HLS-04-07-00002-P Security Guard Training Tax Credit

1/24/07 N.Y. St. Reg. HLS-04-07-00002-P

NEW YORK STATE REGISTER

VOLUME XXIX, ISSUE 4

January 24, 2007

RULE MAKING ACTIVITIES

OFFICE OF HOMELAND SECURITY

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. HLS-04-07-00002-P

Security Guard Training Tax Credit

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed action:

Addition of Part 1000 to Title 9 NYCRR.

Statutory authority:

Executive Law, section 709(2)(n); and Tax Law, section 26(e)

Subject:

Security guard training tax credit.

Purpose:

To provide for a process by which applicants can apply for the tax credit.

Text of proposed rule:

Pursuant to the authority contained in subdivision (e) of Section 26 of the New York State Tax Law and subdivision (n) of subsection (2) of Section 709 of the Executive Law, the Director of the Office of Homeland Security hereby proposes to make and adopt the following amendments, as published in Title 9 of the Official Compilation of Codes, Rules and Regulations of the State of New York, by adding the following:

§ 1000.1 Purpose and general description.

These rules and regulations set forth the application process for the New York State Office of Homeland Security ‘Security Officer Training Tax Credit Program’ as set forth in subsection (e) of Tax Law Section 26 as added by Chapter 537 of the Laws of 2005. A taxpayer, which is subject to tax under article 9, 9-A, 22, 32 or 33 of the Tax Law and is a qualified building owner, shall be allowed a tax credit in the amount of $3,000 for each full-time qualified security officer who has been trained according to the Office of Homeland Security Certified Training Program. The Director of the Office of Homeland Security has the authority to promulgate regulations to establish procedures for the application and allocation of such credits and any other provisions necessary and appropriate to implement this program per Tax Law subdivision (e) of Section 26 and paragraph (n) of subdivision (2) of Section 709 of the Executive Law.

§ 1000.2. Definitions.

As used in this regulation, the following terms shall have the following meanings:

(a) “Qualified Building Owner” means a building owner whose building entrances, exits and common areas are protected by security officers, registered under article 7-A of the General Business Law, whether or not such security officers are employed directly by the building owner or indirectly through a contractor.

(b) “Building” means any commercial building under ownership of a qualified building owner that contains at least 500,000 square feet whose entrances, exits and common areas are protected by security officers licensed under article 7-A of the General Business Law.

(c) “Security Officer” means a security guard registered and subject to Article 7-A of the General Business Law.

(d) “Qualified Security Officers” means security officers who: (i) are employed in positions which are under a legally binding written agreement, including a service contract between qualified building owners and security contractors, enforceable by employees, that provides for a minimum hourly wage rate of at least nine dollars fifty cents for the calendar year two thousand five; nine dollars eighty-five cents for the calendar year two thousand six; and ten dollars eighty-five cents for the calendar year two thousand seven and thereafter; and (ii) have completed the Office of Homeland Security certified security training program as set forth in this section.

(e) “Qualified Security Training Program” means a program certified by the New York State Office of Homeland Security for residential and commercial building security officers, which is designed to: improve observation, detection and reporting skills; improve coordination with local police, fire and emergency services; provide and improve skills and working knowledge of advanced security technology including surveillance systems and access control procedures; require at least 40 hours of training, including 3 hours of training devoted to terrorism awareness.

(f) “Application” means a document issued by the Office of Homeland Security and submitted by a qualified building owner that contains information concerning the Homeland Security, Security Officer Training Tax Credit. Such application shall include, but is not limited to, the following information: the New York State Department of State issued unique identification number of each qualified security officer applied for which the tax credit is being sought and the employment status; the specific work locations; the address and square footage of each eligible building secured by the same qualified security officers; a certification that the employment records remain on file and readily available upon request by the Office of Homeland Security; and any other information necessary to properly evaluate the application.

(g) “Complete Application” means a properly completed and executed application where all questions on the application itself were fully answered by the qualified building owner and that all supporting documents or information required in the application were fully furnished to the Office of Homeland Security to review and approve the application.

(h) “Method of Transmittal” means that all applications containing original forms and supporting documentation must be mailed to the New York State Office of Homeland Security located at 1220 Washington Avenue, Building 7A, 7th Floor, Albany New York 12242, via a mail carrier service that provides proof of date of mailing.

(i) “Filing Period” means April 2nd and ending on April 27th following the calendar year for which the tax credit is being sought.

(j) “Application Filing Date” means date which the application was postmarked by the mail carrier used by applicant regardless of the date the application is received by the Office of Homeland Security, provided that the date is within the filing period specified above.

(k) “Untimely Application” means an application that has been postmarked either before or after the filing period specified.

(l) “Certificate of Tax Credit” means a certificate issued by the Office of Homeland Security that states the amount of the Security Officer Tax Credit that the building owner has qualified for, based on the office's receipt of the complete application and subject to the process set forth in these rules and regulations. The certificate shall include, but not be limited to the following information and any information necessary: name and address of qualified building owner; certificate serial number; amount of tax credit approved; and the calendar year in which such credit was awarded; and any other information as deemed necessary by the Office of Homeland Security.

§ 1000.3. Application Process

In the event that subtraction of the credit allocations of all the eligible applications received on a given day would result in a zero or negative balance of the legislative cap, the tax credits shall be allocated among such qualified building owners for that day on a pro rata basis. Each qualified building owner's request shall be allowed at a reduced rate equivalent to the percentage created by dividing the unallocated tax credits by the aggregate tax credits requested on such date. Untimely applications will not be considered for the tax credit.

(a) Application. A qualified building owner shall file a complete application according to the specified method of transmittal to the Office of Homeland Security within the filing period. The qualified building owner shall file with application such information, deemed necessary for the application process, as requested by the Director of the Office of Homeland Security, which includes, but is not limited to, affirmation by the qualified building owner that the certified training has been provided to each security officer; dates and places of training; hours worked by each qualified security officer for which the taxpayer is applying; and verification that all information has been provided to the best of the qualified building owner's knowledge. The Office of Homeland Security may request additional supporting documentation, as necessary.

All applications postmarked on the first day of the filing period by the required method of transmittal shall be treated as having been filed on the first day of the application period and shall be given priority with all other applications filed on the same day in the awarding of tax credits over all applications postmarked on subsequent days. Applications postmarked on subsequent days shall be given priority based on the date of the postmark.

(b) Criteria for Review of Application. A committee appointed by the Director shall evaluate all applications received by the Office of Homeland Security in accordance with paragraph (a) above. The Office of Homeland Security shall use the following criteria to determine the eligibility of a qualified building owner to receive a certificate of tax credit:

(1) the application is a complete application;

(2) the application is submitted within the filing period and is not untimely;

(3) the applicant is a qualified building owner; and

(4) the qualified building owner certifies and offers proof that the qualified security officers have, in fact, been trained according to an OHS Qualified Security Officer Training Program.

The Director of the Office of Homeland Security shall approve or disapprove the applications based upon criteria set forth by the Office of Homeland Security in order of priority based upon the application filing date of a complete application for allocation of Security Officer Training Tax Credit.

(c) Notification of Determination. If the Office of Homeland Security determines that a qualified building owner is eligible for the Security Officer Training Tax Credit, the Director of the Office of Homeland Security shall issue a certificate of tax credit to the qualified building owner after verification of the information submitted by the qualified building owner. If the application is disapproved, the Office of Homeland Security shall provide the qualified building owner with a notice of disapproval. Any security officer determined not to be a qualified security officer, shall be rejected for the purpose of calculating the qualified building owner's tax credits and any such reduction in tax credit shall be reallocated in conformity with the process specified in these regulations.

Upon a successful verification of eligible and timely applications, the Office of Homeland Security shall, within 45 days of the end of the filing period, issue certificates of tax credit and/or letters of disapproval, as appropriate.

(d) Eligibility in Subsequent Years. Any qualified building owner who is allocated a credit in the first calendar year and who applies for credit in the second calendar year shall, upon successful application, have priority of their percentage amount awarded in the previous year over all other taxpayers who file a complete application in the succeeding calendar year.

(e) Unallocated Tax Credits. If at the end of the calendar year, the aggregate amount of Security Officer Training Tax Credits applied for is less than the calendar year's allocation, then the amount permitted with respect to subsequent taxable years shall be augmented by the amount of such excess.

(f) Audit of Information. The qualified building owners who receive Security Officer Training Tax Credits in any given year shall, upon request by the Director of the Office of Homeland Security, immediately provide or make available any information necessary, including copies of supporting documentation to verify the information submitted in applications for such credit, including verification of training of security guards, the existence of a required contract, the payment of the mandatory wage provision as set forth in paragraph (4) of subdivision (b) of Section 26 of the Tax Law, and any other information deemed necessary by the Director of the Office of Homeland Security.

Text of proposed rule and any required statements and analyses may be obtained from:

Linda Shkreli, Counsel, Office of Homeland Security, 633 3rd, Ave., 32nd Fl., New York, NY 10017, [phone], e-mail: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

Statutory Authority

Subdivision (n) of subsection (2) of section 709 of the New York State Executive Law — State Office of Homeland Security; Appointment of the director; powers and duties, grants the authority to adopt, promulgate, amend and rescind rules and regulations to effectuate the provisions and purposes of this article and the powers and duties of the office in connection therewith.

Subsection (e) of section 26 of the New York State Tax Law was added by Chapter 537 of the Laws of 2005. It mandates that the Director of the Office of Homeland Security, in consultation with the Commissioner of Taxation and Finance, shall promulgate rules and regulations necessary to implement this program.

Legislative Objectives

Subsection (e) of section 26 of the New York State Tax Law requires that the Director of the Office of Homeland Security promulgate regulations which set forth the process for application and receipt of tax credits under the Security Guard Tax Credit Program and create a process by which qualified building owners can apply for a Security Guard Training Tax Credit. The objectives of the legislature in creating the Security Guard Training Tax Credit included the enhancement of the security guard industry to be better equipped to deal with the emerging terrorism threats not currently accounted for in the standardized training that existed prior to the new legislation.

Needs and Benefits

An application process is mandated by subsection (e) of Section 26 of the New York State Tax Law to be promulgated by the Director of the Office of Homeland Security to provide all eligible taxpayers a necessary framework through which such applicants can apply for the tax credit. Such a structure will benefit building owners and the public because a sound tax credit process will be in place to help guard against misuse of the credits. Security guards will benefit from the additional training received, which is mandatory for the building owners to apply for and receive the tax credit.

Alternatives

The tax credit application process could have taken many forms, such as a submission of copies of all paperwork relating to the training and employment of security guards by the taxpayer. A thorough analysis was conducted by the Office of Homeland Security's Legal, Administrative and Training Divisions, as well as with the Department of Taxation and Finance. Taking into consideration public comment and an informal efficiency analysis, it was determined that the application the Office of Homeland Security drafted was the least burdensome. The application form will consolidate information that would otherwise necessitate the copying of an abundance of paperwork. The information provided on the application may be audited in select cases upon awarding of the tax credit.

Further, for the period of two (2) weeks, the draft of the regulations remained on the Office of Homeland Security's website for comment by the public prior to this submission. There were no comments to directly alter the draft regulations, except in one case whereupon a submitter recommended the addition of language referring to audit of information. The Office of Homeland Security included such language. The other submission included questions relating to the legislation, which were answered by the Office of Homeland Security approach.

Compliance Schedule

The amendment will take effect when the Notice of Adoption is published in the State Register.

Costs to State Government

The costs to the State include administrative and legal functions relating to the implementation of the tax credit program, including development and receipt of applications, as well as determinations on recipients. Additionally, two new positions have been created within the Office of Homeland Security for the purpose of administering the tax credit program.

Costs to Local Government

There are no costs to local government.

Cost to Regulated Parties

Any costs are limited to those qualified building owners who seek to apply for the voluntary tax credit. The proposed rules do not pose a cost to any businesses, local governments or individuals in New York State, except for those qualified taxpayers who wish to apply for the voluntary Security Guard Training Tax Credit in accordance with Section 26 of the New York State Tax Law.

The costs related to this tax credit includes about $400 to $500, estimated from the current cost of security guard training multiplied by 5 days, for the training of the guards in the 40 hour Office of Homeland Security certified training. The cost of backfill is expected to be an estimated $450 to $500 for the position of the guard who will sit in training for the period of one week. These costs are not insignificant, but will be offset by the anticipated $3,000 per full time security guard tax credit. Additionally, the necessary increases in hourly wages, as mandated to qualify for the credit under the law is an indefinite cost, which is naturally commensurate with the additionally training received by the guard. Finally, the administrative costs of preparing the tax credit application, which is unknown at this time, will depend on the individual resources of the taxpayer are anticipated. The Office of Homeland Security developed the application and reporting requirements in such a way as to minimize the applicants' burden and time involved in preparing the application. They are, however, expected to be nominal in comparison to the actual credit.

Local Government Mandates

The proposed regulation does not impose a new program duty or responsibility to any county, city, town, village, school district, fire district or special district.

Paperwork

The paperwork requirement imposed by the rule includes any application and supporting documentation for application of the voluntary tax credit for qualified building owners. As required by subsection (d) of Section 26 of the Tax Law Section, taxpayers seeking to take the credit will need to apply to the State Office of Homeland Security to obtain a credit certification. The taxpayers will need to provide the information necessary to prorate the credit for security officers employed for less than a full year.

Duplication

This regulation does not duplicate any existing local, state or federal regulation relating to the Office of Homeland Security.

Federal Standard

No federal law or regulation is applicable.

Regulatory Flexibility Analysis

Effect on Small Businesses and Local Government

The proposed rule will have no negative impact upon small businesses or local government, but rather provides a tax credit to eligible taxpayers.

Compliance Requirements

The proposed rule does not impose compliance requirements on small businesses or local government, except for those qualified taxpayers who wish to apply for the voluntary Security Guard Training Tax Credit in accordance with Section 26 of the New York State Tax Law.

Professional Services

No additional professional services will be required by small businesses or local governments.

Costs

The proposed rule does not pose a cost to small businesses or local government, except for those qualified taxpayers who wish to apply for the voluntary Security Guard Training Tax Credit in accordance with Section 26 of the New York State Tax Law.

The costs related to this tax credit includes about $400 to $500, estimated from the current cost of security guard training multiplied by 5 days, for the training of the guards in the 40 hour Office of Homeland Security certified training. This cost is substantially less than the anticipated $3,000 per full time security guard credit. Additionally, the necessary increases in hourly wages, as mandated to qualify for the credit under the law is an indefinite cost, which is naturally commensurate with the additionally training received by the guard. Finally, the administrative costs of preparing the tax credit application, which is unknown at this time, will depend on the individual resources of the taxpayer are anticipated. The Office of Homeland Security developed the reporting system, so that among other things, would minimize the applicants' burden and time involved in preparing the application. They are, however, expected to be nominal in comparison to the actual credit.

Economic and Technological Feasibility

There is no economic cost associated with the proposed rule and technological feasibility is not a factor in promulgating the proposed rule.

Minimizing Adverse Economic Impact

The proposed rule does not impose compliance mandates on small businesses or local governments, except for those qualified taxpayers who wish to apply for the voluntary Security Guard Training Tax Credit in accordance with Section 26 of the New York State Tax Law.

Small Business Participation

There has been no participation by small business or local government in the proposed rule, except in the case of suggestions and comments offered on the Office of Homeland Security upon posting of the draft for the period of two (2) weeks. There were no comments to directly alter the draft regulations, except in one case whereupon a submitter recommended the addition of language referring to audit of information. The Office of Homeland Security included such language. The other submission included questions relating to the legislation, which were answered by the Office of Homeland Security.

Rural Area Flexibility Analysis

Effect on Rural Areas

There is no expected effect on rural areas throughout the State.

Reporting and Recordkeeping

The proposed rules do not impose any additional reporting or recordkeeping requirements, except for those qualified taxpayers who wish to apply for the voluntary Security Guard Training Tax Credit, including such information as necessary to prove the information included in the application.

Compliance Requirements

The proposed rules do not impose compliance requirements on any businesses, local governments or individuals in New York State, except for those qualified taxpayers who wish to apply for the voluntary Security Guard Training Tax Credit.

Costs

The proposed rules do not pose a cost to any businesses, local governments or individuals in New York State, except for those qualified taxpayers who wish to apply for the voluntary Security Guard Training Tax Credit in accordance with Section 26 of the New York State Tax Law.

The costs related to this tax credit includes about $400 to $500, estimated from the current cost of security guard training multiplied by 5 days, for the training of the guards in the 40 hour Office of Homeland Security certified training. This cost is substantially less than the anticipated $3,000 per full time security guard credit. Additionally, the necessary increases in hourly wages, as mandated to qualify for the credit under the law is an indefinite cost, which is naturally commensurate with the additionally training received by the guard. Finally, the administrative costs of preparing the tax credit application, which is unknown at this time, will depend on the individual resources of the taxpayer are anticipated. They are, however, expected to be nominal in comparison to the actual credit.

Minimizing Adverse Economic Impact on Rural Areas

There is no economic cost associated with the proposed rules, except for those qualified taxpayers who wish to apply for the voluntary Security Guard Training Tax Credit in accordance with Section 26 of the New York State Tax Law.

Rural Area Participation

While the majority of buildings 500,000 square feet or more will generally be in urban areas, there are other buildings throughout the rural areas of the State that would qualify under the definition. Owners of like kind buildings in rural areas were given the same opportunity to comment and will be eligible to apply for the tax credit.

Job Impact Statement

The Office of Homeland Security has determined that this rule will not have a substantial adverse impact on jobs and employment opportunities. Rather, to the contrary, the tax credit may foster increased jobs in the market of training of security guards, which is a requirement to apply for the tax credit. Further, the advancement of training of security guard may also have a positive economic impact on wages in the long run. The overall intent of this rule making is to satisfy the legislative mandate as described in Section 26(e) of the New York State Tax Law to provide an application process for the Security Guard Training Tax Credit.