Modifying the major economic growth attraction program, and including effective date provisions

The bill changes the tax incentives in the program available for a business commencing a project in a rural county. The bill defines a rural county to mean a county with a population of 50,000 persons or less based upon the most recent federal decennial census. Under the bill, the economic development authority (authority) may authorize a tax credit for a business that is up to percent of the business’s qualifying investment located in a rural county. The tax credit shall be remitted to the business equally over a 10-year period. The bill specifies the authority shall not issue a tax credit certificate to the business until the business’s project has been placed in service or until a designated portion of the business’s project has been placed in service, and at least percent of the created jobs associated with the project or a designated portion of the project that pay at least 140 percent of the qualifying wage threshold have been added to the business’s payroll. A tax credit certificate issued to a business located in a rural county is refundable and transferable to another person or entity, subject to the approval by the authority. Prior to approving the transfer, the authority shall verify that the transferee is not associated with a foreign adversary or foreign adversary entity. _____ transferee of the credit for up to consecutive tax years or until depleted, whichever occurs first. The bill sets out requirements for the transferability of a tax credit certificate, including the transferee submitting the tax credit to the department of revenue (department) within days of the transfer along with the transferee’s name and tax identification number. The bill requires the department to reissue a replacement tax credit to the transferee within days, and each replacement tax credit must contain the information required for the original tax credit certificate including the same expiration date. Under current law, if a business fails to comply with any requirements of the program, the business may be required to repay any tax incentives and the repayment shall be considered a tax payment due. The bill specifies any repayment of tax incentives may include any repayment an affiliate of the business is liable for and the repayment shall be considered a tax payment due.1. If a business obtains a tax credit certificate from the authority by way of a prohibited activity, the bill makes the business and any transferee of a tax credit certificate jointly and severally liable to the state for the amount of the tax credits issued, interest and penalties, reasonable attorney fees, and litigation costs, except that the liability of the transferee shall not exceed an amount equal to the amount of the tax credits acquired by the transferee. However, a qualifying transferee of a tax credit certificate is not subject to the liability, revocation, and repayment imposed in the bill. The bill defines “qualifying transferee” to mean a transferee who acquires a tax credit certificate in good faith, without notice of any prohibited activity, and who is not associated with the business. _____ owners and family members of the owners of the business. The bill defines “prohibited activity” to mean a breach or default under the agreement with the authority, the violation of any warranty provided by the business to the authority or the department, the claiming of a tax credit for expenditures that are not a qualifying investment, the violation of any requirements of the program, misrepresentation, fraud, or any other unlawful act or omission. The bill prohibits a transferee of the tax credit certificate from claiming the tax credit until a replacement tax credit has been issued. The transferee may use the tax credit transferred against the taxes for any tax year the original transferor could claim the credit. The bill prohibits the transferability of tax credits for agreements entered into after December 31, 2027. Under current law, if a business receives a five-year tax credit and then sells or otherwise renders the land or buildings unusable within five years of receiving the tax credit, the business is liable to the state for a portion of the tax savings achieved from the tax credit. Due to the possible extension of the tax credit to years for a business making a qualifying investment in a rural county, the bill expands the time period of owing a portion of the tax savings achieved to years, if such a business sells or otherwise renders the land or buildings unusable. The bill specifies any consideration received for the transfer shall not be considered as income by the transferor and any consideration from the transfer of the tax credit shall not be deducted from income by the transferee. Under current law and in the bill, a business is also eligible for sales and use tax refunds, withholding tax credits, and property tax exemptions, if granted from the community where the project is located. _____ income), subchapter III (corporate income), subchapter V (franchise), and the moneys and credits tax (credit unions). The bill also allows the credit against the taxes imposed under Code chapter 432 (tax on insurance premiums). Currently, the authority may authorize tax incentives under the program for up to two businesses by January 1, 2030. The bill changes the number of qualifying projects that may be authorized by the authority by January 1, 2030, to include authorizing a tax credit that is up to percent of the qualifying investment to one business with a project in a rural county in lieu of authorizing up to two other businesses for a tax credit that is up to percent of the qualifying investment. The bill takes effect upon enactment.