§ 43 — Life sciences research and development tax credit

New York § 43

• Jurisdiction: New York
• Law TAX: Tax
• Art. 1: Short Title; Definitions; Miscellaneous

Text

* § 43. Life sciences research and development tax credit. (a)\nAllowance of credit. (1) A taxpayer that is a qualified life sciences\ncompany, or that is a sole proprietor of or a partner in a partnership\nthat is a qualified life sciences company or a shareholder of a New York\nS corporation that is a qualified life sciences company, and is subject\nto tax under article nine-A or twenty-two of this chapter, shall be\nallowed a credit against such tax, pursuant to the provisions referred\nto in subdivision (e) of this section, for a period of three years, as\nprovided in subparagraph (ii) of paragraph two of this subdivision, to\nbe computed as provided in this section, provided that no credit shall\nbe allowed for taxable years beginning on or after January first, two\nthousand twenty-eight. Such credit may be claimed in the taxable year\nspecified on the certificate of tax credit issued to the qualified life\nsciences company.\n (2)(i) For a qualified life sciences company that employs ten or more\npersons during the taxable year, the amount of the credit shall be equal\nto fifteen percent of such qualified life sciences company's research\nand development expenditures in this state for the taxable year. For a\nqualified life sciences company that employs less than ten persons\nduring the taxable year, the amount of the credit shall be equal to\ntwenty percent of such qualified life sciences company's research and\ndevelopment expenditures in this state for the taxable year.\n (ii) The credit shall be allowed only with respect to the first\ntaxable year during which the criteria set forth in this subdivision are\nsatisfied, and with respect to each of the two taxable years next\nfollowing (but only, with respect to each of such years, if such\ncriteria are satisfied). Subsequent certifications of the life sciences\ncompany by the department of economic development pursuant to this\nsection shall not extend the three taxable year time limitation on the\nallowance of the credit set forth in the preceding sentence.\n (3) The total amount of credit allowable to a qualified life sciences\ncompany, or, if the life sciences company is properly included or\nrequired to be included in a combined report, to the combined group,\ntaken in the aggregate, shall not exceed five hundred thousand dollars\nin any taxable year. If the taxpayer is a partner in a partnership that\nis a life sciences company or a shareholder of a New York S corporation\nthat is a life sciences company, then the total amount of credit\nallowable shall be applied at the entity level, so that the total amount\nof credit allowable to all the partners or shareholders of each such\nentity, taken in the aggregate, does not exceed five hundred thousand\ndollars in any taxable year.\n (4) No research and development expenditures made by the life sciences\ncompany and used either as the basis for the allowance of the credit\nprovided for pursuant to this section or used in the calculation of the\ncredit provided pursuant to this section shall be used to claim any\nother credit allowed pursuant to this chapter or be used in the\ncalculation of any other credit allowed pursuant to this chapter.\n (b) Maximum amount of credits. The aggregate amount of tax credits\nallowed under this section to taxpayers subject to tax under articles\nnine-A and twenty-two of this chapter in any taxable year shall be ten\nmillion dollars, and shall be allotted from the funds available for tax\ncredits under article seventeen of the economic development law. Such\naggregate amount of credits shall be allocated by the department of\neconomic development among taxpayers in order of priority based upon the\ndate of filing an application for allocation of life sciences research\nand development tax credit with such department. If the total amount of\nallocated credits applied for in any particular year exceeds the\naggregate amount of tax credits allowed for such year under this\nsection, such excess shall be treated as having been applied for on the\nfirst day of the subsequent year.\n (c) Definitions. As used in this section the following terms shall\nhave the following meanings:\n (1) "Certificate of tax credit" means the document issued to a\nqualified life sciences company by the department of economic\ndevelopment, after the department of economic development has verified\nthat such life sciences company has met all applicable criteria in this\nsection to be eligible for the life sciences research and development\ntax credit allowed under this section, including but not limited to\nverifying that the life sciences company is a new business. The\ncertificate shall be issued annually if such criteria are satisfied and\nshall specify the exact amount of the life sciences research and\ndevelopment tax credit that may be claimed by such qualified life\nsciences company, pursuant to this section, and shall specify the\ntaxable year in which such credit may be claimed.\n (2) "New business" means any business that qualifies as a new business\nunder either paragraph (f) of subdivision one of section two hundred\nten-B or paragraph ten of subsection (a) of section six hundred six of\nthis chapter.\n (3) "Qualified life sciences company" means a life sciences company,\nas defined in subdivision eleven of section three hundred fifty-two of\nthe economic development law, that has been certified by the department\nof economic development as a life sciences company and is a new\nbusiness. Provided however, for purposes of the credit authorized under\nthis section, the department of economic development shall not certify\nas a life sciences company any corporation, partnership, limited\npartnership, or other entity that has been within the immediately\npreceding sixty months a related person to an entity that is a life\nsciences company or an entity that is engaged in scientific research and\ndevelopment as defined in subdivision twenty-two of section three\nhundred fifty-two of the economic development law.\n (4) "Research and development expenditures" means qualified research\nexpenses as defined in subsection (b) of section 41 of the internal\nrevenue code, provided, however, that such qualified research expenses\nshall not include amounts under subparagraph (B) of paragraph 1 of\nsubsection (b) of section 41 of the internal revenue code and as further\ndescribed in paragraph 3 of subsection (b) of section 41 of the internal\nrevenue code. If section 41 of the internal revenue code has expired,\nthen the research and development expenses shall be calculated as if the\nfederal research and development credit structure and definition in\neffect in section 41 in federal tax year two thousand nine were still in\neffect.\n (5) "Related person" means a related person as defined in subparagraph\n(C) of paragraph three of subsection (b) of section 465 of the internal\nrevenue code. For this purpose, a "related person" shall include an\nentity that would have qualified as a "related person" if it had not\nbeen dissolved, liquidated, merged with another entity or otherwise\nceased to exist or operate.\n (d)(1) For purposes of this section, in order to be eligible for the\nlife sciences research and development tax credit allowed under this\nsection, a life sciences company must be issued a certificate of tax\ncredit by the department of economic development. The department of\neconomic development shall verify that such life sciences company has\nmet all applicable eligibility criteria in this section before issuing a\ncertificate of tax credit, including but not limited to verifying that\nthe life sciences company is a new business.\n (2) The commissioner of economic development, after consulting with\nthe commissioner, shall promulgate regulations by October thirty-first,\ntwo thousand seventeen to establish procedures for the allocation of tax\ncredits allowed under this section. Such rules and regulations shall\ninclude provisions describing the application process for the credit\nallowed under this section, the due dates for such applications, the\neligibility standards for qualified life sciences companies, the\nstandards which shall be used to evaluate the applications, the\ndocumentation that will be provided to taxpayers to substantiate to the\ndepartment the amount of tax credits allocated to such taxpayers, and\nsuch other provisions as deemed necessary and appropriate.\nNotwithstanding any other provisions to the contrary in the state\nadministrative procedure act, such rules and regulations may be adopted\non an emergency basis if necessary to meet such October thirty-first,\ntwo thousand seventeen deadline.\n (e) Cross-references. For application of the credit provided for in\nthis section, see the following provisions of this chapter:\n (1) article 9-A: section 210-B: subdivision 52.\n (2) article 22: section 606: subsection (hhh).\n (f) Notwithstanding any provision of this chapter, (i) employees and\nofficers of the department of economic development and the department\nshall be allowed and are directed to share and exchange information\nregarding the credits applied for, allowed, or claimed pursuant to this\nsection and taxpayers who are applying for credits or who are claiming\ncredits, including information contained in or derived from credit claim\nforms submitted to the department and applications for certification\nsubmitted to the department of economic development, and (ii) the\ncommissioner and the commissioner of the department of economic\ndevelopment may release the names and addresses of any taxpayer claiming\nthe credit allowed under this section and the amount of the credit\nearned by the taxpayer. Provided, however, if a taxpayer claims such\ncredit because it is a member of a limited liability company or a\npartner in a partnership, only the amount of credit earned by the entity\nand not the amount of credit claimed by the taxpayer may be released.\n (g) For purposes of the credit allowed under this section, the number\nof persons employed by a qualified life sciences company during the\ntaxable year shall be determined by ascertaining the number of such\nindividuals employed full-time by such company, excluding general\nexecutive officers, on the thirty-first day of March, the thirtieth day\nof June, the thirtieth day of September and the thirty-first day of\nDecember during each taxable year, by adding together the number of such\nindividuals ascertained on each of such dates and dividing the sum so\nobtained by the number of such dates occurring within such taxable year.\nAn individual employed full-time means an employee in a job consisting\nof at least thirty-five hours per week, or two or more employees who are\nin jobs that together constitute the equivalent of a job of at least\nthirty-five hours per week (full-time equivalent).\n * NB There are 2 § 43's\n