HB424 Alabama 2019 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 after the federal research and development tax credit. The credit would be based on in-house research and contract research expenses conducted in Alabama and consortium research expenses for qualified 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 $25 million of credits in any one calendar year; and no eligible company or business could claim more than $2,000,000 in a single tax year. 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 10 percent of other research in Alabama; to provide that no more than $25 million of tax credits would be allowed in any one calendar year, and no one taxpayer would be allowed more than $2,000,000 in a single tax 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 January 1, 2020; to provide that earned but unused credits could be carried forward for five years; to create an allocation system; to provide for the promulgation of forms for information to be submitted to the Department of Revenue, 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 provide for the promulgation of rules; to provide for the coordination between the availability of the federal research credit and the credit herein; and to provide for an effective date.