EMPLOYMENT INCENTIVE CREDIT

The franchise tax on business corporations (Article 9-A) provides that an additional 3% credit (30% of the EZ Investment Tax Credit) may be allowed in each of the three years following the year in which the EZ Investment Tax Credit was taken. To qualify for this second credit, known as the EZ Employment Incentive Credit (EZ-EIC), the taxpayer must employ in the EZ (excluding general executive officers) at least 101% of the average number of people employed in the year before the EZ Investment Tax Credit was claimed.

Like the Investment tax credit, the EZ-EIC may not reduce the tax due to less than the higher of the tax on the minimum taxable income base or the fixed dollar minimum, but any amount of unused credit may be carried forward to the following year or years. 

Example 3:
Using the information from Example 2 and assuming in addition that Wonder Widget Works, Inc. {Wonder) will hire new employees in 1994 and meet the 101% test described previously, Wonder's EZ-EIC is computed as follows: 

• EZ Investment Tax Credit (EZ-ITC) for 1994 $150,000
• EZ-EIC for 1995 (30% of EZ-ITC) $45,000
• EZ-EIC for 1996 (30% of EZ-ITC) $45,000
• EZ-EIC for 1997 (30% of EZ-ITC) $45,000 

If Wonder were a sole proprietorship or partnership, no credit would be available since the additional credit applies only to the franchise tax on business corporations
(Article 9-A).