NY court clarifies lost corporate tax breaks

ALBANY, N.Y. (AP) -- New York's top court has rejected a state attempt to retroactively tax corporations that lost offsetting credits when they failed to meet economic development goals.

The Court of Appeals ruled 5-to-1 Tuesday that the administrative and legislative attempts to recoup 2008 tax credits from nine companies decertified in 2009 from the Empire Zones Program violated their constitutional due process rights.

Statutory changes to the program in 2009 were used to decertify companies engaged in "shirt-changing," or transferring employees and assets among related entities to make it appear they created new jobs, as well as companies that failed to prove payroll increases and investments were greater than their tax credits.

The court says retroactively stripping the credits "simply punished" the corporations for what they'd already done and could not alter.