New York City Extends Biotechnology Credit

The New York City Biotechnology Credit was previously set to expire for tax years beginning after 12/31/2012.  The three-year extension now allows the credit to be utilized to offset general corporation and unincorporated business tax through tax years beginning before January 1, 2016.  Companies eligible for the credit must:

• Be an emerging biotechnology company with activity in New York City;
• Have a ratio of research and development funds to net sales that equals or exceeds 6%.  To the extent that the company has zero revenues but has qualified R&D expenditures it automatically qualifies provided it meets the other criteria;
• Have no more than one hundred full-time employees, of which at least 75 percent are employed in the City of New York; and
• Have annual product sales of $10 million or less, when including affiliates and related members, gross revenues cannot exceed $20M.

The credit is equal to the sum of:

• 18% of research and development property, costs, and fees incurred in connection with emerging technology activities;
•  9% of qualified research expenses paid or incurred by the taxpayer; and
• 100% of qualified high-technology training expenses paid or incurred by the taxpayer, limited to $4,000 per employee per year.

The application for the credit must be completed by January 15th following the tax year for which the credit will be claimed.  For example, for the 2012 tax year, the form must be completed by January 15, 2013.  The city will then certify the amount a taxpayer is permitted to claim on its tax return.  The credit offsets the NYC tax liability dollar for dollar.  Since this credit is refundable, a taxpayer can generate a cash refund to the extent that the credit exceeds the tax liability.  In addition taxpayers with zero tax liability can receive the full amount of the credit as a cash refund.  The maximum credit per taxpayer is $250,000 per year.