ASSEMBLY, No. 963

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Assemblymen FELICE and IMPREVEDUTO

An Act extending the carryforward of the research and development tax credit for certain taxpayers under the corporation business tax, supplementing P.L.1993, c.175 (C.54:10A-5.24).

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. Notwithstanding the provisions of subsection b. of section 1 of P.L.1993, c.175 (C.54:10A-5.24) to the contrary, a taxpayer that has a been allowed a credit pursuant to that section for the fiscal or calendar accounting period (referred to hereafter as the "tax year") in which the qualified research expenses or basic research payment has been incurred in this State in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, environmental technology, and medical device technology, shall be allowed to carry over the amount of the tax year credit which cannot be applied for the tax year to each of the 15 tax years following the credit's tax year.

    As used in this section:

    "Advanced computing" means technologies 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;

    "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;

    "Biotechnology" means any technique that uses living organisms or parts of living organisms, to make or modify products, to improve plants or animals, or to develop micro-organisms for specific uses, including the industrial use of recombinant DNA, cell fusion and novel bioprocessing techniques;

    "Electronic device technology" means technologies involving microelectronics, semiconductors, electronic equipment, and instrumentation, radio frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, and data and digital communications and imaging devices;

    "Environmental technology" means assessment and prevention of threats or damage to human health or the environment, environmental cleanup, and the development of alternative energy sources; and

    "Medical device technology" means technologies 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;

    2. This act shall take effect immediately and section 1 shall apply to tax years beginning on or after January 1 next following enactment.

STATEMENT

    This bill extends the carryforward of the research and development tax credit under the corporation business tax from seven to 15 years for certain advanced technology corporations. The research and development tax credit allows a credit for increases in qualified research expenditures over a base amount and for certain basic research payments incurred in New Jersey beginning in January, 1994. The credit may be carried forward up to seven years if it cannot be used because of tax liability limitations. However, high-technology businesses in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, environmental technology, and medical device technology often must invest in years of research in emerging advanced technologies before reaching a stage in their business development cycle when they can maintain a taxable business profit. Extending the carryforward period of the research and development tax credit for these high-technology firms will increase the likelihood that the credit will serve as a useful tax incentive to those corporations whose research efforts may not bear profits under the corporation business tax for an extended period of time.

    This bill is a companion bill to Assembly Bill No. , Assembly Bill No. , and Assembly Bill No. of 1995, which together constitute the "Hi-Tech, Jobs Creation - Retention Initiative of 1995."

Provides 15 year carryforward of research and development tax credit under the corporation business tax for certain high-technology companies.