Assembly
Speaker Toni G. Atkins has introduced legislation that would help small
businesses cash the research and development tax credits that they are already
earning, but have trouble using.
“Small
businesses are so important to California’s economy that we need to be creative
in helping these job-creators start and succeed,” said Speaker Atkins (D-San
Diego). “Creating a grant program as part of the California Research Tax Credit
helps small businesses by allowing them to cash out some of the research and
development tax credits they receive and reinvest those resources, boosting
their business and moving the state forward.”
AB
437 allows small businesses with $5 million or less in gross receipts to cash
out a portion of the tax credits they have earned and use them to reinvest in
further research and development. This bill authorizes eligible businesses to
cash out 10 percent of all tax credits received in 2014 and 2015. From 2016
onward, eligible businesses will be able to cash out 15 percent of the credits
generated. Any remaining credits would be carried forward by the businesses.
“As
the majority of Biocom’s members are small to mid-size life science companies
still in the research and development phase with no approved product, we praise
and thank Speaker Atkins for this legislation,” Joe Panetta, President and CEO
of Biocom added. “It is an inventive way to allow smaller companies to utilize
the tax credits they have already accrued in a way that will help these
companies to continue to power California’s economy. Ultimately, Speaker
Atkins’ bill will save and create high-skill, high-wage life science jobs for
all of California.”
Data
from the Franchise Tax Board shows that there were $100 million in tax credits
generated for businesses with $1 million to $10 million in gross receipts, but
only $13 million of those credits were used. Small and medium businesses earned
the research and development credits but weren’t able to use them due to lack
of tax liability.
“CHI
applauds Speaker Atkins’ leadership on thoughtful efforts to bolster our
economy by promoting life sciences investment and innovation,” said California
Healthcare Institute President and CEO Sara Radcliffe. “This legislation will
help small companies—engaged in important biomedical research and
development—leverage tax credits and enable them to continue developing
breakthrough treatments and technologies for patients.”
“Research
and development tax credits can be an important tool to help small businesses
remain competitive, but for many companies these credits are more theoretical
than practical,” said John Kabateck, Executive Director of the National
Federation of Independent Business CA, America’s leading small business
advocate. “AB 437 by Assembly Speaker Toni Atkins helps businesses get tangible
benefits from the R&D tax credits they’ve earned. That means more
businesses getting more products in the pipeline and putting more people on the
payroll.”
