Missouri Senate

Senate Committee Substitute

Under current law, the Department of Economic Development is required to limit the monetary amount of qualified equity investments to a level necessary to limit tax credit utilization to no more than fifteen million dollars annually. Following fiscal year 2010, no equity investments may be made unless reauthorization is provided by enactment of a general law by the General Assembly.

This act would require the department to limit the monetary amount of qualified equity investments to a level necessary to limit tax credit utilization to no more than twenty-five million dollars annually. The department is required to deny any application received for certain other economic development incentives which, in addition to the benefits received under the new markets program by the entity, either directly or indirectly, would exceed the projected state benefit. The requirement for reauthorization by enactment of a general law by the General Assembly is moved back two fiscal years to fiscal years following fiscal year 2012.

The secondary mining use tax credit program is created to provide a tax credit for taxpayers, including not-for-profit insurance companies, that incur expenses for the utilization of an existing mine for secondary uses equal to the lesser of hundred percent of such costs or one hundred thousand dollars. The tax credit is fully transferrable, and non-refundable, but may be carried forward five years. The tax credit has an annual aggregate state-wide cap of one million dollars.

The Business Relocation for Secondary Mining Use Tax Credit program is created to provide a tax credit to taxpayers, including not-for-profit insurance companies, that incur expenses in relocating to an existing mine for use of the mine other than mining equal to the lesser of fifty percent of such costs or ten thousand dollars. The tax credit is fully transferrable, and non-refundable, but may be carried forward five years. The tax credit has an annual aggregate state-wide cap of one hundred thousand dollars.

The Abandoned Mine Safety Tax Credit Program is created to provide a tax credit, to taxpayers, including not-for-profit insurance companies, that incur expenses in implementing safety measures or devices in abandoned mines, equal to the lesser of fifty percent of such expenses or fifty thousand dollars. The tax credit is fully transferrable, and non-refundable, but may be carried forward five years. The tax credit has an annual aggregate state-wide cap of five hundred thousand dollars.

The act creates a one thousand dollar refundable state income tax credit for taxpayers who purchase a new or existing home between the effective date of the act and the end of this year. The tax credit program is capped at four million dollars and expires December 31, 2010. The act creates a state and local sales and use tax exemption for utilities, machinery and equipment used or consumed by certain businesses, which after the effective date of the act, commence operations in a facility located in an underground mine which contains at least five hundred thousand square feet of space which could be used by such business. The exemption will expire for taxpayers twenty years from the date the taxpayer is approved for the exemption. The sales tax exemption created by this act and benefits available under the Missouri Quality Jobs Act are mutually exclusive of one another such that any business which receives a tax benefit under one is ineligible for receipt of the other.

Under current law, historic preservation tax credits are authorized for twenty-five percent of eligible rehabilitation costs. This act reduces the amount of the credit to twenty percent of the eligible rehabilitation costs. Tax credit recipients and the Department of Economic Development are required to report job creation resulting from tax credit utilization.

The Department of Economic Development is allowed to authorize up to $5 million in tax credits per year to encourage equity investment in technology-based early stage Missouri companies, commonly referred to as angel investments. Investors who contribute the first five hundred thousand dollars in equity investment to a qualified Missouri business may be issued a tax credit equal to thirty percent of the investment or forty percent of the investment if the qualified business is located in a rural area or distressed community. An investor can receive a credit of up to fifty thousand dollars for an investment in a single qualified business and up to one hundred thousand dollars for investments in more than one qualified business per year. Tax credits for equity investment in technology-based early stage Missouri companies may be carried forward for up to three years or transferred.

Records pertaining to a business project with which the Department of Economic Development, the Economic Development Export Finance Board, or a regional planning commission may be deemed closed records. The Department of Economic Development is allowed to include pre-employment training in its new or expanding industry training. The act specifies what services may be provided including development of training plans, the provision of training through qualified training staff, fees for training professionals, and transportation expenses if the training can be more effectively provided outside the community where the jobs will be located.

The aggregate cap on small business incubator tax credit authorization is increased from five hundred thousand dollars to one million per tax year. The act modifies provisions of law which authorize a tax credit for qualified research expenses. The tax credit will be equal to ten percent of qualified research expenses incurred during the taxable year unless such expenses were incurred in a distressed community, in which case the credit will be equal to twenty-five percent of such expenses. Eligibility for receipt of the tax credit is limited to taxpayers with less than two hundred twenty-five employees, seventy-five percent of which must be employed within the state. Such taxpayers must be engaged, on a for-profit basis, in the development of medical instruments and devices, medical diagnostics and therapeutics, plant science products, or pharmaceutical or veterinary products with agricultural applications in order to receive the credit. Under current law, no qualified research expense tax credits may be approved, awarded or issued after January 1, 2005. This act removes the prohibition on approval and issuance of tax credits and increases the annual tax credit cap from nine million seven hundred thousand to three million dollars provided that at least two million dollars in tax credits be authorized for qualified research expenses incurred in distressed communities. No more than five hundred thousand dollars may be allocated annually per taxpayer unless such taxpayer incurred the qualified research expenses in a distressed community in which case such taxpayer may not receive more than one million dollars in tax credits annually.

The act creates a new tax credit for qualified research expenses. The amount of the tax credit will be based upon the increase in a taxpayer's qualified research expenses over average of the three preceding year's expenses. A taxpayer can receive a tax credit equal to: three percent of the amount of increased expenses which do not exceed two million five hundred thousand dollars; five percent of the amount of increased expenses which exceed two million five hundred thousand but do not exceed five million dollars; and seven and one half percent of the amount of increased expenses which exceed five million dollars. The Department of Economic Development is prohibited from issuing more than seven million dollars in qualified research tax credits annually. Qualified research expenses will be limited to those incurred in the research and development of agricultural biotechnology, plant genomics products, diagnostic and therapeutic medical devices, and prescription pharmaceuticals consumed by humans or animals. Expenses incurred in the research, development, or manufacturing of power system technology for aerospace, space, defense, or implantable or wearable medical devices are also permitted. The department director may allow a taxpayer to transfer up to forty percent of the tax credits issued, but not yet claimed, between January 1, 2010, and December 31, 2016. The Director of the Department of Economic Development must act between August 1 and August 15th on tax credit applications filed between January 1 and July 1st for claims from the previous year. A formula is provided by which tax credits will be issued if the eligible claims for the credits exceed the annual cap. No one taxpayer can be issued more than thirty percent of the total amount of tax credits authorized in any calendar year. Taxpayers are prohibited from simultaneously receiving benefits under this program and the other qualified research tax credit program contained in the act.

The act specifies that if the department fails to respond within thirty days of a Quality Jobs Program applicant's notice of intent, the notice is deemed a disapproval. Currently, the notice is deemed an approval if the department fails to respond within thirty days. The act specifies how the department must apply certain definitions when a business that has already received an approved notice of intent later files another notice of intent and eliminates the per-company annual cap on technology business projects. Qualified companies which file for, or publically announce intentions to seek, bankruptcy protection in the form of a reorganization will still be able to receive benefits under the quality jobs program provided certain conditions are met. The act also increases the annual limit on tax credit issuance for the Missouri Quality Jobs Act from sixty million dollars to one hundred twenty million dollars.

The Small Business and Entrepreneurial Growth Act is established to provide tax incentives for small business expansion. Beginning January 1, 2010, small business employers will be allowed to retain new employee income tax withholdings for one year, if such employer: employs more than five employees and increases payroll by at least twenty percent due to the creation of new jobs which pay at least eighty-five percent of the county average wage; or employs less than five employees and adds new employees so that the total number of employees is five or greater and such jobs pay at least eighty-five percent of the county average wage. Such employers will be allowed to retain all employee income tax withholding for two years if, in addition to the job creation and pay requirements, such employer offers health insurance and pays more than fifty percent of such premiums for all employees. No more than five million dollars in benefits will be available annually under the small business and entrepreneurial growth act.

The act contains an emergency clause.

The act is identical to the senate committee substitute for house committee substitute for house bill 191 (2009).

JASON ZAMKUS