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A00389 Summary:

BILL NOA00389
 
SAME ASNo Same As
 
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 NOA00389
 
01/09/2017referred to ways and means
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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: A389
 
SPONSOR: Gunther
  TITLE OF BILL: An act to amend the tax law, in relation to biofuel production credit for production of cellulosic ethanol   PURPOSE OR GENERAL IDEA OF BILL: 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 SPECIFIC PROVISIONS: Section 1 renumbers Section 28 of the tax law as Section 38-a and amends the section 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.   JUSTIFICATION: In Chapter 62 of the laws of 2006, New York State established a biofuel production credit 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 also intended to support commercialization of new technologies developed at SUNY ESF, Cornell and Clarkson universities for production of cellulosic ethanol using differ- ent feedstocks, such as willow, northern hardwoods, and grasses. Cellulosic ethanol has numerous benefits over ethanol produced from corn or sorghum. First, willows and northern hardwoods are well-suited to the climate of New York State. Therefore, New York State's existing natural resources are uniquely positioned to contribute to increased production of cellulosic ethanol. Second, 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 biomass each year, which would displace at least 30 percent of current petroleum consumption in the United States. Furthermore, 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, not only in biofuel refin- eries, but also in the areas of production, ore-processing, and trans- portation. A 2010 Renewable Fuels Roadmap developed by the New York State Energy and Development Authority (NYSERDA), determined that the biofuel industry offers potential for robust job growth. Depending on the price paid for ethanol in the year 2020, NYSERDA esti- mates between 3,891 and 14,604 jobs can be created by direct and induced biofuel refinery growth, statewide. They further estimate 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, in particular, 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 farm- land to the commercial sector. In order to capitalize on both the environmental and economic opportu- nities afforded by the development of biofuels, New York State should 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
 
                               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
 
        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
    22  dollars. The tax credit allowed pursuant to this section shall apply  to
    23  taxable  years  beginning  before  January  first, two thousand [twenty]
    24  twenty-three.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06053-01-7

        A. 389                              2
 
     1    (b) Definitions. For the purpose of this section, the following  terms
     2  shall have the following meanings:
     3    (1)  "Biofuel"  means a fuel which includes biodiesel and ethanol. The
     4  term "biodiesel" shall mean a fuel comprised exclusively  of  mono-alkyl
     5  esters  of  long chain fatty acids derived from vegetable oils or animal
     6  fats, designated B100, which meets the specifications of American Socie-
     7  ty of Testing and Materials designation D 6751-02.  The  term  "ethanol"
     8  shall  mean  ethyl  alcohol  manufactured  in  the United States and its
     9  territories and sold (i) for fuel use and which has been rendered  unfit
    10  for  beverage  use  in  a  manner  and  which  is produced at a facility
    11  approved by the federal bureau of alcohol, tobacco and firearms for  the
    12  production  of  ethanol  for  fuel, or (ii) as denatured ethanol used by
    13  blenders and refiners which has been rendered unfit  for  beverage  use.
    14  The  term  "biofuel" may also include any other standard approved by the
    15  New York state energy and research development authority.
    16    (2) "Cellulosic ethanol" means the production of ethanol  from  ligno-
    17  cellulosic  biomass  feedstocks  not  used  for food production that are
    18  altered through activities referenced in subparagraph five of  paragraph
    19  (b) of subdivision one of section thirty-one hundred two-e of the public
    20  authorities  law.  Such  lignocellulosic biomass feedstocks may include,
    21  but are not necessarily limited to, switchgrasses or  willows,  agricul-
    22  tural  and forestry residues, clean wood and wood wastes, pulp and paper
    23  mill wastes or extracts, and non-recyclable paper. Any  question  as  to
    24  whether any feedstock qualifies under this paragraph shall be determined
    25  by  the  president of the New York state energy and research development
    26  authority in consultation with the commissioner of environmental conser-
    27  vation and the commissioner of agriculture and markets.
    28    (3) "Biofuel plant" means a commercial facility located  in  New  York
    29  state  at  which one or more biofuels are produced.  For the purposes of
    30  this section,  any  commercial  facility  where  cellulosic  ethanol  is
    31  produced shall be considered a separate biofuel plant.
    32    (c) Reporting requirements. A taxpayer wishing to claim a credit under
    33  this section shall annually certify to the commissioner (i) that biofuel
    34  produced  at the eligible biofuel plant meets all existing standards for
    35  biofuel and (ii) the amount of biofuel produced at the eligible  biofuel
    36  plant during a taxable year.
    37    (d)  Cross-references.  For  application of the credit provided for in
    38  this section, see the following provisions of this chapter:
    39    (1) Article 9: Section 187-c.
    40    (2) Article 9-A: Section 210-B, subdivision 24.
    41    (3) Article 22: Section 606, subsections (i) and (jj).
    42    § 2. Section 187-c of the tax law, as amended by section 2 of  part  K
    43  of chapter 59 of the laws of 2012, is amended to read as follows:
    44    §  187-c.  Biofuel  production  credit.  A taxpayer shall be allowed a
    45  credit to be computed as  provided  in  section  [twenty-eight]  twenty-
    46  eight-a of this chapter, [as added by part X of chapter sixty-two of the
    47  laws  of  two  thousand  six,]  against the tax imposed by this article.
    48  Provided, however, that the amount of such credit  allowed  against  the
    49  tax  imposed by section one hundred eighty-four of this article shall be
    50  the excess of the amount of such credit over the amount  of  any  credit
    51  allowed  by  this section against the tax imposed by section one hundred
    52  eighty-three of this article. In no event shall the  credit  under  this
    53  section  be  allowed  in  an amount which will reduce the tax payable to
    54  less than the applicable minimum tax fixed by section one hundred eight-
    55  y-three or one hundred eighty-five of this  article.  If,  however,  the
    56  amount  of  the  credit  allowed under this section for any taxable year

        A. 389                              3
 
     1  reduces the tax to such amount, the excess shall be treated as an  over-
     2  payment  of  tax  to  be  credited  or  refunded  in accordance with the
     3  provisions of section six hundred eighty-six of this chapter.  Provided,
     4  however, the provisions of subsection (c) of section one thousand eight-
     5  y-eight of this chapter notwithstanding, no interest shall be paid ther-
     6  eon.  The  tax  credit  allowed  pursuant to this section shall apply to
     7  taxable years beginning before  January  first,  two  thousand  [twenty]
     8  twenty-three.
     9    §  3. Section 187-c of the tax law, as amended by section 15 of part S
    10  of chapter 59 of the laws of 2014, is amended to read as follows:
    11    § 187-c. Biofuel production credit. A  taxpayer  shall  be  allowed  a
    12  credit  to  be  computed  as  provided in section [twenty-eight] twenty-
    13  eight-a of this chapter, [as added by part X of chapter sixty-two of the
    14  laws of two thousand six,] against the  tax  imposed  by  this  article.
    15  Provided,  however,  that  the amount of such credit allowed against the
    16  tax imposed by section one hundred eighty-four of this article shall  be
    17  the  excess  of  the amount of such credit over the amount of any credit
    18  allowed by this section against the tax imposed by section  one  hundred
    19  eighty-three  of  this  article. In no event shall the credit under this
    20  section be allowed in an amount which will reduce  the  tax  payable  to
    21  less than the applicable minimum tax fixed by section one hundred eight-
    22  y-three  of  this article. If, however, the amount of the credit allowed
    23  under this section for any taxable year reduces the tax to such  amount,
    24  the  excess  shall be treated as an overpayment of tax to be credited or
    25  refunded in accordance with the provisions of section six hundred eight-
    26  y-six of this chapter. Provided, however, the provisions  of  subsection
    27  (c)  of  section one thousand eighty-eight of this chapter notwithstand-
    28  ing, no interest shall be paid thereon. The tax credit allowed  pursuant
    29  to  this  section  shall apply to taxable years beginning before January
    30  first, two thousand [twenty] twenty-three.
    31    § 4. Subdivision 24 of section 210-B of  the  tax  law,  as  added  by
    32  section  17  of  part A of chapter 59 of the laws of 2014, is amended to
    33  read as follows:
    34    24. Biofuel production  credit.  (a)  General.  A  taxpayer  shall  be
    35  allowed  a  credit, to be computed as provided in section [twenty-eight]
    36  twenty-eight-a of this chapter [added as part X of chapter sixty-two  of
    37  the  laws of two thousand six], against the tax imposed by this article.
    38  The credit allowed under this subdivision for any taxable year shall not
    39  reduce the tax due for such year to less than the fixed  dollar  minimum
    40  amount  prescribed  in  paragraph  (d) of subdivision one of section two
    41  hundred ten of this article.  However, if the amount of  credit  allowed
    42  under  this  subdivision  for  any  taxable year reduces the tax to such
    43  amount or if the taxpayer otherwise pays tax based on the  fixed  dollar
    44  minimum amount, any amount of credit thus not deductible in such taxable
    45  year  shall  be  treated  as  an  overpayment  of  tax to be credited or
    46  refunded in accordance with  the  provisions  of  section  one  thousand
    47  eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
    48  subsection (c) of section one  thousand  eighty-eight  of  this  chapter
    49  notwithstanding,  no  interest  shall  be  paid  thereon. The tax credit
    50  allowed pursuant to this section shall apply to taxable years  beginning
    51  before January first, two thousand [twenty] twenty-three.
    52    §  5.  Subsection  (jj)  of  section 606 of the tax law, as amended by
    53  section 4 of part K of chapter 59 of the laws of  2012,  is  amended  to
    54  read as follows:
    55    (jj)  Biofuel  production credit. A taxpayer shall be allowed a credit
    56  to be computed as provided in section [twenty-eight]  twenty-eight-a  of

        A. 389                              4
 
     1  this  chapter,  [as  added by part X of chapter sixty-two of the laws of
     2  two thousand six,] against the tax  imposed  by  this  article.  If  the
     3  amount  of the credit allowed under this subsection for any taxable year
     4  shall  exceed  the  taxpayer's  tax  for  such year, the excess shall be
     5  treated as an overpayment of tax to be credited or refunded  in  accord-
     6  ance with the provisions of section six hundred eighty-six of this arti-
     7  cle,  provided, however, that no interest shall be paid thereon. The tax
     8  credit allowed pursuant to this section shall  apply  to  taxable  years
     9  beginning before January first, two thousand [twenty] twenty-three.
    10    §  6.  This act shall take effect immediately; provided, however, that
    11  the amendments made to section 187-c of the  tax  law  made  by  section
    12  three  of  this  act  shall take effect on the same date and in the same
    13  manner as section 15 of part S of chapter 59 of the laws of 2014,  takes
    14  effect.
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