HB304 Alabama 2015 Session

Under existing law, there are no economic incentives or tax credits extended to Alabama businesses for qualified research expenses incurred by Alabama companies that spend funds and resources in-house, or pay Alabama research companies to conduct qualified research for new or improved products or services

This bill would establish the Alabama Innovation Act that would provide for a research and development tax credit to certain Alabama companies modeled on the federal research and development tax credit. The credit would be 25 percent of new research at an Alabama research entity, and 5 percent for other new research conducted in Alabama. The credit could be taken against the income tax or the financial institution excise tax

This bill would limit the Alabama Innovation tax credits to no more than $10 million of credits per year, and no eligible company or business could claim more than $2 million of credits. The credits would be claimed on a first-come, first-served basis

To enact the Alabama Innovation Act; to allow a research and development tax credit for qualified research expenses in Alabama in the amount of 25 percent of new research at an Alabama research entity, and 5 percent of other research in Alabama; to provide that no more than $10 million of tax credits would be allowed in any year, and no one taxpayer would be allowed more than $2 million of tax credits in any year; to allow the credits to offset the taxes in Chapters 16 and 18 of Title 40, Code of Alabama 1975, and estimated payments thereof; to provide that the income tax credits shall not affect estimated income tax payments before October 1, 2016; to provide that earned but unused credits could be carried forward for 5 years; to provide for the distribution of the financial institution excise tax when the credit is claimed; to create an allocation system; to provide that economic development project agreements entered into with the state could allocate to the project tax credits which had not yet been allocated and could provide for transferability of the tax credits; and to provide that tax credits shall not be considered securities; to provide for proof that incentives are due to be granted; to provide for the promulgation of forms for information to be submitted to a department of state government, and that such submissions shall be treated as tax returns; to provide that no taxpayer shall have any right to credits that are granted absent strict compliance with this act; to require that the tax credit only apply to research falling within certain industries; to create a new Article 17 of Chapter 18 of Title 40, Code of Alabama 1975; to provide for the promulgation of regulations; to provide for the coordination between the availability of the federal research credit and the credit herein; to provide for the severability of invalid provisions; to provide for the repeal of conflicting laws; to provide for an effective date.