What can locating in a Keystone Opportunity Zone do for your company's bottom line?
You may already be aware that the KOZ program can significantly reduce the cost of doing business through exemptions, deductions, abatements and credits of state and local taxes such as local property tax, state sales and use tax, and Corporate Net Income (CNI) tax.
How do I determine the tax benefit time period for each property?
Contact the appropriate coordinator for the area you are interested in for the expiration date.
Is it possible to have additional properties be placed in a KOZ?
No. It is only possible to add KOZ properties when the legislature creates a window to permit new designations.
How was the KOZ designation determined?
The local taxing jurisdictions (County, Municipality, School District) have to each agree on which underdeveloped and underutilized properties they wanted designated as a KOZ. The local municipalities had to pass appropriate ordinances and/or binding resolutions agreeing to waive, abate or exempt these taxes for a certain period of time. Development approves the local applications.
Who should I contact for information about local KOZs?
You may contact the regional Zone Coordinator for information, or Select Sites for individual properties.
How does a business, resident, or property owner know if they are located within a KOZ?
Contact local coordinators or go to Select Sites for verification.
After verifying that I am in a Zone, what should I do next?
Once you determine you are in a zone, complete the KOZ application and contact the Zone Coordinator for local approval. The deadline to file a KOZ application is December 31 of the year for which benefits are to be received.
What if my application is declined for any reason?
If your KOZ application is non-compliant due to tax issues, you have until February 5 of the following calendar year in order to come into compliance. The deadline to come into compliance with deficiencies for code violations is December 31 of the year for which benefits are to be received.
What are the basic benefits of operating a business in a KOZ?
Businesses making purchases of items subject to Sales and Use Tax – other than motor vehicles and certain real property – will be exempt from state and local Sales and Use Tax on specific materials utilized in a zone or expansion zone. Businesses will also enjoy tax reductions, exemptions, abatements, or credits in corporate taxes, franchise taxes, financial institution taxes, income taxes, and real estate taxes.
How will I obtain a Sale and Use Tax exemption certificate?
The sales tax exemption certificate is issued ONLY to qualified businesses operating in a Zone. After receiving notification that your business is qualified to receive KOZ benefits, a Sales Tax Exemption certificate will be generated and sent to you by the PA Department of Revenue.
Do businesses have to be current with their taxes and local code provisions to receive the tax benefits?
Yes.
Is a qualified business that is leasing property within a KOZ required to complete an application to receive benefits?
Any business interested in receiving tax benefits must complete an application annually.
If an approved KOZ tenant subleases space to a company in a KOZ, does that company have the same tax privileges?
If a tenant subleases space from a company that is located in a KOZ, and if the subleasing company's application is cleared at the state and local levels, they are eligible to receive KOZ benefits.
Must a KOZ business submit a new application if it moves from one zone to another?
Yes.
Must a business owner reapply each year to be eligible for the tax benefits of a KOZ?
Yes.
Does the abatement of taxes occur when development occurs or at another time?
Under the Pennsylvania Keystone Opportunity Zone Act, individuals and businesses can take advantage of some tax provisions immediately, such as real estate taxes and occupancy or use of real property taxes. Other provisions, such as exemptions from Sales and Use Tax, credit for Corporate Net Income and Capital Stock Foreign Franchise Tax, Personal Income Tax, etc., will not be fully realized by the participating businesses until activity or development has commenced.
Where can I find out more about KOZ tax related questions?
Back to questions
Is a site that has contaminated soil eligible for tax exemptions before the hazard has been cleaned up?
There is no provision in the KOZ law that requires environmental issues to be addressed to qualify for KOZ tax benefits. However, local laws and building codes that preceded the creation of KOZ may make an area in a KOZ non-developable until cleanup occurs.
If a tenant of a business located in a KOZ brings in an affiliated company, does that company have the same privileges as its senior affiliate?
Once the new affiliate completes a KOZ application, and the application is approved, the business is entitled to claim the benefits.
How does the KOZ affect existing state or local tax liens, encumbrances judgments, utility or trash assessment, or other claims against the property within the zone?
The KOZ law has no affect. Past due liabilities must be paid in order to claim any KOZ tax benefits.
What are the benefits of living in a KOZ?
People residing in a KOZ for a minimum of 184 consecutive days during a taxable year are permitted a credit on their PA Personal Income Tax return, and local Earned Income Tax.
Do I need to apply for these benefits?
Yes. If you reside in a KOZ, you must complete an annual application.
What if I am not eligible for KOZ benefits because of a non-compliance issue?
If you have a non-compliance state or local tax issue, you have until February 5 of the following calendar year to come into compliance. The deadline to come into compliance for code deficiencies is December 31 of the year in which benefits are to be received.
How do property owners benefit from KOZ?
You may be entitled to real estate tax abatement.
How do I take advantage of the real estate tax abatement if I own KOZ property?
In order to take advantage of the tax savings associated with the program, you must apply and be approved annually as a qualified property owner. This application should be completed and filed accordingly. Please contact your regional zone coordinator for direction on where to file the application. Once the application is approved, you will receive an approval letter. Applications for property owners are due by December 31 of the year in which you are applying for benefits.
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