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.
|
H. B. No. 655 As IntroducedAs Introduced
130th General Assembly | Regular Session | 2013-2014 |
| |
Representatives Beck, Adams, J.
Cosponsors:
Representatives Milkovich, Retherford
A BILL
To amend sections 122.17 and 122.171 of the Revised
Code to reduce the job retention and capital
investment requirements of the Job Retention Tax
Credit for businesses in targeted areas or
industries, to require that a Job Creation or
Retention Tax Credit awarded to such a business
equal 100% of its new or retained income tax
withholding, and to modify the credits' annual
report requirement to provide that employers must
submit reports only if required by the Director of
Development Services.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 122.17 and 122.171 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 or the date the tax credit authority
receives the recommendation described in division (C)(2)(a) of
this section, whichever occurs first, multiplied by the sum of one
plus an annual pay increase factor to be determined by the tax
credit authority.
(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.
(5) "Distressed area" has the same meaning as in section
122.16 of the Revised Code.
(6) "Targeted industry" means the information technology,
manufacturing, automobile, or aerospace industry.
(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, 5726.02, 5729.03, 5733.06, 5736.02, 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 5726.02, 5733.06, or 5747.02 or
Chapter 5751. of the Revised Code, the credit shall be claimed in
the order required under section 5726.98, 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. If the project site is located in a
distressed area, or if the taxpayer is engaged at the project site
primarily in a targeted industry, the percentage shall equal one
hundred per cent. 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)(1) 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.
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 services 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:
(a) The taxpayer's project will increase payroll and income
tax revenue;
(b) The taxpayer's project is economically sound and will
yield a net positive benefit to the people of this state by
increasing opportunities for employment and strengthening the
economy of this state;
(c) Receiving the tax credit is a major factor in the
taxpayer's decision to go forward with the project.
(2)(a) A taxpayer that chooses to begin the project prior to
receiving the determination of the authority may, upon submitting
the taxpayer's application to the authority, request that the
chief investment officer of the nonprofit corporation formed under
section 187.01 of the Revised Code and the director review the
taxpayer's application and recommend to the authority that the
taxpayer's application be considered. As soon as possible after
receiving such a request, the chief investment officer and the
director shall review the taxpayer's application and, if they
determine that the application warrants consideration by the
authority, make that recommendation to the authority not later
than six months after the application is received by the
authority.
(b) The authority shall consider any taxpayer's application
for which it receives a recommendation under division (C)(2)(a) of
this section. If the authority determines that the taxpayer does
not meet all of the criteria set forth in division (C)(1) of this
section, the authority and the development services agency shall
proceed in accordance with rules adopted by the director pursuant
to division (I) of this section.
(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 September 6, 2012, 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 services 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 services
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 whether the taxpayer is in compliance with the agreement
and identifying the amount of the credit that may be claimed for
the taxable or calendar year;
(8)(7) 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 services 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)(8) 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 development services agency 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 services' certificate of verification
under division (D)(7)(6) 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 services, 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, including rules that
establish a procedure to be followed by the tax credit authority
and the development services agency in the event the authority
considers a taxpayer's application for which it receives a
recommendation under division (C)(2)(a) of this section but does
not approve it. 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 business assistance 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 taxpayer shall
make the election by annually submitting a notice to the director
of development services. The notice may be included in an annual
report submitted under division (R) of this section. The election
applies to and is irrevocable for the credit for which the report
notice 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 services 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 5726., 5733., 5736.,
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 services 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 services 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 services 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 services may appoint a
professional employee of the development services agency 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 March of each of the five
calendar years beginning with 2014, 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 development services agency.
(P) On or before the first day of January of 2019, the
director of development services 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 services 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.
(R) The director of development services may require a
taxpayer subject to an agreement entered into under this section
to report annually to the director 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.
Sec. 122.171. (A) As used in this section:
(1) "Capital investment project" means a plan of investment
at a project site for the acquisition, construction, renovation,
or repair of buildings, machinery, or equipment, or for
capitalized costs of basic research and new product development
determined in accordance with generally accepted accounting
principles, but does not include any of the following:
(a) Payments made for the acquisition of personal property
through operating leases;
(b) Project costs paid before January 1, 2002;
(c) Payments made to a related member as defined in section
5733.042 of the Revised Code or to a consolidated elected taxpayer
or a combined taxpayer as defined in section 5751.01 of the
Revised Code.
(2) "Eligible business" means a taxpayer and its related
members with Ohio operations satisfying all of the following:
(a) The (i) If the project site is located in a distressed
area or if the taxpayer is engaged at the project site primarily
in a targeted industry, the taxpayer employs at least one hundred
full-time equivalent employees or has an annual payroll of at
least seven million dollars at the time the tax credit authority
grants the tax credit under this section;
(ii) If the project is not located in a distressed area and
the taxpayer is not engaged at the project site primarily in a
targeted industry, the taxpayer employs at least five hundred
full-time equivalent employees or has an annual payroll of at
least thirty-five million dollars at the time the tax credit
authority grants the tax credit under this section;.
(b) The taxpayer makes or causes to be made payments for the
capital investment project of one of the following:
(i) If the taxpayer is engaged at the project site primarily
as a manufacturer project site is located in a distressed area or
if the taxpayer is engaged at the project site primarily in a
targeted industry, at least fifty twelve million five hundred
thousand dollars in the aggregate at the project site during a
period of three consecutive calendar years, including the calendar
year that includes a day of the taxpayer's taxable year or tax
period with respect to which the credit is granted;
(ii) If the taxpayer is engaged at the project site project
site is not located in a distressed area, and if the taxpayer is
not engaged at the project site primarily in a targeted industry
but is engaged primarily in significant corporate administrative
functions, as defined by the director of development services by
rule, at least twenty million dollars in the aggregate at the
project site during a period of three consecutive calendar years
including the calendar year that includes a day of the taxpayer's
taxable year or tax period with respect to which the credit is
granted;
(iii) If the taxpayer is applying to enter into an agreement
for a tax credit authorized under division (B)(3) of this section,
at least five million dollars in the aggregate at the project site
during a period of three consecutive calendar years, including the
calendar year that includes a day of the taxpayer's taxable year
or tax period with respect to which the credit is granted.
(c) The taxpayer had a capital investment project reviewed
and approved by the tax credit authority as provided in divisions
(C), (D), and (E) of this section.
(3) "Full-time equivalent employees" means the quotient
obtained by dividing the total number of hours for which employees
were compensated for employment in the project by two thousand
eighty. "Full-time equivalent employees" shall exclude hours that
are counted for a credit under section 122.17 of the Revised Code.
(4) "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 all employees employed in the
project whose hours of compensation are included in calculating
the number of full-time equivalent employees.
(5) "Manufacturer" has the same meaning as in section
5739.011 of the Revised Code.
(6) "Project site" means an integrated complex of facilities
in this state, as specified by the tax credit authority under this
section, within a fifteen-mile radius where a taxpayer is
primarily operating as an eligible business.
(7) "Related member" has the same meaning as in section
5733.042 of the Revised Code as that section existed on the
effective date of its amendment by Am. Sub. H.B. 215 of the 122nd
general assembly, September 29, 1997.
(8) "Taxable year" includes, in the case of a domestic or
foreign insurance company, the calendar year ending on the
thirty-first day of December preceding the day the superintendent
of insurance is required to certify to the treasurer of state
under section 5725.20 or 5729.05 of the Revised Code the amount of
taxes due from insurance companies.
(9) "Distressed area" has the same meaning as in section
122.16 of the Revised Code.
(10) "Targeted industry" means the information technology,
manufacturing, automobile, or aerospace industry.
(B) The tax credit authority created under section 122.17 of
the Revised Code may grant tax credits under this section for the
purpose of fostering job retention in this state. Upon application
by an eligible business and upon consideration of the
recommendation of the director of budget and management, tax
commissioner, the superintendent of insurance in the case of an
insurance company, and director of development services under
division (C) of this section, the tax credit authority may grant
the following credits against the tax imposed by section 5725.18,
5726.02, 5729.03, 5733.06, 5736.02, 5747.02, or 5751.02 of the
Revised Code:
(1) A nonrefundable credit to an eligible business;
(2) A refundable credit to an eligible business meeting the
following conditions, provided that the director of budget and
management, tax commissioner, superintendent of insurance in the
case of an insurance company, and director of development services
have recommended the granting of the credit to the tax credit
authority before July 1, 2011:
(a) The business retains at least one thousand full-time
equivalent employees at the project site.
(b) The business makes or causes to be made payments for a
capital investment project of at least twenty-five million dollars
in the aggregate at the project site during a period of three
consecutive calendar years, including the calendar year that
includes a day of the business' taxable year or tax period with
respect to which the credit is granted.
(c) In 2010, the business received a written offer of
financial incentives from another state of the United States that
the director determines to be sufficient inducement for the
business to relocate the business' operations from this state to
that state.
(3) A refundable credit to an eligible business with a total
annual payroll of at least twenty million dollars, provided that
the tax credit authority grants the tax credit on or after July 1,
2011, and before January 1, 2014.
The credits authorized in divisions (B)(1), (2), and (3) of
this section may be granted for a period up to fifteen taxable
years or, in the case of the tax levied by section 5736.02 or
5751.02 of the Revised Code, for a period of up to fifteen
calendar years. The credit amount for a taxable year or a calendar
year that includes the tax period for which a credit may be
claimed equals the income tax revenue for that year multiplied by
the percentage specified in the agreement with the tax credit
authority. The percentage may not exceed seventy-five per cent,
except that, if the project site is located in a distressed area
or if the taxpayer is engaged at the project site primarily in a
targeted industry, the percentage shall equal one hundred per
cent. The credit shall be claimed in the order required under
section 5725.98, 5726.98, 5729.98, 5733.98, 5747.98, or 5751.98 of
the Revised Code. In determining the percentage and term of the
credit, the tax credit authority shall consider both the number of
full-time equivalent employees and the value of the capital
investment project. The credit amount may not be based on the
income tax revenue for a calendar year before the calendar year in
which the tax credit authority specifies the tax credit is to
begin, and the credit shall be claimed only for the taxable years
or tax periods specified in the eligible business' agreement with
the tax credit authority. In no event shall the credit be claimed
for a taxable year or tax period terminating before the date
specified in the agreement. 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.
If a nonrefundable credit allowed under division (B)(1) of
this section for a taxable year or tax period exceeds the
taxpayer's tax liability for that year or period, the excess may
be carried forward for the three succeeding taxable or calendar
years, but the amount of any excess credit allowed in any taxable
year or tax period shall be deducted from the balance carried
forward to the succeeding year or period.
(C) A taxpayer that proposes a capital investment project to
retain jobs in this state may apply to the tax credit authority to
enter into an agreement for a tax credit under this section. The
director of development services shall prescribe the form of the
application. After receipt of an application, the authority shall
forward copies of the application to the director of budget and
management, the tax commissioner, the superintendent of insurance
in the case of an insurance company, and the director of
development services, each of whom shall review the application to
determine the economic impact the proposed project would have on
the state and the affected political subdivisions and shall submit
a summary of their determinations and recommendations to the
authority.
(D) Upon review and consideration of the determinations and
recommendations described in division (C) of this section, the tax
credit authority may enter into an agreement with the taxpayer for
a credit under this section if the authority determines all of the
following:
(1) The taxpayer's capital investment project will result in
the retention of employment in this state and will yield a net
positive benefit to the state.
(2) The taxpayer is economically sound and has the ability to
complete the proposed capital investment project.
(3) The taxpayer intends to and has the ability to maintain
operations at the project site for at least the greater of (a) the
term of the credit plus three years, or (b) seven years.
(4) Receiving the credit is a major factor in the taxpayer's
decision to begin, continue with, or complete the project.
(5) If the taxpayer is applying to enter into an agreement
for a tax credit authorized under division (B)(3) of this section,
the taxpayer's capital investment project will be located in the
political subdivision in which the taxpayer maintains its
principal place of business or maintains a unit or division with
at least four thousand two hundred employees at the project site.
(E) 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, including the amount of the investment, the
period over which the investment has been or is being made, the
number of full-time equivalent employees at the project site, and
the anticipated income tax revenue to be generated.
(2) The term of the credit, the percentage of the tax credit,
the maximum annual value of tax credits that may be allowed each
year, and the first year for which the credit may be claimed.
(3) A requirement that the taxpayer maintain operations at
the project site for at least the greater of (a) the term of the
credit plus three years, or (b) seven years.
(4)(a) In the case of a credit granted under division (B)(1)
of this section, a requirement that the taxpayer retain at least
five hundred the number of full-time equivalent employees required
to be retained under division (A)(2)(a) of this section at the
project site and within this state for the entire term of the
credit, or a requirement that the taxpayer maintain an annual
payroll of at least thirty-five million dollars the amount
required under division (A)(2)(a) of this section for the entire
term of the credit;
(b) In the case of a credit granted under division (B)(2) of
this section, a requirement that the taxpayer retain at least one
thousand full-time equivalent employees at the project site and
within this state for the entire term of the credit;
(c) In the case of a credit granted under division (B)(3) of
this section, either of the following:
(i) A requirement that the taxpayer retain at least five
hundred full-time equivalent employees at the project site and
within this state for the entire term of the credit and a
requirement that the taxpayer maintain an annual payroll of at
least twenty million dollars for the entire term of the credit;
(ii) A requirement that the taxpayer maintain an annual
payroll of at least thirty-five million dollars for the entire
term of the credit.
(5) A requirement that the taxpayer annually report to the
director of development services employment, tax withholding,
capital investment, and other information the director needs to
perform the director's duties under this section.
(6) A requirement that the director of development services
annually review the annual reports of the taxpayer to verify the
information reported under division (E)(5) of this section and
compliance with the agreement. Upon verification, the director
shall issue a certificate to the taxpayer stating that the
information has been verified whether the taxpayer is in
compliance with the agreement and identifying the amount of the
credit for the taxable year or calendar year that includes the tax
period. In determining the number of full-time equivalent
employees, no position shall be counted that is filled by an
employee who is included in the calculation of a tax credit under
section 122.17 of the Revised Code.
(7)(6) A provision providing that the taxpayer may not
relocate a substantial number of employment positions from
elsewhere in this state to the project site unless the director of
development services determines that the taxpayer notified the
legislative authority of the county, township, or municipal
corporation from which the employment positions would be
relocated.
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 movement is confined to the project site. The
transfer of an employment position from one political subdivision
to another political subdivision shall not be considered a
relocation of an employment position if the employment position in
the first political subdivision is replaced by another employment
position.
(8)(7) A waiver by the taxpayer of any limitations periods
relating to assessments or adjustments resulting from the
taxpayer's failure to comply with the agreement.
(F) 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 credit. The reduction of the percentage or term may take
effect in the current taxable or calendar year.
(G) Financial statements and other information submitted to
the department of development services or the tax credit authority
by an applicant for 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 the superintendent of
insurance in the case of an insurance company, the chairperson of
the authority shall provide to the commissioner or superintendent
any statement or other information submitted by an applicant for
or recipient of a tax credit in connection with the credit. The
commissioner or superintendent shall preserve the confidentiality
of the statement or other information.
(H) A taxpayer claiming a tax credit under this section shall
submit to the tax commissioner or, in the case of an insurance
company, to the superintendent of insurance, a copy of the
director of development services' certificate of verification
under division (E)(6)(5) 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) 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 (E)(5) of this section. The taxpayer shall
make the election by annually submitting a notice to the director
of development services. The notice may be included in an annual
report submitted under division (O) 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.
(J) If the director of development services determines that a
taxpayer that received a certificate under division (E)(6)(5) of
this section is not complying with the requirement under division
(E)(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 authority may terminate the agreement and
require the taxpayer, or any related member or members that
claimed the tax credit under division (N) of this section, to
refund to the state all or a portion of the credit claimed in
previous years, as follows:
(1) If the taxpayer maintained operations at the project site
for less than or equal to the term of the credit, an amount not to
exceed one hundred per cent of the sum of any tax credits allowed
and received under this section.
(2) If the taxpayer maintained operations at the project site
longer than the term of the credit, but less than the greater of
(a) the term of the credit plus three years, or (b) seven years,
the amount required to be refunded shall not exceed seventy-five
per cent of the sum of any tax credits allowed and received under
this section.
In determining the portion of the credit to be refunded to
this state, the 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 the superintendent of
insurance. If the taxpayer, or any related member or members who
claimed the tax credit under division (N) of this section, is not
an insurance company, the commissioner shall make an assessment
for that amount against the taxpayer under Chapter 5726., 5733.,
5736., 5747., or 5751. of the Revised Code. If the taxpayer, or
any related member or members that claimed the tax credit under
division (N) of this section, is an insurance company, the
superintendent of insurance shall make an assessment under section
5725.222 or 5729.102 of the Revised Code. The time limitations on
assessments under those chapters and sections do not apply to an
assessment under this division, but the commissioner or
superintendent shall make the assessment within one year after the
date the authority certifies to the commissioner or superintendent
the amount to be refunded.
(K) The director of development services, 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 business assistance 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.
(L) On or before the first day of August of each year, the
director of development services 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)(1) The aggregate amount of tax credits issued under
division (B)(1) of this section during any calendar year for
capital investment projects reviewed and approved by the tax
credit authority may not exceed the following amounts:
(a) For 2010, thirteen million dollars;
(b) For 2011 through 2023, the amount of the limit for the
preceding calendar year plus thirteen million dollars;
(c) For 2024 and each year thereafter, one hundred
ninety-five million dollars.
(2) The aggregate amount of tax credits authorized under
divisions (B)(2) and (3) of this section and allowed to be claimed
by taxpayers in any calendar year for capital improvement projects
reviewed and approved by the tax credit authority in 2011, 2012,
and 2013 combined shall not exceed twenty-five million dollars. An
amount equal to the aggregate amount of credits first authorized
in calendar year 2011, 2012, and 2013 may be claimed over the
ensuing period up to fifteen years, subject to the terms of
individual tax credit agreements.
The limitations in division (M) of this section do not apply
to credits for capital investment projects approved by the tax
credit authority before July 1, 2009.
(N) This division applies only to an eligible business that
is part of an affiliated group that includes a diversified savings
and loan holding company or a grandfathered unitary savings and
loan holding company, as those terms are defined in section
5726.01 of the Revised Code. Notwithstanding any contrary
provision of the agreement between such an eligible business and
the tax credit authority, any credit granted under this section
against the tax imposed by section 5725.18, 5729.03, 5733.06,
5747.02, or 5751.02 of the Revised Code to the eligible business,
at the election of the eligible business and without any action by
the tax credit authority, may be shared with any member or members
of the affiliated group that includes the eligible business, which
member or members may claim the credit against the taxes imposed
by section 5725.18, 5726.02, 5729.03, 5733.06, 5747.02, or 5751.02
of the Revised Code. Credits shall be claimed by the eligible
business in sequential order, as applicable, first claiming the
credits to the fullest extent possible against the tax that the
certificate holder is subject to, then against the tax imposed by,
sequentially, section 5729.03, 5725.18, 5747.02, 5751.02, and
lastly 5726.02 of the Revised Code. The credits may be allocated
among the members of the affiliated group in such manner as the
eligible business elects, but subject to the sequential order
required under this division. This division applies to credits
granted before, on, or after March 27, 2013, the effective date of
H.B. 510 of the 129th general assembly. Credits granted before
that effective date that are shared and allocated under this
division may be claimed in those calendar years in which the
remaining taxable years specified in the agreement end.
As used in this division, "affiliated group" means a group of
two or more persons with fifty per cent or greater of the value of
each person's ownership interests owned or controlled directly,
indirectly, or constructively through related interests by common
owners during all or any portion of the taxable year, and the
common owners. "Affiliated group" includes, but is not limited to,
any person eligible to be included in a consolidated elected
taxpayer group under section 5751.011 of the Revised Code or a
combined taxpayer group under section 5751.012 of the Revised
Code.
(O) The director of development services may require a
taxpayer subject to an agreement entered into under this section
to report annually to the director employment, tax withholding,
capital investment, and other information the director needs to
perform the director's duties under this section.
Section 2. That existing sections 122.17 and 122.171 of the
Revised Code are hereby repealed.
|
|