In an attempt to combat escalating rates of retail theft and ensure the safety of customers and employees alike, the New York State legislature introduced an instrumental change in their annual budget measure for fiscal year 2025, which was passed on April 20, 2024. Included in this measure is the establishment of a Retail Security Tax Credit. This credit, designed to be in effect for the tax years 2024 and 2025, aims to support businesses investing in security equipment for the protection of their employees and goods.
The creation of the Retail Security Tax Credit is seen as a momentous stride in addressing the ever-increasing problem of retail theft across the state of New York. Each year, retailers state-wide reportedly lose an estimated $4.4 billion due to multiple forms of theft. This significant sum illustrates the magnitude of the financial impact of theft on retailers, which the newly introduced tax credit seeks to reduce by encouraging enterprises to upgrade their security systems.
The implication of this tax credit isn’t restricted to protecting goods; it also assures the safety of employees and customers. Furthermore, Governor Kathy Hochul’s administration exhibits a stern commitment to combating organized retail crime through increased penalties for offenders and heightened support for legal enforcement.
The budget compromise includes the novel tax credit as an integral part of Governor Hochul’s five-pronged policy plan. The objective of the plan is to create a safer environment for retail businesses and consumers alike. The plan’s components are multifaceted and involve several substantial policy changes.
The first of these changes calls for an increase in penalties for anyone assaulting a retail worker. The crime, previously regarded as a misdemeanor, now qualifies as a Class E felony. The plan also permits prosecutors to consolidate the value of all stolen goods from multiple stores when charging the criminal.
A sum of $40.2 million is allocated to aid retail theft teams spanning state police, district attorneys’ offices, local law enforcement agencies, plus the recruitment of an additional 100 New York State Police personnel, specifically dedicated to retail crimes. Furthermore, the policy plan includes tax credits totalling up to $5 million for businesses in the calendar years 2024 and 2025, assuming they meet the minimum expenditure on retail theft prevention strategies.
Another principal element of this policy is the promotion of cooperation between local businesses and law enforcement agencies through community antitheft partnerships. The intent behind this is to facilitate a collaborative approach to crime prevention and provide businesses with additional support in confronting these challenges.
To qualify for the Retail Security Tax Credit, businesses must meet a set of predetermined requirements. These stipulations include maintaining a workforce of 25 employees or fewer and operating at least one physical retail location accessible to the general public. Additionally, applicants must submit a tax return in accordance with articles 9, 9-A, or 33 of the tax law.
Other eligibility criteria necessitate that businesses must incur retail theft prevention measure expenses worth over $3,000 per retail location each tax year. Moreover, businesses must furnish certification that verifies their involvement in a community antitheft partnership established by the local business-law enforcement department. The final condition states that businesses must not have overdue local, state, or property taxes, barring the existence of a pre-arranged and legally binding payment plan.
Another defining characteristic of the Retail Security Tax Credit is the specified expenditure amount. To qualify, businesses must accrue combined expenses related to retail theft prevention measures exceeding $3,000 per retail location. Furthermore, a cap of $5 million is imposed on the amount of credits a business can claim each year.
The term ‘retail theft prevention measures’ largely encompasses security officers, security cameras, interior and exterior perimeter security lighting, locking or hardening mechanisms, alarm systems, and access control systems. The application for this credit, which must be submitted each year, is subject to approval by the Tax Commissioner and must be submitted no later than Oct. 31 each calendar year.
While the New York State government is yet to provide a link for the application, interested business owners are encouraged to frequently check the New York Department of Taxation and Finance website for further guidance and updated announcements. SIA CEO Don Erickson expressed that the most suitable security technologies largely depend on the specific type of retail crimes a business encounters, suggesting that video security systems and shop theft alarms may be beneficial for businesses suffering from shoplifting during operating hours, and perimeter security lighting and intrusion alarm systems may be effective against smash-and-grab theft after working hours.
In summary, the embedded Retail Security Tax Credit and the accompanying measures within Governor Hochul’s five-point policy plan altogether comprise a systematic and forward-thinking strategy for tackling retail theft throughout New York State. The policy serves as a medium for financial facilitation of security investments for businesses and amplifies the legal fortitude to deter criminal activities, thus striving to provide enhanced protection for New York’s retail sector and promising a secure shopping experience for all inhabitants.