Using Tax Credits to Help Save Lives

By Glenn E. Albin

Changes in New York state tax law and public health policy have created an opportunity for businesses and individuals to enjoy a tax credit for helping their communities save lives.

The Public Access Defibrillation law, enacted in 1998, opened the door for non-emergency medical personnel to use automatic external defibrillation (AED) devices, which send an electric pulse to “jump-start” a heart in cardiac arrest. The law allows businesses and organizations to keep AED machines on hand as long as there is adequate coordination and training with local healthcare providers, and encourages the purchase of AEDs through a $500 tax credit. While the initiative set the stage for AEDs to proliferate in offices, malls, sporting facilities and other public spaces, the price tag can be cost-prohibitive for money-strapped nonprofit organizations.

CPAs should consider the AED credit in tax planning strategies for their corporate clients that can afford to donate AEDs.
As a CPA and a New York state-certified paramedic, I can attest to the value of these life-saving devices, especially in public spaces. Each minute someone is in cardiac arrest, their chance of survival decreases by 10 percent, according to the American Heart Association (AHA). Along with its campaign to have adults trained in cardiopulmonary resuscitation (CPR), the AHA has worked to make AEDs as commonplace as fire extinguishers, especially because these devices are simple to use and require little training.

AEDs cost between $1,500 and $2,500 each. This amount can put a strain on overburdened school districts in particular, especially if legislation proposed in Albany to require AED devices at all public high school athletic events goes into law soon.

How are school districts to comply with this law without having to pass the cost on to already overburdened school taxpayers? This is where corporate benevolence and thinking outside the box comes into play.

The price of an AED can be lowered when they are purchased in quantity. New York state tax law (Sections 210.25, 1456(j) and 1511(I)) allows for a $500 credit for each AED purchased by Article 9-A General Business Corporations, Article 32 Banking Corporations, and Article 33 Insurance Corporations. The credit is effective for years beginning Jan.1, 2001. In addition, individuals, including sole proprietorships, partnerships, and estates or trusts, may claim this credit. Partners in a partnership and S corporation shareholders should claim their proportionate share of the credit.

Imagine that a corporation purchases 10 AEDs and keeps one for its own use. The other nine AEDs are then donated to a tax-exempt organization, for which the donating corporation receives a charitable contribution deduction. The donating corporation would be entitled to a New York state AED credit on all 10 AEDs. The base cost of the nine AEDs that are donated would be adjusted for the New York AED credit claimed on the nine AEDs in determining the charitable basis for the donating corporation’s federal contribution deduction.

The federal government is now playing a role in proliferating these devices in the public arena, where they can make the difference between life and death. The net cost to the donating corporation is further reduced by the federal and state taxes saved by this charitable deduction. Think of the positive public relations benefit that could evolve by corporations announcing their donation of AEDs.

Information regarding this credit can be found on the New York State Department of Taxation and Finance website at www.tax.state.ny.us. Refer to TSBM–99(4) C and the tax form and instructions CT-250 and IT-250. You should consult with your local emergency medical services provider, county health officials and local police departments in choosing which defibrillator to purchase. Guidance can also be sought by contacting the New York State Department of Health, Bureau of Emergency Medical Services via the web at www.health.state.ny.us/nysdoh/ems/main.htm.