Introduced Version
House Bill 3097 History
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H. B. 3097
(By Delegates Craig, R. Phillips and Williams)
[Introduced
March 25, 2013
; referred to the
Committee on Finance.]
A BILL to amend and reenact §11-13Q-3, §11-13Q-7 and §11-13Q-19
of
the Code of West Virginia, 1931, as amended, all relating to
entitling natural resource producers to the economic
opportunity tax credit and allowing the credit to be used to
offset the severance tax.
Be it enacted by the Legislature of West Virginia:
That §11-13Q-3, §11-13Q-7 and §11-13Q-19 of the Code of West
Virginia, 1931, as amended, be amended and reenacted, all to read
as follows:
ARTICLE 13Q. ECONOMIC OPPORTUNITY TAX CREDIT.
§11-13Q-3. Definitions.
(a) General. -- When used in this article, or in the
administration of this article, terms defined in subsection (b)
have the meanings ascribed to them by this section, unless a
different meaning is clearly required by either the context in which the term is used, or by specific definition, in this article.
(b) Terms defined.
(1) Business. -- The term "business" means any activity which
is engaged in by any person in this state which is taxable under
article thirteen, thirteen-a, twenty-one, twenty-three or
twenty-four of this chapter (or any combination of those articles
of this chapter).
(2) Business expansion. -- The term "business expansion" means
capital investment in a new or expanded business facility in this
state.
(3) Business facility. -- The term "business facility" means
any factory, mill, plant, refinery, warehouse, building or complex
of buildings located within this state, including the land on which
it is located, and all machinery, equipment and other real and
personal property located at or within the facility, used in
connection with the operation of the facility, in a business that
is taxable in this state, and all site preparation and start-up
costs of the taxpayer for the business facility which it
capitalizes for federal income tax purposes.
(4) Commissioner or Tax Commissioner. -- The terms
"commissioner" and "Tax Commissioner" are used interchangeably
herein and mean the Tax Commissioner of the State of West Virginia,
or his or her designee.
(5) Compensation. -- The term "compensation" means wages, salaries, commissions and any other form of remuneration paid to
employees for personal services.
(6) Controlled group. -- The term "controlled group" means one
or more chains of corporations connected through stock ownership
with a common parent corporation if stock possessing at least fifty
percent of the voting power of all classes of stock of each of the
corporations is owned directly or indirectly by one or more of the
corporations; and the common parent owns directly stock possessing
at least fifty percent of the voting power of all classes of stock
of at least one of the other corporations.
(7) Corporation. -- The term "corporation" means any
corporation, joint-stock company or association, and any business
conducted by a trustee or trustees wherein interest or ownership is
evidenced by a certificate of interest or ownership or similar
written instrument.
(8) Designee. -- The term "designee" in the phrase "or his or
her designee," when used in reference to the commissioner, means
any officer or employee of the State Tax Department duly authorized
by the commissioner directly, or indirectly by one or more
redelegations of authority, to perform the functions mentioned or
described in this article.
(9) Eligible taxpayer. -- The term "eligible taxpayer" means
any person who makes qualified investment in a new or expanded
business facility located in this state and creates at least the required number of new jobs and who is subject to any of the taxes
imposed by articles thirteen, thirteen-a, twenty-one, twenty-three
and twenty-four of this chapter, or any combination of those
articles. "Eligible taxpayer" shall also include includes an
affiliated group of taxpayers if the group elects to file a
consolidated files a combined corporation net income tax return
under article twenty-four of this chapter.
(10) Expanded facility. -- The term "expanded facility" means
any business facility, other than a new or replacement business
facility, resulting from the acquisition, construction,
reconstruction, installation or erection of improvements or
additions to existing property if the improvements or additions are
purchased on or after January 1, 2003, but only to the extent of
the taxpayer's qualified investment in the improvements or
additions.
(11) Includes and including. -- The terms "includes" and
"including," when used in a definition contained in this article,
shall not be considered to does not exclude other things otherwise
within the meaning of the term defined.
(12) Leased property. -- The term "leased property" does not
include property which the taxpayer is required to show on its
books and records as an asset under generally accepted principles
of financial accounting. If the taxpayer is prohibited from
expensing the lease payments for federal income tax purposes, the property shall be treated as purchased property under this section.
(13) New business facility. -- The term "new business
facility" means a business facility which satisfies all the
requirements of paragraphs (A), (B), (C) and (D) of this
subdivision.
(A) The facility is employed by the taxpayer in the conduct of
a business the net income of which is or would be taxable under
article twenty-one or twenty-four of this chapter. The facility is
not considered a new business facility in the hands of the taxpayer
if the taxpayer's only activity with respect to the facility is to
lease it to another person or persons.
(B) The facility is purchased by, or leased to, the taxpayer
on or after January 1, 2003.
(C) The facility was not purchased or leased by the taxpayer
from a related person. The commissioner may waive this requirement
if the facility was acquired from a related party for its fair
market value and the acquisition was not tax motivated.
(D) The facility was not in service or use during the ninety
days immediately prior to transfer of the title to the facility, or
prior to the commencement of the term of the lease of the facility:
Provided, That this ninety-day period may be waived by the
commissioner if the commissioner determines that persons employed
at the facility may be treated as "new employees" as that term is
defined in this subsection.
(14) New employee. --
(A) The term "new employee" means a person residing and
domiciled in this state, hired by the taxpayer to fill a position
or a job in this state which previously did not exist in the
taxpayer's business enterprise in this state prior to the date on
which the taxpayer's qualified investment is placed in service or
use in this state. In no case may the number of new employees
directly attributable to the investment for purposes of this credit
exceed the total net increase in the taxpayer's employment in this
state: Provided, That the commissioner may require that the net
increase in the taxpayer's employment in this state be determined
and certified for the taxpayer's controlled group: Provided,
however, That persons filling jobs saved as a direct result of
taxpayer's qualified investment in property purchased or leased for
business expansion may be treated as new employees filling new jobs
if the taxpayer certifies the material facts to the commissioner
and the commissioner expressly finds that:
(i) But for the new employer purchasing the assets of a
business in bankruptcy under chapter seven or eleven of the United
States bankruptcy code and the new employer making qualified
investment in property purchased or leased for business expansion,
the assets would have been sold by the United States bankruptcy
court in a liquidation sale and the jobs saved would have been
lost; or
(ii) But for the taxpayer's qualified investment in property
purchased or leased for business expansion in this state, the
taxpayer would have closed its business facility in this state and
the employees of the taxpayer located at the facility would have
lost their jobs: Provided, That the commissioner may not make this
certification unless the commissioner finds that the taxpayer is
insolvent as defined in 11 U.S.C. §101(32) or that the taxpayer's
business facility was destroyed, in whole or in significant part,
by fire, flood or other act of God.
(B) A person is considered to be a "new employee" only if the
person's duties in connection with the operation of the business
facility are on:
(i) A regular, full-time and permanent basis:
(I) "Full-time employment" means employment for at least one
hundred forty hours per month at a wage not less than the
prevailing state or federal minimum wage, depending on which
minimum wage provision is applicable to the business;
(II) "Permanent employment" does not include employment that
is temporary or seasonal and therefore the wages, salaries and
other compensation paid to the temporary or seasonal employees will
not be considered for purposes of sections five and seven of this
article; or
(ii) A regular, part-time and permanent basis: Provided, That
the person is customarily performing the duties at least twenty hours per week for at least six months during the taxable year.
(15) New job. -- The term "new job" means a job which did not
exist in the business of the taxpayer in this state prior to the
taxpayer's qualified investment being made, and which is filled by
a new employee.
(16) New property. -- The term "new property" means:
(A) Property, the construction, reconstruction or erection of
which is completed on or after January 1, 2003, and placed in
service or use after that date; and
(B) Property leased or acquired by the taxpayer that is placed
in service or use in this state on or after January 1, 2003, if the
original use of the property commences with the taxpayer and
commences after that date.
(17) Original use. -- The term "original use" means the first
use to which the property is put, whether or not the use
corresponds to the use of the property by the taxpayer.
(18) Partnership and partner. -- The term "partnership"
includes a syndicate, group, pool, joint venture or other
unincorporated organization through or by means of which any
business, financial operation or venture is carried on, and which
is not a trust or estate, a corporation or a sole proprietorship.
The term "partner" includes a member in such a syndicate, group,
pool, joint venture or other organization.
(19) Person. -- The term "person" includes any natural person, corporation or partnership.
(20) Property purchased or leased for business expansion.
(A) Included property. -- Except as provided in paragraph (B),
the term "property purchased or leased for business expansion"
means real property and improvements thereto, and tangible personal
property, but only if the real or personal property was
constructed, purchased, or leased and placed in service or use by
the taxpayer, for use as a component part of a new or expanded
business facility as defined in this section, which is located
within the State of West Virginia. This term includes only:
(1) Real property and improvements thereto having a useful
life of four or more years, placed in service or use on or after
January 1, 2003, by the taxpayer.
(2) Real property and improvements thereto, acquired by
written lease having a primary term of ten or more years and placed
in service or use by the taxpayer on or after January 1, 2003.
(3) Tangible personal property placed in service or use by the
taxpayer on or after January 1, 2003, with respect to which
depreciation, or amortization in lieu of depreciation, is allowable
in determining the personal or corporation net income tax liability
of the business taxpayer under article twenty-one or twenty-four of
this chapter, and which has a useful life, at the time the property
is placed in service or use in the state, of four or more years.
(4) Tangible personal property acquired by written lease having a primary term of four years or longer, that commenced and
was executed by the parties thereto on or after January 1, 2003, if
used as a component part of a new or expanded business facility,
shall be is included within this definition.
(5) Tangible personal property owned or leased, and used by
the taxpayer at a business location outside the state which is
moved into the State of West Virginia on or after January 1, 2003,
for use as a component part of a new or expanded business facility
located in the state: Provided, That if the property is owned, it
must be depreciable or amortizable personal property for income tax
purposes, and have a useful life of four or more years remaining at
the time it is placed in service or use in the state, and if the
property is leased, the primary term of the lease remaining at the
time the leased property is placed in service or use in the state,
must be four or more years.
(B) Excluded property. -- The term "property purchased or
leased for business expansion" does not include:
(i) Property owned or leased by the taxpayer and for which the
taxpayer was previously allowed tax credit under article
thirteen-c, thirteen-d or thirteen-e of this chapter, or the tax
credits allowed by this article.
(ii) Property owned or leased by the taxpayer and for which
the seller, lessor, or other transferor, was previously allowed tax
credit under article thirteen-c, thirteen-d or thirteen-e of this chapter, or the tax credits allowed by this article.
(iii) Repair costs, including materials used in the repair,
unless for federal income tax purposes the cost of the repair must
be capitalized and not expensed.
(iv) Airplanes.
(v) Property which is primarily used outside the state, with
use being determined based upon the amount of time the property is
actually used both within and outside the state.
(vi) Property which is acquired incident to the purchase of
the stock or assets of the seller, unless for good cause shown, the
commissioner consents to waiving this requirement.
(vii) Natural resources in place.
(viii) Purchased or leased property, the cost or consideration
for which cannot be quantified with any reasonable degree of
accuracy at the time the property is placed in service or use:
Provided, That when the contract of purchase or lease specifies a
minimum purchase price or minimum annual rent the amount thereof
shall be used to determine the qualified investment in the property
under section eight of this article if the property otherwise
qualifies as property purchased or leased for business expansion.
(21) Purchase. -- The term "purchase" means any acquisition of
property, but only if:
(A) The property is not acquired from a person whose
relationship to the person acquiring it would result in the disallowance of deductions under section 267 or 707 (b) of the
United States Internal Revenue Code of 1986, as amended, and in
effect on January 1, 2003.
(B) The property is not acquired by one component member of a
controlled group from another component member of the same
controlled group. The commissioner can waive this requirement if
the property was acquired from a related party for its then fair
market value; and
(C) The basis of the property for federal income tax purposes,
in the hands of the person acquiring it, is not determined:
(i) In whole, or in part, by reference to the federal adjusted
basis of the property in the hands of the person from whom it was
acquired; or
(ii) Under Section 1014 (e) of the United States Internal
Revenue Code of 1986, as amended, and in effect on January 1, 2002.
(22) Qualified activity. -- The term "qualified activity"
means any business or other activity subject to any of the taxes
imposed by article thirteen, thirteen-a, twenty-one, twenty-three
or twenty-four of this chapter, or any combination of those
articles of this chapter. but does not include the activity of
severance or production of natural resources
(23) Related person. -- The term "related person" means:
(A) A corporation, partnership, association or trust
controlled by the taxpayer;
(B) An individual, corporation, partnership, association or
trust that is in control of the taxpayer;
(C) A corporation, partnership, association or trust
controlled by an individual, corporation, partnership, association
or trust that is in control of the taxpayer; or
(D) A member of the same controlled group as the taxpayer.
For purposes of this section, "control," with respect to a
corporation, means ownership, directly or indirectly, of stock
possessing fifty percent or more of the total combined voting power
of all classes of the stock of the corporation entitled to vote.
"Control," with respect to a trust, means ownership, directly or
indirectly, of fifty percent or more of the beneficial interest in
the principal or income of the trust. The ownership of stock in a
corporation, of a capital or profits interest in a partnership or
association or of a beneficial interest in a trust is determined in
accordance with the rules for constructive ownership of stock
provided in section 267 (c) of the United States Internal Revenue
Code of 1986, as amended, other than paragraph (3) of that section.
(24) Replacement facility. -- The term "replacement facility"
means any property (other than an expanded facility) that replaces
or supersedes any other property located within this state that:
(A) The taxpayer or a related person used in or in connection
with any activity for more than two years during the period of five
consecutive years ending on the date the replacement or superseding property is placed in service by the taxpayer; or
(B) Is not used by the taxpayer or a related person in or in
connection with any qualified activity for a continuous period of
one year or more commencing with the date the replacement or
superseding property is placed in service by the taxpayer.
(25) Research and development. -- The term "research and
development" means systematic scientific, engineering or
technological study and investigation in a field of knowledge in
the physical, computer or software sciences, often involving the
formulation of hypotheses and experimentation, for the purpose of
revealing new facts, theories or principles, or increasing
scientific knowledge, which may reveal the basis for new or
enhanced products, equipment or manufacturing processes.
(A) Research and development includes, but is not limited to,
design, refinement and testing of prototypes of new or improved
products, or design, refinement and testing of manufacturing
processes before commercial sales relating thereto have begun. For
purposes of this section, commercial sales includes, but is not
limited to, sales of prototypes or sales for market testing.
(B) Research and development does not include:
(i) Market research;
(ii) Sales research;
(iii) Efficiency surveys;
(iv) Consumer surveys;
(v) Product market testing;
(vi) Product testing by product consumers or through consumer
surveys for evaluation of consumer product performance or consumer
product usability;
(vii) The ordinary testing or inspection of materials or
products for quality control (quality control testing);
(viii) Management studies;
(ix) Advertising;
(x) Promotions;
(xi) The acquisition of another's patent, model, production or
process or investigation or evaluation of the value or investment
potential related thereto;
(xii) Research in connection with literary, historical, or
similar activities;
(xiii) Research in the social sciences, economics, humanities
or psychology and other nontechnical activities; and
(xiv) The providing of sales services or any other service,
whether technical service or nontechnical service.
(26) Taxpayer. -- The term "taxpayer" means any person subject
to any of the taxes imposed by article thirteen, thirteen-a,
twenty-one, twenty-three or twenty-four of this chapter, or any
combination of those articles of this chapter.
(27) This code. -- The term "this code" means the Code of West
Virginia, 1931, as amended.
(28) This state. -- The term "this state" means the State of
West Virginia.
(29) Used property. -- The term "used property" means property
acquired after December 31, 2002, that is not "new property."
§11-13Q-7. Application of annual credit allowance.
(a) In general. -- The aggregate annual credit allowance for
the current taxable year is an amount equal to the sum of the
following:
(1) The one-tenth part allowed under section four of this
article for qualified investment placed into service or use during
a prior taxable year; plus
(2) The one-tenth part allowed under section four of this
article for qualified investment placed into service or use during
the current taxable year; plus
(3) The one-tenth part allowed under section five of this
article for locating corporate headquarters in this state; or the
amount allowed under section ten of this article of the taxable
year.
(b) Application of current year annual credit allowance. --
The amount determined under subsection (a) of this section is
allowed as a credit against eighty percent of that portion of the
taxpayer's state tax liability which is attributable to and the
direct result of the taxpayer's qualified investment, and applied
as provided in subsections (c) through (f) (g), both inclusive, of this section, and in that order: Provided, That if the median
salary of the new jobs is higher than the statewide average nonfarm
payroll wage, as determined annually by the West Virginia Bureau of
Employment Programs, the amount determined under subsection (a) of
this section is allowed as a credit against one hundred percent of
that portion of the taxpayers state tax liability which is
attributable to and the direct result of the taxpayer's qualified
investment, and shall be applied, as provided in subsections (c)
through (f) (g), both inclusive, of this section, and in that
order.
(c) Business and occupation taxes. -- That portion of the
allowable credit attributable to qualified investment in a business
or other activity subject to the taxes imposed under section two-o,
article thirteen of this chapter must first be applied to reduce
the taxes imposed or payable under section two-o, article thirteen
of this chapter, for the taxable year (determined before
application of allowable credits against tax and the annual
exemption). In no case may the credit allowed under this article
be applied to reduce any tax imposed or payable under section
two-f, or under any other section of article thirteen of this
chapter except section two-o.
(1) If the taxes due under section two-o, article thirteen of
this chapter are not solely attributable to and the direct result
of the taxpayer's qualified investment in a business or other activity taxable under section two-o, article thirteen of this
chapter, the amount of those taxes that are attributable is
determined by multiplying the amount of taxes due under section
two-o, article thirteen of this chapter, for the taxable year
(determined before application of any allowable credits against tax
and the annual exemption), by a fraction, the numerator of which is
all wages, salaries and other compensation paid during the taxable
year to all employees of the taxpayer employed in this state, whose
positions are directly attributable to the qualified investment in
a business or other activity taxable under section two-o, article
thirteen of this chapter. The denominator of the fraction shall be
is the wages, salaries and other compensation paid during the
taxable year to all employees of the taxpayer employed in this
state, whose positions are directly attributable to the business or
other activity of the taxpayer that is taxable under article
thirteen of this chapter.
(2) The annual exemption allowed by section three, article
thirteen of this chapter, plus any credits allowable under articles
thirteen-d, thirteen-e, thirteen-r and thirteen-s of this chapter,
shall be applied against and reduce only the portion of article
thirteen taxes not apportioned to the qualified investment under
this article: Provided, That any excess exemption or credits may
be applied against the amount of article thirteen taxes apportioned
to the qualified investment under this article, that is not offset by the amount of annual credit against the taxes allowed under this
article for the taxable year, unless their application is otherwise
prohibited by this chapter.
(d) Severance taxes. -- That portion of the allowable credit
attributable to qualified investment in a business or other
activity subject to the tax imposed by article thirteen-a of this
chapter, shall first be applied to reduce up to eighty percent of
the taxes imposed by that article for the taxable year, determined
before application of any allowable credits against tax.
_____(1) If the taxes due under article thirteen-a of this chapter
are not solely attributable to and the direct result of the
taxpayer's qualified investment in a business or other activity
taxable under that article, the amount of the taxes which are so
attributable, shall be determined by multiplying the amount of
taxes due under that article for the taxable year, determined
before application of any allowable credits against tax, by a
fraction, the numerator of which is all wages, salaries and other
compensation paid during the taxable year to all employees of the
taxpayer employed in this state, whose positions are directly
attributable to the qualified investment in a business or other
activity taxable under that article. The denominator of the
fraction is the wages, salaries and other compensation paid during
the taxable year to all employees of the taxpayer employed in this
state, whose positions are directly attributable to the business or other activity of the taxpayer that is taxable under that article.
_____(2) Any credits allowable under articles thirteen-d and
thirteen-e of this chapter shall be applied against and reduce only
the portion of article thirteen-a taxes not apportioned to the
qualified investment under this article: Provided, That any excess
credits may be applied against the amount of article thirteen-a
taxes apportioned to the qualified investment under this article,
that is not offset by the amount of annual credit against the taxes
allowed under this article for the taxable year, unless their
application is otherwise prohibited by this chapter.
_____(d) (e) Business franchise tax. --
(1) After application of subsection (c) and (d) of this
section, any unused allowable credit is next applied to reduce the
taxes imposed by article twenty-three of this chapter for the
taxable year (determined after application of the credits against
tax provided in section seventeen of article twenty-three of this
chapter, but before application of any other allowable credits
against tax).
(2) If the taxes due under article twenty-three of this
chapter are not solely attributable to and the direct result of the
taxpayer's qualified investment in a business or other activity
taxable under article twenty-three of this chapter for the taxable
year, the amount of the taxes which are so attributable are
determined by multiplying the amount of taxes due (determined after application of the credits against tax as provided in section
seventeen, article twenty-three of this chapter, but before
application of any other allowable credits), by a fraction, the
numerator of which is all wages, salaries and other compensation
paid during the taxable year to all employees of the taxpayer
employed in this state, whose positions are directly attributable
to the qualified investment in a business or other activity taxable
under article twenty-three of this chapter. The denominator of the
fraction is wages, salaries and other compensation paid during the
taxable year to all employees of the taxpayer employed in this
state, whose positions are directly attributable to the business or
other activity of the taxpayer that is taxable under article
twenty-three of this chapter.
(3) Any credits allowable under articles thirteen-d,
thirteen-e, thirteen-r and thirteen-s of this chapter are applied
against and reduce only the portion of article twenty-three taxes
not apportioned to the qualified investment under this article:
Provided, That any excess exemption or credits may be applied
against the amount of article twenty-three taxes apportioned to the
qualified investment under this article that is not offset by the
amount of annual credit against those taxes allowed under this
article for the taxable year, unless their application is otherwise
prohibited by this chapter.
(e) (f) Corporation net income taxes. --
(1) After application of subsections (c), and (d) and (e) of
this section, any unused credit is next applied to reduce the taxes
imposed by article twenty-four of this chapter for the taxable year
(determined before application of allowable credits against tax).
(2) If the taxes due under article twenty-four of this chapter
(determined before application of allowable credits against tax)
are not solely attributable to and the direct result of the
taxpayer's qualified investment, the amount of the taxes that is
attributable are determined by multiplying the amount of taxes due
under article twenty-four of this chapter for the taxable year
(determined before application of allowable credits against tax),
by a fraction, the numerator of which is all wages, salaries and
other compensation paid during the taxable year to all employees of
the taxpayer employed in this state whose positions are directly
attributable to the qualified investment. The denominator of the
fraction is the wages, salaries and other compensation paid during
the taxable year to all employees of the taxpayer employed in this
state.
(3) Any credits allowable under article twenty-four of this
chapter are applied against and reduce only the amount of article
twenty-four taxes not apportioned to the qualified investment under
this article: Provided, That any excess credits may be applied
against the amount of article twenty-four taxes apportioned to the
qualified investment under this article that is not offset by the amount of annual credit against such the taxes allowed under this
article for the taxable year, unless their application is otherwise
prohibited by this chapter.
(f) (g) Personal income taxes. --
(1) If the person making the qualified investment is an
electing small business corporation (as defined in section 1361 of
the United States Internal Revenue Code of 1986, as amended), a
partnership, a limited liability company that is treated as a
partnership for federal income tax purposes or a sole
proprietorship, then any unused credit, after application of
subsections (c) (d) and (e) through (f) of this section, is allowed
as a credit against the taxes imposed by article twenty-one of this
chapter on the income from business or other activity subject to
tax under article thirteen or twenty-three of this chapter or on
income of a sole proprietor attributable to the business.
(2) Electing small business corporations, limited liability
companies, partnerships and other unincorporated organizations
shall allocate the credit allowed by this article among its members
in the same manner as profits and losses are allocated for the
taxable year.
(3) If the amount of taxes due under article twenty-one of
this chapter (determined before application of allowable credits
against tax) that is attributable to business, is not solely
attributable to and the direct result of the qualified investment of the electing small business corporation, limited liability
company, partnership, other unincorporated organization or sole
proprietorship, the amount of the taxes that are so attributable
are determined by multiplying the amount of taxes due under article
twenty-one of this chapter (determined before application of
allowable credits against tax), that is attributable to business by
a fraction, the numerator of which is all wages, salaries and other
compensation paid during the taxable year to all employees of the
electing small business corporation, limited liability company,
partnership, other unincorporated organization or sole
proprietorship employed in this state, whose positions are directly
attributable to the qualified investment. The denominator of the
fraction is the wages, salaries and other compensation paid during
the taxable year to all employees of the taxpayer.
(4) No credit is allowed under this section against any
employer withholding taxes imposed by article twenty-one of this
chapter.
(g) (h) If the wages, salaries and other compensation fraction
formula provisions of subsections (c) through (f) (g) of this
section, inclusive, do not fairly represent the taxes solely
attributable to and the direct result of qualified investment of
the taxpayer the commissioner may require, in respect to all or any
part of the taxpayer's businesses or activities, if reasonable:
(1) Separate accounting or identification;
(2) Adjustment to the wages, salaries and other compensation
fraction formula to reflect all components of the tax liability;
(3) The inclusion of one or more additional factors that will
fairly represent the taxes solely attributable to and the direct
result of the qualified investment of the taxpayer and all other
project participants in the businesses or other activities subject
to tax; or
(4) The employment of any other method to effectuate an
equitable attribution of the taxes.
In order to effectuate the purposes of this subsection, the
commissioner may propose for promulgation rules, including
emergency rules, in accordance with article three, chapter
twenty-nine-a of this code.
(h) (i) Unused credit. -- If any credit remains after
application of subsection (b) of this section, the amount thereof
is carried forward to each ensuing tax year until used or until the
expiration of the third taxable year subsequent to the end of the
initial ten-year credit application period. If any unused credit
remains after the thirteenth year, the amount thereof is forfeited.
No carry back to a prior taxable year is allowed for the amount of
any unused portion of any annual credit allowance.
§11-13Q-19. Business eligible for credit entitlements.
(a) Notwithstanding any other provision of this article to the
contrary, except as provided in section five of this article, no entitlement to the economic opportunity tax credit may result from,
and no credit is available to any taxpayer for, investment placed
in service or use except for taxpayers engaged in the following
industries or business activities:
(1) Manufacturing, including, but not limited to, chemical
processing and chemical manufacturing, manufacture of wood products
and forestry products, manufacture of aluminum, manufacture of
paper, paper processing, recyclable paper processing, food
processing, commercial hydroponic growing of food crops,
manufacture of aircraft or aircraft parts, manufacture of
automobiles or automobile parts, and all other manufacturing
activities, but not timbering or timber severance or timber
hauling, or mineral severance, hauling, processing or preparation,
or coal severance, hauling, processing or preparation or synthetic
fuel manufacturing taxable under section two-f, article thirteen of
this chapter;
(2) Information processing, including, but not limited to,
telemarketing, information processing, systems engineering, back
office operations and software development;
(3) The activity of warehousing, including, but not limited
to, commercial warehousing and the operation of regional
distribution centers by manufacturers, wholesalers or retailers;
(4) The activity of goods distribution (exclusive of retail
trade);
(5) Destination-oriented recreation and tourism; and
(6) Research and development, as defined in section three of
this article; and
(7) Production of natural resources.
(b) Notwithstanding the fact that a company, entity or
taxpayer is engaged in an industry or business activity enumerated
in subsection (a) of this section, the company, entity or taxpayer
must qualify for the economic opportunity tax credit by fulfilling
the qualified investment, jobs creation and other credit
entitlement requirements of this article in order to obtain
entitlement to any credit under this article. Failure to fulfill
the statutory requirements of this article results in a partial or
complete loss of the tax credit.
NOTE: The purpose of this bill is to extend the economic
opportunity tax credit to producers of natural resources and to
allow the tax credit to be used to offset severance tax liability.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.