Bill Text: NJ A1381 | 2012-2013 | Regular Session | Introduced
Bill Title: Provides corporation business tax incentives for life sciences research.
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Introduced - Dead) 2012-01-10 - Introduced, Referred to Assembly Commerce and Economic Development Committee [A1381 Detail]
Download: New_Jersey-2012-A1381-Introduced.html
STATE OF NEW JERSEY
215th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2012 SESSION
Sponsored by:
Assemblyman UPENDRA J. CHIVUKULA
District 17 (Middlesex and Somerset)
Assemblyman JOSEPH CRYAN
District 20 (Union)
Assemblywoman PAMELA R. LAMPITT
District 6 (Burlington and Camden)
Assemblywoman ANNETTE QUIJANO
District 20 (Union)
Co-Sponsored by:
Assemblyman Fuentes and Assemblywoman Wagner
SYNOPSIS
Provides corporation business tax incentives for life sciences research.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act providing corporation business tax incentives for life sciences research, amending P.L.1993, c.175.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.1993, c.175 (C.54:10A-5.24) is amended to read as follows:
1. a. A taxpayer shall be allowed a credit, subject to the provisions of subsection b. of this section, against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to
(1) 10% of the excess of the qualified research expenses for the [fiscal or calendar accounting year (referred to hereafter in this section as the "tax year")] privilege period over the base amount; and
(2) 10% of the basic research payments for the privilege period
determined in accordance with section 41 of the federal Internal Revenue Code of 1986 [,] ( 26 U.S.C. s.41 ) [,] as in effect on June 30, 1992, and provided that subsection (h) of 26 U.S.C. s.41 relating to termination shall not apply. Provided however, that the terms "qualified research expenses," "base amount," "qualified organization base amount period," "basic research" and any other terms determined by the Director of the Division of Taxation to affect the calculation of the credit shall include only expenditures for research conducted in this State.
b. No credit shall be allowed under section 42 of P.L.1987, c.102 (C.54:10A-5.3), or under the "Manufacturing Equipment and Employment Investment Tax Credit Act," P.L.1993, c.171 (C.54:10A-5.16 et al.), or under P.L.1993, c.170 (C.54:10A-5.4 et seq.), for property or expenditures for which a credit is allowed, or which are includable in the calculation of a credit allowed, under this section.
The tax imposed for a [fiscal or calendar accounting year] privilege period pursuant to section 5 of P.L.1945, c.162, shall first be reduced by the amount of any credit allowed pursuant to section 19 of P.L.1983, c.303 (C.52:27H-78), then by any credit allowed pursuant to section 12 of P.L.1985, c.227 (C.55:19-13), then by any credit allowed pursuant to section 42 of P.L.1987, c.102 (C.54:10A-5.3), then by any credit allowed under section 3 of P.L.1993, c.170 (C.54:10A-5.6), and then by any credit allowed under section 3 or 4 of P.L.1993, c.171 (C.54:10A-5.18 or C.54:10A-5.19), prior to applying any credits allowable pursuant to this section. Credits allowable pursuant to this section shall be applied in the order of the credits' [tax years] privilege periods. The amount of the credits applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162, for [an accounting year] a privilege period shall not exceed 50% of the tax liability otherwise due and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162. The amount of tax year credit otherwise allowable under this section which cannot be applied for the [tax year] privilege period due to the limitations of this subsection may be carried over, if necessary, to the seven [accounting years] privilege periods following a credit's [tax year] privilege period.
c. (1) For the five privilege periods beginning on or after the July 1 next following enactment of P.L. , c. (pending before the Legislature as this bill), a taxpayer shall, notwithstanding the provisions of subsection a. of this section, be allowed a credit, subject to the provisions of subsection b. of this section, against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to
(a) 20% of the excess of the qualified research expenses for life sciences research for the privilege period over the base amount; and
(b) 20% of the basic research payments for life sciences research for the privilege period,
provided that a taxpayer's qualified research expenses and basic research payments for life sciences research for a privilege period creditable under this subsection shall not exceed $150,000,000; and provided further that, notwithstanding the provision of subsection a. of this section that amounts be determined in accordance with section 41 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.41) as in effect on June 30, 1992, the basic research payments for life sciences research shall be determined as if "contract research expenses" determined pursuant to subparagraph (A) of paragraph (3) of subsection (b) of section 41 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.41) were determined as 100 percent of any amount paid or incurred by the taxpayer for qualified research; and provided further qualified research shall include amounts paid to a qualified research incubator.
(2) for the purposes of this section:
"Life sciences research" means any qualified research with respect to the branch of knowledge or study of biology, biochemistry, biophysics, bioengineering, biotechnology, microbiology, genetics, or physiology (in each case as that knowledge or study relates to human beings), but does not include sociology or psychology.
"Qualified research incubator" means an entity created by and operated under State law exclusively to conduct qualified life sciences research on behalf of the taxpayer and one or more unrelated taxpayers.
(3) This subsection shall not apply with respect to a taxpayer for a privilege period for which an election is in effect under paragraph (15) of subsection (k) of section 4 of P.L.1945, c.162 (C.54:10A-5.24).
(cf: P.L.1993, c.175, s.1)
2. This act shall take effect immediately.
STATEMENT
This bill provides corporation business tax incentives for life sciences research investments made over the next five years. Life sciences research is defined by the bill as research with respect to the branch of knowledge or study of biology, biochemistry, biophysics, bioengineering, biotechnology, microbiology, genetics, or physiology (in each case as that knowledge or study relates to human beings), but not including sociology or psychology.
The bill encourages companies to increase their expenditures for life sciences research by doubling the credit for research and development in New Jersey if the research is life sciences research.
Currently, a credit is allowed for 10 percent of the increase in qualified research expenses in a tax year over a base amount and 10 percent of the basic research payments made to institutions of higher education, scientific research organizations and institutions that make grants for scientific research.
This bill increases those percentages of expenditure for research to 20 percent of the amount expended if the research is life sciences research and includes in qualifying basic research payments any payments made to a "qualified research incubator," an entity created by and operated under State law exclusively to conduct qualified life sciences research on behalf of the taxpayer and one or more unrelated taxpayers.
This incentive is available for the five tax years following the enactment of the bill, but a taxpayer must, for any tax year, chose one or the other.
The increased credit provides an incentive for investors to put investments in New Jerseys' life sciences industry. An already growing industry in NJ will continue to grow. Innovation in biotechnology will create ripple effects for the entire economy of New Jersey.
