Massachusetts 2023-2024 Regular Session

Massachusetts Senate Bill S1881 Compare Versions

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

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1	1	1 of 1
2	2	SENATE DOCKET, NO. 2228 FILED ON: 1/20/2023
3	3	SENATE . . . . . . . . . . . . . . No. 1881
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Mark C. Montigny
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act relative to economic development tax credits.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :Mark C. MontignySecond Bristol and Plymouth 1 of 6
16	16	SENATE DOCKET, NO. 2228 FILED ON: 1/20/2023
17	17	SENATE . . . . . . . . . . . . . . No. 1881
18	18	By Mr. Montigny, a petition (accompanied by bill, Senate, No. 1881) of Mark C. Montigny for
19	19	legislation relative to economic development tax credits. Revenue.
20	20	[SIMILAR MATTER FILED IN PREVIOUS SESSION
21	21	SEE SENATE, NO. 1925 OF 2021-2022.]
22	22	The Commonwealth of Massachusetts
23	23	_______________
24	24	In the One Hundred and Ninety-Third General Court
25	25	(2023-2024)
26	26	_______________
27	27	An Act relative to economic development tax credits.
28	28	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
29	29	of the same, as follows:
30	30	1 SECTION 1. Chapter 62C, as appearing in the 2022 Official Edition, is hereby amended
31	31	2by inserting after section 89 the following:-
32	32	3 Section 90. Sunsets for Tax Incentive Programs
33	33	4 (a) For the purposes of Sections 90-92 inclusive, “Tax Incentive” is defined as
34	34	5 1. the tax credit in subsection (j) of section 6 of chapter 62 and section 38Q of chapter 63;
35	35	6 2. the dairy farmer tax credit in subsection (o) of said section 6 of said chapter 62 and the
36	36	7dairy farm tax credit in section 38Z of said chapter 63;
37	37	8 3. the U.S.F.D.A. user fees credit in section 31M of said chapter 63 and subsection (n) of
38	38	9said section 6 of said chapter 62; 2 of 6
39	39	10 4. the film tax credit in subsection (b) of section 38X of said chapter 63 and subsection (l)
40	40	11of said section 6 of said chapter 62;
41	41	12 5. the credit for cost of qualifying property in subsection (m) of said section 6 of said
42	42	13chapter 62 and section 38U of said chapter 63;
43	43	14 6. the life sciences refundable jobs credit in subsection (r) of said section 6 of said
44	44	15chapter 62 and section 38CC of said chapter 63;
45	45	16 7. the deductions for qualifying clinical testing expenses in section 38V of said chapter
46	46	1763;
47	47	18 8. the credit for qualified research expenses in section 38W of said chapter 63;
48	48	19 9. the historic rehabilitation tax credit in section 38R of said chapter 63 and section 6J of
49	49	20said chapter 62;
50	50	21 10. the low-income housing tax credit in section 31H of said chapter 63 and section 6I of
51	51	22said chapter 62;
52	52	23 11. the medical device tax credit in section 31L of said chapter 63 and section 61/2 of
53	53	24said chapter 62;
54	54	25 12. the refundable research credit in subsection (j) of section 38M of said chapter 63;
55	55	26 13. the economic development incentive program in subsection (g) of said section 6 of
56	56	27said chapter 62 and section 38N of said chapter 63;
57	57	28 14. the donated land tax credit in subsection (p) of said section 6 of said chapter 62 and
58	58	29section 38AA of said chapter 63; 3 of 6
59	59	30 15. the abandoned building renovation deduction in section 38O of chapter 63;
60	60	31 16. the credit for company shuttle van purchase or lease expenses in section 31E of
61	61	32chapter 63; and
62	62	33 17. any transferrable or refundable credits under chapter 62 and 63 established on or after
63	63	34July 1, 2010.
64	64	35 (b) For the purposes of Sections 90-92 inclusive, “Sunset Provision” is defined as, text
65	65	36contained in law requiring the law to expire and lose force of law unless reauthorized by an act
66	66	37of the legislature.
67	67	38 (c) Notwithstanding any general or special law to the contrary, all tax incentive as
68	68	39defined in subsection (a) shall expire within one year of the passage of this act unless
69	69	40reauthorized by an act of the legislature after review and examination of each such tax incentive.
70	70	41Upon each reauthorization, the legislature shall include a sunset provision to take effect within 3
71	71	42years of the date of reauthorization.
72	72	43 (d) Any future program that awards a transferable or refundable tax credit to any taxpayer
73	73	44shall include a sunset provision with an expiration date set up to 3 years after of the initial
74	74	45passage of the program. Upon each reauthorization, the legislature shall include a sunset
75	75	46provision to take effect within 3 years of the date of reauthorization.
76	76	47 (e) The Inspector General in consultation with the Department of Revenue shall:-
77	77	48 (1) review and evaluate each tax incentive with a sunset provision scheduled to take
78	78	49effect in a given year. 4 of 6
79	79	50 (2) Upon reviewing each tax incentive, recommend to continue the tax incentive without
80	80	51changes, amend the tax incentive, or eliminate the tax incentive.
81	81	52 (3) submit a written report containing an explanation of the recommendations to the
82	82	53legislature. The report shall include a detailed description of the committee’s reasoning,
83	83	54analyses, and any data collected pursuant to paragraph (4) of this subsection.
84	84	55 (4) consider the following factors when evaluating and reviewing a tax incentive:
85	85	56 (i) Whether the tax incentive is achieving the policy goals and purposes that it was
86	86	57intended to address
87	87	58 (ii) The revenue forgone to administer the tax incentive
88	88	59 (iii) The benefit derived from the tax incentive
89	89	60 (iv)The extent to which the tax incentive is helping residents, businesses, or other entities
90	90	61within the commonwealth
91	91	62 (v) Number of jobs created by the tax incentive (if applicable)
92	92	63 (vi) Any other information the Inspector General deems valuable in considering whether
93	93	64or not the tax incentive program achieved its desired public policy outcome
94	94	65 (5) use any available resources to evaluate each tax incentive including, but not limited
95	95	66to, commissioning a report from any agency, such as the Department of Revenue, detailing the
96	96	67tax incentive program and consisting of any content that the subcommittee deems necessary,
97	97	68referring to other states evaluations of similar tax incentives, or citing academic studies or
98	98	69surveys of similar tax incentive programs. 5 of 6
99	99	70 SECTION 2. Chapter 62C is hereby amended by inserting after section 90 the following:-
100	100	71 Section 91 Clawback Provision for Tax Incentives
101	101	72 (a) Any law containing a sunset provision pursuant to section 90 of chapter 62C shall
102	102	73include a clawback provision.
103	103	74 (1) The clawback provision, so called, which permits the commonwealth to recoup
104	104	75foregone tax receipt from tax incentives recipients who fail to achieve or meet stated goals and
105	105	76benchmarks, including but not limited to job creation goals set for in their tax credit programs.
106	106	77 (2) Whenever a benefit is claimed, awarded, or otherwise obtained pursuant to a law
107	107	78containing a sunset provision as defined in section 90 of chapter 62C, the awarding entity must
108	108	79include explicit goals and benchmarks to be achieved by the recipient tax payer.
109	109	80 (3) Whenever a benefit is claimed, awarded, or otherwise obtained pursuant to a law
110	110	81containing a sunset provision as defined in section 90 of chapter 62C, the awarding entity must
111	111	82inform the recipient about the clawback provision by providing a copy of this section and
112	112	83explaining ramifications of his or her failure to meet the stated goals and benchmarks.
113	113	84 SECTION 3. Chapter 62C is hereby amended by inserting after section 91 the following:-
114	114	85 Section 92
115	115	86 (a) Before submitting any new tax incentive program for legislative approval, the
116	116	87governor shall include in the governor’s legislative proposal or bill for the new tax incentive the
117	117	88following: 6 of 6
118	118	89 (1) The new tax incentive’s clearly specified public policy purpose, goals, and desired
119	119	90outcomes
120	120	91 (2) A finding that the tax credit incentive is expected to be highly effective at achieving
121	121	92the stated public policy purposes
122	122	93 (3) Estimates of forgone revenue from the new tax credit incentive
123	123	94 (4) For discretionary grant like tax incentives, an overall annual dollar cap on foregone
124	124	95revenue
125	125	96 (5) For discretionary grant like tax credit programs, the criteria to be applied by the
126	126	97administering agency in making discretionary awards of tax credit programs and
127	127	98 (6) For discretionary grant like tax credit programs, provisions for the tax credit
128	128	99program’s administration including, but not limited to, clear written conditions and
129	129	100commitments, public disclosure of recipients and tax benefits, if tax incentive conditions are not
130	130	101met by the recipient, threshold for further review and enforcements including the use of the tax
131	131	102incentive’s clawback provision, and a competitive award process.