senate Bill S6837

2011-2012 Legislative Session

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

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Archive: Last Bill Status - Passed Senate


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

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 18, 2012 referred to ways and means
delivered to assembly
passed senate
ordered to third reading cal.1282
committee discharged and committed to rules
Mar 28, 2012 referred to local government

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S6837 - Bill Details

See Assembly Version of this Bill:
A9939
Current Committee:
Law Section:
General Municipal Law
Laws Affected:
Add §959-c, Gen Muni L; amd §§210, 606, 1456 & 1511, Tax L

S6837 - Bill Texts

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

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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.

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

                                  6837

                            I N  S E N A T E

                             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.

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