SB 3 - This act modifies provisions of existing tax credit programs in a manner consistent with the recommendations of the Tax Credit Review Commission and establishes new tax incentive programs. TAX CREDITS TO ATTRACT SPORTING EVENTS
The act creates a refundable income and financial institutions tax credit which may be available for sports commissions, convention and visitors bureaus, certain nonprofit organizations, counties, and municipalities to offset expenses incurred in attracting sporting events to the state. Applicants for the tax credit must submit game support contracts to the department of economic development for approval. The tax credit will be equal to the lesser of five dollars for each admission ticket sold for the event or one hundred percent of eligible expenses incurred. No more than three million dollars in tax credits may be issued per fiscal year. The tax credits are fully transferrable, provided a notarized endorsement is filed with the Department of Economic Development. The Department of Economic Development is prohibited from certifying game support contracts after August 28, 2017, but may certify game support contracts prior to such date which pertain to games to be held after August 10, 2017.
The act also creates an income tax credit equal to fifty percent of the amount of an eligible donation made, on or after January 1, 2011, to a certified sponsor or local organizing committee for the purposes of attracting sporting events to the state. The tax credit may not be applied against withholding taxes. The tax credit is non-refundable, but may be carried forward four years. The tax credit is transferable. Certified sponsors and local organizing committees may apply to the Department of Economic Development for the tax credits. Applications for tax credits must be accompanied by payment in an amount equal to the tax credits requested. The Department of Economic Development is prohibited from issuing more than ten million dollars in tax credits each fiscal year. The provisions of this act shall automatically sunset six years after the effective date of the act unless reauthorized.
MISSOURI DOWNTOWN ECONOMIC STIMULUS ACT (MODESA)
The act prohibits the approval of projects under the Missouri downtown economic stimulus act on or after the effective date of the act.
AEROTROPOLIS TRADE INCENTIVE AND TAX CREDIT ACT
For all taxable years beginning on or after January 1, 2011, the act authorizes air export tax credits for freight forwarders in an amount equal to thirty cents per chargeable kilo shipped on a qualifying outbound flight. In lieu of the previously mentioned tax credit, a freight forwarder will be entitled to an air export tax credit equal to thirty-five cents per chargeable kilo if the shipment contains perishable freight. The Department of Economic Development is required to adjust the tax credit amounts based upon fluctuations in fuel costs for over-the-road transportation. In order to receive air export tax credits, freight forwarders must file an application with the department containing the master airway bill for the shipment. The act requires the department to establish procedures to allow freight forwarders to receive air export tax credits within ten business days of the departure of the qualifying flight.
The total amount of air export tax credits which may be authorized under the act cannot exceed sixty million dollars. The act establishes annual caps on issuance of air export tax credits, and to the extent that in any given year more tax credits are authorized than may be issued, the amount in excess of the cap on issuance will be carried forward for issuance in the following year. The authorization of air export tax credits is prohibited after August 28, 2019, but the act allows for the subsequent issuance of any tax credits which are authorized prior to such date.
All tax credits provided under the act will be fully transferrable and non-refundable, but may be carried forward up to six years.
The provisions of the act establishing the aerotropolis trade incentive and tax credit act will automatically sunset eight years from the effective date of the act unless reauthorized.
DATA CENTERS
The act authorizes state and local sales and use tax exemptions for new and expanding data centers and permits donation lease agreements between municipalities and data center projects.
MOSIRA
The act establishes the Missouri Science and Reinvestment Act which, subject to appropriation, will provide funding for incentives to attract science and innovation companies to the state.
MISSOURI HOUSING DEVELOPMENT COMMISSION
The act modifies the composition of the commission by reducing the membership from ten to six members, and removing all state-wide elected officials from the commission. No more than three members of the commission may be from the same political party. The operating budget of the commission will be subject to appropriation.
COMPETE MISSOURI
This act establishes the Compete Missouri Program which combines six existing business incentive programs and will provide tax incentives for job creation, job retention, and capital investment. The act also establishes the Compete Missouri Job Training Program which combines three existing job training programs and provides funding for job training.
The act establishes the Compete Missouri Job Training Program which will provide financial assistance for job training for new jobs created by qualified companies. Financial assistance will also be available to business and technology centers established by Missouri community colleges, or state-owned postsecondary technical colleges, to provide business and training services for growth industries. The act provides for the diversion of withholding taxes from new or retained jobs of qualified companies to pay costs incurred by new or retained jobs training projects administered by local educational agencies such as community and technical colleges.
The provisions of the act creating the Compete Missouri Training Program will automatically sunset July 1, 2018, unless reauthorized. (Sections 620.800 to 620.809)
The Compete Missouri Program is established to provide tax incentives in the form of sales and use tax exemptions, retained withholding taxes, and refundable income and financial institutions tax credits for qualified companies that create new or retain existing jobs and make capital investments. The program provides both entitlement and discretionary benefits for qualified companies that offer health insurance to all employees and pay at least fifty percent of the premiums. Tax credits provided under the program are fully transferrable and must be used within one taxable year following the close of the taxable year in which they are issued. (Sections 620.2000 to 620.2020)
Qualified companies, which create a minimum of twenty new jobs with an average wage equal to or exceeding ninety percent of the county average wage or retain at least one hundred and twenty-five jobs with an average wage equal to or in excess of ninety percent of the county average wage and make at least fifteen million dollars in capital investment, will be eligible to receive up to three years of state and local sales tax exemption for purchases of tangible personal property and building materials used to construct, repair, or remodel a project facility. The Department of Economic Development will certify qualified companies for the state sales tax exemptions while local governments will have the option to certify qualified companies for exemptions from their local sales taxes. The act contains recapture provisions requiring repayment of tax incentives in the event a qualified company fails to meet program requirements. (Sections 144.062 and 144.540)
Qualified companies that create twenty or more new jobs with an average wage equal to or in excess of ninety percent of the county average wage will be entitled to retain withholding taxes from new payroll for a period of five years. Such a company will also be entitled to tax credits equal to up to two percent of new payroll to be issued each year for five years, provided that the combined tax credit and retained withholding benefits cannot exceed five percent of new payroll. The act gives the department of economic development the discretion to issue such company additional tax credits, equal to up to four percent of payroll, for five years provided that the total amount of all benefits received does not exceed nine percent of new payroll annually. In addition, discretionary tax credits authorized by the department cannot exceed the projected net state benefit.
If a qualified company is in a targeted industry and it creates ten or more new jobs with an average wage equal to or in excess of ninety percent of the county average wage, it will be entitled to retain withholding taxes from new payroll for a period of five years. Such a company will also be entitled to tax credits equal to up to three percent of new payroll to be issued each year for five years, provided that the combined tax credit and retained withholding benefits cannot exceed six percent of new payroll. The act gives the Department of Economic Development the discretion to issue such company additional tax credits, equal to up to six percent of new payroll, for five years provided that the total amount of all benefits received does not exceed nine percent of new payroll annually. Discretionary tax credits authorized by the department cannot exceed the projected net state benefit.
Qualified companies, located within an enhanced enterprise zone, that create two or more new jobs with an average wage equal to or in excess of eighty percent of the county average wage and make a capital investment of at least one hundred thousand dollars will be entitled to retain withholding taxes for a period of five years.
Any qualified company that is an existing Missouri business and meets the aforementioned conditions under the compete Missouri program will be entitled to retain withholding taxes for an additional year.
The Department of Economic Development may provide up-front financing to qualified companies in the form of refundable tax credits capable of being issued upon approval of the project. To receive such benefits, a qualified company must enter into a written agreement with the department that provides performance requirements and clawback provisions. Qualified companies in targeted industries could receive tax credits equal to as much as nine percent of new payroll projected over a five year period. Non-targeted industry qualified companies could receive tax credits equal to as much as seven percent of new payroll projected over a five year period.
The Department of Economic Development may allow qualified companies, that agree to retain at least one hundred and twenty-five existing jobs with an average wage equal to or in excess of the county average wage for at least ten years and agree to make a capital investment equal to one half of the amount of state benefits provided within two years, to retain withholding taxes from the retained jobs for a period of ten years. The Department of Economic Development may provide up-front financing to qualified companies in the form of refundable tax credits capable of being issued upon approval of the project. Qualified companies, that agree to retain at least one hundred and twenty-five existing jobs with an average wage equal to or in excess of the county average wage for at least ten years and agree to make a capital investment equal to one half of the amount of state benefits provided within two years, could receive tax credits equal to as much as eighty percent of withholdings from retained job payroll projected over a ten year period. In order to receive the job retention benefits, a qualified company must enter into a written agreement with the department providing detailed performance requirements and recapture provisions.
The Department of Economic Development is required to respond to a request for a proposed benefit award under the Compete Missouri Program within five business days of the receipt of such request. The response must contain either a proposal of benefits or a written refusal stating the reasons no proposal will be provided. Failure by the department to approve or disapprove a notice of intent for benefits under the program will result in a deemed approval. Beginning January 1, 2012, the department of economic development must provide quarterly reports on the program to the general assembly, including a listing of all approved and disapproved applicants and the department's response time to requests for proposed benefit awards. Qualified companies that receive benefits under the program will be required to provide annual reports to the department, in order to document compliance with all applicable requirements and stating the amount of sales taxes exempted.
The act prohibits the approval of new projects after the effective date of the act, under the Quality Jobs, Enhanced Enterprise Zone, BUILD, Development, Rebuilding Communities, and Business Facilities programs.
The act limits the amount of up-front job creation and retention tax credits that may be authorized each fiscal year to no more than the amount appropriated.
The total amount of all tax credits authorized for each fiscal year under the Compete Missouri Program including any up-front job creation/retention tax credits and any outstanding authorizations for tax credits under the six programs prohibited from approving new projects after August 28, 2011, cannot exceed:
1) $111 million for FY 2012;
2) $126 million for FY 2013; and
3) $141 million for FY 2014 and each subsequent fiscal year.
The provisions of the act creating the Compete Missouri Program will automatically sunset six years after the effective date of the act unless reauthorized.
RETALIATORY TAXES
The act prohibits an insurance company claiming a state premium tax credit or deduction from be required to pay any additional retaliatory tax under Section 375.916 as a result of claiming the credit or deduction.
TAX CREDIT REFORM
This act also modifies provisions of Missouri tax credit programs in accordance with recommendations made by the Missouri Tax Credit Review Commission Report.
MISSOURI PROPERTY TAX CREDIT (CIRCUIT BREAKER)
The act reduces the current law amount of tax credit awards for property tax credits for rent constituting taxes actually paid by:
1) Seventeen percent for the 2012 calendar year;
2) Thirty-three percent for the 2013 calendar year;
3) Fifty percent for the 2014 calendar year;
4) Sixty-seven percent for the 2015 calendar year;
5) Eighty-three percent for the 2016 calendar year; and
6) One hundred percent for the 2017 calendar year and all subsequent calendar years.
In any year in which tax credit awards for property tax credits for rent constituting taxes actually paid are reduced, such reduction may be offset by appropriation. If such an appropriation is made, the director of the department of revenue will determine the amount of such offset for each taxpayer and issue a refund to such taxpayers.
SPECIAL NEEDS ADOPTION TAX CREDITS
The act makes international adoptions ineligible for special needs adoption tax credits.
LOW-INCOME HOUSING TAX CREDITS
The act establishes a one hundred ten million dollar cap for authorizations of 9% low-income housing tax credits for FY 2012. Subject to appropriation, up to an additional ten million dollars in 9% credits may be authorized for such fiscal year. For each subsequent fiscal year the amount of 9% low-income housing tax credits which may be authorized is reduced by ten million dollars and the additional amount which may be authorized, subject to appropriation, is increased by a corresponding amount. Beginning FY 2017, no more than fifty million dollars in 9% low-income housing tax credits may be authorized each fiscal year, but subject to appropriation up to an additional sixty million dollars in tax credits may be authorized.
Authorizations of 4% low-income housing tax credits are capped at sixteen million dollars for FY 2012. Subject to appropriation, an additional four million dollars in 4% low-income housing tax credits may be authorized for such fiscal year. For each subsequent fiscal year the amount of 4% low-income housing tax credits which may be authorized is reduced by four million dollars and the additional amount which may be authorized, subject to appropriation, is increased by a corresponding amount. Beginning FY 2016, no more 4% low-income housing tax credits may be authorized each fiscal year, unless an appropriation is made. In any such fiscal year in which an appropriation is made, no more than the lesser of the amount appropriated or twenty million dollars in 4% low-income tax credits may be authorized.
The act prohibits the authorization of 4% low-income housing tax credits after June 30, 2015. The stacking of state 9% low-income housing tax credits with state historic preservation tax credits for the same project is prohibited. The carry-back for low-income housing tax credits is reduced from three years to two years.
WINE AND GRAPE PRODUCER TAX CREDITS
Beginning January 1, 2012, the authorization of wine and grape producer tax credits will be limited to no more than two hundred thousand dollars each year.
RESIDENTIAL TREATMENT AGENCY TAX CREDITS
Under current law, residential treatment agencies are prohibited from applying for residential treatment agency tax credits in an amount greater than forty percent of the payments received by the agency from the Department of Social Services. This act would allow residential treatment agencies to apply for such tax credits in an amount which does not exceed the amount of payments received by the agency from the Department of Social Services.
HISTORIC PRESERVATION TAX CREDITS
Under current law, the Department of Economic Development is prohibited from issuing more than one hundred forty million dollars in historic preservation tax credits in any fiscal year for projects which will receive more than two hundred and seventy-five thousand dollars in tax credits.
LARGE PROJECTS:
For FY 2012, this act would prohibit the Department of Economic Development from approving more than seventy million dollars in historic preservation tax credits, increased by the amount of any recisions of approved applications for such tax credits, for projects which would receive more than two hundred and seventy-five thousand dollars in tax credits. Subject to appropriation, the amount of historic preservation tax credits which may be authorized by the department may be increased by up to ten million dollars for such fiscal year. For each subsequent fiscal year the amount of historic preservation tax credits which may be authorized is reduced by ten million dollars and the additional amount which may be authorized, subject to appropriation, is increased by a corresponding amount. Beginning FY 2014, the Department of Economic Development will be prohibited from approving more than fifty million dollars in historic preservation tax credits, increased by the amount of any recisions of approved applications for such tax credits, for projects which would receive more than two hundred and seventy-five thousand dollars in tax credits no more than fifty million dollars each fiscal year, but subject to appropriation up to an additional thirty million dollars in tax credits may be authorized for such projects.
SMALL PROJECTS:
For FY 2012, this act would prohibit the Department of Economic Development from approving more than nine million dollars in historic preservation tax credits, increased by the amount of any recisions of approved applications for tax such credits, for projects which would receive less than two hundred and seventy-five thousand dollars in tax credits. Subject to appropriation, the amount of historic preservation tax credits which may be authorized by the department may be increased by up to one million dollars for such fiscal year. Each subsequent fiscal year, the amount of historic preservation tax credits which may be authorized is reduced by one million dollars and the additional amount which may be authorized, subject to appropriation, is increased by a corresponding amount. Beginning FY 2016, the Department of Economic Development will be prohibited from approving more than five million dollars in historic preservation tax credits, increased by the amount of any recisions of approved applications for tax such credits, for projects which would receive less than two hundred and seventy-five thousand dollars in tax credits no more than fifty million dollars each fiscal year, but subject to appropriation up to an additional five million dollars in tax credits may be authorized for such projects.
NON-INCOME PRODUCING RESIDENTIAL PROJECTS:
The act prohibits the department from issuing more than one hundred twenty-five thousand dollars in historic preservation tax credits per project for non-income producing residential rehabilitation projects.
TRANSITION RULES:
Applicants for projects that, as of the effective date of the act, have: received approval from the Department of Economic Development; incurred certain levels of expenses; or received certification from the state historical preservation officer will not be subject to the new limitations on tax credit issuance, but will be subject to the current law limitations on tax credit issuance.
STACKING:
The act also prohibits the stacking of state historic preservation tax credits with state 9% low-income housing tax credits. Historic preservation tax credits will now be capable of being carried back one year or forward five years.
COST CERTIFICATION AND TAX CREDIT ISSUANCE:
The act requires historic preservation tax credit applications to include a cost certification performed by a licensed certified public accountant. Within forty-five days following receipt of a tax credit application and cost certification, the Department of Economic Development must issue the lesser of seventy-five percent of the amount of tax credits certified as eligible under the cost certification or the amount of tax credits the project was preliminarily approved to receive. Within one hundred fifty days following the receipt of the tax credit application and cost certification the Department of Economic Development must determine the final amount of tax credits available for the project and, if applicable, issue any remaining credits. If the department determines more tax credits were issued during the preliminary issuance than the project is eligible to receive, the department will recapture the excess. Additional cost certification requirements and recapture provisions are created for projects which claim accrued developer fees as eligible costs for tax credits. The act creates a third party appeals process in which developers can challenge eligibility determinations made by the department.
BROWNFIELD REMEDIATION TAX CREDITS
The act prohibits the authorization of more than thirty million dollars in Brownfield Remediation tax credits in each fiscal year beginning FY 2012. The act prohibits the authorization of more than ten million dollars in Brownfield tax credits each fiscal year beginning FY 2012, for projects that receive benefits under the Distressed Areas Land Assemblage program.
SUNSET PROVISIONS FOR CERTAIN TAX CREDIT PROGRAMS
Due to the Tax Credit Review Commission's recommendation that reforms to programs be made on a prospective basis, rather than utilizing traditional sunset provisions, this act prohibits the authorization of tax credits under the following programs after the effective date of the act:
1) The Neighborhood Preservation Tax Credit;
2) The Development Tax Credit
3) The Brownfield Jobs and Investment Tax Credit;
4) The Small Business Incubator Tax Credit;
5) The Rebuilding Communities Tax Credit;
6) The Missouri Development Finance Board Infrastructure Contribution Credit; and
7) The Missouri Development Finance Board Bond Guarantee Tax Credit
The authorization of tax credits under the following programs will be prohibited after August 28, 2014:
1) The MDFB Bond Guarantee Tax Credit;
2) The MDFB Infrastructure Development Contribution Tax Credit;
3) The Family Farm Breeding Livestock Tax Credit;
4) The Agricultural Product Utilization Tax Credit;
5) The New Generation Cooperative Tax Credit;
6) The Qualified Beef Tax Credit; and
7) The Wine and Grape Producer Tax Credit.
The authorization of tax credits under the following programs will be prohibited after August 28, 2015:
1) The Domestic Violence Shelter Tax Credit;
2) The Maternity Home Tax Credit;
3) The Pregnancy Resource Center Tax Credit;
4) The Shared Care Tax Credit;
5) The Youth Opportunities Tax Credit;
6) The Disabled Access Tax Credit;
7) The Family Development Account Tax Credit;
8) The Residential Treatment Agency Tax Credit;
9) The Food Pantry Tax Credit;
10) The Neighborhood Assistance Program;
11) The Property Tax Credit (Circuit Breaker);
12) The Public Safety Officer Surviving Spouse Tax Credit;
13) The Affordable Housing Tax Credit;
14) The Special Needs Adoption Tax Credit;
15) The Children in Crisis Tax Credit; and
16) The Residential Dwelling Access Tax Credit.
The authorization of tax credits under the following programs will be prohibited after August 28, 2018:
1) The Low-Income Housing Tax Credit;
2) The Historic Preservation Tax Credit; and
3) The Brownfield Remediation Tax Credit.
Where, under current law, a tax credit was subject to the sunset act, the sunset provision is modified to sunset such program on the date provided above.
The limitations on tax credit authorizations provided in the act will not impair an administering agencies ability to issue tax credits that were authorized prior to the date on which authorizations are prohibited, nor will they affect a taxpayer's ability to redeem such tax credits.
REPEAL OF CERTAIN TAX CREDIT PROGRAMS
This act repeals the following tax credit programs:
1) The Charcoal Producers Tax Credit;
2) The Self-Employed Health Insurance Tax Credit; and
3) The Health Care Access Fund Tax Credit.
Provisions contained in this act are similar to provisions contained in the SS/SCS/HCS/HB's 116 & 316 (2011). This act contains an emergency clause.
JASON ZAMKUS