Recently, the state's tax department denied $1.7 million in Empire Zone tax credits to five businesses for 2005. That crackdown for the first time targeted so-called shirt-changers, companies that changed their names to qualify for tax breaks intended for true start-ups.
Because businesses can claim the tax breaks for up to 13 years, the audits will eventually save New York a projected $17 million, said Tom Bergin, tax department spokesman.
The tax department is auditing the returns of 19 more businesses that may have received big Empire Zone tax breaks by simply changing their corporate names, and it plans to audit 150, Bergin said. Meanwhile, this month Empire State Development Corp., which runs the program, notified 180 businesses -- including 39 in five counties surrounding Syracuse -- that the state may kick them out of the program.
"Unfortunately, some of these businesses have been taking advantage of a system that needs to be fixed," agency co-chairman Patrick Foye testified Monday in Albany at a state budget hearing.
The 180 businesses missed by at least 60 percent the job creation or investment projections they made to qualify for the program. Those businesses, which the agency would not identify, were given 10 days to explain to the state why they should not be expelled, said A.J. Carter, an Empire State Development Corp. spokesman.
All good moves, I must say. The Empire Zone program has lost its way. It needs either a complete overhaul or it needs to be shut down. It has not lived up to its intended purpose and several companies have taken advantage of the Empire Zone benefits when they shouldn't be.
