Establishes an angel tax credit for investors who invest in certified startup business enterprises.

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S6837-2011 Actions

• Jun 18, 2012: referred to ways and means
• Jun 18, 2012: DELIVERED TO ASSEMBLY
• Jun 18, 2012: PASSED SENATE
• Jun 18, 2012: ORDERED TO THIRD READING CAL.1282
• Jun 18, 2012: COMMITTEE DISCHARGED AND COMMITTED TO RULES
• Mar 28, 2012: REFERRED TO LOCAL GOVERNMENT

S6837-2011 Meetings

Rules: Jun 18, 2012, Rules: Jun 21, 2012

S6837-2011 Calendars

Floor Calendar: Jun 18, 2012

S6837-2011 Votes

S6837-2011 Memo

BILL NUMBER:S6837

TITLE OF BILL:
An act
to amend the general municipal law and the tax law, in relation to
establishing an angel tax credit for investments made in small
businesses

PURPOSE:
To establish an angel tax credit for investors who invest in certified
startup business enterprises.

SUMMARY OF PROVISIONS:
This bill creates a new angel tax credit that provides incentives for
investment in targeted industries and technologies which is available
in other states. The bill authorizes the Commissioner of Economic
Development to certify Startup Business Enterprises (SBE) and
allocates $7 million in total Angel Tax Credits each year. The
minimum investment is $100,000 and is capped at $1 million in
qualifying contributions to capital; and no single certified SBE will
be eligible for more than $1 million in qualifying contributions. The
investor is provided with a refundable credit equal to 35 percent of
such investor's qualifying investment (i.e. a $1 million capital
investment would result in a $350,000 credit). The
credit is available to Article 9-A, Article 22, Article 32, and
Article 33 taxpayers.

JUSTIFICATION:
New York State small businesses are at a disadvantage to those located
in other states which offer tax credits like the Angel Tax Credit due
to the lack of both public and private investment dollars. Other
states have economic development programs, as well as angel tax
credits, that support both business development and business
attraction efforts. In New York this results in a continued lack of
private investment in early stage companies often stunting their
growth and causing them to lag behind their competition.

In the past decade, more than 20 states have implemented programs to
both attract and or retain investment capital using tax credits,
which reduce the risk and cost of these ventures.

To become more competitive, New York State needs to create a tax
environment that promotes private investment within emerging
business. This bill will facilitate job growth and a more diverse
statewide economy.

LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
Assuming the Commissioner of Economic Development allocates $7 million
of Angel Tax Credits each year of the three year period and each such
Certified SBE raises the maximum $1,000,000 in capital contributions
based upon the credits, the total annual cost to the State of New
York credits would be $7 million with a total cost over three years
of $21 million.


EFFECTIVE DATE:
Immediately.

S6837-2011 Text

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

                                    6837

                              I N  SENATE

                               March 28, 2012
                                 ___________

  Introduced  by  Sens.  DeFRANCISCO,  VALESKY  --  read twice and ordered
    printed, and when printed to be committed to the  Committee  on  Local
    Government

  AN  ACT  to amend the general municipal law and the tax law, in relation
    to establishing an angel tax credit  for  investments  made  in  small
    businesses

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


    Section 1. The general municipal  law  is  amended  by  adding  a  new
  section 959-c to read as follows:

    S 959-C. CERTIFIED STARTUP BUSINESS ENTERPRISE. (A) CERTIFICATION. (I)
  THE COMMISSIONER SHALL APPROVE APPLICATIONS FOR QUALIFICATION OF A BUSI-
  NESS  ENTERPRISE AS A CERTIFIED STARTUP BUSINESS ENTERPRISE. AS A CONDI-
  TION FOR APPROVAL OF SUCH APPLICATION, THE COMMISSIONER IS AUTHORIZED TO
  SPECIFY CERTAIN REQUIREMENTS TO BE SATISFIED AS A CONDITION FOR APPROVAL
  OF A BUSINESS ENTERPRISE AS A CERTIFIED STARTUP BUSINESS  ENTERPRISE  AS
  THE  COMMISSIONER DEEMS NECESSARY TO ENSURE THE QUALIFYING ANGEL INVEST-
  MENT WILL MAKE A SUBSTANTIAL CONTRIBUTION TO THE ECONOMIC DEVELOPMENT OF
  THIS STATE, INCLUDING THE USE OF  A  SYSTEM  OF  EVALUATION  OF  VARIOUS
  APPLICANT BUSINESS ENTERPRISES IN A COMPETITIVE FASHION.
    (II)  WITH  RESPECT  TO AN APPROVED APPLICATION FOR QUALIFICATION OF A
  BUSINESS ENTERPRISE AS A  CERTIFIED  STARTUP  BUSINESS  ENTERPRISE,  THE
  COMMISSIONER  SHALL  ISSUE  TO SUCH BUSINESS ENTERPRISE A CERTIFICATE OF
  QUALIFICATION AS A CERTIFIED STARTUP BUSINESS ENTERPRISE  SETTING  FORTH
  THE  EFFECTIVE  DATE  OF  THE CERTIFICATION AND THE AMOUNT OF QUALIFYING
  ANGEL INVESTMENT AWARDED TO SUCH BUSINESS ENTERPRISE, WHICH AMOUNT SHALL
  BE NO LESS THAN ONE HUNDRED  THOUSAND  DOLLARS  AND  NO  MORE  THAN  ONE
  MILLION DOLLARS.
    (III)  FOR  THE  PERIOD  JULY  FIRST, TWO THOUSAND TWELVE THROUGH JUNE
  THIRTIETH, TWO THOUSAND THIRTEEN, THE COMMISSIONER  MAY  CERTIFY  UP  TO
  SEVEN  MILLION  DOLLARS  IN  QUALIFYING ANGEL INVESTMENT. FOR THE PERIOD
  JULY FIRST, TWO THOUSAND THIRTEEN THROUGH JUNE THIRTIETH,  TWO  THOUSAND
  FOURTEEN,  THE  COMMISSIONER  MAY CERTIFY UP TO SEVEN MILLION DOLLARS IN
  QUALIFYING ANGEL INVESTMENT. FOR THE PERIOD  JULY  FIRST,  TWO  THOUSAND

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD15182-01-2

 S. 6837                             2

  FOURTEEN  THROUGH JUNE THIRTIETH, TWO THOUSAND FIFTEEN, THE COMMISSIONER
  MAY CERTIFY UP TO SEVEN MILLION DOLLARS IN QUALIFYING ANGEL INVESTMENT.
    (B)  DEFINITIONS.  AS  USED IN THIS SECTION, THE FOLLOWING TERMS SHALL
  HAVE THE FOLLOWING MEANINGS:

    (I) "CERTIFIED STARTUP BUSINESS  ENTERPRISE"  SHALL  MEAN  A  BUSINESS
  ENTERPRISE LOCATED IN NEW YORK STATE:

    (1) WITH LESS THAN FIVE MILLION DOLLARS IN ANNUAL REVENUES;
    (2)  WHOSE  PRIMARY  ACTIVITY  CONSISTS  OF A QUALIFYING TECHNOLOGY OR
  INNOVATION ACTIVITY; AND
    (3) THAT HAS BEEN CERTIFIED AS A CERTIFIED STARTUP BUSINESS ENTERPRISE
  BY THE COMMISSIONER.
    (II) "QUALIFYING TECHNOLOGY OR INNOVATION ACTIVITY" SHALL MEAN:

    (1) BIOTECHNOLOGIES, WHICH SHALL BE DEFINED AS TECHNOLOGIES  INVOLVING
  THE  SCIENTIFIC  MANIPULATION  OF  LIVING  ORGANISMS,  ESPECIALLY AT THE
  MOLECULAR AND/OR THE SUB-MOLECULAR GENETIC LEVEL,  TO  PRODUCE  PRODUCTS
  CONDUCIVE  TO  IMPROVING  THE  LIVES  AND HEALTH OF PLANTS, ANIMALS, AND
  HUMANS; AND THE ASSOCIATED SCIENTIFIC RESEARCH, PHARMACOLOGICAL, MECHAN-
  ICAL, AND COMPUTATIONAL APPLICATIONS AND SERVICES CONNECTED  WITH  THESE
  IMPROVEMENTS;
    (2)  INFORMATION AND COMMUNICATION TECHNOLOGIES, EQUIPMENT AND SYSTEMS
  THAT INVOLVE ADVANCED  COMPUTER  SOFTWARE  AND  HARDWARE,  VISUALIZATION
  TECHNOLOGIES, AND HUMAN INTERFACE TECHNOLOGIES;
    (3)  ADVANCED  MATERIALS  AND PROCESSING TECHNOLOGIES THAT INVOLVE THE
  DEVELOPMENT, MODIFICATION, OR IMPROVEMENT OF ONE OR  MORE  MATERIALS  OR
  METHODS  TO  PRODUCE  DEVICES  AND  STRUCTURES WITH IMPROVED PERFORMANCE
  CHARACTERISTICS OR SPECIAL FUNCTIONAL ATTRIBUTES, OR TO ACTIVATE,  SPEED
  UP, OR OTHERWISE ALTER CHEMICAL, BIOCHEMICAL, OR MEDICAL PROCESSES;
    (4)  ELECTRONIC AND PHOTONIC DEVICES AND COMPONENTS FOR USE IN PRODUC-
  ING ELECTRONIC, OPTOELECTRONIC, MECHANICAL  EQUIPMENT  AND  PRODUCTS  OF
  ELECTRONIC DISTRIBUTION WITH INTERACTIVE MEDIA CONTENT;
    (5)  ENERGY  EFFICIENCY,  RENEWABLE ENERGY AND ENVIRONMENTAL TECHNOLO-
  GIES, PRODUCTS, DEVICES AND SERVICES; OR
    (6) SMALL SCALE SYSTEMS INTEGRATION AND PACKAGING.
    (III) "QUALIFYING ANGEL INVESTMENT" SHALL MEAN A CONTRIBUTION  TO  THE
  CAPITAL  OF  A CERTIFIED STARTUP BUSINESS ENTERPRISE, PROVIDED THAT SUCH
  CONTRIBUTION TO CAPITAL IS MADE WITHIN TWELVE MONTHS AFTER THE EFFECTIVE
  DATE OF THE CERTIFIED TECHNOLOGY VENTURE'S CERTIFICATE OF  QUALIFICATION
  AS  A  CERTIFIED  TECHNOLOGY VENTURE AND SUCH CONTRIBUTION IS APPLIED BY
  THE CERTIFIED STARTUP BUSINESS  ENTERPRISE  AGAINST  ITS  ALLOCATION  OF
  QUALIFYING  ANGEL  INVESTMENT.  TOGETHER WITH ALL OTHER QUALIFYING ANGEL
  INVESTMENTS MADE TO A SINGLE CERTIFIED STARTUP BUSINESS ENTERPRISE,  THE
  TOTAL  QUALIFYING  ANGEL  INVESTMENT MAY NOT EXCEED ONE MILLION DOLLARS.
  NOTHING HEREIN SHALL PROHIBIT A PERSON MAKING A QUALIFYING ANGEL INVEST-
  MENT FROM MAKING ADDITIONAL CONTRIBUTIONS TO THE CAPITAL OF  THE  CERTI-
  FIED STARTUP BUSINESS ENTERPRISE OR MAKING LOANS TO OR OTHER INVESTMENTS
  IN  THE  CERTIFIED  STARTUP BUSINESS ENTERPRISE, PROVIDED, HOWEVER, THAT
  SUCH OTHER CONTRIBUTIONS, LOANS AND INVESTMENTS SHALL NOT BE TREATED  AS
  QUALIFYING ANGEL INVESTMENTS.
    S 2. Section 210 of the tax law is amended by adding a new subdivision
  12-H to read as follows:

    12-H.  ANGEL TAX CREDIT.  (A) ALLOWANCE OF CREDIT. A TAXPAYER THAT HAS
  MADE A QUALIFYING ANGEL INVESTMENT, AS SUCH TERM IS DEFINED IN PARAGRAPH
  (III) OF SUBDIVISION (B) OF SECTION NINE  HUNDRED  FIFTY-NINE-C  OF  THE
  GENERAL  MUNICIPAL  LAW,  SHALL BE ALLOWED A CREDIT EQUAL TO THIRTY-FIVE
  PERCENT OF THE AMOUNT OF SUCH QUALIFYING ANGEL INVESTMENT.

 S. 6837                             3

    (B) APPLICATION OF CREDIT. 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 SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO
  SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS 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 EIGHT-
  Y-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION
  (C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING,
  NO INTEREST SHALL BE PAID THEREON.
    S 3. Section 606 of the tax law is amended by adding a new subdivision
  (uu) to read as follows:

    (UU)  ANGEL  TAX  CREDIT. (1) ALLOWANCE OF CREDIT. A TAXPAYER THAT HAS
  MADE A QUALIFYING ANGEL INVESTMENT, AS SUCH TERM IS DEFINED IN PARAGRAPH
  (III) OF SUBDIVISION (B) OF SECTION NINE  HUNDRED  FIFTY-NINE-C  OF  THE
  GENERAL  MUNICIPAL  LAW,  OR  THAT IS A MEMBER OF A PARTNERSHIP THAT HAS
  MADE A QUALIFYING ANGEL INVESTMENT, SHALL BE ALLOWED A CREDIT  EQUAL  TO
  THIRTY-FIVE  PERCENT  OF  THE AMOUNT OF SUCH QUALIFYING ANGEL INVESTMENT
  OR, IN THE CASE OF A TAXPAYER WHO IS A MEMBER OF A PARTNERSHIP THAT  HAS
  MADE  A  QUALIFYING ANGEL INVESTMENT, A PORTION OF SUCH QUALIFYING ANGEL
  INVESTMENT EQUAL TO THE PORTION OF  ITEMS  OF  INCOME,  GAIN,  LOSS  AND
  DEDUCTION ASSOCIATED WITH THE QUALIFYING ANGEL INVESTMENT PROPERLY ALLO-
  CABLE  TO  SUCH  TAXPAYER UNDER SECTION 704 OF THE INTERNAL REVENUE CODE
  FOR THE TAXABLE YEAR.
    (2) APPLICATION OF CREDIT. IF THE AMOUNT OF THE 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.
    S 4. Section 1456 of the tax law is amended by adding a  new  subdivi-
  sion (z) to read as follows:

    (Z)  ANGEL  TAX  CREDIT.  (1) ALLOWANCE OF CREDIT. A TAXPAYER THAT HAS
  MADE A QUALIFYING ANGEL INVESTMENT, AS SUCH TERM IS DEFINED IN PARAGRAPH
  (III) OF SUBDIVISION (B) OF SECTION NINE  HUNDRED  FIFTY-NINE-C  OF  THE
  GENERAL  MUNICIPAL  LAW,  SHALL BE ALLOWED A CREDIT EQUAL TO THIRTY-FIVE
  PERCENT OF THE AMOUNT OF SUCH QUALIFYING ANGEL INVESTMENT.
    (2) APPLICATION OF CREDIT. THE CREDIT ALLOWED  UNDER  THIS  SUBSECTION
  FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
  THAN THE MINIMUM TAX FIXED BY SUBSECTION (B) OF SECTION FOURTEEN HUNDRED
  FIFTY-FIVE OF THIS ARTICLE. HOWEVER, IF THE  AMOUNT  OF  CREDIT  ALLOWED
  UNDER  THIS  SUBSECTION  FOR  ANY  TAXABLE  YEAR REDUCES THE TAX TO SUCH
  AMOUNT, THEN ANY AMOUNT OF CREDIT THUS 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 EIGHT-
  Y-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION
  (C) OF SECTION TEN HUNDRED EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING,
  NO INTEREST SHALL BE PAID THEREON.
    S  5.  Section 1511 of the tax law is amended by adding a new subdivi-
  sion (cc) to read as follows:

    (CC) ANGEL TAX CREDIT. (1) ALLOWANCE OF CREDIT. A  TAXPAYER  THAT  HAS
  MADE A QUALIFYING ANGEL INVESTMENT, AS SUCH TERM IS DEFINED IN PARAGRAPH
  (III)  OF  SUBDIVISION  (B)  OF SECTION NINE HUNDRED FIFTY-NINE-C OF THE
  GENERAL MUNICIPAL LAW, SHALL BE ALLOWED A CREDIT  EQUAL  TO  THIRTY-FIVE
  PERCENT OF THE AMOUNT OF SUCH QUALIFYING ANGEL INVESTMENT.

 S. 6837                             4

    (2)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
  FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO  LESS
  THAN  THE  MINIMUM  TAX  FIXED  BY  PARAGRAPH FOUR OF SUBDIVISION (A) OF
  SECTION FIFTEEN HUNDRED TWO  OF  THIS  ARTICLE  OR  BY  SECTION  FIFTEEN
  HUNDRED  TWO-A OF THIS ARTICLE, WHICHEVER IS APPLICABLE. HOWEVER, IF THE
  AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION  FOR  ANY  TAXABLE  YEAR
  REDUCES  THE  TAX  TO  SUCH  AMOUNT,  THEN ANY AMOUNT OF CREDIT THUS 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 EIGHTY-EIGHT OF THIS
  CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.
    S 6. This act shall take effect immediately.