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H. B. No. 558 As IntroducedAs Introduced
129th General Assembly | Regular Session | 2011-2012 |
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A BILL
To amend section 5725.33 of the Revised Code to make
various changes to the administration of the New
Markets tax credit, including the acceleration of
the receipt of New Markets tax credit
installments, allowing community development
entities to make credit-eligible investments in a
low-income community business that derives 15% or
more of its annual revenue from renting or selling
real estate, eliminating the requirement to
calculate adjusted purchase price of investments
in calculating the amount of the credit,
permitting entities to identify qualifying equity
investments from any community development entity,
and clarifying that the maximum allowable credit
for each investor is $1 million.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 5725.33 of the Revised Code be
amended to read as follows:
Sec. 5725.33. (A) Except as otherwise provided in this
section, terms used in this section have the same meaning as
section 45D of the Internal Revenue Code, any related proposed,
temporary or final regulations promulgated under the Internal
Revenue Code, any rules or guidance of the internal revenue
service or the United States department of the treasury, and any
related rules or guidance issued by the community development
financial institutions fund of the United States department of the
treasury, as such law, regulations, rules, and guidance exist on
the effective date of the enactment amendment of this section by
H.....B. 1.... of the 128th 129th general assembly.
(1) "Adjusted purchase price" means the amount paid for
qualified equity investments multiplied by the qualified
low-income community investments made by the issuer in projects
located in this state as a percentage of the total amount of
qualified low-income community investments made by the issuer in
projects located in all states on the credit allowance date during
the applicable tax year, subject to divisions (B)(1) and (2) of
this section.
(2) "Applicable percentage" means zero five per cent for each
of the first two three credit allowance dates, seven per cent for
the third credit allowance date, and eight six per cent for the
four following credit allowance dates.
(3)(2) "Credit allowance date" means the date, on or after
January 1, 2010, a qualified equity investment is made and each of
the six anniversary dates thereafter. For qualified equity
investments made after the effective date of this section October
16, 2009, but before January 1, 2010, the initial credit allowance
date is January 1, 2010, and each of the six anniversary dates
thereafter is on the first day of January of each year.
(4) "Qualified active low-income community business" excludes
any business that derives or projects to derive fifteen per cent
or more of annual revenue from the rental or sale of real
property, except any business that is a special purpose entity
principally owned by a principal user of that property formed
solely for the purpose of renting, either directly or indirectly,
or selling real property back to such principal user if such
principal user does not derive fifteen per cent or more of its
gross annual revenue from the rental or sale of real property.
(5)(3) "Qualified community development entity" includes only
entities:
(a) That have entered into an allocation agreement with the
community development financial institutions fund of the United
States department of the treasury with respect to credits
authorized by section 45D of the Internal Revenue Code;
(b) Whose service area includes any portion of this state;
and
(c) That will designate an equity investment in such entities
as a qualified equity investment for purposes of both section 45D
of the Internal Revenue Code and this section.
The investment may
be committed from any qualified community development entity.
(6)(4) "Qualified equity investment" is limited to an equity
investment in a qualified community development entity that:
(a) Is acquired after the effective date of the enactment of
this section October 16, 2009, at its original issuance solely in
exchange for cash;
(b) Has at least eighty-five per cent of its cash purchase
price used by the qualified community development entity to make
qualified low-income community investments, provided that in the
seventh year after a qualified equity investment is made, only
seventy-five per cent of such cash purchase price must be used by
the qualified community development entity to make qualified
low-income community investments; and
(c) Is designated by the issuer as a qualified equity
investment.
"Qualified equity investment" includes any equity investment
that would, but for division (A)(6)(4)(a) of this section, be a
qualified equity investment in the hands of the taxpayer if such
investment was a qualified equity investment in the hands of a
prior holder.
(B) There is hereby allowed a nonrefundable credit against
the tax imposed by section 5725.18 of the Revised Code for an
insurance company holding a qualified equity investment on the
credit allowance date occurring in the calendar year for which the
tax is due. The credit shall equal the applicable percentage of
the adjusted purchase price of qualified low-income community
investments, subject to divisions (B)(1) and (2) of this section:
(1) For the purpose of calculating the amount of qualified
low-income community investments held by a qualified community
development entity, an investment shall be considered held by a
qualified community development entity even if the investment has
been sold or repaid, provided that, at any time before the seventh
anniversary of the issuance of the qualified equity investment,
the qualified community development entity reinvests an amount
equal to the capital returned to or received or recovered by the
qualified community development entity from the original
investment, exclusive of any profits realized and costs incurred
in the sale or repayment, in another qualified low-income
community investment within twelve months of the receipt of such
capital. If the qualified low-income community investment is sold
or repaid after the sixth anniversary of the issuance of the
qualified equity investment, the qualified low-income community
investment shall be considered held by the
qualfied qualified
community development entity through the seventh anniversary of
the qualified equity investment's issuance.
(2) The qualified low-income community investment shall be
made in projects located in this state and shall equal the sum of
the qualified low-income community investments in each qualified
active low-income community business in this state, not to exceed
two million five hundred sixty-four thousand one hundred three
dollars, in which the qualified community development entity
invests, including such investments in any such businesses in this
state related to that qualified active low-income community
business through majority ownership or control. The credit for the
sum of such investments shall not exceed one million dollars.
The credit shall be claimed in the order prescribed by
section 5725.98 of the Revised Code. If the amount of the credit
exceeds the amount of tax otherwise due after deducting all other
credits in that order, the excess may be carried forward and
applied to the tax due for not more than four ensuing years.
By claiming a tax credit under this section, an insurance
company waives its rights under section 5725.222 of the Revised
Code with respect to the time limitation for the assessment of
taxes as it relates to credits claimed that later become subject
to recapture under division (E) of this section.
(C) The amount of qualified equity investments on the basis
of which credits may be claimed under this section and sections
5729.16 and 5733.58 of the Revised Code shall not exceed the
amount, estimated by the director of development, that would cause
the total amount of credits allowed each fiscal year to exceed ten
million dollars, computed without regard to the potential for
taxpayers to carry tax credits forward to later years.
(D) If any amount of the federal tax credit allowed for a
qualified equity investment for which a credit was received under
this section is recaptured under section 45D of the Internal
Revenue Code, or if the director of development determines that an
investment for which a tax credit is claimed under this section is
not a qualified equity investment or that the proceeds of an
investment for which a tax credit is claimed under this section
are used to make qualified low-income community investments other
than in a qualified active low-income community business, all or a
portion of the credit received on account of that investment shall
be paid by the insurance company that received the credit to the
superintendent of insurance. The amount to be recovered shall be
determined by the director of development pursuant to rules
adopted under division (E) of this section. The director shall
certify any amount due under this division to the superintendent
of insurance, and the superintendent shall notify the treasurer of
state of the amount due. Upon notification, the treasurer shall
invoice the insurance company for the amount due. The amount due
is payable not later than thirty days after the date the treasurer
invoices the insurance company. The amount due shall be considered
to be tax due under section 5725.18 of the Revised Code, and may
be collected by assessment without regard to the time limitations
imposed under section 5725.222 of the Revised Code for the
assessment of taxes by the superintendent. All amounts collected
under this division shall be credited as revenue from the tax
levied under section 5725.18 of the Revised Code.
(E) The tax credits authorized under this section and
sections 5729.16 and 5733.58 of the Revised Code shall be
administered by the department of development. The director of
development, in consultation with the tax commissioner and the
superintendent of insurance, pursuant to Chapter 119. of the
Revised Code, shall adopt rules for the administration of this
section and sections 5729.16 and 5733.58 of the Revised Code. The
rules shall provide for determining the recovery of credits under
division (D) of this section, division (D) of section 5729.16, and
section 5733.58 of the Revised Code, including prorating the
amount of the credit to be recovered on any reasonable basis, the
manner in which credits may be allocated among claimants, and the
amount of any application or other fees to be charged in
connection with a recovery.
(F) There is hereby created in the state treasury the new
markets tax credit operating fund. The director of development is
authorized to charge reasonable application and other fees in
connection with the administration of tax credits authorized by
this section and sections 5729.16 and 5733.58 of the Revised Code.
Any such fees collected shall be credited to the fund. The
director of development shall use money in the fund to pay
expenses related to the administration of tax credits authorized
under sections 5725.33, 5729.16, and 5733.58 of the Revised Code.
Section 2. That existing section 5725.33 of the Revised Code
is hereby repealed.
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