FOR IMMEDIATE RELEASE: August 1, 2012
SCHUMER-SPONSORED BILL WOULD ALLOW 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 Don’t Have Same Opportunities to Use Program; Coons-Schumer Legislation Allows Start-Up Companies to Claim Tax Credit Against Payroll Taxes As Opposed to Income Taxes
Legislation Would be Boost for Accelerate Long Island Efforts to Grow Businesses and Commercialize Long Island Research
Schumer: If We Want Our Star-Ups to Succeed, We Need to Ensure they Have Access to the Same Incentives as Established Companies
United States Senator Charles E. Schumer is championing legislation that would allow start-up companies to gain access to research and development tax credits that currently exist only 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 Accelerate Long Island’s efforts to foster start-up companies on Long Island, looking to commercialize research being developed in the island’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 companies enjoy,” said Schumer. “This bill will make sure start-ups on Long Island and throughout the country can devote more resources to innovation and creating jobs.”
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.
“Every technology startup I know has an initial R&D investment period where the company goes through a trial and error learning phase. The most fragile stage of a tech startup is the early years where it builds a product for the market. This new bill would increase the chances of success for startups around the country, and bring fairness to the R&D tax credit system.” – Mark Fasciano, Managing Partner, Canrock Ventures.
"The Accelerate start-ups we are hoping to nurture here on Long Island need every break they can get and a tax break is a great start. I commend the Senator for thinking outside the box on ways the federal government can help young companies on LI," said resi Cooper, interim Executive Director for Accelerate Long Island.
Kevin Law: President & CEO of the Long Island Association, Chairman of Accelerate Long Island: “Accelerate Long Island will unlock the economic potential of Long Island's world-class research institutions by connecting their work product with entrepreneurs and inventors to commercialize technology, foster the growth of a high-tech innovative economy, and create new jobs and businesses on Long Island. I applaud Senator Schumer’s legislation to provide start-up companies the tools they need to continue to grow their businesses and create thriving new sectors in the Long Island’s economy.”