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January 8, 2010

QEZE Sales Tax Credit or Refund

As you are aware, the 2009 legislative changes affected the QEZE sales tax exemption. Beginning September 1, 2009, a QEZE must pay the appropriate sales tax and then file a claim for a credit or refund of the state sales tax portion. Form AU-12, Application for Credit or Refund of Sales or Use Tax - Qualified Empire Zone Enterprise (QEZE), is attached and now available for use. This form should be used only for purchases made on or after September 1, 2009 by a QEZE.1 As there are several steps to filing a claim, we have outlined our own set of instructions below. (Note: Full instructions from the Department of Taxation and Finance are attached.)

Applicant Information: Complete the general company information and amount of refund/credit claimed on the Applicant Information section of the form.

Basis for Claim: Place an "X" in the applicable boxes A through E of the Basis for Claim section.2

Employment Test: A QEZE is required to pass the employment test for the tax year prior to the year for which a sales tax credit or refund is being claimed. Place an "X" in the appropriate box indicating which of the following Employment Test forms pertains to the QEZE based on the earliest certification date of the QEZE. A QEZE must then complete the appropriate form as discussed below.

Certification of Information: This section should be executed by an authorized representative of the QEZE.

Selection of Employment Test Form based on QEZE Certification: 

  • If certified before April 1, 2005, use Form AU-12.1
  • If certified on or after April 1, 2005 and before April 1, 2009, use Form AU-12.2
  • If certified on or after April 1, 2009, use Form AU-12.3

A QEZE certified prior to April 1, 2009 must have applied for and received Form DTF-81, Qualified Empire Zone Enterprise (QEZE) Sales Tax Certification in order to file Form AU-12.

  • New Business. If a QEZE qualified as a "new business" when it originally filed for sales tax certification, it only needs to provide the QEZE name, EIN, sales tax certification number found on its DTF-81 and mark an "X" in the box at the top of Form AU-12.1 or Form AU-12.2.
  • Not Qualifying as a New Business. A QEZE not qualifying as a "new business"must complete the entire Employment Test form. A copy of the original form used to apply for sales tax certification (DTF-80, DTF-82, DTF-83 or DTF-84) will provide the base period information needed to complete Form AU-12.1 or Form AU-12.2. Detailed employment information consistent with that reported on the tax returns is needed to complete these forms.

If a QEZE certified prior to April 1, 2009 has not yet applied for sales tax certification, it must apply (using Form DTF-82, DTF-83 or DTF-84, depending upon certification date) and receive its sales tax certification prior to filing a claim. Our office can assist with this process, if desired.

A QEZE certified on or after April 1, 2009 is eligible for a refund or credit on sales tax paid on qualifying purchases beginning the first month after its certification date only if the locality in which the purchase is made has elected to provide this refund at the local level also. (Few municipalities have enacted this.) Currently, this is limited to the following jurisdictions: Allegany County, Cayuga County, City of Auburn, Erie County, Herkimer County, Montgomery County, and Niagara County. If applicable, Form AU-12.3 must be completed in its entirety.

The following documentation must be attached to each Form AU-12:

  1. Certificate of Eligibility
  2. Empire Zone Retention Certificate
  3. Appropriate Employment Test form (AU-12.1, AU-12.2 or AU-12.3)
  4. Invoices, receipts, and proof of payment of sales tax paid to substantiate the claim (all documentation must identify the QEZE as purchaser). If substantiation is voluminous in nature, a QEZE may submit a summary spreadsheet containing all pertinent information. A sampling of documents may be requested by the New York State Department of Taxation and Finance in order to verify items contained on the spreadsheet.
  5. If you are submitting a claim for qualifying purchases made for more than one Empire Zone location, you must attach a list of all Zone addresses included in the claim.

Points to remember:

  • Only one Form AU-12 may be filed for each sales tax quarter.
  • If your claim covers purchases for more than one tax year, Employment Test forms must be completed and attached for each tax year being included.
  • Keep copies of your completed Employment Test form, as you are required to attach a copy of the form to each subsequent claim you file for the same tax year. A new Employment Test form will need to be completed for each tax year in which a QEZE is eligible to claim the refund/credit of sales or use tax.

All appropriate forms are attached. Should you have any questions or need further assistance with this process, please contact Angela Barry at (315) 425-2874 or Marj Pepe at (315) 425-2883.

1 Form AU-11, Application for Credit or Refund of Sales or Use Tax, should only be used (i) for purchases made prior to September 1, 2009; and (ii) to claim a credit or refund for sales tax paid on building materials used on construction, expansion, or rehabilitation of Zone property.
2 Form FT-500, Application for Refund of Sales Tax Paid on Automotive Fuels, is still used to apply for a refund of sales tax paid on qualifying purchases of diesel/motor fuel; this cannot be claimed on the AU-12.


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