Alabama 2022 Regular Session

Alabama Senate Bill SB303 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1 SB303
2	2	2 218176-1
3	3	3 By Senators Orr and Melson
4	4	4 RFD: Finance and Taxation Education
5	5	5 First Read: 09-MAR-22
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7	7	Page 0 1 218176-1:n:03/04/2022:JF/cmg LSA2022-114F
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13	13	7
14	14	8 SYNOPSIS: This bill would change the reporting date
15	15	9 requirements of state agencies that administer
16	16	10 economic tax incentives and establish sunset
17	17	11 provisions and reporting guidelines for economic
18	18	12 tax incentives.
19	19	13
20	20	14 A BILL
21	21	15 TO BE ENTITLED
22	22	16 AN ACT
23	23	17
24	24	18 Relating to economic tax incentives; to amend
25	25	19 Section 40-1-50, Code of Alabama 1975; to change the reporting
26	26	20 date requirements of state agencies which administer economic
27	27	21 tax incentives; to align committee schedules to review state
28	28	22 agency reports; to establish sunset dates for tax incentive
29	29	23 programs; to establish future sunset dates for extended tax
30	30	24 incentive programs; and to provide required guidelines for all
31	31	25 new incentive legislation.
32	32	26 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
33	33	Page 1 1 Section 1. Section 40-1-50, Code of Alabama 1975, is
34	34	2 amended to read as follows:
35	35	3 "§40-1-50.
36	36	4 "(a) For the purpose of this section, the term
37	37	5 economic tax incentive shall mean any tax credits, deductions,
38	38	6 exemptions, abatements, preferential rates, or rebates given
39	39	7 as an economic incentive. For the purpose of this section, the
40	40	8 term economic incentive shall mean an inducement provided by
41	41	9 the government, where the government promises to forgo tax
42	42	10 revenues to which it is otherwise entitled or to provide some
43	43	11 other benefit to an individual or an entity and in exchange
44	44	12 the individual or entity promises to take specific action that
45	45	13 contributes to economic development. In order for the
46	46	14 Legislature to get accurate and complete information regarding
47	47	15 the costs and benefits of economic tax incentives, each state
48	48	16 agency that administers an economic tax incentive shall
49	49	17 annually report the information required herein to the
50	50	18 Legislature.
51	51	19 "(b) The head of each state agency that administers
52	52	20 any economic tax incentive shall prepare and submit to the
53	53	21 Legislature a report regarding each economic tax incentive
54	54	22 that the agency administers as set forth in the schedule
55	55	23 provided by the Alabama Department of Revenue pursuant to
56	56	24 subsection (f)(2) no later than the second first Legislative
57	57	25 day of the Regular Session beginning in the 2018 2023 Regular
58	58	26 Session of the Legislature and each year thereafter. The
59	59	Page 2 1 report shall include an assessment of each economic tax
60	60	2 incentive based on the following criteria:
61	61	3 "(1) Whether or not each economic tax incentive has
62	62	4 been successful in meeting the purpose for which it was
63	63	5 enacted, in particular, whether each economic tax incentive
64	64	6 benefits those originally intended to be benefited, and if
65	65	7 not, those who do benefit.
66	66	8 "(2) Whether or not the state receives a positive
67	67	9 return on investment, specifically the direct and indirect
68	68	10 impact on state and local tax revenues, from the business or
69	69	11 industry for which the economic tax incentive is intended to
70	70	12 benefit and any other economic benefits produced by such tax
71	71	13 incentive.
72	72	14 "(3) The economic results of each economic tax
73	73	15 incentive, taking into account the extent to which the
74	74	16 incentive successfully changes business behavior, and the
75	75	17 unintended or inadvertent effects, benefits, or harm caused by
76	76	18 the economic tax incentive, including whether the economic tax
77	77	19 incentive conflicts with other state laws or regulations.
78	78	20 "(c)(1) Nothing in this section shall be construed
79	79	21 to require the disclosure of proprietary or trade secret
80	80	22 information that has been submitted to any state agency with
81	81	23 respect to an economic tax incentive.
82	82	24 "(2) Nothing in this section shall be construed to
83	83	25 supercede any provision with respect to the confidentiality of
84	84	26 taxpayer records.
85	85	Page 3 1 "(d) Each state agency required to submit a report
86	86	2 pursuant to the provisions of this section may request from
87	87	3 any other state or local agency, official, recipient of funds,
88	88	4 or the Alabama Department of Revenue, any information
89	89	5 necessary to complete the required report. Any such agency,
90	90	6 official, or recipient shall comply with this request.
91	91	7 "(e) For purposes of this section, the term state
92	92	8 agency shall mean any office, department, board, commission,
93	93	9 institution, or division within the executive branch of state
94	94	10 government, excluding the Alabama Department of Revenue.
95	95	11 Administration of an economic tax incentive shall be evidenced
96	96	12 by a legal requirement or authorization to undertake any of
97	97	13 the following actions for purposes of administration of the
98	98	14 tax incentive:
99	99	15 "(1) Promulgation of rules or regulations; in cases
100	100	16 where more than one agency has rulemaking authority, the
101	101	17 report shall be prepared collaboratively.
102	102	18 "(2) Determination, review, or confirmation of
103	103	19 eligibility or qualifications.
104	104	20 "(3) Entering into a contract with an entity for
105	105	21 purposes of a tax credit.
106	106	22 "(4) Facilitating economic tax incentives by
107	107	23 distributing funds to non-state agencies.
108	108	24 "(5) Conducting oversight or substantial
109	109	25 administrative functions for an economic tax incentive when
110	110	26 the public purpose associated with the economic tax incentive
111	111	27 is within the core mission of the agency.
112	112	Page 4 1 "(f)(1) The Department of Revenue shall develop a
113	113	2 format for reports required herein. The format shall be made
114	114	3 available to all state agencies for use in preparation of
115	115	4 their required reports.
116	116	5 "(2) The Department of Revenue shall prepare, every
117	117	6 four years, a four-year schedule of the economic tax
118	118	7 incentives to be reported to the Legislature beginning with
119	119	8 the 2018 Regular Session of the Legislature.
120	120	9 "(3) The Department of Revenue shall provide state
121	121	10 agencies with any tax information necessary to complete the
122	122	11 required report relating to an economic tax incentive of such
123	123	12 agency.
124	124	13 "(g) The House Ways and Means Education Committee
125	125	14 and the Senate Committee on Finance and Taxation - Education
126	126	15 shall conduct joint hearings on the tax expenditure report
127	127	16 every odd-numbered year to be concluded by the tenth
128	128	17 legislative day of the regular session of the Legislature The
129	129	18 House Ways and Means Committees and the Senate Finance and
130	130	19 Taxation Committees referred to in this subsection as
131	131	20 committees, shall conduct hearings on the reports every
132	132	21 odd-numbered year, to be concluded thirty days before the
133	133	22 beginning of the Regular Session of the Legislature. The
134	134	23 committees shall analyze and consider each economic tax
135	135	24 incentive and shall provide a recommendation to modify,
136	136	25 discontinue, or take no action with respect to each economic
137	137	26 tax incentive."
138	138	Page 5 1 Section 2. The Brownfield Development Tax Abatement
139	139	2 Act, Chapter 9C, of Title 40, commencing with Section 40-9C-1,
140	140	3 Code of Alabama 1975, is repealed December 31, 2027, unless
141	141	4 extended by an act of the Legislature prior to that date for
142	142	5 no more than five additional years.
143	143	6 Section 3. The Rural Physician Tax Credit, Article
144	144	7 4A, commencing with Section 40-18-130, Chapter 18, of Title
145	145	8 40, Code of Alabama 1975, is repealed December 31, 2027,
146	146	9 unless extended by an act of the Legislature prior to that
147	147	10 date for no more than five additional years.
148	148	11 Section 4. The Coal Production Tax Credit, Article
149	149	12 8, commencing with Section 40-18-220, Chapter 18, of Title 40,
150	150	13 Code of Alabama 1975, is repealed December 31, 2027, unless
151	151	14 extended by an act of the Legislature prior to that date for
152	152	15 no more than five additional years.
153	153	16 Section 5. The Reemployment Act of 2010, Article 10,
154	154	17 commencing with Section 40-18-270, Chapter 18, of Title 40,
155	155	18 Code of Alabama 1975, is repealed December 31, 2027, unless
156	156	19 extended by an act of the Legislature prior to that date for
157	157	20 no more than five additional years.
158	158	21 Section 6. The Full Employment Act of 2011, Article
159	159	22 11, commencing with Section 40-18-290, Chapter 18, of Title
160	160	23 40, Code of Alabama 1975, is repealed December 31, 2027,
161	161	24 unless extended by an act of the Legislature prior to that
162	162	25 date for no more than five additional years.
163	163	26 Section 7. The Veterans Employment Act, Article 13,
164	164	27 commencing with Section 40-18-320, Chapter 18, of Title 40,
165	165	Page 6 1 Code of Alabama 1975, is repealed December 31, 2027, unless
166	166	2 extended by an act of the Legislature prior to that date for
167	167	3 no more than five additional years.
168	168	4 Section 8. The Irrigation Equipment Tax Credit,
169	169	5 Article 14, commencing with Section 40-18-340, Chapter 18, of
170	170	6 Title 40, Code of Alabama 1975, is repealed December 31, 2027,
171	171	7 unless extended by an act of the Legislature prior to that
172	172	8 date for no more than five additional years.
173	173	9 Section 9. The Entertainment Industry Incentive Act
174	174	10 of 2009, Article 3, commencing with section 41-7A-40, Chapters
175	175	11 7A, of Title 41, Code of Alabama 1975, is repealed December
176	176	12 31, 2027. Prior to the repeal the incentive, the Department of
177	177	13 Commerce shall report to the Legislature beginning in 2023 and
178	178	14 annually thereafter, regarding the entertainment industry
179	179	15 incentives, in accordance with Section 40-1-50.
180	180	16 Section 10. The Alabama Enterprise Zone Act, Article
181	181	17 2, commencing with Section 41-23-20, Chapter 23, of Title 41,
182	182	18 Code of Alabama 1975, unless extended by an act of the
183	183	19 Legislature prior to that date for no more than five
184	184	20 additional years.
185	185	21 Section 11. The repealing of the incentives listed
186	186	22 in sections 2 through 10 shall only affect the availability of
187	187	23 the tax credits after December 31, 2027 and shall not cause a
188	188	24 reduction or suspension of any credits awarded on or prior to
189	189	25 December 31, 2027.
190	190	Page 7 1 Section 12. (a) Beginning in the 2023 Regular
191	191	2 Session of the Legislature, all new economic tax incentive
192	192	3 legislation shall have provisions for the following:
193	193	4 (1) For every bill enacting a new tax credit, a tax
194	194	5 credit performance statement which must state the legislative
195	195	6 purpose for the new tax credit. The tax credit performance
196	196	7 statement must indicate one or more of the following as the
197	197	8 legislative purpose of the new tax credit:
198	198	9 a. Tax credits intended to induce certain designated
199	199	10 behavior by taxpayers.
200	200	11 b. Tax credits intended to improve industry
201	201	12 competitiveness.
202	202	13 c. Tax credits intended to create or retain jobs.
203	203	14 d. Tax credits intended to reduce structural
204	204	15 inefficiencies in the tax structure.
205	205	16 e. Tax credits intended to provide tax relief for
206	206	17 certain businesses or individuals.
207	207	18 (2) Every new tax credit shall expire on the first
208	208	19 day of the calendar year following the calendar year that is
209	209	20 five years from the effective date of the tax credit. With
210	210	21 respect to any new property tax exemption, the exemption does
211	211	22 not apply to taxes levied for collection beginning in the
212	212	23 calendar year following the calendar year that is five years
213	213	24 from the effective date of the tax credit.
214	214	25 (3) An annual limit on the amount of credits or
215	215	26 incentives that may be provided during any annual period.
216	216	Page 8 1 (4) Limit the number of years for carryforward of
217	217	2 unused credits to no more than five years.
218	218	3 (5) Limit any transfer or sale of credits to only
219	219	4 one transaction after filing paperwork and a filing fee with
220	220	5 the Department of Revenue.
221	221	6 (6) Require pre-certification of all income and
222	222	7 financial institutions excise tax credits by the Department of
223	223	8 Revenue before they can be claimed.
224	224	9 (b) Beginning with the tax year beginning after
225	225	10 December 31, 2023, taxpayers claiming a new tax credit
226	226	11 preference must report the amount of the tax preference
227	227	12 claimed by the taxpayer to the Department of Revenue as
228	228	13 otherwise required by statute or determined by the department
229	229	14 as part of the taxpayer's regular tax reporting
230	230	15 responsibilities.
231	231	16 Section 13. This act shall become effective on the
232	232	17 first day of the third month following its passage and
233	233	18 approval by the Governor, or its otherwise becoming law.
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