A. General Rules
1. The Agency will grant a sales and use tax exemption by the delivery of a sales tax letter (the “Tax Letter” to the applicant (the Company”).
2. Except as provided below, the Tax Letter will be delivered on or after the date the Agency issues its industrial development revenue bonds for the Company’s project.
3. The Tax Letter will provide the following:
a. The sales and use tax exemption will be granted only for those costs associated with the acquisition, construction (or reconstruction) and installation of the capital project to be financed with the industrial development revenue bonds. A sales and use tax exemption will not be allowed for costs incurred by the Company in operating the project.
b. The Tax Letter will expire on the earlier of the date (i) two years following the closing date of the industrial development revenue bonds, or (ii) completion of the project. Extensions of the Tax Letter may be granted at the sole discretion of the Agency upon the request of the Company in the event the project is not competed within such two-year period.
c. The Company must keep records regarding the amount of sales and use tax savings realized by the Company and make such records available to the Agency upon the request of the Agency.
4. In the documents executed by the Company in connection with the issuance by the Agency of its industrial development revenue bonds, the Company will agree to the following:
a. To indemnify the Agency for any liability incurred by the Agency in connection with the project.
b. To deliver certificates to the Agency evidencing that the indemnification described above is covered by insurance.
B. Special Rules
1. Upon the request of the Company and the satisfaction of the conditions of Paragraph 2 below, the Agency may, at its sole discretion, deliver a Tax Letter prior to the date the Agency issues its industrial development revenue bonds for the Company’s project.
2. The Agency will not deliver the Tax Letter prior to the date the Agency issues its industrial development revenue bonds for the Company’s project unless the following conditions are satisfied:
a. The Company must execute an indemnification agreement whereby the company agrees to indemnify the Agency for any liability incurred by the Agency in connection with the project.
b. The Company must deliver certificates to the Agency evidencing that the indemnification described above is covered by insurance.
c. The company must pay one-half of the Agency’s administrative fee due in connection with the issuance of the industrial development revenue bonds.
d. The Company must keep records regarding the amount of sales and use tax savings realized by the Company and make such records available to the Agency upon the request of the Agency.
e. The Tax Letter will provide that it will expire one year from the date of its delivery. The Agency will extend the expiration date of the Tax Letter after industrial development revenue bonds are issued for the Company.
3. In the event the Agency delivers a Tax Letter prior to the issue date of the industrial development revenue bonds and such bonds are not issued within one year from the delivery date of the Tax Letter, the Agency will take the following actions.
a. Advise the Company that the Tax Letter has expired and, further, that the Company must pay all sales and use tax savings realized by the Company to the appropriate New York State office.
b. Obtain from the company the written records describing the sales and use tax savings realized by the Company.
c. Notify the New York State Department of Taxation and Finance that the Company owes New York State certain sales and use taxes and deliver to New York State the copies of the written records described above.
d. In the event the Company pays the sales and use tax savings realized by the Company to the appropriate New York State office, the Agency will refund to the company the portion of the Agency’s administrative fee paid in connection with the delivery of the Tax Letter.
C. In the event that the Company has not complied with the law of the State of New York as they apply to the payment of sales taxes, the Agency hereby declares that the Agency is not responsible for insuring such compliance and enforcement, and that the responsibility to ensure such compliance and enforcement is under the jurisdiction of the New York State Department of Taxation and Finance, Tax Compliance Bureau.
