Highlighting the importance of the wording of a statute, the New York State Tax Appeals Tribunal, reversing an Administrative Law Judge, held that a manufacturer was allowed both a refund of 50 percent of its Empire Zone investment tax credit (“EZ‑ITC”) as a “new business” and a refund of 50 percent of its EZ‑ITC as the owner of a qualified investment project (“QUIP”) or significant investment project (“SCIP”). As a result, the manufacturer was entitled to a refund of 100 percent of the credit carryover, totaling over $152 million. GlobalFoundries U.S. Inc., Docket No.829184 (NYS Tax App. Trib. Jan. 19, 2023).
The issue in the case was whether the New York Tax Law, which provides that a taxpayer that is a new business may elect to receive a refund of 50 percent of its EZ‑ITC carryover and that a taxpayer that is the owner of a QUIP or a SCIP may elect to receive a refund of 50 percent of its EZ‑ITC carryover, permits a taxpayer that is both a new business and an owner of a QUIP or SCIP to elect to receive both such refunds in a single year, resulting in a refund of 100 percent of the credit carryover for that year.
The Facts: GlobalFoundries manufactures semiconductor products in a designated Empire Zone in New York. On its initial New York tax returns, it filed for and received a refund of 50 percent of its EZ‑ITC carryover for its taxable year 2014. It subsequently filed an amended return seeking a refund of the remining 50 percent.
It was undisputed that GlobalFoundries qualified as both a new business and as the owner of a QUIP or SCIP. Its entitlement to the EZ‑ITC in the claimed amounts was also undisputed as was its right to carry over the credit.
The Division of Taxation, however, denied the refund claim on the basis that a taxpayer was only entitled to a refund of 50 percent of the carryover.
The Decision: Although finding that the statue should be strictly construed against the taxpayer, the Tribunal nonetheless ruled for GlobalFoundries. The statute at issue, Tax Law Section 210-B(3)(d), first contains a carryover provision for new businesses. The next sentence, which begins with the words “In addition,” contains the carryover provision for owners of a QUIP or SCIP. Finding the statute facially unambiguous, the Tribunal interpreted it based on its plain meaning, finding that the “words ‘in addition,’ of course, mean ‘also.’” Consequently, “[t]he statute as written thus provides two benefits, one ‘in addition’ to the other, each available to ‘any’ taxpayer that qualifies.”
The Tribunal found additional support for its conclusion in the fact that another Empire Zone carryover provision specifically limited the carryover to either new businesses or owners of a QUIP or SCIP. Finally, the Tribunal held that for one of the two years at issue, GlobalFoundries had not timely filed a refund claim and, therefore, that refund claim was untimely.
Inasmuch as New York cannot appeal decisions of the Tax Appeals Tribunal, this decision is final. It does, moreover, demonstrate the importance of the words contained in a statute.
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