New York State Covid Tax Credits

Tax Alert | Michael E. Williams | Aug 03, 2021


New York State announced the launch of the $35 million Restaurant Return to Work Credit Program on July 29, 2021.  This credit can provide up to $50,000 ($5,000 per new worker hired between April 1, 2021 and December 31, 2021) to qualified restaurants in New York State and City.

To qualify one must be a small and independently owned restaurants with 100 or less full-time equivalent employees located in New York City (where indoor dining was subject to suspension for over six months) or in other areas in the State designed as Orange or Red by the New York State Health Department for a period of 30 or more days (including some areas of Chemung, Erie, Monroe, Onondaga, Orange, Rockland, and Westchester Counties).  A restaurant must be able to show that it sustained a 40% reduction in gross receipts or full-time equivalent employees.  In addition, the restaurant must hire at least one full time worker showing it increased its workforce.

Qualified restaurants include full and limited-service restaurants, bars, nightclubs, taverns, and similar drinking establishments, and certain breweries, wineries, cideries, distilleries, and meaderies with a tasting room (the tasting room needs to constitute 33% of sales).  Franchises, public companies, take out, caterers, mobile food services, supermarkets, groceries, and other specialty shops are not eligible.

Applications can be filed after August 31, 2021 with what the state is calling the Fast-Track Option (one can claim an advance payment) or claim the credit with their tax filings.  These Fast-Track Option applications need to be submitted by November 15, 2021 (September 15, 2021 to secure the advance payment) to report new hires between April 1, 2021 and August 31, 2021.  If one chooses the Fast-Track Option, they cannot apply for additional credits for new hires made after August 31.

(In the FAQs provided by the State it is noted that these credits are first come first served and when the pool runs out there will be no additional funds provided, therefore careful consideration of the timing of one’s application is necessary)


On July 22nd New York State announced the launch of a two-year $100 million state tax credit program for qualified production companies that are principally engaged in the production of musical or theatrical productions located in New York City.

The credit is equal to up to 25% of the allowable production expenses up to a total credit of $3 million per production (first-year program applicants receiving up to $3 million per production and second-year applications being eligible for up to $1.5 million).

A qualified production is specifically a for profit original or adaptive version of a musical or theatrical production that is a live, scripted dramatic performance by one or more performers with or without musical performances or accompaniment that is performed in a qualified New York City production facility.  (ballet, opera, musical solo, group, band, or orchestra performance, or solo, duo, or several performers’ stand-up comedy performances do not qualify).

A qualified New York City production facility is one where live theatrical productions are or intended to be primarily presented; contains at least one stage with a seating capacity of five hundred or more seats, and dressing rooms, storage areas, and other ancillary amenities necessary for the qualified musical and theatrical production, and whose receipts attributable to ticket sales constitute seventy-five percent or more of gross receipts of the facility.

To qualify a production company must also take part in a diversity and arts job training program, the production must be made available and accessible for low-or no-cost to low-income New Yorkers, and the production company must agree to donate up to 50% of the credit received if certain levels of profitability are reached.

The credit period of the qualified production begins on the production date, defined as twelve weeks prior to the first paid public performance after April 19, 2021 (productions that were first performed in a qualified facility prior to the pandemic shall be treated as qualified).

The credit period ends on the date the production closes, defined as the date after the production’s final public performance on which the move of all physical production assets (i.e., sets, costumes, lighting, and audio equipment) from the qualified New York City production facility to their subsequent facilities (such as lessor vendor facilities and storage facilities) is complete and all qualified costs are paid.

Qualified costs include tangible property used and services performed directly and predominantly in the production of a qualified musical and theatrical production:

  • Design, construction and operation of sets, special and visual effects, wardrobes, make-up, lighting, sound, staging
  • Salaries, wages, fees, payroll taxes, workers’ compensation insurance and other fringe benefits up to $200,000 per week
  • Technical and production crew costs
  • 50% of advertising and marketing costs (in state only)

Certain costs are specifically excluded,

  • Airfare, hotels,
  • Per diem,
  • Entertainment,
  • Insurance (premiums, deductibles and all costs covered by insurance, excepting workers’ compensation),
  • Licenses,
  • Certification,
  • Union membership,
  • Legal fees,
  • Parking tickets,
  • Rights/Management,
  • Royalties and
  • 50% of advertising and marketing.

In both of these programs the collection of other grants (such as SVOG, RRF) and loans (such as PPP) do not impact one’s ability to apply.