As Introduced

130th General Assembly
Regular Session
2013-2014
S. B. No. 309


Senators Beagle, Tavares 

Cosponsor: Senator Seitz 

A BILL
To amend section 5725.33 of the Revised Code to 1
modify the qualifications for the New Markets Tax 2
Credit and the schedule for receiving the credit. 3


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

       Section 1. That section 5725.33 of the Revised Code be 4
amended to read as follows:5

       Sec. 5725.33.  (A) Except as otherwise provided in this 6
section, terms used in this section have the same meaning as 7
section 45D of the Internal Revenue Code, any related proposed, 8
temporary or final regulations promulgated under the Internal 9
Revenue Code, any rules or guidance of the internal revenue 10
service or the United States department of the treasury, and any 11
related rules or guidance issued by the community development 12
financial institutions fund of the United States department of the 13
treasury, as such law, regulations, rules, and guidance exist on 14
October 16, 2009.15

       As used in this section:16

       (1) "Adjusted purchase price" means the amount paid for 17
qualified equity investments multiplied by the qualified 18
low-income community investments made by the issuer in projects 19
located in this state as a percentage of the total amount of 20
qualified low-income community investments made by the issuer in 21
projects located in all states on the credit allowance date during 22
the applicable tax year, subject to divisions (B)(1) and (2) of 23
this section.24

       (2) "Applicable percentage" means zerofive per cent for each 25
of the first twothree credit allowance dates, seven per cent for 26
the third credit allowance date, and eightsix per cent for the 27
four following credit allowance dates.28

       (3) "Credit allowance date" means the date, on or after 29
January 1, 2010, a qualified equity investment is made and each of 30
the six anniversary dates thereafter. For qualified equity 31
investments made after October 16, 2009, but before January 1, 32
2010, the initial credit allowance date is January 1, 2010, and 33
each of the six anniversary dates thereafter is on the first day 34
of January of each year. For investments made before the effective 35
date of ...B... of the 130th general assembly that were not 36
qualified equity investments under the law as it existed at the 37
time the investment was made but are qualified equity investments 38
under the amendments made by that act, the initial credit 39
allowance date is the effective date of that act.40

       (4) "Qualified active low-income community business" excludes 41
any business that derives or projects to derive fifteen per cent 42
or more of annual revenue from the rental or sale of real 43
property, except any business that is a special purpose entity 44
principally owned by a principal user of that property formed 45
solely for the purpose of renting, either directly or indirectly, 46
or selling real property back to such principal user if such 47
principal user does not derive fifteen per cent or more of its 48
gross annual revenue from the rental or sale of real property.49

       (5) "Qualified community development entity" includes only 50
entities:51

       (a) Thatthat have entered into an allocation agreement with 52
the community development financial institutions fund of the 53
United States department of the treasury with respect to credits 54
authorized by section 45D of the Internal Revenue Code;55

       (b) Whoseand whose service area includes any portion of this 56
state; and57

       (c) That will designate an equity investment in such entities 58
as a qualified equity investment for purposes of both section 45D 59
of the Internal Revenue Code and this section.60

       (6)(5) "Qualified equity investment" is limited to an equity 61
investment in a qualified community development entity that:62

       (a) Is acquired after October 16, 2009, at its original 63
issuance solely in exchange for cash;64

       (b) Has at least eighty-five per cent of its cash purchase 65
price used by the qualified community development entity to make 66
qualified low-income community investments, provided that in the 67
seventh year after a qualified equity investment is made, only 68
seventy-five per cent of such cash purchase price must be used by 69
the qualified community development entity to make qualified 70
low-income community investments; and71

       (c) Is designated by the issuer as a qualified equity 72
investment.73

       "Qualified equity investment" includes any equity investment 74
that would, but for division (A)(6)(5)(a) of this section, be a 75
qualified equity investment in the hands of the taxpayer if such 76
investment was a qualified equity investment in the hands of a 77
prior holder.78

       (B) There is hereby allowed a nonrefundable credit against 79
the tax imposed by section 5725.18 of the Revised Code for an 80
insurance company holding a qualified equity investment on the 81
credit allowance date occurring in the calendar year for which the 82
tax is due. The credit shall equal the applicable percentage of 83
the adjusted purchase price of qualified low-income community 84
investments, subject to divisions (B)(1) and (2) of this section:85

       (1) For the purpose of calculating the amount of qualified 86
low-income community investments held by a qualified community 87
development entity, an investment shall be considered held by a 88
qualified community development entity even if the investment has 89
been sold or repaid, provided that, at any time before the seventh 90
anniversary of the issuance of the qualified equity investment, 91
the qualified community development entity reinvests an amount 92
equal to the capital returned to or received or recovered by the 93
qualified community development entity from the original 94
investment, exclusive of any profits realized and costs incurred 95
in the sale or repayment, in another qualified low-income 96
community investment within twelve months of the receipt of such 97
capital. If the qualified low-income community investment is sold 98
or repaid after the sixth anniversary of the issuance of the 99
qualified equity investment, the qualified low-income community 100
investment shall be considered held by the qualified community 101
development entity through the seventh anniversary of the 102
qualified equity investment's issuance.103

       (2) The qualified low-income community investment made in 104
this state shall equal the sum of the qualified low-income 105
community investments in each qualified active low-income 106
community business in this state, not to exceed two million five 107
hundred sixty-four thousand dollars, in which the qualified 108
community development entity invests, including such investments 109
in any such businesses in this state related to that qualified 110
active low-income community business through majority ownership or 111
control.112

       The credit shall be claimed in the order prescribed by 113
section 5725.98 of the Revised Code. If the amount of the credit 114
exceeds the amount of tax otherwise due after deducting all other 115
credits in that order, the excess may be carried forward and 116
applied to the tax due for not more than four ensuing years. 117

       By claiming a tax credit under this section, an insurance 118
company waives its rights under section 5725.222 of the Revised 119
Code with respect to the time limitation for the assessment of 120
taxes as it relates to credits claimed that later become subject 121
to recapture under division (E) of this section.122

       (C) The amount of qualified equity investments on the basis 123
of which credits may be claimed under this section and sections 124
5726.54, 5729.16, and 5733.58 of the Revised Code shall not exceed 125
the amount, estimated by the director of development, that would 126
cause the total amount of credits allowed each fiscal year to 127
exceed ten million dollars, computed without regard to the 128
potential for taxpayers to carry tax credits forward to later 129
years.130

       (D) If any amount of thea federal tax credit allowed for a 131
qualified equity investment for which a credit was received under 132
this section is recaptured under section 45D of the Internal 133
Revenue Code, or if the director of development services 134
determines that an investment for which a tax credit is claimed 135
under this section is not a qualified equity investment or that 136
the proceeds of an investment for which a tax credit is claimed 137
under this section are used to make qualified low-income community 138
investments other than in a qualified active low-income community 139
business, all or a portion of the credit received on account of 140
that investment shall be paid by the insurance company that 141
received the credit to the superintendent of insurance. The amount 142
to be recovered shall be determined by the director of development 143
services pursuant to rules adopted under division (E) of this 144
section. The director shall certify any amount due under this 145
division to the superintendent of insurance, and the 146
superintendent shall notify the treasurer of state of the amount 147
due. Upon notification, the treasurer shall invoice the insurance 148
company for the amount due. The amount due is payable not later 149
than thirty days after the date the treasurer invoices the 150
insurance company. The amount due shall be considered to be tax 151
due under section 5725.18 of the Revised Code, and may be 152
collected by assessment without regard to the time limitations 153
imposed under section 5725.222 of the Revised Code for the 154
assessment of taxes by the superintendent. All amounts collected 155
under this division shall be credited as revenue from the tax 156
levied under section 5725.18 of the Revised Code.157

       (E) The tax credits authorized under this section and 158
sections 5726.54, 5729.16, and 5733.58 of the Revised Code shall 159
be administered by the department of development services agency. 160
The director of development services, in consultation with the tax 161
commissioner and the superintendent of insurance, pursuant to 162
Chapter 119. of the Revised Code, shall adopt rules for the 163
administration of this section and sections 5726.54, 5729.16, and 164
5733.58 of the Revised Code. The rules shall provide for 165
determining the recovery of credits under division (D) of this 166
section and under sections 5726.54, 5729.16, and 5733.58 of the 167
Revised Code, including prorating the amount of the credit to be 168
recovered on any reasonable basis, the manner in which credits may 169
be allocated among claimants, and the amount of any application or 170
other fees to be charged in connection with a recovery.171

       (F) There is hereby created in the state treasury the new 172
markets tax credit operating fund. The director of development 173
services is authorized to charge reasonable application and other 174
fees in connection with the administration of tax credits 175
authorized by this section and sections 5726.54, 5729.16, and 176
5733.58 of the Revised Code. Any such fees collected shall be 177
credited to the fund. The director of development services shall 178
use money in the fund to pay expenses related to the 179
administration of tax credits authorized under sections 5725.33, 180
5726.54, 5729.16, and 5733.58 of the Revised Code.181

       Section 2. That existing section 5725.33 of the Revised Code 182
is hereby repealed.183