NY State Senate Bill 2013-S4077

Senate Bill S4077

2013-2014 Legislative Session

Relates to requirements under the qualified emerging technology company facilities, operations and training credit

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Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2014	referred to investigations and government operations
Mar 07, 2013	referred to investigations and government operations

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2013-S4077 (ACTIVE) - Details

Current Committee:: Senate Investigations And Government Operations
Law Section:: Tax Law
Laws Affected:: Amd §§210 & 606, Tax L

2013-S4077 (ACTIVE) - Summary

Relates to requirements under the qualified emerging technology company facilities, operations and training credit; increases credit; permits company growth within the state; extends application of credit.

2013-S4077 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S4077

TITLE OF BILL:  An act to amend the tax law, in relation to the
qualified emerging technology company facilities, operations and
training credit

PURPOSE: Removes the sunset, expands eligibility, and increases the
amount of the qualified emerging technology company facilities,
operations and training credit.

SUMMARY OF PROVISIONS: In general, this bill maintains the provisions
of the underlying but now expired law, enhancing the credit and
amending subdivision 12-G of section 210 of the Tax Law, and section
606 of the Tax Law in order to make the following changes:

* Eligibility: Increases company gross revenue permitted for
eligibility from $20 million to $40 million. Also excludes non-U.S.
based employees from the employee counting requirements and
establishes criteria for counting partners.

* Credits:

- R&D PROPERTY: Increases the credit from 18% to 30% for purchase of
R&D property (defined by IRS code) used for testing, inspection, or
quality control, also for fees paid for use of facilities and
processes, and fees for production or commercial distribution of

qualified products.

- RESEARCH & PATENT: Increases the credit for research, dissemination,
and patent-related and grant application fees and expenses from 9% to
15% and maintains prohibition against counting advertising or
promotion or litigation or consultant expenses as eligible expenses.

- TRAINING: Continues the 100% credit with a $4,000 annual cap per
employee for training expenses, and maintains requirements that
training occur only at NYS colleges and universities, that it relate
to the company product, that the employee pass the course, etc.

* TERM & AMOUNT: Maintains the maximum term as five years (four years
within an incubator), but increases the credit from $250,000 to
$500,000 total per year for property and processes, and $100,000 for
training. Changes the application of the credit to make it site based
as well as at an entity level, to insure that the credit is available
based on activity not entity.

* SUNSET: Strikes the current sunset, which made the credit
inapplicable for tax years beginning on or after January 1, 2012.

JUSTIFICATION: To continue incentivizing growth of the emerging
technology sector of New York's economy, this legislation enhances and
makes permanent the Qualified Emerging Technology Company Facilities,
Operations and Training Credit originally enacted in the 2005-06
budget. Since the credit's enactment, it has been shown to be an
effective tool to encourage the creation, expansion and retention of
these cutting edge firms. In the last year for which the credit was
applicable, the Tax Expenditure report estimated its value at $22


million. Thus number suggests an investment of qualified expenses of
over $80 million by these firms in New York, with a much greater
return when the companies begin full-fledged commercial production of
their products.

Imitation, it is said, is the sincerest form of flattery. Other states
have seen the success of the credit and it is now being duplicated in
other states and nations at substantially greater levels than
currently offered in New York State. Therefore, this bill enhances the
credit to make it comparable to programs in Canada, England, Singapore
and states such as Pennsylvania, Washington, Maryland, North Carolina,
New Jersey, Wisconsin and Illinois. The size of the eligible firms is
doubled to encourage retention, the credit amounts are increased by
two-thirds, alien employees that relocate to New York will not count
against the employee limitation, and the new training credit is made
easier to access. These enhancements include an increase of up to an
annual benefit of $500,000 per eligible high-technology or
biotechnology or other high-technology company, including $100,000 for
high-technology training, an increase in the R&D credit from 18% to
30% and in the qualified research expense credit from 9% to 15%. In
addition, this bill expands the existing eligibility requirements to
include companies with gross revenues of $40 million or less. The bill
also makes it clear that all partners in the aggregate are bound by
the statutory caps per eligible site. Most importantly, the expired
sunset for the program is eliminated. Enactment of this legislation
will reinstate New York's most important and effective program for
nascent high-technology firms.

LEGISLATIVE HISTORY: S6838 of 2012 remained in the Tax Committee.

FISCAL IMPLICATIONS: $15 million annually.

EFFECTIVE DATE: This act shall take effect immediately.

2013-S4077 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4077

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              March 7, 2013
                               ___________

Introduced   by  Sens.  GOLDEN,  BONACIC,  GALLIVAN,  GRIFFO,  GRISANTI,
  MAZIARZ, RANZENHOFER,  SEWARD,  VALESKY,  ZELDIN  --  read  twice  and
  ordered  printed, and when printed to be committed to the Committee on
  Investigations and Government Operations

AN ACT to amend the tax law, in relation to the qualified emerging tech-
  nology company facilities, operations and training credit

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Subdivision 12-G of section 210 of the tax law, as amended
by section 1-a of part A of chapter 63 of the laws of  2005,  and  para-
graph (f) as amended by section 2 of part A of chapter 57 of the laws of
2010, is amended to read as follows:
  12-G. Qualified emerging technology company facilities, operations and
training  credit. (a) A taxpayer that is a qualified emerging technology
company pursuant to the provisions of section thirty-one  hundred  two-e
(and  specifically  for  the  activities  referenced in paragraph (b) of
subdivision one of such section thirty-one hundred two-e) of the  public
authorities  law,  and  that meets the eligibility requirements in para-
graph (b) of this subdivision, shall be allowed a credit against the tax
imposed by this article. The amount of credit shall be equal to the  sum
of  the amounts specified in paragraphs (c), (d), and (e) of this subdi-
vision subject to the limitations in paragraph (f) of this subdivision.
  (b) An eligible taxpayer shall (i) have no more than one hundred full-
time employees, of which at least seventy-five percent are  employed  in
New  York  state,  EXCEPT  AS OTHERWISE PROVIDED IN THIS PARAGRAPH, (ii)
have a ratio of research and development funds to net sales, as referred
to in section thirty-one hundred two-e of the  public  authorities  law,
which  equals  or exceeds six percent during its taxable year, and (iii)
have gross revenues, along with the gross revenues of its affiliates and
related members, not exceeding [twenty] FORTY million  dollars  for  the
taxable  year  immediately  preceding the year the taxpayer is allowed a

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07373-03-3

S. 4077                             2

credit under this subdivision. For purposes of this paragraph, the  term
"related member" shall have the same meaning as set forth in clauses (A)
and  (B)  of  subparagraph  one  of paragraph (o) of subdivision nine of
section  two  hundred  eight  of this article, and the term "affiliates"
shall mean those corporations that are members of  the  same  affiliated
group (as defined in section fifteen hundred four of the internal reven-
ue  code)  as  the  taxpayer.   FOR PURPOSES OF SUBPARAGRAPH (I) OF THIS
PARAGRAPH, EMPLOYEES WHO ARE EMPLOYED OUTSIDE THE UNITED  STATES  DURING
THE  TAXABLE  YEAR  SHALL  NOT  BE CONSIDERED; A TAXPAYER THAT MEETS THE
EMPLOYMENT REQUIREMENTS IN SUBPARAGRAPH (I) OF  THIS  PARAGRAPH  IN  THE
FIRST  YEAR  IN  WHICH THE CREDIT ALLOWED BY THIS SUBDIVISION IS CLAIMED
WILL NOT BE CONSIDERED INELIGIBLE SOLELY AS A RESULT OF HAVING MORE THAN
ONE HUNDRED FULL-TIME EMPLOYEES IN OTHER  TAXABLE  YEARS  IN  WHICH  THE
CREDIT  IS  CLAIMED,  PROVIDED  AT  LEAST  SEVENTY-FIVE  PERCENT  OF THE
FULL-TIME EMPLOYEES IN THE OTHER TAXABLE YEARS ARE EMPLOYED IN NEW  YORK
STATE;  AND  AN  INDIVIDUAL  WHO IS A PARTNER IN A PARTNERSHIP THAT IS A
QUALIFIED EMERGING TECHNOLOGY COMPANY WILL  BE  CONSIDERED  A  FULL-TIME
EMPLOYEE  IF THE INDIVIDUAL PARTNER PARTICIPATES IN THE PARTNERSHIP ON A
FULL-TIME BASIS DURING THE TAXABLE YEAR AND THE INVOLVEMENT OF THE INDI-
VIDUAL PARTNER IN THE ACTIVITIES OF THE PARTNERSHIP DURING  THE  TAXABLE
YEAR  SATISFIES THE REQUIREMENTS FOR MATERIAL PARTICIPATION FOR THE SAME
TAXABLE YEAR WITHIN THE MEANING OF SUBSECTION (H) OF SECTION 469 OF  THE
INTERNAL REVENUE CODE.
  (c)  An  eligible  taxpayer  shall  be allowed a credit for [eighteen]
THIRTY per centum of the cost or other  basis  for  federal  income  tax
purposes  of  research  and development property as defined in paragraph
(b) of subdivision twelve of  this  section  that  is  acquired  by  the
taxpayer by purchase as defined in section 179(d) of the internal reven-
ue  code and placed in service during the taxable year. Provided, howev-
er, for the purposes of this paragraph only, an eligible taxpayer  shall
be  allowed  a credit for such percentage of the (i) cost or other basis
for federal income tax purposes for property  used  in  the  testing  or
inspection of materials and products,
  (ii)  the  costs  or  expenses  associated with quality control of the
research and development,
  (iii) fees for use of sophisticated technology  facilities  and  proc-
esses,
  (iv)  fees  for  the production or eventual commercial distribution of
materials and products resulting from  the  activities  of  an  eligible
taxpayer  as long as such activities fall under the activities listed in
paragraph (b) of subdivision one of section thirty-one hundred two-e  of
the  public  authorities  law. The costs, expenses and other amounts for
which a credit is allowed and claimed under this paragraph shall not  be
used in the calculation of any other credit allowed under this article.
  (d)  An eligible taxpayer shall be allowed a credit for [nine] FIFTEEN
per centum of "qualified research expenses"  paid  or  incurred  by  the
taxpayer  in  the taxable year. "Qualified research expenses" shall mean
expenses associated with in-house  research  and  processes,  and  costs
associated  with  the  dissemination of the results of the products that
directly result from such research and development activities; provided,
however, that such costs shall  not  include  advertising  or  promotion
through  media.  In  addition,  costs associated with the preparation of
patent applications, patent application  filing  fees,  patent  research
fees, patent examinations fees, patent post allowance fees, patent main-
tenance  fees, and grant application expenses and fees shall be eligible
for such credit. In no case shall the credit allowed  under  this  para-

S. 4077                             3

graph apply to expenses for litigation or the challenge of another enti-
ty's  intellectual  property  rights, or for contract expenses involving
outside paid consultants.
  (e) An eligible taxpayer shall be allowed a credit for qualified high-
technology  training expenditures as described in this paragraph paid or
incurred by the taxpayer. (i) The amount of credit shall be one  hundred
percent of the training expenses described in subparagraph (iii) of this
paragraph, subject to a limitation of no more than four thousand dollars
per employee per year for such training expenses.
  (ii)  Qualified  high-technology  training  shall  include a course or
courses taken and satisfactorily completed by an employee of the taxpay-
er at an accredited, degree granting post-secondary college or universi-
ty in New York  state  that  (A)  directly  relates  to  the  activities
referred  to  in  paragraph (b) of subdivision one of section thirty-one
hundred two-e of the public authorities law, and
  (B) is intended to upgrade, retrain or  improve  the  productivity  or
theoretical  awareness  of  the  employee.  Such  course  or courses may
include, but are not limited to, instruction  or  research  relating  to
techniques,  meta,  macro,  or  micro-theoretical or practical knowledge
bases or frontiers, or ethical concerns related to such activities. Such
course or courses shall  not  include  classes  in  the  disciplines  of
management,  accounting  or the law or any class designed to fulfill the
discipline specific requirements of a degree program at  the  associate,
baccalaureate,  graduate  or  professional  level  of these disciplines.
Satisfactory completion of a course or courses shall  mean  the  earning
and  granting  of  credit  or  equivalent unit, with the attainment of a
grade of "B" or higher in a graduate level course or courses, a grade of
"C" or higher in an undergraduate level course or courses, or a  similar
measure  of  competency for a course that is not measured according to a
standard grade formula.
  (iii) Qualified high-technology training  expenditures  shall  include
expenses for tuition and mandatory fees, software required by the insti-
tution,  fees for textbooks or other literature required by the institu-
tion offering the course or courses, minus applicable  scholarships  and
tuition  or fee waivers not granted by the taxpayer or any affiliates of
the taxpayer, that are paid or reimbursed  by  the  taxpayer.  Qualified
high-technology  expenditures  do  not  include room and board, computer
hardware or software not specifically assigned for such course or cours-
es, late-charges, fines or membership dues and  similar  expenses.  Such
qualified  expenditures shall not be eligible for the credit provided by
this section unless the employee for whom the expenditures are disbursed
is continuously employed by the taxpayer in a full-time, full-year posi-
tion primarily located at a qualified site during  the  period  of  such
coursework  and  lasting  through at least one hundred eighty days after
the satisfactory completion of  the  qualifying  course-work.  Qualified
high-technology  training  expenditures  shall  not include expenses for
in-house or shared training outside of a New York state higher education
institution or the use of consultants outside of credit granting  cours-
es,  whether  such  consultants function inside of such higher education
institution or not.
  (iv) If a taxpayer  relocates  from  an  academic  business  incubator
facility  partnered with an accredited post-secondary education institu-
tion located within New York state, which provides  space  and  business
support  services  to taxpayers, to another site, the credit provided in
this section shall be allowed for all expenditures referenced in subpar-
agraph (iii) of this paragraph paid or incurred  in  the  two  preceding

S. 4077                             4

taxable years that the taxpayer was located in such an incubator facili-
ty  for  employees of the taxpayer who also relocate from said incubator
facility to such New York site and are employed and primarily located by
the  taxpayer  in New York. Such expenditures in the two preceding years
shall be added to  the  amounts  otherwise  qualifying  for  the  credit
provided  by  this subdivision that were paid or incurred in the taxable
year that the taxpayer relocates from such a facility.    Such  expendi-
tures  shall  include  expenses  paid  for an eligible employee who is a
full-time, full-year employee of said taxpayer during the  taxable  year
that  the  taxpayer relocated from an incubator facility notwithstanding
(i) that such employee was employed full or  part-time  as  an  officer,
staff-person  or  paid  intern  of  the  taxpayer when such taxpayer was
located at such incubator facility or (ii) that such  employee  was  not
continuously  employed  when  such taxpayer was located at the incubator
facility during the one hundred eighty day period referred to in subpar-
agraph (iii) of this paragraph, provided such employee received wages or
equivalent income for at least seven  hundred  fifty  hours  during  any
twenty-four  month period when the taxpayer was located at the incubator
facility. Such expenditures shall include payments made to such employee
after the taxpayer has relocated from the incubator facility for  quali-
fied expenditures if such payments are made to reimburse an employee for
expenditures  paid  by the employee during such two preceding years. The
credit provided under this subparagraph shall be allowed in any  taxable
year that the taxpayer qualifies as an eligible taxpayer.
  (v)  For  purposes  of this subdivision the term "academic year" shall
mean the annual period  of  sessions  of  a  post-secondary  college  or
university.
  (vi) For the purposes of this subdivision the term "academic incubator
facility"  shall  mean  a  facility  providing low-cost space, technical
assistance, support services and  educational  opportunities,  including
but  not  limited  to  central  services  provided by the manager of the
facility to the tenants of the facility, to an  entity  located  in  New
York state. Such entity's primary activity must be an activity described
in  paragraph (b) of subdivision one of section thirty-one hundred two-e
of the public authorities law, and such entity must be in the  formative
stage  of  development.  The  academic incubator facility and the entity
must act in partnership with an  accredited  post-secondary  college  or
university  located  in New York state. An academic incubator facility's
mission shall be to promote job creation,  entrepreneurship,  technology
transfer,  and provide support services to incubator tenants, including,
but not limited to, business  planning,  management  assistance,  finan-
cial-packaging,  linkages  to  financing services, and coordinating with
other sources of assistance.
  (f) An eligible taxpayer may claim credits under this subdivision  for
four  consecutive  taxable years, except, if a taxpayer is located in an
academic incubator facility and relocates within New  York  state  to  a
nonacademic  incubator  site, then the taxpayer (i) may make a revocable
election to defer the credit provided  under  this  subdivision  to  the
first  taxable  year  beginning  after  the  taxpayer  relocates from an
academic incubator facility, and (ii) shall be eligible for such  credit
for  five consecutive taxable years. In no case shall the credit allowed
by this subdivision to a taxpayer exceed [two hundred and fifty] A TOTAL
OF FIVE HUNDRED thousand dollars per year UNDER PARAGRAPHS (C)  AND  (D)
OF  THIS  SUBDIVISION  AND  ONE  HUNDRED THOUSAND DOLLARS PER YEAR UNDER
PARAGRAPH (E) OF THIS SUBDIVISION.  If the taxpayer is a  partner  in  a
partnership  or  shareholder of a New York S corporation, then the limit

S. 4077                             5

imposed by the preceding sentence shall be applied at the entity  level,
so that the aggregate credit allowed PER QUALIFIED SITE to all the part-
ners  or  shareholders  of each such entity in the taxable year does not
exceed  [two  hundred  and fifty] FIVE HUNDRED thousand dollars PER YEAR
UNDER PARAGRAPHS (C) AND (D) OF THIS SUBDIVISION AND ONE  HUNDRED  THOU-
SAND DOLLARS PER YEAR UNDER PARAGRAPH (E) OF THIS SUBDIVISION.
  (g)  The  credit  allowed  under this subdivision for any taxable year
shall not reduce the tax due for such year to less than  the  higher  of
the  amounts  prescribed in paragraphs (c) and (d) of subdivision one of
this section. However, if the amount of credit allowed under this subdi-
vision for any taxable year reduces the tax to such amount,  any  amount
of  credit  not  deductible  in such taxable year shall be treated as an
overpayment of tax to be credited or refunded  in  accordance  with  the
provisions  of section ten hundred eighty-six of this chapter. Provided,
however, the provisions of subsection (c) of section ten hundred  eight-
y-eight of this chapter notwithstanding, no interest shall be paid ther-
eon.
  [(h) The credit allowed under this subdivision shall not be applicable
for  taxable  years  beginning  on  or after January first, two thousand
twelve.]
  S 2. Subsection (nn) of section 606 of the  tax  law,  as  amended  by
section  1-a of part A of chapter 63 of the laws of 2005 and paragraph 6
as amended by section 3 of part A of chapter 57 of the laws of 2010,  is
amended to read as follows:
  (nn)  Qualified emerging technology company facilities, operations and
training credit. (1) A taxpayer that is a qualified emerging  technology
company  pursuant  to the provisions of section thirty-one hundred two-e
(and specifically for the activities  referenced  in  paragraph  (b)  of
subdivision  one of such section thirty-one hundred two-e) of the public
authorities law, and that meets the eligibility  requirements  in  para-
graph  two of this subsection, shall be allowed a credit against the tax
imposed by this article. The amount of credit shall be equal to the  sum
(or  pro  rata  share  of  the  sum in the case of a partnership) of the
amounts  specified  in  paragraphs  three,  four,  and  five   of   this
subsection,  subject  to  the  limitations  in  paragraph  six  of  this
subsection.
  (2) An eligible taxpayer shall (i) have no more than one hundred full-
time employees, of which at least seventy-five percent are  employed  in
New York state, EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH,
  (ii)  have  a ratio of research and development funds to net sales, as
referred to in section thirty-one hundred two-e of the  public  authori-
ties  law,  which equals or exceeds six percent during its taxable year,
and
  (iii) have gross revenues, along with the gross revenues of its affil-
iates and related members, not exceeding [twenty] FORTY million  dollars
for  the  taxable  year  immediately  preceding the year the taxpayer is
allowed a credit under this subsection. For purposes of this  paragraph,
the  term  "related  member" shall have the same meaning as set forth in
clauses (A) and (B) of subparagraph one of paragraph (o) of  subdivision
[9]  NINE  of  section  two  hundred eight of this chapter, and the term
"affiliates" shall mean those corporations that are members of the  same
affiliated  group  (as  defined  in  section fifteen hundred four of the
internal revenue code) as the taxpayer.   FOR PURPOSES  OF  SUBPARAGRAPH
(I)  OF  THIS  PARAGRAPH,  EMPLOYEES WHO ARE EMPLOYED OUTSIDE THE UNITED
STATES DURING THE TAXABLE YEAR SHALL NOT BE CONSIDERED; A TAXPAYER  THAT
MEETS  THE EMPLOYMENT REQUIREMENTS IN SUBPARAGRAPH (I) OF THIS PARAGRAPH

S. 4077                             6

IN THE FIRST YEAR IN WHICH THE CREDIT  ALLOWED  BY  THIS  SUBSECTION  IS
CLAIMED  WILL  NOT BE CONSIDERED INELIGIBLE SOLELY AS A RESULT OF HAVING
MORE THAN ONE HUNDRED FULL-TIME EMPLOYEES  IN  OTHER  TAXABLE  YEARS  IN
WHICH  THE  CREDIT IS CLAIMED, PROVIDED AT LEAST SEVENTY-FIVE PERCENT OF
THE FULL-TIME EMPLOYEES IN THE OTHER TAXABLE YEARS ARE EMPLOYED  IN  NEW
YORK  STATE; AND AN INDIVIDUAL WHO IS A PARTNER IN A PARTNERSHIP THAT IS
A QUALIFIED EMERGING TECHNOLOGY COMPANY WILL BE CONSIDERED  A  FULL-TIME
EMPLOYEE  IF THE INDIVIDUAL PARTNER PARTICIPATES IN THE PARTNERSHIP ON A
FULL-TIME BASIS DURING THE TAXABLE YEAR AND THE INVOLVEMENT OF THE INDI-
VIDUAL PARTNER IN THE ACTIVITIES OF THE PARTNERSHIP DURING  THE  TAXABLE
YEAR  SATISFIES THE REQUIREMENTS FOR MATERIAL PARTICIPATION FOR THE SAME
TAXABLE YEAR WITHIN THE MEANING OF SUBSECTION (H) OF SECTION 469 OF  THE
INTERNAL REVENUE CODE.
  (3)  An  eligible  taxpayer  shall  be allowed a credit for [eighteen]
THIRTY per centum of the cost or other  basis  for  federal  income  tax
purposes of research and development property as defined in subparagraph
(B)  of paragraph two of subsection (a) of this section that is acquired
by the taxpayer by purchase as defined in section 179(d) of the internal
revenue code and is placed in service during the taxable year. Provided,
however, for the purposes of this paragraph only, an  eligible  taxpayer
shall  be  allowed a credit for such percentage of the (i) cost or other
basis for federal income purposes for property used in  the  testing  or
inspection of materials and products,
  (ii)  the  costs  or  expenses  associated with quality control of the
research and development,
  (iii) fees for use of sophisticated technology  facilities  and  proc-
esses, and
  (iv)  fees for production or eventual commercial distribution of mate-
rials and products resulting from the activities of an eligible taxpayer
as long as such activities fall under the activities listed in paragraph
(b) of subdivision one of section thirty-one hundred two-e of the public
authorities law. The costs, expenses and other amounts for which a cred-
it is allowed and claimed under this paragraph shall not be used in  the
calculation of any other credit allowed under this article.
  (4)  An  eligible taxpayer shall be allowed a credit for [nine percen-
tum] FIFTEEN PER  CENTUM  of  "qualified  research  expenses",  paid  or
incurred  by  the  taxpayer  in  the  taxable  year. "Qualified research
expenses" shall mean expenses associated with in-house research, use  of
sophisticated  technology facilities and processes, and costs associated
with the dissemination of the results  of  the  products  that  directly
result from such research and development activities; provided, however,
that  such  costs  shall  not  include  advertising or promotion through
media. In addition, costs associated  with  the  preparation  of  patent
applications,  patent  application  filing  fees,  patent research fees,
patent examinations fees, patent post allowance fees, patent maintenance
fees, and grant application expenses and fees shall be eligible for such
credit. In no case shall the credit allowed by this paragraph  apply  to
expenses for litigation or the challenge of another entity's intellectu-
al  property  rights,  or  for  contract expenses involving outside paid
consultants.
  (5) An eligible taxpayer shall be allowed a credit for qualified high-
technology training expenditures as described in this paragraph paid  or
incurred by the taxpayer.
  (a)  The amount of credit shall be one hundred percent of the training
expenses described in subparagraph (c) of this paragraph, subject  to  a

S. 4077                             7

limitation  of  no more than four thousand dollars per employee per year
for such training expenses.
  (b)  Qualified  high-technology  training  shall  include  a course or
courses taken and satisfactorily completed by an employee of the taxpay-
er at an accredited, degree granting post-secondary college or universi-
ty in New York state that
  (i) directly relates to the activities referred to in paragraph (b) of
subdivision one of  section  thirty-one  hundred  two-e  of  the  public
authorities law, and
  (ii)  is  intended  to upgrade, retrain or improve the productivity or
theoretical awareness of  the  employee.  Such  course  or  courses  may
include,  but  are  not  limited to, instruction or research relating to
techniques, meta, macro, or  micro-theoretical  or  practical  knowledge
bases or frontiers, or ethical concerns related to such activities. Such
course  or  courses  shall  not  include  classes  in the disciplines of
management, accounting or the law or any class designed to  fulfill  the
discipline  specific  requirements of a degree program at the associate,
baccalaureate, graduate or  professional  level  of  these  disciplines.
Satisfactory  completion  of  a course or courses shall mean the earning
and granting of credit or equivalent unit,  with  the  attainment  of  a
grade of "B" or higher in a graduate level course or courses, a grade of
"C"  or higher in an undergraduate level course or courses, or a similar
measure of competency for a course that is not measured according  to  a
standard grade formula.
  (c)  Qualified  high-technology  training  expenditures  shall include
expenses for tuition and mandatory fees, and software  required  by  the
institution,  fees  for  textbooks  or  other literature required by the
institution offering the course or courses,  minus  applicable  scholar-
ships  and  tuition  or  fee  waivers not granted by the taxpayer or any
affiliate of the taxpayer, paid or reimbursed by the taxpayer.    Quali-
fied high technology expenditures do not include room and board, comput-
er  hardware  or  software  not specifically assigned for such course or
courses, late-charges, fines or membership dues  and  similar  expenses.
Such qualified expenditures shall not be eligible for the credit allowed
by  this  subsection  unless  the employee for whom the expenditures are
disbursed is continuously employed by the taxpayer in a full-time, full-
year position primarily located at a qualified site during the period of
such coursework and lasting through at least one  hundred  [and]  eighty
days  after  the  satisfactory completion of the qualifying course-work.
Qualified  high-technology  training  expenditures  shall  not   include
expenses  for  in  house  or shared training outside of a New York state
higher education institution or the use of consultants outside of credit
granting courses whether such consultants function inside of such higher
education institution or not.
  (d) If a taxpayer relocates from an academic business incubator facil-
ity partnered with an accredited  post-secondary  education  institution
located within New York state, which provides space and business support
services  to  taxpayers,  to  another  site, the credit provided in this
subsection shall be allowed for all expenditures referenced in  subpara-
graph  (c) of this paragraph paid or incurred in the two preceding taxa-
ble years that the taxpayer was located in such  an  incubator  facility
for  employees  of  the  taxpayer  who also relocate from said incubator
facility to such New York site and are employed and primarily located by
the taxpayer in New York. Such expenditures in the two  preceding  years
shall  be  added  to  the  amounts  otherwise  qualifying for the credit
provided by this subsection that were paid or incurred  in  the  taxable

S. 4077                             8

year that the taxpayer relocated from such a facility. Such expenditures
shall  include expenses paid or incurred for an eligible employee who is
a full-time, full-year employee of said taxpayer during the taxable year
that  the  taxpayer relocated from an incubator facility notwithstanding
(i) that such employee was employed full or  part-time  as  an  officer,
staff-person  or  paid  intern  of  the  taxpayer when such taxpayer was
located at such incubator facility or (ii) that such  employee  was  not
continuously  employed  when  such taxpayer was located at the incubator
facility during the one hundred eighty day period referenced in subpara-
graph (c) of this paragraph, provided such employee  received  wages  or
equivalent  income  for  at  least  seven hundred fifty hours during any
twenty-four month period when the taxpayer was located at the  incubator
facility.  Such  expenditures  shall  include  payments  made to such an
employee after the taxpayer has relocated from  the  incubator  facility
for  qualified  expenditures if such payments are made to reimburse such
an employee for qualified expenditures paid by the employee during  such
two  preceding  years. The credit provided under this subparagraph shall
be allowed, in any year that said  taxpayer  qualifies  as  an  eligible
taxpayer.
  (e)  For  purposes  of  this subsection the term "academic year" shall
mean the annual period  of  sessions  of  a  post-secondary  college  or
university.
  (f)  For  the purposes of this subsection the term "academic incubator
facility" shall mean a  facility  providing  low-cost  space,  technical
assistance,  support  services  and educational opportunities, including
but not limited to central services  provided  by  the  manager  of  the
facility  to  the  tenants  of the facility, to an entity located in New
York state. Such entity's primary activity must be an activity described
in paragraph (b) of subdivision one of section thirty-one hundred  two-e
of  the public authorities law, and such entity must be in the formative
stage of development. The academic incubator  facility  and  the  entity
must  act  in  partnership  with an accredited post-secondary college or
university located in New York state. An academic  incubator  facility's
mission  shall  be to promote job creation, entrepreneurship, technology
transfer, and provide support services to incubator tenants,  including,
but  not  limited  to,  business planning, management assistance, finan-
cial-packaging, linkages to financing services,  and  coordinating  with
other sources of assistance.
  (6)  An  eligible taxpayer may claim credits under this subsection for
four consecutive taxable years, except, if a taxpayer is located  in  an
academic  incubator  facility  and  relocates within New York state to a
nonacademic incubator site, then the taxpayer (i) may make  a  revocable
election to defer the credit provided under this subsection to the first
taxable  year  beginning  after  the taxpayer relocates from an academic
incubator facility, and (ii) shall be eligible for such credit for  five
consecutive  years.  In  no  case  shall  the  credit  allowed  by  this
subsection to a taxpayer exceed [two hundred fifty] FIVE  HUNDRED  thou-
sand dollars per year UNDER PARAGRAPHS THREE AND FOUR OF THIS SUBSECTION
AND  ONE  HUNDRED THOUSAND DOLLARS PER YEAR UNDER PARAGRAPH FIVE OF THIS
SUBSECTION.  If the taxpayer is a partner in a partnership or sharehold-
er of a New York S corporation, then the limit imposed by the  preceding
sentence  shall  be  applied  at the entity level, so that the aggregate
credit allowed PER QUALIFIED SITE to all the partners or shareholders of
each such entity in the taxable year does not exceed [two hundred fifty]
FIVE HUNDRED thousand dollars PER YEAR UNDER PARAGRAPHS THREE  AND  FOUR

S. 4077                             9

OF THIS SUBSECTION AND ONE HUNDRED THOUSAND DOLLARS PER YEAR UNDER PARA-
GRAPH FIVE OF THIS SUBSECTION.
  (7)  If  the  amount  of  credit allowed under this subsection for any
taxable year shall exceed the taxpayer's tax for such year,  the  excess
shall  be treated as an overpayment of tax to be credited or refunded in
accordance with the provisions of section six hundred eighty-six of this
article, provided, however, that no interest shall be paid thereon.
  [(8) The credit allowed under this subsection shall not be  applicable
for  taxable  years  beginning  on  or after January first, two thousand
twelve.]
  S 3. This act shall take effect immediately.

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