Provides an exemption from the tax on sales and the compensating use tax for certain equipment purchased by companies located in college incubator facilities

3 Co-sponsors

• James S. Alesi
• William J. Larkin Jr.
• Thomas F. O'Mara

BILL NUMBER:S3175A

Title of bill

An act to amend the tax law, in relation to providing an exemption from the tax on sales and the compensating use tax for certain equipment purchased by companies located in academic incubator facilities

Purpose

This legislation is consistent with our state's general efforts to encourage the creation and growth of small business. Companies in incubators, by their nature, are small and have limited resources. This bill alleviates a small but significant tax burden on these firms by exempting them from sales tax on equipment that costs $500 or more.

Summary of provisions

Section 1 of the bill amends section 1115 of the tax law which provides companies that are located in an academic incubator facility with a sales tax exemption for the purchase of equipment with a price of $500 or more, and provides for the definition of an academic incubator.

Justification

During the last decade, one of the most effective state tools used to encourage job growth and creation has been its investment in high technology incubators. Incubator facilities provide researchers and entrepreneurs with the physical space and support staff necessary to help transfer the technology developed in the laboratory into a commercial product of value.

Efforts to develop research ides into viable products are usually done with limited resources. Costs of operation must be kept at a minimum to allow researchers the opportunity to advance their theories. Incubators certainly provide low cost office space, however, rents are not the only expense that these businesses incur. Equipment costs can also be a major impediment to the success of the business. To help reduce this cost this bill would exempt business. To help rescue this cost this bill would exempt businesses located in incubators from sales tax on equipment purchases. Taxing this equipment is contrary to the general concept of incubators, which is to reduce the cost associated with a start-up firm struggling to develop its ides/research into a product.

The amendment clarifies that the exemption is only for those companies located in an academic incubator facility and the equipment be used in the incubator facility.

Legislative history

2009-10: S.1997 2007-08 S.942B 2005-06 S.1415A 2003-04 S.485 2001-02: S.2341

Fiscal implications

Implementation: There would be some loss of state revenue.

Effective date

This act shall take effect September 1, 2012.