Sacramento CA: Speaker pro Tempore Mullin Proposes Legislation to Simplify California's Biotech Tax Credit Calculation Process

Speaker pro Tempore Mullin Proposes Legislation to Simplify California’s Biotech Tax Credit Calculation Process

Bill would establish consistency with federal credit regulations

Sacramento, CA – Speaker pro Tem Kevin Mullin has introduced AB 544 in an effort to simplify the credit calculation process for research and development firms. Currently, California’s calculation methods are outdated and inconsistent with federal requirements. As a result, companies must conduct dual audits which are costly and often burdensome.

In 1981 Congress established the federal research credit, “to encourage business firms to perform the research necessary to increase the innovative qualities and efficiency of the U.S. economy.” California followed in 1987 with a similar credit for research conducted in the state. While California currently conforms to the federal “standard method,” it does not conform to the “simplified method” and is still using an outdated federal method that expired in 2008.

According to Mullin, “All of these inconsistencies and discrepancies lead to confusion and a duplication of effort on the part of companies. Wouldn’t it be more productive for them to focus that time and money on new life science innovations?”

Eve Bukowski of the California Healthcare Institute agrees, saying “California’s 2,490 biomedical companies and their employees contribute more than $9 billion in federal, state and local taxes. AB 544 streamlines tax compliance for these companies and encourages them to invest in new research that benefits the lives of millions”.

This change is also supported by the manufacturing industry because it could provide a boost to California’s effort to keep and attract more manufacturing jobs. Dorothy Rothrock of the California Manufacturing and Technology Association stated, “According to the U.S. Trade and Development Agency, manufacturers do more than 60% of the R&D in the country. AB 544 simplifies the calculation of tax liability and avoids needless expenses. This bill benefits California manufacturers and encourages increased R&D activity in state.”

Ultimately, AB 544 would establish consistent credit calculation rules for research firm acquisitions, dispositions and aggregations and eliminate the confusing differences between federal and state law.

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Kevin Mullin represents the 22nd Assembly District and is the Speaker pro Tempore of the California State Assembly. He chairs the Select Committee on Biotechnology and serves on the following committees: Budget, Budget Subcommittee #4 on State Administration, Business and Professions, Local Government, Utilities & Commerce, and Revenue and Taxation. The 22nd district includes the cities of Belmont, Brisbane, Burlingame, Foster City, Hillsborough, Millbrae, Pacifica, Redwood City, San Bruno, San Carlos, San Mateo, portions of South San Francisco and the San Mateo County Coastside communities of Montara and Moss Beach.

Susan

Susan Kennedy

Director of Communications

Office of Assemblymember Kevin Mullin, AD 22

916-319-2022 office

925-437-2510 cell

susan.kennedy@asm.ca.gov

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Robert Riechel

Photo Credit: San Bruno Patch Archives

Source Credit: Office of Assemblyman Kevin Mullin

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