§235-110.91  Tax credit for researchactivities.  (a)  Section 41 (with respect to the credit for increasingresearch activities) and section 280C(c) (with respect to certain expenses forwhich the credit for increasing research activities are allowable) of theInternal Revenue Code shall be operative for the purposes of this chapter asprovided in this section; except that references to the base amount shall notapply and credit for all qualified research expenses may be taken withoutregard to the amount of expenses for previous years.  If section 41 of theInternal Revenue Code is repealed or terminated prior to January 1, 2011, itsprovisions shall remain in effect for purposes of the income tax law of theState as modified by this section, as provided for in subsection (j).

(b)  All references to Internal Revenue Codesections within sections 41 and 280C(c) of the Internal Revenue Code shall beoperative for purposes of this section.

(c)  There shall be allowed to each qualifiedhigh technology business subject to the tax imposed by this chapter an incometax credit for qualified research activities equal to the credit for researchactivities provided by section 41 of the Internal Revenue Code and as modifiedby this section.  The credit shall be deductible from the taxpayer's net incometax liability, if any, imposed by this chapter for the taxable year in whichthe credit is properly claimed.

(d)  Every qualified high technology business,before March 31 of each year in which qualified research and developmentactivity was conducted in the previous taxable year, shall submit a written,certified statement to the director of taxation identifying:

(1)  Qualified expenditures, if any, expended in theprevious taxable year; and

(2)  The amount of tax credits claimed pursuant tothis section, if any, in the previous taxable year.

(e)  The department shall:

(1)  Maintain records of the names and addresses ofthe taxpayers claiming the credits under this section and the total amount ofthe qualified research and development activity costs upon which the tax creditis based;

(2)  Verify the nature and amount of the qualifyingcosts or expenditures;

(3)  Total all qualifying and cumulative costs orexpenditures that the department certifies; and

(4)  Certify the amount of the tax credit for eachtaxable year and cumulative amount of the tax credit.

Upon each determination made under thissubsection, the department shall issue a certificate to the taxpayer verifyinginformation submitted to the department, including the qualifying costs orexpenditure amounts, the credit amount certified for each taxable year, and thecumulative amount of the tax credit during the credit period.  The taxpayershall file the certificate with the taxpayer's tax return with the department.

The director of taxation may assess and collecta fee to offset the costs of certifying tax credit claims under this section. All fees collected under this section shall be deposited into the taxadministration special fund established under section 235-20.5.

(f)  As used in this section:

"Basic research" under section 41(e)of the Internal Revenue Code shall not include research conducted outside ofthe State.

"Qualified high technology business"means the same as in section 235-110.9.

"Qualified research" under section41(d)(1) of the Internal Revenue Code shall not include research conductedoutside of the State.

(g)  If the tax credit for qualified researchactivities claimed by a taxpayer exceeds the amount of income tax payment duefrom the taxpayer, the excess of the tax credit over payments due shall berefunded to the taxpayer; provided that no refund on account of the tax creditallowed by this section shall be made for amounts less than $1.

(h)  All claims for a tax credit under thissection shall be filed on or before the end of the twelfth month following theclose of the taxable year for which the credit may be claimed.  Failure toproperly claim the credit shall constitute a waiver of the right to claim thecredit.

(i)  The director of taxation may adopt anyrules under chapter 91 and forms necessary to carry out this section.

(j)  This section shall not apply to taxableyears beginning after December 31, 2010. [L 1999, c 178, §25; am L 2000, c 174,§4 and c 297, §9; am L 2001, c 221, §10; am L 2004, c 215, §9]