New York’s Employer Training Incentive Program (ETIP) What does it mean for your business?

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The Employee Training Incentive Program (“ETIP”) provides a refundable income tax credit of up to $10,000 per employee trained and up to $3,000 per intern for qualifying internship programs in advanced technologies.

ETIP was recently enacted as part of New York State’s 2015-2016 executive budget legislation, regulations and eligibility criteria for which are promulgated by The Department of Economic Development (“The Department”). The benefit is determined based on the amount of a participant’s “eligible training” costs. Similar to New York’s existing Excelsior Job’s Program, ETIP requires an application and a pre-approval process.

Is your business eligible for the program?

In order to be eligible, businesses must: operate in New York, predominantly in a strategic industry. Strategic industries are defined by the Commissioner (of Economic Development) as those with: shortages of workers trained to work within the applicant’s industry; technological disruption in the applicant’s industry, requiring significant capital investment for existing businesses to remain competitive; the ability and need of the applicant to relocate outside of the state in order to attract talent; the potential of the applicant to recruit minorities and women to be trained to work in an industry in which they are traditionally underrepresented; or, the potential of the applicant to create jobs in economically distressed areas. Additionally, businesses must obtain eligible training from an approved provider, create at least ten net new jobs or make a significant capital investment in connection with the eligible training, and must be in compliance with all worker protection and environmental laws and regulations, and state and local taxes.

ETIP Program Regulations define “eligible training” as training provided by an approved provider[1] to upgrade, retrain or improve the productivity of employees; provided to employees filling net new jobs[2], or to existing employees in connection with a significant capital investment (at least one million dollars in new business processes or equipment) by a participating business entity; determined by the Commissioner to satisfy a business need on the part of a participating business entity, or an internship program in advanced technology approved by the Commissioner and provided by an approved provider, on or after August 1st, 2015, to provide employment and experience opportunities for current students, recent graduates, and recent members of the armed forces.  “Eligible training” does not include programs designed to train or upgrade skills as required by a federal or state entity, training which may result in the awarding of a license or certificate required by law in order to perform a job function, and culturally focused training.

Unfortunately, this program is not open to businesses in all industries, without receiving a waiver from the Commissioner. The following types of businesses are prohibited: retail and wholesale businesses, restaurants, real estate brokers, law firms or businesses providing legal services, medical or dental practices, real estate management companies, hospitality, finance and financial services, businesses providing personal services, businesses providing business administrative or support services, accounting firms or businesses providing accounting services, businesses providing utilities, and businesses engaged in the generation or distribution of electricity, the distribution of natural gas, or the production of steam associated with the generation of electricity.

To apply for the program, an initial application must be submitted to the Department prior to procuring eligible training from an approved provider or retaining interns to participate in an eligible internship program. The application as well as other ETIP material may be found on the State of NY’s Empire State Development website.

Additionally, for businesses providing employee training in NYC, they may be eligible to receive funds from the NYC Customized Training Program, administered by NYC Business Solutions. Awards of up to $400,000 per applicant may be provided. Among other requirements, to qualify a business must project wage increases for all currently employed trainees and propose to train at least 10 new trainees. Applications are accepted year-round on the NYC Business Solution’s Office’s website.

[1] “Approved providers” must have a written curriculum describing the skills and knowledge to be gained by individuals from the training program, employ individuals with sufficient credentials to provide the training, provide such training for at least one year, and possess accreditation or certification, where applicable, in the subject matter of training provided.

[2] “Net new jobs” are full-time wage paying jobs, requiring 35 hours per week or more, filled by individuals for more than 6 months that have received eligible training. These jobs must be created in NY and new to the state, not transferred from employment with another business located in NY through an acquisition, merger, consolidation, or other reorganization or through the acquisition of assets of another business, and have not been transferred from employment with a related person in NY.

Withum-placeholder Christine Mellusi, CPA
973-898-9494
cmellusi@withum.com

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To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

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