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
                               ___________

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.