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NYC Biotech Tax Credit Application

The New York City (“NYC”) introduced legislation in 2010 to create a new Biotech tax credit (“Credit”) for small biotech companies to accelerate their commercialization efforts by providing a refundable tax credit for facilities, operations, and training. The Credit is applied against the General Corporation Tax and Unincorporated Business Tax in NYC. The Credit can be claimed for tax period beginning on January 1, 2010 and ending on December 31, 2012. Eligible firms can receive up to $250,000 per year. The Credit for all companies will be capped at $3 million per year.

The credit will help a young firm equip a lab, train technicians and fund access to high tech equipment.

Who is eligible for the Credit?

The companies must engage in biotechnologies and:

  • Be an emerging technology company or a company whose ratio of research and development funds to net sales equals or exceeds the average ratio for all companies surveyed by the National Science Foundation.
  • Have no more than 100 full-time employees, of which at least 75% are employed in NYC.
  • Have a ratio of research and development funds to net sales that equals or exceeds six percent during the calendar year ending in the tax year for which the credit is claimed.
  • Have annual product sales of $10 million or less.
  • Have gross revenues, including the gross revenues of its “affiliates” and “related members,” not exceeding $20 million for the calendar year immediately preceding the tax year for which the credit is claimed.

When to apply for the Credit and how?

Companies must submit an application no later than January 15th following the tax year of the Credit. Thus the application is due on January 18th if companies apply for tax year 2010. If the application is approved, NYC will issue a Certificate of Tax Credit. The Credit would then be claimed on the 2010 tax return.

What are qualified expenditures for the Credit and How to calculate the Credit?

  • 18% of the cost of research and development property
  • 9% of the qualified research expenses paid or incurred
  • 100% of the employee training, and is limited to $4,000 per employee per year.

If companies meet the increased employment requirement of 5% compared to a base year, 100% of the Credit is allowed, up to $250,000 per year. Those that do not grow will still be eligible for the credit but at half the rate.

The Tax Credit application can be found here: NYC Biotech Tax Credit

Eisner Amper LLP is assisting clients in applying for this new state benefit.

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