To help the Indian owned business organizations (BOs) reap the benefits of various incentives offered by the Federal and the State Governments in the United States, the Citi in association with Anchin Economic Development LLC, an advisory firm, organized a panel discussion at the Citigroup Center in Manhattan, New York last week.
The panel discussed in details about a group of government incentives like the Empire Zone Program and the Relocation and Employment Assistance Program (REAP). The panelists were of the opinion that under the right circumstances and with correct planning, the tax benefits under the Empire Zone can be substantial and, in fact, can completely eliminate a company’s New York State tax liability.
One of the panelists, Paul Gevertzman, CPA JD Partner of Anchin, Block & Anchin LLP noted, “Businesses operating inside one of the Empire Zones are eligible for significant tax benefits and cash refunds that are applied against new capital investments or are triggered by the creation of new jobs. Benefits include tax reduction credits, real property tax credits, wage tax credits, investment tax credits and utility rate reductions. The real property tax credit can be particularly significant as it may be refunded in cash for up to 100% of the real property taxes paid to the local taxing jurisdiction. Additionally, new companies formed within a five-year period may be eligible to receive a 50% cash refund of certain other generated tax credits.”
However, new program legislation enacted in 2005 allows the Empire Zone to be “placed or foot-printed on any manufacturing company location in the state creating 50 or more jobs over 5 years”, informed Gevertzman. “These businesses, designated as “regionally significant projects,” are eligible for Empire Zone designation regardless of their location.”
Alexandra Simon, a Senior Business Analyst from the New York City Department of Small Business Services was also present at the panel. She said, “REAP applies to companies that relocate from outside New York City or south of 96th Street in Manhattan to a location north of 96th Street or to one of the outer boroughs. The program has a broad definition of “relocation” and includes either the move of prior business operations or the establishment of expanded business operations at an eligible location.”
Continuing on the same lines, David Meade, Project Manager of Anchin Economic Development LLC added, “In addition to its geographic constraints, the program only applies to companies that have been in existence for at least 24 months and the property must either be eligible for the Industrial and Commercial Incentive Program (ICIP), leased by New York City’s IDA, or owned by the city or specified authority. Meade said this is why REAP benefits are often received in conjunction with ICIP benefits. Unlike ICIP, the benchmark is higher for REAP, as eligible companies must improve their property by more than 25% of the assessed value for industrial property or 50% for commercial property.”
The panelists pointed out that now is the time to capitalize on this program even in this economy, where people are cutting back on staff and delaying investments because the program will sunset June 30, 2010. Gevertzman opined, “There is a soft landing so if you get in by 6/10 you are eligible for the full 10 years of benefits. So when the economy does turn around you will be positioned to get the benefits – but if you wait till the economy turns around the program will be closed.”
Close to 75 people attended the event, of whom, mostly were US-based Indian business clients of Citi and Anchin Dignitaries like Nancy Ploeger, representing The Manhattan Chamber of commerce were also present. Earlier, Ali T Hirji, Vice President for Business development at Citibank had begun the proceedings for the evening and had soon handed over the charge to Kuldeepak Acharya, CPA, and an audit partner of Anchin, Block and Anchin LLP, who presided over the entire session.
When asked about how the Citi and Anchin came up with the idea of organizing such an event, Hirji remarked, "I was tasked with orchestrating the internal resources within the bank to make this a real opportunity for our Indian business clients." Working with his Manager, Glen Celentano, Area Director for South Manhattan Business Banking, Hirji began reaching out to lawyers and CPAs with Indian practices. "Citi and the CPA firm of Anchin Anchin & Block are now producing a series of educational events on a variety of topics that we felt would be of interest and great value to the Indian business and professional community in the Tri-State area", he added.
Acharya made an interesting comment by saying, “Indian-owned companies may be eligible for millions of dollars in benefits simply as a result of their growth. Yet companies walk away from millions of dollars in benefits every time they embark on a business growth project because of a failure to engage a professional economic development planner.”
The reason behind this failure was immediately addressed by some of the Indian entrepreneurs present at the gathering who shared their grievances with the panel. Kalpana Patel, President of Unique Comp Inc. was the most vociferous of the lot. She said, “Local Law 129 was passed 3 yrs ago by city council which has become a law. Asians businesses were considered minority owned and were a part of target group that NY City agencies will give contracts to. This law eliminated Asians saying that you have done well so you do not need to be in the group - now we are faced with serious problems - we cannot compete with large firms and we are not minority firms in need. Many engineering, architect firms, IT firms got together to oppose the law and also hired an attorney but without our representation in city council our voices were not heard.”
“We have done well because we worked diligently, controlled our expenses, hired right people and worked hard. Why are we punished for all the right work ethics? Mayor Bloomberg or his associates do not give a damn about this and we Asians are very forgiving in not demanding fair share! I myself own an award winning Information Technology firm servicing Federal and New York State agencies but got no opportunities with NY City Mayoral agencies due to local law 129,” Patel protested.
After the conclusion of the two-hour-long program, Hirji said, "Initial responses have all been positive, and we therefore remain encouraged that this type of knowledge sharing is critical for the continuing success of Indian BO's in the Tri-State Area.”
“Citi-Anchin India Business Initiative is planning to conduct educational seminars and events in future for the middle market Indian business community such as today’s, with the help of its Board of Advisors and collaborating partners, such as the Manhattan Chamber of Commerce, TiE Tri-State, Hodgson Russ LLP, Moses & Singer LLP and Kelly Drye & Warren LLP”, concluded Acharya.
