Bill S4890-2013

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

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

Details

Actions

  • Jan 8, 2014: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • Jun 11, 2013: REPORTED AND COMMITTED TO RULES
  • May 21, 2013: REPORTED AND COMMITTED TO FINANCE
  • Apr 30, 2013: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Votes

VOTE: COMMITTEE VOTE: - Investigations and Government Operations - May 21, 2013
Ayes (9): Marcellino, Carlucci, Golden, Nozzolio, O'Mara, Zeldin, Hoylman, Diaz, Squadron

Memo

BILL NUMBER:S4890

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

PURPOSE: To reinstate the QETC tax credit, which expired in 2011.

SUMMARY OF PROVISIONS: Amends Paragraphs (a), (b) and (h) of subdivision 12-G of section 210 of the tax law, and Paragraphs 1, 2 and 8 of subsection (nn) of section 606, to reinstate the QETC tax credit for taxable years beginning January 1, 2013. It makes clear that the language applies prospectively, and eliminates a clause that the Tax Department considered ambiguous. Adds provisions to eliminate the cap on total employment after the qualifying year, so long as 75% of total employees are locates in New York, and allows a partner in a company to be considered an employee only if he or she is full time and meets material participation requirements. Also, the sunset for the program is eliminated. If enacted, the program would be permanent.

EXISTING LAW:. The QETC expired in 2011.

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enhances and makes permanent the Qualified Emerging Technology Company Facilities, Operations and Training Credit originally enacted in the 2005-6 budget. The credit was 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 are now duplicating it in some cases at substantially greater levels than was offered in New York State. The secret to its effectiveness is refundability, which few other states offer at this time. Refundability is maintained in this reenactment.

The main body of the program remains intact The credit is the sum of credits available under the capital (18%), R&D (9%), and training ($4,000 per employee) components of the bill. The credits are claimable for four years, and cannot total more than $250,000 in any year. An eligible taxpayer must have 100 or fewer employees, although in subsequent years this number may increase, so long as 75% of full time employees are in New York State, have a 6% ration of R&D to net sales, have gross revenues of $20 million or less, and meet the QETC activities and product definition. Enactment of this legislation will reinstate New York's most important and effective program for nascent high-technology firms.

FISCAL IMPLICATIONS: To be determined

EFFECTIVE DATE: Immediate.


Text

STATE OF NEW YORK ________________________________________________________________________ 4890 2013-2014 Regular Sessions IN SENATE April 30, 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. Paragraphs (a), (b) and (h) of 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, are amended to read as follows: (a) [A taxpayer that is a qualified emerging technology company pursu- ant to the provisions of section thirty-one hundred two-e (and specif- ically 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 paragraph (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 subdivision subject to the limitations in paragraph (f) of this subdivision] FOR TAXABLE YEARS BEGINNING ON AND AFTER JANUARY FIRST, TWO THOUSAND THIRTEEN, A TAXPAYER THAT IS A QUALIFIED EMERGING TECHNOLOGY COMPANY PURSUANT TO THE PROVISIONS OF SUBPARAGRAPH ONE OF PARAGRAPH (C) OF SUBDIVISION ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW, AND THAT MEETS THE ELIGIBILITY REQUIREMENTS IN PARAGRAPH (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 SUBDIVISION SUBJECT TO THE LIMITA- TIONS 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 million dollars for the taxable year immediately preceding the year the taxpayer is allowed a 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 PARA- GRAPH, EMPLOYEES WHO ARE EMPLOYED OUTSIDE THE UNITED STATES DURING THE TAXABLE YEAR SHALL NOT BE CONSIDERED; A TAXPAYER THAT MEETS THE EMPLOY- MENT 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 INDIVIDUAL PARTNER IN THE ACTIVITIES OF THE PARTNERSHIP DURING THE TAXABLE YEAR SATISFIES THE REQUIREMENTS FOR MATERIAL PARTICIPATION FOR THE SAME TAXA- BLE YEAR WITHIN THE MEANING OF SUBSECTION (H) OF SECTION 469 OF THE INTERNAL REVENUE CODE. [(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. Paragraphs 1, 2 and 8 of 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, are amended to read as follows: (1) [A taxpayer that is a qualified emerging technology company pursu- ant to the provisions of section thirty-one hundred two-e (and specif- ically 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 paragraph 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] FOR TAXABLE YEARS BEGINNING ON AND AFTER JANUARY FIRST, TWO THOUSAND THIRTEEN, A TAXPAYER THAT IS A QUALIFIED EMERGING TECHNOLOGY COMPANY PURSUANT TO THE PROVISIONS OF SUBPARAGRAPH ONE OF PARAGRAPH (C) OF SUBDIVISION ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW, AND THAT MEETS THE ELIGIBILITY REQUIREMENTS IN PARAGRAPH 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 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 reven- ue code) as the taxpayer. FOR PURPOSES OF SUBPARAGRAPH (I) OF THIS PARA- GRAPH, EMPLOYEES WHO ARE EMPLOYED OUTSIDE THE UNITED STATES DURING THE TAXABLE YEAR SHALL NOT BE CONSIDERED; A TAXPAYER THAT MEETS THE EMPLOY- MENT REQUIREMENTS IN SUBPARAGRAPH (I) OF THIS PARAGRAPH 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 INDIVIDUAL PARTNER IN THE ACTIVITIES OF THE PARTNERSHIP DURING THE TAXABLE YEAR SATISFIES THE REQUIREMENTS FOR MATERIAL PARTICIPATION FOR THE SAME TAXA- BLE YEAR WITHIN THE MEANING OF SUBSECTION (H) OF SECTION 469 OF THE INTERNAL REVENUE CODE. [(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; provided that the amend- ments to paragraph (b) of subdivision 12-G of section 210 of the tax law made by section one of this act and the amendments to paragraph 2 of subsection (nn) of section 606 of the tax law made by section two of this act shall apply to taxable years beginning January 1, 2013.

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