COVID-19 Response Center

New York State COVID-19 Capital Costs Tax Credit Program Now Available Until Program Funds are Exhausted

If you are an independently owned and operated business in New York State that incurred additional COVID-19-related operational costs – from structural changes and building upgrades to health-related supplies and materials – you may be eligible for financial assistance in the form of a refundable tax credit to help reduce pandemic-related financial impacts on your business.

The time to act is now.

Eligibility requirements for the State’s COVID-19 Capital Costs Tax Credit Program include:

• 100 employees or less
• Gross receipts of less than $2.5 million in New York State for the taxable year that includes December 31, 2021
• Have at least $2,000 of qualifying expenses (see below) between January 1, 2021 and December 31, 2022. 

Small businesses meeting eligibility requirements can receive a tax credit of 50% of qualifying expenses up to a maximum of $25,000 in tax credits (based on qualifying expenses of $50,000). 

New York Capital Costs Tax Credit Program Qualifying Expenses

The Empire State Development website provides additional details on the program, including this list of qualifying expenses you may have incurred in the following categories of items:

Qualifying Expenses New York COVID-19 Capital Costs Tax Credit Program
Supplies to disinfect and/or protect against COVID-19 transmission Restocking of perishable goods to replace those lost during the COVID-19 pandemic Physical barriers and sneeze guard Hand sanitizer stations Respiratory devices such as air purifier systems installed at the business entity's location Signage related to the COVID-19 pandemic including, but not limited to, signage detailing vaccine and masking requirements, and social distancing Materials required to define and/or protect space such as barriers Materials needed to block off certain seats to allow for social distancing Certain point of sale payment equipment to allow for contactless payment	Equipment and/or materials and supplies for new product lines in response to the COVID-19 pandemic Software for online payment platforms to enable delivery or contactless purchases   Building construction and retrofits to accommodate social distancing and installation of air purifying equipment but not for costs for non-COVID-19 pandemic related capital renovations or general "closed for renovations" upgrades Machinery and equipment to accommodate contactless sales Materials to accommodate increased outdoor activity such as heat lamps, outdoor lighting, and materials related to outdoor space expansions Other costs as determined by the department
Source: https://esd.ny.gov/covid-19-capital-costs-tax-credit#regulations-&-comment-period

How to Claim the New York Capital Costs Tax Credit

Credits will be awarded on a first come first serve basis until the $250 million program fund is depleted, so time is of the essence for businesses to apply and capture the credit.

To begin, complete a required eligibility screening tool to determine if your business qualifies for the program. Once qualified, you will be emailed a link to an application that must be completed and accompanied by documentation to show proof of expenses.

If you have any questions about eligibility, the application process, or required documentation for this New York State tax credit, please contact the Freed Maxick Tax Team.

The airline industry and higher education have something in common: providing a valuable service to its customer base by stewarding them through their own individual journeys. But there is one stark difference which has a great impact on the financial viability of either organization, and that is monitoring their capacities. A flight on any aircraft has only a finite number of seats that a given number of passengers can occupy. Each ticket sold is a drop of vital revenue that an airline cherishes in hopes of outweighing its expenses. Some of these costs are variable, such as flight personnel, food and beverages, fuel, repairs, and maintenance. Not to mention all of the fixed and supporting costs airlines pay just to occupy precious space in an airport terminal. Every attempt is made for each seat to be filled to maximize the amount of revenue earned before each plane sets course on its journey.

This kind of business acumen is a no-brainer for an airline - increase your return on investment (ROI). Yet, where airlines prioritize maximum capacity, many higher education institutions struggle to maximize their seat capacities within their classrooms. Why is such a fundamental way of doing business overlooked? 

The short answer is “it’s complicated.” The important decisions routinely made about course offerings, class sizes, classroom usage, faculty staffing, and independent studies are managed by academic departments. Many deans and chairs do not have the data visualization to interpret the relationship between costs and class sizes. In addition, curricular sequencing is usually not supportive of maximizing ROI, causing most sections to run well under maximum capacity. This predicament ultimately compounds and starts to undermine the institution’s financial stability.

When we review our client’s classroom scheduling optimization data, one of the key metrics we focus on is how to identify what class sizes are optimal for the program and what classes and programs are losing money for the institution. These are not easy conversations for academic departments to have because the welfare of their department, colleagues, alumni, and current students are at stake. Many departments never have these conversations, nor would they be able to obtain the data visualizations needed to have them.

A common strategic benchmark of most institutions is measuring how many students are placed in a particular class section (according to National Center for Education Statistics (NCES) from 2009, the average class size of a U.S. private institution was 19). When we dig into the data, we often find that institutions have multiple sections containing class sizes of 1-5 students. At this enrollment, tuition revenue isn’t even enough to cover both the instructional and non-instructional expenses to run that section.

Several key arguments often surface from academic and financial leaders when they review this data for the first time such as, “a smaller class size provides for a more intimate setting and enhances the student’s ability to learn and retain knowledge in one’s field of study.” Another common rebuttal is, “we needed to open that section in order to ensure the students’ progress in their major.” The financial cost of maintaining smaller class sizes equates to more sections being offered which increases instructional costs through having to add additional faculty overload contracts and hiring adjunct professors. 

So, how can your institution optimize its classroom scheduling by pruning its small class sizes and eliminating smaller sections? Here are 4 strategies for managing your class section sizes:

• Get Rid of Pre-Reqs. Modify course requirements so that the courses could be taken in any sequence rather than as prerequisites for each other. This can help eliminate sections of teaching each term in a relatively small department, and allow the department more flexibility for course runs. If content knowledge is needed before students’ progress, consider basic online content modules instead of prerequisites.

• Merge course content. Courses that achieve the same objective with similarities of their content could be consolidated within an academic department or another school at the institution. One of the more classic examples for this is introductory courses in Statistics. At many institutions, there are distinct versions offered in Math, Business, Social Sciences, and other areas – with mostly overlapping content.  

• Decrease new course development. Newly created courses spawn additional faculty costs but don’t necessarily increase tuition revenue to the institution. Just adding additional courses to the population without eliminating other courses or sections increases the overall instructional expense. In addition, when you allocate your current student population over an increased roster of courses, this creates a negative impact on your bottom line.

• Prune current courses. Many institutions have a number of courses that consistently have low enrollment. Cutting these courses reduces cost and redirects your faculty to perfecting critical classes of their curriculum

Connect with Freed Maxick’s Higher Education Business Intelligence Specialists

Freed Maxick’s Business Intelligence Consulting practice focuses on bringing relevant and useful data to colleges and universities that would otherwise go unnoticed. Our team of professionals uses its proprietary software platform and methodology to help you analyze critical financial components of how your programs operate, drilling into the revenues, expenses, and course level detail of your academic portfolios. We refresh this data throughout the year to allow for comparisons across periods, so it’s not just a one-time snapshot, but can be used to further refine strategy to mitigate costs, set targets and hold stakeholders accountable to results.

Please schedule a complimentary discussion with our team at 716.336.7067 or visit our website at www.freedmaxick.com.

The higher education landscape is quickly evolving. The institutions that are nimble, and the most prepared to embrace change, are the ones that will set themselves apart as we embark on life after COVID. In the seemingly perpetual wake of a pandemic entering its third year, schools are being challenged to meet the new academic needs of their students while facing unprecedented financial obstacles. Faculty have been forced out of their comfort zones and into the virtual space, paving the way for the classroom of the future, while senior administrators try to balance budgets with declining enrollments.

Somewhere in between lies the student service experience, a critical yet often overlooked component on every college campus. Simply put, students and their families have more choices, are more informed than ever, and their expectations are extremely high. Schools must be committed to the deconstruction of the traditional barriers that stand in the way of student access in an effort to meet students and their families where they are.

The most consequential student service areas on any campus are those of Financial Aid, Student Accounts (Bursar) and the Office of the Registrar. These areas support students by providing access to the funding necessary to finance their education, demonstrating return on investment, communicating progress toward degree completion, monitoring academic progress, and so much more. These functions play a key role in the recruitment, persistence and retention of a robust student body.

While the functional operations of these three areas are inevitably very connected, their policies, procedures, workflows, and communication patterns tend to be disjointed, severely outdated and nearly impossible for students to navigate. Their physical locations are disconnected, and tasks are often still communicated via email and carried out on paper. This can be frustrating for students, who dread long checklists and even fundamental interactions with student service staff. Connecting with students in meaningful ways can revolutionize the student service experience, while infusing technology into your day-to-day operations can dramatically impact service delivery from day one.  

Despite the fact that institutions are aware of the central and significant role that student services play in the life cycle of a student, many experience a myriad of roadblocks that put these transformational efforts to the back burner. Budgetary constraints, combined with and an inadequate talent pool to administer such change can cause many in senior leadership to spin their wheels.

For institutions where a lack of operating dollars and/or change agents on campus are the main culprit, financial leaders could consider earmarking a portion of their institutional portion of The Higher Education Emergency Relief Funds (HEERF), a source of funds received by the government specifically designed to support these types of institutional changes.

What can HEERF funds be used for?

In a cover letter dated April 21, 2020, the Secretary of Education provided colleges and universities a broad spectrum of guidance for the potential uses of the institutional portion of the HEERF relief funds:

“I encourage you to use the portion of your award for Recipient's Institutional Costs to expand your remote learning programs, build your IT capacity to support such programs, and train faculty and staff to operate effectively in a remote learning environment…I also encourage you to consider using the funds for Recipient's Institutional Costs to expand support for your students with the most significant financial needs…including eligible expenses under a student's cost of attendance, such as course materials, technology, health care, childcare, food, and housing."

Despite the alignment between HEERF support and furthering the higher education mission, many institutions have yet to exhaust their institutional portion of HEERF. According to the U.S Department of Education’s COVID Relief Data, only 56% of total HEERF funds have been spent as of December 31, 2021.

As an alternative to spending that only serves as short-term fixes to your problems of today, shift your focus to areas of innovation that can transform and enable your leaders to invest in new ways to do business within your student service areas for tomorrow. This creates an institution on course for a better and more sustainable future - one that more neatly aligns campus services to the needs of students, faculty, staff, and the communities that they serve.

Connect with Freed Maxick’s Higher Education Consultants

Freed Maxick’s Higher Education Consulting practice focuses on bringing innovation to colleges and universities in order to drive change and transform existing process  

Please schedule a complimentary discussion with our team at 716.336.7067 for an in-depth discussion of your needs.

Enacted in March 2021, the American Rescue Plan (ARP) Act was designed to combat the economic crisis caused by the COVID-19 pandemic. The $1.9 trillion package had a variety of mechanisms to deliver assistance to the American people via several federal agencies. The Department of Agriculture has recently unveiled the Emergency Rural Health Care (ERHC) program which is to provide immediate assistance to rural health care providers that have been affected by the pandemic as well as to improve health care delivery related to COVID-19.

This program provides up to $500 million in grant funding to help broaden health care access and improve community health outcomes as it pertains to the COVID-19 pandemic. Applicants will be awarded between $25,000 and $1 million for their respective grants.

Applications are due by October 12, 2021 and will continue to be accepted so long as funding remains available.

Who is eligible to apply for the ERHC grant?

Eligible applicants may consist of public bodies, community-based nonprofit corporations, and federally recognized tribes located in an eligible rural area.

What constitutes as an eligible rural area?

The term ‘rural area’ is defined in section 343(a)(13)(C) of the Consolidated Farm and Rural Development Act. A rural area may mean “…any area other than a city, town, or unincorporated area that has a population of greater than 20,000 (i.e. a population of not more than 20,000)." For purposes of the grant, population can be measured based upon the latest U.S. Census data.

Those statistics may be adjusted to exclude long-term prison populations as well as up to 1,500 service members living in government quarters on a military installation.

Applicants can be headquartered in urban areas and request funds for facilities located in – and primarily serving – rural areas.

What can the ERHC grant funds be used for?

Funds must be utilized in correlation with the COVID-19 pandemic, and there are a variety of uses that applicants can utilize the funds for, such as increasing capacity for vaccine distribution or increasing telehealth capabilities, but most notably is the potential to be reimbursed for health care-related lost revenue used to maintain capacity during the coronavirus pandemic. While the Provider Relief Funds (PRF) were primarily utilized for this purpose, many providers still had lost revenues in excess of the funds received via PRF. IMPORTANT: Applicant requests for reimbursement of lost revenue must also include a certification from a certified public accountant confirming that the calculation of lost revenue is accurate.

It is also important to note is that these funds are prohibited from being utilized for a number of purposes, including but not limited to:

• Expenses or losses reimbursed (or obligated to be reimbursed) from any other sources (i.e. losses previously reimbursed through PRF);
• Expenses related to staffing needs exceeding annual salaries of $100,000 as prorated over the applicable time period; or
• Payments for existing indebtedness unrelated to COVID-19

How are the ERHC grant awards calculated?

Applicants will be limited to percentages of the respective project cost (or lost revenues) ranging from 15% to 75%. Factors include total population of the eligible rural area and the median household income of the area.

What does my organization need to apply?

Nonprofit applicants must provide the following items in conjunction with their application:

• Articles of incorporation
• By-laws
• Evidence of good standing
• Evidence of ties to the local rural community as demonstrated by:
  • Close association with or control by a local unit of government; or
  • Broad-based ownership and control by members of the community, demonstrated through a listing of the board members that represent the community; or
  • Substantial public funding as demonstrated through taxes, revenue bonds, local government sources, or community-wide fundraising campaigns.
• Evidence of eligibility including:
  • Location of the facility and associated population demographics
  • Description of the service area
  • Evidence the facility primarily serves rural residents

Freed thoughts

While the items required for submission to the Emergency Rural Health Care (ERHC) program may be slightly more than what providers have previously had to submit for other rounds of funding, most providers’ lost revenue calculation has already been performed for the year ended December 31, 2020. Any lost revenue calculated for 2021 should follow the same methodology.

If you have any questions or need additional guidance, Freed Maxick Healthcare can help. Please contact Chirico Rozsa at 716.847.2651 or utilize our contact form.

On September 10, 2021, Heath and Human Services (HHS) announced the availability of an additional $25.5 billion of funding for health care providers. Included in the package is $17 billion of additional Provider Relief Funds (PRF) for a Phase 4 tranche, as well as $8.5 billion in American Rescue Plan (ARP) funding. On September 29, 2021, providers can begin their application process.

What are these COVID-19 relief funds for?

The Phase 4 distribution is meant to continue funding lost revenues and COVID-19 related operating expenses incurred between July 1, 2020 and March 31, 2021. This specific distribution is designed to provide additional support to smaller providers by reimbursing a higher percentage of lost revenues and COVID-19 related expenses as compared to larger providers.

The ARP funding is targeted to assist providers who service Medicaid/CHIP and Medicare beneficiaries living in rural areas as defined by the Federal Office of Rural Health Policy. Similar to the Phase 4 funding, the ARP is designed to provide additional support to providers that service Medicaid/CHIP patients, by utilizing the oftentimes higher Medicare reimbursement rates.

How do I know if my healthcare organization is considered ‘rural’?

Health Resources & Services Administration (HRSA) has provided an online tool that will assist providers in determining whether their organization can be considered. Click here for the HRSA eligibility analyzer.

What kinds of healthcare providers are eligible for this COVID-19 relief?

While acute care hospitals and skilled nursing facilities are the most thought of ‘providers’, any provider or supplier of health care is eligible.

What should my organization be doing?

Prior to the application process, HHS recommends that your organization gathers any supporting information such as recent tax documents and financial statements related to the second half of 2020 and first quarter of 2021.

Does my organization need to apply for PRF and ARP separately?

No. HRSA is allowing providers to apply for both payment streams in a single application.

Freed thoughts

Although HHS has not released official guidance regarding what these funds may be used for, signs point to them following the same terms and conditions from Phases 1-3 of the PRF General Distributions. Therefore, if you have any lost revenue and/or increased expenses that will not be covered by the funding you have already received from HHS, FEMA, PPP, and other sources, we recommend that you apply.

If you have any questions or need additional guidance, Freed Maxick Healthcare can help. Please contact Chirico Rozsa at 716.847.2651 or utilize our contact form.

Yet another unpleasant side effect of the COVID-19 pandemic and the ongoing battle with its variants is the potential state income/franchise, sales, and payroll tax consequences related to remote workers. Remote workers can create tax compliance issues for both the employer and for themselves. Consider the following:

1.) Remote workers can create physical nexus in another state subjecting the employer to another state’s income/franchise, sales and/or payroll tax filing requirements.

2.) Remote workers may subject themselves to another state’s income tax. The employer may be required to register and withhold state income tax on behalf of their remote workers. The remote worker may be entitled to claim a resident credit to avoid double tax.

3.) Six states: Arkansas, Connecticut, Delaware, Nebraska, New York, and Pennsylvania, employ a “convenience of the employer rule”. Massachusetts temporarily employed this rule during the pandemic. Under this rule, employees are taxed by the employer’s home state where they normally work if the employee is working remotely for their own convenience. Grace period’s that certain states employed during the pandemic are expiring which may result in double tax paid by the remote worker.

4.) Some states include payroll as a factor when apportioning income to their state. Remote workers increase the payroll factor which increases state income/franchise tax liability.

5.) Due to the lack of uniformity among states, employers must address the specific rules that apply in those states to determine whether to register for income/franchise, sales, and/or payroll taxes, and whether to withhold and remit payroll taxes to those states. This will increase the cost of state tax compliance.

New Approach to Remote Work State Tax Compliance

Due to the pandemic, it is necessary for employers to address whether additional state tax compliance is required when employees are working remotely during the year in other states. Employers should develop a process to track the work location of their employees during the year to determine if/when the employer is required to comply with the tax laws in another state. The employer may be required to register as “doing business” for income/franchise, sales and payroll taxes based on the physical presence of remote workers in another state.

The Tax Team at Freed Maxick can assist in determining the state tax consequences of your remote workforce. For a complimentary discussion of your situation, please contact me at don.warrant@freedmaxick.com, or reach me by phone at 716.847.2651.