United States Senator Charles E. Schumer is championing legislation that would allow start-up companies in western New York 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 Z80 Labs’ efforts to foster start-up companies in Buffalo, looking to commercialize research being developed in western New York’s higher-education institutes.
“As the R&D Tax Credit program exists now, Buffalo’s 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 in Buffalo 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.
“This bill will provide a tremendous boost to New York’s start-up companies” said Jordan Levy, local entrepreneur and founder of Z80 Labs. “It will help New York start-ups, like the ones we will be working with at Z80 Labs quickly grow and most importantly create jobs. Senator Schumer’s support of this important legislation provides a critical boos to New York’s start-up ecosystem.”
New Buffalo technology incubators like Z80 Labs, headquartered in the Buffalo News building, stand to benefit from this legislation. Z80 Labs aims to jumpstart the internet-based technology sector in the Buffalo area, providing a platform for a technology economy in Buffalo and western New York. Z80 Labs will invite entrepreneurs from WNY, Southern Ontario, Southern Tier and Rochester areas to be a part of their incubator in downtown Buffalo, and participate in the new opportunities offered by the internet based world in building a new economy for the Buffalo and WNY areas.