The online versions of legislation provided on this website are not official. Enrolled bills are the final version passed by the Ohio General Assembly and presented to the Governor for signature. The official version of acts signed by the Governor are available from the Secretary of State's Office in the Continental Plaza, 180 East Broad St., Columbus.
|
Sub. H. B. No. 327 As Reported by the House Economic and Small Business Development CommitteeAs Reported by the House Economic and Small Business Development Committee
129th General Assembly | Regular Session | 2011-2012 |
| |
Cosponsors:
Representatives Baker, Brenner, Stebelton, Buchy
A BILL
To amend section 122.17 of the Revised Code to
authorize employers who meet certain wage and
other requirements to receive a job creation tax
credit for the employment of home-based employees
and to require the Director of Development to
issue a report on the credit after six years.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 122.17 of the Revised Code be amended
to read as follows:
Sec. 122.17. (A) As used in this section:
(1) "Income tax revenue" means the total amount withheld
under section 5747.06 of the Revised Code by the taxpayer during
the taxable year, or during the calendar year that includes the
tax period, from the compensation of each employee or each
home-based employee employed in the project to the extent the
employee's withholdings are not used to determine the credit under
section 122.171 of the Revised Code. "Income tax revenue" excludes
amounts withheld before the day the taxpayer becomes eligible for
the credit.
(2) "Baseline income tax revenue" means income tax revenue
except that the applicable withholding period is the twelve months
immediately preceding the date the tax credit authority approves
the taxpayer's application multiplied by the sum of one plus an
annual pay increase factor to be determined by the tax credit
authority. If the taxpayer becomes eligible for the credit after
the first day of the taxpayer's taxable year or after the first
day of the calendar year that includes the tax period, the
taxpayer's baseline income tax revenue for the first such taxable
or calendar year of credit eligibility shall be reduced in
proportion to the number of days during the taxable or calendar
year for which the taxpayer was not eligible for the credit. For
subsequent taxable or calendar years, "baseline income tax
revenue" equals the unreduced baseline income tax revenue for the
preceding taxable or calendar year multiplied by the sum of one
plus the pay increase factor.
(3) "Excess income tax revenue" means income tax revenue
minus baseline income tax revenue.
(4) "Home-based employee" means an employee whose services
are performed primarily from the employee's residence in this
state exclusively for the benefit of the project and whose rate of
pay is at least one hundred thirty-one per cent of the federal
minimum wage under 29 U.S.C. 206.
(B) The tax credit authority may make grants under this
section to foster job creation in this state. Such a grant shall
take the form of a refundable credit allowed against the tax
imposed by section 5725.18, 5729.03, 5733.06, or 5747.02 or levied
under Chapter 5751. of the Revised Code. The credit shall be
claimed for the taxable years or tax periods specified in the
taxpayer's agreement with the tax credit authority under division
(D) of this section. With respect to taxes imposed under section
5733.06 or 5747.02 or Chapter 5751. of the Revised Code, the
credit shall be claimed in the order required under section
5733.98, 5747.98, or 5751.98 of the Revised Code. The amount of
the credit available for a taxable year or for a calendar year
that includes a tax period equals the excess income tax revenue
for that year multiplied by the percentage specified in the
agreement with the tax credit authority. Any credit granted under
this section against the tax imposed by section 5733.06 or 5747.02
of the Revised Code, to the extent not fully utilized against such
tax for taxable years ending prior to 2008, shall automatically be
converted without any action taken by the tax credit authority to
a credit against the tax levied under Chapter 5751. of the Revised
Code for tax periods beginning on or after July 1, 2008, provided
that the person to whom the credit was granted is subject to such
tax. The converted credit shall apply to those calendar years in
which the remaining taxable years specified in the agreement end.
(C) A taxpayer or potential taxpayer who proposes a project
to create new jobs in this state may apply to the tax credit
authority to enter into an agreement for a tax credit under this
section. The
An application shall not propose to include both home-based
employees and employees who are not home-based employees in the
computation of income tax revenue for the purposes of the same tax
credit agreement. If a taxpayer or potential taxpayer employs both
home-based employees and employees who are not home-based
employees in a project, the taxpayer shall submit separate
applications for separate tax credit agreements for the project,
one of which shall include home-based employees in the computation
of income tax revenue and one of which shall include all other
employees in the computation of income tax revenue.
The director of development shall prescribe the form of the
application. After receipt of an application, the authority may
enter into an agreement with the taxpayer for a credit under this
section if it determines all of the following:
(1) The taxpayer's project will increase payroll and income
tax revenue;
(2) The taxpayer's project is economically sound and will
benefit the people of this state by increasing opportunities for
employment and strengthening the economy of this state;
(3) Receiving the tax credit is a major factor in the
taxpayer's decision to go forward with the project.
(D) An agreement under this section shall include all of the
following:
(1) A detailed description of the project that is the subject
of the agreement;
(2)(a) The term of the tax credit, which, except as provided
in division (D)(2)(b) of this section, shall not exceed fifteen
years, and the first taxable year, or first calendar year that
includes a tax period, for which the credit may be claimed;
(b) If the tax credit is computed on the basis of home-based
employees, the term of the credit shall expire on or before the
last day of the taxable or calendar year ending before the
beginning of the seventh year after the effective date of H.B. 327
of the 129th general assembly;
(3) A requirement that the taxpayer shall maintain operations
at the project location for at least the greater of seven years or
the term of the credit plus three years;
(4) The percentage, as determined by the tax credit
authority, of excess income tax revenue that will be allowed as
the amount of the credit for each taxable year or for each
calendar year that includes a tax period;
(5) The pay increase factor to be applied to the taxpayer's
baseline income tax revenue;
(6) A requirement that the taxpayer annually shall report to
the director of development employment, tax withholding,
investment, the provision of health care benefits and tuition
reimbursement if required in the agreement, and other information
the director needs to perform the director's duties under this
section;
(7) A requirement that the director of development annually
review the information reported under division (D)(6) of this
section and verify compliance with the agreement; if the taxpayer
is in compliance, a requirement that the director issue a
certificate to the taxpayer stating that the information has been
verified and identifying the amount of the credit that may be
claimed for the taxable or calendar year;
(8) A provision providing that the taxpayer may not relocate
a substantial number of employment positions from elsewhere in
this state to the project location unless the director of
development determines that the legislative authority of the
county, township, or municipal corporation from which the
employment positions would be relocated has been notified by the
taxpayer of the relocation.
For purposes of this section, the movement of an employment
position from one political subdivision to another political
subdivision shall be considered a relocation of an employment
position unless the employment position in the first political
subdivision is replaced.
(9) If the tax credit is computed on the basis of home-based
employees, that the tax credit may not be claimed by the taxpayer
until the taxable year or tax period in which the taxpayer employs
at least two hundred employees more than the number of employees
the taxpayer employed on June 30, 2011.
(E) If a taxpayer fails to meet or comply with any condition
or requirement set forth in a tax credit agreement, the tax credit
authority may amend the agreement to reduce the percentage or term
of the tax credit. The reduction of the percentage or term may
take effect in the current taxable or calendar year.
(F) Projects that consist solely of point-of-final-purchase
retail facilities are not eligible for a tax credit under this
section. If a project consists of both point-of-final-purchase
retail facilities and nonretail facilities, only the portion of
the project consisting of the nonretail facilities is eligible for
a tax credit and only the excess income tax revenue from the
nonretail facilities shall be considered when computing the amount
of the tax credit. If a warehouse facility is part of a
point-of-final-purchase retail facility and supplies only that
facility, the warehouse facility is not eligible for a tax credit.
Catalog distribution centers are not considered
point-of-final-purchase retail facilities for the purposes of this
division, and are eligible for tax credits under this section.
(G) Financial statements and other information submitted to
the department of development or the tax credit authority by an
applicant or recipient of a tax credit under this section, and any
information taken for any purpose from such statements or
information, are not public records subject to section 149.43 of
the Revised Code. However, the chairperson of the authority may
make use of the statements and other information for purposes of
issuing public reports or in connection with court proceedings
concerning tax credit agreements under this section. Upon the
request of the tax commissioner or, if the applicant or recipient
is an insurance company, upon the request of the superintendent of
insurance, the chairperson of the authority shall provide to the
commissioner or superintendent any statement or information
submitted by an applicant or recipient of a tax credit in
connection with the credit. The commissioner or superintendent
shall preserve the confidentiality of the statement or
information.
(H) A taxpayer claiming a credit under this section shall
submit to the tax commissioner or, if the taxpayer is an insurance
company, to the superintendent of insurance, a copy of the
director of development's certificate of verification under
division (D)(7) of this section with the taxpayer's tax report or
return for the taxable year or for the calendar year that includes
the tax period. Failure to submit a copy of the certificate with
the report or return does not invalidate a claim for a credit if
the taxpayer submits a copy of the certificate to the commissioner
or superintendent within sixty days after the commissioner or
superintendent requests it.
(I) The director of development, after consultation with the
tax commissioner and the superintendent of insurance and in
accordance with Chapter 119. of the Revised Code, shall adopt
rules necessary to implement this section. The rules may provide
for recipients of tax credits under this section to be charged
fees to cover administrative costs of the tax credit program. The
fees collected shall be credited to the tax incentive programs
operating fund created in section 122.174 of the Revised Code. At
the time the director gives public notice under division (A) of
section 119.03 of the Revised Code of the adoption of the rules,
the director shall submit copies of the proposed rules to the
chairpersons of the standing committees on economic development in
the senate and the house of representatives.
(J) For the purposes of this section, a taxpayer may include
a partnership, a corporation that has made an election under
subchapter S of chapter one of subtitle A of the Internal Revenue
Code, or any other business entity through which income flows as a
distributive share to its owners. A partnership, S-corporation, or
other such business entity may elect to pass the credit received
under this section through to the persons to whom the income or
profit of the partnership, S-corporation, or other entity is
distributed. The election shall be made on the annual report
required under division (D)(6) of this section. The election
applies to and is irrevocable for the credit for which the report
is submitted. If the election is made, the credit shall be
apportioned among those persons in the same proportions as those
in which the income or profit is distributed.
(K) If the director of development determines that a taxpayer
who has received a credit under this section is not complying with
the requirement under division (D)(3) of this section, the
director shall notify the tax credit authority of the
noncompliance. After receiving such a notice, and after giving the
taxpayer an opportunity to explain the noncompliance, the tax
credit authority may require the taxpayer to refund to this state
a portion of the credit in accordance with the following:
(1) If the taxpayer maintained operations at the project
location for a period less than or equal to the term of the
credit, an amount not exceeding one hundred per cent of the sum of
any credits allowed and received under this section;
(2) If the taxpayer maintained operations at the project
location for a period longer than the term of the credit, but less
than the greater of seven years or the term of the credit plus
three years, an amount not exceeding seventy-five per cent of the
sum of any credits allowed and received under this section.
In determining the portion of the tax credit to be refunded
to this state, the tax credit authority shall consider the effect
of market conditions on the taxpayer's project and whether the
taxpayer continues to maintain other operations in this state.
After making the determination, the authority shall certify the
amount to be refunded to the tax commissioner or superintendent of
insurance, as appropriate. If the amount is certified to the
commissioner, the commissioner shall make an assessment for that
amount against the taxpayer under Chapter 5733., 5747., or 5751.
of the Revised Code. If the amount is certified to the
superintendent, the superintendent shall make an assessment for
that amount against the taxpayer under Chapter 5725. or 5729. of
the Revised Code. The time limitations on assessments under those
chapters do not apply to an assessment under this division, but
the commissioner or superintendent, as appropriate, shall make the
assessment within one year after the date the authority certifies
to the commissioner or superintendent the amount to be refunded.
(L) On or before the first day of August each year, the
director of development shall submit a report to the governor, the
president of the senate, and the speaker of the house of
representatives on the tax credit program under this section. The
report shall include information on the number of agreements that
were entered into under this section during the preceding calendar
year, a description of the project that is the subject of each
such agreement, and an update on the status of projects under
agreements entered into before the preceding calendar year.
(M) There is hereby created the tax credit authority, which
consists of the director of development and four other members
appointed as follows: the governor, the president of the senate,
and the speaker of the house of representatives each shall appoint
one member who shall be a specialist in economic development; the
governor also shall appoint a member who is a specialist in
taxation. Of the initial appointees, the members appointed by the
governor shall serve a term of two years; the members appointed by
the president of the senate and the speaker of the house of
representatives shall serve a term of four years. Thereafter,
terms of office shall be for four years. Initial appointments to
the authority shall be made within thirty days after January 13,
1993. Each member shall serve on the authority until the end of
the term for which the member was appointed. Vacancies shall be
filled in the same manner provided for original appointments. Any
member appointed to fill a vacancy occurring prior to the
expiration of the term for which the member's predecessor was
appointed shall hold office for the remainder of that term.
Members may be reappointed to the authority. Members of the
authority shall receive their necessary and actual expenses while
engaged in the business of the authority. The director of
development shall serve as chairperson of the authority, and the
members annually shall elect a vice-chairperson from among
themselves. Three members of the authority constitute a quorum to
transact and vote on the business of the authority. The majority
vote of the membership of the authority is necessary to approve
any such business, including the election of the vice-chairperson.
The director of development may appoint a professional
employee of the department of development to serve as the
director's substitute at a meeting of the authority. The director
shall make the appointment in writing. In the absence of the
director from a meeting of the authority, the appointed substitute
shall serve as chairperson. In the absence of both the director
and the director's substitute from a meeting, the vice-chairperson
shall serve as chairperson.
(N) For purposes of the credits granted by this section
against the taxes imposed under sections 5725.18 and 5729.03 of
the Revised Code, "taxable year" means the period covered by the
taxpayer's annual statement to the superintendent of insurance.
(O) On or before the first day of January of each of the six
calendar years following the year in which H.B. 327 of the 129th
general assembly becomes effective, each taxpayer subject to an
agreement with the tax credit authority under this section on the
basis of home-based employees shall report the number of
home-based employees and other employees employed by the taxpayer
in this state to the department of development.
(P) On or before the first day of January of the seventh
calendar year following the year in which H.B. 327 of the 129th
general assembly became effective, the director of development
shall submit a report to the governor, the president of the
senate, and the speaker of the house of representatives on the
effect of agreements entered into under this section in which the
taxpayer included home-based employees in the computation of
income tax revenue. The report shall include information on the
number of such agreements that were entered into in the preceding
six years, a description of the projects that were the subjects of
such agreements, and an analysis of nationwide home-based
employment trends, including the number of home-based jobs created
from July 1, 2011, through June 30, 2017, and a description of any
home-based employment tax incentives provided by other states
during that time.
(Q) The director of development may require any agreement
entered into under this section for a tax credit computed on the
basis of home-based employees to contain a provision that the
taxpayer makes available health care benefits and tuition
reimbursement to all employees.
Section 2. That existing section 122.17 of the Revised Code
is hereby repealed.
|