Arizona Governor Jan Brewer signs SB1254 into law;
modifies current R&D tax credit to allow small technology companies
to receive a refund of 75% of their eligible tax credit
PHOENIX, Ariz. – May 11, 2010 — A relentless
supporter of Research & Development (R&D) Tax Credits, the Arizona Technology
Council celebrated the passage of Arizona State Senate Bill 1254, signed into law today by Arizona Governor Jan Brewer.
By offering taxpayers
that employ less than 150 full-time employees a discounted
refund of 75 cents for
each dollar of an R&D tax credit already earned, this
important legislation has the affect of providing small technology companies access
to much-needed capital for fostering job creation and global
competitiveness. Total
refunds for all taxpayers are limited to $5 million per year.
“This legislation is
good public policy that rewards small innovation-based companies for
their investments in R&D and allows them to create high paying, high
quality jobs in Arizona,” said Steven Zylstra, president and CEO of the Arizona
Technology Council. “We appreciate everyone who stepped forward to make
it possible including legislative champions Senator Barbara Leff and
Representative Lucy Mason who have worked with the Council for years to
direct this legislation successfully through the process. The Council
would also like to thank Senators Manual Alvarez and John Nelson, House
Majority Leader John McComish, Majority Whip Andy Tobin, Representatives
David Stevens and Chad Campbell.”
“Senate Bill 1254 was
truly one of the most important pieces of legislation we produced this
session,” said Senator Leff. “This tax credit will ensure that Arizona
remains competitive in attracting fast-growing, high tech companies.”
Representative Mason added, “We want the backbone of the high tech
industries in Arizona, those
companies with fewer than 150 employees, to benefit from this
legislation’s research and development credit; for we know when they
succeed all Arizonans benefit.”
Access to capital is the lifeblood of high-tech startup
companies, especially in the critical early years when they are
developing products but don't generate profits. Venture Capital (VC) is
often the major source of early-stage funding, but Arizona
ranked 39th in growth in VC investment from 2002 to 2008, according to a
Milken Institute report on Arizona
high-tech development issued in December, 2009.
By modifying Arizona’s
existing R&D Tax Credit legislation to allow for the discounted
refund as opposed to strictly a tax credit, SB 1254 puts cash in the
pockets of entrepreneurs who are often trying to move from research to prototyping and limited production. In
return, the state actually reduces its liability by applying the 25%
discount to its accrued tax credit obligation.
“In many ways this legislation is
really a capital formation initiative,” said Howard Stewart, president,
AGM Container Controls, who testified in favor of the legislation. “Arizona
has become creative in how it is mobilizing funds in the private sector
to grow our economy.”
The R&D Tax Credit is widely successful in Arizona,
especially since its expansion in 2007. According to recent data from
the Department of Revenue, in 2007 161 individual taxpayers claimed $2.6
million in credits while 185 corporate taxpayers claimed $43.8 million.
The R&D tax credit law has spurred economic development and innovation for both large and small companies. Evidence of success is demonstrated by Intel’s announcement in 2009 of their $3 billion investment in Chandler, reported to be partly due to Arizona’s R&D Tax Credit.
About the Arizona
Technology Council
The
Arizona Technology Council is a private, not-for-profit trade
association founded to connect, represent and support the state's
expanding technology industry. To promote economic growth and
professional development in Arizona's
technology sector, the Council provides members networking
opportunities, business support and access to educational forums. The
Council strives to distinguish Arizona
as a leader in the technology community and offer resources that are
exclusive to its members. To become a member or to learn more about the
Arizona Technology Council, please visit http://www.aztechcouncil.org.
You are also invited to This email address is being protected from spambots. You need JavaScript enabled to view it.
the president and his staff, Twitter @aztechcouncil, or view the Council’s Facebook, LinkedIn, or Plaxo
page.
