OK
Oklahoma Senate Bill SB1859

Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB1859 Compare Versions

Only one version of the bill is available at this time.
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5353 STATE OF OKLAHOMA
5454
5555 2nd Session of the 58th Legislature (2022)
5656
5757 SENATE BILL 1859 By: David
5858
5959
6060
6161
6262
6363 AS INTRODUCED
6464
6565 An Act relating to the Oklahoma Quality Jobs P rogram
6666 Act; amending 68 O.S. 2021, S ections 3603 and 3604,
6767 which relate to definitions and quarterly incentive
6868 payments; adding net benefit rate limit for certain
6969 industry; modifying qualification requirement s for
7070 certain industry; updating statutory language;
7171 updating statutory reference; and providing an
7272 effective date.
7373
7474
7575
7676
7777 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
7878 SECTION 1. AMENDATORY 68 O.S. 2021, Section 3603, is
7979 amended to read as follows:
8080 Section 3603. A. As used in the Oklahoma Quality Jobs Program
8181 Act:
8282 1. a. “Basic industry” means:
8383 (1) those manufacturing activities defined or
8484 classified in the NAICS Manual under Industry
8585 Sector Nos. 31, 32 and 33, Industry Group No.
8686 5111 or Industry No. 11331,
8787 (2) those electric power generation, transmiss ion and
8888 distribution activities defined or classif ied in
8989
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140140 the NAICS Manual under U.S. Industry Nos. 221111
141141 through 221122, if:
142142 (a) an establishment engaged therein qualifies
143143 as an exempt wholesale generator as defined
144144 by 15 U.S.C., Section 79z -5a,
145145 (b) the exempt wholesale genera tor facility
146146 consumes from sources located within the
147147 state at least ninety percent (90%) of the
148148 total energy used to produce the electrical
149149 output which qualifies for the specialized
150150 treatment provided by the Energy Policy Act
151151 of 1992, P.L. 102-486, 106 Stat. 2776, as
152152 amended, and federal regulations adopted
153153 pursuant thereto,
154154 (c) the exempt wholesale generator facility
155155 sells to purchasers located outside the
156156 state for consumption in activities located
157157 outside the state at least ninety percent
158158 (90%) of the total electrical energy outp ut
159159 which qualifies for the specialized
160160 treatment provided by the Energy Policy Act
161161 of 1992, P.L. 102-486, 106 Stat. 2776, as
162162 amended, and federal regulations adopted
163163 pursuant thereto, and
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215215 (d) the facility is constructed on or af ter July
216216 1, 1996,
217217 (3) those administrative and facilities support
218218 service activities defined or classified in the
219219 NAICS Manual under Industry Group Nos. 5611 and
220220 5612, Industry Nos. 51821, 519130, 52232 and
221221 56142 or U.S. Industry Nos. 524291 and 551114,
222222 those other support activities for air
223223 transportation defined or classified in the NAICS
224224 Manual under Industry Group No. 488190, and those
225225 support, repair, and maintenanc e service
226226 activities for the wind industry defined or
227227 classified in the NAICS Manual und er Industry
228228 Group No. 811310,
229229 (4) those professional, scientific and technical
230230 service activities defined or classified in the
231231 NAICS Manual under U.S. Industry Nos. 541 710 and
232232 541380,
233233 (5) distribution centers for retail or wholesale
234234 businesses defined or c lassified in the NAICS
235235 Manual under Sector No. 42, if forty percent
236236 (40%) or more of the inventory processed through
237237 such warehouse is shipped out -of-state,
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289289 (6) those adjustment and collection service
290290 activities defined or classified in the NAICS
291291 Manual under U.S. Industry No. 561440 , if
292292 seventy-five percent (75%) of the loans to be
293293 serviced were made by out -of-state debtors,
294294 (7) (a) those air transportation activities d efined
295295 or classified in the NAICS Manual under
296296 Industry Group No. 4811, if the following
297297 facilities are located in t his state:
298298 (i) the corporate headquarters of an
299299 establishment classified therein, and
300300 (ii) a facility or facilities at which
301301 reservations for transportation
302302 provided by such an establishment are
303303 processed, whether such services are
304304 performed by employees o f the
305305 establishment, by employees of a
306306 subsidiary of or other entity
307307 affiliated with the establishment or by
308308 employees of an entity with who m the
309309 establishment has contracted for the
310310 performance of such ser vices; provided,
311311 this provision shall not disquali fy an
312312 establishment which uses an out -of-
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364364 state entity or employees for some
365365 reservations services, or
366366 (b) those air transportation activitie s defined
367367 or classified in the NAICS Manual under
368368 Industry Group No. 4811, if an establi shment
369369 classified therein ha s or will have within
370370 one (1) year sales of at least seventy -five
371371 percent (75%) of its total sales, as
372372 determined by the Incentive Approval
373373 Committee pursuant to the provisions of
374374 subsection B of this secti on, to out-of-
375375 state customers or buyers, to in-state
376376 customers or buyers if the product or
377377 service is resold by the purchaser to an
378378 out-of-state customer or buyer for ultimate
379379 use, or to the federal government,
380380 (8) flight training services activities defin ed or
381381 classified in the NAICS Manual under U.S.
382382 Industry Group No. 611512, which for purposes of
383383 the Oklahoma Quality Jobs Program Act shall
384384 include new direct jobs for which gross payroll
385385 existed on or after January 1, 2003, as
386386 identified in the NAICS Man ual,
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438438 (9) the following, if an establishment classi fied
439439 therein has or will have within one (1) year
440440 sales of at least seventy -five percent (75%) of
441441 its total sales, as determined by the Ince ntive
442442 Approval Committee pursuant to the provisions of
443443 subsection B of this section, to out-of-state
444444 customers or buyers, to in-state customers or
445445 buyers if the product or service is resold by the
446446 purchaser to an out-of-state customer or buyer
447447 for ultimate use, or to the federal government:
448448 (a) those transportation and w arehousing
449449 activities defined or classified in the
450450 NAICS Manual under Industry Subsector No.
451451 493, if not otherwise listed in this
452452 paragraph, Industry Subsector Nos. 482 and
453453 484 and Industry Group Nos. 4884 through
454454 4889,
455455 (b) those passenger transportation a ctivities
456456 defined or classified in the NAICS Manua l
457457 under Industry Nos. 561510 and 561599,
458458 (c) those freight or cargo transportation
459459 activities defined or classified in the
460460 NAICS Manual under Industry No. 541614,
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512512 (d) those insurance activities defined or
513513 classified in the NAICS Manual under
514514 Industry Group No. 5241,
515515 (e) those services to dwellings and other
516516 buildings, as defined or classified in the
517517 NAICS Manual under Industry Group No. 5617,
518518 excluding U.S. Industry Nos. 561730, 56171,
519519 56172, 56174 and 56179 ,
520520 (f) those equipment rental and leasing
521521 activities defined or classified in the
522522 NAICS Manual under Industry Group No. 5324,
523523 (g) those information technology and other
524524 computer-related service activities defined
525525 or classified in the NAICS Manual under
526526 Industry Group Nos. 5112, 5182, 5191 and
527527 5415,
528528 (h) those business support service activities
529529 defined or classified in the NAICS Manual
530530 under U.S. Industry Nos. 561410 through
531531 561430, excluding 56143, and Industry No.
532532 51911,
533533 (i) those medical and diagnostic lab oratory
534534 activities defined or classified in the
535535 NAICS Manual under Industry Group No. 6215,
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587587 (j) those professional, scientific and technical
588588 service activities defined or classified in
589589 the NAICS Manual under Industry Group Nos.
590590 5412, 5414, 5415, 5416 and 5 417, Industry
591591 Nos. 54131, 54133, 54136 and 54137, and U.S.
592592 Industry No. 541990, if not otherwise listed
593593 in this paragraph,
594594 (k) those communication service activities
595595 defined or classified in the NAICS Manual
596596 under Industry Nos. 51741 and 51791,
597597 (l) those refuse systems activiti es defined or
598598 classified in the NAICS Manual under
599599 Industry Group No. 5622, provided that the
600600 establishment is primarily engaged in the
601601 capture and distribution of meth ane gas
602602 produced within a landfill,
603603 (m) general wholesale distribu tion of groceries,
604604 defined or classified in the NA ICS Manual
605605 under Industry Group Nos. 4244 and 4245,
606606 (n) those activities relating to processing of
607607 insurance claims, defined or classified i n
608608 the NAICS Manual under U.S. Industry Nos.
609609 524210 and 524292; pro vided, activities
610610 described in U.S. Industry Nos. 524210 and
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662662 524292 in the NAICS Manual other than
663663 processing of insurance claims shall not be
664664 included for purposes of this subdivision,
665665 (o) those agricultural activities classified in
666666 the NAICS Manual under U.S. Industry Nos.
667667 112120 and 112310,
668668 (p) those professional organization activities
669669 classified in the NAICS Manual under U.S.
670670 Industry No. 813920,
671671 (q) alternative energy structure construc tion
672672 classified in the NAICS Manual under U.S.
673673 Industry No. 237130,
674674 (r) solar reflective coating application
675675 classified in the NAICS Manual under U.S.
676676 Industry No. 238160,
677677 (s) solar heating equipment installation
678678 classified in the NAICS Manual under U.S.
679679 Industry No. 238220,
680680 (t) those wired telecommunications carriers
681681 classified in the NAICS Manual under U.S.
682682 Industry No. 517110, and
683683 (u) those securities, commodity contracts and
684684 investment activities classified in the
685685
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736736 NAICS Manual under Industry Subsector N o.
737737 523,
738738 (10) those activities related to extraction or
739739 pipeline transportation of petrol eum, natural gas
740740 or refined petroleum products, defined or
741741 classified in the NAICS Manual under Industry
742742 Group No. 2111, 213111, 213112 or 486, subject to
743743 the limitations provided in paragraph 3 of this
744744 subsection and paragraph 3 of s ubsection B of
745745 this section,
746746 (11) those activities performed by the federal
747747 civilian workforce at a facility of the Federal
748748 Aviation Administration located in this state if
749749 the Director of the Oklahoma Department of
750750 Commerce determines or is notified that the
751751 federal government is soliciting proposals or
752752 otherwise inviting states to compete for
753753 additional federal civilian employment or
754754 expansion of federal civilian employment at such
755755 facilities,
756756 (12) those activities defined or classified in the
757757 NAICS Manual under U.S. Industry No. 711211 (2007
758758 version),
759759
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810810 (13) those real estate or brokerage activities
811811 classified in the NAICS Manual under U.S.
812812 Industry No. 53120 for which at least seventy -
813813 five percent (75%) of the establishment ’s
814814 revenues are attributed to out -of-state sales and
815815 at least seventy-five percent (75%) of the real
816816 estate transactions generating those revenues are
817817 attributed to real property located outside the
818818 State of Oklahoma this state, or
819819 (14) those support activities for rail transportation
820820 and those support activities for water
821821 transportation defined or classified in the NAICS
822822 Manual under U.S. Industry Nos. 4882 and 4883.
823823 b. An establishment described in subparagraph a of this
824824 paragraph shall not be considered to be engaged in a
825825 basic industry unless it offers, or will of fer within
826826 one hundred eighty (180) days of employment, a basic
827827 health benefits plan to the individuals it employs in
828828 new direct jobs in this state which is determined by
829829 the Oklahoma Department of Commerce to consist of the
830830 following elements or elements substantially
831831 equivalent thereto:
832832 (1) not more than fifty percent (50%) of the premium
833833 shall be paid by the employee,
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885885 (2) coverage for basic hospital care,
886886 (3) coverage for physician care,
887887 (4) coverage for mental health care,
888888 (5) coverage for substance abu se treatment,
889889 (6) coverage for prescripti on drugs, and
890890 (7) coverage for prenatal care;
891891 2. “Change-in-control event” means the transfer to one or more
892892 unrelated establishme nts or unrelated persons, of either:
893893 a. beneficial ownership of more than fifty perc ent (50%)
894894 in value and more than fifty pe rcent (50%) in voting
895895 power of the outstanding equity securities of the
896896 transferred establishment, or
897897 b. more than fifty percent (5 0%) in value of the assets
898898 of an establishment.
899899 A transferor shall be treated as rel ated to a transferee if more
900900 than fifty percent (50%) of the voting interests of the transferor
901901 and transferee are owned, directly or indirectly, by the other or
902902 are owned, directly or indirectly, by the same person or persons,
903903 unless such transferred esta blishment has an outstanding class of
904904 equity securities registered under Sections 12(b) or 15(d) of the
905905 Securities Exchange Act of 1934, as amended, in which event the
906906 transferor and transferee will be treated as unrelated; pro vided, an
907907 establishment applying for the Oklahoma Quality Jobs Program Act as
908908 a result of a change -in-control event is required to apply within
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960960 one hundred eighty (180) days of the change -in-control event to
961961 qualify for consideration. An establishment ent ering the Oklahoma
962962 Quality Jobs Program Act as the result of a change-in-control event
963963 shall be required to maintain a level of new direct jobs as agreed
964964 to in its contract with the Oklahoma Department of Commerce and to
965965 pay new direct jobs an average annu alized wage which equals or
966966 exceeds one hundred twenty-five percent (125%) of the average county
967967 wage as that percentage is determined by the Oklahoma Department of
968968 Commerce based upon the most recent U.S. Department of Commerce data
969969 for the county in whic h the new jobs are located. For purposes of
970970 this paragraph, healthcar e premiums paid by the applicant for
971971 individuals in new direct jobs shall not be included in the
972972 annualized wage. Such establishme nt entering the Oklahoma Quality
973973 Jobs Program Act as th e result of a change -in-control event shall be
974974 required to retain the contracted average annualized wage and
975975 maintain the contracted maintenance level of new direct jobs numbers
976976 as certified by the Oklahoma Tax Commission. If the required
977977 average annualized wage or the required new d irect jobs numbers do
978978 not equal or exceed such con tracted level during any quarter, the
979979 quarterly incentive payments shall not be made and shall not be
980980 resumed until such time as su ch requirements are met. An
981981 establishment described in this paragraph shal l be required to repay
982982 all incentive payments rece ived under the Oklahoma Quality Jobs
983983 Program Act if the establishment is determined by the Tax Commission
984984
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10351035 to no longer have busines s operations in the state within three (3)
10361036 years from the beginning of the calendar quarter for which the first
10371037 incentive payment claim is filed;
10381038 3. “New direct job”:
10391039 a. means full-time-equivalent employment in this state in
10401040 an establishment which has qua lified to receive an
10411041 incentive payment pursuan t to the provisions of the
10421042 Oklahoma Quality Jobs Program Act which employment d id
10431043 not exist in this state prior to the date of approval
10441044 by the Department of the application of the
10451045 establishment pursuant to the provisions of Section
10461046 3604 of this title and w ith respect to an
10471047 establishment qualifying for incentive payments
10481048 pursuant to division (12) of subparagraph a of
10491049 paragraph 1 of this subsection shall not include
10501050 compensation paid to an employee or independent
10511051 contractor for an athletic contest conducted i n the
10521052 state if the compensati on is paid by an entity that
10531053 does not have its pri ncipal place of business in the
10541054 state or that does not own real or personal property
10551055 having a market value of at least One Million Dollars
10561056 ($1,000,000.00) located in the state, and the
10571057 employees or independ ent contractors of such entity
10581058 are compensated to compete against the employees or
10591059
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11101110 independent contractors of an establishment that
11111111 qualifies for incentive payments pursuant to divi sion
11121112 (12) of subparagraph a of paragraph 1 of this
11131113 subsection and which is organized under Oklahoma law
11141114 or that is lawfully r egistered to do business in the
11151115 state and which does have its principal place of
11161116 business located in the state and owns real or
11171117 personal property having a market value of at lea st
11181118 One Million Dollars ($1,00 0,000.00) located in the
11191119 state; provided, that if an application of an
11201120 establishment is approved by the Oklahoma Department
11211121 of Commerce after a change -in-control event and the
11221122 Director of the Oklahoma Department of Commerce
11231123 determines that the jobs located at such establishment
11241124 are likely to leave the sta te, “new direct job” shall
11251125 include employment that existed in this state prior to
11261126 the date of application which is retained in this
11271127 state by the new establishment following a ch ange in
11281128 control event, if suc h job otherwise qualifies as a
11291129 new direct job, and
11301130 b. shall include full-time-equivalent employment in this
11311131 state of employees who are employed by an employment
11321132 agency or similar en tity other than the establishment
11331133 which has qualified to receive an incenti ve payment
11341134
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11851185 and who are leased or otherwise provide d under
11861186 contract to the qualified establishment, if such job
11871187 did not exist in this state prior to the date of
11881188 approval by the Depar tment of the application of the
11891189 establishment or the job otherwise qualifie s as a new
11901190 direct job following a change-in-control event. A job
11911191 shall be deemed to exist in this state prior to
11921192 approval of an application if the activities and
11931193 functions for which the particular job exists have
11941194 been ongoing at any time within six (6) mo nths prior
11951195 to such approval. With respect to esta blishments
11961196 defined in division (10) of subparagraph a of
11971197 paragraph 1 of this subsection, new direct jobs shall
11981198 be limited to those jobs directly comprising the
11991199 corporate headquarters of or directly relating to
12001200 manufacturing, maintenance, administrative, fi nancial,
12011201 engineering, surveying, geological or geophysical
12021202 services performed by the establishment. Under no
12031203 circumstances shall e mployment relating to field
12041204 services be considered new direct jobs;
12051205 4. “Estimated direct state benefits” means the tax revenues
12061206 projected by the Department to accrue to the state as a result of
12071207 new direct jobs;
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12591259 5. “Estimated direct state costs ” means the costs projected by
12601260 the Department to accrue t o the state as a result of ne w direct
12611261 jobs. Such costs shall include, but not be limited to:
12621262 a. the costs of education of new state resident children,
12631263 b. the costs of public health, public safety and
12641264 transportation services to be provided to new state
12651265 residents,
12661266 c. the costs of other state services to be provided to
12671267 new state residents, and
12681268 d. the costs of other state services;
12691269 6. “Estimated net direct state benefits ” means the estimated
12701270 direct state benefits less the estimated direct state costs;
12711271 7. “Net benefit rate” means the estimated net direct state
12721272 benefits computed as a per centage of gross payroll; provided:
12731273 a. except as otherwise provided in this paragraph, the
12741274 net benefit rate may be variable and sha ll not exceed
12751275 five percent (5%),
12761276 b. the net benefit rate shall not exceed s ix percent (6%)
12771277 in connection with an establishmen t which is owned and
12781278 operated by an entity which has been awarded a United
12791279 States Department of Defense contract for which:
12801280 (1) bids were solicited and accepted by the United
12811281 States Department of Defense fr om facilities
12821282 located outside this state,
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13341334 (2) the term is or is renewable for not less than
13351335 twenty (20) years, and
13361336 (3) the average annual salary, excluding benefits
13371337 which are not subject to Oklahoma income taxes,
13381338 for new direct jobs created as a direct res ult of
13391339 the awarding of the contract is projected b y the
13401340 Oklahoma Department of Commerce to equal or
13411341 exceed Forty Thousand Dollars ($40,000.00) within
13421342 three (3) years of the date of the first
13431343 incentive payment,
13441344 c. except as otherwise provided in subparagrap h d of this
13451345 paragraph, in no event shall incentive payments,
13461346 cumulatively, exceed the estimated net direct state
13471347 benefits,
13481348 d. the net benefit rate shall be five percent (5%) for an
13491349 establishment locating:
13501350 (1) in an opportunity zone located in a high -
13511351 employment county, as such terms are defined in
13521352 subsection G of Section 3604 of this title, or
13531353 (2) in a county in which:
13541354 (a) the per capita personal income, as
13551355 determined by the Departmen t, is eighty-five
13561356 percent (85%) or less of the statewide
13571357 average per capita personal income,
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14091409 (b) the population has decreased over the
14101410 previous ten (10) years, as determined by
14111411 the Oklahoma Department of Commerce based on
14121412 the most recent U.S. Department of Commerce
14131413 data, or
14141414 (c) the unemployment rate e xceeds the lesser of
14151415 five percent (5%) or two percentage points
14161416 above the state average unemployment rate as
14171417 certified by the Oklahoma Employment
14181418 Security Commission,
14191419 e. the net benefit rate shall not exceed si x percent (6%)
14201420 in connection with an establish ment which:
14211421 (1) is, as of the date of application, receiving
14221422 incentive payments pursuant to the Oklahoma
14231423 Quality Jobs Program Act and has been receiving
14241424 such payments for at least one (1) year prior to
14251425 the date of application, and
14261426 (2) expands its operation s in this state by creating
14271427 additional new direct jobs which pay average
14281428 annualized wages which equal or exceed one
14291429 hundred fifty percent (150%) of the average
14301430 annualized wages of new direct jobs on which
14311431 incentive payments were received during the
14321432 preceding calendar year,
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14841484 f. with respect to an establishment defined or classified
14851485 in the NAICS Manual under U.S. Industry No. 711211
14861486 (2007 version) or any establishment defined or
14871487 classified in the NAICS Manual as a U.S. Industry
14881488 Number which is not included wit hin the definition of
14891489 “basic industry” as such term is defined in this
14901490 section on April 17, 2008, the net benefit rate shall
14911491 not exceed the highest rate of income tax imposed upon
14921492 the Oklahoma taxable income of individuals pursuant to
14931493 subparagraph (g) or s ubparagraph (h), as applicabl e,
14941494 of paragraph 1 and paragraph 2 of subsection B of
14951495 Section 2355 of this title. Any change in such
14961496 highest rate of individual income tax imposed pursuant
14971497 to the provisions of Sect ion 2355 of this title shall
14981498 be applicable to the computation of incentive payments
14991499 to an establishment as described by this subparagraph
15001500 and shall be effective for purposes of incentive
15011501 payments based on payroll paid by such establishment
15021502 on or after January 1 of any applicable year for which
15031503 the net benefit rate is modified as required by this
15041504 subparagraph, and
15051505 g. the net benefit rate shall not exceed six percent (6%)
15061506 in connection with an establishment which employs
15071507 United States military veterans in at least ten
15081508
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15591559 percent (10%) of its gross payroll. The net benefit
15601560 rate for an establishment which employs United States
15611561 military veterans in at least ten percent (10%) of its
15621562 payroll shall not be lower than five percent (5%) , and
15631563 h. with respect to a hydrogen manufacturing establishment
15641564 defined or classified in the NAICS Manual unde r U.S.
15651565 Industry No. 325120, the net benefit rate s hall not
15661566 exceed six percent (6%) .
15671567 Incentive payments made pursuant to the provisions of this
15681568 subparagraph shall be based upon payroll associated with such new
15691569 direct jobs. For purposes of this subparagraph , the amount of
15701570 health insurance premiums or other benefits paid by the
15711571 establishment shall not be included for purpo ses of computation of
15721572 the average annualized wage;
15731573 8. “Gross payroll” means wages, as defined in Section 2385 .1 of
15741574 this title for new dire ct jobs;
15751575 9. a. “Establishment” means any business or governmental
15761576 entity, no matter what legal form , including, but not
15771577 limited to, a sole proprietorship; partnership;
15781578 limited liability company; corporation or combination
15791579 of corporations which have a centr al parent
15801580 corporation which makes corporate manage ment decisions
15811581 such as those involving consolidation, acquisition,
15821582 merger or expansion; federal agency; political
15831583
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16341634 subdivision of the State of Oklahoma; or trust
16351635 authority; provided, distinct, identifiable s ubunits
16361636 of such entities may be determined to be a n
16371637 establishment, for all purposes of the Oklahoma
16381638 Quality Jobs Program Act, by the Department subject to
16391639 the following conditions:
16401640 (1) within three (3) years of the first comple te
16411641 calendar quarter following the start date, the
16421642 entity must have a minimum pa yroll of Two Million
16431643 Five Hundred Thousand Dollars ($2,500,000.00) and
16441644 the subunit must also have or will have a minimum
16451645 payroll of Two Million Five Hundred Thousand
16461646 Dollars ($2,500,000.00),
16471647 (2) the subunit is engaged in an activity or service
16481648 or produces a product which is demonstratively
16491649 independent and separate from th e entity’s other
16501650 activities, services or products and could be
16511651 conducted or produced in the absence of any oth er
16521652 activity, service or produ ction of the entity,
16531653 (3) has an accounting system capable of tracking or
16541654 facilitating an audit of the subunit ’s payroll,
16551655 expenses, revenue and production. Limited
16561656 interunit overlap of administrative and
16571657 purchasing functions sh all not disqualify a
16581658
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17091709 subunit from consideration as an establishment by
17101710 the Department,
17111711 (4) the entity has not previously had a subunit
17121712 determined to be an establishment pursuant to
17131713 this section; provided, the restriction set forth
17141714 in this division shall no t apply to subunits
17151715 which qualify pursuant to the provisions of
17161716 subparagraph b of paragraph 7 of this subsection,
17171717 and
17181718 (5) it is determined by the Department that the
17191719 entity will have a probable net gain in total
17201720 employment within the incentive period.
17211721 b. The Department may promulgate rules to further limit
17221722 the circumstances under whi ch a subunit may be
17231723 considered an establishment. The Department sh all
17241724 promulgate rules to determine whether a subunit of an
17251725 entity achieves a net gain in total employment. The
17261726 Department shall establish c riteria for determining
17271727 the period of time within which such gain must be
17281728 demonstrated and a method for determining n et gain in
17291729 total employment;
17301730 10. “NAICS Manual” means any manual, book or other publication
17311731 containing the North American Industry Classif ication System, United
17321732
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17831783 States, 1997, promulgated b y the Office of Management and Budget of
17841784 the United States of Ameri ca, or the latest revised edition;
17851785 11. “Qualified federal contract ” means a contract between an
17861786 agency or instrumentality of the United St ates government, including
17871787 but not limited to the Department of Defense or any branch of the
17881788 United States Armed Forc es, but exclusive of any contract performed
17891789 for the Federal Emergency Management Agency as a direct result of a
17901790 natural disaster declared b y the Governor or the President of the
17911791 United States with respect to damage to property located in Oklahoma
17921792 or loss of life or personal injury to persons in Oklahoma, and a
17931793 lawfully recognized business entity, whether or not th e business
17941794 entity is organized under the laws of the State of Oklahoma this
17951795 state or whether or not the principal place of business of the
17961796 business entity is located within the State of Oklahoma this state,
17971797 for the performance of services , including but not limited to
17981798 testing, research, development, consu lting or other services in a
17991799 basic industry, if the contract involves the performance of such
18001800 services performed on or after July 1, 2009, by the employees of the
18011801 business entity within the State of Oklahom a this state or if the
18021802 contract involves the perfo rmance of such services performed on or
18031803 after July 1, 2009, by employees of a lawfully recognized business
18041804 entity that is a subco ntractor of the business entity with which the
18051805 prime contract has been formed . A qualified federal contract
18061806 described in this paragraph shall not qualify unless both the
18071807
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18581858 qualified federal contractor and any subcontractors originally
18591859 involved in the work o r added subsequently during the period of
18601860 performance verify to the qualified federal contractor verifier that
18611861 it offers, or will offer within one hundred eighty (180) days of
18621862 employment of its respective employees, a basic health benefits plan
18631863 as described in subparagraph b of paragraph 1 of this subsection to
18641864 individuals who perf orm qualified labor hours in this state;
18651865 12. “Qualified federal contractor verifier” means a nonprofit
18661866 entity organized under the laws of the State of Oklahoma this state,
18671867 having an affiliation with a comprehensive university which is part
18681868 of The Oklahoma State System of Higher Education, and having the
18691869 following characteristi cs:
18701870 a. established multiyear classified and unclas sified
18711871 indefinite-delivery/indefinite-quantity federal
18721872 contract vehicles in excess of Fifty Million Dollars
18731873 ($50,000,000.00),
18741874 b. current capability to sponsor and maintain personnel
18751875 security clearances and authorized by the federal
18761876 government to handle and perform classified work up to
18771877 the Top Secret Sensitive Compartment ed Information
18781878 levels,
18791879 c. at least one on-site federally certified Sensitive
18801880 Compartmented Information Facility,
18811881
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19321932 d. on-site secure mass dat a storage complex with the
19331933 capability of isolating , segregating and protecting
19341934 corporate proprietary and classified i nformation,
19351935 e. trusted agent status by maintaining no ownership of ,
19361936 vested interest in, nor royalty production from any
19371937 intellectual property,
19381938 f. at least one hundred thousand (100,000) squ are feet of
19391939 configurable laboratory and support space,
19401940 g. the direct access to restricted air space through a
19411941 formalized memorandum o f agreement with the Department
19421942 of Defense,
19431943 h. at least five thousand (5, 000) acres available for
19441944 outdoor testing and train ing facilities, and
19451945 i. the ability to house state -of-the-art surety
19461946 facilities, including chemical, biological,
19471947 radiological, explosi ves, electronics, and unmanned
19481948 systems laboratories and ranges;
19491949 13. “SIC Manual” means the 1987 revision to the Standard
19501950 Industrial Classification Manual, promulgated by the Office of
19511951 Management and Budget of the United States of America;
19521952 14. “Start date” means the date on which an establishment may
19531953 begin accruing benefits fo r the creation of new direct jobs, which
19541954 date shall be determined by the Department;
19551955
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20062006 15. “Effective date” means the date of approval of a contract
20072007 under which incentive payments will be made pursuant to the Oklahoma
20082008 Quality Jobs Program Act, which shall b e the date the signed and
20092009 accepted incentive contr act is received by the Department; provided,
20102010 an approved project ma y have a start date which is different from
20112011 the effective date;
20122012 16. “Total qualified labor hours ” means the reimbursed payment
20132013 amount for hours of work performed by the State of Oklahoma
20142014 workforce of a qualified federal contractor or the State of Oklahoma
20152015 workforce of a subcontractor of a qualified federal contractor an d
20162016 which are required for the full performance of a qualified federal
20172017 contract;
20182018 17. “Qualified labor rate” means the fully reimbursed labor
20192019 rate paid through a qualified federal contract for qualified labor
20202020 hours to the qualified federal contractor or subc ontractor;
20212021 18. “Qualified federal contractor ” means a business entity:
20222022 a. maintaining a prime contract with the federal
20232023 government as defined in paragraph 11 of this
20242024 subsection,
20252025 b. providing notice of intent to apply to the Department
20262026 within one hundred e ighty (180) days of July 1, 2010,
20272027 or one hundred eighty (180) days of the date of the
20282028 award of a qualified federal contract or award of a
20292029
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20802080 new qualified subcontract under an existing qualifie d
20812081 federal contract, and
20822082 c. adding substantively to the contract by performing at
20832083 least eight percent (8%) of the tot al labor whether
20842084 qualified and nonqualified labor as determined by the
20852085 federal contractor verifier on a direct contract or
20862086 individual task order or delivery order on an
20872087 indefinite-delivery/indefinite-quantity or other
20882088 blanket contract vehicle.
20892089 Should a prime contractor provide n otice to the Department of
20902090 its intent not to apply for incentive for a qualified federal
20912091 contract or fails to qualify under the criteria above,
20922092 subcontractors in order of tier ranking as determined by the federal
20932093 contract verifier ma y assume the role of th e prime and apply to
20942094 become a qualified federal co ntractor provided the entity meets the
20952095 same criteria above with the exception that notice of intent to
20962096 apply with the Department must be provided within sixty (60) days of
20972097 the prime’s disqualification or on e hundred eighty (180) days of the
20982098 award of its subcontract, whichever is later; and
20992099 19. “Proxy establishment” means a public trust which:
21002100 a. is organized and existing under Section 176 of Title
21012101 60 of the Oklahoma Statutes for the b enefit of a
21022102 geographic area which includes a city or county or
21032103 some combination thereof, and
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21552155 b. benefits a geographic area where new direct jobs which
21562156 meet the requirements of the Oklahoma Quality Jobs
21572157 Program Act are created by an establishment, other
21582158 than the proxy establishme nt, which is a branch of the
21592159 Armed Forces of the U nited States.
21602160 A proxy establishment may be determined to be an esta blishment
21612161 for all purposes of the Oklahoma Quality Jobs Program Ac t by the
21622162 Department and incentive payments may be made to such proxy
21632163 establishment for new direct jobs otherwise qualified pursuant to
21642164 the Oklahoma Quality Jobs Program Act. The Department may
21652165 promulgate rules to further specify the circumstances under wh ich a
21662166 proxy establishment may be considered an est ablishment for the
21672167 purposes of making application for incentive payments pursuant to
21682168 the Oklahoma Quality Jobs Program Act. Provided , however, that with
21692169 respect to any data on qualifying direct new jobs fr om a branch of
21702170 the Armed Forces of the United Stat es, such rules shall onl y require
21712171 a proxy establishment to provide such da ta as would otherwise be
21722172 publicly releasable by the branch of the A rmed Forces of the United
21732173 States.
21742174 B. The Incentive Approval Comm ittee is hereby created and shall
21752175 consist of the Director of the Office of Management and Enterprise
21762176 Services, the Director of the Department and one member of the
21772177 Oklahoma Tax Commission app ointed by the Tax Commission, or a
21782178 designee from each agency appr oved by such member. It shall be the
21792179
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22302230 duty of the Committee to determine t he eligibility of all applicants
22312231 for the Oklahoma Quality Jobs Program Act, subject to the applicable
22322232 requirements.
22332233 C. For an establishment defined as a “basic industry” pursuant
22342234 to division (4) of subparagraph a of paragraph 1 of subsection A of
22352235 this section, the Incentive Approval Committee shall consi st of the
22362236 members provided by subsection B of this section and the Executive
22372237 Director of the Oklahoma Center for the Advancement of Science and
22382238 Technology, or a designee from the Cen ter appointed by the Exe cutive
22392239 Director.
22402240 SECTION 2. AMENDATORY 68 O.S. 2021, Section 3604, is
22412241 amended to read as follows:
22422242 Section 3604. A. Except as otherwise provided in subsect ion I
22432243 or subsection L of this section, an establis hment which meets the
22442244 qualifications specified in the Oklahoma Quality Job s Program Act
22452245 may receive quarterly incentive payments fo r a ten-year period from
22462246 the Oklahoma Tax Commission pursuant to the provis ions of the
22472247 Oklahoma Quality Jobs Program Act; pro vided, such an establish ment
22482248 defined or classified in the NAICS Manual und er U.S. Industry No.
22492249 711211 (2007 version) may receive qu arterly incentive payments for a
22502250 fifteen-year period. The amount of such p ayments shall be equal to
22512251 the net benefit rate mul tiplied by the actual gr oss payroll of new
22522252 direct jobs for a calendar quar ter as verified by the Oklahoma
22532253 Employment Security Commi ssion.
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23052305 B. In order to receive incentive payments, an establishment
23062306 shall apply to the Oklahoma Department of Commerce. The application
23072307 shall be on a form prescribed by the Department and shall cont ain
23082308 such information as may be required by the Department to determine
23092309 if the applicant is qualified. An establishment may apply fo r an
23102310 effective date for a project, which shall not be more than twenty-
23112311 four (24) months from the date the application is sub mitted to the
23122312 Department.
23132313 C. Except as otherwise provide d by subsection D or E of this
23142314 section, in order to qualify to receive such payments, the
23152315 establishment applying shall be req uired to:
23162316 1. Be engaged in a basic industry;
23172317 2. Have an annual gross pay roll for new direct jobs projected
23182318 by the Department to e qual or exceed Two Million Five Hundred
23192319 Thousand Dollars ($2,500,000.00) wi thin three (3) years of the first
23202320 complete calendar quarter following the start date; and
23212321 3. Have a number of full -time-equivalent employees subject to
23222322 the tax imposed by Section 2 355 of this title and working an annual
23232323 average of thirty (30) or more hour s per week in new direct jobs
23242324 located in this stat e equal to or in excess of eighty percent (80%)
23252325 of the total number of new direct jobs.
23262326 D. In order to qualify to receive incentiv e payments as
23272327 authorized by the Oklahoma Quality Jobs Program Act, an
23282328 establishment engaged in an activity described under:
23292329
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23802380 1. Industry Group Nos. 3 111 through 3119 of the NAICS Manual
23812381 shall be required to:
23822382 a. have an annual gross payroll for new direct j obs
23832383 projected by the Department to equal or exceed One
23842384 Million Five Hundred Thousand Dollars ($1,500,000.00)
23852385 within three (3) years of the first comp lete calendar
23862386 quarter following the start date and make, or which
23872387 will make within one (1) year, at least s eventy-five
23882388 percent (75%) of its total sales, as determined by the
23892389 Incentive Approval Committee pursuant to the
23902390 provisions of subsection B of Section 3603 of this
23912391 title, to out-of-state customers or buyers, to in-
23922392 state customers or buyers if the product or service is
23932393 resold by the purchaser to an out -of-state customer or
23942394 buyer for ultimate use, or to the federal government,
23952395 unless the annual gross payr oll equals or exceeds Two
23962396 Million Five Hundred Tho usand Dollars ($2,500,000.00)
23972397 in which case the requireme nts for purchase of output
23982398 provided by this subparagraph shall not apply, a nd
23992399 b. have a number of full -time-equivalent employees
24002400 working an average o f thirty (30) or more hours per
24012401 week in new direct jobs equal to or in excess of
24022402 eighty percent (80%) of th e total number of new direct
24032403 jobs; and
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24552455 2. Division (4) of subparagraph a o f paragraph 1 of subsection
24562456 A of Section 3603 of t his title, or a hydrogen manufacturing
24572457 establishment defined or classified in the NAICS Manual under U.S.
24582458 Industry No. 325120, shall be required to:
24592459 a. have an annual gross payroll for new direct jobs
24602460 projected by the Department to equal or exceed One
24612461 Million Five Hundred Thousan d Dollars ($1,500,000.00)
24622462 within three (3) years o f the first complete calendar
24632463 quarter following the start date, and
24642464 b. have a number of full -time-equivalent employees
24652465 working an average of thirty (30) or more hours per
24662466 week in new direct jobs equal to or in excess of
24672467 eighty percent (80%) of the total nu mber of new direct
24682468 jobs.
24692469 E. 1. An establishment which locates its principal business
24702470 activity within a site consisting of at least ten (10) acres which:
24712471 a. is a federal Superfund removal site,
24722472 b. is listed on the National Priorities List established
24732473 under Section 9605 of Title 42 of the United States
24742474 Code,
24752475 c. has been formally deferred to the state in lieu of
24762476 listing on the National Priorities List, or
24772477 d. has been determined by the Department of Environmen tal
24782478 Quality to be contaminated by any substance re gulated
24792479
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25302530 by a federal or state statute governing environmental
25312531 conditions for real property pursuant to an order of
25322532 the Department of Environmental Quality,
25332533 shall qualify for incentive payments irrespective of its actual
25342534 gross payroll or the number of full -time-equivalent employees
25352535 engaged in new direct jobs.
25362536 2. In order to qualify for the incentive payments pursuant to
25372537 this subsection, the establishment shall conduct the act ivity
25382538 resulting in at least fifty percent (50%) of its Oklahoma taxable
25392539 income or adjusted gross income, as determined under Section 2358 of
25402540 this title, whether from the sale of products or services or both
25412541 products and services, at the physical location w hich has been
25422542 determined not to comply with the federal or state statutes
25432543 described in this subsection with respect to environmental
25442544 conditions for real property. The establishment shall be subject to
25452545 all other requirements of the Oklahoma Quality Jobs Pr ogram Act
25462546 other than the exemptio ns provided by this subsection.
25472547 3. In order to qualify for the incentive payments pursuant to
25482548 this subsection, the entity shall obtain from the Department of
25492549 Environmental Quality a letter of concurrence that:
25502550 a. the site designated by the entity does mee t one or
25512551 more of the requirements listed in paragr aph 1 of this
25522552 subsection, and
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26042604 b. the site is being or has been remediated to a level
26052605 which is consistent with the intended use of th e
26062606 property.
26072607 In making its determination, the Department of Environmental
26082608 Quality may rely on existing data and information a vailable to it,
26092609 but may also require the applying entity to provide additional data
26102610 and information as necessary.
26112611 4. If authorized by the Department of Environmental Qualit y
26122612 pursuant to paragraph 3 of this subsection, the entity may utilize a
26132613 remediated portion of the property for its intended purpose prior to
26142614 remediation of the remainder of the site, and shall qualify for
26152615 incentive payments based on employment associated wi th the portion
26162616 of the site.
26172617 F. Except as otherwise provided by subsection G of thi s
26182618 section, for applications submitted on and after June 4, 2003, in
26192619 order to qualify to receive incentive payments as authorized by the
26202620 Oklahoma Quality Jobs Program Act, in addition to other
26212621 qualifications specified herein, an establishment shall be requi red
26222622 to pay new direct jobs an average annualized wage which equals or
26232623 exceeds:
26242624 1. One hundred ten percent (110%) of the average cou nty wage as
26252625 determined by the Department of Commerce based on the most rec ent
26262626 U.S. Department of Commerce data for the count y in which the new
26272627 direct jobs are located. For purposes of this paragraph, health
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26792679 care premiums paid by the applicant for individu als in new direct
26802680 jobs shall be included in the annualized wage; or
26812681 2. One hundred percent (100%) of the average county wag e as
26822682 that percentage is determined by the Department of Commerce based
26832683 upon the most recent U.S. Department of Commerce data for the county
26842684 in which the new jobs are located . For purposes of this paragraph ,
26852685 health care premiums paid by the applicant for i ndividuals in new
26862686 direct jobs shall not be included in the annualized wage.
26872687 Provided, no average wage requirement shall exceed Twent y-five
26882688 Thousand Dollars ($25,000.00), in any county. This maximum wage
26892689 threshold shall be indexed and modified from time to time based on
26902690 the latest Consumer Price Index year -to-date percent change release
26912691 as of the date of the annual average county wage data release from
26922692 the Bureau of Economic Analysis of the U.S. Department o f Commerce.
26932693 G. 1. As used in this subsection, “opportunity zone” means one
26942694 or more census tracts in which, according to the most recent Federal
26952695 Decennial Census, at least thirty pe rcent (30%) of the residents
26962696 have annual gross household incomes from all sources below the
26972697 poverty guidelines established b y the U.S. Department of Health and
26982698 Human Services. An establishment which is otherwise qualified to
26992699 receive incentive payments and which locates its principal business
27002700 activity in an opportunity zone shal l not be subject to the
27012701 requirements of subsection F of this section.
27022702 2. As used in this subsection:
27032703
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27542754 a. “negative economic event ” means:
27552755 (1) a man-made disaster or natural disaster as
27562756 defined in Section 683.3 of Title 63 o f the
27572757 Oklahoma Statutes, resultin g in the loss of a
27582758 significant number of jobs with in a particular
27592759 county of this state, or
27602760 (2) an economic circumstance in which a significant
27612761 number of jobs within a particular coun ty of this
27622762 state have been lost due to an establishment
27632763 changing its structure, consolidating with
27642764 another establishment, cl osing or moving all or
27652765 part of its operations out of this state, and
27662766 b. “significant number of jobs ” means Local Area
27672767 Unemployment Statistics (LAUS) data, as determined by
27682768 the Bureau of Labor Statistics, fo r a county which are
27692769 equal to or in excess of five percent (5%) of the
27702770 total amount of Local Area Unemployment Statistics
27712771 (LAUS) data for that county for the calendar year, or
27722772 most recent twelve-month period in which employ ment is
27732773 measured, preceding the e vent.
27742774 An establishment which is otherwise qualifie d to receive
27752775 incentive payments and which locates in a county in which a negative
27762776 economic event has occurred within the eighteen -month period
27772777 preceding the start date shall not be subject to the requiremen ts of
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28292829 subsection F of this section; provided, an e stablishment shall not
28302830 be eligible to receive incentive payments based upon a negative
28312831 economic event with respect to jobs that are transferred from one
28322832 county of this state to another.
28332833 H. The Department s hall determine if the applicant is qualified
28342834 to receive incentive payments.
28352835 I. If the applicant is determined to be qualified by the
28362836 Department and is not subject to the provisions of subparagraph d of
28372837 paragraph 7 of subse ction A of Section 3603 of this t itle, the
28382838 Department shall conduct a cost/benefit analysis to determine the
28392839 estimated net direct state benefits and the net benefit rate
28402840 applicable for a ten -year period beginning wi th the first complete
28412841 calendar quarter following the start date and to est imate the amount
28422842 of gross payroll for a ten -year period beginning with the first
28432843 complete calendar quarter following the start date or for a fifteen -
28442844 year period for an establishment defined or classified in the NAICS
28452845 Manual under U.S. Industry No. 711211 ( 2007 version). In conducting
28462846 such cost/benefit an alysis, the Department shall consider
28472847 quantitative factors, such as the anticipated level of new tax
28482848 revenues to the state along wit h the added cost to the state of
28492849 providing services, and such other criter ia as deemed appropriate by
28502850 the Department. In no event shall incentive payments, cumulatively,
28512851 exceed the estimated net direct state benefits, except for
28522852
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29032903 applicants subject to the provisions of subparagraph d of paragraph
29042904 7 of subsection A of Section 360 3 of this title.
29052905 J. Upon approval of such an appl ication, the Department shall
29062906 notify the Tax Commission and shall provide it with a copy of the
29072907 contract and the results of the cost /benefit analysis. The Tax
29082908 Commission may require the qualified establish ment to submit such
29092909 additional information as may be necessary to administer the
29102910 provisions of the Oklahoma Quality Jobs Program Act. The approved
29112911 establishment shall file quarterly claims with the Tax Commission
29122912 and shall continue to file such quarterly claims during the ten-year
29132913 incentive period to sho w its continued eligibility for incentive
29142914 payments, as provided in Section 3606 of this title, or until it is
29152915 no longer qualified to receive incentive payments. The
29162916 establishment may be audited by the Tax Commission to verify such
29172917 eligibility. Once the e stablishment is approved, an agreement shall
29182918 be deemed to exist between the establishment and the State of
29192919 Oklahoma, requiring the c ontinued incentive payment to be made as
29202920 long as the establishment retains its eligibility as defined in and
29212921 established pursuant to this section and Sections 3603 and 3606 of
29222922 this title and within the limitations contained in the Oklahoma
29232923 Quality Jobs Program Act, which existed at the time of su ch
29242924 approval. An establishment de scribed in this subsection shall be
29252925 required to repay all incentive payments received under the Oklahoma
29262926 Quality Jobs Program Act if the establishment is determined by the
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29782978 Oklahoma Tax Commission to no longer have business operations in the
29792979 state within three (3) years from the beginning of the calendar
29802980 quarter for which the first incentive payment claim is filed.
29812981 K. A municipality with a population of less than one hundred
29822982 thousand (100,000) persons in which an establishme nt eligible to
29832983 receive quarterly incentive payments pursuant to the provisions of
29842984 this section is located may file a claim with the Tax Commission for
29852985 up to twenty-five percent (25%) of the amount of such payment. The
29862986 amount of such claim shall not exceed amounts paid by the
29872987 municipality for direct costs of municipal infrastructure
29882988 improvements to provide water and sewer service to the
29892989 establishment. Such claim shall not be approved by the Tax
29902990 Commission unless the municipality and the establishment have
29912991 entered into a written agreement for such claims to be filed by the
29922992 municipality prior to submission of the application of the
29932993 establishment pursuant to the provisions of this section. If such
29942994 claim is approved, th e amount of the payment to the establishm ent
29952995 made pursuant to the provisio ns of Section 3606 of this title shall
29962996 be reduced by the amount of the approved claim by the municipality
29972997 and the Tax Commission shall issue a warrant to the municipality in
29982998 the amount of the approved claim in the same mann er as warrants are
29992999 issued to qualifying establishments.
30003000 L. For any contract execut ed by an establishment on or after
30013001 the effective date of this act August 2, 2018, five percent (5%) of
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30533053 the quarterly incentive payme nt amount shall be transferred by the
30543054 Oklahoma Tax Commission to the Oklahoma Quick Actio n Closing Fund.
30553055 SECTION 3. This act shall become effective November 1, 2022.
30563056
30573057 58-2-3105 QD 1/20/2022 10:31:32 PM