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ENGROSSED HOUSE AMENDME NT
TO
ENGROSSED SENATE BILL NO . 609 By: Coleman and Hall of the
Senate
and
Hilbert of the House
An Act relating to ad valorem tax; amending 68 O.S.
2011, Section 2902, as last amended by Section 1,
Chapter 258, O.S.L. 20 19 (68 O.S. Supp. 2020, Section
2902), which relates to exemption for manufacturing
facilities; modifying definitions; adjusting certain
investment requirement to inflation index; requiring
the Oklahoma Tax Commission to publish certain
adjustments; adjusting wage threshold; requiring
wages exceed certain Quality Jobs Program Act
requirements; authorizing the Oklahoma Tax Commission
to request verification; removing exceptions for
failure to meet certain payroll requirements;
modifying certain classificatio n; and providing an
effective date.
AUTHOR: Add the following Senate Coauthor: Kirt
AMENDMENT NO. 1. Delete the title, enacting clause and entire bill
and replace with:
"An Act relating to tax; amending 62 O.S. 2011,
Sections 856, 860 and 866, whic h relate to the Local
Development Act; modifying required content of
project plans; modifying provisions related to
duration of certain districts based on certain
industry description; modifying requirements for
certain written agreement; amending 68 O.S. 2011,
Section 2902, as last amended by Section 1, Chapter
258, O.S.L. 2019 (68 O.S. Supp. 2020, Section 2902),
which relates to exemption for manufacturing
facilities; modifying definitions; modifying
eligibility for exemption based on certain industry
description; providing exception for certain
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personal property; adjusting certain investment
requirement to inflation index; requiring the
Oklahoma Tax Commission to publish certain
adjustments; adjusting wage threshold; requiring
wages exceed certain Quality Jobs Program Act
requirements; authorizing the Oklahoma Tax
Commission to request verification; removing
exceptions for failure to meet certain payroll
requirements; modifying certain classification; and
providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 62 O.S. 2011, Section 856, is
amended to read as follows:
Section 856. A. The governing body shall designate and adopt
the proposed boundaries of any district and the pro posed boundaries
of any project area. Except as otherwise provided in this
subsection, any districts created by a city or town shall be
confined to that territory within the corporate limits of such city
or town and any districts created by a county shall be confined to
that territory within the unincorporated areas of the county. Any
city, town or county may by agreement jointly create a district with
another entity.
B. Upon the adoption and approval of the project plan, the
governing body shall adopt a n ordinance or resolution, whichever is
applicable, which:
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1. Describes the boundaries of districts and project areas
sufficiently definite to identify with ordinary and reasonable
certainty the territory included in them;
2. Creates the district as of a date provided in it or defers
determination of such date, provided such date must be no more than
ten (10) years after the date of approval of the project plan ;
3. Assigns a name to the district for identification purposes.
The first district created sh all be known as either an Incentive
District or Increment District Number One, City, Town or County of
__________, whichever is applicable. Each subsequently created
district shall be appropriately named and shall be assigned the next
consecutive number; and
4. Contains findings that:
a. the project area or district meets at least one of the
following criteria:
(1) is a reinvestment area,
(2) is a historic preservation area,
(3) is an enterprise area, or
(4) is a combination of the areas specified in
divisions (1), (2) and (3) of this subparagraph,
b. the improvement of the area is likely to enhance the
value of other real property in the area and to
promote the general public interest. It shall not be
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necessary to identify the specific parcels meeting th e
criteria, and
c. the guidelines specified in paragraphs 1 and 2 of
Section 852 of this title shall be followed ,
d. the aggregate net assessed value of the taxable
property in all districts as determined pursuant to
Section 862 of this title within the ci ty or town
shall not exceed twenty -five percent (25%) of the
total net assessed value of taxable property within
the city or town for cities or towns having a
population of fifty thousand (50,000) or more or shall
not exceed thirty-five percent (35%) of th e total net
assessed value of taxable property within the city or
town for cities or towns having a population of less
than fifty thousand (50,000),
e. for projects approved by a county, the aggregate net
assessed value of the taxable property in all
districts as determined pursuant to Section 862 of
this title within the county shall not exceed fifteen
percent (15%) of the total net assessed value of the
taxable property within the county,
f. the aggregate net assessed value of the taxable
property in all districts as determined pursuant to
Section 862 of this title within the city, the town or
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the county shall not exceed twenty -five percent (25%)
of the total net assessed value of any affected school
district located within the city, town or county, and
g. the land area of this district and all other districts
within the city, the town or the county shall not
exceed twenty-five percent (25%) of the total land
area of the city, the town or the county .
C. It is the intention of the Legislature in adopting th e Local
Development Act that no long -term contractual obligation be created
by the mere adoption of an ordinance or resolution establishing an
increment district. Notwithstanding any provision contained in an
ordinance, resolution or project plan, an ordi nance or resolution
establishing an increment district shall constitute a legislative
act and may be repealed, modified or amended at any time during the
term of the increment district, by subsequent action of the
governing body except as otherwise authori zed pursuant to Sections
854 and 863 of this title ; provided, however, that no such ordinance
shall be repealed, modified or amended during the time that any
bonds payable from incremental revenues are outstanding without the
consent of the bondholders, if such bonds are issued pursuant to the
provisions of Article X, Section 35 of the Oklahoma Constitution
following its amendment by State Question No. 693.
D. However, nothing in the Local Development Act shall restrict
the ability of:
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1. Any city, town o r county to:
a. issue debt in accordance with the applicable
provisions of Article X of the Oklahoma Constitution,
and any statutes enacted in connection therewith, and
b. use incremental revenues derived from an increment
district to pay principal, intere st or premium
associated with such indebtedness; or
2. Any public entity, other than a city, town or county, to:
a. issue tax apportionment bonds or notes in accordance
with Section 863 of this title or to issue other types
of revenue bonds or notes in ac cordance with other
applicable provisions of Oklahoma law, and
b. use incremental revenues derived from an increment
district to pay principal, interest or premium
associated with such indebtedness.
SECTION 2. AMENDATORY 62 O.S. 2 011, Section 860, is
amended to read as follows:
Section 860. A. A project plan may contain a provision that
certain local taxes may be subject to incentives or may be exempted
in reinvestment areas, historic preservation areas or enterprise
areas.
B. The governing body may grant incentives or exemptions from
local taxation only on the new investment made. No ad valorem tax
incentives or exemptions may be granted on the value of property
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which has been assessed or which is subject to assessment prior to
the adoption of the project plan. No ad valorem tax incentives or
exemptions authorized in this section may be granted for retail
establishments. If a retail establishment is located in property
which otherwise qualifies for an incentive or exemption pu rsuant to
this section, the incentive or exemption shall not be allowed for
that portion of the property used for such retail establishment. As
used in this subsection, "retail establishment" shall not include an
establishment that provides lodging, inclu ding but not limited to a
hotel, apartment hotel, public rooming house or motel. No ad
valorem tax incentives or exemptions authorized in this section may
be granted if the property is located in an increment district or as
long as the property is subject to the ad valorem tax exemption for
new or expanding manufacturing facilities as authorized by Section
6B of Article X of the Oklahoma Constitution. In the event of
disposition by lease or sublease to a lessee not entitled to an ad
valorem tax exemption, the improvements placed thereon shall not be
entitled to an ad valorem tax exemption provided for in Section 850
et seq. of this title. The Except as otherwise provided by this
subsection, the incentives or exemptions, which may be full or
partial, may be granted for a period not to exceed five (5) years;
however, in enterprise zones incentives or exemptions may be granted
for a period not to exceed six (6) years . With respect to an
establishment the business of which is described by U.S. Industry
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Number 518210 of the North American Industry Classification System
(NAICS) Manual, 2017 revision, such incentives or exemptions may be
granted for a period not to exceed twenty -five (25) years.
C. No incentives or exemptions may be granted to any business
or firm that is relocating from within the state and is subject to
or in the process of recruitment by two or more governmental
entities within the state unless the governmental entity in which
the business or firm does not locate adopts a resolution giving
their approval to the granting of incentives or exemptions to the
business or firm locating in the competing governmental entity. No
incentives or exemptions may be granted to an out -of-state business
or firm that is subject to or in the process of recruitme nt by two
or more governmental entities within the state except as otherwise
provided for in this subsection. The prohibition against incentives
or exemptions to a business or firm relocating within the state may
be waived upon application by the governin g body to, and approval
of, the Director of the Oklahoma Department of Commerce. In order
for the Director to approve the waiver, the Director must find that
the incentives or exemptions are necessary and sufficient to attract
the business or firm and tha t the benefits generated by the business
location outweigh the costs of the business location.
D. A project plan may contain a provision that ad valorem taxes
may be exempted in a commercial historic preservation area that is
adjacent to and serves design ated historical residential areas for
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neighborhood commercial preservation purposes in order for the
neighborhood to retain its basic character and scale. No ad valorem
tax exemption may be granted on the value of property which has been
assessed or which is subject to assessment prior to the adoption of
the project plan. No ad valorem tax exemption shall be granted
pursuant to the provisions of this subsection for single -family
residences. The governing body may grant the exemption only on the
increase in value of the property. The exemptions may be granted
for a specific period of time as determined by a written agreement
between the property owners of the area and the governing body and
may be renewed. Uses of the property eligible for this exemption
may include but not be limited to commercial, office or multifamily
residential use.
SECTION 3. AMENDATORY 62 O.S. 2011, Section 866, is
amended to read as follows:
Section 866. A. There shall be a written agreement between th e
governing body and the property owners who are granted tax
incentives or exemptions pursuant to Section 860 of this title. The
written agreement may include, but shall not be limited to, the
following:
1. List the kind, number, and location A description of all
proposed improvements to the property;
2. Provide access to and authorize inspection of the property
by city, town or county employees to ensure that the improvements or
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repairs are made according to the specifications and conditions of
the agreement;
3. Limit the uses of the property consistent with the general
purpose of encouraging developmen t or redevelopment of the area
during the period that the tax incentives or exemptions or the
increment financing are in effect;
4. Provide for recaptur ing the local tax revenue lost as a
result of the agreement if the owner of the property fails to make
the improvements or repairs as provided by the agreement; and
5. Include any other requirement deemed by the governing body
necessary to carry out the a greement.
B. There shall be a written agreement between the governing
body and the property owners in historic preservation areas who are
granted ad valorem tax exemptions pursuant to subsection D of
Section 860 of this title. The written agreement shall include the
following:
1. List the location of the property;
2. Provide access to and authorize inspection of the property
by city, town or county employees to ensure that the property is
being maintained according to the specifications and conditions o f
the agreement;
3. Limit the uses of the property consistent with the general
purpose of encouraging neighborhood commercial preservation of the
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area during the period that the ad valorem tax exemptions are in
effect;
4. Provide for recapturing the ad v alorem tax revenue lost as a
result of the agreement if the owner of the property fails to
maintain the property as provided by the agreement;
5. Specify the time frame of the agreement including whether
renewals can occur, at what time such renewals can occur and under
what conditions renewals can occur;
6. Specify rehabilitations, preservation efforts and other
specific actions that should be taken by the property owners on an
individual or collective basis;
7. Provide for reciprocal actions by public entities to
protect, enhance and improve the commercial historic preservation
area and the surrounding residential areas served by such districts;
8. Provide review and approval procedures that may be used when
usage or ownership of the property changes; and
9. Include any other requirement deemed by the governing body
necessary to carry out the agreement.
C. The governing body shall enter into written agreements with
active project participants of increment projects. The written
agreement may include, but shall not be limited to, the provisions
specified in paragraphs 1 through 5 of subsection A of this section.
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SECTION 4. AMENDATORY 68 O.S. 2011, Section 2902, as
last amended by Section 1, Chapter 258, O.S.L. 2019 (68 O.S. Sup p.
2020, Section 2902), is amended to read as follows:
Section 2902. A. Except as otherwise provided by subsection H
of Section 3658 of this title pursuant to which the exemption
authorized by this section may not be claimed, a qualifying
manufacturing concern, as defined by Section 6B of Article X of the
Oklahoma Constitution, and as further defined herein, shall be
exempt from the levy of any ad valorem taxes upon new, expanded or
acquired manufacturing facilities, including facilities engaged in
research and development, for a period of five (5) years. The
provisions of Section 6B of Article X of the Oklahoma Constitution
requiring an existing facility to have been unoccupied for a period
of twelve (12) months prior to acquisition shall be construed as a
qualification for a facility to initially receive an exemption, and
shall not be deemed to be a qualification for that facility to
continue to receive an exemption in each of the four (4) years
following the initial year for which the exemption was gran ted.
Such facilities are hereby classified for the purposes of taxation
as provided in Section 22 of Article X of the Oklahoma Constitution.
B. For purposes of this section, the following definitions
shall apply:
1. "Manufacturing facilities " means facilities engaged in the
mechanical or chemical transformation of materials or substances
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into new products and except as provided by paragraph 8 6 of
subsection C of this section shall include:
a. establishments which have received a manufacturer
exemption permit pursuant to the provisions of Section
1359.2 of this title,
b. facilities, including repair and replacement parts,
primarily engaged in aircraft repair, building and
rebuilding whether or not on a factory basis,
c. establishments primarily engaged in computer services
and data processing as defined under Industrial Group
Numbers 5112 and 5415, and U.S. Industry Number 334611
and 519130 of the NAICS Manual, latest revision, and
which derive at least fifty percent (50%) of their
annual gross revenues fr om the sale of a product or
service to an out-of-state buyer or consumer, and as
defined under Industrial Group Number 5142 5182 of the
NAICS Manual, latest revision, which derive at least
eighty percent (80%) of their annual gross revenues
from the sale of a product or service to an out -of-
state buyer or consumer. Eligibility as a
manufacturing facility pursuant to this subparagraph
shall be established, subject to review by the
Oklahoma Tax Commission, by annually filing an
affidavit with the Tax Commiss ion stating that the
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facility so qualifies and such other information as
required by the Tax Commission. For purposes of
determining whether annual gross revenues are derived
from sales to out-of-state buyers, all sales to the
federal government shall be considered to be an out -
of-state buyer,
d. for which facilities that the investment cost of the
construction, acquisition or expansion of the
manufacturing facility is Two Hundred Fifty Thousand
Dollars ($250,000.00) Five Hundred Thousand Dollars
($500,000.00) or more with respect to assets placed
into service during calendar year 2022. For
subsequent calendar years, the investment required
shall be increased annually by a percentage equal to
the previous year’s increase in the Consumer Price
Index-All Urban Consumers ("CPI-U") and such adjusted
amount shall be the required investment cost in order
to qualify for the exemption authorized by this
section. The Oklahoma Department of Commerce shall
determine the amount of the increase, if any, on
January 1 of each year. The Oklahoma Tax Commission
shall publish on its website at least annually the
adjusted dollar amount in order to qualify for the
exemption authorized by this section and shall include
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the adjusted dollar amount in any of its relevant
forms or publications with respect to the exemption .
Provided, "investment cost" shall not include the cost
of direct replacement, refurbishment, repair or
maintenance of existing machinery or equipment, except
that "investment cost" shall include capital
expenditures for direct replacement, refurbishment,
repair or maintenance of existing machinery or
equipment that qualifies for depreciation and/or
amortization pursuant to the Internal Revenue Code of
1986, as amended, and such expenditures shall be
eligible as a part of an "expansion" that otherwise
qualifies under this section, and
e. establishments primarily engaged in distribution as
defined under Industry Numbers 49311, 49312, 49313 and
49319 and Industry Sector Number 42 of the NAICS
Manual, latest revision , and which meet the following
qualifications:
(1) construction with an initial capital investment
of at least Five Million Dollars ($5,000,000.00),
(2) employment of at least one hundred (100) full -
time-equivalent employees, as certified by the
Oklahoma Employment Security Commission,
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(3) payment of wages or salaries to its employees at
a wage which equals or exceeds one hundred
seventy-five percent (175%) of the federally
mandated minimum wage, as certified by the
Oklahoma Employment Security Commission the
average wage requirements in the Oklahoma Quality
Jobs Program Act for the year in which the real
property was placed into service , and
(4) commencement of construction on or after November
1, 2007, with construction to be completed within
three (3) years from the date of the commencement
of construction,
f. facilities engaged in the manufacturing, compounding,
processing or fabrication of materials into articles
of tangible personal property according to the special
order of a customer (custom order man ufacturing) by
manufacturers classified as operating in North
American Industry Classification System (NAICS)
Sectors 32 and 33, but does not include such custom
order manufacturing by manufacturers classified in
other NAICS code sectors, and
g. with respect to any entity making an application for
the exemption authorized by this sec tion on or after
January 1, 2023, the establishment making application
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for exempt treatment of real or personal property
acquired or improved beginning January 1, 2022, and
for any calendar year thereafter, the entity shall be
required to pay new direct jobs, as defined by Section
3603 of this title for purposes of the Oklahoma
Quality Jobs Program Act, an average annualized wage
which equals or exceeds the average wage requireme nt
in the Oklahoma Quality Jobs Program Act for the year
in which the real or personal property was placed into
service. The Oklahoma Tax Commission may request
verification from the Oklahoma Department of Commerce
that an establishment seeking an exempti on for real or
personal property pays an average annualized wage that
equals or exceeds the average wage requirement in
effect for the year in which the real or personal
property was placed into service . For purposes of
this subparagraph, it shall not be necessary for the
establishment to qualify for incentive payments
pursuant to the Oklahoma Quality Jobs Program Act, but
the establishment shall be subject to the wage
requirements of the Oklahoma Quality Jobs Program Act
with respect to new direct jobs in order to qualify
for the exempt treatment authorized by this section .
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Eligibility as a manufacturing facility pursuant to this
subparagraph shall be established, subject to review by the Tax
Commission, by annually filing an affidavit with the Tax Commiss ion
stating that the facility so qualifies and containing such other
information as required by the Tax Commission.
Provided, eating and drinking places, as well as other retail
establishments, shall not qualify as manufacturing facilities for
purposes of this section, nor shall centrally assessed properties.
Eligibility as a manufacturing facility pursuant to this
subparagraph shall be established, subject to review by the Tax
Commission, by annually filing an application with the Tax
Commission stating th at the facility so qualifies and containing
such other information as required by the Tax Commission;
2. "Facility" and "facilities", except as otherwise provided by
this section, means and includes the land, buildings, structures ,
and improvements used directly and exclusively in the manufacturing
process. Effective January 1, 2022, and for each calendar year
thereafter, for establishments which have received a manufacturer
exemption permit pursuant to the provisions of Section 1359.2 of
this title, or facilities engaged in manufacturing activities
defined or classified in the NAICS Manual under Industry Nos. 311111
through 339999, inclusive, but for no other establishments, facility
and facilities means and includes the land, buildings, structures,
improvements, machinery, fixtures, equipment and other personal
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property used directly and exclusively in the manufacturing process;
and
3. "Research and development " means activities directly related
to and conducted for the purpose of discovering, enhancing,
increasing or improving future or existing products or processes or
productivity.
C. The following provisions shall apply:
1. A manufacturing concern shall be entitled to the exemption
herein provided for each new manufacturing facility constructed,
each existing manufacturing facility acquired and the expansion of
existing manufacturing facilities on the same site, as such terms
are defined by Section 6B of Article X of the Oklahoma Constitution
and by this section;
2. Except as otherwise provided in p aragraph 5 of this
subsection, no No manufacturing concern shall receive more than one
five-year exemption for any one manufacturing facility unless the
expansion which qualifies the manufacturing facility for an
additional five-year exemption meets the re quirements of paragraph 4
of this subsection and the employment level established for any
previous exemption is maintained;
3. Any exemption as to the expansion of an existing
manufacturing facility shall be limited to the increase in ad
valorem taxes directly attributable to the expansion;
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4. Except as provided in paragraphs 5 and 6 of this subsection,
all All initial applications for any exemption for a new, acquired
or expanded manufacturing facility shall be granted only if:
a. there is a net increase in annualized base payroll
over the initial payroll of at least Two Hundred Fifty
Thousand Dollars ($250,000.00) if the facility is
located in a county with a population of fewer than
seventy-five thousand (75,000), according to the most
recent Federal Decennial Census, while maintaining or
increasing base payroll in subsequent years, or at
least One Million Dollars ($1,000,000.00) if the
facility is located in a county with a population of
seventy-five thousand (75,000) or more, according to
the most recent Federal Decennial Census, while
maintaining or increasing base payroll in subsequent
years; provided the payroll requirement of this
subparagraph shall be waived for claims for
exemptions, including claims previously denied or on
appeal on March 3, 2010 , for all initial applications
for exemption filed on or after January 1, 2004, and
on or before March 31, 2009, and all subsequent annual
exemption applications filed related to the initial
application for exemption, for an applicant, if the
facility has been located in Oklahoma for at least
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fifteen (15) years engaged in marine engine
manufacturing as defined under U.S. Industry Number
333618 of the NAICS Manual, latest revision, and has
maintained an average employment of five hundred (500)
or more full-time-equivalent employees over a ten -year
period. Any applicant that qualifies for the payroll
requirement waiver as outlined in the previous
sentence and subsequently closes its Oklahoma
manufacturing plant prior to January 1, 2012, may be
disqualified for exemption and subject to recapture.
For an applicant engaged in paperboard manufacturing
as defined under U.S. Industry Number 322130 of the
NAICS Manual, latest revision, union master payouts
paid by the buyer of the facility to specified
individuals employed by the facility at the time of
purchase, as specified under the purchase agreement,
shall be excluded from payroll for purposes of this
section.
In order to provide certainty with respect to
investments in manufacturing facilities pertaining to
all initial applications for exemption filed on or
after January 1, 2016, the following definitions shall
apply:
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(1) "base payroll" shall mean total payroll adjusted
for any nonrecurring bonuses, exercise of stock
option or stock rights and other nonrecurring ,
extraordinary items included in total payroll,
and
(2) "initial payroll" shall mean base payroll for the
year immediately preceding the initial
construction, acquisition or expansion.
The Tax Commission shall verify payroll information
through the Oklahoma Employment Security Commission by
using reports from the Oklahoma Employment Security
Commission for the calendar year immediately preceding
the year for which initial application is made for
base-line payroll, which must be maintained or
increased for each subsequent year; provided, a
manufacturing facility shall have the option of
excluding from its payroll, for purposes of this
section:
i. payments to sole proprietors, members
of a partnership, members of a limited
liability company who own at least t en
percent (10%) of the capital of the
limited liability company or
stockholder-employees of a corporation
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who own at least ten percent (10%) of
the stock in the corporation, and
ii. any nonrecurring bonuses, exercise of
stock option or stock rights or oth er
nonrecurring, extraordinary items
included in total payroll numbers as
reported by the Oklahoma Employment
Security Commission. A manufacturing
facility electing either option shall
indicate such election upon its
application for an exemption under thi s
section. Any manufacturing facility
electing either option shall submit
such information as the Tax Commission
may require in order to verify payroll
information. Payroll information
submitted pursuant to the provisions of
this paragraph shall be submi tted to
the Tax Commission and shall be subject
to the provisions of Section 205 of
this title, and
b. the facility offers, or will offer within one hundred
eighty (180) days of the date of employment, a basic
health benefits plan to the full -time-equivalent
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employees of the facility, which is determined by the
Department of Commerce to consist of the elements
specified in subparagraph b of paragraph 1 of
subsection A of Section 3603 of this title or elements
substantially equivalent thereto.
For purposes of this section, calculation of the amount of
increased base payroll shall be measured from the start of initial
construction or expansion to the completion of such construction or
expansion or for three (3) years from the start of initial
construction or expansion, whichever occurs first. The amount of
increased base payroll shall include payroll for full -time-
equivalent employees in this state who are employed by an entity
other than the facility which has previously or is currently
qualified to receive a n exemption pursuant to the provisions of this
section and who are leased or otherwise provided to the facility, if
such employment did not exist in this state prior to the start of
initial construction or expansion of the facility. The
manufacturing concern shall submit an affidavit to the Tax
Commission, signed by an officer, stating that the construction,
acquisition or expansion of the facility will result in a net
increase in the annualized base payroll as required by this
paragraph and that full -time-equivalent employees of the facility
are or will be offered a basic health benefits plan as required by
this paragraph. If, after the completion of such construction or
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expansion or after three (3) years from the start of initial
construction or expansio n, whichever occurs first, the construction,
acquisition or expansion has not resulted in a net increase in the
amount of annualized base payroll, if required, or any other
qualification specified in this paragraph has not been met, the
manufacturing concern shall pay an amount equal to the amount of any
exemption granted, including penalties and interest thereon, to the
Tax Commission for deposit to the Ad Valorem Reimbursement Fund;
5. If a facility fails to meet the base payroll requirement of
subparagraph a of paragraph 4 of this subsection, the payroll
requirement shall be waived for claims for exemptions, including
claims previously denied or on appeal on June 1, 2009, for all
initial applications for exemption filed on or after January 1,
2004, and on or before March 31, 2009, and all subsequent annual
exemption applications filed related to such initial application for
exemption, for an applicant, if the facility:
a. has been located for at least five (5) years as of
March 31, 2009, in a county in Ok lahoma with a
population of six hundred thousand (600,000) or more,
b. is owned by an applicant that has been engaged in
manufacturing as defined under U.S. Industry Numbers
323110, 323111, 323121 and 323122 of the NAICS Manual,
latest revision,
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c. is owned by an applicant that maintains a workforce of
at least three hundred (300) employees on June 1,
2009,
d. is owned by an applicant that has filed multiple
applications for exemption pursuant to this section,
and
e. is owned by an applicant that operates a t least one
facility in this state of at least seven hundred
thirty thousand (730,000) square feet on June 1, 2009.
In the event that any applicant obtaining a waiver of the payroll
requirement pursuant to this paragraph ceases to operate all of its
facilities in this state on or before a date that is four (4) years
after any initial application for an exemption is filed by such
applicant, all sums of property taxes exempted under this paragraph
through a waiver of the payroll requirement that relate to suc h
application shall become due and payable as if such sums were
assessed in the year in which the applicant ceases to operate all of
its facilities in the state;
6. Any new, acquired or expanded automotive final assembly
manufacturing facility which does not meet the requirements of
paragraph 4 of this subsection shall be granted an exemption only if
all other requirements of this section are met and only if the
investment cost of the construction, acquisition or expansion of the
manufacturing facility is Three Hundred Million Dollars
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($300,000,000.00) or more and the manufacturing facility retains an
average employment of one thousand seven hundred fifty (1,750) or
more full-time-equivalent employees in the year in which the
exemption is initially granted and in each of the four (4)
subsequent years only if an average employment of one thousand seven
hundred fifty (1,750) or more full -time-equivalent employees is
maintained in the subsequent year. Any property installed to
replace property damaged by the t ornado or natural disaster that
occurred May 8, 2003, may continue to receive the exemption provided
in this paragraph for the full five -year period based on the value
of the previously qualifying assets as of January 1, 2003. The
exemption shall continue in effect as long as all other
qualifications in this paragraph are met. If the average employment
of one thousand seven hundred fifty (1,750) or more full -time-
equivalent employees is reduced as a result of temporary layoffs
because of a tornado or natu ral disaster on May 8, 2003, then the
average employment requirement shall be waived for year 2003 of the
exemption period. Calculation of the number of employees shall be
made in the same manner as required under Section 2357.4 of this
title for an investment tax credit. As used in this paragraph,
“expand” and “expansion” shall mean and include any increase to the
size or scope of a facility as well as any renovation, restoration,
replacement or remodeling of a facility which permits the
manufacturing of a new or redesigned product;
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7. Any Except as otherwise provided by this paragraph, any new,
acquired, or expanded computer data processing, data preparation, or
information processing services provider classified in Industrial
Group Number 7374 of the S IC Manual, latest revision, and U.S.
Industry Number 514210 518210 of the North American Industrial
Classification System (NAICS) Manual, latest 2017 revision, may
apply for exemptions under this section for each year in which new,
acquired, or expanded ca pital improvements to the facility are made
for assets placed in service not later than December 31, 2021, if:
a. there is a net increase in annualized payroll of the
applicant at any facility or facilities of the
applicant in this state of at least Two Hu ndred Fifty
Thousand Dollars ($250,000.00), which is attributable
to the capital improvements, or a net increase of
Seven Million Dollars ($7,000,000.00) or more in
capital improvements, while maintaining or increasing
payroll at the facility or facilities in this state
which are included in the application, and
b. the facility offers, or will offer within one hundred
eighty (180) days of the date of employment of new
employees attributable to the capital improvements, a
basic health benefits plan to the fu ll-time-equivalent
employees of the facility, which is determined by the
Department of Commerce to consist of the elements
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specified in subparagraph b of paragraph 1 of
subsection A of Section 3603 of this title or elements
substantially equivalent thereto .
An establishment described by this paragraph, the primary
business activity of which is described by Industry No. 518210 of
the North American Industry Classification System (NAICS) Manual,
2017 revision, that has applied for and been granted an exemptio n
for personal property at any time within five (5) years prior to the
effective date of this act, may apply for exemptions for items of
eligible personal property to be located within improvements to real
property and such real property and improvements h aving been exempt
from ad valorem taxation prior to the effective date of this act
pursuant to the provisions of this section if such personal property
is placed in service not later than December 31, 2036. No
additional personal property of such establis hment placed in service
after such date shall qualify for the exempt treatment otherwise
authorized pursuant to this paragraph ;
8. 6. Effective January 1, 2017, an entity engaged in electric
power generation by means of wind, as described by the North
American Industry Classification System, No. 221119, shall not be
defined as a qualifying manufacturing concern for purposes of the
exemption otherwise authorized pursuant to Section 6B of Article X
of the Oklahoma Constitution or qualify as a "manufacturing
facility" as defined in this section. No initial application for
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exemption shall be filed by or accepted from an entity engaged in
electric power generation by means of wind on or after January 1,
2018; and
9. 7. An entity or applicant engaged in an indu stry as defined
under U.S. Industry Number 324110 of the NAICS Manual, latest
revision, which has applied for or been granted an exemption for a
time period which began on or after calendar year 2012 and before
calendar year 2016 but which did not meet the payroll requirements
of subparagraph a of paragraph 4 of this subsection because of
nonrecurring bonuses, exercise of stock option or stock rights or
other nonrecurring, extraordinary items included in total payroll in
the previous year, shall be allowed an exemption, beginning with
calendar year 2016, for the number of years, including the calendar
year for which the exemption was denied, remaining in the entity’s
five-year exemption period, provided such entity attains or
increases payroll at or above th e initial or base payroll
established for the exemption ; and
8. A facility engaged in manufacturing defined under U.S.
Industry Number 327310 of the NAICS Manual shall have the payroll
requirements of paragraph 4 of this subsection waived for tax year
2021, which is based in part on the 2020 calendar year payroll
reported to the Oklahoma Employment Security Commission, and may
continue to receive the exemption for the five -year period provided
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in this section only if all other requirements of this section are
met.
D. 1. Except as provided in paragraph 2 of this subsection,
the five-year period of exemption from ad valorem taxes for any
qualifying manufacturing facility property shall begin on January 1
following the initial qualifying use of the property in the
manufacturing process.
2. The five-year period of exemption from ad valorem taxes for
any qualifying manufacturing facility, as specified in subparagraphs
a and b of this paragraph, which is located within a tax incentive
district created pursuant to the Local Development Act by a county
having a population of at least five hundred thousand (500,000),
according to the most recent Federal Decennial Census, shall begin
on January 1 following the expiration or termination of the ad
valorem exemption, a batement, or other incentive provided through
the tax incentive district. Facilities qualifying pursuant to this
subsection shall include:
a. a manufacturing facility as defined in subparagraph c
of paragraph 1 of subsection B of this section, and
b. an establishment primarily engaged in distribution as
defined under Industry Number 49311 of the North
American Industry Classification System for which the
initial capital investment was at least One Hundred
Eighty Million Dollars ($180,000,000.00); provided,
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that the qualifying job creation and depreciable
property investment occurred prior to calendar year
2017 but not earlier than calendar year 2013.
E. Any person, firm or corporation claiming the exemption
herein provided for shall file each year for whic h exemption is
claimed, an application therefor with the county assessor of the
county in which the new, expanded or acquired facility is located.
The application shall be on a form or forms prescribed by the Tax
Commission, and shall be filed on or befor e March 15, except as
provided in Section 2902.1 of this title, of each year in which the
facility desires to take the exemption or within thirty (30) days
from and after receipt by such person, firm or corporation of notice
of valuation increase, whicheve r is later. In a case where
completion of the facility or facilities will occur after January 1
of a given year, a facility may apply to claim the ad valorem tax
exemption for that year. If such facility is found to be qualified
for exemption, the ad val orem tax exemption provided for herein
shall be granted for that entire year and shall apply to the ad
valorem valuation as of January 1 of that given year. For
applicants which qualify under the provisions of subparagraph b of
paragraph 1 of subsection B of this section, the application shall
include a copy of the affidavit and any other information required
to be filed with the Tax Commission.
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F. The application shall be examined by the county assessor and
approved or rejected in the same manner as prov ided by law for
approval or rejection of claims for homestead exemptions. The
taxpayer shall have the same right of review by and appeal from the
county board of equalization, in the same manner and subject to the
same requirements as provided by law for review and appeals
concerning homestead exemption claims. Approved applications shall
be filed by the county assessor with the Tax Commission no later
than June 15, except as provided in Section 2902.1 of this title, of
the year in which the facility desi res to take the exemption.
Incomplete applications and applications filed after June 15 will be
declared null and void by the Tax Commission. In the event that a
taxpayer qualified to receive an exemption pursuant to the
provisions of this section shall make payment of ad valorem taxes in
excess of the amount due, the county treasurer shall have the
authority to credit the taxpayer’s real or personal property tax
overpayment against current taxes due. The county treasurer may
establish a schedule of up t o five (5) years of credit to resolve
the overpayment.
G. Nothing herein shall in any manner affect, alter or impair
any law relating to the assessment of property, and all property,
real or personal, which may be entitled to exemption hereunder shall
be valued and assessed as is other like property and as provided by
law. The valuation and assessment of property for which an
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exemption is granted hereunder shall be performed by the Tax
Commission using one or more of the cost, income and expense and
sales comparison approaches to estimate fair cash value in
accordance with the Uniform Standards of Professional Appraisal
Practice.
H. The Tax Commission shall have the authority and duty to
prescribe forms and to promulgate rules as may be necessary to carry
out and administer the terms and provisions of this section.
SECTION 5. This act shall become effective November 1, 2021. "
Passed the House of Representatives the 21st day of April, 2021.
Presiding Officer of the House of
Representatives
Passed the Senate the ____ day of __________, 2021.
Presiding Officer of the Senate
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ENGROSSED SENATE
BILL NO. 609 By: Coleman and Hall of the
Senate
and
Hilbert of the House
An Act relating to ad valorem tax; amending 68 O.S.
2011, Section 2902, as last amended by Section 1,
Chapter 258, O.S.L. 2019 (68 O.S. Supp. 2020, Section
2902), which relates to exemption for manufacturing
facilities; modifying definitions; adjusting certain
investment requirement to inflation index; requiri ng
the Oklahoma Tax Commission to publish certain
adjustments; adjusting wage threshold; requiring
wages exceed certain Quality Jobs Program Act
requirements; authorizing the Oklahoma Tax Commission
to request verification; removing exceptions for
failure to meet certain payroll requirements;
modifying certain classification; and providing an
effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 6. AMENDATORY 68 O.S. 2011, Section 2902, as
last amended by Section 1, Chapter 258, O.S.L. 2019 (68 O.S. Supp.
2020, Section 2902), is amended to read as follows:
Section 2902. A. Except as otherwise provided by subsection H
of Section 3658 of this title pursuant to which the exemption
authorized by this sectio n may not be claimed, a qualifying
manufacturing concern, as defined by Section 6B of Article X of the
Oklahoma Constitution, and as further defined herein, shall be
exempt from the levy of any ad valorem taxes upon new, expanded or
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acquired manufacturing facilities, including facilities engaged in
research and development, for a period of five (5) years. The
provisions of Section 6B of Article X of the Oklahoma Constitution
requiring an existing facility to have been unoccupied for a period
of twelve (12) months prior to acquisition shall be construed as a
qualification for a facility to initially receive an exemption, and
shall not be deemed to be a qualification for that facility to
continue to receive an exemption in each of the four (4) years
following the initial year for which the exemption was granted.
Such facilities are hereby classified for the purposes of taxation
as provided in Section 22 of Article X of the Oklahoma Constitution.
B. For purposes of this section, the following definitions
shall apply:
1. “Manufacturing facilities” means facilities engaged in the
mechanical or chemical transformation of materials or substances
into new products and except as provided by paragraph 8 6 of
subsection C of this section shall include:
a. establishments which have received a manufacturer
exemption permit pursuant to the provisions of Section
1359.2 of this title,
b. facilities, including repair and replacement parts,
primarily engaged in aircraft repair, building and
rebuilding whether or not on a fac tory basis,
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c. establishments primarily engaged in computer services
and data processing as defined under Industrial Group
Numbers 5112 and 5415, and U.S. Industry Number 334611
and 519130 of the NAICS Manual, latest revision, and
which derive at least fif ty percent (50%) of their
annual gross revenues from the sale of a product or
service to an out-of-state buyer or consumer, and as
defined under Industrial Group Number 5142 of the
NAICS Manual, latest revision, which derive at least
eighty percent (80%) o f their annual gross revenues
from the sale of a product or service to an out -of-
state buyer or consumer. Eligibility as a
manufacturing facility pursuant to this subparagraph
shall be established, subject to review by the
Oklahoma Tax Commission, by annu ally filing an
affidavit with the Tax Commission stating that the
facility so qualifies and such other information as
required by the Tax Commission. For purposes of
determining whether annual gross revenues are derived
from sales to out-of-state buyers, all sales to the
federal government shall be considered to be an out -
of-state buyer,
d. for which facilities that the investment cost of the
construction, acquisition or expansion of the
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manufacturing facility is Two Hundred Fifty Thousand
Dollars ($250,000.00) Five Hundred Thousand Dollars
($500,000.00) or more with respect to assets placed
into service during calendar year 2022. For
subsequent calendar years, the investment required
shall be increased annually by a percentage equal to
the previous year’s increase in the Consumer Price
Index-All Urban Consumers (“CPI -U”) and such adjusted
amount shall be the required investment cost in order
to qualify for the exemption authorized by this
section. The Oklahoma Department of Commerce shall
determine the amount of the increase, if any, on
January 1 of each year. The Oklahoma Tax Commission
shall publish on its website at least annually the
adjusted dollar amount in order to qualify for the
exemption authorized by this section and shall include
the adjusted dollar amount in any of its relevant
forms or publications with respect to the exemption .
Provided, “investment cost” shall not include the cost
of direct replacement, refurbishment, repair or
maintenance of existing machinery or equipment, except
that “investment cost” shall include capital
expenditures for direct replacement, refurbishment,
repair or maintenance of existing machinery or
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equipment that qualifies for depreciation and/or
amortization pursuant to the Internal Revenue Code of
1986, as amended, and such expenditures shall be
eligible as a part of an “expansion” that otherwise
qualifies under this section, and
e. establishments primarily engaged in distribution as
defined under Industry Numbers 49311, 49312, 49313 and
49319 and Industry Sector N umber 42 of the NAICS
Manual, latest revision, and which meet the following
qualifications:
(1) construction with an initial capital investment
of at least Five Million Dollars ($5,000,000.00),
(2) employment of at least one hundred (100) full -
time-equivalent employees, as certified by the
Oklahoma Employment Security Commission,
(3) payment of wages or salaries to its employees at
a wage which equals or exceeds one hundred
seventy-five percent (175%) of the federally
mandated minimum wage, as certified by the
Oklahoma Employment Security Commission the
average wage requirements in the Oklahoma Quality
Jobs Program Act for the year in which the real
property was placed into service , and
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(4) commencement of construction on or after November
1, 2007, with construction to be completed within
three (3) years from the date of the commencement
of construction,
f. facilities engaged in the manufacturing, compounding,
processing or fabrication of materials into articles
of tangible personal property according to the special
order of a customer (custom order manufacturing) by
manufacturers classified as operating in North
American Industry Classification System (NAICS)
Sectors 32 and 33, but does not include such custom
order manufacturing by manufacturers classified i n
other NAICS code sectors, and
g. with respect to any entity making an application for
the exemption authorized by this section on or after
January 1, 2022, the establishment making application
for exempt treatment of real or personal property
acquired or improved beginning January 1, 2022, and
for any calendar year thereafter, the entity shall be
required to pay new direct jobs, as defined by Section
3603 of this title for purposes of the Oklahoma
Quality Jobs Program Act, an average annualized wage
which equals or exceeds the average wage requirement
in the Oklahoma Quality Jobs Program Act for the year
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in which the real or personal property was placed into
service. The Oklahoma Tax Commission may request
verification from the Oklahoma Department of Comm erce
that an establishment seeking an exemption for real or
personal property pays an average annualized wage that
equals or exceeds the average wage requirement in
effect for the year in which the real or personal
property was placed into service .
Eligibility as a manufacturing facility pursuant to this
subparagraph shall be established, subject to review by the Tax
Commission, by annually filing an affidavit with the Tax Commission
stating that the facility so qualifies and containing such other
information as required by the Tax Commission.
Provided, eating and drinking places, as well as other retail
establishments, shall not qualify as manufacturing facilities for
purposes of this section, nor shall centrally assessed properties.
Eligibility as a manufa cturing facility pursuant to this
subparagraph shall be established, subject to review by the Tax
Commission, by annually filing an application with the Tax
Commission stating that the facility so qualifies and containing
such other information as required by the Tax Commission;
2. “Facility” and “facilities” , except as otherwise provided by
this paragraph, means and includes the land, buildings, structures ,
and improvements used directly and exclusively in the manufacturing
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process. Effective January 1, 2022, and for each calendar year
thereafter, for establishments which have received a manufacturer
exemption permit pursuant to the provisions of Section 1359.2 of
this title, or facilities engaged in manufacturing activities
defined or classified in the N AICS Manual under Industry Nos. 311111
through 339999, inclusive, but for no other establishments, facility
and facilities means and includes the land, buildings, structures,
improvements, machinery, fixtures, equipment and other personal
property used directly and exclusively in the manufacturing process;
and
3. “Research and development” means activities directly related
to and conducted for the purpose of discovering, enhancing,
increasing or improving future or existing products or processes or
productivity.
C. The following provisions shall apply:
1. A manufacturing concern shall be entitled to the exemption
herein provided for each new manufacturing facility constructed,
each existing manufacturing facility acquired and the expansion of
existing manufacturing facilities on the same site, as such terms
are defined by Section 6B of Article X of the Oklahoma Constitution
and by this section;
2. Except as otherwise provided in paragraph 5 of this
subsection, no No manufacturing concern shall receive mor e than one
five-year exemption for any one manufacturing facility unless the
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expansion which qualifies the manufacturing facility for an
additional five-year exemption meets the requirements of paragraph 4
of this subsection and the employment level establ ished for any
previous exemption is maintained;
3. Any exemption as to the expansion of an existing
manufacturing facility shall be limited to the increase in ad
valorem taxes directly attributable to the expansion;
4. Except as provided in paragraphs 5 and 6 of this subsection,
all All initial applications for any exemption for a new, acquired
or expanded manufacturing facility shall be granted only if:
a. there is a net increase in annualized base payroll
over the initial payroll of at least Two Hundred Fifty
Thousand Dollars ($250,000.00) if the facility is
located in a county with a population of fewer than
seventy-five thousand (75,000), according to the most
recent Federal Decennial Census, while maintaining or
increasing base payroll in subsequent y ears, or at
least One Million Dollars ($1,000,000.00) if the
facility is located in a county with a population of
seventy-five thousand (75,000) or more, according to
the most recent Federal Decennial Census, while
maintaining or increasing base payroll in subsequent
years; provided the payroll requirement of this
subparagraph shall be waived for claims for
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exemptions, including claims previously denied or on
appeal on March 3, 2010, for all initial applications
for exemption filed on or after January 1, 20 04, and
on or before March 31, 2009, and all subsequent annual
exemption applications filed related to the initial
application for exemption, for an applicant, if the
facility has been located in Oklahoma for at least
fifteen (15) years engaged in marine e ngine
manufacturing as defined under U.S. Industry Number
333618 of the NAICS Manual, latest revision, and has
maintained an average employment of five hundred (500)
or more full-time-equivalent employees over a ten -year
period. Any applicant that qualifi es for the payroll
requirement waiver as outlined in the previous
sentence and subsequently closes its Oklahoma
manufacturing plant prior to January 1, 2012, may be
disqualified for exemption and subject to recapture.
For an applicant engaged in paperboar d manufacturing
as defined under U.S. Industry Number 322130 of the
NAICS Manual, latest revision, union master payouts
paid by the buyer of the facility to specified
individuals employed by the facility at the time of
purchase, as specified under the purc hase agreement,
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shall be excluded from payroll for purposes of this
section.
In order to provide certainty with respect to
investments in manufacturing facilities pertaining to
all initial applications for exemption filed on or
after January 1, 2016, the f ollowing definitions shall
apply:
(1) “base payroll” shall mean total payroll adjusted
for any nonrecurring bonuses, exercise of stock
option or stock rights and other nonrecurring,
extraordinary items included in total payroll,
and
(2) “initial payroll” shall mean base payroll for the
year immediately preceding the initial
construction, acquisition or expansion.
The Tax Commission shall verify payroll information
through the Oklahoma Employment Security Commission by
using reports from the Oklahoma Employm ent Security
Commission for the calendar year immediately preceding
the year for which initial application is made for
base-line payroll, which must be maintained or
increased for each subsequent year; provided, a
manufacturing facility shall have the opti on of
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excluding from its payroll, for purposes of this
section:
i. payments to sole proprietors, members
of a partnership, members of a limited
liability company who own at least ten
percent (10%) of the capital of the
limited liability company or
stockholder-employees of a corporation
who own at least ten percent (10%) of
the stock in the corporation, and
ii. any nonrecurring bonuses, exercise of
stock option or stock rights or other
nonrecurring, extraordinary items
included in total payroll numbers as
reported by the Oklahoma Employment
Security Commission. A manufacturing
facility electing either option shall
indicate such election upon its
application for an exemption under this
section. Any manufacturing facility
electing either option shall submit
such information as the Tax Commission
may require in order to verify payroll
information. Payroll information
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submitted pursuant to the provisions of
this paragraph shall be submitted to
the Tax Commission and shall be subject
to the provisions of Section 205 of
this title, and
b. the facility offers, or will offer within one hundred
eighty (180) days of the date of employment, a basic
health benefits plan to the full -time-equivalent
employees of the facility, which is determined by the
Department of Commerce to consist of the elements
specified in subparagraph b of paragraph 1 of
subsection A of Section 3603 of this title or elements
substantially equivalent thereto.
For purposes of this section, calculation of the amount of
increased base payroll shall be measured from the start of initial
construction or expansion to the completion of such construction or
expansion or for three (3) years from the start of initial
construction or expansion, whichever occurs first. The amount of
increased base payroll shal l include payroll for full -time-
equivalent employees in this state who are employed by an entity
other than the facility which has previously or is currently
qualified to receive an exemption pursuant to the provisions of this
section and who are leased or otherwise provided to the facility, if
such employment did not exist in this state prior to the start of
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initial construction or expansion of the facility. The
manufacturing concern shall submit an affidavit to the Tax
Commission, signed by an officer, s tating that the construction,
acquisition or expansion of the facility will result in a net
increase in the annualized base payroll as required by this
paragraph and that full -time-equivalent employees of the facility
are or will be offered a basic health benefits plan as required by
this paragraph. If, after the completion of such construction or
expansion or after three (3) years from the start of initial
construction or expansion, whichever occurs first, the construction,
acquisition or expansion has no t resulted in a net increase in the
amount of annualized base payroll, if required, or any other
qualification specified in this paragraph has not been met, the
manufacturing concern shall pay an amount equal to the amount of any
exemption granted, includi ng penalties and interest thereon, to the
Tax Commission for deposit to the Ad Valorem Reimbursement Fund;
5. If a facility fails to meet the base payroll requirement of
subparagraph a of paragraph 4 of this subsection, the payroll
requirement shall be wa ived for claims for exemptions, including
claims previously denied or on appeal on June 1, 2009, for all
initial applications for exemption filed on or after January 1,
2004, and on or before March 31, 2009, and all subsequent annual
exemption applications filed related to such initial application for
exemption, for an applicant, if the facility:
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a. has been located for at least five (5) years as of
March 31, 2009, in a county in Oklahoma with a
population of six hundred thousand (600,000) or more,
b. is owned by an applicant that has been engaged in
manufacturing as defined under U.S. Industry Numbers
323110, 323111, 323121 and 323122 of the NAICS Manual,
latest revision,
c. is owned by an applicant that maintains a workforce of
at least three hundred (300) employees on June 1,
2009,
d. is owned by an applicant that has filed multiple
applications for exemption pursuant to this section,
and
e. is owned by an applicant that operates at least one
facility in this state of at least seven hundred
thirty thousand (730,000) square feet on June 1, 2009.
In the event that any applicant obtaining a waiver of the payroll
requirement pursuant to this paragraph ceases to operate all of its
facilities in this state on or before a date that is four (4) years
after any initial application for an exemption is filed by such
applicant, all sums of property taxes exempted under this paragraph
through a waiver of the payroll requirement that relate to such
application shall become due and payable as if such sums were
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assessed in the year in which the applicant ceases to operate all of
its facilities in the state;
6. Any new, acquired or expanded automotive final assembly
manufacturing facility which does not meet the requirements of
paragraph 4 of this subsection shall be granted an exemption only if
all other requirements of this section are met and only if the
investment cost of the construction, acquisition or expansion of the
manufacturing facility is Three Hundred Million Dollars
($300,000,000.00) or more and the manufacturin g facility retains an
average employment of one thousand seven hundred fifty (1,750) or
more full-time-equivalent employees in the year in which the
exemption is initially granted and in each of the four (4)
subsequent years only if an average employment o f one thousand seven
hundred fifty (1,750) or more full -time-equivalent employees is
maintained in the subsequent year. Any property installed to
replace property damaged by the tornado or natural disaster that
occurred May 8, 2003, may continue to receiv e the exemption provided
in this paragraph for the full five -year period based on the value
of the previously qualifying assets as of January 1, 2003. The
exemption shall continue in effect as long as all other
qualifications in this paragraph are met. I f the average employment
of one thousand seven hundred fifty (1,750) or more full -time-
equivalent employees is reduced as a result of temporary layoffs
because of a tornado or natural disaster on May 8, 2003, then the
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average employment requirement shall b e waived for year 2003 of the
exemption period. Calculation of the number of employees shall be
made in the same manner as required under Section 2357.4 of this
title for an investment tax credit. As used in this paragraph,
“expand” and “expansion” shall mean and include any increase to the
size or scope of a facility as well as any renovation, restoration,
replacement or remodeling of a facility which permits the
manufacturing of a new or redesigned product;
7. Any new, acquired, or expanded computer da ta processing,
data preparation, or information processing services provider
classified in Industrial Group Number 7374 of the SIC Manual, latest
revision, and U.S. Industry Number 514210 518210 of the North
American Industrial Classification System (NAICS ) Manual, latest
2017 revision, may apply for exemptions under this section for each
year in which new, acquired, or expanded capital improvements to the
facility are made if:
a. there is a net increase in annualized payroll of the
applicant at any facilit y or facilities of the
applicant in this state of at least Two Hundred Fifty
Thousand Dollars ($250,000.00), which is attributable
to the capital improvements, or a net increase of
Seven Million Dollars ($7,000,000.00) or more in
capital improvements, whil e maintaining or increasing
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payroll at the facility or facilities in this state
which are included in the application, and
b. the facility offers, or will offer within one hundred
eighty (180) days of the date of employment of new
employees attributable to the capital improvements, a
basic health benefits plan to the full -time-equivalent
employees of the facility, which is determined by the
Department of Commerce to consist of the elements
specified in subparagraph b of paragraph 1 of
subsection A of Sectio n 3603 of this title or elements
substantially equivalent thereto;
8. 6. Effective January 1, 2017, an entity engaged in electric
power generation by means of wind, as described by the North
American Industry Classification System, No. 221119, shall not b e
defined as a qualifying manufacturing concern for purposes of the
exemption otherwise authorized pursuant to Section 6B of Article X
of the Oklahoma Constitution or qualify as a “manufacturing
facility” as defined in this section. No initial application for
exemption shall be filed by or accepted from an entity engaged in
electric power generation by means of wind on or after January 1,
2018; and
9. 7. An entity or applicant engaged in an industry as defined
under U.S. Industry Number 324110 of the NAIC S Manual, latest
revision, which has applied for or been granted an exemption for a
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time period which began on or after calendar year 2012 and before
calendar year 2016 but which did not meet the payroll requirements
of subparagraph a of paragraph 4 of thi s subsection because of
nonrecurring bonuses, exercise of stock option or stock rights or
other nonrecurring, extraordinary items included in total payroll in
the previous year, shall be allowed an exemption, beginning with
calendar year 2016, for the numb er of years, including the calendar
year for which the exemption was denied, remaining in the entity’s
five-year exemption period, provided such entity attains or
increases payroll at or above the initial or base payroll
established for the exemption.
D. 1. Except as provided in paragraph 2 of this subsection,
the five-year period of exemption from ad valorem taxes for any
qualifying manufacturing facility property shall begin on January 1
following the initial qualifying use of the property in the
manufacturing process.
2. The five-year period of exemption from ad valorem taxes for
any qualifying manufacturing facility, as specified in subparagraphs
a and b of this paragraph, which is located within a tax incentive
district created pursuant to the Local Development Act by a county
having a population of at least five hundred thousand (500,000),
according to the most recent Federal Decennial Census, shall begin
on January 1 following the expiration or termination of the ad
valorem exemption, abatement, or other incentive provided through
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the tax incentive district. Facilities qualifying pursuant to this
subsection shall include:
a. a manufacturing facility as defined in subparagraph c
of paragraph 1 of subsection B of this section, and
b. an establishment primarily engaged in distribution as
defined under Industry Number 49311 of the North
American Industry Classification System for which the
initial capital investment was at least One Hundred
Eighty Million Dollars ($180,000,000.00); provided,
that the qualifying job creation and depreciable
property investment occurred prior to calendar year
2017 but not earlier than calendar year 2013.
E. Any person, firm or corporation claiming the exemption
herein provided for shall file each year for which exemption i s
claimed, an application therefor with the county assessor of the
county in which the new, expanded or acquired facility is located.
The application shall be on a form or forms prescribed by the Tax
Commission, and shall be filed on or before March 15, e xcept as
provided in Section 2902.1 of this title, of each year in which the
facility desires to take the exemption or within thirty (30) days
from and after receipt by such person, firm or corporation of notice
of valuation increase, whichever is later. In a case where
completion of the facility or facilities will occur after January 1
of a given year, a facility may apply to claim the ad valorem tax
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exemption for that year. If such facility is found to be qualified
for exemption, the ad valorem tax exem ption provided for herein
shall be granted for that entire year and shall apply to the ad
valorem valuation as of January 1 of that given year. For
applicants which qualify under the provisions of subparagraph b of
paragraph 1 of subsection B of this sect ion, the application shall
include a copy of the affidavit and any other information required
to be filed with the Tax Commission.
F. The application shall be examined by the county assessor and
approved or rejected in the same manner as provided by law f or
approval or rejection of claims for homestead exemptions. The
taxpayer shall have the same right of review by and appeal from the
county board of equalization, in the same manner and subject to the
same requirements as provided by law for review and ap peals
concerning homestead exemption claims. Approved applications shall
be filed by the county assessor with the Tax Commission no later
than June 15, except as provided in Section 2902.1 of this title, of
the year in which the facility desires to take t he exemption.
Incomplete applications and applications filed after June 15 will be
declared null and void by the Tax Commission. In the event that a
taxpayer qualified to receive an exemption pursuant to the
provisions of this section shall make payment of ad valorem taxes in
excess of the amount due, the county treasurer shall have the
authority to credit the taxpayer’s real or personal property tax
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overpayment against current taxes due. The county treasurer may
establish a schedule of up to five (5) ye ars of credit to resolve
the overpayment.
G. Nothing herein shall in any manner affect, alter or impair
any law relating to the assessment of property, and all property,
real or personal, which may be entitled to exemption hereunder shall
be valued and assessed as is other like property and as provided by
law. The valuation and assessment of property for which an
exemption is granted hereunder shall be performed by the Tax
Commission.
H. The Tax Commission shall have the authority and duty to
prescribe forms and to promulgate rules as may be necessary to carry
out and administer the terms and provisions of this section.
SECTION 7. This act shall become effective November 1, 2021.
Passed the Senate the 2nd day of March, 2021.
Presiding Officer of the Senate
Passed the House of Representatives the ____ day of __________,
2021.
Presiding Officer of the House
of Representatives
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