N.Y. Tax Law § 43: Life sciences research and development tax credit

* § 43. Life sciences research and development tax credit. (a)

Allowance of credit. (1) A taxpayer that is a qualified life sciences

company, or that is a sole proprietor of or a partner in a partnership

that is a qualified life sciences company or a shareholder of a New York

S corporation that is a qualified life sciences company, and is subject

to tax under article nine-A or twenty-two of this chapter, shall be

allowed a credit against such tax, pursuant to the provisions referred

to in subdivision (e) of this section, for a period of three years, as

provided in subparagraph (ii) of paragraph two of this subdivision, to

be computed as provided in this section, provided that no credit shall

be allowed for taxable years beginning on or after January first, two

thousand twenty-eight. Such credit may be claimed in the taxable year

specified on the certificate of tax credit issued to the qualified life

sciences company.

(2)(i) For a qualified life sciences company that employs ten or more

persons during the taxable year, the amount of the credit shall be equal

to fifteen percent of such qualified life sciences company's research

and development expenditures in this state for the taxable year. For a

qualified life sciences company that employs less than ten persons

during the taxable year, the amount of the credit shall be equal to

twenty percent of such qualified life sciences company's research and

development expenditures in this state for the taxable year.

(ii) The credit shall be allowed only with respect to the first

taxable year during which the criteria set forth in this subdivision are

satisfied, and with respect to each of the two taxable years next

following (but only, with respect to each of such years, if such

criteria are satisfied). Subsequent certifications of the life sciences

company by the department of economic development pursuant to this

section shall not extend the three taxable year time limitation on the

allowance of the credit set forth in the preceding sentence.

(3) The total amount of credit allowable to a qualified life sciences

company, or, if the life sciences company is properly included or

required to be included in a combined report, to the combined group,

taken in the aggregate, shall not exceed five hundred thousand dollars

in any taxable year. If the taxpayer is a partner in a partnership that

is a life sciences company or a shareholder of a New York S corporation

that is a life sciences company, then the total amount of credit

allowable shall be applied at the entity level, so that the total amount

of credit allowable to all the partners or shareholders of each such

entity, taken in the aggregate, does not exceed five hundred thousand

dollars in any taxable year.

(4) No research and development expenditures made by the life sciences

company and used either as the basis for the allowance of the credit

provided for pursuant to this section or used in the calculation of the

credit provided pursuant to this section shall be used to claim any

other credit allowed pursuant to this chapter or be used in the

calculation of any other credit allowed pursuant to this chapter.

(b) Maximum amount of credits. The aggregate amount of tax credits

allowed under this section to taxpayers subject to tax under articles

nine-A and twenty-two of this chapter in any taxable year shall be ten

million dollars, and shall be allotted from the funds available for tax

credits under article seventeen of the economic development law. Such

aggregate amount of credits shall be allocated by the department of

economic development among taxpayers in order of priority based upon the

date of filing an application for allocation of life sciences research

and development tax 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 under this

section, such excess shall be treated as having been applied for on the

first day of the subsequent year.

(c) Definitions. As used in this section the following terms shall

have the following meanings:

(1) "Certificate of tax credit" means the document issued to a

qualified life sciences company by the department of economic

development, after the department of economic development has verified

that such life sciences company has met all applicable criteria in this

section to be eligible for the life sciences research and development

tax credit allowed under this section, including but not limited to

verifying that the life sciences company is a new business. The

certificate shall be issued annually if such criteria are satisfied and

shall specify the exact amount of the life sciences research and

development tax credit that may be claimed by such qualified life

sciences company, pursuant to this section, and shall specify the

taxable year in which such credit may be claimed.

(2) "New business" means any business that qualifies as a new business

under either paragraph (f) of subdivision one of section two hundred

ten-B or paragraph ten of subsection (a) of section six hundred six of

this chapter.

(3) "Qualified life sciences company" means a life sciences company,

as defined in subdivision eleven of section three hundred fifty-two of

the economic development law, that has been certified by the department

of economic development as a life sciences company and is a new

business. Provided however, for purposes of the credit authorized under

this section, the department of economic development shall not certify

as a life sciences company any corporation, partnership, limited

partnership, or other entity that has been within the immediately

preceding sixty months a related person to an entity that is a life

sciences company or an entity that is engaged in scientific research and

development as defined in subdivision twenty-two of section three

hundred fifty-two of the economic development law.

(4) "Research and development expenditures" means qualified research

expenses as defined in subsection (b) of section 41 of the internal

revenue code, provided, however, that such qualified research expenses

shall not include amounts under subparagraph (B) of paragraph 1 of

subsection (b) of section 41 of the internal revenue code and as further

described in paragraph 3 of subsection (b) of section 41 of the internal

revenue code. If section 41 of the internal revenue code has expired,

then the research and development expenses shall be calculated as if the

federal research and development credit structure and definition in

effect in section 41 in federal tax year two thousand nine were still in

effect.

(5) "Related person" means a related person as defined in subparagraph

(C) of paragraph three of subsection (b) of section 465 of the internal

revenue code. For this purpose, a "related person" shall include an

entity that would have qualified as a "related person" if it had not

been dissolved, liquidated, merged with another entity or otherwise

ceased to exist or operate.

(d)(1) For purposes of this section, in order to be eligible for the

life sciences research and development tax credit allowed under this

section, a life sciences company must be issued a certificate of tax

credit by the department of economic development. The department of

economic development shall verify that such life sciences company has

met all applicable eligibility criteria in this section before issuing a

certificate of tax credit, including but not limited to verifying that

the life sciences company is a new business.

(2) The commissioner of economic development, after consulting with

the commissioner, shall promulgate regulations by October thirty-first,

two thousand seventeen to establish procedures for the allocation of tax

credits allowed under this section. Such rules and regulations shall

include provisions describing the application process for the credit

allowed under this section, the due dates for such applications, the

eligibility standards for qualified life sciences companies, the

standards which shall be used to evaluate the applications, the

documentation that will be provided to taxpayers to substantiate to the

department the amount of tax credits allocated to such taxpayers, and

such other provisions as deemed necessary and appropriate.

Notwithstanding any other provisions to the contrary in the state

administrative procedure act, such rules and regulations may be adopted

on an emergency basis if necessary to meet such October thirty-first,

two thousand seventeen deadline.

(e) Cross-references. For application of the credit provided for in

this section, see the following provisions of this chapter:

(1) article 9-A: section 210-B: subdivision 52.

(2) article 22: section 606: subsection (hhh).

(f) Notwithstanding any provision of this chapter, (i) employees and

officers of the department of economic development and the department

shall be allowed and are directed to share and exchange information

regarding the credits applied for, allowed, or claimed pursuant to this

section and taxpayers who are applying for credits or who are claiming

credits, including information contained in or derived from credit claim

forms submitted to the department and applications for certification

submitted to the department of economic development, and (ii) the

commissioner and the commissioner of the department of economic

development may release the names and addresses of any taxpayer claiming

the credit allowed under this section and the amount of the credit

earned by the taxpayer. Provided, however, if a taxpayer claims such

credit because it is a member of a limited liability company or a

partner in a partnership, only the amount of credit earned by the entity

and not the amount of credit claimed by the taxpayer may be released.

(g) For purposes of the credit allowed under this section, the number

of persons employed by a qualified life sciences company during the

taxable year shall be determined by ascertaining the number of such

individuals employed full-time by such company, excluding general

executive officers, on the thirty-first day of March, the thirtieth day

of June, the thirtieth day of September and the thirty-first day of

December during each taxable year, by adding together the number of such

individuals ascertained on each of such dates and dividing the sum so

obtained by the number of such dates occurring within such taxable year.

An individual employed full-time means an employee in a job consisting

of at least thirty-five hours per week, or two or more employees who are

in jobs that together constitute the equivalent of a job of at least

thirty-five hours per week (full-time equivalent).

* NB There are 2 § 43's