2007 Legislation
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HOUSE BILL NO. 261 – Income tax credit/invest technology


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Bill Status

H0261...............................................by REVENUE AND TAXATION
INCOME TAX CREDIT - Adds to existing law to provide an income tax credit
for technology investment; and to provide criteria to be eligible for the
03/02    House intro - 1st rdg - to printing
03/05    Rpt prt - to Rev/Tax

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 261
                             BY REVENUE AND TAXATION COMMITTEE
  1                                        AN ACT
 17    Be It Enacted by the Legislature of the State of Idaho:
 18        SECTION 1.  LEGISLATIVE INTENT -- SHORT TITLE. (1) The purpose of this act
 19    is  to attract new equity investment to develop strategic business infrastruc-
 20    ture within Idaho's areas of core competency and to assist in the creation and
 21    expansion of Idaho businesses that are job and wealth creating enterprises, by
 22    granting tax credits against the  Idaho  income  tax  liability  of  investors
 23    investing  in  these  businesses.  This act shall be administered by the Idaho
 24    Department of Commerce and Labor along with the Idaho State Tax Commission and
 25    the State Treasurer, with the primary goal of encouraging private investors to
 26    provide high-risk financing for Idaho's  emerging  bioscience  and  technology
 27    businesses.
 28        (2)  This  act  shall  be  known and may be cited as the "Idaho Technology
 29    Investment Tax Credit Act."
 30        SECTION 2.  That Chapter 30, Title 63, Idaho Code, be,  and  the  same  is
 31    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 32    ignated as Section 63-3029L, Idaho Code, and to read as follows:
 33        63-3029L.  IDAHO TECHNOLOGY INVESTMENT TAX CREDIT. (1)  As  used  in  this
 34    section:
 35        (a)  "Certificate" means a technology investment tax credit certificate, a
 36        physical certificate issued by the department that evidences an investor's
 37        right  to  take  a nonrefundable tax credit according to the provisions of
 38        this section.
 39        (b)  "Commission" means the Idaho technology investment tax credit  certi-
 40        fication commission that reviews applicants and grants qualified status.
 41        (c)  "Committee" means the technology investment tax credit oversight com-
 42        mittee  that  will review the performance of the investment tax credit and
  1        its commission pursuant to this section.
  2        (d)  "Department" means the Idaho department of commerce and labor.
  3        (e)  "Effective date" is the date on which  the  qualified  investment  is
  4        deemed to have been accepted by the qualified business.
  5        (f)  "Idaho business" means any business with its principal place of busi-
  6        ness  having  at least fifty-one percent (51%) of its assets and fifty-one
  7        percent (51%) of its employees located in Idaho.
  8        (g)  "Qualified Idaho business" means a business located in Idaho that  is
  9        approved and certified as a qualified Idaho business according to the pro-
 10        visions  of  this  section. A "qualified company" must be a research-based
 11        company engaged in technology, bioscience or ag/ecosystems biotechnology.
 12             (i)   A "bioscience company" is a corporation, limited liability com-
 13             pany, partnership  or  other  business  entity  that  is  engaged  in
 14             research  and  development, manufacturing, marketing and licensing of
 15             products and services relating to medical,  bioengineering  or  other
 16             life   science   based   applications   or   applications  of  modern
 17             biomechanical or bioinformatics technologies in the fields of  human,
 18             plant   or   animal  health,  aquaculture,  agriculture,  ecosystems,
 19             defense, homeland security or the environment. The bioscience company
 20             must also meet other requirements enumerated in this section.
 21             (ii)  A "technology company" is a corporation, limited liability com-
 22             pany, partnership or other business entity  that  is  engaged  in  at
 23             least  one  (1) of the following: developing an innovative or propri-
 24             etary new product or business or having a significant portion of  its
 25             operations involved in research and development activities. The tech-
 26             nology  company  must also meet other requirements enumerated in this
 27             section.
 28        (h)  "Qualified investment" means money or money equivalent given in  con-
 29        sideration  for  qualified  securities that are offered in compliance with
 30        applicable Idaho statutes and rules and federal statutes and regulations.
 31        (i)  "Qualified investor" is a natural person or any corporation, partner-
 32        ship, limited liability company or lawfully organized entity  who  invests
 33        in  a  qualified Idaho company and who is eligible to make such investment
 34        under accepted federal and state guidelines as an "accredited investor."
 35        (j)  "Qualified security" means any one (1) or more  forms  of  securities
 36        granted by qualified Idaho companies in return for investment capital that
 37        have  been approved in form and substance by the commission. Such forms of
 38        investment include any form of equity such as a general or  limited  part-
 39        nership  interest;  common  stock; preferred stock, with or without voting
 40        rights and without regard to seniority position or whether it is  convert-
 41        ible  into common stock; interest in a limited liability company; and con-
 42        vertible debt, which may include warrants or other means of equity conver-
 43        sion so long as the equity instrument requires no repayment, no matter how
 44        described, within five (5) years of the  effective  date  of  the  initial
 45        investment  and  the debt instrument is convertible into equity securities
 46        of the issuer.
 47        (k)  "Qualified taxable year" is the calendar year plus the following  six
 48        (6) month period.
 49        (2)  (a) Only  qualified  investors may qualify to receive a nonrefundable
 50        tax credit pursuant to this section.
 51        (b)  A nonrefundable credit against  taxes  imposed  by  section  63-3024,
 52        Idaho  Code,  shall  be allowed for qualified investments in the qualified
 53        securities of a qualified Idaho business. The credit shall be in  a  total
 54        amount  equal  to  thirty-five  percent  (35%) of the investor's qualified
 55        investment in the qualified securities of  a  qualified  Idaho  technology
  1        business, or in the total amount of forty-five percent (45%) if the quali-
  2        fied  investment  is made in the qualified securities of a qualified Idaho
  3        bioscience business.
  4        (c)  Twenty-five percent (25%) of the total issued and  nonrefundable  tax
  5        credit  shall  be  vested and usable immediately and an additional twenty-
  6        five percent (25%) shall vest at each of the three (3) subsequent anniver-
  7        sary dates of the issuance of the original tax credit certificate.
  8        (d)  A vested tax credit may be used to offset future investor tax liabil-
  9        ity and may be carried forward for fourteen (14) consecutive taxable years
 10        from the anniversary date of the certificate or until exhausted, whichever
 11        occurs first.
 12        (e)  A qualified investor and its affiliates, following an  investment  in
 13        qualified  securities of a qualified Idaho business, may not own more than
 14        twenty-five percent (25%) of the  outstanding  equity  interests  in  such
 15        business.
 16        (f)  The  cumulative  aggregate  amount of the tax credits allowed by this
 17        section shall not exceed fifty million dollars  ($50,000,000).  The  total
 18        aggregate  amount  of tax credits allowed to be used by this section shall
 19        be up to ten million dollars ($10,000,000) per qualified taxable year.
 20        (g)  The investor tax credits for businesses that were  qualified  by  the
 21        commission  during any calendar year must be issued by June 30 of the fol-
 22        lowing year or the company must requalify. If the cumulative  tax  credits
 23        are  exhausted  prior  to  a  qualified  business  completing its approved
 24        investment total, the business must reapply in another calendar  year  for
 25        its  investors  to  be  eligible to participate in the tax credit pool for
 26        such new year.
 27        (h)  The reasonable cost of the administration of this section, the review
 28        of applications for  certification  as  qualified  Idaho  businesses,  the
 29        review  of  investor tax credit certificate applications, and the issuance
 30        of tax credit certificates may be reimbursed  through  fees  paid  by  the
 31        qualified  Idaho  businesses  and  investors according to a reasonable fee
 32        schedule adopted by the commission.
 33        (3)  (a) Before an investor may be entitled  to  receive  tax  credits  as
 34        authorized  by  this  section,  such  investor  must have made a qualified
 35        investment in a qualified security of  a  qualified  Idaho  business.  The
 36        business  must  have  been approved by the commission as a qualified Idaho
 37        business prior to the date on which the investment was made, except in the
 38        circumstance provided as follows: investments made in the  period  between
 39        January  1, 2007, and approval by the governor of this act may be eligible
 40        for qualified status upon review by the commission pursuant to  this  sec-
 41        tion;  and  applications for certification of investments made during this
 42        time period must be made by June 30, 2007.
 43        (b)  To be designated as a qualified Idaho  business,  an  Idaho  business
 44        must make application to the commission in each taxable year for which the
 45        business desires certification. The application to the commission shall be
 46        in  the  form and substance as required by the commission and at a minimum
 47        includes:
 48             (i)    The name, address and taxpayer identification  number  of  the
 49             business  and certified copies of the organizational documents of the
 50             business;
 51             (ii)   Business plan details, including a description of the business
 52             and the management, product, market and financial plan of  the  busi-
 53             ness;
 54             (iii)  A  description  of  the  business's innovative and proprietary
 55             technology, product or service;
  1             (iv)   Evidence  supporting  the  business's  status  as   an   Idaho
  2             bioscience or technology business;
  3             (v)    Any related party compensation;
  4             (vi)   A  statement  of  the  potential economic impact of the enter-
  5             prise, including the number, location and types of jobs  expected  to
  6             be created;
  7             (vii)  A  description  of  the qualified securities to be issued, the
  8             consideration to be paid for the qualified securities, and the amount
  9             of tax credits to be required;
 10             (viii) A statement of the amount, timing and  projected  use  of  the
 11             proceeds to be raised from the proposed sale of qualified securities;
 12             and
 13             (ix)   Such  other information as the commission may request, such as
 14             the names, addresses  and  taxpayer  identification  numbers  of  all
 15             investors  who  may qualify for the tax credit. Once the business has
 16             been qualified, such list of investors who may qualify  for  the  tax
 17             credit  shall  be  amended as newly qualified securities are sold and
 18             the business will certify the effective date on which each investment
 19             was deemed received.
 20        (c)  No business may be eligible for initial designation  as  a  qualified
 21        Idaho  business  unless  the  commission determines in its sole discretion
 22        that the business meets all of the following criteria:
 23             (i)   The business must have had an annual gross revenue of less than
 24             five million dollars ($5,000,000) in the most recent taxable year  of
 25             the  business  or  a net book value of less than five million dollars
 26             ($5,000,000), and have less than fifty (50) full-time employee equiv-
 27             alents, at the end of the most recently completed fiscal year;
 28             (ii)  The business must be engaged in research and development, tech-
 29             nology transfer or the innovative application  of  new  technologies.
 30             The business may not derive more than ten percent (10%) of its income
 31             from  passive  investments,  other  than  short-term interest-bearing
 32             investments using the  proceeds  of  qualified  investments,  pending
 33             their  use  for general working capital purposes that generate inter-
 34             est, dividends, royalties or capital gains or any  business  arrange-
 35             ments,  the  effect  of which is to immunize an investor from risk of
 36             loss; distribute  excessive  capital  to  employees,  board  members,
 37             related parties or other affiliates of the business unless such capi-
 38             tal is the product of profitability exceeding the current commitments
 39             of the business and any activity that is in violation of the law.
 40             (iii) The business must satisfy all other requirements of the commis-
 41             sion in administration of this section.
 42        (d)  The  maximum  amount  of  qualified investments in a single qualified
 43        Idaho bioscience company  cannot exceed an aggregate of two  million  dol-
 44        lars ($2,000,000) in tax credit eligible funding for a single taxable year
 45        and  four  million  dollars ($4,000,000) under the period of this section;
 46        and qualified investments in a single qualified Idaho  technology  company
 47        cannot  exceed  an  aggregate  of  one million dollars ($1,000,000) in tax
 48        credit eligible funding for a single taxable year and two million  dollars
 49        ($2,000,000) under the period of this legislation.
 50        (e)  Business records, trade secrets and proprietary information submitted
 51        to  the commission or discussed by the commission in its proceedings shall
 52        be maintained in a secure  environment  and  shall  be  kept  confidential
 53        according to the provisions of chapter 3, title 9, Idaho Code, and chapter
 54        47, title 67, Idaho Code.
 55        (f)  A  business  applying  for  designation as a qualified Idaho business
  1        shall have the burden of proof to demonstrate to the commission the quali-
  2        fications of the business under this section. Qualified  Idaho  businesses
  3        shall notify the commission in a timely manner of any changes in the qual-
  4        ifications  of  the business or in the eligibility of investors to claim a
  5        tax credit for investments in a qualified security.
  6        (4)  The designation of a business as a qualified Idaho business shall  be
  7    made  by  the  commission. A business shall be so designated if the commission
  8    determines in its sole discretion, based upon the application submitted by the
  9    business and any additional investigation the commission  may  make  that  the
 10    following criteria have been or shall be satisfied:
 11        (a)  The  Idaho  business  satisfies  the criteria in subsection (3)(c) of
 12        this section;
 13        (b)  The ability of investors in the business to receive tax  credits  for
 14        qualified investments in qualified securities of the business is necessary
 15        because  funding  otherwise available for the business is not available on
 16        commercially reasonable terms;
 17        (c)  The business has the reasonable potential to succeed  and  to  create
 18        measurable employment within the state;
 19        (d)  The  existing  owners of the business and other founders have made or
 20        are committed to make a substantial financial and time commitment  to  the
 21        business;
 22        (e)  The securities to be issued and purchased are qualified securities;
 23        (f)  The  business commits to notify prospective investors of the stipula-
 24        tions under which they may receive and retain tax credits under this  sec-
 25        tion; and
 26        (g)  Binding  commitments have been made by the business to the department
 27        for adequate reporting of financial data, including a  requirement  for  a
 28        timely  annual report, the right of access to the financial records of the
 29        business, and the right of the department to record and publish normal and
 30        customary data and information related to the issuance of tax credits that
 31        are not otherwise determined to be trade or business secrets.
 32        (5)  Each investor having made a qualified investment and who desires  tax
 33    credits shall submit a certificate application to the commission. The certifi-
 34    cate application shall be in the form and substance as required by the commis-
 35    sion and at a minimum shall include:
 36        (a)  The name, address and taxpayer identification number of the qualified
 37        Idaho business;
 38        (b)  The name, address and taxpayer identification number of the investor;
 39        (c)  A  description  of the qualified securities issued, the consideration
 40        paid for the qualified securities  and  the  amount  of  any  tax  credits
 41        requested;
 42        (d)  The  effective  date  of  the investment, certified by the business's
 43        ranking individual;
 44        (e)  An acknowledgment by investors that they have read and understand the
 45        stipulations of this section and the conditions under which the tax credit
 46        certificate is granted, including the conditions of compliance which could
 47        serve to disqualify the credit in whole or in part;
 48        (f)  A copy of the commission's notice  of  qualification  that  was  duly
 49        issued to the business receiving the investment.
 50        (6)  After  the commission has notified a business that it has been deemed
 51    qualified by the commission, the business and  its  investors  may  begin  the
 52    process of applying for tax credit certificates:
 53        (a)  The  commission shall notify the qualified Idaho business, the inves-
 54        tor and the Idaho state tax commission if the tax  credit  application  is
 55        approved,  if  issuable  tax credits are available, and will then issue an
  1        investor tax credit certificate to the investor, which will  also  contain
  2        its  effective,  or anniversary date based on the date the qualified busi-
  3        ness is deemed to have received the qualifying investment.
  4        (b)  If, during any calendar year, certificate applications are  submitted
  5        for  more than issuable tax credits, the certificate applications shall be
  6        evaluated on a first-come, first-served basis until the amount of issuable
  7        tax credits have been exhausted and the commission shall issue a  lack  of
  8        available credit notice to the applicant when there are insufficient issu-
  9        able tax credits.
 10        (c)  If  the  commission  determines in its sole discretion that there has
 11        not been a qualified investment in a qualified  security  of  a  qualified
 12        Idaho  business  by  a qualified investor, the commission shall notify the
 13        applicant of such determination. The certificate application shall be sus-
 14        pended indefinitely until the applicant provides  sufficient  evidence  to
 15        the  committee  justifying, in the commission's sole discretion, the issu-
 16        ance of a tax credit certificate.
 17        (d)  Any qualified designation, or any tax credits issued, even if vested,
 18        may be rescinded by the commission if the company is found to have commit-
 19        ted material illegal acts, knowingly provided  false  information  to  the
 20        commission or committed other business fraud.
 21        (e)  Any  violation  or  noncompliance  of  qualification  requirements as
 22        determined by the commission could result in revocation  of  unvested  tax
 23        credits including:
 24             (i)   The  failure  of  a  business  to timely file annual statements
 25             required by the commission;
 26             (ii)  Changes in a business originally qualified  by  the  commission
 27             that  would  serve  to  disqualify  the business in subsequent years,
 28             other than for exceeding gross revenue and net book value criteria;
 29             (iii) A business becoming out of compliance due to redesignation  out
 30             of  Idaho  of  the  majority  of its employees or business assets, in
 31             addition to either the business's headquarters  being  moved  out  of
 32             state or its Idaho presence being diminished since its qualification.
 33        (7)  (a) Each  qualified  Idaho  business  for which tax credits have been
 34        issued pursuant to this section shall report to the commission annually:
 35             (i)   The name, address and taxpayer identification  number  of  each
 36             investor who has made a qualified investment in the qualified securi-
 37             ties  of  a qualified Idaho business and has received tax credits for
 38             this investment during the preceding year  and  all  other  preceding
 39             years;
 40             (ii)  The  amounts  of  these  investments  by  each  investor  and a
 41             description of the qualified securities issued  in  consideration  of
 42             such investments; and
 43             (iii) Any  additional information the commission may require pursuant
 44             to this section.
 45        (b)  The oversight committee shall report annually to  the  governor,  the
 46        senate and the house of representatives. The report shall specify:
 47             (i)   The  manner in which the purpose, as described in this act, has
 48             been carried out;
 49             (ii)  The total investments made for the purchase of qualified  secu-
 50             rities  of  qualified  Idaho businesses during the preceding year and
 51             cumulatively since the effective date of this section;
 52             (iii) An estimate of jobs created and new  economic  activity  gener-
 53             ated.
 54        (c)  Any violation of the reporting requirements set forth in this section
 55        shall  be  grounds for revocation of the tax credit certificate under this
  1        section.
  2        (d)  If the commission determines that a business is  not  in  substantial
  3        compliance  with the requirements of this section to maintain its designa-
  4        tion, the commission, by written notice, shall inform the qualified  Idaho
  5        business that such business will lose its designation as a qualified Idaho
  6        business  in  sixty  (60)  calendar  days  from the date of mailing of the
  7        notice unless such business corrects the deficiencies and is once again in
  8        compliance with the requirements for designation.
  9        (e)  At the end of the sixty (60) day period, if the qualified Idaho busi-
 10        ness is still not in substantial compliance, the commission shall cause to
 11        be sent a notice of loss of designation to the business and to  all  known
 12        investors  in the business. Loss of designation of a qualified Idaho busi-
 13        ness shall preclude the  issuance  of  any  additional  tax  credits  with
 14        respect to that business.
 15        (f)  Investors in a qualified Idaho business shall be entitled to keep all
 16        vested tax credits issued under this section unless it is shown that there
 17        have  been  material misstatements, false statements or knowledge of such,
 18        upon which qualification was partially based. If such is shown,  investors
 19        could  be  required  to repay tax credits to the state and any legal costs
 20        incurred by the state.
 21        (8)  (a) Subject to the requirements of this subsection,  a  taxpayer  who
 22        earns  and is entitled to the credit or to an unused portion of the credit
 23        allowed by this section may transfer all or a portion of the unused credit
 24        to another taxpayer required to file an Idaho state income tax return.
 25        (b)  In the event of such transfer, the transferee may claim the credit on
 26        the transferee's income tax return originally filed  during  the  calendar
 27        year in which the transfer takes place and in the case of carryover of the
 28        credit,  on  the transferee's returns for the number of years of carryover
 29        available to the transferor at the time of  the  transfer  unless  earlier
 30        exhausted.
 31        (c)  Before  completing  a  transfer under this subsection, the transferor
 32        shall notify the state tax commission of its  intention  to  transfer  the
 33        credit  and the identity of the transferee. The state tax commission shall
 34        provide the transferor with a written  statement  of  the  amount  of  the
 35        credit  available under this section as then appearing in the commission's
 36        records and the number of years the credit may be carried  over  based  on
 37        the effective date of the original certificate.
 38        (d)  The  transferee shall attach a copy of the statement to any return in
 39        regard to which the transferred credit is claimed.
 40        (e)  In the event that after the transfer the state tax commission  deter-
 41        mines  that  the amount of credit properly available under this section is
 42        less than the amount claimed by the transferor of the credit or  that  the
 43        credit is subject to recapture, the tax commission shall assess the amount
 44        of  overstated  or  recaptured credit as taxes due from the transferor and
 45        not the transferee. The assessment shall be made in  the  manner  provided
 46        for  a deficiency in taxes under this chapter. The credit cannot be trans-
 47        ferred to a funded company under this section or any affiliated parties or
 48        investors to the funded company.
 49        (9)  (a) The commission, which is hereby created, will be comprised of not
 50        less than three (3) nor more than seven (7) individuals  who  collectively
 51        represent  credible  and  extensive  business and investment experience as
 52        well as specific knowledge of bioscience and technology businesses.
 53        (b)  Commission members shall be appointed annually by the director of the
 54        department of commerce and labor.
 55        (c)  Not more than one-half (1/2) of the commissioners may be replaced  in
  1        any one (1) year.
  2        (d)  The  commission  shall  meet  monthly to review and certify companies
  3        according to this section.
  4        (e)  The commission shall have the discretion, with approval by the  over-
  5        sight  committee  to  make  reasonable adjustments as necessary to achieve
  6        program objectives in the certification and reporting processes for compa-
  7        nies.
  8        (f)  Members of the commission shall be compensated as provided in section
  9        59-509(c), Idaho Code.
 10        (10) (a) An oversight committee is hereby created which shall  consist  of
 11        the commission along with an appointee by the governor, the speaker of the
 12        house of representatives and the president pro tempore of the senate.
 13        (b)  The  oversight  committee  will meet at least once annually to review
 14        the Idaho technology investment tax credit program and  oversee  a  report
 15        reviewing  its  effectiveness in encouraging investment in targeted compa-
 16        nies.
 17        (c)  The oversight committee will provide testimony at the end of five (5)
 18        years to assist in determining whether the program should be  renewed  for
 19        an additional five (5) years.
 20        (11) The  state  of  Idaho, the commission, the commissioners, the depart-
 21    ment, the state tax commission or their employees and agents shall not be lia-
 22    ble for any trade secrets or other confidential information that may  be  dis-
 23    seminated to third parties, for any decisions made regarding a business's sta-
 24    tus  as a qualified Idaho business, or for any damages to any person making an
 25    investment pursuant to this section.
 26        SECTION 3.  An emergency existing  therefor,  which  emergency  is  hereby
 27    declared to exist, this act shall be in full force and effect on and after its
 28    passage  and  approval, and retroactively to January 1, 2007. Investments made
 29    in the period between January 1, 2007, and approval of this act by the  gover-
 30    nor  may be eligible for qualified status upon review by the commission pursu-
 31    ant to Section 2 of this act. Applications for  certification  of  investments
 32    made  during this time period must be made by June 30, 2007. The Department of
 33    Commerce and Labor may take necessary action to implement  the  provisions  of
 34    this act.

Statement of Purpose / Fiscal Impact

                    STATEMENT OF PURPOSE
                          RS 16859
       This legislation is proposed as a result of the 2006 Bioscience Tax
   Incentives Task Force to provide the State of Idaho with an efficient
   tool to help attract pools of high-risk seed investment capital to help
   build its early stage, research-based biotechnology and technology
   company infrastructure in every part of the state.  Idaho has had
   measurable difficulty raising this critical capital.  In 2006 the
   National Association of Seed 16859 and Venture Funds reported no Idaho
   seed or venture capital fund investments out of a US total of 312 for
   $1.16 billion; and only 6 such investments over the past 10 years
   totaling $18 million, or 0.14% of a US total of 3993 investments
   totaling $13.19 billion.  New investment in this important economic
   growth sector provides new high paying jobs and a stream of new tax
   revenues to the State.  It encourages and stimulates valuable research
   and development activities throughout our economy and education system
   and will build efficiently upon Idaho's existing strengths in
   technology, agriculture/ecosystem biotechnology and biomedical
       The legislation uses the competitive incentive of state tax relief
   to investors willing to make high-risk investments in young, research
   based companies that have been prequalified by an experienced
   commission working with the Department of Commerce and Labor.  The
   program provides a forty-five percent (45%) credit to investors in
   qualified biotechnology companies and a thirty-five percent (35%)
   credit to investors in qualified technology companies. While the state
   receives investment capital immediately, the investment credits are
   earned on a four tax year vesting schedule. A company must continue to
   qualify its ongoing business activities in Idaho each year or the
   vesting of credits stops.  This method of granting incentives means
   that the state should be in a positive, leveraged cash flow position in
   each year of the program and is projected to directly provide several
   thousand new jobs, along with significant new revenues, that will
   continue into the future.
                       FISCAL IMPACT
       A maximum of ten million dollars ($10,000,000) of incentive is
   offered per any calendar year for five (5) consecutive years beginning
   in 2007.  The vesting schedule would result in the following state tax
   credit obligations if a full complement of investment is received in
   each year and if all companies complete at least three years of
   qualified business in Idaho:
          2007   $2,500,000
          2008   $5,000,000
          2009   $7,500,000
          2010   $10,000,000
          2011   $10,000,000
          2012   $7,500,000
          2013   $5,000,000
          2014   $2,500,000
  Phil Syrdal, Co-chair Bioscience Tax Incentives Task Force
  c/o Idaho Bioscience Association
  Steve Simpson, Co-chair Bioscience Tax Incentives Task Force
  c/o Kestrelink Inc.
  STATEMENT OF PURPOSE/FISCAL NOTE                     H 261