CSHB 232(STA): "An Act establishing an economic development tax credit; and providing for an effective date."
00CS FOR HOUSE BILL NO. 232(STA) 01 "An Act establishing an economic development tax credit; and providing for an 02 effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 43.20 is amended by adding a new section to read: 05 Sec. 43.20.043. ECONOMIC DEVELOPMENT TAX CREDIT. (a) Subject to 06 the conditions set out in this section, and in addition to any other credit authorized to the 07 taxpayer by this chapter, a taxpayer may apply as a credit against the state tax liability 08 that may be imposed on the taxpayer under this chapter for a taxable year after 09 December 31, 1995, the amount approved as a credit by the Alaska Industrial 10 Development and Export Authority under AS 44.88.088 for that taxable year. 11 (b) The credit allowed by this section may not 12 (1) exceed the amount approved as a credit by the Alaska Industrial 13 Development and Export Authority under AS 44.88.088; 14 (2) be awarded for more than 10 consecutive taxable years after approval;
01 and 02 (3) be used in a tax year by a taxpayer in conjunction with any other tax 03 credit program. 04 (c) If the commissioner determines that a taxpayer who has received a credit 05 under this section is not complying with the requirements of the tax credit agreement or 06 all of the provisions of this section and AS 44.88.088, the commissioner shall, after 07 giving the taxpayer an opportunity to explain the noncompliance, begin an enforcement 08 action against the taxpayer under AS 43.10. 09 (d) On or before March 31 each year, the commissioner shall submit a report to 10 the Alaska Industrial Development and Export Authority on the tax credit program under 11 this section. The report must include information on the number of agreements that were 12 entered into under AS 44.88.088 during the preceding calendar year, a description of the 13 project that is the subject of each agreement, a summary of the status of projects under 14 agreements entered into before the preceding calendar year, and the sum of the credits 15 awarded under this section. 16 * Sec. 2. AS 44.88 is amended by adding a new section to article 3 to read: 17 Sec. 44.88.088. ECONOMIC DEVELOPMENT TAX CREDIT. (a) The 18 membership of the authority may make economic development tax credit awards under 19 this section to foster job creation or to expand value-added manufacturing or processing 20 industries in the state. The credit may only be claimed for the taxable years specified 21 in the taxpayer's tax credit agreement and may not be applied retrospectively. 22 (b) A person that proposes a project to create new jobs or to expand value-added 23 manufacturing or processing industries in the state may apply to the authority to enter 24 into an agreement for a tax credit under this section. The authority shall prescribe the 25 form of the application. 26 (c) After receipt of an application, the authority shall negotiate with the applicant 27 and may enter into an agreement with the applicant for a credit under this section if the 28 membership of the authority determines that 29 (1) the applicant's project satisfies at least one of the following: 30 (A) the authority 31 (i) verifies that at least one other state is being considered
01 for the project; 02 (ii) determines, using best available data, that the 03 projected costs for the applicant's project in this state would exceed the 04 costs of the project in the competing state, taking into account the 05 probable effect of the competing state's incentive programs based on state, 06 local, private, and federal funds available to the competing state; and 07 (iii) finds that receiving the tax credit is a beneficial 08 factor in the applicant's decision to proceed with the project and not 09 receiving the tax credit will result in the applicant not creating new jobs 10 in the state; 11 (B) the applicant's project will, upon completion, provide a net 12 increase of at least 25 percent in the number of new employees employed by the 13 applicant; or 14 (C) the applicant's project is economically feasible and will, upon 15 completion, benefit the people of the state by increasing opportunities for 16 employment and strengthening the economy of the state, and significantly 17 expands existing facilities in the state; 18 (2) awarding the tax credit will result in a net increase in jobs, in value-added manufacturing or processing indus 19 or in a net fiscal gain to this state, as 20 certified by the office of management and budget, using the best available data; and 21 (3) the credit is not prohibited by (g) of this section. 22 (d) A person is not entitled to claim the credit provided by this section for jobs 23 that the person relocates from one site in the state to another site in the state. 24 Determinations under this subsection shall be made by the membership of the authority. 25 (e) In negotiating the credit amount that should be awarded, the membership of 26 the authority shall take into consideration the following factors: 27 (1) the economy of the area where the proposed investment is to occur; 28 (2) the potential effect on the economy of the state; 29 (3) the magnitude of the cost differential between the state and the 30 competing state; 31 (4) the incremental payroll attributable to the project;
01 (5) the extent to which new or expanded value-added manufacturing or 02 processing will take place; 03 (6) the capital investment attributable to the project; 04 (7) the amount the average wage paid by the applicant exceeds the 05 average wage paid within the area in which the project will be located; 06 (8) the costs to the state with respect to the project; and 07 (9) the financial assistance that is otherwise provided by the state and the 08 municipalities in the affected area. 09 (f) The membership shall determine the amount and duration of a tax credit 10 awarded under this section. The credit amount may not exceed the lesser of 11 (1) the amount of the credit approved under (c) of this section, which 12 credit amount may not exceed five percent of the amount of gross wages payable as 13 compensation for new employees; or 14 (2) 25 percent of the tax due and payable by the taxpayer under this 15 chapter. 16 (g) The membership of the authority shall enter into an agreement with an 17 applicant that is awarded a credit under this section. The agreement must include 18 (1) a detailed description of the project that is the subject of the 19 agreement; 20 (2) the duration of the tax credit and the first taxable year for which the 21 credit may be claimed; 22 (3) the credit amount that will be allowed for each taxable year; 23 (4) a requirement that the taxpayer shall maintain operations at the 24 project location for at least two times the number of years as the term of the tax credit; 25 (5) a specific method for determining the number of new employees 26 employed during a taxable year who are performing jobs not previously performed by 27 an employee; 28 (6) a requirement that the taxpayer shall annually report to the authority 29 the number of new employees who are performing jobs not previously performed by an 30 employee and any other information the membership of the authority needs to perform 31 its duties under this section;
01 (7) a requirement that the membership of the authority is authorized to 02 verify with the appropriate state agencies the amounts reported under (6) of this 03 subsection and after doing so shall issue a certificate of verification to the taxpayer 04 stating that the amounts have been verified; 05 (8) a requirement that the taxpayer shall provide written notification to 06 the authority and the membership of the authority not more than 30 days after the 07 taxpayer makes or receives a proposal that would transfer the taxpayer's state tax liability 08 obligations to a successor taxpayer; and 09 (9) any other performance conditions that the membership of the 10 authority determines are appropriate. 11 (h) A taxpayer claiming a credit under this section shall submit to the department 12 a copy of the certificate of verification under (g) of this section for the taxable year. 13 However, failure to submit a copy of the certificate does not invalidate a claim for a 14 credit. 15 (i) Biennially, the authority shall provide for an evaluation of the tax credit 16 program authorized by this section. The evaluation must include an assessment of the 17 effectiveness of the program in creating new jobs in the state and of the revenue effect 18 of the program, and may include a review of the practices and experiences of other states 19 with similar programs. The membership of the authority shall submit a report on the 20 evaluation to the governor and the legislature. 21 (j) In this section, 22 (1) "credit amount" means the amount agreed to between the membership 23 of the authority and applicant under this section; 24 (2) "full-time employee" means an individual who is employed for 25 consideration for at least 35 hours each week or who renders any other standard of 26 service generally accepted by custom or specified by contract as full-time employment; 27 (3) "new employee" 28 (A) means 29 (i) a full-time employee employed by a taxpayer in the 30 project that is the subject of a tax credit agreement and who is first 31 employed by the taxpayer after the taxpayer enters into the tax credit
01 agreement; 02 (ii) notwithstanding (B)(i) of this paragraph, a new 03 employee who performs a job that was previously performed by an 04 employee who was treated under the agreement as a new employee and 05 was promoted by the taxpayer to another job; 06 (B) does not include 07 (i) an employee of the taxpayer who performs a job that 08 was previously performed by another employee if that job existed for at 09 least six months before hiring the new employee; 10 (ii) an employee of the taxpayer who was previously 11 employed in the state by a related member of the taxpayer and whose 12 employment was shifted to the taxpayer after the taxpayer entered into the 13 tax credit agreement; or 14 (iii) a child, grandchild, parent, or spouse, other than a 15 spouse who is legally separated from the individual, of any individual 16 who is an employee of the taxpayer and who has a direct or an indirect 17 ownership interest of at least five percent in the profits, capital, or value 18 of the taxpayer, as determined in accordance with 26 U.S.C. 1563. 19 * Sec. 3. This Act takes effect January 1, 1996.