ENGROSSED
Senate Bill No. 5
(By Senators Tomblin, Mr. President, and Boley
By Request of the Executive)
____________
[Introduced July 14, 1996; referred to the
Committee on Finance.]
____________
A BILL to amend chapter eleven of the code of West Virginia, one
thousand nine-hundred thirty-one, as amended, by adding
thereto two new articles, designated articles six-e and
thirteen-l, all generally relating to taxation and economic
development; setting forth short titles; defining terms,
specifying the valuation of specialized manufacturing
production property for purposes of the ad valorem property
tax; specifying initial determination of whether a given
item of property is specialized manufacturing production
property to be made by county assessor of the county;
setting forth methods and procedures for protest and appeal
and time limitations therefor; setting forth effective date;
establishing the natural gas industry jobs retention tax credit; specifying the amount of credit allowed; application
of annual tax credit; annual computation of the number of
jobs held by qualified employees; methods for determining
jobs in place during the tax year; treatment of any
decreases in the number of West Virginia employees during
the taxable year; the tax commissioner's authority to
prescribe alternative methods for determining the number of
jobs held by qualified employees during the taxable year;
availability of tax credit to successors of eligible
taxpayers; allocation of credit between predecessor eligible
taxpayers and successor taxpayers in the year of transfer or
successorship; methods for computation of jobs held by
qualified employees of successors to qualified taxpayers;
requirements for recapture of credit; interest penalties and
additions to tax; specifying the statute of limitations; and
setting forth effective date.
Be it enacted by the Legislature of West Virginia;
That chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto two new articles, designated articles six-e and
thirteen-l, all to read as follows:
ARTICLE 6E. SPECIAL METHOD FOR VALUATION OF CERTAIN MANUFACTURING PRODUCTION PROPERTY.
§11-6E-1. Short title.
This article shall be known and cited as the "Specialized
Manufacturing Production Property Valuation Act."
§11-6E-2. Definitions.
(a) When used in this article, or in the administration of
this article, terms defined in subsection (b) of this section
have the meanings ascribed to them by this section, unless a
different meaning is clearly required by the context in which the
term is used.
(b) Terms Defined.
(1)
"Die" means a device for shaping, forming or stamping
material by pressure or by a blow, or for impressing a figure or
design on material by pressure or by a blow, and other devices as
set forth in this subdivision.
(A) The term "die" means and includes:
(i) Dies used in compression molding, transfer molding,
injection molding, blow molding or blowing, vacuum forming and
extrusion molding;
(ii) Extrusion dies and drawing dies consisting of a block
made of metal or other material which is perforated by a hole
having a particular cross section which imparts a shape to plastic, thermoplastic, hot or ductile metal or other material
that is extruded through the hole by ramming or pressure, or
drawn through the hole;
(iii) A block made of metal or other material which is
pressed into a blank of material, often sheet metal, positioned
between the die and a mold, so that the material is pressed into
the mold by the die and caused to assume a desired shape in
manufacturing; and
(iv) A block or blocks of metal or other material
constructed in halves, which operate in such a way that, when a
blank of sheet metal is positioned between the halves of the die
and pressed between the halves of the die, a desired shape is
imparted to the sheet metal.
(B) The term "die" does not include threading dies, screwing
dies, chasers, or any die holder or die stock for threading dies,
screwing dies or chasers. For purposes of this section, the terms
"threading die", "screwing die" or "chaser" mean one or more
blocks made of steel, or other material, threaded internally with
cutting points, or surfaces for producing screw threads.
Threading dies, screwing dies or chasers can be made in a single
block or in segments.
(2)
"Directly used in manufacturing," in relation to
specialized manufacturing production property directly used in
manufacturing, means directly used in those activities or
operations which constitute an integral and essential part of the
manufacturing activity, as contrasted with and distinguished from
those activities or operations which are simply incidental,
convenient or remote to the manufacturing activity.
(A) Those uses of specialized manufacturing production
property which constitute direct use in the activity of
manufacturing include only:
(i) Use of the property to cause a direct physical change
upon property undergoing manufacturing;
(ii) In the case of jigs, use of the property to physically
control or direct the physical movement or operation of property
undergoing manufacturing in conjunction with and during the
making of a direct physical change upon that property, or use of
a jig in direct physical contact with the property undergoing
manufacturing as a checking fixture, to test the property
undergoing manufacturing or part for conformity to
specifications;
(iii) In the case of patterns, use of a pattern in each production cycle to make a new mold in the ongoing manufacturing
process, where the mold made from the pattern is directly used to
cause a direct physical change upon property undergoing
manufacturing; and
(iv) In the case of templates, use of templates by placing
them in physical contact with property undergoing manufacturing
for the direct marking of, or direct location of, holes,
contours, cuts, cutout sections or shapes to be incorporated into
the manufactured property.
(3)
"Form" means a mold, as defined in this section, or a
frame, shape, body or implement around which or on which a
manufactured product is shaped or made, and which is designed to
cause the manufactured product to take on a specific particular
shape.
(4)
"Jig" means and includes a mechanical device used to
accurately guide or locate a tool or other implement that causes
a direct physical change in property undergoing manufacturing or
used to maintain the correct position between property undergoing
manufacturing and a tool or implement. The jig is mainly used
for producing interchangeable parts or exact reproductions of the
same manufactured item or product. The term "jig" shall not include any conveyor belt, roller conveyor, track conveyor,
crane, chain line, chain conveyor or other apparatus which serves
merely to move property from one operation or place in the
manufacturing process to another operation or place. The term
"jig" includes a checking fixture, which is a jig built to test
manufactured parts produced from a set of dies or other
manufactured parts, for conformity to specifications.
(5)
"Manufacturer" means a person engaged in the activity of
manufacturing in this state.
(6)
"Manufacturing" means a systematic operation or
integrated series of systematic operations engaged in as a
business or segment of a business which transforms or converts
tangible personal property by physical, chemical or other means
into a different form, composition or character from that in
which it originally existed. In no case shall the term
"manufacturing" include the activities of building construction,
construction of other structures or facilities affixed to or on
realty, retailing or agriculture, food processing or food
manufacturing, the operation of any restaurant or retail food
preparation or sales operation, the production of any natural
resource, contract mining or any other activity of severing, producing, processing or extracting any natural resource.
Manufacturing production begins with the arrival of raw materials
and ends when the property has reached that point where no
further chemical, physical or other changes are to be made to the
resultant property in the production process.
(7)
"Manufacturing service provider" means a person engaged
in a manufacturing activity who does not have legal title to or
any economic interest in the tangible personal property
transformed or converted by the manufacturing process, and who
engages in the manufacturing activity as a service to another
person.
(8)
"Mold" means a form, block, vessel or matrix containing
a cavity or cavities into which fluid, molten material, plastic
material or malleable material is poured, pressed, rammed or
injected to form a manufactured object conforming to the contours
of the mold and having the desired shape, pattern or relief.
The term "mold" includes molds and mold cavities used in
compression molding, transfer molding, injection molding, blow
molding or blowing, and vacuum forming.
For purposes of this article, the term "mold" does not
include any sand casting flask or other apparatus or equipment used in conjunction with sand casting. However, patterns used in
sand casting may constitute specialized manufacturing production
property, as defined in this section.
(9)
"Pattern" means a model for making a mold, as defined in
this section, where production of the manufactured product by use
of the mold entails the destruction of the mold with each
production cycle, such as sand casting. The term "pattern"
includes a model for making a sand casting mold into which molten
metal is poured to form a casting.
A pattern qualifies as specialized manufacturing production
property under this article only where the pattern must be
repeatedly used in each production cycle to make a new mold in
the ongoing manufacturing process, and where the mold made from
the pattern is directly used in manufacturing to cause a direct
physical change upon property undergoing manufacturing.
For purposes of this subdivision, the term "model" means a
shape or figure made of wood, metal or other material having the
basic shape of the manufactured product, with such appropriate
sprues, runners and other necessary additional features as may be
needed for efficient casting or production of the manufactured
product.
(10)
"Person" means and includes any state, or its political
subdivisions or an agency of the state of West Virginia or its
political subdivisions, or any individual, firm, partnership,
joint venture, joint stock company, the government of the United
States or its agencies, any public or private corporation,
municipal corporation, cooperative, estate, trust, business
trust, receiver, executor, administrator, any other fiduciary,
any representative appointed by order of any court or otherwise
acting on behalf of others, or any other group or combination
acting as a unit.
(11)
"Salvage value" means the lower of fair market salvage
value or five percent of the original cost of the property.
(12)
"Specialized manufacturing production property" means
molds, jigs, dies, forms, patterns or templates, as defined in
this section, directly used in manufacturing. Molds, jigs, dies,
forms, patterns and templates directly used in manufacturing may
qualify as specialized manufacturing production property
notwithstanding the fact that the molds, jigs, dies, forms,
patterns and templates may be owned by a person other than the
West Virginia manufacturer or the West Virginia manufacturing
service provider. In no case shall specialized manufacturing production property include any property not actively and
directly used by a West Virginia manufacturer or West Virginia
manufacturing service provider in the activity of manufacturing.
(A) For purposes of this article, specialized manufacturing
production property does not include:
(i) Research and development equipment used in developing
new products or improving present products;
(ii) Computers and computer software;
(iii) Layout and design equipment, including computers and
computer software;
(iv) Machinery, tools, parts and materials used to repair
equipment, including equipment directly used in the manufacturing
process;
(v) Drawings, blueprints or blueprinting equipment;
(vi) Tangible personal property used in testing and
inspecting products on the production line or elsewhere for
quality control purposes:
Provided, That this exclusion shall
not apply to tangible personal property which would otherwise
meet the definition of a jig;
(vii) Equipment, and supplies used in packaging or packing
manufactured products for sale; and
(viii) Any sand casting flask or sand casting equipment or
other apparatus used in conjunction with sand casting. However,
patterns used in sand casting may constitute specialized
manufacturing production property.
(ix) Any equipment or property other than molds, jigs, dies,
forms, patterns or templates, as defined in this section.
(13)
"Template" means an instrument or implement, often in
the form of a flat or contoured sheet, plate, or strip of metal,
plastic, wood or other material, having markings or lines,
perforations, cuts, cutout sections, or one or more edges shaped
to conform to a desired shape or any combination of perforations,
cuts, cutout sections or shaped edges, to be used as a guide or
gauge for marking locations for, or otherwise locating the
placement of cuts, cutout sections, holes or a desired shape to
be transferred to the property undergoing manufacturing. Only
those templates, as defined in this section, which are physically
placed upon the property undergoing manufacturing for the direct
marking of, or direct location of, holes, contours, cuts, cutout
sections or shapes to be incorporated into the property qualify
as specialized manufacturing production property for purposes of
this article.
(A) In no case shall templates constitute specialized
manufacturing production property for purposes of this article if
the templates are used in:
(i) Drafting, drawing or design;
(ii) Research and development;
(iii) Layout and design of products or production equipment;
(iv) Set up, adjustment, ongoing operation or repair of
production machinery, tools and parts or other machinery, tools
and parts;
(v) Testing and inspecting products on the production line
or elsewhere for quality control purposes:
Provided, That this
exclusion shall not apply to tangible personal property which
would otherwise meet the definition of a jig; or
(vi) Packaging or packing manufactured products for sale.
§11-6E-3. Valuation of specialized manufacturing production
property.
Notwithstanding any other provision of this code to the
contrary, the value of specialized manufacturing production
property, for the purpose of ad valorem property taxation under
this chapter and under Article X of the Constitution of this
State, shall be its salvage value.
§11-6E-4. Initial determination by county assessor.
The assessor of the county in which a specific item of
property is located shall determine, in writing, whether that
specific item of property is specialized manufacturing production
property subject to valuation in accordance with this article.
Upon making a determination that a taxpayer has specialized
manufacturing production property, the county assessor shall
notify the tax commissioner of that determination, and shall
provide such information to the tax commissioner as the tax
commissioner may require relating to that determination.
§11-6E-5. Protest and appeal.
At any time after the property is returned for taxation but
prior to the first day of January of the assessment year, any
taxpayer may apply to the county assessor for information
regarding the issue of whether any particular item or items or
property constitute specialized production manufacturing property
under this article which should be subject to valuation in
accordance with this article. If the taxpayer believes that some
portion of the taxpayer's property is subject to the provisions
of this article, the taxpayer shall file objections in writing
with the county assessor. The county assessor shall decide the
matter by either sustaining the protest and making proper
corrections, or by stating, in writing if requested, the reasons for the county assessor's refusal. The county assessor may, and
if the taxpayer requests, the county assessor shall, before the
first day of January of the assessment year, certify the question
to the tax commissioner in a statement sworn to by both parties,
or if the parties are unable to agree, in separate sworn
statements. The sworn statement or statements shall contain a
full description of the property and any other information which
the tax commissioner may require.
The tax commissioner shall, as soon as possible on receipt
of the question, but in no case later than the twenty-eighth day
of February of the assessment year, instruct the county assessor
as to how the property shall be treated. The instructions issued
and forwarded by mail to the county assessor are binding upon the
county assessor, but either the county assessor or the taxpayer
may apply to the circuit court of the county for review of the
question of the applicability of this article to the property in
the same fashion as is provided for appeals from the county
commission in section twenty-five, article three of this chapter.
The tax commissioner shall prescribe forms on which the questions
under this section shall be certified and the tax commissioner
has the authority to pursue any inquiry and procure any information which may be necessary for disposition of the matter.
§11-6E-6. Effective date.
This article shall be effective on and after the first day
of July, one thousand nine hundred ninety-seven.
ARTICLE 13L. THE NATURAL GAS INDUSTRY JOBS RETENTION ACT.
§11-13L-1. Short title.
This article shall be known and cited as the "Natural Gas
Industry Jobs Retention Act."
§11-13L-2. Definitions.
(a)
General. -- When used in this article, or in the
administration of this article, terms defined in subsection (b)
of this section have the meanings ascribed to them by this
section, unless a different meaning is clearly required by the
context in which the term is used.
(b)
Terms defined.
(1)
"Affiliate" means and includes all persons, as defined
in this section, which are affiliates of each other when either
directly or indirectly:
(A) One person controls or has the power to control the
other or
(B) A third party or third parties control or have the power
to control two persons, the two thus being affiliates. In determining whether concerns are independently owned and operated
and whether or not an affiliation exists, consideration shall be
given to all appropriate factors, including common ownership,
common management and contractual relationships.
(2)
"Commissioner or tax commissioner" means the tax
commissioner of the state of West Virginia, or the tax
commissioner's delegate.
(3)
"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.
(4)
"Delegate," when used in reference to the tax
commissioner, means any officer or employee of the tax division
of the department of tax and revenue duly authorized by the tax
commissioner directly, or indirectly by one or more redelegations
of authority, to perform the functions mentioned or described in
this article.
(5)
"Eligible taxpayer" means any person subject to the tax
prescribed by section two-e, article thirteen of this chapter
that had at least one qualified employee on the first day of January, one thousand nine hundred ninety-six. "Eligible
taxpayer" also means and includes those members of an affiliated
group of taxpayers engaged in a unitary business, in which one or
more members of the affiliated group is a person subject to the
tax prescribed by section two-e, article thirteen of this chapter
that had at least one qualified employee on the first day of
January, one thousand nine hundred ninety-six. Affiliates not
engaged in the unitary business with an affiliated group member
subject to the tax prescribed by section two-e, article thirteen
of this chapter that had at least one qualified employee on the
first day of January, one thousand nine hundred ninety-six do not
qualify as eligible taxpayers.
(6)
"Full time employee" means an employee who works, is on
a work site, on paid vacation leave or other paid leave, in the
aggregate, at least one thousand five hundred hours per year.
(7)
"Natural person" or "individual" means a human being.
(8)
"New job" means a full time employment position held by
a West Virginia resident domiciled in this state which did not
exist in this state with any employer prior to the taxpayer's
current taxable year.
(9)
"Partnership" and "partner" means and 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 a syndicate, group, pool, joint
venture or organization.
(10)
"Person" means and includes any natural person,
corporation, limited liability company or partnership.
(11)
"Qualified employee" means a West Virginia resident
domiciled in this state who is a full time employee of a
taxpayer.
(12)
"Related entity," "related person," "entity related to"
or "person related to" means:
(A) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof
controlled by the taxpayer;
(B) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof that is
in control of the taxpayer;
(C) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof controlled by an individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof that is
in control of the taxpayer; or
(D) A member of the same controlled group as the taxpayer.
For purposes of this article, "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 which
entitles its owner 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 shall be determined in accordance
with the rules for constructive ownership of stock provided in
section 267(c) of the United States Internal Revenue Code, as
amended:
Provided, That paragraph (3) of section 267(c) of the
United States Internal Revenue Code shall not apply.
(13)
"Tax year" or "taxable year" means the tax year of the
taxpayer for federal income tax purposes.
(14)
"Taxpayer" means any person subject to the tax prescribed by section two-e, article thirteen of this chapter.
(15)
"Unitary business" means a business structured so that
the operations of the business segments of a corporation,
including segments consisting of members of an affiliated group
of commonly owned and controlled corporations or entities,
contribute to or depend on each other in such a way as to result
in functional integration between business segments in engaging
in the natural gas business. "Unitary natural gas business"
includes business segments involved in the exploration,
development, purchase, transportation, storage, marketing,
distribution and sale of natural gas and distribution and sale of
heavier hydrocarbons, such as propane, and such business segments
or affiliates which provide services supporting any of the
foregoing natural gas business activities.
Where the taxpayer asserts that business segments are unitary,
the taxpayer has the burden of proof.
§11-13L-3. Eligibility for tax credits; creation of the credit.
There shall be allowed to every eligible taxpayer a credit
against the tax prescribed under section two-e, article thirteen
of this chapter, as determined under this article.
§11-13L-4. Amount of credit allowed.
(a)
Credit allowed. -- Eligible taxpayers shall be allowed a credit against the tax prescribed by section two-e, article
thirteen of this chapter, the application of which and the amount
of which shall be determined as provided in this article.
(b)
Amount of credit. --
(1) The amount of credit allowed to the eligible taxpayer is
one thousand dollars multiplied by the number of qualified
employees employed by the eligible taxpayer during the taxable
year, as determined under section six of this article:
Provided,
That if the number of qualified employees employed by the
eligible taxpayer during the taxable year, as determined under
section six of this article, is less than sixty percent of the
number of qualified employees employed by the eligible taxpayer
on the first day of January, one thousand nine hundred ninety-
six, as adjusted under subdivision (2) of this subsection, then
no credit shall be allowed for the taxable year.
(2) For purposes of this section, the tax commissioner shall
adjust the number of qualified employees determined to be in
place on the first day of January, one thousand nine hundred
ninety six, to reflect a sale, transfer or spin off of an
affiliate or segment of the business of an eligible taxpayer in
circumstances where the sale, transfer or spin off does not result in a decrease in the number of jobs in place in this
state. A sale, transfer or spin off that results in no loss of
jobs in this state shall not cause the eligible taxpayer to lose
entitlement to the credit in circumstances where the sixty
percent limitation set forth in this section would otherwise
operate to cause a disallowance of the credit. This subsection
shall not be construed to prevent adjustment of the amount of
credit allowed to the eligible taxpayer based upon the number of
qualified employees employed by the eligible taxpayer during the
taxable year, as determined under section six of this article.
(3) For any taxable year subsequent to a taxable year when
credit was disallowed by reason of employment falling below the
sixty percent level, an eligible taxpayer may be allowed credit
under this article if the number of qualified employees employed
by the eligible taxpayer during the taxable year, as determined
under section six of this article, has increased to a number
equal to or greater than sixty percent of the number of qualified
employees employed by the eligible taxpayer on the first day of
January, one thousand nine hundred ninety-six.
§11-13L-5. Application of annual credit allowance.
(a)
Application of credit. -- The amount of credit allowed
shall be taken against the tax liabilities of the eligible taxpayer for the current taxable year prescribed by section two-
e, article thirteen of this chapter. Any credit remaining after
application of the credit against the tax liabilities for the
current taxable year is forfeited and shall not carry back to any
prior taxable year and shall not carry forward to any subsequent
taxable year. The credit allowed under this article shall be
applied after application of all other applicable tax credits
allowed for the taxable year against the tax prescribed by
section two-e, article thirteen of this chapter.
(b) For purposes of asserting the credit against tax, the
taxpayer shall prepare and file with the monthly tax return filed
under section two-e, article thirteen of this chapter for the
last month of the taxpayer's tax year, aa annual schedule showing
the amount of tax paid for the taxable year, and the amount of
credit allowed under this article. The annual schedule shall set
forth the information and be in the form prescribed by the tax
commissioner. The credit allowed under this article shall be
allowed against a pro rata portion of monthly tax liabilities of
the qualified taxpayer under section two-e, article thirteen of
this chapter, in accordance with the procedures and requirements
prescribed by the tax commissioner. The annual total tax liability and total tax credit allowed under this article are
subject to adjustment and reconciliation pursuant to the filing
of the annual schedule. The taxpayer shall pay any tax due or
claim any credit allowable for the taxable year and shown on the
annual schedule, with the monthly tax return filed under section
two-e, article thirteen of this chapter for the last month of the
taxpayer's tax year.
§11-13L-6. Annual computation of the number of jobs held by
qualified employees.
(a) The taxpayer shall determine the number of jobs held by
qualified employees of the taxpayer in the taxable year by
calculating the average number of qualified employees holding
jobs for each month of the taxable year by averaging the
beginning and ending monthly employment of qualified employees,
then totalling the monthly averages and dividing that total by
twelve.
(b) If, as a result of business growth, merger, expansion or
any other growth in the number of jobs in place, the number of
full time employees employed by a taxpayer in the taxable year
exceeds:
(1) The number of qualified employees employed by the
taxpayer on the first day of January, one thousand nine hundred ninety-six, or
(2) The number of qualified employees employed by the
taxpayer during the prior taxable year;
then only that portion of the increase in the number of full time
jobs that results from the creation of new jobs, as defined in
section two of this article, shall be counted, along with
qualified jobs in place from the prior taxable year, as part of
the total number of qualified jobs in place for the taxable year.
Preexisting jobs carried over from a corporation or other entity
merged with the taxpayer, and not reflective of a true increase
in the number of jobs in West Virginia, or preexisting jobs
formerly in place with a contract service provider which are
taken over or supplanted by the internal operations of the
taxpayer, or any other increase in the count of jobs in place
with a taxpayer which is not reflective of new jobs, as defined
in section two of this article, shall not count as qualified jobs
for purposes of the credit allowed under this article.
(c) The tax commissioner may prescribe alternative methods
for determining the number of jobs held by qualified employees in
place in the taxable year upon a finding by the tax commissioner
that an alternative method is appropriate for ascertaining an accurate and realistic determination of jobs held by qualified
employees in the taxable year. For purposes of prescribing
alternative methods, the tax commissioner may require the
deduction or inclusion of jobs in place with contract service
providers that provide or at any time provided any service to any
eligible taxpayer or to any member of the affiliated group
related to any eligible taxpayer or to any one or more entities
related to the eligible taxpayer:
Provided, That deduction, or
inclusion of those jobs shall only pertain to jobs held by
employees of the contract service provider that are attributable
or that were formerly attributable to the service provided by the
contract service provider to the taxpayer. The tax commissioner
may require any deconsolidation of any filing entity, or may
require an alternative method based on separate accounting,
unitary combination, combination of the affiliated group or
combination of the taxpayer and one or more entities related to
the taxpayer, or any other method determined by the tax
commissioner to be appropriate for ascertaining an accurate and
realistic determination of jobs held by qualified employees in
the taxable year.
§11-13L-7. Availability of credit to successors.
(a) (1) Where there has been a transfer or sale of the business assets of an eligible taxpayer to a successor taxpayer
which continues to operate the business in this State, and
remains subject to the tax prescribed under section two-e,
article thirteen of this chapter, the successor taxpayer is
entitled to the credit allowed under this article:
Provided,
That the successor taxpayer otherwise remains in compliance with
the requirements of this article for entitlement to the credit.
(2) For any taxable year during which a transfer, or sale of
the business assets of an eligible taxpayer to a successor
taxpayer under this section occurs, or a merger allowed under
this section occurs, the credit allowed under this article shall
be apportioned between the predecessor eligible taxpayer and the
successor taxpayer based on the number of days during the taxable
year that each taxpayer acted as the legal employer of qualified
employees upon which the credit allowed under this article is
based and the number of days during the taxable year that each
taxpayer owned the business assets transferred.
(b) Stock purchases. -- Where a corporation which is an
eligible taxpayer entitled to the credit allowed under this
article is purchased through a stock purchase by a new owner and
remains a legal entity so as to retain its corporate identity, the entitlement of that corporation to the credit allowed under
this article will not be affected by the ownership change.
(c) Mergers. --
(1) Where a corporation or other entity which is an eligible
taxpayer entitled to the credit allowed under this article is
merged with another corporation or entity, the surviving
corporation or entity shall be treated as a successor business
under this section, and shall be entitled to the credit to which
the predecessor eligible taxpayer was originally entitled only if
the surviving corporation or entity substantially maintains the
jobs in place that were held by qualified employees prior to the
merger.
(2) The amount of credit available in any taxable year
during which a merger occurs shall be apportioned between the
predecessor eligible taxpayer and the successor eligible taxpayer
based on the number of days during the taxable year that each
taxpayer acted as the legal employer of qualified employees upon
which the credit allowed under this article is based and the
number of days during the tax year that each owned the
transferred business assets.
(d) No provision of this section or of this article shall be construed to allow sales or other transfers of the tax credit
allowed under this article. The credit allowed under this article
can be transferred only in circumstances where there is a valid
successorship as described under this section.
§11-13L-8. Credit recapture; interest; penalties; additions to
tax; statute of limitations.
(a) If it appears upon audit or otherwise that any person or
entity has taken the credit against tax allowed under this
article and was not entitled to take the credit, then the credit
improperly taken under this article shall be recaptured. Amended
returns shall be filed for any tax year for which the credit was
improperly taken. Any additional taxes due under this chapter
shall be remitted with the amended return or returns filed with
the tax commissioner, along with interest, as provided in section
seventeen, article ten of this chapter and a ten percent penalty
and such other penalties and additions to tax as may be
applicable pursuant to the provisions of article ten of this
chapter.
(b) Recapture for jobs loss. --
(1) In any tax year when the number of qualified employees
employed by the taxpayer, as determined under section six of this
article, is less than sixty percent of the number of qualified employees employed by the taxpayer on the first day of January,
one thousand nine hundred ninety-six, as adjusted, in addition to
the loss of credit allowed under this article for the tax year,
credit recapture shall apply, and the tax payer shall return to
the state an amount of tax determined by subtracting the number
of qualified employees for such tax year from sixty percent of
the number of qualified employees employed by the taxpayer as of
the first day of January, one thousand nine hundred ninety six,
as adjusted, and multiplying the difference by one thousand
dollars. An amended return shall be filed for the prior tax year
for which credit recapture is required. Any additional taxes due
under this chapter shall be remitted with the amended return
filed with the tax commissioner, along with interest, as provided
in section seventeen, article ten of this chapter, and a ten
percent penalty and such other penalties and additions to tax as
may be applicable pursuant to the provisions of article ten of
this chapter.
(2) Notwithstanding the provisions of article ten of this
chapter, penalties and additions to tax imposed under article ten
of this chapter and the ten percent penalty imposed under this
section may be waived at the discretion of the tax commissioner. However, interest is not subject to waiver.
(c) Notwithstanding the provisions of article ten of this
chapter, the statute of limitations for the issuance of an
assessment of tax by the tax commissioner shall be five years
from the date of filing of any tax return on which this credit
was taken or five years from the date of payment of any tax
liability calculated pursuant to the assertion of the credit
allowed under this article, whichever is later.
§11-13L-9. Effective date. -- This article shall be effective
for tax years beginning on or after the first day of October, one
thousand nine hundred and ninety-six.