Investment Tax Credit
Last Updated: August 14, 2008
Overview:
The investment tax credit (ITC) for financial services firms, which grants firms a credit against taxes paid on technology-related equipment, such as computers and telecommunications devices, used in its principal business, is currently scheduled to expire on September 30, 2008.
Position:
SIFMA urges making the investment tax credit permanent. SIFMA also supports making technical corrections to ease administration of the ITC.
Status:
SIFMA strongly supported the ITC technical corrections bill (S 8681/A 11736) that passed in the final days. SIFMA was successful in advocating for the elimination of the current “all or a substantial portion" employment test, allowing firms to aggregate broker-dealer and investment advisory functions, and allowing affiliates to aggregate activities for purposes of qualifying for the ITC. Earlier this year as part of the 2008-2009 enacted budget, SIFMA was also successful in gaining a provision to renew until 2011. SIFMA advocated for these changes recommended by members of the State Tax Committee, who played a key role in this process. The ITC correction included replacing the current test with a choice of three acceptable options. The first option would require up 80 percent of administrative and support employees the year the credit is claimed; the second option requires an average number of New York State employees that perform administrative and support functions during the year the credit is claimed to be equal to or greater than 95 percent of the average number of employees that perform these functions and are located in this state during the thirty-six months immediately preceding the year for which the credit is claimed. The last option requires firms to have 90 percent of the employees they had in 12/31/1998 (the first year the credit was available).
The session ended before one final SIFMA correction could be made and that would be expanding the credit to registered investment advisors. We plan to advocate for this final portion of the technical correction during the remainder of 2008. The bill should be delivered to the Governor for his signature shortly.
