senate Bill S3732

Amended

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

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 13 / Feb / 2013
    • REFERRED TO LOCAL GOVERNMENT
  • 22 / May / 2013
    • REPORTED AND COMMITTED TO FINANCE
  • 12 / Jun / 2013
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 12 / Jun / 2013
    • ORDERED TO THIRD READING CAL.1329
  • 13 / Jun / 2013
    • PASSED SENATE
  • 13 / Jun / 2013
    • DELIVERED TO ASSEMBLY
  • 13 / Jun / 2013
    • REFERRED TO WAYS AND MEANS
  • 08 / Jan / 2014
    • DIED IN ASSEMBLY
  • 08 / Jan / 2014
    • RETURNED TO SENATE
  • 08 / Jan / 2014
    • REFERRED TO LOCAL GOVERNMENT
  • 30 / Apr / 2014
    • AMEND AND RECOMMIT TO LOCAL GOVERNMENT
  • 30 / Apr / 2014
    • PRINT NUMBER 3732A
  • 13 / May / 2014
    • AMEND AND RECOMMIT TO LOCAL GOVERNMENT
  • 13 / May / 2014
    • PRINT NUMBER 3732B
  • 14 / May / 2014
    • REPORTED AND COMMITTED TO FINANCE
  • 28 / May / 2014
    • 1ST REPORT CAL.943
  • 29 / May / 2014
    • 2ND REPORT CAL.
  • 02 / Jun / 2014
    • ADVANCED TO THIRD READING
  • 09 / Jun / 2014
    • AMENDED ON THIRD READING (T) 3732C
  • 12 / Jun / 2014
    • PASSED SENATE
  • 12 / Jun / 2014
    • DELIVERED TO ASSEMBLY
  • 12 / Jun / 2014
    • REFERRED TO WAYS AND MEANS

Summary

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

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Bill Details

Versions:
S3732
S3732A
S3732B
S3732C
Legislative Cycle:
2013-2014
Current Committee:
Law Section:
General Municipal Law
Laws Affected:
Add §959-c, Gen Muni L; amd §§210, 606, 1456 & 1511, Tax L
Versions Introduced in 2011-2012 Legislative Cycle:
S6837

Sponsor Memo

BILL NUMBER:S3732

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 technolo-
gies which is available in other states. The bill authorizes the Commis-
sioner 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 invest-
ment 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 envi-
ronment that promotes private investment within emerging business. This
bill will facilitate job growth and a more diverse statewide economy.

LEGISLATIVE HISTORY: S.6837/A.9939

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.

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

                                  3732

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            February 13, 2013
                               ___________

Introduced by Sens. DeFRANCISCO, GALLIVAN, MAZIARZ, SEWARD -- 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 THIRTEEN THROUGH JUNE
THIRTIETH, TWO THOUSAND FOURTEEN, THE COMMISSIONER  MAY  CERTIFY  UP  TO
SEVEN  MILLION  DOLLARS  IN  QUALIFYING ANGEL INVESTMENT. FOR THE PERIOD

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07810-01-3

S. 3732                             2

JULY FIRST, TWO THOUSAND FOURTEEN THROUGH JUNE THIRTIETH,  TWO  THOUSAND
FIFTEEN,  THE  COMMISSIONER  MAY  CERTIFY UP TO SEVEN MILLION DOLLARS IN
QUALIFYING ANGEL INVESTMENT. FOR THE PERIOD  JULY  FIRST,  TWO  THOUSAND
FIFTEEN  THROUGH  JUNE THIRTIETH, TWO THOUSAND SIXTEEN, 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

S. 3732                             3

GENERAL MUNICIPAL LAW, SHALL BE ALLOWED A CREDIT  EQUAL  TO  THIRTY-FIVE
PERCENT OF THE AMOUNT OF SUCH QUALIFYING ANGEL INVESTMENT.
  (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
(vv) to read as follows:
  (VV) 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

S. 3732                             4

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 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.

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