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A00389 Summary:

BILL NOA00389A
 
SAME ASSAME AS S07255
 
SPONSORGunther
 
COSPNSR
 
MLTSPNSR
 
Ren 28 to be 28-a, amd 28-a, 187-c, 210-B & 606, Tax L
 
Includes the production of cellulosic ethanol within the biofuel production tax credit.
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A00389 Actions:

BILL NOA00389A
 
01/09/2017referred to ways and means
01/03/2018referred to ways and means
01/12/2018amend and recommit to ways and means
01/12/2018print number 389a
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A00389 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A389A
 
SPONSOR: Gunther
  TITLE OF BILL: An act to amend the tax law, in relation to biofuel production credit for production of cellulosic ethanol   PURPOSE: To provide an additional tax credit for production of cellulosic ethanol in the amount of 25 cents per gallon after the production of the first 40,000 gallons.   SUMMARY OF PROVISIONS: Section one amends section 28 of the tax law, which is renumbered to section 28-a, to provide a tax credit of 25 cents per gallon for the production of cellulosic ethanol after the production of the first forty thousand gallons per year presented to market. The section further defines cellulosic ethanol," and amends the definition of "biofuel plant" to include any commercial facility where cellulosic ethanol is one or more of the biofuels being produced at such facility, and, for purposes of applying the tax credit, the facility shall be considered a separate biofuel plant. Section two though four of the bill amend sections 187-c, 210-B and 606 of the tax law to make provisions for the biofuel production credit. Section five provides for the effective date.   JUSTIFICATION: Chapter 62 of the laws of 2006 established a biofuel production credit in New York State, equal to 15 cents per gallon after the production of the first forty thousand gallons of biofuels. This legislation demon- strated New York State's commitment to mass production of biofuels such as ethanol made from corn. The legislation was intended to support commercialization of new technologies developed at universities includ- ing SUNY ESF, Cornell and Clarkson, for production of cellulosic ethanol using different feedstocks, such as willow, northern hardwoods, and grasses. Cellulosic ethanol has numerous benefits that ethanol produced from corn or sorghum lack. First, willows and northern hardwoods are better suited to the climate of New York State. New York State's existing natural resources are uniquely positioned to contribute to increased production of cellulosic ethanol. In addition, the U.S. Department of Energy and U.S. Department of Agriculture reported in April 2005 that the United States has the capacity to sustainably produce 1.3 billion tons of biom- ass each year, which would displace at least 30 percent of current petroleum consumption in the United States. Also, cellulosic ethanol produces fewer greenhouse gas emissions than other types of ethanol. From an economic standpoint, the development of the biofuel industry in New York has the potential to create jobs in biofuel refineries, as well as in the areas of production, ore-processing, and transportation. A 2010 Renewable Fuels Roadmap developed by the New York State Energy and Development Authority (NYSERDA), determined that the biofuel industry has the potential for robust job growth. Depending on the price paid for ethanol in the year 2020, NYSERDA estimates between 3,891 and 14,604 jobs can be created by direct and induced biofuel refinery growth, statewide, and that labor income, wages and salaries paid across the state, will fall between $172.6 million and $608.3 million. Overall, NYSERDA projects the gross domestic product of the industry to be between $0.46 billion and $1.7 billion. Rural communities across New York stand to benefit from the development of the biofuel industry as it provides an opportunity to diversify, add value to traditional products, and return abandoned farmland to the commercial sector. In order to capitalize on both the environmental and economic opportu- nities afforded by the development of biofuels, it is imperative that New York State generate additional incentives for the production of cellulosic ethanol.   LEGISLATIVE HISTORY: 2015-16: A1830 referred to Ways & Means 2014: A9389 Referred to Ways & Means 2012: S.7147 PASSED SENATE; A.9997 Referred to Assembly Ways and Means 2011: S.3345 SENATE INVESTIGATIONS AND GOVERNMENT OPERATIONS COMMITTEE 2009-10: S.3375 SENATE INVESTIGATIONS AND GOVERNMENT OPERATIONS COMMIT- TEE; A.3840 Assembly Ways and Means Committee 2007-08: S.5389 PASSED SENATE; A.7570-A Assembly Ways and Means Commit- tee.   FISCAL IMPLICATIONS: To be determined.   EFFECTIVE DATE: Immediately.
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A00389 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         389--A
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                     January 9, 2017
                                       ___________
 
        Introduced  by M. of A. GUNTHER -- read once and referred to the Commit-
          tee on Ways and Means -- recommitted to  the  Committee  on  Ways  and
          Means  in  accordance  with  Assembly  Rule  3,  sec.  2  -- committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee

        AN ACT to amend the tax law, in relation to  biofuel  production  credit
          for production of cellulosic ethanol
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 28 of the tax law, as added by section 1 of part  X
     2  of chapter 62 of the laws of 2006, subdivision (a) as amended by section
     3  1  of  part  K  of  chapter  59  of the laws of 2012, subdivision (d) as
     4  amended by section 46 of part A of chapter 59 of the laws  of  2014,  is
     5  renumbered section 28-a and amended to read as follows:
     6    § 28-a. Biofuel production credit.  (a) General. A taxpayer subject to
     7  tax  under  article  nine, nine-A or twenty-two of this chapter shall be
     8  allowed a credit against such tax pursuant to the provisions  referenced
     9  in  subdivision  (d)  of  this section. The credit (or pro rata share of
    10  earned credit in the case of a partnership) for each gallon  of  biofuel
    11  produced  at a biofuel plant on or after January first, two thousand six
    12  shall equal fifteen cents per gallon or twenty-five cents per gallon for
    13  production of cellulosic ethanol after the production of the first forty
    14  thousand gallons per year presented to market.  The  credit  under  this
    15  section shall be capped at two and one-half million dollars per taxpayer
    16  per  taxable  year for up to no more than four consecutive taxable years
    17  per biofuel plant. If the taxpayer is a  partner  in  a  partnership  or
    18  shareholder  of  a  New  York S corporation, then the cap imposed by the
    19  preceding sentence shall be applied at the entity  level,  so  that  the
    20  aggregate  credit  allowed  to  all the partners or shareholders of each
    21  such entity in the taxable year does not exceed two and one-half million
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06053-02-8

        A. 389--A                           2
 
     1  dollars. The tax credit allowed pursuant to this section shall apply  to
     2  taxable years beginning before January first, two thousand twenty.
     3    (b)  Definitions. For the purpose of this section, the following terms
     4  shall have the following meanings:
     5    (1) "Biofuel" means a fuel which includes biodiesel and  ethanol.  The
     6  term  "biodiesel"  shall mean a fuel comprised exclusively of mono-alkyl
     7  esters of long chain fatty acids derived from vegetable oils  or  animal
     8  fats, designated B100, which meets the specifications of American Socie-
     9  ty  of  Testing  and Materials designation D 6751-02. The term "ethanol"
    10  shall mean ethyl alcohol manufactured  in  the  United  States  and  its
    11  territories  and sold (i) for fuel use and which has been rendered unfit
    12  for beverage use in a  manner  and  which  is  produced  at  a  facility
    13  approved  by the federal bureau of alcohol, tobacco and firearms for the
    14  production of ethanol for fuel, or (ii) as  denatured  ethanol  used  by
    15  blenders  and  refiners  which has been rendered unfit for beverage use.
    16  The term "biofuel" may also include any other standard approved  by  the
    17  New York state energy and research development authority.
    18    (2)  "Cellulosic  ethanol" means the production of ethanol from ligno-
    19  cellulosic biomass feedstocks not used  for  food  production  that  are
    20  altered  through activities referenced in subparagraph five of paragraph
    21  (b) of subdivision one of section thirty-one hundred two-e of the public
    22  authorities law. Such lignocellulosic biomass  feedstocks  may  include,
    23  but  are  not necessarily limited to, switchgrasses or willows, agricul-
    24  tural and forestry residues, clean wood and wood wastes, pulp and  paper
    25  mill  wastes  or  extracts, and non-recyclable paper. Any question as to
    26  whether any feedstock qualifies under this paragraph shall be determined
    27  by the president of the New York state energy and  research  development
    28  authority in consultation with the commissioner of environmental conser-
    29  vation and the commissioner of agriculture and markets.
    30    (3)  "Biofuel  plant"  means a commercial facility located in New York
    31  state at which one or more biofuels are produced.  For the  purposes  of
    32  this  section,  any  commercial  facility  where  cellulosic  ethanol is
    33  produced shall be considered a separate biofuel plant.
    34    (c) Reporting requirements. A taxpayer wishing to claim a credit under
    35  this section shall annually certify to the commissioner (i) that biofuel
    36  produced at the eligible biofuel plant meets all existing standards  for
    37  biofuel  and (ii) the amount of biofuel produced at the eligible biofuel
    38  plant during a taxable year.
    39    (d) Cross-references. For application of the credit  provided  for  in
    40  this section, see the following provisions of this chapter:
    41    (1) Article 9: Section 187-c.
    42    (2) Article 9-A: Section 210-B, subdivision 24.
    43    (3) Article 22: Section 606, subsections (i) and (jj).
    44    §  2. Section 187-c of the tax law, as amended by section 15 of part S
    45  of chapter 59 of the laws of 2014, is amended to read as follows:
    46    § 187-c. Biofuel production credit. A  taxpayer  shall  be  allowed  a
    47  credit  to  be  computed  as  provided in section [twenty-eight] twenty-
    48  eight-a of this chapter, [as added by part X of chapter sixty-two of the
    49  laws of two thousand six,] against the  tax  imposed  by  this  article.
    50  Provided,  however,  that  the amount of such credit allowed against the
    51  tax imposed by section one hundred eighty-four of this article shall  be
    52  the  excess  of  the amount of such credit over the amount of any credit
    53  allowed by this section against the tax imposed by section  one  hundred
    54  eighty-three  of  this  article. In no event shall the credit under this
    55  section be allowed in an amount which will reduce  the  tax  payable  to
    56  less than the applicable minimum tax fixed by section one hundred eight-

        A. 389--A                           3
 
     1  y-three  of  this article. If, however, the amount of the credit allowed
     2  under this section for any taxable year reduces the tax to such  amount,
     3  the  excess  shall be treated as an overpayment of tax to be credited or
     4  refunded in accordance with the provisions of section six hundred eight-
     5  y-six  of  this chapter. Provided, however, the provisions of subsection
     6  (c) of section one thousand eighty-eight of this  chapter  notwithstand-
     7  ing,  no interest shall be paid thereon. The tax credit allowed pursuant
     8  to this section shall apply to taxable years  beginning  before  January
     9  first, two thousand twenty.
    10    §  3.  Subdivision  24  of  section  210-B of the tax law, as added by
    11  section 17 of part A of chapter 59 of the laws of 2014,  is  amended  to
    12  read as follows:
    13    24.  Biofuel  production  credit.  (a)  General.  A  taxpayer shall be
    14  allowed a credit, to be computed as provided in  section  [twenty-eight]
    15  twenty-eight-a  of this chapter [added as part X of chapter sixty-two of
    16  the laws of two thousand six], against the tax imposed by this  article.
    17  The credit allowed under this subdivision for any taxable year shall not
    18  reduce  the  tax due for such year to less than the fixed dollar minimum
    19  amount prescribed in paragraph (d) of subdivision  one  of  section  two
    20  hundred  ten  of this article.  However, if the amount of credit allowed
    21  under this subdivision for any taxable year  reduces  the  tax  to  such
    22  amount  or  if the taxpayer otherwise pays tax based on the fixed dollar
    23  minimum amount, any amount of credit thus not deductible in such taxable
    24  year shall be treated as  an  overpayment  of  tax  to  be  credited  or
    25  refunded  in  accordance  with  the  provisions  of section one thousand
    26  eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
    27  subsection  (c)  of  section  one  thousand eighty-eight of this chapter
    28  notwithstanding, no interest shall  be  paid  thereon.  The  tax  credit
    29  allowed  pursuant to this section shall apply to taxable years beginning
    30  before January first, two thousand twenty.
    31    § 4. Subsection (jj) of section 606 of the  tax  law,  as  amended  by
    32  section  4  of  part  K of chapter 59 of the laws of 2012, is amended to
    33  read as follows:
    34    (jj) Biofuel production credit. A taxpayer shall be allowed  a  credit
    35  to  be  computed as provided in section [twenty-eight] twenty-eight-a of
    36  this chapter, [as added by part X of chapter sixty-two of  the  laws  of
    37  two  thousand  six,]  against  the  tax  imposed by this article. If the
    38  amount of the credit allowed under this subsection for any taxable  year
    39  shall  exceed  the  taxpayer's  tax  for  such year, the excess shall be
    40  treated as an overpayment of tax to be credited or refunded  in  accord-
    41  ance with the provisions of section six hundred eighty-six of this arti-
    42  cle,  provided, however, that no interest shall be paid thereon. The tax
    43  credit allowed pursuant to this section shall  apply  to  taxable  years
    44  beginning before January first, two thousand twenty.
    45    § 5. This act shall take effect immediately.
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