and use taxes generally range between 7%-8.5%.

Items Exempted

The sales and use tax exemption granted by the IDA shall normally extend only to the following items acquired during the tax exemption period described below:

  • Items incorporated into the real property;
  • Tangible personal property including furniture, furnishings and equipment used to initially equip the project or otherwise forming part of the project, if purchases as agent of the IDA;
  • The rental of tools and other items necessary for the construction, reconstruction and/or equipping of the project, if rented as agent of the IDA; and
  • Office supplies, fuel and similar items consumed in the process of acquiring, constructing, reconstruction and/or equipping the project, if purchased as agent of the IDA.

Items Not Exempted

A sales and use tax exemption shall not be granted for the following:

  • Purchases occurring beyond the tax exemption period described above
  • Repairs, replacements of renovations of the project, unless such repairs, replacements or renovations constitute major capital-type expenses approved by the IDA as a separate project in the manner contemplated by the Act; or
  • Operating expenses, unless such operating expenses constitute major capital-type expenses approved by the IDA as a separate project in the manner contemplated by the Act.

  • Read more about the Sales Tax Exemption

    General


    State law provides that purchases of tangible personal property by the IDA or by an agent of the IDA, and purchase of tangible personal property by a contractor for incorporation into or improving, maintaining, servicing or repairing real property of the IDA, are exempt from sales and use taxes imposed pursuant to Article 28 or the Tax Law.

    The IDA has a general policy of abating sales taxes applicable only to the initial acquisition, construction, re-construction and/or equipping of each project with respect to which the IDA grants financial assistance. The IDA has no requirement for imposing a payment in lieu of tax arising from the exemption of a project from sales and/or use taxes applicable to the initial acquisition, construction reconstruction and/or equipping of such project, except as described in below or in the circumstance where (a) a project is offered sales tax exemption on the condition that a certain event (such as the issuance of bonds by the IDA with respect to the project) occur by a certain date and (b) such event does not occur, in which case the IDA may require that the applicant make payments in lieu of sales tax to the New York State Department of Taxation and Finance.

    Period of Exemption

    Except as set forth in subsection (A) above, the period of time for which a sales tax exemption shall be effective (the “tax exemption period”) shall be determined as follows:

    • Unless otherwise determined by the IDA, the tax exemption for sales and use taxes shall be for the tax exemption period commencing with the issuance by the IDA of bonds, notes or other evidences of indebtedness with respect to the project and ending on the date of completion of the project.
    • Early Commencement. The tax exemption period may, at the discretion of the IDA, commence earlier than the date of issuance by the IDA, of the IDA’s debt relating to the project, provided that (a) the IDA has complied with the requirements of Section 859-a of the Act, (b) the IDA thereafter adopts a resolution determining to commence such period earlier, said resolution to be substantially in the form of Appendix A attached hereto, (c) the applicant agrees to the conditions of such resolution and supplies to the IDA the materials required to be supplied to the IDA thereunder, and (d) the (Chairman) (Executive Director) (General Counsel) of the IDA acknowledges satisfaction of all conditions to the granting of such tax exemption set forth in such resolution.
    • The tax exemption period will normally end upon the completion of the project. On construction projects, the parties shall agree on the estimated date of completion of the project, and the tax exemption shall cease on the earlier of (a) the actual date of completion of the project or (b) the date which is six (6) months after the estimated date of such project. On non-construction projects, the parties shall agree on the estimated date of completion of the project, and the tax exemption shall cease on the earlier of (a) the actual date of completion of the project or (b) the date which is three (3) months after the estimated date of completion of the project. If the IDA and the applicant shall fail to agree on a date for completion of the project, the IDA shall on notice to the applicant make the determination on the basis of available evidence.
    • The IDA, for good cause shown, may adopt a resolution extending the period for completion of the project and/or extending the tax exemption period.

    Items Exempted

    The sales and use tax exemption granted by the IDA shall normally extend only to the following items acquired during the tax exemption period described above:

    • Items incorporated into the real property;
    • Tangible personal property including furniture, furnishings and equipment used to initially equip the project or otherwise forming part of the project, if purchases as agent of the IDA;
    • The rental of tools and other items necessary for the construction, reconstruction and/or equipping of the project, if rented as agent of the IDA; and
    • Office supplies, fuel and similar items consumed in the process of acquiring, constructing, reconstruction and/or equipping the project, if purchased as agent of the IDA.

    Items Not Exempted

    A sales and use tax exemption shall not be granted for the following:

    • Purchases occurring beyond the tax exemption period described above
    • Repairs, replacements of renovations of the project, unless such repairs, replacements or renovations constitute major capital-type expenses approved by the IDA as a separate project in the manner contemplated by the Act; or
    • Operating expenses, unless such operating expenses constitute major capital-type expenses approved by the IDA as a separate project in the manner contemplated by the Act.

    Percentage of Exemption

    Unless otherwise determined by resolution of the IDA, the sales and use tax exemption shall be equal to one hundred percent (100%) of the sales and/or use taxes that would have been levied if the project were not exempt by reason of the IDA’s involvement in the project. If an exemption of less than one hundred percent (100%) is determined by the IDA, then the applicant shall be required to pay a PILOT to the IDA equal to the applicable percentage of sales and/or use tax liability not being abated. The IDA shall remit such PILOT within thirty (30) days of receipt by the IDA to the affected tax jurisdictions in accordance with Section 874 (3) of the Act.

    Confirmation Letter

    The final act of granting a sales and/or use tax exemption by the IDA shall be confirmed by the execution by an authorized officer of the IDA of a confirmation letter by the IDA. Such confirmation letter shall be in the form of either Appendix 17B (where the exemption is permanent, because the IDA is satisfied that any conditions precedent to such tax exemption, such as the issuance of bonds by the IDA, have been satisfied) or Appendix 17C (where such exemption is tentative, because there remain conditions precedent to such tax exemption which have not been satisfied). Each such confirmation letter shall describe the scope and term of the sales and use tax exemption being granted.

    Required Filings

    The New York State Department of Taxation and Finance requires that proper forms and supporting materials be filed with a vendor to establish a purchaser’s entitlement to a sales tax exemption. For example, TSB-M-87(7) outlines the materials that must be filed to establish entitlement to sales tax exemption as “agent” of the IDA. It is the responsibility of the applicant and/or project occupant to ensure that the proper documentation is filed with each vendor to obtain any sales tax exemptions authorized by the IDA.

    Required Reports and Records

    Pursuant to section 874(8), the applicant and/or project occupant is required to annually file with the New York State Department of Taxation and Finance a statement of the value of all sales and use tax exemptions claimed under the Act by the applicant and/or the project occupant and/or all agents, subcontractors and consultants thereof. The project documents shall require that (1) a copy of such statement will also be filed with the IDA and (2) that the project occupant shall maintain, for a period ending seven (7) years after the last purchase made under the sales and use tax exemption, and make available to the IDA at the request of the IDA, detailed records which shall show the method of calculating the sales and use tax exemption benefit granted by the IDA.

    To learn more about Sales and Use Tax Exemptions and if your business and project would qualify please contact:  Elizabeth Staubach, Economic Development Coordinator at 518-439-4955 ext. 1189 or estaubach@townofbethlehem.org.