§235-110.91  Tax credit for research
activities.  (a)  Section 41 (with respect to the credit for increasing
research activities) and section 280C(c) (with respect to certain expenses for
which the credit for increasing research activities are allowable) of the
Internal Revenue Code shall be operative for the purposes of this chapter as
provided in this section; except that references to the base amount shall not
apply and credit for all qualified research expenses may be taken without
regard to the amount of expenses for previous years.  If section 41 of the
Internal Revenue Code is repealed or terminated prior to January 1, 2011, its
provisions shall remain in effect for purposes of the income tax law of the
State as modified by this section, as provided for in subsection (j).



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



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



(d)  Every qualified high technology business,
before March 31 of each year in which qualified research and development
activity 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 the
previous taxable year; and



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



(e)  The department shall:



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



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



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



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



Upon each determination made under this
subsection, the department shall issue a certificate to the taxpayer verifying
information submitted to the department, including the qualifying costs or
expenditure amounts, the credit amount certified for each taxable year, and the
cumulative amount of the tax credit during the credit period.  The taxpayer
shall file the certificate with the taxpayer's tax return with the department.



The director of taxation may assess and collect
a fee to offset the costs of certifying tax credit claims under this section. 
All fees collected under this section shall be deposited into the tax
administration 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 of
the State.



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



"Qualified research" under section
41(d)(1) of the Internal Revenue Code shall not include research conducted
outside of the State.



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



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



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



(j)  This section shall not apply to taxable
years 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]