As Introduced

129th General Assembly
Regular Session
2011-2012
H. B. No. 327


Representative Gonzales 

Cosponsors: Representatives Baker, Brenner, Stebelton 

A BILL
To amend sections 122.17 and 122.171 of the Revised 1
Code to provide for a six-year trial period in 2
which taxpayers may receive a job creation or job 3
retention tax credit for the employment of 4
home-based employees and to require the Director 5
of Development to issue a report at the end of the 6
six-year period.7


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1. That sections 122.17 and 122.171 of the Revised 8
Code be amended to read as follows:9

       Sec. 122.17.  (A) As used in this section:10

       (1) "Income tax revenue" means the total amount withheld 11
under section 5747.06 of the Revised Code by the taxpayer during 12
the taxable year, or during the calendar year that includes the 13
tax period, from the compensation of each employee or each 14
home-based employee employed in the project to the extent the 15
employee's withholdings are not used to determine the credit under 16
section 122.171 of the Revised Code. "Income tax revenue" excludes 17
amounts withheld before the day the taxpayer becomes eligible for 18
the credit.19

       (2) "Baseline income tax revenue" means income tax revenue 20
except that the applicable withholding period is the twelve months 21
immediately preceding the date the tax credit authority approves 22
the taxpayer's application multiplied by the sum of one plus an 23
annual pay increase factor to be determined by the tax credit 24
authority. If the taxpayer becomes eligible for the credit after 25
the first day of the taxpayer's taxable year or after the first 26
day of the calendar year that includes the tax period, the 27
taxpayer's baseline income tax revenue for the first such taxable 28
or calendar year of credit eligibility shall be reduced in 29
proportion to the number of days during the taxable or calendar 30
year for which the taxpayer was not eligible for the credit. For 31
subsequent taxable or calendar years, "baseline income tax 32
revenue" equals the unreduced baseline income tax revenue for the 33
preceding taxable or calendar year multiplied by the sum of one 34
plus the pay increase factor.35

       (3) "Excess income tax revenue" means income tax revenue 36
minus baseline income tax revenue.37

       (4) "Home-based employee" means an employee whose services 38
are performed primarily from the employee's residence in this 39
state exclusively for the benefit of the project and whose rate of 40
pay is at least nine dollars and fifty cents per hour. 41

       (B) The tax credit authority may make grants under this 42
section to foster job creation in this state. Such a grant shall 43
take the form of a refundable credit allowed against the tax 44
imposed by section 5725.18, 5729.03, 5733.06, or 5747.02 or levied 45
under Chapter 5751. of the Revised Code. The credit shall be 46
claimed for the taxable years or tax periods specified in the 47
taxpayer's agreement with the tax credit authority under division 48
(D) of this section. With respect to taxes imposed under section 49
5733.06 or 5747.02 or Chapter 5751. of the Revised Code, the 50
credit shall be claimed in the order required under section 51
5733.98, 5747.98, or 5751.98 of the Revised Code. The amount of 52
the credit available for a taxable year or for a calendar year 53
that includes a tax period equals the excess income tax revenue 54
for that year multiplied by the percentage specified in the 55
agreement with the tax credit authority. Any credit granted under 56
this section against the tax imposed by section 5733.06 or 5747.02 57
of the Revised Code, to the extent not fully utilized against such 58
tax for taxable years ending prior to 2008, shall automatically be 59
converted without any action taken by the tax credit authority to 60
a credit against the tax levied under Chapter 5751. of the Revised 61
Code for tax periods beginning on or after July 1, 2008, provided 62
that the person to whom the credit was granted is subject to such 63
tax. The converted credit shall apply to those calendar years in 64
which the remaining taxable years specified in the agreement end.65

       (C) A taxpayer or potential taxpayer who proposes a project 66
to create new jobs in this state may apply to the tax credit 67
authority to enter into an agreement for a tax credit under this 68
section. The69

       An application shall not propose to include both home-based 70
employees and employees who are not home-based employees in the 71
computation of income tax revenue for the purposes of the same tax 72
credit agreement. If a taxpayer or potential taxpayer employs both 73
home-based employees and employees who are not home-based 74
employees in a project, the taxpayer shall submit separate 75
applications for separate tax credit agreements for the project, 76
one of which shall include home-based employees in the computation 77
of income tax revenue and one of which shall include all other 78
employees in the computation of income tax revenue.79

       The director of development shall prescribe the form of the 80
application. After receipt of an application, the authority may 81
enter into an agreement with the taxpayer for a credit under this 82
section if it determines all of the following:83

       (1) The taxpayer's project will increase payroll and income 84
tax revenue;85

       (2) The taxpayer's project is economically sound and will 86
benefit the people of this state by increasing opportunities for 87
employment and strengthening the economy of this state;88

       (3) Receiving the tax credit is a major factor in the 89
taxpayer's decision to go forward with the project.90

       (D) An agreement under this section shall include all of the 91
following:92

       (1) A detailed description of the project that is the subject 93
of the agreement;94

       (2)(a) The term of the tax credit, which, except as provided 95
in division (D)(2)(b) of this section, shall not exceed fifteen 96
years, and the first taxable year, or first calendar year that 97
includes a tax period, for which the credit may be claimed;98

       (b) If home-based employees are included in the computation 99
of income tax revenue for purposes of the credit, the term of the 100
credit shall expire on or before the last day of the taxable or 101
calendar year ending before the beginning of the seventh year 102
after the effective date of ....B. ... of the 129th general 103
assembly;104

       (3) A requirement that the taxpayer shall maintain operations 105
at the project location for at least the greater of seven years or 106
the term of the credit plus three years;107

       (4) The percentage, as determined by the tax credit 108
authority, of excess income tax revenue that will be allowed as 109
the amount of the credit for each taxable year or for each 110
calendar year that includes a tax period;111

       (5) The pay increase factor to be applied to the taxpayer's 112
baseline income tax revenue;113

       (6) A requirement that the taxpayer annually shall report to 114
the director of development employment, tax withholding, 115
investment, and other information the director needs to perform 116
the director's duties under this section;117

       (7) A requirement that the director of development annually 118
review the information reported under division (D)(6) of this 119
section and verify compliance with the agreement; if the taxpayer 120
is in compliance, a requirement that the director issue a 121
certificate to the taxpayer stating that the information has been 122
verified and identifying the amount of the credit that may be 123
claimed for the taxable or calendar year;124

       (8) A provision providing that the taxpayer may not relocate 125
a substantial number of employment positions from elsewhere in 126
this state to the project location unless the director of 127
development determines that the legislative authority of the 128
county, township, or municipal corporation from which the 129
employment positions would be relocated has been notified by the 130
taxpayer of the relocation.131

       For purposes of this section, the movement of an employment 132
position from one political subdivision to another political 133
subdivision shall be considered a relocation of an employment 134
position unless the employment position in the first political 135
subdivision is replaced.136

       (E) If a taxpayer fails to meet or comply with any condition 137
or requirement set forth in a tax credit agreement, the tax credit 138
authority may amend the agreement to reduce the percentage or term 139
of the tax credit. The reduction of the percentage or term may 140
take effect in the current taxable or calendar year.141

       (F) Projects that consist solely of point-of-final-purchase 142
retail facilities are not eligible for a tax credit under this 143
section. If a project consists of both point-of-final-purchase 144
retail facilities and nonretail facilities, only the portion of 145
the project consisting of the nonretail facilities is eligible for 146
a tax credit and only the excess income tax revenue from the 147
nonretail facilities shall be considered when computing the amount 148
of the tax credit. If a warehouse facility is part of a 149
point-of-final-purchase retail facility and supplies only that 150
facility, the warehouse facility is not eligible for a tax credit. 151
Catalog distribution centers are not considered 152
point-of-final-purchase retail facilities for the purposes of this 153
division, and are eligible for tax credits under this section.154

       (G) Financial statements and other information submitted to 155
the department of development or the tax credit authority by an 156
applicant or recipient of a tax credit under this section, and any 157
information taken for any purpose from such statements or 158
information, are not public records subject to section 149.43 of 159
the Revised Code. However, the chairperson of the authority may 160
make use of the statements and other information for purposes of 161
issuing public reports or in connection with court proceedings 162
concerning tax credit agreements under this section. Upon the 163
request of the tax commissioner or, if the applicant or recipient 164
is an insurance company, upon the request of the superintendent of 165
insurance, the chairperson of the authority shall provide to the 166
commissioner or superintendent any statement or information 167
submitted by an applicant or recipient of a tax credit in 168
connection with the credit. The commissioner or superintendent 169
shall preserve the confidentiality of the statement or 170
information.171

       (H) A taxpayer claiming a credit under this section shall 172
submit to the tax commissioner or, if the taxpayer is an insurance 173
company, to the superintendent of insurance, a copy of the 174
director of development's certificate of verification under 175
division (D)(7) of this section with the taxpayer's tax report or 176
return for the taxable year or for the calendar year that includes 177
the tax period. Failure to submit a copy of the certificate with 178
the report or return does not invalidate a claim for a credit if 179
the taxpayer submits a copy of the certificate to the commissioner 180
or superintendent within sixty days after the commissioner or 181
superintendent requests it.182

       (I) The director of development, after consultation with the 183
tax commissioner and the superintendent of insurance and in 184
accordance with Chapter 119. of the Revised Code, shall adopt 185
rules necessary to implement this section. The rules may provide 186
for recipients of tax credits under this section to be charged 187
fees to cover administrative costs of the tax credit program. The 188
fees collected shall be credited to the tax incentive programs 189
operating fund created in section 122.174 of the Revised Code. At 190
the time the director gives public notice under division (A) of 191
section 119.03 of the Revised Code of the adoption of the rules, 192
the director shall submit copies of the proposed rules to the 193
chairpersons of the standing committees on economic development in 194
the senate and the house of representatives.195

       (J) For the purposes of this section, a taxpayer may include 196
a partnership, a corporation that has made an election under 197
subchapter S of chapter one of subtitle A of the Internal Revenue 198
Code, or any other business entity through which income flows as a 199
distributive share to its owners. A partnership, S-corporation, or 200
other such business entity may elect to pass the credit received 201
under this section through to the persons to whom the income or 202
profit of the partnership, S-corporation, or other entity is 203
distributed. The election shall be made on the annual report 204
required under division (D)(6) of this section. The election 205
applies to and is irrevocable for the credit for which the report 206
is submitted. If the election is made, the credit shall be 207
apportioned among those persons in the same proportions as those 208
in which the income or profit is distributed.209

       (K) If the director of development determines that a taxpayer 210
who has received a credit under this section is not complying with 211
the requirement under division (D)(3) of this section, the 212
director shall notify the tax credit authority of the 213
noncompliance. After receiving such a notice, and after giving the 214
taxpayer an opportunity to explain the noncompliance, the tax 215
credit authority may require the taxpayer to refund to this state 216
a portion of the credit in accordance with the following:217

       (1) If the taxpayer maintained operations at the project 218
location for a period less than or equal to the term of the 219
credit, an amount not exceeding one hundred per cent of the sum of 220
any credits allowed and received under this section;221

       (2) If the taxpayer maintained operations at the project 222
location for a period longer than the term of the credit, but less 223
than the greater of seven years or the term of the credit plus 224
three years, an amount not exceeding seventy-five per cent of the 225
sum of any credits allowed and received under this section.226

       In determining the portion of the tax credit to be refunded 227
to this state, the tax credit authority shall consider the effect 228
of market conditions on the taxpayer's project and whether the 229
taxpayer continues to maintain other operations in this state. 230
After making the determination, the authority shall certify the 231
amount to be refunded to the tax commissioner or superintendent of 232
insurance, as appropriate. If the amount is certified to the 233
commissioner, the commissioner shall make an assessment for that 234
amount against the taxpayer under Chapter 5733., 5747., or 5751. 235
of the Revised Code. If the amount is certified to the 236
superintendent, the superintendent shall make an assessment for 237
that amount against the taxpayer under Chapter 5725. or 5729. of 238
the Revised Code. The time limitations on assessments under those 239
chapters do not apply to an assessment under this division, but 240
the commissioner or superintendent, as appropriate, shall make the 241
assessment within one year after the date the authority certifies 242
to the commissioner or superintendent the amount to be refunded.243

       (L) On or before the first day of August each year, the 244
director of development shall submit a report to the governor, the 245
president of the senate, and the speaker of the house of 246
representatives on the tax credit program under this section. The 247
report shall include information on the number of agreements that 248
were entered into under this section during the preceding calendar 249
year, a description of the project that is the subject of each 250
such agreement, and an update on the status of projects under 251
agreements entered into before the preceding calendar year.252

       (M) There is hereby created the tax credit authority, which 253
consists of the director of development and four other members 254
appointed as follows: the governor, the president of the senate, 255
and the speaker of the house of representatives each shall appoint 256
one member who shall be a specialist in economic development; the 257
governor also shall appoint a member who is a specialist in 258
taxation. Of the initial appointees, the members appointed by the 259
governor shall serve a term of two years; the members appointed by 260
the president of the senate and the speaker of the house of 261
representatives shall serve a term of four years. Thereafter, 262
terms of office shall be for four years. Initial appointments to 263
the authority shall be made within thirty days after January 13, 264
1993. Each member shall serve on the authority until the end of 265
the term for which the member was appointed. Vacancies shall be 266
filled in the same manner provided for original appointments. Any 267
member appointed to fill a vacancy occurring prior to the 268
expiration of the term for which the member's predecessor was 269
appointed shall hold office for the remainder of that term. 270
Members may be reappointed to the authority. Members of the 271
authority shall receive their necessary and actual expenses while 272
engaged in the business of the authority. The director of 273
development shall serve as chairperson of the authority, and the 274
members annually shall elect a vice-chairperson from among 275
themselves. Three members of the authority constitute a quorum to 276
transact and vote on the business of the authority. The majority 277
vote of the membership of the authority is necessary to approve 278
any such business, including the election of the vice-chairperson.279

       The director of development may appoint a professional 280
employee of the department of development to serve as the 281
director's substitute at a meeting of the authority. The director 282
shall make the appointment in writing. In the absence of the 283
director from a meeting of the authority, the appointed substitute 284
shall serve as chairperson. In the absence of both the director 285
and the director's substitute from a meeting, the vice-chairperson 286
shall serve as chairperson.287

       (N) For purposes of the credits granted by this section 288
against the taxes imposed under sections 5725.18 and 5729.03 of 289
the Revised Code, "taxable year" means the period covered by the 290
taxpayer's annual statement to the superintendent of insurance.291

       (O) On or before the first day of January of the seventh 292
calendar year following the year in which ....B. ... of the 129th 293
general assembly became effective, the director of development 294
shall submit a report to the governor, the president of the 295
senate, and the speaker of the house of representatives on the 296
effect of agreements entered into under this section by the tax 297
credit authority in which the taxpayer included home-based 298
employees in the computation of income tax revenue. The report 299
shall include information on the number of such agreements that 300
were entered into in the preceding six years and a description of 301
the projects that were the subjects of such agreements.302

       Sec. 122.171. (A) As used in this section:303

       (1) "Capital investment project" means a plan of investment 304
at a project site for the acquisition, construction, renovation, 305
or repair of buildings, machinery, or equipment, or for 306
capitalized costs of basic research and new product development 307
determined in accordance with generally accepted accounting 308
principles, but does not include any of the following:309

       (a) Payments made for the acquisition of personal property 310
through operating leases;311

       (b) Project costs paid before January 1, 2002;312

       (c) Payments made to a related member as defined in section 313
5733.042 of the Revised Code or to a consolidated elected taxpayer 314
or a combined taxpayer as defined in section 5751.01 of the 315
Revised Code.316

       (2) "Eligible business" means a taxpayer and its related 317
members with Ohio operations satisfying all of the following:318

       (a) The taxpayer employs at least five hundred full-time 319
equivalent employees at the time the tax credit authority grants 320
the tax credit under this section;321

       (b) The taxpayer makes or causes to be made payments for the 322
capital investment project of either of the following:323

       (i) If the taxpayer is engaged at the project site primarily 324
as a manufacturer, at least fifty million dollars in the aggregate 325
at the project site during a period of three consecutive calendar 326
years, including the calendar year that includes a day of the 327
taxpayer's taxable year or tax period with respect to which the 328
credit is granted;329

       (ii) If the taxpayer is engaged at the project site primarily 330
in significant corporate administrative functions, as defined by 331
the director of development by rule, at least twenty million 332
dollars in the aggregate at the project site during a period of 333
three consecutive calendar years including the calendar year that 334
includes a day of the taxpayer's taxable year or tax period with 335
respect to which the credit is granted.336

       (c) The taxpayer had a capital investment project reviewed 337
and approved by the tax credit authority as provided in divisions 338
(C), (D), and (E) of this section.339

       (3) "Full-time equivalent employees" means the quotient 340
obtained by dividing the total number of hours for which employees 341
or home-based employees were compensated for employment in the 342
project by two thousand eighty. "Full-time equivalent employees" 343
shall exclude hours that are counted for a credit under section 344
122.17 of the Revised Code.345

       (4) "Income tax revenue" means the total amount withheld 346
under section 5747.06 of the Revised Code by the taxpayer during 347
the taxable year, or during the calendar year that includes the 348
tax period, from the compensation of all employeeseach employee 349
or home-based employee employed in the project whose hours of 350
compensation are included in calculating the number of full-time 351
equivalent employees.352

       (5) "Manufacturer" has the same meaning as in section 353
5739.011 of the Revised Code.354

       (6) "Project site" means an integrated complex of facilities 355
in this state, as specified by the tax credit authority under this 356
section, within a fifteen-mile radius where a taxpayer is 357
primarily operating as an eligible business.358

       (7) "Related member" has the same meaning as in section 359
5733.042 of the Revised Code as that section existed on the 360
effective date of its amendment by Am. Sub. H.B. 215 of the 122nd 361
general assembly, September 29, 1997.362

       (8) "Taxable year" includes, in the case of a domestic or 363
foreign insurance company, the calendar year ending on the 364
thirty-first day of December preceding the day the superintendent 365
of insurance is required to certify to the treasurer of state 366
under section 5725.20 or 5729.05 of the Revised Code the amount of 367
taxes due from insurance companies.368

       (9) "Home-based employee" has the same meaning as in section 369
122.17 of the Revised Code.370

       (B) The tax credit authority created under section 122.17 of 371
the Revised Code may grant tax credits under this section for the 372
purpose of fostering job retention in this state. Upon application 373
by an eligible business and upon consideration of the 374
recommendation of the director of budget and management, tax 375
commissioner, the superintendent of insurance in the case of an 376
insurance company, and director of development under division (C) 377
of this section, the tax credit authority may grant the following 378
credits against the tax imposed by section 5725.18, 5729.03, 379
5733.06, 5747.02, or 5751.02 of the Revised Code:380

       (1) A nonrefundable credit to an eligible business;381

       (2) A refundable credit to an eligible business meeting the 382
following conditions, provided that the director of budget and 383
management, tax commissioner, superintendent of insurance in the 384
case of an insurance company, and director of development have 385
recommended the granting of the credit to the tax credit authority 386
before July 1, 2011:387

       (a) The business retains at least one thousand full-time 388
equivalent employees at the project site.389

       (b) The business makes or causes to be made payments for a 390
capital investment project of at least twenty-five million dollars 391
in the aggregate at the project site during a period of three 392
consecutive calendar years, including the calendar year that 393
includes a day of the business' taxable year or tax period with 394
respect to which the credit is granted.395

       (c) In 2010, the business received a written offer of 396
financial incentives from another state of the United States that 397
the director determines to be sufficient inducement for the 398
business to relocate the business' operations from this state to 399
that state.400

       The credits authorized in divisions (B)(1) and (2) of this 401
section may be granted for a period up to fifteen taxable years 402
or, in the case of the tax levied by section 5751.02 of the 403
Revised Code, for a period of up to fifteen calendar years, except 404
that if home-based employees are included in the computation of 405
income tax revenue for purposes of the credit, the term of the 406
credit shall expire on or before the last day of the taxable or 407
calendar year ending before the beginning of the seventh year 408
after the effective date of ....B. ... of the 129th general 409
assembly. The credit amount for a taxable year or a calendar year 410
that includes the tax period for which a credit may be claimed 411
equals the income tax revenue for that year multiplied by the 412
percentage specified in the agreement with the tax credit 413
authority. The percentage may not exceed seventy-five per cent. 414
The credit shall be claimed in the order required under section 415
5725.98, 5729.98, 5733.98, 5747.98, or 5751.98 of the Revised 416
Code. In determining the percentage and term of the credit, the 417
tax credit authority shall consider both the number of full-time 418
equivalent employees and the value of the capital investment 419
project. The credit amount may not be based on the income tax 420
revenue for a calendar year before the calendar year in which the 421
tax credit authority specifies the tax credit is to begin, and the 422
credit shall be claimed only for the taxable years or tax periods 423
specified in the eligible business' agreement with the tax credit 424
authority. In no event shall the credit be claimed for a taxable 425
year or tax period terminating before the date specified in the 426
agreement. Any credit granted under this section against the tax 427
imposed by section 5733.06 or 5747.02 of the Revised Code, to the 428
extent not fully utilized against such tax for taxable years 429
ending prior to 2008, shall automatically be converted without any 430
action taken by the tax credit authority to a credit against the 431
tax levied under Chapter 5751. of the Revised Code for tax periods 432
beginning on or after July 1, 2008, provided that the person to 433
whom the credit was granted is subject to such tax. The converted 434
credit shall apply to those calendar years in which the remaining 435
taxable years specified in the agreement end.436

        If a nonrefundable credit allowed under division (B)(1) of 437
this section for a taxable year or tax period exceeds the 438
taxpayer's tax liability for that year or period, the excess may 439
be carried forward for the three succeeding taxable or calendar 440
years, but the amount of any excess credit allowed in any taxable 441
year or tax period shall be deducted from the balance carried 442
forward to the succeeding year or period. 443

       (C) A taxpayer that proposes a capital investment project to 444
retain jobs in this state may apply to the tax credit authority to 445
enter into an agreement for a tax credit under this section. The446
An application shall not propose to include both home-based 447
employees and employees who are not home-based employees in the 448
computation of income tax revenue or in the determination of the 449
number of full-time equivalent employees retained for the purposes 450
of the same tax credit agreement. If a taxpayer employs both 451
home-based employees and employees who are not home-based 452
employees in a project, the taxpayer shall submit separate 453
applications for separate tax credit agreements, one of which 454
shall include home-based employees in the computation of income 455
tax revenue and the determination of the number of full-time 456
equivalent employees retained, and one of which shall include all 457
other employees in the computation of income tax revenue and the 458
determination of the number of full-time equivalent employees 459
retained.460

       The director of development shall prescribe the form of the 461
application. After receipt of an application, the authority shall 462
forward copies of the application to the director of budget and 463
management, the tax commissioner, the superintendent of insurance 464
in the case of an insurance company, and the director of 465
development, each of whom shall review the application to 466
determine the economic impact the proposed project would have on 467
the state and the affected political subdivisions and shall submit 468
a summary of their determinations and recommendations to the 469
authority. 470

       (D) Upon review and consideration of the determinations and 471
recommendations described in division (C) of this section, the tax 472
credit authority may enter into an agreement with the taxpayer for 473
a credit under this section if the authority determines all of the 474
following:475

       (1) The taxpayer's capital investment project will result in 476
the retention of employment in this state.477

       (2) The taxpayer is economically sound and has the ability to 478
complete the proposed capital investment project.479

       (3) The taxpayer intends to and has the ability to maintain 480
operations at the project site for at least the greater of (a) the 481
term of the credit plus three years, or (b) seven years.482

       (4) Receiving the credit is a major factor in the taxpayer's 483
decision to begin, continue with, or complete the project.484

       (E) An agreement under this section shall include all of the 485
following:486

       (1) A detailed description of the project that is the subject 487
of the agreement, including the amount of the investment, the 488
period over which the investment has been or is being made, the 489
number of full-time equivalent employees at the project site, and 490
the anticipated income tax revenue to be generated.491

       (2) The term of the credit, the percentage of the tax credit, 492
the maximum annual value of tax credits that may be allowed each 493
year, and the first year for which the credit may be claimed.494

        (3) A requirement that the taxpayer maintain operations at 495
the project site for at least the greater of (a) the term of the 496
credit plus three years, or (b) seven years.497

       (4) A requirement that the taxpayer retain a specified number 498
of full-time equivalent employees at the project site and within 499
this state for the term of the credit, including a requirement 500
that the taxpayer continue to employ at least five hundred 501
full-time equivalent employees during the entire term of the 502
agreement in the case of a credit granted under division (B)(1) of 503
this section, and one thousand full-time equivalent employees in 504
the case of a credit granted under division (B)(2) of this 505
section.506

       (5) A requirement that the taxpayer annually report to the 507
director of development employment, tax withholding, capital 508
investment, and other information the director needs to perform 509
the director's duties under this section.510

       (6) A requirement that the director of development annually 511
review the annual reports of the taxpayer to verify the 512
information reported under division (E)(5) of this section and 513
compliance with the agreement. Upon verification, the director 514
shall issue a certificate to the taxpayer stating that the 515
information has been verified and identifying the amount of the 516
credit for the taxable year or calendar year that includes the tax 517
period. In determining the number of full-time equivalent 518
employees, no position shall be counted that is filled by an 519
employee who is included in the calculation of a tax credit under 520
section 122.17 of the Revised Code.521

        (7) A provision providing that the taxpayer may not relocate 522
a substantial number of employment positions from elsewhere in 523
this state to the project site unless the director of development 524
determines that the taxpayer notified the legislative authority of 525
the county, township, or municipal corporation from which the 526
employment positions would be relocated.527

       For purposes of this section, the movement of an employment 528
position from one political subdivision to another political 529
subdivision shall be considered a relocation of an employment 530
position unless the movement is confined to the project site. The 531
transfer of an employment position from one political subdivision 532
to another political subdivision shall not be considered a 533
relocation of an employment position if the employment position in 534
the first political subdivision is replaced by another employment 535
position.536

       (8) A waiver by the taxpayer of any limitations periods 537
relating to assessments or adjustments resulting from the 538
taxpayer's failure to comply with the agreement.539

       (F) If a taxpayer fails to meet or comply with any condition 540
or requirement set forth in a tax credit agreement, the tax credit 541
authority may amend the agreement to reduce the percentage or term 542
of the credit. The reduction of the percentage or term may take 543
effect in the current taxable or calendar year.544

       (G) Financial statements and other information submitted to 545
the department of development or the tax credit authority by an 546
applicant for or recipient of a tax credit under this section, and 547
any information taken for any purpose from such statements or 548
information, are not public records subject to section 149.43 of 549
the Revised Code. However, the chairperson of the authority may 550
make use of the statements and other information for purposes of 551
issuing public reports or in connection with court proceedings 552
concerning tax credit agreements under this section. Upon the 553
request of the tax commissioner, or the superintendent of 554
insurance in the case of an insurance company, the chairperson of 555
the authority shall provide to the commissioner or superintendent 556
any statement or other information submitted by an applicant for 557
or recipient of a tax credit in connection with the credit. The 558
commissioner or superintendent shall preserve the confidentiality 559
of the statement or other information.560

       (H) A taxpayer claiming a tax credit under this section shall 561
submit to the tax commissioner or, in the case of an insurance 562
company, to the superintendent of insurance, a copy of the 563
director of development's certificate of verification under 564
division (E)(6) of this section with the taxpayer's tax report or 565
return for the taxable year or for the calendar year that includes 566
the tax period. Failure to submit a copy of the certificate with 567
the report or return does not invalidate a claim for a credit if 568
the taxpayer submits a copy of the certificate to the commissioner 569
or superintendent within sixty days after the commissioner or 570
superintendent requests it.571

       (I) For the purposes of this section, a taxpayer may include 572
a partnership, a corporation that has made an election under 573
subchapter S of chapter one of subtitle A of the Internal Revenue 574
Code, or any other business entity through which income flows as a 575
distributive share to its owners. A partnership, S-corporation, or 576
other such business entity may elect to pass the credit received 577
under this section through to the persons to whom the income or 578
profit of the partnership, S-corporation, or other entity is 579
distributed. The election shall be made on the annual report 580
required under division (E)(5) of this section. The election 581
applies to and is irrevocable for the credit for which the report 582
is submitted. If the election is made, the credit shall be 583
apportioned among those persons in the same proportions as those 584
in which the income or profit is distributed.585

       (J) If the director of development determines that a taxpayer 586
that received a tax credit under this section is not complying 587
with the requirement under division (E)(3) of this section, the 588
director shall notify the tax credit authority of the 589
noncompliance. After receiving such a notice, and after giving the 590
taxpayer an opportunity to explain the noncompliance, the 591
authority may terminate the agreement and require the taxpayer to 592
refund to the state all or a portion of the credit claimed in 593
previous years, as follows:594

        (1) If the taxpayer maintained operations at the project site 595
for less than or equal to the term of the credit, an amount not to 596
exceed one hundred per cent of the sum of any tax credits allowed 597
and received under this section.598

        (2) If the taxpayer maintained operations at the project site 599
longer than the term of the credit, but less than the greater of 600
(a) the term of the credit plus three years, or (b) seven years, 601
the amount required to be refunded shall not exceed seventy-five 602
per cent of the sum of any tax credits allowed and received under 603
this section.604

       In determining the portion of the credit to be refunded to 605
this state, the authority shall consider the effect of market 606
conditions on the taxpayer's project and whether the taxpayer 607
continues to maintain other operations in this state. After making 608
the determination, the authority shall certify the amount to be 609
refunded to the tax commissioner or the superintendent of 610
insurance. If the taxpayer is not an insurance company, the 611
commissioner shall make an assessment for that amount against the 612
taxpayer under Chapter 5733., 5747., or 5751. of the Revised Code. 613
If the taxpayer is an insurance company, the superintendent of 614
insurance shall make an assessment under section 5725.222 or 615
5729.102 of the Revised Code. The time limitations on assessments 616
under those chapters and sections do not apply to an assessment 617
under this division, but the commissioner or superintendent shall 618
make the assessment within one year after the date the authority 619
certifies to the commissioner or superintendent the amount to be 620
refunded.621

       (K) The director of development, after consultation with the 622
tax commissioner and the superintendent of insurance and in 623
accordance with Chapter 119. of the Revised Code, shall adopt 624
rules necessary to implement this section. The rules may provide 625
for recipients of tax credits under this section to be charged 626
fees to cover administrative costs of the tax credit program. The 627
fees collected shall be credited to the tax incentive programs 628
operating fund created in section 122.174 of the Revised Code. At 629
the time the director gives public notice under division (A) of 630
section 119.03 of the Revised Code of the adoption of the rules, 631
the director shall submit copies of the proposed rules to the 632
chairpersons of the standing committees on economic development in 633
the senate and the house of representatives.634

       (L) On or before the first day of August of each year, the 635
director of development shall submit a report to the governor, the 636
president of the senate, and the speaker of the house of 637
representatives on the tax credit program under this section. The 638
report shall include information on the number of agreements that 639
were entered into under this section during the preceding calendar 640
year, a description of the project that is the subject of each 641
such agreement, and an update on the status of projects under 642
agreements entered into before the preceding calendar year.643

       (M)(1) The aggregate amount of tax credits issued under 644
division (B)(1) of this section during any calendar year for 645
capital investment projects reviewed and approved by the tax 646
credit authority may not exceed the following amounts:647

       (a) For 2010, thirteen million dollars;648

       (b) For 2011 through 2023, the amount of the limit for the 649
preceding calendar year plus thirteen million dollars;650

       (c) For 2024 and each year thereafter, one hundred 651
ninety-five million dollars.652

       (2) The aggregate amount of tax credits issued under division 653
(B)(2) of this section during any calendar year for capital 654
improvement projects reviewed and approved by the tax credit 655
authority may not exceed eight million dollars.656

       The limitations in division (M) of this section do not apply 657
to credits for capital investment projects approved by the tax 658
credit authority before July 1, 2009.659

       (N) On or before the first day of January of the seventh 660
calendar year following the year in which ....B. ... of the 129th 661
general assembly became effective, the director of development 662
shall submit a report to the governor, the president of the 663
senate, and the speaker of the house of representatives on the 664
effect of agreements entered into under this section by the tax 665
credit authority in which the taxpayer included home-based 666
employees in the computation of income tax revenue. The report 667
shall include information on the number of such agreements that 668
were entered into in the preceding six years and a description of 669
the projects that were the subjects of such agreements.670

       Section 2. That existing sections 122.17 and 122.171 of the 671
Revised Code are hereby repealed.672