Schumer Announces First-Ever Tax Credit Aimed at Helping Start-Up Companies Create Jobs Has Passed Key Finance Committee
By Long Island News & PRs Published: April 04 2014
Startup Innovation Credit Act Now a Part of Annual Tax Extenders Package – Bill Will Now Move to Senate Floor for Full Senate Vote.
Washington, DC - March 4, 2014 - Today, U.S. Senator Charles E. Schumer announced that his bipartisan legislation to help innovative startup companies access the successful Research and Development Tax Credit has passed the Senate Finance Committee, and Schumer is urging his colleagues to pass the legislation in the full Senate. The Startup Innovation Credit Act, which allows qualifying companies to claim the R&D Tax Credit against their employment taxes instead of their income taxes, was introduced as an amendment to the annual tax-credit extension bill, which would extend the R&D credit for two years. The amendment passed the Committee unanimously and will now go to the Senate floor for a vote.
“Start-up companies are the job-creating engines of our future, but they face immense challenges getting their businesses off the ground to the point of profitability. As the R&D Tax Credit exists now, these emerging companies are behind the eight ball, without access to the same job-producing programs that already-established companies enjoy,” Senator Schumer said. “This bill will make sure start-ups in New York and throughout the country can devote more resources to innovation and creating jobs, and I will fight for its passage in the full Senate.”
Research and development is the cornerstone of any competitive company, institution, or country, and while the Research & Development Tax Credit has proven essential to American innovators, it does not currently help startups. According to the Government Accountability Office, more than half of the credit claimed by companies each year goes to firms with $1 billion or more in receipts.
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 new 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 employment taxes by an equivalent amount up to $250,000.
In addition to Senator Schumer the Startup Innovation Credit Act is cosponsored by Senators Chris Coons (D-DE), Mike Enzi (R-WY), Marco Rubio (R-Fla.), Roy Blunt (R-Mo.), Debbie Stabenow (D-Mich.), Jerry Moran (R-Kan.), and Tim Kaine (D-Va.). It was first introduced in August 2012.
The Schumer-Enzi amendment in the Senate Finance Committee was cosponsored by Senators Warner, Roberts, Stabenow, and Maria Cantwell (D-Was.).
The tax extenders package now goes to the floor for consideration by the full Senate.
The full text of the legislation can be downloaded here.