AZ Investment Tax Credit
The main objective of the Investment Tax Credit program is to expand early stage
investments in targeted Arizona small businesses. The program accomplishes this
goal by providing tax credits to investors who make capital investment in small
businesses certified by the Arizona Commerce Authority. To view the list of
businesses that have been certified under this program please click
here.
Income Tax Credit Provisions
An investor seeking an income tax credit must document to the ACA the
investment was made in either a qualified rural or bioscience company or any
other qualified small business. For a qualified bioscience or rural company, the
tax credit may total up to 35% of the investment amount over three years; for
any other qualified business, the tax credit may total up to 30% over three
years. If the tax credits exceed the investor’s income tax liability, any unused
tax credit amount may be carried forward for up to three taxable years as long
as the investor timely claims the credits with Revenue.
Commerce may authorize up to $20 million in tax credits to qualified investors
beginning July 1, 2006 through June 30, 2011. The tax credits will be authorized
on a first come, first served basis, which is established by the date and time
the investor files an application with Commerce. Download the Tax
Credit Allocation Table to view
the remaining amount of tax credits available.
For more detailed information please see below or direct questions to the Program
Manager.
Basic Eligibility Requirements
All the following criteria must be met at the time of investment for the
investor to receive an allocation of tax credits.
An investor may be a "qualified
investor" eligible for tax credits if it:
-
Is an individual, limited liability company, sub-chapter S corporation,
partnership or a family or grantor trust. Excluded entities are corporations
subject to tax under title 43, chapter 11, such as C corporations, and
certain trusts, such as irrevocable trusts and IRA's or similar retirement
accounts. NEW!
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Submits an application to Commerce within 30 calendar days after making a
qualified investment. If an application is submitted more than 30 calendar
days after making an investment, it will be rejected and the investor
notified
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Makes qualified investments in one or more qualified small businesses. The
investor and its affiliates may earn tax credits on investments of up to
$250,000 in a single year; investment amounts over $250,000 do not generate
tax credits
-
Does not possess, along with its affiliates, more than 30% of the total
voting power of all equity securities of the qualified small business
immediately before making an investment
An investment may be a "qualified
investment" if it:
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Is made on or after July 1, 2006
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Is an equity security
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Is at least $25,000 cash or cash equivalent
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Is not made with funds in an IRA or similar retirement account NEW!
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Is reported to Commerce within 30 calendar days after the investment is made
A small business may be a "qualified
small business" if it:
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Is a corporation, limited liability company, partnership or other business
entity (Sole proprietors are ineligible)
-
Maintains a portion of its operations in Arizona
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Has at least two principal non-administrative full-time equivalent employees
who are Arizona residents
-
Is in the early stage of development and is not principally engage in
statutorily precluded activities as
provided in A.R.S.
§41-1518(K)(6)
-
Does not engage in activities that involve human cloning or embryonic stem
cell research
-
Does not have assets exceeding $2 million, exclusive of intellectual
property and any qualified investment
-
Has not received aggregated qualified investments in excess of $2 million by
all qualified investors in all years
To view the list of businesses that have been certified under this program
please click
here.
Application Process
To download the appropriate forms and instructions to apply for Investment Tax
Credit Program, click on the applicable link below: