Senate Bill No. 702
(By Senators Craigo and Prezioso)
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[Introduced February 23, 1998; referred to the
Committee on Small Business; and then to the Committee on
Finance.]
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A BILL to amend and reenact sections seven-a and fourteen,
article thirteen-c, chapter eleven of the code of West
Virginia, one thousand nine hundred thirty-one, as amended,
all relating to providing small business tax credit;
specifying amount of credit allowed; specifying application
of credit; specifying certification of new jobs; providing
for small business tax credit projects; providing for
issuance of regulations; specifying effective dates;
specifying restrictions and limitations on credits allowed
by said article thirteen-c; setting forth legislative
findings; specifying construction; specifying nonapplication
against severance taxes; setting forth transition rules;
specifying treatment of successor project participants;
setting forth definitions; specifying requirement for application for credit; and specifying penalty for failure
to file.
Be it enacted by the Legislature of West Virginia:
That sections seven-a and fourteen, article thirteen-c,
chapter eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted, all to
read as follows:
ARTICLE 13C. BUSINESS INVESTMENT AND JOBS EXPANSION CREDIT.
§11-13C-7a. Small business credit.
(a)
"Small business" defined. -- For purposes of this
section, the term "small business" means a business which has an
annual payroll of one million five hundred thousand dollars or
less, or annual gross sales of not more than five million
dollars:
Provided, That beginning the first day of January, one
thousand nine hundred eighty-nine, and each first day of January
thereafter, the tax commissioner shall prescribe amounts which
shall apply in lieu of the above amounts during that calendar
year. These amounts shall be prescribed by increasing the amount
of each by the cost-of-living adjustment for such calendar year.
The requirements for annual payroll and annual gross receipts,
once met by a given taxpayer in that taxable year when qualified
investment is first placed in service or use shall not again be
applied to that same taxpayer in subsequent years to defeat the
small business credit to which the taxpayer gained entitlement in that year. However, the median compensation requirements
applicable to any small business, except a small business
entitled to a certified project credit, shall be determined when
qualified investment is first placed in service or use; and
subsequently redetermined inflation adjusted amounts for median
compensation for each year shall be the requirements applicable
to that small business for each year throughout the ten-year
credit period and any further carryover or other extended credit
period for the original credit to which the requirements relate.
(1)
Cost-of-living adjustment. -- For purposes of subsection
(a) of this section, the cost-of-living adjustment for any
calendar year is the percentage (if any) by which:
(A) The consumer price index for the preceding calendar year
exceeds;
(B) The consumer price index for the calendar year one
thousand nine hundred eighty-seven.
(2)
Consumer price index for any calendar year. -- For
purposes of subdivision (1) of this subsection, the consumer
price index for any calendar year is the average of the federal
consumer price index as of the close of the twelve-month period
ending on the thirty-first day of August of such calendar year.
(3)
Consumer price index. -- For purposes of subdivision (2)
os this subsection, the term "Federal Consumer Price Index" means
the last consumer price index for all urban consumers published by the United States department of labor.
(4)
Rounding. -- If any increase under subdivision (1) of
this subsection is not a multiple of fifty dollars, such increase
shall be rounded to the next lowest multiple of fifty dollars.
(b)
Amount of credit allowed.
(1)
Credit allowed. -- An eligible small business taxpayer
shall be allowed a credit against the portion of taxes imposed by
this state that are attributable to and the direct consequence of
the eligible small business taxpayer's qualified investment in a
new or expanded business in this state which results in the
creation of at least ten new jobs. The amount of this credit
shall be determined as provided in this section.
(2)
Amount of credit. -- The amount of credit allowable
under this section is determined by dividing the amount of the
eligible small business taxpayer's "qualified investment"
(determined under section six of this article) in "property
purchased for business expansion" (as defined in section three of
this article) by ten. The amount of qualified investment so
apportioned to each year of the ten-year credit period shall be
the annual measure against which taxpayer's annual new jobs
percentage (determined under subsection (d) of this section) is
applied. The product of this calculation establishes the maximum
amount of credit allowable each year for ten consecutive years
under this section due to the qualified investment.
(3)
Application of credit. -- The annual credit allowance
must be taken beginning with the taxable year in which the
taxpayer places the qualified investment into service or use in
this state, unless the taxpayer elects to delay the beginning of
the ten-year credit period until the next succeeding taxable
year. This election shall be made in the annual income tax
return filed under this chapter by the taxpayer for the taxable
year in which the qualified investment is placed in service or
use. Once made, this election cannot be revoked. The annual
credit allowance shall be taken and applied in the manner
prescribed in section five.
(c)
New jobs. -- The term "new jobs" has the meaning
ascribed to it in subdivision (14), subsection (b), section three
of this article:
Provided, That the median compensation of such
new jobs shall not be less than eleven thousand dollars per year
and that beginning the first day of January, one thousand nine
hundred eighty-nine, and each first day of January thereafter,
the tax commissioner shall adjust the median annual compensation
specified in this subsection by increasing the amount thereof by
the annual cost-of-living adjustment determined under subsection
(a) of this section.
(1) The term "new employee" shall have the meaning ascribed
to it in subdivision (13), subsection (b), section three of this
article:
Provided, That such term shall not include employees filling new jobs who:
(A) Are related individuals, as defined in Subsection (i),
Section 51 of the Internal Revenue Code of 1986, or a person who
owns ten percent or more of the business with such ownership
interest to be determined under rules set forth in Subsection
(b), Section 267 of said Internal Revenue Code; or
(B) Worked for the taxpayer during the six-month period
ending on the date taxpayer's qualified investment is placed in
service or use and is rehired by the taxpayer during the six- month period beginning on the date taxpayer's qualified
investment is placed in service or use.
(2)
When a job is attributable. -- An employee's position
is directly attributable to the qualified investment if:
(A) The employee's service is performed or his
or her base
of operations is at the new or expanded business facility;
(B) The position did not exist prior to the construction,
renovation, expansion or acquisition of the business facility and
the making of the qualified investment; and
(C) But for the qualified investment, the position would not
have existed.
(d)
New jobs percentage. -- The annual new jobs percentage
is based on the number of new jobs created in this state by the
taxpayer that is directly attributable to taxpayer's qualified
investment:
(1) If at least ten new jobs are created and filled during
the taxable year in which the qualified investment is placed in
service or use, the applicable new jobs percentage shall be
thirty percent:
Provided, That for each new job over ten, up to
forty such additional new jobs, the applicable new jobs
percentage shall be increased by adding thereto one half of one
percent, with the maximum new jobs percentage not to exceed fifty
percent.
(2) During each of the remaining nine years of the ten-year
credit period, the annual new jobs percentage shall be based on
the average number of new jobs that were filled during that
taxable year:
Provided, That for purposes of estimating the new
jobs percentage that will be applicable for each subsequent
credit year, the taxpayer shall use the new jobs percentage
allowable for the taxable year immediately prior thereto, and in
the annual income tax return filed under this chapter for the
then current tax year, taxpayer shall redetermine his
or her
allowable new jobs percentage for that year based on the average
number of new employees employed in new jobs during that year
(determined on a monthly basis) created as the direct result of
taxpayer's qualified investment.
(e)
Certification of new jobs. -- With the annual income tax
return filed under this chapter for each taxable year during the
ten-year credit period, the taxpayer shall certify:
(1) The new jobs percentage for that taxable year.
(2) The amount of the credit allowance for that year.
(3) If the business is a partnership or electing small
business corporation, the amount of credit allocated to the
partners or shareholders, as the case may be.
(4) That qualified investment property continue to be used
in the business, or if any of it was disposed of during the year
the date of disposition and that such property was not disposed
of prior to expiration of its useful life, as determined under
section six.
(5) That the new jobs created by the qualified investment
continue to exist and are filled by persons who meet the
definition of new employee (as defined in subdivision (1),
subsection (c) of this section) and are paid an average annual
compensation equal to or greater than the minimum average annual
compensation required by this section.
(f)
Small business project. -- A small business may apply to
the tax commissioner under section four-b for certification of
subdivision (1), subsection (a), section four-b project if that
project will create at least ten new jobs.
(g)
Regulations. -- The tax commissioner shall prescribe
such regulations as he
or she may deem necessary in order to
determine the amount of credit allowed under this section to a
taxpayer; to verify taxpayer's continued entitlement to claim such credit; and to verify proper application of the credit
allowed. The tax commissioner may, by regulation, require a
taxpayer intending to claim credit under this section to file
with the tax commissioner a notice of intent to claim this
credit, before the taxpayer begins reducing his
or her monthly or
quarterly installment payments of estimated tax for the credit
provided in this section.
(h)
Effective date.
(1) The credit provided in this section shall be allowed for
qualified investment property purchased or leased after the
thirtieth day of June, one thousand nine hundred eighty-seven.
(2) The amendments to this section enacted in the year one
thousand nine hundred ninety-eight shall be retroactive to tax
years beginning on or after the first day of January, one
thousand nine hundred ninety-five.
§11-13C-14. Restrictions and limitations on credits allowed by
this article.
(a)
Findings. -- The Legislature finds that the tax credits
allowed under provisions of this article heretofore enacted have
not effectively and efficiently increased employment through
investment in certain industry segments; that while there has
been a significant net decrease in employment in the coal
industry in recent years the amount of credit being claimed by
producers of coal has significantly increased; that the increasing cost of the credits allowed by this article to coal
producers is eroding the state's ability to reasonably fund
essential state services such as public education, public safety
and basic human services; and that this erosion will continue
unless remedial legislation is enacted.
(b)
Construction. -- The rule of statutory construction
codified in subsection (b), section twelve of this article, is
hereby replaced with a rule of reasonable construction in which
the burden of proof is on the taxpayer to establish by clear and
convincing evidence that the taxpayer is entitled to the benefits
allowed by this article.
(c)
Credit not to be applied against severance taxes.
(1) Notwithstanding any provision in this chapter to the
contrary, no credit shall be allowed against the taxes imposed by
article thirteen-a of this chapter for taxable years ending on or
after the
date of passage of this section tenth day of March, one
thousand nine hundred ninety, unless one of the transition rules
in paragraph (2) of this subsection applies.
(2)
Transition rules. -- The general rule stated in
paragraph (1) of this subsection shall not apply:
(A) To qualified investment property placed in service or
use prior to the
date of passage of this section tenth day of
March, one thousand nine hundred ninety.
(B) To property purchased or leased for business expansion that is placed in service or use on or after the
date of passage
of this section tenth day of March, one thousand nine hundred
ninety, if at least one of the following clauses applies to such
property:
(i) The new or expanded business facility was constructed,
reconstructed or erected, pursuant to a written construction
contract executed prior to the
date of passage of this section
tenth day of March, one thousand nine hundred ninety, as limited
to the provisions of such contract as of such date then binding
on the taxpayer, but only to the extent such new or expanded
business facility is placed in service or use prior to the first
day of January, one thousand nine hundred ninety-two.
(ii) The new or expanded business facility which is part of
a project described in paragraph (1), subsection (a), section
four-b of this article, was constructed, reconstructed or
erected, pursuant to a written construction contract executed
prior to the
date of passage of this section tenth day of March,
one thousand nine hundred ninety, as limited to the provisions of
such contract as of such date then binding on the taxpayer:
Provided, That only that portion of the contract price
attributable to that percentage of the construction contract
completed prior to the first day of January, one thousand nine
hundred ninety-two, (determined under principles set forth in
Section 460(b) of the Internal Revenue Code of 1986, as in effect before the
date of passage of this section tenth day of March,
one thousand nine hundred ninety, which is placed in service or
use prior to the first day of January, one thousand nine hundred
ninety-four, may be treated as property purchased for business
expansion under section six of this article.
(iii) The new or expanded business facility was purchased or
leased pursuant to a written contract executed prior to the
date
of passage of this section tenth day of March, one thousand nine
hundred ninety, as limited to the provisions then binding on the
taxpayer as of such date, but only to the extent such new or
expanded business facility is placed in service or use prior to
the first day of January, one thousand nine hundred ninety-two.
(iv) The machinery or equipment or other tangible personal
property purchased or leased for business expansion at a new or
expanded business facility was purchased or leased by the
taxpayer pursuant to a written contract to purchase or lease
identifiable tangible personal property executed before the
date
of passage of this section tenth day of March, one thousand nine
hundred ninety, as limited to the provisions of such written
contract then binding on the taxpayer, but only to the extent the
tangible personal property purchased or leased under such
contract is placed in service or use before the first day of
January, one thousand nine hundred ninety-two:
Provided, That
when such tangible personal property is purchased or leased as aforesaid as part of a project described in clause (ii) of this
subparagraph, such tangible personal property must be placed in
service or use prior to the first day of January, one thousand
nine hundred ninety-four, to be treated as property purchased or
leased for business expansion under section six of this article.
(C) To property purchased or leased for business expansion
that is placed in service or use on or after the d
ate of passage
of this section tenth day of March, one thousand nine hundred
ninety, as part of a project otherwise eligible for the credit
under subsection (a), section four-b of this article, if all of
the requirements of clauses (i), (ii), (iii) and (iv) of this
subparagraph are satisfied:
(i) The taxpayer and other participants in the project, if
any, have made investments in property purchased or leased for
business expansion as defined in subdivision (19), subsection
(b), section three of this article prior to the
date of passage
of this section tenth day of March, one thousand nine hundred
ninety, in excess of ten million dollars.
(ii) The investments described in clause (i) of this
subparagraph were made pursuant to a plan for an integrated
project to be developed over a period of one or more years and
with the expectation of making additional investments in the
integrated project.
(iii) The portion of the project constructed, purchased or leased after the
date of passage of this section tenth day of
March, one thousand nine hundred ninety, meets the definition of
new business facility in subdivision (3), subsection (e) of this
section.
(iv) The new jobs created by the project after the
date of
passage of this section tenth day of March, one thousand nine
hundred ninety, are filled by new employees as defined in
subdivision (4), subsection (e) of this section.
(3)
Notice of claim under transition rules.
(A)
Notice required. -- Any person intending to assert a
claim for credit based, in whole or in part, on application of
the transition rules in subparagraph (B) or (C), paragraph (2) of
this subsection (c), shall file written notice of such intention
with the tax commissioner on or before the first day of July, one
thousand nine hundred ninety. In the case of a multiparticipant
project, this notice may be filed by the managing project
participant on behalf of all participants in such project. Such
notice shall be in a form prescribed by the tax commissioner and
all information required by such form shall be provided.
(B)
Failure to file notice. -- If any person fails to timely
file the notice required by this paragraph, such person shall be
precluded from claiming credit under this article for such
investment.
(d)
Treatment of successor project participants. -- Whenever a participant in a project certified under paragraph (2) or (3),
subsection (a), section four-b of this article, is replaced by
another participant in that project on or after the
date of
passage of this section tenth day of March, one thousand nine
hundred ninety, the tax credits available to such successor
participant as a result of the transfer shall not exceed the
amount of credits that would have been available to the
predecessor participant had the transfer to the successor
participant not occurred:
Provided, That if the project plan
provides for annual recalculation of the division of the credit
allowable for each year among the participants in the project in
order to maximize the collective use of such credit by the
project participants, or for any other purpose, then the credit
available to the successor participant as a result of the
transfer shall be limited each year to the amount of credit
actually used by the predecessor participant to offset taxes for
the taxable year immediately preceding the taxable year in which
such participant's obligations or interest in the project, as
described in the project plan certified by the tax commissioner,
passed to the successor participant in the project.
(e)
Certain terms redefined. -- Notwithstanding the
provisions of subsection (b), section three of this article, or
any other provision of this article, to the contrary, the
following terms have the meanings assigned to them by this section.
(1)
Construction contract. -- The term "construction
contract" means any contract for the building, construction,
reconstruction or rehabilitation of, or the installation of any
integral components to, or improvements of, a new or existing
business facility.
(2)
Excluded property. -- The term "property purchased or
leased for business expansion" shall not include:
(A) Property owned or leased by the taxpayer and for which
the taxpayer was previously allowed tax credit for industrial
expansion, tax credit for industrial revitalization, tax credit
for coal loading facilities or the tax credits allowed by this
article.
(B) Property owned or leased by the taxpayer and for which
the seller, lessor, or other transferor, was previously allowed
tax credit for industrial expansion, tax credit for industrial
revitalization, tax credit for coal loading facilities, or the
tax credits allowed by this article.
(C) 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.
(D) Airplanes.
(E) Property which is primarily used outside this state,
with use being determined based upon the amount of time the property is actually used both within and without this state.
(F) Property which is acquired incident to the purchase of
the stock or assets of the seller, unless for good cause shown,
the tax commissioner consents to waiving this requirement.
(G) Natural resources in place purchased or leased prior to
the first day of March, one thousand nine hundred eighty-five, or
purchased or leased after such date pursuant to an option to
purchase or lease such natural resources in place acquired prior
to such date but exercised, in whole or in part, on or after the
date of passage of this section tenth day of March, one thousand
nine hundred ninety; and natural resources in place purchased or
leased on or after the
date of passage of this section tenth day
of March, one thousand nine hundred ninety, unless pursuant to a
written contract to purchase or lease executed prior to the
passage of this section.
(H) Property purchased or leased on or after the
date of
passage of this section tenth day of March, one thousand nine
hundred ninety, unless pursuant to a written contract to purchase
or lease executed prior to the passage of this section, the cost
or consideration for which cannot be quantified with any
reasonable degree of accuracy at the time such 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 such property under section six of this article if
the property otherwise qualifies as property purchased or leased
for business expansion.
(3)
New business facility. -- The term "new business
facility" means a business facility which satisfies all the
requirements of subparagraphs (A), (B), (C) and (D) of this
paragraph.
(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. Such
facility shall not be considered a new business facility in the
hands of the taxpayer if the taxpayer's only activity with
respect to such facility is to lease it to another person or
persons.
(B) Such facility is purchased by, or leased to, the
taxpayer after the first day of March, one thousand nine hundred
eighty-five.
(C) The facility was not purchased or leased by the taxpayer
from a related person or a project participant, or related person
of a project participant, in any certified project in which the
taxpayer is a participant. The tax 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) Such facility was not in service or use during the ninety days immediately prior to transfer of the title to such
facility, or prior to the commencement of the term of the lease
of such facility:
Provided, That this ninety-day period may be
waived by the tax commissioner if the commissioner determines
that persons employed at the facility may be treated as "new
employees" as that term is defined under paragraph (4) of this
subsection.
(4)
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
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 shall the number of new employees
directly attributable to such investment for purposes of this
credit exceed the total net increase in the taxpayer's employment
in this state:
Provided, That with respect to taxpayers who file
application for certification after the
date of passage of this
section tenth day of March, one thousand nine hundred ninety, the
tax 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; and in the case of a project
involving more than one person for the controlled groups of all
participants, taken as a whole:
Provided, however, That persons filling jobs saved as a direct result of taxpayer's qualified
investment in property purchased or leased for business expansion
on or after the
effective date of this section tenth day of
March, one thousand nine hundred ninety, may be treated as new
employees filling new jobs if the taxpayer certifies the material
facts to the tax commissioner and the tax 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 such 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 so saved
would have been lost; or
(ii) But for taxpayer's qualified investment in property
purchased or leased for business expansion in this state,
taxpayer would have closed its business facility in this state
and the employees of the taxpayer located at such facility would
have lost their jobs:
Provided, That the tax commissioner shall
not make this certification unless the tax commissioner finds
that the taxpayer is insolvent as defined in 11 U.S.C. §101 (31)
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 shall be deemed to be a "new employee" only if such 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 such 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 such person is customarily performing such duties at least
twenty hours per week for at least six months during the taxable
year.
(5)
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 if the property was purchased on or after the
date of
passage of this section tenth day of March, one thousand nine hundred ninety.
(6)
Small business. -- The term "small business" means a
small business which has an annual payroll of one million seven
hundred thousand dollars or less, and annual gross receipts of
not more than five million five hundred thousand dollars:
Provided, That on or before the fifteenth of January, one
thousand nine hundred ninety-one, and on or before each fifteenth
day of January thereafter, the tax commissioner shall prescribe
amounts which shall apply in lieu of the above amounts for
taxable years beginning on or after the first day of January of
the calendar year in which determination is made.
Provided,
however, That this determination shall not apply to small
business projects which have received certification from the tax
commissioner prior to the passage of this section if the said
small business projects which have previously received
certification continue to meet the requirements of a small
business as in effect at the time of the certification of the
project. Such prescribed amounts shall be determined in
accordance with section seven-a of this article and notice
thereof shall be filed in the state register The prescribed
amounts shall be determined in accordance with section seven-a of
this article and notice thereof shall be filed in the state
register. The requirements for annual payroll and annual gross
receipts, once met by a given taxpayer in that taxable year when qualified investment is first placed in service or use shall not
again be applied to that same taxpayer in subsequent years to
defeat the small business credit to which the taxpayer gained
entitlement in that year. However, the median compensation
requirements applicable to any small business, except a small
business entitled to a certified project credit, shall be
determined when qualified investment is first placed in service
or use; and subsequently redetermined inflation adjusted amounts
for median compensation for each year shall be the requirements
applicable to that small business for each year throughout the
ten-year credit period and any further carryover or other
extended credit period for the original credit to which the
requirements relate. For purposes of this definition:
(A)
Annual Payroll. -- The annual payroll of a business
shall include the employees of its domestic and foreign
affiliates, whether employed on a full-time, part-time,
temporary, or other basis, during the preceding twelve months.
If a business has not been in existence for twelve months, the
payroll of the business shall be divided by the number of weeks,
including fractions of a week, that it has been in business, and
the result multiplied by fifty-two. That amount shall then be
added to the twelve month payrolls of its domestic and foreign
affiliates to determine the annual payroll of the business for
purposes of this section.
(B)
Annual gross receipts. -- The annual gross receipts of
a business shall include the annual gross receipts of its foreign
and domestic affiliates.
(i) The "annual gross receipts" of a business which has been
in business for three or more complete fiscal years means the
annual gross revenues of the business for the last three fiscal
years. For purposes of this definition, the gross revenues of
the business includes revenues from sales of tangible personal
property and services, interest, rents, royalties, fees,
commissions and receipts from any other source, but less returns
and allowances, sales of fixed assets, interaffiliated
transactions between a business and its domestic and foreign
affiliates, and taxes collected for remittance to a third party,
as shown on its books for federal income tax purposes.
(ii) The annual receipts of a business that has been in
business for less than three complete fiscal years means its
total receipts for the period it has been in business, divided by
the number of weeks including fractions of a week that it has
been in business, and multiplied by fifty-two.
(C)
Affiliates. -- The term "affiliates" includes all
concerns which are affiliates of each other when either directly
or indirectly: (i) One concern controls or has the power to
control the other; or (ii) a third party or parties controls or
has the power to control both. In determining whether concerns are independently owned and operated and whether or not
affiliation exists, consideration shall be given to all
appropriate factors, including common ownership, common
management and contractual relationships.
(D)
Concern. -- The term "concern" means any business entity
organized for profit (even if its ownership is in the hands of a
nonprofit entity), having a place of business located in this
state, and which makes a contribution to the economy of this
state through payment of taxes, or the sale or use in this state
of tangible personal property, or the procurement or providing of
services in this state, or the hiring of employees who work in
this state. "Concern" includes, but is not limited to, any
person as defined in paragraph eighteen, subsection (b), section
three of this article.
(f)
Application for credit required.
(1)
Application required. -- Notwithstanding any provision
of this article to the contrary, no credit shall be allowed or
applied under this article for any qualified investment property
placed in service or use on or after the first day of January,
one thousand nine hundred ninety, until the person asserting a
claim for the allowance of credit under this article makes
written application to the tax commissioner for allowance of
credit as provided in this subsection and receives written
acknowledgement of its receipt from tax commissioner:
Provided, That in the case of a multiparticipant project this notice may be
filed by the managing project participant on behalf of all
participants in that project. An application for credit shall be
filed no later than the last day of the due date, without
extensions, for filing the tax returns required under article
twenty-one or twenty-four of this chapter for the taxable year in
which the property to which the credit relates is placed in
service or use and all information required by such form shall be
provided.
(2)
Failure to file. -- The failure to timely apply for the
credit shall result in the forfeiture of fifty percent of the
annual credit allowance otherwise allowable under this article.
This penalty shall apply annually until such application is
filed.
(g) Regulations. -- Within one hundred eighty days after the
effective date of this section, the tax commissioner shall
promulgate emergency regulations for this section, which shall
also be filed as proposed legislative rules, in conformity with
the provisions of article three, chapter twenty-nine-a of this
code; and, if such regulations are timely filed, the Legislature
shall act upon such proposed legislative regulations at its next
regular session to begin in the year one thousand nine hundred
ninety-one.
(h) Studies and reviews. -- The tax commissioner shall review the accounts of all taxpayers who are currently claiming
tax credits under this article for the purpose of ensuring that
such credits are being claimed only in accordance with this
article. The tax commissioner shall report his findings and
conclusions based on such reviews at the next regular session of
the Legislature along with recommendations for any further
legislative change: Provided, That the confidentiality of all
taxpayers and taxpayer information shall be preserved in such
report and that this report shall in no way be deemed to affect
future enforcement of this section.
(i) (g) Effective date.
(1) Except as otherwise expressly provided in this section,
the provisions of this section shall apply to property placed in
service or use on or after the
date of passage of this section by
the Legislature tenth day of March, one thousand nine hundred
ninety, notwithstanding any provision of prior law which may be
in conflict with this section. In the case of any such
ambiguity, the provisions of this section shall control
resolution of such ambiguity.
(2) The term "date of passage of this section" means the
date on which this bill, as enacted, becomes an enrolled bill.
(2) The amendments to this section enacted in the year, one
thousand nine hundred ninety-eight, shall be retroactive, and
shall be effective for tax years beginning on or after the first day of January, one thousand nine hundred ninety-five.
__________
(NOTE: The purpose of this bill is to effectuate the
legislative intent that the small business tax credit provide an
incentive for investment, economic growth and jobs creation.
Therefore, once a small business has met the statutory and
regulatory requirements for annual payroll and annual gross
receipts for entitlement to the small business credit, it would
appear contrary to the intent of the legislation for any such
small business, having gained legitimate entitlement to the tax
credit, to then lose the tax credit by reason of having grown
larger in succeeding years so that the annual gross payroll
requirement or the annual gross receipts requirement (or both) is
exceeded at some time during the ten-year credit period and any
related carryover credit years.
The bill specifies that the requirements for annual payroll
and annual gross receipts, once met by a given Taxpayer in the
taxable year when qualified investment is first placed in service
or use shall not again be applied to that same Taxpayer in
subsequent years to defeat the small business credit to which the
Taxpayer gained entitlement in that year.
However, the bill specifies that median compensation
requirements (minimum pay for workers requirements) applicable to
any small business, except a small business entitled to a
certified project credit, shall be determined when qualified
investment is first placed in service or use; and subsequently
redetermined inflation adjusted amounts for median compensation
for each year shall be the requirements applicable to that small
business for each year throughout the ten-year credit period and
any further carryover or other extended credit period for the
original credit to which the requirements relate.
The bill is retroactive to tax years beginning on or after
January 1, 1995.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.)