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SB 112 - Missouri's New Markets program provides a tax credit that can be taken against state income tax, bank tax, insurance premium tax, other financial institutions tax, and express companies tax by investors in funds established by specialized financial institutions called Community Development Entities (CDEs)for projects in Missouri. Current law prohibits the authorization of investments that would receive tax credits under the New Markets tax credit program after June 30, 2010. Beginning on the effective date of the act, this act allows the Department of Economic Development to again authorize new qualified investments that would qualify for the New Markets tax credit. This act also modifies certain terms of the New Markets tax credit program for investments made after the effective date of the act. Currently, the credit totals 39% of the amount invested by the taxpayer in the CDE as adjusted by state statute, and is claimed over a seven year period (0% for the first 2 years, 7% for the 3rd year, and 8% for the next 4 years). Under this act, the tax credit amount will be equal to 58% of the unadjusted amount invested in the CDE and the credits will be claimed over a seven year period (0% for the first 2 years, 11 % for the 3rd and 4th year, and 12% for the next 3 years). Currently, these tax credits are not transferable. This act does not prohibit the transfer of these tax credits, except that the credits are not saleable on the open market. Currently, there is a $25 million fiscal year cap on utilization of the tax credit. This act reduces the cap to $15 million per fiscal year. Current law requires CDEs to invest 85% of the capital into Missouri Qualified Businesses. This act requires that 150% of the capital that the CDE raises be invested in Missouri Qualified Businesses. The Department of Economic Development is required to give the CDE six months after notice of noncompliance with certain terms of the program before the department recaptures the tax credits. The act creates the New Markets Performance Guarantee Fund and requires CDEs that seek to have their investments designated as eligible for New Markets tax credits to pay one-half percent of the investment amount as a deposit that will be refunded to the CDE if the CDE invests 85% of the purchase price of the investment in qualified low-income community investments in Missouri within twelve months of the investment. The act also prohibits CDEs from making certain distributions to their equity holders or making cash payments on long-term debt securities until the investment meets certain requirements and the Department of Economic Development approves the request. If the department denies the request unreasonably, the burden of proof is on the department in any administrative or legal proceeding. Fees from the investment fund are prohibited from being paid to a CDE until after the seventh anniversary of the initial investment. The act establishes a sunset of six years after the effective date for the version of the New Markets tax credit created by this act. This act contains an emergency clause. This act is similar to HB 227 (2013). MIKE HAMMANN
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