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S. B. No. 309 As IntroducedAs Introduced
130th General Assembly | Regular Session | 2013-2014 |
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A BILL
To amend section 5725.33 of the Revised Code to
modify the qualifications for the New Markets Tax
Credit and the schedule for receiving the credit.
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
October 16, 2009.
(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) "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 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.
For investments made before the effective
date of ...B... of the 130th general assembly that were not
qualified equity investments under the law as it existed at the
time the investment was made but are qualified equity investments
under the amendments made by that act, the initial credit
allowance date is the effective date of that act.
(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) "Qualified community development entity" includes only
entities:
(a) That 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 and 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.
(6)(5) "Qualified equity investment" is limited to an equity
investment in a qualified community development entity that:
(a) Is acquired after 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)(5)(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 qualified community
development entity through the seventh anniversary of the
qualified equity investment's issuance.
(2) The qualified low-income community investment made in
this state 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 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 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
5726.54, 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 a 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 services
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
services 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 5726.54, 5729.16, and 5733.58 of the Revised Code shall
be administered by the department of development services agency.
The director of development services, 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 5726.54, 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 and under sections 5726.54, 5729.16, and 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
services is authorized to charge reasonable application and other
fees in connection with the administration of tax credits
authorized by this section and sections 5726.54, 5729.16, and
5733.58 of the Revised Code. Any such fees collected shall be
credited to the fund. The director of development services shall
use money in the fund to pay expenses related to the
administration of tax credits authorized under sections 5725.33,
5726.54, 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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