Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB594 Compare Versions

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28		-	ENGROSSED SENATE
29		-	BILL NO. 594 By: McCortney, Hall and Kirt of
30		-	the Senate
	29	+	SENATE FLOOR VERSION
	30	+	February 24, 2021
	31	+
	32	+
	33	+	SENATE BILL NO. 594 By: McCortney and Hall of the
	34	+	Senate
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32	36		and
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34	38		Pfeiffer of the House
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40	45		An Act relating to income tax credit; amending 68
41	46		O.S. 2011, Section 2357.4, as last ame nded by Section
42	47		1, Chapter 329, O.S.L. 2016 (68 O.S. Supp. 2020,
43	48		Section 2357.4), which relates to tax credit for
44	49		investments; deleting credit for increa se of certain
45	50		employees; increasing investment requirement in
46	51		certain property; indexing investment req uirement to
47	52		certain measure of inflation; requiring the Oklahoma
48	53		Department of Commerce to d etermine adjustment;
49	54		modifying term for carryover of u nused credit;
50	55		modifying term of annual limit for credits used;
51	56		providing annual limit for credit earned before
52	57		certain year; clarifying statutory language; and
53	58		providing an effective date.
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58	63		BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
59	64		SECTION 1. AMENDATORY 68 O.S. 2011, Section 235 7.4, as
60	65		last amended by Section 1, Cha pter 329, O.S.L. 2016 (68 O.S. Supp.
61	66		2020, Section 2357.4), is amended to read as follows:
62	67		Section 2357.4. A. Except as otherwise provided in subsection
63	68		F of Section 3658 of this title and in subsections J and K of t his
64	69		section, for taxable years beginni ng after December 31, 1987, there
65		-	shall be allowed a credit against the tax imposed by Section 2355 of
66		-	this title for:
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	97	+	shall be allowed a credit against the tax imposed by Section 2355 of
	98	+	this title for:
93	99		1. Investment investment in qualified depreciable property
94	100		placed in service during those years fo r use in a manufacturing
95	101		operation, as defined in Section 13 52 of this title, which has
96	102		received a manufacturer exemption permit pursuant to the provisions
97	103		of Section 1359.2 of this title or a qualified aircraft maintenance
98	104		or manufacturing facility as def ined in Section 1357 of this title
99	105		in this state or a qualif ied web search portal as defined in Section
100	106		1357 of this title; or
101	107		2. A net increase in the number of full -time-equivalent
102	108		employees in a manufacturing operation, as defined in Section 1352
103	109		of this title, which has received a manufac turer exemption permit
104	110		pursuant to the provisions of Section 1359.2 of this title or a
105	111		qualified aircraft maintenance or manufacturing facility defined in
106	112		Section 1357 of this title in this state or in a qualified web
107	113		search portal as defined in Section 13 57 of this title inclu ding
108	114		employees engaged in support services .
109	115		B. Except as otherwise provided in subsection F of Section 3658
110	116		of this title and in subsections J and K of this section, for
111	117		taxable years beginning a fter December 31, 1998, there shall be
112	118		allowed a credit agai nst the tax imposed by Section 2355 of this
113	119		title for:
114		-	1. Investment investment in qualified depreciable property with
115		-	a total cost equal to or greater than Forty Million Dollars
116		-	($40,000,000.00) within three (3) years from the date of initial
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	147	+	1. Investment investment in qualified depreciable property with
	148	+	a total cost equal to or greater than Forty Million Dollars
	149	+	($40,000,000.00) within three (3) years from the date of initial
143	150		qualifying expenditure and placed in service in this state during
144	151		those years for use in the manufacture of products described by any
145	152		Industry Number contained in Division D of Part I of the Standard
146	153		Industrial Classification (SIC) Manual, lates t revision; or
147	154		2. A net increase in the number of full-time-equivalent
148	155		employees in this state engaged in the manufacture of any goods
149	156		identified by any Industry Number contained in Division D of Part I
150	157		of the Standard Industrial Classification (SIC) Manu al, latest
151	158		revision, if the total cost of qualified depreciable property placed
152	159		in service by the business entity within the state equals or exceeds
153	160		Forty Million Dollars ($40,000,000.00) within three (3) years from
154	161		the date of initial qualifying expenditu re.
155	162		C. The business entity may claim the credit authorized by
156	163		subsection B of this section for expenditures incurred or for a net
157	164		increase in the number of full -time-equivalent employees after the
158	165		business entity prov ides proof satisfactory to the Oklahom a Tax
159	166		Commission that the conditions imposed pursuant to paragraph 1 or
160	167		paragraph 2 of subsection B of this section have been satisfied.
161	168		D. If a business entity fails to expend the amount required by
162	169		paragraph 1 or paragraph 2 of subsection B of this sect ion within
163	170		the time required, the business entity may not claim the credit
164		-	authorized by subsection B of this section but shall be allowed to
165		-	claim a credit pursuant to subsection A of this section if the
166		-	requirements of subsection A of this section are me t with respect to
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	198	+	authorized by subsection B of this section but shall be allowed to
	199	+	claim a credit pursuant to subsection A of this section if the
	200	+	requirements of subsection A of this section are me t with respect to
193	201		the investment in qualified depreciable property or net increase in
194	202		the number of full-time-equivalent employees .
195	203		E. The credit provided for in subsection A of this section , if
196	204		based upon investment in qualified depreciable property, shall not
197	205		be allowed unless the investment in qualified depreciable property
198	206		is at least Fifty Thousand Dollars ($50,000.00) Five Hundred
199	207		Thousand Dollars ($500,000.00) and, beginning January 1, 2023, the
200	208		investment required shall be increased annually by a p ercentage
201	209		equal to the previous year’s increase in the national Consumer Price
202	210		Index (CPI). The Oklahoma Department of Commerce shall determin e
203	211		the amount of the increase, if any, on January 1 of each year. The
204	212		credit provided for in subsection A or B of this section shall no t
205	213		be allowed if the applicable investment is the direct cause of a
206	214		decrease in the number of full -time-equivalent employees. Qualified
207	215		property shall be limited to machinery, fixtures, equipment,
208	216		buildings or substantial improvements thereto, placed in se rvice in
209	217		this state during the taxable year. The taxable years for which the
210	218		credit may be allowed if based upon investment in qualified
211	219		depreciable property shall be measured from the year in wh ich the
212	220		qualified property is placed i n service. If the cre dit provided for
213	221		in subsection A or B of this section is calculated on the basis of
214		-	the cost of the qualified pro perty, the credit shall be allowed in
215		-	each of the four (4) subsequent years. If th e qualified property on
216		-	which a credit has previously been a llowed is acquired from a
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	249	+	the cost of the qualified pro perty, the credit shall be allowed in
	250	+	each of the four (4) subsequent years. If th e qualified property on
	251	+	which a credit has previously been a llowed is acquired from a
243	252		related party, the date such property is placed in service by the
244	253		transferor shall be c onsidered to be the date such property is
245	254		placed in service by the transferee, for purposes of determining the
246	255		aggregate number of years for wh ich credit may be allowed.
247	256		F. The credit provided for in subsection A or B of this
248	257		section, if based upon an inc rease in the number of full -time-
249	258		equivalent employees, shall be allowed in each of the four (4)
250	259		subsequent years only if the level of new emplo yees is maintained in
251	260		the subsequent year. In calculating the credit by the number of new
252	261		employees, only those employees whose paid wages or salary were at
253	262		least Seven Thousand Dollars ($7,000.0 0) during each year the credit
254	263		is claimed shall be included in the calculation. Provided, that the
255	264		first year a credit is claimed for a new employee, such employee may
256	265		be included in the calculation notwithstanding paid wages of less
257	266		than Seven Thousand D ollars ($7,000.00) if the employee was hired in
258	267		the last three quarters of the tax year, has wages or salary which
259	268		will result in annual paid wages in excess of Seven Thousa nd Dollars
260	269		($7,000.00) and the taxpayer submits an affidavit stating that the
261	270		employee’s position will be retained in the following tax year an d
262	271		will result in the payment of wages in excess of Seven Thousand
263	272		Dollars ($7,000.00). The number of new employe es shall be
264		-	determined by comparing the monthly average number of full -time
265		-	employees subject to Oklahoma income tax with holding for the final
266		-	quarter of the taxable yea r with the corresponding period of the
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	300	+	determined by comparing the monthly average number of full -time
	301	+	employees subject to Oklahoma income tax with holding for the final
	302	+	quarter of the taxable year with the corresponding period of the
293	303		prior taxable year, as substantiated by such rep orts as may be
294	304		required by the Tax Commission.
295	305		G. The credit allowed by subsection A of this section shall be
296	306		the greater amount of either:
297	307		1. One percent (1%) one percent (1%) of the cost of the
298	308		qualified property building property and the cost of substantial
299	309		improvements to building property , plus one-half of one percent
300	310		(0.5%) of the cost of qu alified machinery, equipme nt or fixtures in
301	311		the year the property qualified building, machinery, equipment or
302	312		fixture is placed in service ; or
303	313		2. Five Hundred Dollars ($500.00) for each new employee. No
304	314		credit shall be allowed in any taxable year for a net increase in
305	315		the number of full-time-equivalent employees if such increase is a
306	316		result of an investment in qualified depreciable property for which
307	317		an income tax credit has been allowed as authorized by this section .
308	318		H. G. The credit allowed by subsection B of this section shall
309	319		be the greater amount of either:
310	320		1. Two percent (2%) two percent (2%) of the cost of the
311	321		qualified property building property and the cost of substantial
312	322		improvements to building property , plus one percent (1%) of the cost
313	323		of qualified machinery, equipment or fix tures in the year the
314		-	property qualified building, machinery, equipment or fixture is
315		-	placed in service; or
316		-	2. One Thousand Dollars ($1,000.00) for each new employee .
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	351	+	property qualified building, machinery, equipment or fixture is
	352	+	placed in service; or
	353	+	2. One Thousand Dollars ($1,000.00) for each new employee .
343	354		No credit shall be allowed in a ny taxable year for a net
344	355		increase in the number of full-time-equivalent employees if such
345	356		increase is a result of an in vestment in qualified deprec iable
346	357		property for which an income tax credit has been allowed as
347	358		authorized by this section .
348	359		I. H. Except as provided by subsection G of Section 3658 of
349	360		this title, any credits allowed but not used in any taxable year may
350	361		be carried over in order as follows :
351	362		1. To For credits awarded before tax year 2022, to each of the
352	363		four (4) years following the year of qu alification;
353	364		2. To For credits awarded before t ax year 2022, to the extent
354	365		not used in those years in order to each of the fifteen (15) years
355	366		following the initial five-year period;
356	367		3. For credits awarded for tax year 2022 and subsequent tax
357	368		years, to each of the following five (5) years;
358	369		4. If a C corporation that otherw ise qualified for the credits
359	370		under subsection A of this section subsequently changes it s
360	371		operating status to that of a pass -through entity which is being
361	372		treated as the same entity for federal tax purposes, the credits
362	373		will continue to be available as if the pass-through entity had
363		-	originally qualified for the credits subject to the limitati ons of
364		-	this section;
365		-	4. 5. To the extent not used in paragraphs 1 and 2 of this
366		-	subsection, such credits from qualified depreciable property plac ed
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	401	+	originally qualified for the credits subject to the limitati ons of
	402	+	this section;
	403	+	4. 5. To the extent not used in paragraphs 1 and 2 of this
	404	+	subsection, such credits from qualified depreciable property plac ed
393	405		in service on or after January 1, 2000, may be utilized in any
394	406		subsequent tax years after the initial twent y-year period; and
395	407		5. 6. Provided, for tax years beginning on or after January 1,
396	408		2016, and ending on or before December 31, 2018 2016 through 2018
397	409		and tax year 2022 and subsequent tax years, the amount of credits
398	410		available as an offset in a taxable year shall be limited to the
399	411		percentage calculated by the Tax Commission pursuant to the
400	412		provisions of subsection L K of this section.
401	413		J. I. No credit otherwise authorized by the provisions of this
402	414		section may be claimed for any event, transaction, investment,
403	415		expenditure or other act occurring on or after July 1, 2010, for
404	416		which the credit would otherwis e be allowable until the provisions
405	417		of this subsection shall cease to b e operative on July 1, 2012.
406	418		Beginning July 1, 2012, the credit authorized by this sect ion may be
407	419		claimed for any event, transaction, investment, expenditure or other
408	420		act occurring on or after July 1, 2010, according to the provision s
409	421		of this section; pro vided, credits accrued during the period from
410	422		July 1, 2010, through June 30, 2012, shall be limited to a period of
411	423		two (2) taxable years. The credit shall be limited in each taxable
412	424		year to fifty percent (50%) of the total amount of the accrued
413		-	credit. Any tax credits which accru e during the period of July 1,
414		-	2010, through June 30, 2012, ma y not be claimed for any period prior
415		-	to the taxable year beginning January 1, 2012. No credits which
416		-	accrue during the period of July 1, 2010, t hrough June 30, 2012, may
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	452	+	credit. Any tax credits which accrue during the period of July 1,
	453	+	2010, through June 30, 2012, ma y not be claimed for any period prior
	454	+	to the taxable year beginning January 1, 2012. No credits which
	455	+	accrue during the period of July 1, 2010, t hrough June 30, 2012, may
443	456		be used to file an amended tax return for any taxable year prior to
444	457		the taxable year beginning January 1, 2012.
445	458		K. J. Beginning January 1, 2017, except with respect to tax
446	459		credits allowed from investment or job creation occurring prior to
447	460		January 1, 2017, the credits authorized by this section shall not be
448	461		allowed for investment or job creation in electric power generation
449	462		by means of wind as described by the North American Industry
450	463		Classification System, No. 221119.
451	464		L. K. For tax years beginning on or after January 1, 2016, and
452	465		ending on or before December 31, 2018 2016 through 2018 and tax year
453	466		2022 and subsequent tax years , the total amount of credits
454	467		authorized by this section u sed to offset tax shall be adjusted
455	468		annually to limit the annual amount of credits to Twenty-five
456	469		Million Dollars ($25,0 00,000.00). Credits originating from
457	470		qualified property placed into service ten (10) years before the
458	471		current tax year shall be limited to no more than One Million
459	472		Dollars ($1,000,000.00) of the Twenty-five Million Dollars
460	473		($25,000,000.00) annual limit. The Tax Commission shall annually
461	474		calculate and publish a percentage by which the credits authorized
462	475		by this section shall be reduced so the total amount of credits used
463		-	to offset tax does not exceed Twenty -five Million Dollars
464		-	($25,000,000.00) per year. The formula to be used for the
465		-	percentage adjustment shall be Twenty -five Million Dollars
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	503	+	to offset tax does not exceed Twenty -five Million Dollars
	504	+	($25,000,000.00) per year. The formula to be used for the
	505	+	percentage adjustment shall be Twenty -five Million Dollars
492	506		($25,000,000.00) divided by the c redits used to offset tax in the
493	507		second preceding year.
494	508		M. L. Pursuant to subsectio n L K of this section, in the event
495	509		the total tax credits authorized by this section exc eed Twenty-five
496	510		Million Dollars ($25,000,000.00) in any calendar y ear, the Tax
497	511		Commission shall permit any excess over Twenty -five Million Dollars
498	512		($25,000,000.00) but shall factor such excess into the percentage
499	513		adjustment formula for subsequent years.
500	514		SECTION 2. This act shall become effective November 1, 2021.
501		-	Passed the Senate the 3rd day of March, 2021.
502		-
503		-
504		-
505		-	Presiding Officer of the Senate
506		-
507		-
508		-	Passed the House of Representativ es the ____ day of __________,
509		-	2021.
510		-
511		-
512		-
513		-	Presiding Officer of the House
514		-	of Representatives
515		-
	515	+	COMMITTEE REPORT BY: COMMITTEE ON APPROPRIATIONS
	516	+	February 24, 2021 - DO PASS