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New York Offers Tax Incentives to Employers Who Hire Substance Abusers in Recovery

Unless you have been living under a rock the last decade, you are aware the United States is dealing with a major opioid epidemic.   According to the Centers for Disease Control and Prevention, more than 140 Americans die from drug overdoses, 91 of which are due to opioids, including heroin.  The U.S. Department of Health and Human Services (“HHS”) declared the opioid crisis a nationwide public health emergency in 2017.  In Fiscal Year 2017, HHS invested almost $900 million in opioid-specific funding, to support treatment and recovery services, target availability of overdose-reversing drugs, train first responders, and more.

New York State has now chosen to make its own strides in assisting in the recovery of users of opioids and other illicit substances. The State’s budget for Fiscal Year 2020 includes the first ever tax incentive program for employers who hire people recovering from substance use disorders. According to Governor Andrew Cuomo, the Recovery Tax Credit Program is intended to “help remove the stigma surrounding addiction and ensure those battling this disease can create a stable and sustainable path to recovery.”

Beginning in 2020, up to $2 million will be allocated for this program annually, with employers receiving a maximum credit of $2,000 for each eligible person they hire who has worked a minimum of 500 hours. Eligible individuals are those with a substance use disorder in a state of wellness, free from the signs and symptoms of active addiction and who have demonstrated to the employer’s satisfaction that he or she has completed a course of treatment for such substance use disorder. The New York State Office of Alcoholism and Substance Abuse Services will administer the program in conjunction with the Department of Taxation and Finance.

To claim credit for eligible individuals employed during the preceding calendar year, an employer must apply annually to the New York State Office of Alcoholism and Substance Abuse Services by January 15.  The program begins in the 2020 tax year. Employers who employ an eligible individual in the 2020 tax year can apply for the credit no later than January 15, 2021. To receive the credit, employers must also demonstrate that they provide a recovery supportive environment and maintain a formal working relationship with a local recovery community organization.

New York’s tax credit is designed to encourage and accelerate growth across the state by increasing employment opportunities.  This law is the first of its kind, but it won’t be the last. New York State has proven time and time again that it likes to set the stage for other states to follow.  Employers in New York State should consider this program if it works for their business.  Employers outside of New York State – stay tuned.  These types of incentives might be headed your way as the country continues its battle against the opioid crisis.

Brody and Associates regularly provides counsel on federal, state and local employment law compliance. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.