House Bill No. 5505
Public Act No. 22-4
AN ACT CONCERNING CERTAIN AEROSPACE MANUFACTURING
PROJECTS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective from passage) (a) As used in this section:
(1) "Aerospace manufacturing project" means a project involving the
production of helicopters in this state that, if certified by the
commissioner as provided in subsection (b) of this section, will require
(A) primary helicopter production for current United States government
programs specified in the assistance agreement, as of the date of the
assistance agreement, to be carried out at one or more facilities in this
state, (B) the undertaking and maintaining of primary production for
helicopters to be produced during the term of the assistance agreement
under one or more future United States government programs specified
in the assistance agreement under production contracts entered into by
the eligible taxpayer after the effective date of this section, to be carried
out at one or more facilities in this state, and (C) minimum requirements
for total employment in this state, average employee wages in this state,
supplier spend and capital expenditures by an eligible taxpayer in
furtherance of such project continuing through at least June 30, 2042;
(2) "Annual recapture amount" means the total project tax benefits House Bill No. 5505
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utilized by an eligible taxpayer divided by ten;
(3) "Assistance agreement" means a contract entered into between the
commissioner and an eligible taxpayer in accordance with subsection (c)
of this section, including any amendments to or extensions of such
contract;
(4) "Average wage requirement" means, for compliance years
commencing on or after July 1, 2022, and prior to July 1, 2032, an average
annual wage for full-time employees in this state that is not less than the
amounts specified in the assistance agreement;
(5) "Benefit period" means the period commencing on the effective
date of the assistance agreement and ending on June 30, 2032;
(6) "Capital expenditure" means bona fide costs to the wholly-owned
subsidiary and its subsidiaries for: (A) Acquisition of lands, buildings,
machinery, equipment or any combination thereof; (B) site and
infrastructure improvements; (C) planning costs; (D) research and
development expenses, as defined in section 12-217n of the general
statutes, revision of 1958, revised to January 1, 2021, and including, but
not limited to, development of new products and markets; and (E)
development of diversification strategies, including plans for regional
diversification strategies and consultants required for the completion of
such strategies and plans;
(7) "Capital expenditure requirement" means, for compliance years
commencing on or after July 1, 2022, and prior to July 1, 2032, a total
annual amount of capital expenditures made in this state by the wholly-
owned subsidiary that is not less than:
(A) Seventy million two hundred thousand dollars for the
compliance year ending June 30, 2023;
(B) Seventy-one million one hundred thousand dollars for the House Bill No. 5505
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compliance year ending June 30, 2024;
(C) Seventy-two million nine hundred thousand dollars for the
compliance year ending June 30, 2025;
(D) Seventy-three million eight hundred thousand dollars for the
compliance year ending June 30, 2026;
(E) Seventy-five million six hundred thousand dollars for the
compliance year ending June 30, 2027;
(F) Seventy-seven million four hundred thousand dollars for the
compliance year ending June 30, 2028;
(G) Seventy-eight million three hundred thousand dollars for the
compliance year ending June 30, 2029;
(H) Eighty million one hundred thousand dollars for the compliance
year ending June 30, 2030;
(I) Eighty-one million nine hundred thousand dollars for the
compliance year ending June 30, 2031; and
(J) Eighty-three million seven hundred thousand dollars for the
compliance year ending June 30, 2032;
(8) "Commissioner" means the Commissioner of Economic and
Community Development;
(9) "Company" means an entity with a place of business or a wholly-
owned subsidiary located in this state and the direct and indirect
subsidiaries and affiliates of such entity;
(10) "Compliance year" means each twelve -month period
commencing July first and continuing through June thirtieth of the
following year, provided the initial compliance year shall commence on House Bill No. 5505
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July 1, 2022, and end on June 30, 2023, and the last compliance year shall
commence on July 1, 2031, and end on June 30, 2032. "Annual" refers to
a compliance year;
(11) "Contract year" means each twelve-month period commencing
July first and continuing through June thirtieth of the following year,
provided the initial contract year shall commence on July 1, 2022, and
end on June 30, 2023, and the last contract year shall commence on July
1, 2041, and end on June 30, 2042;
(12) "Corporation business tax" means the tax due under chapter 208
of the general statutes;
(13) "Eligible taxpayer" means a company that, at the time application
is made under subsection (b) of this section, (A) is engaged in the
aerospace industry, (B) employs not less than seven thousand
individuals in this state, (C) operates the company's primary helicopter
production facility for its current United States government programs
in this state, (D) plans to bid on a production contract or contracts for a
helicopter under one or more United States government programs, and
(E) has a wholly-owned subsidiary with production facilities and its
headquarters, as set forth in the assistance agreement, in this state prior
to the effective date of this section;
(14) (A) "Employee requirement" means, for compliance years
commencing on or after July 1, 2022, and prior to July 1, 2032:
(i) A minimum level of full-time employees in this state that is not
less than an average of seven thousand three hundred seventy-five for
each compliance year if the eligible taxpayer has entered into a
production contract for one United States government program
specified in the assistance agreement; and
(ii) A minimum level of full-time employees in this state that is not
less than an average of seven thousand five hundred for each House Bill No. 5505
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compliance year if the eligible taxpayer has entered into production
contracts for two United States government programs specified in the
assistance agreement.
(B) The average number of full-time employees for each compliance
year shall be determined by adding the number of full-time employees
at the end of each quarter of the respective compliance year and
dividing the sum of such quarters by four;
(15) "Full-time employee" means an employee in this state of the
company who works a minimum of thirty-five hours per week. "Full-
time employee" does not include an employee working on a temporary
or seasonal basis or any individual who does not receive a federal Form
W-2 from the company;
(16) "Minimum requirements" means the minimum conditions the
eligible taxpayer must satisfy during each compliance year to qualify for
the sales and use tax offset for such compliance year and the refundable
tax credit for such compliance year, including, but not limited to, (A)
achieving the employee requirement, average wage requirement,
supplier spend requirement and capital expenditure requirement, (B)
the maintenance of the wholly-owned subsidiary's headquarters, as set
forth in the assistance agreement, in this state, (C) the maintenance and
operation of the company's primary helicopter production facility for its
current United States government programs, as of the date of the
assistance agreement, in this state, (D) the undertaking and maintaining
in this state of the company's primary production for helicopters to be
produced during the term of the assistance agreement under one or
more future United States government programs specified in the
assistance agreement under production contracts entered into by the
eligible taxpayer after the effective date of this section, and (E) the
maintenance of diversity and workforce training programs by the
company in accordance with the terms of the assistance agreement; House Bill No. 5505
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(17) "Production" means the various operations related to the
completion of a helicopter, including, but not limited to, procurement,
engineering, manufacture, assembly, integration and testing;
(18) "Production contract" means a contract with the United States
government for the production of helicopters;
(19) "Project tax benefit" means the total benefit accruing to an eligible
taxpayer with respect to the sales and use tax offset and the refundable
tax credit;
(20) "Refundable tax credit" means the credit described in subsection
(e) of this section;
(21) "Regular place of business" means any bona fide office, factory,
warehouse or other space in this state at which a supply company is
doing business in its own name in a regular and systematic manner and
which place is continuously maintained, occupied and used by the
supply company in carrying on its business through its employees
regularly in attendance to carry on the supply company's business in the
supply company's own name. "Regular place of business" does not
include a place of business for a statutory agent for service of process, a
temporary office or location used by the supply company only for the
duration of the contract or an office maintained, occupied and used by
a person affiliated with the supply company;
(22) "Sales and use tax" means the taxes due under chapter 219 of the
general statutes;
(23) "Sales and use tax offset" means the offset described under
subsection (d) of this section;
(24) "Supply company" means any commercial business with a
regular place of business in this state that supplies goods and services
necessary to support (A) the manufacturing of company products, or (B) House Bill No. 5505
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company operations. "Supply company" does not include any local,
state or federal revenue collection or taxing entity;
(25) (A) "Supplier spend requirement" means, for compliance years
commencing on or after July 1, 2022, and prior to July 1, 2032, the total
annual spend by the wholly-owned subsidiary and by the company, on
behalf of the wholly-owned subsidiary, with supply companies in this
state of not less than:
(i) Three hundred million dollars for compliance years commencing
on or after July 1, 2022, and prior to July 1, 2024;
(ii) Four hundred ten million dollars for compliance years
commencing on or after July 1, 2024, and prior to July 1, 2029; and
(iii) Four hundred seventy million dollars for compliance years
commencing on or after July 1, 2029, and prior to July 1, 2032.
(B) If an expenditure qualifies for both the supplier spend
requirement and the capital expenditures requirement, the eligible
taxpayer may choose between such categories for which such
expenditure may be counted. In no event shall any such expenditure be
counted towards more than one such category; and
(26) "Wholly-owned subsidiary" means a subsidiary of the company,
or such subsidiary's successor to its operations, that has its
headquarters, as set forth in the assistance agreement, in this state.
"Wholly-owned subsidiary" includes any direct or indirect subsidiary of
the company's wholly-owned subsidiary and any limited liability
company wholly owned directly or indirectly by the company's wholly-
owned subsidiary.
(b) (1) Any eligible taxpayer that intends to undertake an aerospace
manufacturing project may apply to the commissioner for certification
of such project as a certified aerospace manufacturing project. In order House Bill No. 5505
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to receive such certification, an eligible taxpayer shall apply to the
commissioner, in a form acceptable to the commissioner and including
such information as prescribed by the commissioner, including, but not
limited to, (A) a detailed plan outlining the aerospace manufacturing
project, (B) the term of such project, and (C) the estimated expenditures
for such project. The commissioner may require such eligible taxpayer
to submit such additional information as may be necessary to evaluate
the application.
(2) All decisions of the commissioner with respect to any application
received under subdivision (1) of this subsection shall be made in the
commissioner's discretion. The provisions of this subsection shall not be
construed to authorize suit against this state by any taxpayer that is
denied certification by the commissioner and shall not be construed as
a waiver of sovereign immunity.
(c) (1) Upon certification by the commissioner of an application as
provided in subsection (b) of this section, the commissioner may enter
into an assistance agreement with an eligible taxpayer pursuant to
which the commissioner may, in consideration of the eligible taxpayer's
agreement to meet the minimum requirements in a compliance year in
connection with the certified aerospace manufacturing project and as
further inducement for the eligible taxpayer to enter into an aerospace
manufacturing project, agree to permit the eligible taxpayer to offset its
sales and use tax liability and to claim a credit against its corporation
business tax liability up to a specified amount for the corresponding
compliance year.
(2) Such assistance agreement shall have a term of not less than
twenty years and shall list:
(A) The specifications of the certified aerospace manufacturing
project; House Bill No. 5505
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(B) The length of time the certified aerospace manufacturing project
will take to complete;
(C) The minimum requirements the eligible taxpayer agrees to meet
during each compliance year;
(D) The commitment by the eligible taxpayer to (i) maintain the
headquarters, as set forth in the assistance agreement, of the wholly-
owned subsidiary or its successor in this state, (ii) operate its primary
helicopter production facility for its current United States government
programs, as of the date of the assistance agreement, in this state, and
(iii) to undertake and maintain its primary production of helicopters to
be produced during the term of the assistance agreement under one or
more future United States government programs specified in the
assistance agreement in this state under production contracts entered
into by the eligible taxpayer after the effective date of this section;
(E) The amount of sales and use tax that the eligible taxpayer is
eligible to offset for each compliance year set forth in the assistance
agreement, provided the eligible taxpayer meets the minimum
requirements for each such compliance year;
(F) The terms and conditions of the repayment of any sales and use
tax offsets and other required financial penalties resulting from the
eligible taxpayer's failure to comply with the terms of the assistance
agreement;
(G) The amount of corporation business tax, subject to the limits set
forth in subsection (e) of this section, against which the eligible taxpayer
is eligible to claim a credit for each compliance year set forth in the
assistance agreement, provided the eligible taxpayer meets the
minimum requirements for each such compliance year;
(H) The manner and method for the eligible taxpayer to provide
notice of any disputed claim under the assistance agreement; and House Bill No. 5505
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(I) Any other terms and conditions the commissioner may require.
(3) The assistance agreement shall provide that the project tax benefit
be earned and utilized during the first eight years of the term of any
production contract, provided no project tax benefit may be earned or
utilized beyond the benefit period.
(4) Any eligible taxpayer that enters into an assistance agreement
with the commissioner under this subsection may, in the event of any
disputed claim under such assistance agreement, bring an action against
this state to the superior court for the judicial district of Hartford for the
purpose of having such claim determined, provided notice of such
disputed claim is first given to the commissioner in the manner and
method described in such assistance agreement. No such action shall be
allowed unless it is brought not later than two years after the date on
which the eligible taxpayer gave proper notice to the commissioner in
accordance with such assistance agreement. All legal defenses under
such assistance agreement, except sovereign immunity, are reserved to
this state.
(5) If the provisions of subsection (c) or (e) of section 32-223 of the
general statutes or section 32-462 of the general statutes are in conflict
with the assistance agreement, the provisions of such assistance
agreement shall supersede.
(6) Upon the execution of the assistance agreement, the commissioner
shall issue an allocation notice stating the maximum combined amount
of the sales and use tax offset and the refundable tax credit available to
the eligible taxpayer for the benefit period and the specific requirements
the eligible taxpayer shall meet to qualify for such offset and credit. Such
notice shall certify to the eligible taxpayer that the offsets and credits
may be claimed by the eligible taxpayer if the eligible taxpayer meets
the specific requirements set forth in the notice. House Bill No. 5505
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(d) (1) The assistance agreement shall provide for the offset of sales
and use tax amounts otherwise payable by the eligible taxpayer under
the provisions of chapter 219 of the general statutes. Such offset shall be
made in the form, timing and manner determined by the commissioner
in consultation with the Commissioner of Revenue Services. The sales
and use tax offset amounts shall be calculated after the application of all
other sales and use tax exemptions set forth in chapter 219 of the general
statutes in effect on the effective date of this section and any subsequent
amendments to said chapter that the eligible taxpayer is eligible to
claim. Nothing in this subsection shall affect the eligible taxpayer's
ability to claim the sales and use tax exemptions that it otherwise
qualifies for under any provision of the general statutes.
(2) Subsequent to a production contract taking effect for helicopters
to be produced during the term of the assistance agreement, not later
than sixty days after the end of each compliance year or, if the eligible
taxpayer requests and the commissioner approves an extended date, not
later than such extended date, the eligible taxpayer shall certify, subject
to a third-party audit performed in accordance with the Department of
Economic and Community Development audit guide or such protocols
as may be set forth in the assistance agreement, the actual employment,
wages, supplier spend and capital expenditure amounts to the
commissioner in accordance with the requirements of the assistance
agreement. If the results of such audit reveal that the eligible taxpayer
has claimed a sales and use tax offset in excess of the amount allowable,
the eligible taxpayer shall be subject to the repayment provisions as set
forth in the assistance agreement. At the end of each compliance year,
upon receipt of the eligible taxpayer's certification, the commissioner
shall notify the Commissioner of Revenue Services whether the eligible
taxpayer has met all minimum requirements necessary to qualify for the
sales and use tax offset or is required to repay the amount of such offset
in accordance with the terms of the assistance agreement. House Bill No. 5505
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(e) (1) If the results of the audit performed pursuant to subdivision
(2) of subsection (d) of this section reveal that the eligible taxpayer was
unable to utilize all of the sales and use tax offset to which it was entitled
under the assistance agreement for a compliance year against its sales
and use tax liability, the assistance agreement shall permit the eligible
taxpayer to claim the excess amount as a refundable tax credit, not to
exceed five million dollars for each compliance year, against the
corporation business tax. If the amount of the excess is greater than five
million dollars for any compliance year, the excess over five million
dollars shall be carried forward to future compliance years to offset the
eligible taxpayer's sales and use tax liability and then as refundable tax
credits of up to five million dollars for each compliance year against the
eligible taxpayer's corporation business tax liability, until the excess is
fully utilized, except that no carry-forward shall extend beyond the
benefit period. Such carry-forward shall be utilized prior to any sales
and use tax offset earned in any subsequent compliance year.
(2) If the amount of the refundable tax credit exceeds the eligible
taxpayer's corporation business tax liability for the applicable income
year, the Commissioner of Revenue Services shall treat such excess as
an overpayment and shall refund the amount of such excess, without
interest, to the eligible taxpayer. In no event shall the refundable tax
credits allowed under this subsection exceed forty-five million dollars
in the aggregate over the term of the assistance agreement. The eligible
taxpayer shall claim the refundable tax credit allowed under this
subsection on its corporate tax return for the income year that ends
during the compliance year and such credit shall not be subject to the
limits set forth in section 12-217zz of the general statutes.
Notwithstanding the provisions of section 12-217aa of the general
statutes, such credit shall be claimed after all other tax credits have been
claimed.
(3) Not later than thirty days after the commissioner receives an audit House Bill No. 5505
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performed pursuant to subdivision (2) of subsection (d) of this section
or as provided for in the assistance agreement, during each year of the
benefit period, the Department of Economic and Community
Development shall issue the eligible taxpayer a credit voucher that sets
forth the amount of the refundable tax credit permitted pursuant to this
subsection and the income year for which such credit may be claimed.
The commissioner shall annually provide to the Commissioner of
Revenue Services a report detailing all credit vouchers that have been
issued under this subsection.
(f) (1) The eligible taxpayer shall pay the total amount of project tax
benefit that was utilized by the eligible taxpayer for a particular
compliance year and any penalty set forth in the assistance agreement if
the commissioner determines that the eligible taxpayer failed to satisfy
any of the minimum requirements for such compliance year.
(2) The project tax benefit utilized by the eligible taxpayer under
subsections (d) and (e) of this section shall be subject to recapture during
the contract years commencing on or after July 1, 2032, and ending on
June 30, 2042, if the eligible taxpayer fails to satisfy during such time
period certain annual thresholds relating to employee head count,
average wages, supplier spend and capital expenditures, as detailed in
the assistance agreement, and such other requirements including (A) the
maintenance of the wholly-owned subsidiary's headquarters, as set
forth in the assistance agreement, in this state, (B) the maintenance and
operation of the company's primary helicopter production facility for its
current United States government programs, as of the date of the
assistance agreement, in this state, (C) the undertaking and maintaining
in this state of the company's primary production for helicopters to be
produced during the term of the assistance agreement under one or
more of its future United States government programs specified in the
assistance agreement under production contracts entered into by the
eligible taxpayer after the effective date of this section, and (D) the House Bill No. 5505
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maintenance of diversity and workforce training programs by the
company in accordance with the terms of the assistance agreement.
(3) If the eligible taxpayer enters into a production contract with the
United States government for one helicopter program specified in the
assistance agreement, the targeted job requirement shall be seven
thousand two hundred fifty, and the minimum job requirement shall be
six thousand for each of the years subject to the recapture under
subdivision (2) of this subsection. If the eligible taxpayer enters into
production contracts with the United States government for two
helicopter programs specified in the assistance agreement, the targeted
job requirement shall be seven thousand seven hundred fifty, and the
minimum job requirement shall be seven thousand for each of the years
subject to the recapture under subdivision (2) of this subsection. The
annual recapture amount shall be (A) repaid if the number of actual jobs
in any year subject to the recapture is less than the minimum job
requirement, and (B) prorated at ninety per cent value of the annual
recapture amount if the number of actual jobs is equal to or greater than
the minimum job requirement but less than the targeted job
requirement. In addition to the recapture job obligation, the
commissioner may require other criteria, including, but not limited to,
wage requirements, with respect to the recapture of the remaining ten
per cent of the annual recapture amount. In no event shall the amount
of the recapture exceed the annual recapture amount.
(g) The aggregate amount of the project tax benefit granted by the
commissioner under this section shall not exceed (1) six million two
hundred fifty thousand dollars for each compliance year or fifty million
dollars during the term of the assistance agreement if the eligible
taxpayer has entered into a production contract after the effective date
of this section with the United States government for one helicopter
program specified in the assistance agreement, and (2) nine million
three hundred seventy-five thousand dollars for each compliance year House Bill No. 5505
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or seventy-five million dollars during the term of the assistance
agreement if the eligible taxpayer has entered into production contracts
after the effective date of this section with the United States government
for two helicopter programs specified in the assistance agreement.
(h) The commissioner shall not enter into any assistance agreement
under subsection (c) of this section after January 31, 2023.
(i) The commissioner may make revisions to the terms of the
assistance agreement to address a scenario where a delay, not caused by
the eligible taxpayer, prevents the eligible taxpayer from entering into
one or more production contracts by June 30, 2024. Such revisions may
include changes to the timing of (1) the benefit period, (2) the
compliance years, (3) the contract years, (4) the minimum requirements,
and (5) the recapture period, and other conforming changes, provided
in all cases, the project tax benefit shall be earned and utilized during
the first eight years of the term of any such production contract.
(j) The commissioner may from time to time amend, supplement or
modify the terms of the assistance agreement consistent with the
provisions of this section.
Approved April 28, 2022