senate Bill S5238

Vetoed By Governor
2013-2014 Legislative Session

Provides an angel investor credit against certain taxes imposed in a city of one million or more for investment in certain qualified emerging companies

download bill text pdf

Sponsored By

Archive: Last Bill Status Via A2355 - Vetoed by Governor


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

do you support this bill?

Actions

view actions (11)
Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Dec 18, 2013 tabled
vetoed memo.256
Dec 06, 2013 delivered to governor
Jun 21, 2013 returned to assembly
passed senate
3rd reading cal.1616
substituted for s5238
Jun 21, 2013 substituted by a2355
ordered to third reading cal.1616
committee discharged and committed to rules
May 15, 2013 referred to investigations and government operations

Votes

view votes

S5238 - Bill Details

See Assembly Version of this Bill:
A2355
Law Section:
Tax Law
Laws Affected:
Amd ยงยง1201-a & 1310, Tax L
Versions Introduced in 2011-2012 Legislative Session:
S7683, A10711

S5238 - Bill Texts

view summary

Provides an angel investor credit against the unincorporated business tax and personal income tax in New York city for investments in certain qualified emerging companies and medical technology companies.

view sponsor memo
BILL NUMBER:S5238

TITLE OF BILL: An act to amend the tax law, in relation to
authorizing any city having a population of one million or more to
provide an angel investor credit against the unincorporated business
tax and personal income tax of such city for certain qualified
emerging companies and medical technology companies

SUMMARY OF PROVISIONS: Section 1 enables any city with a population of
one million or more to allow an angel investor credit to an eligible
taxpayer against the unincorporated business tax Such credit would be
allowed to an eligible taxpayer that 1) is an accredited investor; 2)
makes a qualified investment in a company located in the city that
engages in biotechnology or medical technology; 3) has no more than
100 full-time employees, of which at least 75% are employed in the
city of New York, has 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 has gross revenues, along with the gross revenues of
its affiliates and related members, not exceeding $20 million for the
taxable year immediately preceding the year the taxpayer is allowed a
credit under this subdivision; and (4) own less than 50% of the
qualified emerging technology company ("QETC") or medical technology
company after their qualified investment.

Eligible taxpayers granted an angel investor credit for a qualified
investment against the city personal income tax shall be ineligible
for an angel investor credit against the unincorporated business tax
for such investment

Sets forth definitions for 1) a "qualified investment", 2) "related
member", and 3) "affiliates".

Such credit shall be refundable and allowed against the unincorporated
business tax paid on or after January 1, 2013.

No later than October 1, 2012, the NYC Department of Finance shall
establish by rule procedures for the allocation of the angel investor
credit to eligible taxpayers.

Any local law adopted pursuant to this Act may provide for a credit
for a maximum of 3 consecutive calendar years, but shall not apply to
taxable years beginning on or before January 1, 2013 or after January
1, 2016.

Section 2 mirrors the provisions of section 1, except that:

1. Such section applies to the city personal income tax,

2. Eligible taxpayers granted an angel investor credit for a qualified
investment against the unincorporated business tax shall be ineligible
for an angel investor credit against the city personal income tax for
such investment;

3. In the case of a resident taxpayer, the credit provided shall be
against the credit provided shall be allowed against the city personal
income tax for the taxable year reduced by the credits already taken


against the PIT. If the credit exceeds the tax as so reduced, the
credit shall be refundable;

4. If a taxpayer changes residency status during the taxable year from
resident to nonresident, or from nonresident to resident, the credit
shall be prorated according to the number of months in the period of
residence; and

5. In the case of a husband and wife who file a joint return, but who
are required to determine their city personal income taxes separately,
the angel investor credit may be applied against the tax of either or
divided between them as they may elect. In the case of a husband and
wife who are not required to file a federal return, the credit under
this subsection shall be allowed only if such taxpayers file a joint
city personal income tax return.

Section 3 provides that the aggregate amount of tax credits allowed
under this act in any calendar year shall be up to $3 million. Such
aggregate amount of credits shall be allocated by the New York City
department of finance among taxpayers in order of priority based upon
the date of filing an application for allocation of the angel investor
credit with such department. If the total amount of allocated credits
applied for in any particular year exceeds the aggregate amount of tax
credits allowed for such year, such excess shall be treated as having
been applied for on the first day of the subsequent year.

STATEMENT IN SUPPORT: The Angel Investor Tax Credit would provide an
incentive for investment in small, early stage biotech and medtech
businesses in New York City. It is designed to aid the formation of
promising firms by lowering their cost of capital. It would provide
accredited investors with a credit of up to 10% of their investment.
Angel Investors look for fast growing firms and as a result Angel
Credits can be a significant source of job growth over time.
Investors would receive a refundable credit equal to 10% of eligible
investment Credits would be limited to a maximum credit of $100,000
payable over 5 years (about $20,000 per year) Given that nationally
the typical angel's investment in a single firm is around $325,000, we
expect most credits to be well under the limit. The credit would be
against the City's personal income tax, or for partnerships; against
the unincorporated business tax. The total credits that the City could
issue in a given year will be capped at $3 million. Why an Angel
Credit? Like the City's Biotech Tax Credit, an angel investor tax
credit for biotech and medtech would attract capital to a promising
sector in the city and could be viewed as part of a long term effort
to diversify the City economy. Nationally, this is a rapidly growth
export sector that makes use of growing demand in the world economy.

BACKGROUND Angel Investors An angel investor is an affluent individual
who provides personal capital to start-up companies, often through a
trust, fund, or business. They are distinct from venture capitalists
who invest other persons' capital through a professionally-managed
fund. Angel investors are particularly critical for small start-ups
seeking capital, because most venture capital funds are not interested
in investments of less than $1 million. Indeed, angel investments are
highly sought after by high- growth start-ups, particularly after
spending their own personal resources.


Angel investments in the United States account for almost as much in
aggregate as those of venture capitalists. In 2010 angel investors
provided $20.1 billion in capital. Angel investors however, furnish
capital to 20 times as many businesses as do venture capitalists. In
2010 61,900 firms were served by angel investors, versus 3,047 busi-
nesses by venture capitalists. According to the Center for Venture
Research, there were 258,000 angel investors in the United States in
2007 In 2010 healthcare/medical firms accounted for 30% of angel
investments. In comparison, software, biotech and industrial/energy
firms comprised 16%, 15%, and 8% of angel investments respectively.

Angel Credits in Other States. Currently, more than 20 states have
some form of an Angel Investor Credit. New Jersey is among them.

FISCAL IMPACT: The credit will have no impact on the New York State
Budget. The New York City Council Finance Division estimates that the
credit will reduce City personal income tax a unincorporated business
tax revenues by $600,000 in City Fiscal Year 2014, rising to $1.8
million in City Fiscal Year 2016.

EFFECTIVE DATE: Immediate

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5238

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 15, 2013
                               ___________

Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law, in relation to authorizing any city  having
  a population of one million or more to provide an angel investor cred-
  it  against the unincorporated business tax and personal income tax of
  such city for certain qualified emerging companies and  medical  tech-
  nology companies

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 1201-a of the tax law is amended by  adding  a  new
subdivision (e) to read as follows:
  (E)  ANGEL  INVESTOR  CREDIT. 1. ANY CITY IN THIS STATE HAVING A POPU-
LATION OF ONE MILLION OR MORE,  ACTING  THROUGH  ITS  LOCAL  LEGISLATIVE
BODY,  IS  HEREBY  AUTHORIZED  TO ADOPT AND AMEND LOCAL LAWS TO ALLOW AN
ANGEL INVESTOR CREDIT AGAINST THE UNINCORPORATED  BUSINESS  TAX  IMPOSED
PURSUANT  TO  THE  AUTHORITY OF CHAPTER SEVEN HUNDRED SEVENTY-TWO OF THE
LAWS OF NINETEEN HUNDRED SIXTY-SIX TO AN ELIGIBLE TAXPAYER THAT: (A)  IS
AN  ACCREDITED  INVESTOR  AS  DEFINED IN RULE 501 OF REGULATION D OF THE
SECURITIES AND EXCHANGE COMMISSION OF THE UNITED STATES PURSUANT TO  THE
SECURITIES  EXCHANGE  ACT  OF  1933,  AS  AMENDED; (B) MAKES A QUALIFIED
INVESTMENT IN A QUALIFIED EMERGING TECHNOLOGY  COMPANY,  AS  DEFINED  IN
PARAGRAPH  (C) OF SUBDIVISION ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF
THE PUBLIC AUTHORITIES LAW, EXCEPT THAT SUCH COMPANY SHALL MEAN A COMPA-
NY LOCATED IN SUCH CITY, THAT ENGAGES IN THE  ACTIVITIES  REFERENCED  IN
SUBPARAGRAPH   FIVE  OF  PARAGRAPH  B  OF  SUBDIVISION  ONE  OF  SECTION
THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW, OR MAKES A QUAL-
IFIED INVESTMENT IN A COMPANY THAT ENGAGES  IN  MEDICAL  TECHNOLOGY,  AS
DEFINED  IN  PARTS  3345 AND 3394 OF THE NORTH AMERICAN INDUSTRY CLASSI-
FICATION SYSTEM; (C) HAS NO MORE THAN ONE HUNDRED  FULL-TIME  EMPLOYEES,
OF  WHICH AT LEAST SEVENTY-FIVE PERCENT ARE EMPLOYED IN SUCH CITY, HAS A

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02754-01-3

S. 5238                             2

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  HAS  GROSS
REVENUES,  ALONG  WITH  THE GROSS REVENUES OF ITS AFFILIATES AND RELATED
MEMBERS, NOT EXCEEDING TWENTY MILLION DOLLARS FOR THE TAXABLE YEAR IMME-
DIATELY PRECEDING THE YEAR THE TAXPAYER IS ALLOWED A CREDIT  UNDER  THIS
SUBDIVISION;  AND  (D)  OWNS  LESS  THAN  FIFTY PERCENT OF THE QUALIFIED
EMERGING TECHNOLOGY COMPANY OR  MEDICAL  TECHNOLOGY  COMPANY  AFTER  THE
QUALIFIED  INVESTMENT;  PROVIDED,  HOWEVER, NO CREDIT AUTHORIZED BY THIS
SUBDIVISION FOR A QUALIFIED INVESTMENT SHALL BE GRANTED TO A TAXPAYER IF
SUCH TAXPAYER IS GRANTED AN ANGEL  INVESTOR  CREDIT  AGAINST  THE  TAXES
IMPOSED  PURSUANT  TO  ARTICLE THIRTY OF THIS CHAPTER FOR SUCH QUALIFIED
INVESTMENT. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO THE  SUM  OF  THE
AMOUNTS SPECIFIED IN PARAGRAPH TWO OF THIS SUBDIVISION. FOR THE PURPOSES
OF  THIS  SUBDIVISION,  A "QUALIFIED INVESTMENT" SHALL MEAN THE CONTRIB-
UTION OF PROPERTY TO A CORPORATION IN EXCHANGE FOR ORIGINAL ISSUE  CAPI-
TAL STOCK OR OTHER OWNERSHIP INTEREST, THE CONTRIBUTION OF PROPERTY TO A
PARTNERSHIP  IN EXCHANGE FOR AN INTEREST IN THE PARTNERSHIP, AND SIMILAR
CONTRIBUTIONS IN THE CASE OF A BUSINESS ENTITY NOT IN CORPORATE OR PART-
NERSHIP FORM IN EXCHANGE FOR  AN  OWNERSHIP  INTEREST  IN  SUCH  ENTITY;
PROVIDED,  HOWEVER, A QUALIFIED INVESTMENT SHALL NOT INCLUDE INVESTMENTS
MADE BY OR ON BEHALF OF AN OWNER OF THE  BUSINESS,  INCLUDING,  BUT  NOT
LIMITED  TO,  A  STOCKHOLDER, PARTNER OR SOLE PROPRIETOR, OR ANY RELATED
PERSON, AS DEFINED IN SUBPARAGRAPH (C) OF PARAGRAPH THREE OF  SUBSECTION
(B) OF SECTION FOUR HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE. FOR
PURPOSES  OF  THIS  SUBDIVISION,  THE TERM "RELATED MEMBER" SHALL MEAN A
PERSON, CORPORATION, OR OTHER ENTITY, INCLUDING AN ENTITY THAT IS TREAT-
ED AS A PARTNERSHIP OR OTHER PASS-THROUGH VEHICLE FOR PURPOSES OF FEDER-
AL TAXATION, WHETHER SUCH PERSON, CORPORATION OR ENTITY IS A TAXPAYER OR
NOT, WHERE ONE SUCH PERSON, CORPORATION, OR ENTITY, OR  SET  OF  RELATED
PERSONS,  CORPORATIONS  OR  ENTITIES,  DIRECTLY  OR  INDIRECTLY  OWNS OR
CONTROLS A CONTROLLING INTEREST IN ANOTHER ENTITY.  SUCH ENTITY OR ENTI-
TIES MAY INCLUDE ALL TAXPAYERS UNDER ARTICLES  NINE,  NINE-A,  THIRTEEN,
TWENTY-TWO,  THIRTY-TWO, THIRTY-THREE OR THIRTY-THREE-A OF THIS CHAPTER.
FOR PURPOSES OF THIS SUBDIVISION, 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.
  2. (A) THE PERCENTAGE OF THE CREDIT ALLOWED TO A TAXPAYER  UNDER  THIS
SUBDIVISION  SHALL  BE  TWO  PERCENT  PER EACH QUALIFIED INVESTMENT MADE
DURING THE TAXABLE YEAR AND THE SUCCEEDING FOUR YEARS PROVIDED THE CRED-
IT IS PROPERLY CLAIMED PURSUANT TO THE RULES ESTABLISHED BY THE NEW YORK
CITY DEPARTMENT OF FINANCE, UP TO A MAXIMUM  ALLOWED  CREDIT  OF  TWENTY
THOUSAND  DOLLARS PER TAXABLE YEAR. THE TOTAL AMOUNT OF CREDIT ALLOWABLE
TO A TAXPAYER UNDER THIS SUBDIVISION FOR ALL YEARS, TAKEN IN THE  AGGRE-
GATE,  SHALL NOT EXCEED ONE HUNDRED THOUSAND DOLLARS. IF THE TAXPAYER IS
A PARTNER IN A PARTNERSHIP OR MEMBER IN AN UNINCORPORATED BUSINESS, THEN
THE LIMIT IMPOSED BY THE PRECEDING SENTENCE  SHALL  BE  APPLIED  AT  THE
ENTITY  LEVEL,  SO THAT THE AGGREGATE CREDIT ALLOWED TO ALL THE PARTNERS
IN SUCH PARTNERSHIP OR MEMBERS IN SUCH UNINCORPORATED  BUSINESS  IN  ANY
TAXABLE  YEAR  DOES  NOT  EXCEED  TWENTY THOUSAND DOLLARS, AND THE TOTAL
AMOUNT OF CREDIT ALLOWABLE TO ALL THE PARTNERS IN  SUCH  PARTNERSHIP  OR
MEMBERS  IN  SUCH  UNINCORPORATED  BUSINESS  FOR ALL YEARS, TAKEN IN THE
AGGREGATE, SHALL NOT EXCEED ONE HUNDRED THOUSAND DOLLARS.    THE  CREDIT
ALLOWED  UNDER  THIS SUBDIVISION SHALL NOT BE ALLOWED TO A TAXPAYER WITH
RESPECT TO ANY UNINCORPORATED BUSINESS TAX PAID  FOR  ANY  TAXABLE  YEAR

S. 5238                             3

BEGINNING  BEFORE  JANUARY  FIRST,  TWO  THOUSAND  FOURTEEN.  THE CREDIT
ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR SHALL BE  DEEMED  TO
BE  AN  OVERPAYMENT  OF  TAX BY THE TAXPAYER TO BE CREDITED OR REFUNDED,
WITHOUT INTEREST, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 11-526 OF
THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK.
  (B)  IF, AT ANY TIME DURING THE FIVE YEAR PERIOD BEGINNING ON THE DATE
THAT THE QUALIFIED INVESTMENT IS MADE BY THE TAXPAYER THERE IS A  RECAP-
TURE  EVENT WITH RESPECT TO SUCH INVESTMENT, THEN THE UNINCORPORATED TAX
OWED BY SUCH TAXPAYER FOR THE TAXABLE YEAR IN WHICH  SUCH  EVENT  OCCURS
SHALL BE INCREASED BY THE CREDIT RECAPTURE AMOUNT.
  (1)  FOR PURPOSES OF THIS SUBPARAGRAPH, THE CREDIT RECAPTURE AMOUNT IS
AN AMOUNT EQUAL TO THE SUM OF: (I) THE AGGREGATE DECREASE IN THE CREDITS
ALLOWED TO THE TAXPAYER UNDER THIS SUBDIVISION  FOR  ALL  PRIOR  TAXABLE
YEARS  WHICH  WOULD HAVE RESULTED IF NO CREDIT HAD BEEN DETERMINED UNDER
THIS SUBDIVISION WITH RESPECT TO SUCH QUALIFIED  INVESTMENT,  PLUS  (II)
INTEREST  AT  THE  UNDERPAYMENT  RATE  ESTABLISHED  BY THE NEW YORK CITY
DEPARTMENT OF FINANCE FOR EACH PRIOR TAXABLE YEAR FOR THE PERIOD  BEGIN-
NING  ON  THE  DUE DATE FOR FILING THE RETURN FOR THE PRIOR TAXABLE YEAR
INVOLVED.
  (2) FOR PURPOSES OF THIS SUBPARAGRAPH, A RECAPTURE EVENT SHALL MEAN IF
AT THE CLOSE OF ANY TAXABLE YEAR IN THE FIVE-YEAR PERIOD: (I) THE QUALI-
FIED EMERGING TECHNOLOGY COMPANY OR MEDICAL TECHNOLOGY COMPANY NO LONGER
QUALIFIES AS A QUALIFIED EMERGING TECHNOLOGY COMPANY OR MEDICAL TECHNOL-
OGY COMPANY; (II) THE QUALIFIED EMERGING TECHNOLOGY COMPANY  OR  MEDICAL
TECHNOLOGY  COMPANY  HAS  BEEN  SOLD  BY  THE TAXPAYER INVESTING IN SUCH
COMPANY; OR (III) THE TAXPAYER HAS WITHDRAWN THE  TAXPAYER'S  INVESTMENT
WHOLLY  OR  PARTIALLY  FROM THE QUALIFIED EMERGING TECHNOLOGY COMPANY OR
MEDICAL TECHNOLOGY COMPANY.
  3. THE NEW YORK CITY DEPARTMENT OF FINANCE SHALL ESTABLISH BY RULE  BY
OCTOBER  THIRTY-FIRST,  TWO  THOUSAND  THIRTEEN PROCEDURES FOR THE ALLO-
CATION OF TAX CREDITS AS REQUIRED BY PARAGRAPH TWO OF THIS  SUBDIVISION.
SUCH  RULES SHALL INCLUDE PROVISIONS DESCRIBING THE APPLICATION PROCESS,
THE DUE DATES FOR SUCH APPLICATIONS, THE STANDARDS THAT SHALL BE USED TO
EVALUATE THE APPLICATIONS, THE DOCUMENTATION THAT WILL  BE  PROVIDED  TO
TAXPAYERS  TO  SUBSTANTIATE  THE AMOUNT OF TAX CREDITS ALLOCATED TO SUCH
TAXPAYERS, AND SUCH OTHER PROVISIONS AS DEEMED NECESSARY  AND  APPROPRI-
ATE.
  4.  ANY LOCAL LAW ADOPTED PURSUANT TO THIS SUBDIVISION MAY PROVIDE FOR
A CREDIT AS AUTHORIZED BY  THIS  SUBDIVISION  FOR  A  MAXIMUM  OF  THREE
CONSECUTIVE  CALENDAR YEARS, PROVIDED, HOWEVER, THAT ANY SUCH CREDIT MAY
NOT APPLY TO TAXABLE YEARS BEGINNING BEFORE JANUARY FIRST, TWO  THOUSAND
FOURTEEN OR BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND SEVENTEEN.
  S 2. Section 1310 of the tax law is amended by adding a new subsection
(g) to read as follows:
  (G)  ANGEL INVESTOR CREDIT. (1) NOTWITHSTANDING ANY OTHER PROVISION OF
LAW TO THE CONTRARY, ANY CITY HAVING A  POPULATION  OF  ONE  MILLION  OR
MORE,  ACTING  THROUGH  ITS LOCAL LEGISLATIVE BODY, IS HEREBY AUTHORIZED
AND EMPOWERED TO ADOPT AND AMEND LOCAL LAWS GRANTING IN ANY  SUCH  CITY,
AN ANGEL INVESTOR CREDIT AGAINST THE TAXES AUTHORIZED IN THIS ARTICLE TO
AN  ELIGIBLE  TAXPAYER THAT: (A) IS AN ACCREDITED INVESTOR AS DEFINED IN
RULE 501 OF REGULATION D OF THE SECURITIES AND  EXCHANGE  COMMISSION  OF
THE  UNITED  STATES  PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED; (B) MAKES A QUALIFIED INVESTMENT IN A QUALIFIED EMERGING  TECH-
NOLOGY  COMPANY,  AS  DEFINED  IN  PARAGRAPH (C) OF SUBDIVISION ONE   OF
SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES  LAW,  EXCEPT
THAT  SUCH  COMPANY  SHALL  MEAN  A  COMPANY  LOCATED IN SUCH CITY, THAT

S. 5238                             4

ENGAGES IN THE ACTIVITIES REFERENCED IN SUBPARAGRAPH FIVE OF PARAGRAPH B
OF SUBDIVISION ONE OF SECTION THIRTY-ONE HUNDRED  TWO-E  OF  THE  PUBLIC
AUTHORITIES  LAW,  OR  MAKES  A  QUALIFIED  INVESTMENT IN A COMPANY THAT
ENGAGES  IN MEDICAL TECHNOLOGY, AS DEFINED IN PARTS 3345 AND 3394 OF THE
NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM; (C) HAS NO MORE THAN  ONE
HUNDRED  FULL-TIME EMPLOYEES, OF WHICH AT LEAST SEVENTY-FIVE PERCENT ARE
EMPLOYED IN SUCH CITY, HAS 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 HAS 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 SUBSECTION; AND (D) OWNS LESS THAN FIFTY
PERCENT OF THE QUALIFIED EMERGING TECHNOLOGY COMPANY OR MEDICAL TECHNOL-
OGY COMPANY AFTER THEIR  QUALIFIED  INVESTMENT;  PROVIDED,  HOWEVER,  NO
CREDIT AUTHORIZED BY THIS SUBSECTION FOR A QUALIFIED INVESTMENT SHALL BE
GRANTED  TO  A  TAXPAYER  IF  SUCH TAXPAYER IS GRANTED AN ANGEL INVESTOR
CREDIT AGAINST THE UNINCORPORATED BUSINESS TAX IMPOSED PURSUANT  TO  THE
AUTHORITY  OF  CHAPTER SEVEN HUNDRED SEVENTY-TWO OF THE LAWS OF NINETEEN
HUNDRED SIXTY-SIX FOR SUCH QUALIFIED INVESTMENT. THE AMOUNT OF THE CRED-
IT SHALL BE EQUAL TO THE SUM OF THE AMOUNTS SPECIFIED IN  PARAGRAPH  TWO
OF  THIS  SUBSECTION  SUBJECT TO THE LIMITATIONS IN PARAGRAPHS THREE AND
FOUR OF THIS SUBSECTION. FOR PURPOSES OF THIS SUBSECTION,  A  "QUALIFIED
INVESTMENT"  SHALL MEAN THE CONTRIBUTION OF PROPERTY TO A CORPORATION IN
EXCHANGE FOR ORIGINAL ISSUE CAPITAL STOCK OR OTHER  OWNERSHIP  INTEREST,
THE  CONTRIBUTION OF PROPERTY TO A PARTNERSHIP IN EXCHANGE FOR AN INTER-
EST IN THE PARTNERSHIP, AND SIMILAR CONTRIBUTIONS IN THE CASE OF A BUSI-
NESS ENTITY NOT IN CORPORATE OR PARTNERSHIP  FORM  IN  EXCHANGE  FOR  AN
OWNERSHIP  INTEREST  IN  SUCH  ENTITY;  PROVIDED,  HOWEVER,  A QUALIFIED
INVESTMENT SHALL NOT INCLUDE INVESTMENTS MADE BY  OR  ON  BEHALF  OF  AN
OWNER  OF  THE  BUSINESS,  INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER,
PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON, AS DEFINED IN SUBPAR-
AGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR  HUNDRED
SIXTY-FIVE OF THE INTERNAL REVENUE CODE. FOR PURPOSES OF THIS SUBSECTION
A  "RELATED  MEMBER"  SHALL MEAN A PERSON, CORPORATION, OR OTHER ENTITY,
INCLUDING  AN  ENTITY  THAT  IS  TREATED  AS  A  PARTNERSHIP  OR   OTHER
PASS-THROUGH  VEHICLE  FOR  PURPOSES  OF  FEDERAL TAXATION, WHETHER SUCH
PERSON, CORPORATION OR ENTITY IS A  TAXPAYER  OR  NOT,  WHERE  ONE  SUCH
PERSON,  CORPORATION, OR ENTITY, OR SET OF RELATED PERSONS, CORPORATIONS
OR ENTITIES, DIRECTLY OR  INDIRECTLY  OWNS  OR  CONTROLS  A  CONTROLLING
INTEREST  IN  ANOTHER  ENTITY.   SUCH ENTITY OR ENTITIES MAY INCLUDE ALL
TAXPAYERS UNDER ARTICLES NINE, NINE-A, THIRTEEN, TWENTY-TWO, THIRTY-TWO,
THIRTY-THREE OR THIRTY-THREE-A OF THIS CHAPTER.  FOR  PURPOSES  OF  THIS
SUBSECTION,  "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.
  (2) (A) THE PERCENTAGE OF THE CREDIT ALLOWED TO A TAXPAYER UNDER  THIS
SUBSECTION  SHALL  BE  TWO  PERCENT  PER  EACH QUALIFIED INVESTMENT MADE
DURING THE TAXABLE YEAR AND THE SUCCEEDING FOUR YEARS PROVIDED THE CRED-
IT IS PROPERLY CLAIMED PURSUANT TO THE RULES ESTABLISHED BY THE NEW YORK
CITY DEPARTMENT OF FINANCE, UP TO A MAXIMUM  ALLOWED  CREDIT  OF  TWENTY
THOUSAND  DOLLARS PER TAXABLE YEAR. THE TOTAL AMOUNT OF CREDIT ALLOWABLE
TO A TAXPAYER UNDER THIS SUBSECTION FOR ALL YEARS, TAKEN IN  THE  AGGRE-
GATE,  SHALL NOT EXCEED ONE HUNDRED THOUSAND DOLLARS. IF THE TAXPAYER IS
A PARTNER IN A PARTNERSHIP OR MEMBER IN AN UNINCORPORATED BUSINESS, THEN
THE LIMIT IMPOSED BY THE PRECEDING SENTENCE  SHALL  BE  APPLIED  AT  THE

S. 5238                             5

ENTITY  LEVEL,  SO THAT THE AGGREGATE CREDIT ALLOWED TO ALL THE PARTNERS
IN SUCH PARTNERSHIP OR MEMBERS IN SUCH UNINCORPORATED  BUSINESS  IN  ANY
TAXABLE  YEAR  DOES  NOT  EXCEED  TWENTY THOUSAND DOLLARS, AND THE TOTAL
AMOUNT  OF  CREDIT  ALLOWABLE TO ALL THE PARTNERS IN SUCH PARTNERSHIP OR
MEMBERS IN SUCH UNINCORPORATED BUSINESS FOR  ALL  YEARS,  TAKEN  IN  THE
AGGREGATE,  SHALL  NOT  EXCEED ONE HUNDRED THOUSAND DOLLARS.  THE CREDIT
ALLOWED UNDER THIS SUBSECTION SHALL NOT BE ALLOWED TO  A  TAXPAYER  WITH
RESPECT  TO ANY CITY PERSONAL INCOME TAX IMPOSED UNDER THIS ARTICLE PAID
FOR ANY TAXABLE YEAR BEGINNING BEFORE JANUARY FIRST, TWO THOUSAND  FOUR-
TEEN.
  (B)  IF, AT ANY TIME DURING THE FIVE YEAR PERIOD BEGINNING ON THE DATE
THAT THE QUALIFIED INVESTMENT IS MADE BY THE TAXPAYER THERE IS A  RECAP-
TURE  EVENT  WITH  RESPECT  TO  SUCH  INVESTMENT, THEN THE CITY PERSONAL
INCOME TAX OWED BY SUCH TAXPAYER FOR THE  TAXABLE  YEAR  IN  WHICH  SUCH
EVENT  OCCURS  SHALL  BE  INCREASED  BY THE CREDIT RECAPTURE AMOUNT. FOR
PURPOSES OF THIS SUBPARAGRAPH, THE CREDIT RECAPTURE AMOUNT IS AN  AMOUNT
EQUAL  TO  THE SUM OF: (I) THE AGGREGATE DECREASE IN THE CREDITS ALLOWED
TO THE TAXPAYER UNDER THIS SUBSECTION FOR ALL PRIOR TAXABLE YEARS  WHICH
WOULD  HAVE  RESULTED  IF  NO  CREDIT  HAD  BEEN  DETERMINED  UNDER THIS
SUBSECTION WITH RESPECT TO SUCH QUALIFIED INVESTMENT, PLUS (II) INTEREST
AT THE UNDERPAYMENT RATE ESTABLISHED BY THE NEW YORK CITY DEPARTMENT  OF
FINANCE  FOR EACH PRIOR TAXABLE YEAR FOR THE PERIOD BEGINNING ON THE DUE
DATE FOR FILING THE RETURN FOR THE  PRIOR  TAXABLE  YEAR  INVOLVED.  FOR
PURPOSES  OF THIS SUBPARAGRAPH, A "RECAPTURE EVENT" SHALL MEAN IF AT THE
CLOSE OF ANY TAXABLE YEAR IN THE FIVE-YEAR  PERIOD:  (I)  THE  QUALIFIED
EMERGING  TECHNOLOGY  COMPANY  OR  MEDICAL  TECHNOLOGY COMPANY NO LONGER
QUALIFIES AS A QUALIFIED EMERGING TECHNOLOGY COMPANY OR A MEDICAL  TECH-
NOLOGY  COMPANY;  (II)  THE QUALIFIED EMERGING TECHNOLOGY COMPANY OR THE
MEDICAL TECHNOLOGY COMPANY HAS BEEN SOLD BY THE  TAXPAYER  INVESTING  IN
SUCH COMPANY; OR (III) THE TAXPAYER HAS WITHDRAWN THE TAXPAYER'S INVEST-
MENT  WHOLLY OR PARTIALLY FROM THE QUALIFIED EMERGING TECHNOLOGY COMPANY
OR THE MEDICAL TECHNOLOGY COMPANY.
  (3) IN THE CASE OF A RESIDENT TAXPAYER, THE CREDIT PROVIDED  BY  LOCAL
LAW  ADOPTED  PURSUANT  TO  THIS SUBSECTION SHALL BE ALLOWED AGAINST THE
TAXES AUTHORIZED BY THIS ARTICLE FOR THE TAXABLE  YEAR  REDUCED  BY  THE
CREDITS  PERMITTED  BY THIS ARTICLE. IF THE CREDIT EXCEEDS THE TAX AS SO
REDUCED, THE TAXPAYER MAY RECEIVE, AND THE  COMPTROLLER,  SUBJECT  TO  A
CERTIFICATE  OF  THE  COMMISSIONER  OF  THE  NEW YORK CITY DEPARTMENT OF
FINANCE, SHALL PAY AS AN OVERPAYMENT, WITHOUT INTEREST,  THE  AMOUNT  OF
SUCH EXCESS.
  (4) IF A TAXPAYER CHANGES STATUS DURING THE TAXABLE YEAR FROM RESIDENT
TO  NONRESIDENT,  OR  FROM  NONRESIDENT TO RESIDENT, THE CREDIT SHALL BE
PRORATED ACCORDING TO THE NUMBER OF MONTHS IN THE PERIOD OF RESIDENCE.
  (5) SUBJECT TO THE PROVISIONS OF PARAGRAPH THREE OF  THIS  SUBSECTION,
IN  THE  CASE OF A HUSBAND AND WIFE WHO FILE A JOINT RETURN, BUT WHO ARE
REQUIRED TO DETERMINE THEIR CITY PERSONAL INCOME TAXES  SEPARATELY,  THE
CREDIT AUTHORIZED PURSUANT TO THIS SUBSECTION MAY BE APPLIED AGAINST THE
TAX  OF EITHER OR DIVIDED BETWEEN THEM AS THEY MAY ELECT. IN THE CASE OF
A HUSBAND AND WIFE WHO ARE NOT REQUIRED TO FILE A  FEDERAL  RETURN,  THE
CREDIT  UNDER  THIS  SUBSECTION  SHALL BE ALLOWED ONLY IF SUCH TAXPAYERS
FILE A JOINT CITY PERSONAL INCOME TAX RETURN.
  (6) THE NEW YORK CITY DEPARTMENT OF FINANCE SHALL ESTABLISH BY RULE BY
OCTOBER THIRTY-FIRST, TWO THOUSAND THIRTEEN  PROCEDURES  FOR  THE  ALLO-
CATION  OF  TAX  CREDITS AS REQUIRED BY PARAGRAPHS TWO AND THREE OF THIS
SUBSECTION. SUCH RULES SHALL INCLUDE PROVISIONS DESCRIBING THE  APPLICA-
TION  PROCESS,  THE  DUE DATES FOR SUCH APPLICATIONS, THE STANDARDS THAT

S. 5238                             6

SHALL BE USED TO EVALUATE THE APPLICATIONS, THE DOCUMENTATION THAT  WILL
BE PROVIDED TO TAXPAYERS TO SUBSTANTIATE THE AMOUNT OF TAX CREDITS ALLO-
CATED  TO  SUCH TAXPAYERS, AND SUCH OTHER PROVISIONS AS DEEMED NECESSARY
AND APPROPRIATE.
  (7)  ANY LOCAL LAW ADOPTED PURSUANT TO THIS SUBSECTION MAY PROVIDE FOR
A CREDIT AS AUTHORIZED BY THIS SUBSECTION FOR A MAXIMUM OF THREE CONSEC-
UTIVE CALENDAR YEARS, PROVIDED, HOWEVER, THAT ANY SUCH  CREDIT  MAY  NOT
APPLY TO TAXABLE YEARS BEGINNING JANUARY FIRST, TWO THOUSAND FOURTEEN OR
BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND SEVENTEEN.
  S 3. The aggregate amount of tax credits allowed under this act in any
calendar  year  shall  be  up  to  three million dollars. Such aggregate
amount of credits shall be allocated by the New York city department  of
finance  among  taxpayers  in  order  of priority based upon the date of
filing an application for allocation of an angel  investor  credit  with
such department. If the total amount of allocated credits applied for in
any  particular year exceeds the aggregate amount of tax credits allowed
for such year, such excess shall be treated as having been  applied  for
on the first day of the subsequent year.
  S  4.  A  certified copy of the local law enacted pursuant to this act
shall be mailed by registered mail to the state department  of  taxation
and  finance  at  its office in Albany within fifteen days of its enact-
ment. However, the state department of taxation and  finance  may  allow
additional  time  for  such certified copy to be mailed if it deems such
action to be consistent with its duties under this act.
  S 5. This act shall take effect immediately.

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.