Bill Text: DE HB416 | 2015-2016 | 148th General Assembly | Draft
Bill Title: An Act To Amend Title 30 Of The Delaware Code Relating To Tax Credits.
Spectrum: Moderate Partisan Bill (Republican 8-1)
Status: (Introduced - Dead) 2016-06-09 - Introduced and Assigned to Revenue & Finance Committee in House [HB416 Detail]
Download: Delaware-2015-HB416-Draft.html
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SPONSOR: |
Rep. Ramone & Rep. Spiegelman & Sen. Lavelle; |
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Reps. Briggs King, Hensley, Miro, Wilson; Sen. Marshall |
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HOUSE OF REPRESENTATIVES 148th GENERAL ASSEMBLY |
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HOUSE BILL NO. 416 |
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AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO TAX CREDITS. |
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-fifths of all members elected to each house thereof concurring therein):
Section 1.Amend Title 30 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
Chapter 20B.Delaware Innovation and Job Creation Incentive
§20B-100 Declaration of Purpose
The purpose of this chapter is to create an tax incentive program that will encourage capital investment in Delaware technology companies by individual investors and investment funds, commonly referred to as "Angel Investors", by providing a tax credit for these Angel Investors when they make qualifying investments in Delaware technology companies.
§20B-101 Definitions
As used in this chapter:
(1)"Affiliated group" has the meaning provided by §1504 of the Internal Revenue Code (26 U.S.C. §1504), but including for this purpose pass-through entities, as defined in §1601 of this title that would be includible if they were classified as corporations, the equity interests in which would be treated as stock, and the ownership of such interests would satisfy the stock ownership requirements of the said 26 U.S.C. §1504.
(2) "Advanced computing" means a technology used in the designing and developing of computing hardware and software, including innovations in designing the full spectrum of hardware from hand-held calculators to super computers, and peripheral equipment.
(3)"Advanced materials" means materials with engineered properties created through the development of specialized processing and synthesis technology, including ceramics, high value-added metals, electronic materials, composites, polymers, and biomaterials.
(4)"Affiliate" means any business organization or person that directly or indirectly through 1 or more intermediaries, controls or is controlled by, or is under common control with, or who is an officer, director, employee, or trustee of the Delaware technology business.
(5)"Angel Investor" shall mean an individual investor or investment fund meeting the requirements of §102 of this chapter for qualified investors.
(6)"Biotechnology" means the continually expanding body of fundamental knowledge about the functioning of biological systems from the macro level to the molecular and sub-atomic levels, as well as novel products, services, technologies and sub-technologies developed as a result of insights gained from research advances which add to that body of fundamental knowledge.
(7)"Delaware technology business" means a company certified as such by the Director under this Chapter.
(8)"Director" means the Director of the Delaware Economic Development Office, as defined by §5002(c) of Title 29.
(9) "Electronic device technology" means a technology involving microelectronics, semiconductors, electronic equipment, and instrumentation, radio frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, or data and digital communications and imaging devices.
(10)"Environmental technology" means assessment and prevention of threats or damage to human health or the environment, environmental cleanup, or the development of alternative energy sources.
(11)"Family" means a family member within the meaning of the Internal Revenue Code, section 267(c)(4).
(12)"Information technology" means software publishing, motion picture and video production, television production and post-production services, telecommunications, data processing, hosting and related services, custom computer programming services, computer system design, computer facilities management services, other computer related services and computer training.
(13)"Life sciences" means the production of medical equipment, ophthalmic goods, medical or dental instruments, diagnostic substances, biopharmaceutical products; or physical and biological research.
(14)"Medical device technology" means a technology involving any medical equipment or product (other than a pharmaceutical product) that has therapeutic value, diagnostic value, or both, and is regulated by the federal Food and Drug Administration.
(15)"Mobile communications technology" means a technology involving the functionality and reliability of transmission of voice and multimedia data using a communication infrastructure via a computer or a mobile device, that shall include but shall not be limited to smartphones, electronic books and tablets, mp3 players, motor vehicle electronics, home entertainment systems, and other wireless appliances, without having connected to any physical or fixed link.
(16)"Qualified investment" means a cash investment of at least $10,000 in a calendar year made by an Angel Investor, or a cash investment of at least $30,000 in a calendar year made by a qualified fund, to a Delaware technology business who actually received the investment in the tax year in which a tax credit is claimed.
(17)"Qualified research expenses" means qualified research expenses as defined in §41 of the Internal Revenue Code [26 U.S.C. §41], in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, environmental technology, information technology, life sciences, medical device technology, mobile communications technology, or renewable energy technology.
(18)"Renewable energy or chemistry technology" means a technology involving the generation of electricity from solar energy; wind energy; wave or tidal action; geothermal energy; the combustion of gas from the anaerobic digestion of food waste and sewage sludge at a biomass generating facility; and the combustion of methane gas captured from a landfill; a fuel cell powered by methanol, ethanol, landfill gas, digestor gas, biomass gas, or other renewable fuel but not powered by a fossil fuel.
(19)"Secretary" means the Secretary of the Department of Finance described in §8302 of Title 29.
(20)"Tax Credit" means a reduction of the final balance for any tax that is owed by an Angel Investor as a result of a tax or fee imposed under this Title, under Chapter 11 of Title 5, or §§702 and 703 of Title 18.
(21)"Tax Year" means the fiscal or calendar accounting year period for the Angel Investor.
§20B-102 Angel Investor Qualifications
(a) An individual or investment fund making a qualified investment in a Delaware technology business shall be eligible for tax credits for the tax year in which the investment was made if the individual or investment fund:
(1) Is not an affiliate or affiliated group of the Delaware technology business; and
(2) Is not a related by blood or marriage to any person owning more than 40% of the Delaware technology business; and
(3) Qualifies as an accredited investor pursuant to Regulation D of the United States Securities and Exchange Commission (17 C.F.R. §230.501); and
(4) The investment was made in connection with an exchange for an equity interest in the Delaware technology business; and
(5)The Delaware technology business received certification pursuant to Section 20B-103 of this Chapter for the calendar year in which the qualified investment was made.
§20B-103Certification as a Delaware technology business
(a)Businesses may apply to the Director for certification as a Delaware technology business for a calendar year. The application must be in the form and be made under the procedures specified by the director, accompanied by an application fee of $150. Application fees shall be deposited in the Angel Investor Program Administration Fund. The application for certification must be made available by November 1 of each year.
(b) Within 60 days of receiving an application for certification, the Director shall certify the business as a Delaware technology business, request additional information from the applicant, or reject the applicant for failure to qualify. The Director may make a single request for additional information from the applicant that must be made within 30 days of receipt of the application.
(c)To receive certification, an applicant must satisfy all of the following conditions:
(1) The business is domiciled in Delaware; and
(2) At least 75% of the employees of the business are based in Delaware; and
(3)The business has fewer than 50 full time employees; and
(4)The business has qualified research expenses paid or incurred for research conducted in this State; and
(5) The primary business activity of the business is to engage in research and innovation in the fields of the business is engaged in advanced computing, advanced materials, biotechnology, electronic device technology, environmental technology, information technology, life sciences, medical device technology, mobile communications technology, pharmaceutics or renewable energy technology or other comparable field as determined by the Director; and
(6) The business has
(i) not been in operation for more than ten years, or
(ii) not been in operation for more than 20 years if the business is engaged in the research, development, or production of medical devices or pharmaceuticals for which United States Food and Drug Administration approval is required; and
(7) The business has not previously received certification under this subsection for a previous calendar year; and
§20B-104 Tax Credit for Qualified Investments
(a) An Angel Investor making a qualified investment is eligible for a tax credit equal to 25 percent of the qualified investment or $250,000, whichever is less.
(b)The investor may use all or part of the tax credits authorized for that year and may carry forward available unused tax credits for a maximum of five taxable years.
§20B-105: Reporting and Revocation
(a) Each Angel Investor claiming a tax credit pursuant to this subchapter shall submit a report to the Director within 3 months following the filing of the claim for the tax credit identifying the following information:
(1)The amount of the investment made.
(2)The identity of the Delaware technology business that received the investment.
(3) Specific details concerning the consideration received by the Angel Investor for the investment.
(4)The amount of the tax credit claimed, and if applicable the amount of unused tax credit being carried forward or forfeited.
(5) All persons holding more than a 25% ownership interest in the Angel Investor and all officers and directors of the Angel Investor.
(6) For any person identified under paragraph (5) of this subsection, the report shall identify any person or family of that person holding either an ownership interest or position in the Delaware technology business.
(7) A description of any tax credits previously or contemporaneously being claimed under this chapter.
(b)The Director may revoke any tax credits claimed under this chapter if the Angel Investor fails to issue a report as required under subsection (a) of this section, or if the Director determines that the specific tax credit being claimed was not eligible under the terms and conditions provided under this chapter.
§20B-106.Limitations on Credits.
(a) The aggregate amount of such tax credits approved for all firms shall not exceed $5,000,000 in any 1 fiscal year.
(b) The Director shall ensure that each application has the date and time of submission recorded. Credits will be awarded in chronological order based upon the date and time upon which each complete application is received by the Delaware State Housing Authority. If a credit award results in exceeding the $5,000,000 limitation for the fiscal year in which it is awarded, the amount by which such credit award exceeds $5,000,000 shall carry over to the succeeding fiscal year and shall receive priority for that year.
Section 2.This act shall sunset January 1st of the fifth year after enactment.
SYNOPSIS
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A number of States have adopted measures to encourage angel investors to make an investment into scientific or technology based companies.This funding is critical in order for these new companies to get off the ground and to begin operating.This bill follows other States by offering a tax credit to Angel Investors or qualified Angel Investor funds in an amount equal to 25% of the investment, with a maximum credit of $250,000.00 annually to each angel Investor or qualified fund, with a total annual state cap of $5,000,000.The Director of DEDO will be required to pre-certify the business as being a qualified recipient pursuant to the requirements identified in this Bill.A business is only eligible to be certified as a qualified recipient for one tax year.The Angel Investors are required to issue a report to the Director for any tax credits claimed, which may be revoked for non-compliance. |
