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AN ACT relating to the Kentucky Reinvestment Act Program. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF SUBCHAPTER 34 OF KRS CHAPTER 3
154 IS CREATED TO READ AS FOLLOWS: 4
(1) An approved company or, with the authority's consent, an affiliate of an 5
approved company may impose wage assessments against employees as provided 6
in this section, if a wage assessment is included in the incentives awarded to the 7
approved company in the reinvestment agreement. The level of wage assessment 8
shall be negotiated as part of the reinvestment agreement. 9
(2) If the reinvestment project is located in an enhanced county, the approved 10
company or, with the authority's consent, an affiliate of an approved company 11
may require that each employee subject to the income tax imposed by KRS 12
141.020, whose job was preserved or created as a result of the project, as a 13
condition of employment or the retention of employment, agree to pay an 14
assessment up to twenty percent (20%) of the individual income tax rate imposed 15
by KRS 141.020, and which assessment shall operate as the Commonwealth's 16
wage assessment. 17
(3) If the reinvestment project is not located in an enhanced county, the approved 18
company or, with the authority's consent, an affiliate of the approved company 19
may require that each employee subject to the income tax imposed by KRS 20
141.020, whose job was preserved or created as a result of the project, as a 21
condition of employment or the retention of employment, agree to pay an 22
assessment up to fifteen percent (15%) of the individual income tax rate imposed 23
by KRS 141.020. The Commonwealth's wage assessment shall be either of the 24
following: 25
(a) Up to ten percent (10%) of the individual income tax rate imposed by KRS 26
141.020 if the project is located in a local jurisdiction where: 27 UNOFFICIAL COPY 23 RS BR 1121
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1. No local occupational license fee is imposed; 1
2. a. A local occupational license fee greater than or equal to five 2
percent (5%) of the individual income tax rate in KRS 141.020 is 3
imposed; and 4
b. The local jurisdiction agrees to forgo the local wage assessment, 5
at least five percent (5%) of the individual income tax rate 6
imposed by KRS 141.020 through credits against the local 7
occupational license fee for the affected employees; or 8
3. a. A local occupational license fee less than five percent (5%) of the 9
individual income tax rate in KRS 141.020 is imposed; and 10
b. The local jurisdiction agrees to forgo the total amount of the 11
local occupational license fee as the local wage assessment; or 12
(b) Up to two (2) times the forgone local wage assessment rate if the project is 13
located in a local jurisdiction where: 14
1. a. A local occupational license fee greater than or equal to five 15
percent (5%) of the individual income tax rate in KRS 141.020 is 16
imposed; and 17
b. The local jurisdiction agrees to forgo an amount of the local 18
occupational license fee that is less than five percent (5%) of the 19
individual income tax rate imposed by KRS 141.020 as the local 20
wage assessment; or 21
2. a. A local occupational license fee less than five percent (5%) of the 22
individual income tax rate in KRS 141.020 is imposed; and 23
b. The local jurisdiction agrees to forgo only a portion of the total 24
amount of the local occupational license fee as the local wage 25
assessment. 26
(4) If the reinvestment project is not located in an enhanced county, and: 27 UNOFFICIAL COPY 23 RS BR 1121
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(a) Is located in a local jurisdiction that does not impose a local occupational 1
license fee, the local jurisdiction shall be required to provide some 2
alternative inducement satisfactory to the authority at the local level in 3
order for a preliminarily approved company to receive final approval. 4
However, the authority may waive this requirement if there are reasonable 5
circumstances that prevent the local jurisdiction from providing a 6
reasonable incentive; or 7
(b) Is located in a local jurisdiction that does impose a local occupational 8
license fee, the local jurisdiction may request that the authority waive the 9
local occupational license fee requirements established by subsection (3) of 10
this section if the local jurisdiction offers alternative incentives of similar 11
value satisfactory to the authority. The authority shall review all requests 12
for a waiver, and may waive the local occupational license fee requirements 13
and instead require the local jurisdiction to provide alternative incentives of 14
similar value if the authority determines that the circumstances warrant an 15
alternative contribution by the local jurisdiction. 16
(5) Each employee paying the assessment shall simultaneously be entitled to a credit 17
against the Kentucky individual income tax required to be withheld under Section 18
2 of this Act equal to the Commonwealth's wage assessment and shall be entitled 19
to a credit against the local occupational license tax equal to the local wage 20
assessment. 21
(6) If more than one (1) local jurisdiction imposes an occupational license fee, the 22
local jurisdiction portion of the assessment shall be prorated proportionately 23
among the taxes imposed by the local jurisdiction unless one (1) local jurisdiction 24
agrees to forgo the receipt of these taxes in an amount equal to the local 25
jurisdiction portion of the wage assessment, in which case no proration shall be 26
made. 27 UNOFFICIAL COPY 23 RS BR 1121
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(7) If an approved company elects to impose the assessment as a condition of 1
employment, or retention of employment, it shall be authorized to deduct the 2
assessment from each payment of wages to the employee. 3
(8) Notwithstanding KRS 131.183(3), if an approved company elects not to deduct the 4
assessment from each payment of wages to the employee, but rather requests a 5
reimbursement of state tax imposed by KRS 141.020 or local occupational tax in 6
the aggregate after they have been paid to the state or local jurisdiction, no 7
interest shall be paid by the state or by the local jurisdiction on that 8
reimbursement. 9
(9) No credit or portion thereof shall be allowed against any occupational license fee 10
imposed by or dedicated solely to the board of education in a local jurisdiction. 11
(10) An approved company imposing an assessment shall make its payroll, books, and 12
records available to the authority or the department upon request, and shall file 13
with the authority or department documentation pertaining to the assessment as 14
the authority or department may require. 15
(11) Any assessment of the wages of employees of an approved company in connection 16
with their employment at a reinvestment project shall permanently cease at the 17
expiration of the reinvestment agreement. 18
Section 2. KRS 141.310 is amended to read as follows: 19
(1) Every employer making payment of wages on or after January 1, 1971, shall deduct 20
and withhold upon the wages a tax determined under KRS 141.315 or by the tables 21
authorized by KRS 141.370. 22
(2) If wages are paid with respect to a period which is not a payroll period, the amount 23
to be deducted and withheld shall be that applicable in the case of a miscellaneous 24
payroll period containing a number of days, including Sundays and holidays, equal 25
to the number of days in the period with respect to which the wages are paid. 26
(3) If wages are paid by an employer without regard to any payroll period or other 27 UNOFFICIAL COPY 23 RS BR 1121
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period, the amount to be deducted and withheld shall be that applicable in the case 1
of a miscellaneous payroll period containing a number of days equal to the number 2
of days, including Sundays and holidays, which have elapsed since the date of the 3
last payment of wages by the employer during the calendar year, or the date of 4
commencement of employment with the employer during the year, or January 1 of 5
the year, whichever is the later. 6
(4) In determining the amount to be deducted and withheld under this section, the 7
wages may, at the election of the employer, be computed to the nearest dollar. 8
(5) The tables mentioned in subsection (1) of this section shall consider the standard 9
deduction. 10
(6) The department may permit the use of accounting machines to calculate the proper 11
amount to be deducted from wages when the calculation produces substantially the 12
same result as set forth in the tables authorized by KRS 141.370. Prior approval of 13
the calculation shall be secured from the department at least thirty (30) days before 14
the first payroll period for which it is to be used. 15
(7) The department may, by administrative regulations, authorize employers: 16
(a) To estimate the wages which will be paid to any employee in any quarter of 17
the calendar year; 18
(b) To determine the amount to be deducted and withheld upon each payment of 19
wages to the employee during the quarter as if the appropriate average of the 20
wages estimated constituted the actual wages paid; and 21
(c) To deduct and withhold upon any payment of wages to the employee during 22
the quarter the amount necessary to adjust the amount actually deducted and 23
withheld upon the wages of the employee during the quarter to the amount 24
that would be required to be deducted and withheld during the quarter if the 25
payroll period of the employee was quarterly. 26
(8) The department may provide by regulation, under the conditions and to the extent it 27 UNOFFICIAL COPY 23 RS BR 1121
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deems proper, for withholding in addition to that otherwise required under this 1
section and KRS 141.315 in cases in which the employer and the employee agree to 2
the additional withholding. The additional withholding shall for all purposes be 3
considered tax required to be deducted and withheld under this chapter. 4
(9) Effective January 1, 1992, any employer required by this section to withhold 5
Kentucky income tax who assesses and withholds from employees the job 6
assessment fee provided in KRS 154.24-110 may offset a portion of the fee against 7
the Kentucky income tax required to be withheld from the employee under this 8
section. The amount of the offset shall be four-fifths (4/5) of the amount of the 9
assessment fee withheld from the employee or the Commonwealth's contribution of 10
KRS 154.24-110(3) applies. If the provisions in KRS 154.24-150(3) or (4) apply, 11
the offset, the offset shall be one hundred percent (100%) of the assessment. 12
(10) Any employer required by this section to withhold Kentucky income tax who 13
assesses and withholds from employees an assessment provided in KRS 154.22-070 14
or KRS 154.28-110 may offset the fee against the Kentucky income tax required to 15
be withheld from the employee under this section. 16
(11) Any employer required by this section to withhold Kentucky income tax who 17
assesses and withholds from employees the job assessment fee provided in KRS 18
154.26-100 may offset a portion of the fee against the Kentucky income tax 19
required to be withheld from the employee under this section. The amount of the 20
offset shall be four-fifths (4/5) of the amount of the assessment fee withheld from 21
the employee, or if the agreement under KRS 154.26-090(1)(f)2. is consummated, 22
the offset shall be one hundred percent (100%) of the assessment fee. 23
(12) Any employer required by this section to withhold Kentucky income tax who 24
assesses and withholds from employees the job development assessment fee 25
provided in KRS 154.23-055 may offset a portion of the fee against the Kentucky 26
income tax required to be withheld from the employee under this section. The 27 UNOFFICIAL COPY 23 RS BR 1121
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amount of the offset shall be equal to the Commonwealth's contribution as 1
determined by KRS 154.23-055(1) to (3). 2
(13) Any employer required by this section to withhold Kentucky income tax who 3
assesses and withholds from employees the job development assessment fee 4
provided in KRS 154.32-090 may offset the state portion of the assessment against 5
the Kentucky income tax required to be withheld from the employee under this 6
section. 7
(14) Any employer required by this section to withhold Kentucky income tax who 8
assesses and withholds from employees the job assessment fee provided in Section 9
1 of this Act may offset the state portion of the assessment against the Kentucky 10
income tax required to be withheld from the employee. 11
(15) Any employer required by this section to withhold Kentucky income tax may be 12
required to post a bond with the department. The bond shall be a corporate surety 13
bond or cash. The amount of the bond shall be determined by the department, but 14
shall not exceed fifty thousand dollars ($50,000). 15
(16)[(15)] Any employer required by this section to withhold Kentucky income tax who 16
assesses and withholds from employees an assessment provided in KRS 154.27-080 17
may offset the assessment against the Kentucky income tax required to be withheld 18
from the employee under this section. 19
(17)[(16)] The Commonwealth may bring an action for a restraining order or a 20
temporary or permanent injunction to restrain or enjoin the operation of an 21
employer's business until the bond is posted or the tax required to be withheld is 22
paid or both. The action may be brought in the Franklin Circuit Court or in the 23
Circuit Court having jurisdiction of the defendant. 24
Section 3. KRS 141.350 is amended to read as follows: 25
The amount deducted and withheld as tax under KRS 141.310 and 141.315 during any 26
calendar year upon the wages of any individual and the amount of credit described in 27 UNOFFICIAL COPY 23 RS BR 1121
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KRS 154.22-070(2), 154.23-055, 154.24-110, 154.24-150(3) and (4), 154.26-100(2), 1
154.27-080, 154.28-110, [or] 154.32-090, or Section 1 of this Act shall be allowed as a 2
credit to the recipient of the income against the tax imposed by KRS 141.020, for taxable 3
years beginning in the calendar year. If more than one (1) taxable year begins in the 4
calendar year, the amount shall be allowed as a credit against the tax for the last taxable 5
year so beginning. 6
Section 4. KRS 154.34-090 is amended to read as follows: 7
By October 1 of each year, the department shall certify to the authority, in the form of an 8
annual report, aggregate tax credits and wage assessment fees claimed on tax returns 9
filed during the fiscal year ending June 30 of that year by approved companies with 10
respect to their reinvestment projects under this subchapter and KRS 141.415 and shall 11
certify to the authority, within ninety (90) days from the date an approved company has 12
filed its state tax return, when an approved company has taken incentives equal to its 13
approved costs. 14
Section 5. KRS 154.34-110 is amended to read as follows: 15
(1) The purpose of this subchapter is to provide a means for the Commonwealth to 16
promote job retention by providing incentives for existing businesses to reinvest in 17
existing operations in Kentucky for eligible companies. 18
(2) (a) To qualify for the incentives provided in this subchapter, an approved 19
company shall: 20
1. Incur eligible equipment and related costs of at least one million dollars 21
($1,000,000) for leased projects and at least two million five hundred 22
thousand dollars ($2,500,000) for all other reinvestment projects; 23
2. Agree to maintain a full-time employment base of at least eighty-five 24
percent (85%) at the facility on the date of preliminary approval; and 25
3. Not have been awarded incentives under Subchapter 26 of this chapter 26
for a period of at least five (5) years prior to applying for incentives 27 UNOFFICIAL COPY 23 RS BR 1121
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under this subchapter. 1
(b) An approved company meeting the expenditure and employment retention 2
requirements established by this subsection shall be eligible to recover up to 3
fifty percent (50%) of the amount expended for eligible equipment and related 4
costs. The actual amount that an approved company may recover shall be 5
negotiated with the authority, and may be less than the maximum amount for 6
which the approved company is eligible. 7
(3) An approved company shall be eligible for incentives under this subchapter as 8
follows: 9
(a) tax incentives of up to one hundred percent (100%) of the Kentucky income 10
tax imposed under KRS 141.020 or 141.040 and the limited liability entity tax 11
imposed under KRS 141.0401 on the income, Kentucky gross profits, or 12
Kentucky gross receipts of the approved company generated by or arising 13
from the eligible project, as set forth in KRS 154.34-120; and 14
(b) Wage assessments against the gross wages of each employee subject to the 15
Kentucky tax imposed by KRS 141.020, whose job was created or preserved 16
as a result of the reinvestment project as provided in this subchapter, 17
provided, however, the maximum amount of wage assessments for the 18
reinvestment projects receiving preliminary approval in each fiscal year 19
shall be capped at twenty-five million dollars ($25,000,000). 20
(4) The General Assembly finds and declares that: 21
(a) The general welfare and material well-being of the citizens of the 22
Commonwealth depend in large measure upon the reinvestment and 23
development of existing industry in the Commonwealth; 24
(b) It is in the best interest of the Commonwealth to induce reinvestment in 25
existing facilities of eligible companies within the Commonwealth in order to 26
advance the public purposes of relieving unemployment by preserving jobs 27 UNOFFICIAL COPY 23 RS BR 1121
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that may be lost if not for the incentives to be offered by the authority to 1
approved companies, and by preserving and creating sources of tax revenues 2
for the support of public services provided by the Commonwealth; and 3
(c) The authority prescribed by this subchapter and the purposes to be 4
accomplished under this subchapter are proper governmental and public 5
purposes for which public moneys may be expended. 6
(5) On or before November 1, 2021, and each November 1 thereafter, the authority 7
shall submit an overview report to the Interim Joint Committee on Appropriations 8
and Revenue and the Governor on the success or failure of each completed project 9
in order to determine the effectiveness of the program. The report shall include but 10
not be limited to the following information: 11
(a) The number of applications receiving preliminary approval during the fiscal 12
year; 13
(b) The number of final approvals issued during the fiscal year; 14
(c) The total amount of eligible equipment and other costs projected by the 15
approved company at preliminary approval; 16
(d) The total amount of eligible equipment and other costs actually incurred by 17
the approved company at final approval; 18
(e) The total number of full time jobs required to be preserved or retained as a 19
result of the reinvestment project; 20
(f) The total actual number of full-time jobs reported by the reinvestment project 21
as being preserved or retained on an annual basis; 22
(g) The maximum approved costs that may be recovered by the approved 23
companies for the reinvestment projects; and 24
(h) The location of the reinvestment projects receiving preliminary and final 25
approval during the fiscal year. 26