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

BILL NUMBER:S6838

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 on the qualified emerging technology company facilities, operations and training credit, expands eligibility for the credits and increases the amount of credit allowable.

Summary of provisions

Section 1 - amends subdivision 12-G of section 210 of the Tax Law. Section 2 - amends subsection (nn) of section 606 of the Tax Law. Section 3 effective date.

Justification

To continue to foster the growth of the burgeoning emerging technology sector of New York State'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enhances and makes permanent the Qualified Emerging Technology Company Facilities, Operations and Training Credit originally enacted in the 2005-06 budget.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 new credit's enactment, it has been clearly illustrated that New York State has created an effective tool to encourage the creation, expansion and retention of these cutting edge firms. One unforeseen side effect, however, is this success has been duplicated by other states and nations at substantially greater incentive levels than currently offered in New York State.

This bill enhances the credit to make the incentives comparable to current 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 amount of the credits are increased by two-thirds, alien employees that will be relocate to New York will not count against the employee limitation, and the new training credit is made easier to access. These enhancements will ensure the leadership role New York has taken in attracting and encouraging these firms. 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, this legislation increases the research and development credit from 18% to 30% and increases 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 close a potential loophole in the current legislation by making it clear that all partners in the aggregate are bound by the statutory caps per eligible site. For example, credits earned by investments or eligible training expenditures in a firm will be bound by the annual cap at an entity level.

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. with the expiration of these credits, these cutting-edge companies are finding even greater difficulty in attracting additional private capital since they cannot show that the State truly is committed to their success and growth.

Legislative history

This is a new bill.

Fiscal implications

$15 million annually.

Effective date

This act shall take effect immediately.