FOR IMMEDIATE RELEASE: August 1, 2012
SCHUMER-SPONSORED BILL WOULD ALLOW ROCHESTER-AREA START-UP COMPANIES TO TAP INTO R&D TAX CREDITS THAT ARE CURRENTLY RESTRICTED TO COMPANIES WITH ALREADY ESTABLISHED REVENUE STREAMS
Because R&D Credits Are Currently Pegged to Income Taxes, Start-Ups in Rochester Don’t Have Same Opportunities to Use Program; Schumer-Coons Pushes Legislation that Allows Start-Up Companies to Claim Tax Credit Against Payrolls Taxes As Opposed to Income Taxes
Schumer Legislation Would be Boost for High Tech Rochester and Excell Partners’ Efforts to Grow Businesses and Commercialize Rochester Research
Schumer: If We Want Our Start-Ups to Succeed, We Need to Ensure they Have Access to the Same Incentives as Established Companies
United States Senator Charles E. Schumer championed legislation today that would allow start-up companies to gain access to research and development tax credits that currently only exist for companies with already established revenue streams. The Startup Innovation Credit Act of 2012, would allow emerging companies to claim R&D tax credits against employment taxes instead of income taxes, which severely restricts the ability of newly formed companies from accessing this vital small business jobs program. The bipartisan legislation, introduced with Senators Coons, Enzi and Rubio, could be a boon to High Tech Rochester (HTR) and Rochester’s Excell Partners’ efforts to foster start-up companies in Rochester, looking to commercialize research being developed in Rochester’s major research institutes.
“As the R&D Tax Credit program exists now, start-up companies are starting behind the eight ball, without access to the same job-producing programs that already established and profitable companies enjoy,” said Schumer. “This bill will make sure start-ups in the Rochester-Finger Lakes region and throughout the country can devote more resources to innovation and creating jobs.”
"Startup companies face immense challenges in getting their businesses off the ground and to a point of generating revenue and profits,” said James Senall, President of High Tech Rochester Inc. “Innovative programs like the R&D tax credit can make a huge difference in helping those companies preserve their much needed cash so they can invest in their businesses and improve their odds of getting across that commercialization chasm."
To qualify for the Startup Innovation Credit, a company must be less than five years old and have less than $5 million in gross receipts. Since many young companies invest heavily in research and development in their first few years and don’t have income tax liability, they are unable to claim a federal income tax credit, like the R&D Tax Credit. With the Startup Innovation Credit, a startup company that lacks the income tax liability necessary to claim the R&D Tax Credit can instead claim the credit in the following year by reducing its employer-side payroll taxes by an equivalent amount up to $250,000.
High Tech Rochester and Excell Partners in Rochester assist to develop entrepreneurs and new start-up companies that stand to benefit greatly from this legislation. In particular, Excell Partners’ technology venture capital fund was set up by the University of Rochester and the State of New York to manage a state-supported fund, which finances high-tech startup companies throughout Upstate New York. Despite the fact that there is a strong research base across the Upstate region that generates marketable technologies, few venture funds exist that make the critical early investments smaller companies need to effectively develop and sell these technologies. Excell Partners works to bridge this gap and support regional economic development by identifying promising new technologies and ensuring that small companies with high potential for commercial success have the resources they need to become self-sustaining businesses.
HTR is focused on Greater Rochester New York economic development in the technology and high growth business sector and assists the development of new and emerging businesses through its business incubators, the Lennox Tech Enterprise Center (TEC) and the Rochester BioVenture Center (RBC). Through its Manufacturing Extension Partnership (MEP), the organization improves the competitive position of small manufacturing firms.