BILL NUMBER: S7230

SPONSOR: KAPLAN
 
TITLE OF BILL:

An act to amend the tax law, in relation to providing an exclusion from
income for amounts received pursuant to the COVID-19 pandemic small
business recovery grant program

 
PURPOSE:

To amend the tax law to ensure that grant awards made via the COVID-19
Pandemic Small Business Recovery Grant Program are exempt from personal
income tax.

 
SUMMARY OF PROVISIONS:

Section 1 amends section 208 of the tax law to provide an exemption from
the corporate franchise tax for grants received pursuant to the COVID-19
pandemic small business recovery grant program established in section
16-ff of the urban development corporation act.
              

Section 2 amends section 612 of the tax law to exempt from personal
income tax, grants received pursuant to the COVID-19 pandemic small
business recovery grant program established in section 16-ff of the
urban development corporation act.

 
EXISTING LAW:

The Governor signed into law the COVID-19 Pandemic Small Business Recov-
ery Grant Program as part of the 2021-2022 New York State Budget.

 
JUSTIFICATION:

The $800 million COVID-19 Pandemic Small Business Recovery Grant Program
is a transformative commitment of the state of New York to build back
our small businesses better than ever. This program was designed to
assist the State's small and microbusinesses, who were hit incredibly
hard by the COVID-19 pandemic, to recover from losses due to the public
health crisis. This program is critical to the survival of New York's
small business community, especially our minority and women-owned small
businesses and those in economically challenged neighborhoods, which
were also hit the hardest by COVID.  The program puts New York's small
businesses on the road to recovery.

This legislation provides further benefit to small businesses by ensur-
ing grants from this program are not taxed as income. While the tax law
generally considers grant awards as taxable income, it is clear that the
grants provided by this program were never intended to be considered
taxable income for these small businesses who have already been hit so
hard. This legislation clarifies and furthers the policy goal of ensur-
ing our COVID-impacted small businesses are a part of New York's econom-
ic recovery.

 
LEGISLATIVE HISTORY:

The COVID-19 Pandemic Small Business Recovery Grant Program was created
pursuant to chapter 53 of the laws of 2021.

 
BUDGET IMPLICATIONS:

None, as the grants provided by this program were not intended to be
taxed.

 
EFFECTIVE DATE:
Immediately.