S T A T E O F N E W Y O R K
________________________________________________________________________
2638
2011-2012 Regular Sessions
I N A S S E M B L Y
January 19, 2011
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Introduced by M. of A. GABRYSZAK, SCHIMMINGER, MORELLE, LUPARDO, MAGNAR-
ELLI -- Multi-Sponsored by -- M. of A. MILLMAN -- read once and
referred to the Committee on Ways and Means
AN ACT to amend the tax law, in relation to creating the qualified
emerging technology commercialization tax credit
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 210 of the tax law is amended by adding a new
subdivision 12-H to read as follows:
12-H. QUALIFIED EMERGING TECHNOLOGY COMMERCIALIZATION TAX CREDIT. (A)
AS USED IN THIS SUBDIVISION:
(1) "QUALIFIED EMERGING TECHNOLOGY COMPANY" SHALL MEAN A COMPANY
LOCATED IN NEW YORK STATE: (I) WHOSE PRIMARY PRODUCTS OR SERVICES ARE
CLASSIFIED AS EMERGING TECHNOLOGIES AND WHOSE TOTAL ANNUAL PRODUCT SALES
ARE TEN MILLION DOLLARS OR LESS; OR (II) A COMPANY WHICH HAS RESEARCH
AND DEVELOPMENT ACTIVITIES IN NEW YORK STATE AND WHOSE RATIO OF RESEARCH
AND DEVELOPMENT FUNDS TO NET SALES EQUALS OR EXCEEDS THE AVERAGE RATIO
FOR ALL SURVEYED COMPANIES CLASSIFIED AS DETERMINED BY THE NATIONAL
SCIENCE FOUNDATION IN THE MOST RECENT PUBLISHED RESULTS FROM ITS SURVEY
OF INDUSTRY RESEARCH AND DEVELOPMENT, OR ANY COMPARABLE SUCCESSOR SURVEY
AS DETERMINED BY THE DEPARTMENT, AND WHOSE TOTAL ANNUAL PRODUCT SALES
ARE TEN MILLION DOLLARS OR LESS. THE DEFINITION OF "RESEARCH AND DEVEL-
OPMENT FUNDS" SHALL BE THE SAME AS THAT USED BY THE NATIONAL SCIENCE
FOUNDATION IN THE AFOREMENTIONED SURVEY.
(2) "QUALIFIED COMMERCIALIZATION EXPENSES" MEANS TESTING; PROTOTYPING;
DESIGNING; NECESSARY MATERIALS AND FIXTURES, OR LABORATORY EQUIPMENT;
INCORPORATION FEES AND LEGAL EXPENSES; ATTORNEY FEES; FEES FOR LICENSING
OF TECHNOLOGIES DEVELOPED AT UNIVERSITIES; TRANSACTIONAL LEGAL EXPENSES
RELATED TO LICENSING UNIVERSITY TECHNOLOGIES; TRADE SHOW AND CONFERENCE
FEES; AND PRODUCT PROMOTION AND MARKET RESEARCH EXPENSES.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06201-01-1
A. 2638 2
(B) A TAXPAYER THAT IS A QUALIFIED EMERGING TECHNOLOGY COMPANY (AND
SPECIFICALLY FOR THE ACTIVITIES REFERENCED IN PARAGRAPH (B) OF SUBDIVI-
SION ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES
LAW), AND THAT MEETS THE ELIGIBILITY REQUIREMENTS IN PARAGRAPH (C) OF
THIS SUBDIVISION, SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY
THIS ARTICLE.
(C) AN ELIGIBLE TAXPAYER SHALL (1) HAVE NO MORE THAN ONE HUNDRED
FULL-TIME EMPLOYEES, OF WHICH AT LEAST SEVENTY-FIVE PERCENT ARE EMPLOYED
IN NEW YORK STATE, (2) HAVE A RATIO OF RESEARCH AND DEVELOPMENT FUNDS TO
NET SALES, AS REFERRED TO IN SECTION THIRTY-ONE HUNDRED TWO-E OF THE
PUBLIC AUTHORITIES LAW, WHICH EQUALS OR EXCEEDS SIX PERCENT DURING ITS
TAXABLE YEAR, AND (3) HAVE GROSS REVENUES, ALONG WITH THE GROSS REVENUES
OF ITS AFFILIATES AND RELATED MEMBERS, NOT EXCEEDING TWENTY MILLION
DOLLARS FOR THE TAXABLE YEAR IMMEDIATELY PRECEDING THE YEAR THE TAXPAYER
IS ALLOWED A CREDIT UNDER THIS SUBDIVISION. FOR PURPOSES OF THIS PARA-
GRAPH, THE TERM "RELATED MEMBER" SHALL HAVE THE SAME MEANING AS SET
FORTH IN CLAUSES (A) AND (B) OF SUBPARAGRAPH ONE OF PARAGRAPH (O) OF
SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS ARTICLE, AND THE
TERM "AFFILIATES" SHALL MEAN THOSE CORPORATIONS THAT ARE MEMBERS OF THE
SAME AFFILIATED GROUP (AS DEFINED IN SECTION FIFTEEN HUNDRED FOUR OF THE
INTERNAL REVENUE CODE) AS THE TAXPAYER.
(D) AN ELIGIBLE TAXPAYER SHALL BE ALLOWED A CREDIT FOR FIFTEEN PER
CENTUM OF "QUALIFIED COMMERCIALIZATION EXPENSES" PAID OR INCURRED BY THE
TAXPAYER IN THE TAXABLE YEAR. THE CREDIT SHALL BE ALLOWED FOR "QUALIFIED
COMMERCIALIZATION EXPENSES" ASSOCIATED WITH IN-HOUSE EXPENSES OR FOR
CONTRACT EXPENSES INVOLVING OUTSIDE PAID CONSULTANTS. AN ELIGIBLE
TAXPAYER MAY CLAIM CREDITS UNDER THIS SUBDIVISION FOR FOUR CONSECUTIVE
TAXABLE YEARS. IN NO CASE SHALL THE CREDIT ALLOWED BY THIS SUBDIVISION
TO A TAXPAYER EXCEED ONE HUNDRED THOUSAND DOLLARS PER YEAR.
(E) 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 SUBDI-
VISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT
OF CREDIT 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 ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE
THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST
SHALL BE PAID THEREON.
S 2. Section 606 of the tax law is amended by adding a new subsection
(ss) to read as follows:
(SS) QUALIFIED EMERGING TECHNOLOGY COMMERCIALIZATION TAX CREDIT. (1)
AS USED IN THIS SUBSECTION:
(I) "QUALIFIED EMERGING TECHNOLOGY COMPANY" SHALL MEAN A COMPANY
LOCATED IN NEW YORK STATE: (1) WHOSE PRIMARY PRODUCTS OR SERVICES ARE
CLASSIFIED AS EMERGING TECHNOLOGIES AND WHOSE TOTAL ANNUAL PRODUCT SALES
ARE TEN MILLION DOLLARS OR LESS; OR (2) A COMPANY WHICH HAS RESEARCH AND
DEVELOPMENT ACTIVITIES IN NEW YORK STATE AND WHOSE RATIO OF RESEARCH AND
DEVELOPMENT FUNDS TO NET SALES EQUALS OR EXCEEDS THE AVERAGE RATIO FOR
ALL SURVEYED COMPANIES CLASSIFIED AS DETERMINED BY THE NATIONAL SCIENCE
FOUNDATION IN THE MOST RECENT PUBLISHED RESULTS FROM ITS SURVEY OF
INDUSTRY RESEARCH AND DEVELOPMENT, OR ANY COMPARABLE SUCCESSOR SURVEY AS
DETERMINED BY THE DEPARTMENT, AND WHOSE TOTAL ANNUAL PRODUCT SALES ARE
TEN MILLION DOLLARS OR LESS. THE DEFINITION OF "RESEARCH AND DEVELOPMENT
A. 2638 3
FUNDS" SHALL BE THE SAME AS THAT USED BY THE NATIONAL SCIENCE FOUNDATION
IN THE AFOREMENTIONED SURVEY.
(II) "QUALIFIED COMMERCIALIZATION EXPENSES" MEANS TESTING; PROTOTYP-
ING; DESIGNING; NECESSARY MATERIALS AND FIXTURES, OR LABORATORY EQUIP-
MENT; INCORPORATION FEES AND LEGAL EXPENSES; ATTORNEY FEES; FEES FOR
LICENSING OF TECHNOLOGIES DEVELOPED AT UNIVERSITIES; TRANSACTIONAL LEGAL
EXPENSES RELATED TO LICENSING UNIVERSITY TECHNOLOGIES; TRADE SHOW AND
CONFERENCE FEES; AND PRODUCT PROMOTION AND MARKET RESEARCH EXPENSES.
(2) A TAXPAYER THAT IS A QUALIFIED EMERGING TECHNOLOGY COMPANY (AND
SPECIFICALLY FOR THE ACTIVITIES REFERENCED IN PARAGRAPH (B) OF SUBDIVI-
SION ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES
LAW), AND THAT MEETS THE ELIGIBILITY REQUIREMENTS IN PARAGRAPH THREE OF
THIS SUBSECTION, SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY
THIS ARTICLE.
(3) AN ELIGIBLE TAXPAYER SHALL (I) HAVE NO MORE THAN ONE HUNDRED
FULL-TIME EMPLOYEES, OF WHICH AT LEAST SEVENTY-FIVE PERCENT ARE EMPLOYED
IN NEW YORK STATE, (II) HAVE A RATIO OF RESEARCH AND DEVELOPMENT FUNDS
TO NET SALES, AS REFERRED TO IN SECTION THIRTY-ONE HUNDRED TWO-E OF THE
PUBLIC AUTHORITIES LAW, WHICH EQUALS OR EXCEEDS SIX PERCENT DURING ITS
TAXABLE YEAR, AND (III) HAVE GROSS REVENUES, ALONG WITH THE GROSS REVEN-
UES OF ITS AFFILIATES AND RELATED MEMBERS, NOT EXCEEDING TWENTY MILLION
DOLLARS FOR THE TAXABLE YEAR IMMEDIATELY PRECEDING THE YEAR THE TAXPAYER
IS ALLOWED A CREDIT UNDER THIS SUBSECTION. FOR PURPOSES OF THIS PARA-
GRAPH, THE TERM "RELATED MEMBER" SHALL HAVE THE SAME MEANING AS SET
FORTH IN CLAUSES (A) AND (B) OF SUBPARAGRAPH ONE OF PARAGRAPH (O) OF
SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS CHAPTER, AND THE
TERM "AFFILIATES" SHALL MEAN THOSE CORPORATIONS THAT ARE MEMBERS OF THE
SAME AFFILIATED GROUP (AS DEFINED IN SECTION FIFTEEN HUNDRED FOUR OF THE
INTERNAL REVENUE CODE) AS THE TAXPAYER.
(4) THE AMOUNT OF CREDIT SHALL BE EQUAL TO THE AMOUNT (OR PRO RATA
SHARE OF THE AMOUNT IN THE CASE OF A PARTNERSHIP) SPECIFIED IN PARAGRAPH
FIVE OF THIS SUBSECTION, SUBJECT TO THE LIMITATIONS IN PARAGRAPH SIX OF
THIS SUBSECTION.
(5) AN ELIGIBLE TAXPAYER SHALL BE ALLOWED A CREDIT FOR FIFTEEN PER
CENTUM OF "QUALIFIED COMMERCIALIZATION EXPENSES" PAID OR INCURRED BY THE
TAXPAYER IN THE TAXABLE YEAR. THE CREDIT SHALL BE ALLOWED FOR "QUALIFIED
COMMERCIALIZATION EXPENSES" ASSOCIATED WITH IN-HOUSE EXPENSES OR FOR
CONTRACT EXPENSES INVOLVING OUTSIDE PAID CONSULTANTS.
(6) AN ELIGIBLE TAXPAYER MAY CLAIM CREDITS UNDER THIS SUBSECTION FOR
FOUR CONSECUTIVE TAXABLE YEARS. IN NO CASE SHALL THE CREDIT ALLOWED BY
THIS SUBSECTION TO A TAXPAYER EXCEED ONE HUNDRED THOUSAND DOLLARS PER
YEAR.
(7) IF THE AMOUNT OF 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 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause (xxxii) to read as
follows:
(XXXII) QUALIFIED EMERGING AMOUNT OF CREDIT UNDER
TECHNOLOGY COMMERCIALIZATION TAX SUBDIVISION TWELVE-H OF SECTION
CREDIT UNDER SUBSECTION (SS) TWO HUNDRED TEN
S 4. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2011.