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53	53	STATE OF OKLAHOMA
54	54
55	55	1st Session of the 59th Legislature (2023)
56	56
57	57	SENATE BILL 305 By: Bergstrom
58	58
59	59
60	60
61	61
62	62
63	63	AS INTRODUCED
64	64
65	65	An Act relating to income tax credit; amending 68
66	66	O.S. 2021, Section 2357.4, which relates to tax
67	67	credit for investments in qualified depreciable
68	68	property and a net increase in full -time-equivalent
69	69	employees; limiting certain credit to certain tax
70	70	years; limiting certain tax credit to property placed
71	71	in service before certain date; limiting requirement
72	72	to provide satisfactory proof to certain years;
73	73	limiting carry forward of certain credits to certain
74	74	years; providing for carry forward of certain
75	75	credits; requiring submission of claim to carry
76	76	forward credit; requiring submission and approval of
77	77	application to claim certain credit; requiring the
78	78	Oklahoma Department of Commerce to pr escribe certain
79	79	form; requiring the Department to notify Oklahoma Tax
80	80	Commission of application approval; and providing an
81	81	effective date.
82	82
83	83
84	84
85	85
86	86
87	87	BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
88	88	SECTION 1. AMENDATORY 68 O.S. 2021, Section 2357.4, is
89	89	amended to read as follows:
90	90	Section 2357.4. A. Except as otherwise provided in subsection
91	91	F of Section 3658 of this title and i n subsections J and K of this
92	92	section, for taxable years beginning after December 31, 1987, there
93	93
94	94
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144	144	shall be allowed a credit against the tax imposed by Section 2355 of
145	145	this title for:
146	146	1. Investment in qualified depreciable prop erty placed in
147	147	service during those years for use in a manufacturing operation, as
148	148	defined in Section 1352 of this title, which has received a
149	149	manufacturer exemption permit pursuant to the provisions of Section
150	150	1359.2 of this title or a qualified aircraft maintenance or
151	151	manufacturing facility as defined in Section 1357 of this title i n
152	152	this state or a qualified web search po rtal as defined in Section
153	153	1357 of this title; or
154	154	2. A For tax years 1988 through 202 3, a net increase in the
155	155	number of full-time-equivalent employees in a manufac turing
156	156	operation, as defined in Section 1352 of thi s title, which has
157	157	received a manufacturer exemption permit pursuant to the provisions
158	158	of Section 1359.2 of this title or a qualified aircraft maintenance
159	159	or manufacturing fac ility defined in Section 1357 of this title in
160	160	this state or in a qualified web s earch portal as defined in Section
161	161	1357 of this title including employees en gaged in support services.
162	162	B. Except as otherwise provided in subsection F of Section 3658
163	163	of this title and in subsections J an d K of this section, for
164	164	taxable years beginning af ter December 31, 1998, there shall be
165	165	allowed a credit against the tax impos ed by Section 2355 of this
166	166	title for:
167	167
168	168
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218	218	1. Investment in qualified depreciable property with a total
219	219	cost equal to or greater than Forty Million Dollars ($40,000,000.00)
220	220	within three (3) years from the date of initial qualifying
221	221	expenditure and placed in se rvice in this state during those years
222	222	for use in the manufacture of products described by any Indu stry
223	223	Number contained in Divis ion D of Part I of the Standard Industrial
224	224	Classification (SIC) Manual, latest revision; or
225	225	2. A For property placed in service before January 1, 2024, a
226	226	net increase in the number of full-time-equivalent employees in this
227	227	state engaged in the manufacture of any goods identified by any
228	228	Industry Number contained in Division D of Part I of the Standard
229	229	Industrial Classification (SIC) Manual, latest revision, if the
230	230	total cost of qualifie d depreciable property placed in service b y
231	231	the business entity within t he state equals or exceeds Forty Million
232	232	Dollars ($40,000,000.00) within three (3) years from the date of
233	233	initial qualifying expenditure.
234	234	C. The For property placed in service before January 1, 2024,
235	235	the business entity may c laim the credit authorized by subsection B
236	236	of this section for expenditures incur red or for a net increase in
237	237	the number of full-time-equivalent employees after the business
238	238	entity provides proof satisfactory to the Oklahoma Tax Commission
239	239	that the conditions imposed pursuant to paragraph 1 or paragraph 2
240	240	of subsection B of this sectio n have been satisfied.
241	241
242	242
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292	292	D. If a business entity fails to expend the amount required by
293	293	paragraph 1 or paragraph 2 of subsection B of this section within
294	294	the time required, the business entity may not claim the credit
295	295	authorized by subsection B of this sect ion but shall be allowed to
296	296	claim a credit pursuant to subsection A of this section if the
297	297	requirements of subsection A of this section are met with respect to
298	298	the investment in qualified depreciable property or net increase in
299	299	the number of full-time-equivalent employees.
300	300	E. The credit provided for in subsection A of this section, if
301	301	based upon investment in qualified depreciable property, shall not
302	302	be allowed unless the inve stment in qualified depreciable property
303	303	is at least Fifty Thousand Dollars ($50, 000.00). The credit
304	304	provided for in subsection A or B of this section shall not be
305	305	allowed if the applicable investment is the direct cause of a
306	306	decrease in the number of ful l-time-equivalent employees. Qualified
307	307	property shall be limited to machinery, f ixtures, equipment,
308	308	buildings, or substantial improvements thereto, placed in service in
309	309	this state during the taxable year. The taxable years for which the
310	310	credit may be allowed if based upon investment in qualified
311	311	depreciable property shall be measured from the year in which the
312	312	qualified property is placed in service. If the credit provided for
313	313	in subsection A or B of this section is calculated on the basis of
314	314	the cost of the qualified property, the credit shall be allowed in
315	315	each of the four (4) subs equent years. If the qualified property on
316	316
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367	367	which a credit has previously been allowed is acquired from a
368	368	related party, the date such property is placed in service by the
369	369	transferor shall be considered to be the date such property is
370	370	placed in service by the transferee, for purposes of determining the
371	371	aggregate number of years for which credit may be allowed.
372	372	F. The credit provided for in subsection A or B of this
373	373	section, if based upon an increase in the number of full-time-
374	374	equivalent employees, shall be allowed in each of the four (4)
375	375	subsequent years only if the level of new employees is maintained in
376	376	the subsequent year. In calculating the credit by the number of new
377	377	employees, only those employees whose paid wages or salary were at
378	378	least Seven Thousand Dollars ($7,000.00) during each year the credit
379	379	is claimed shall be included in the calculation. Provided, that the
380	380	first year a credit is claimed for a new employee, such employee may
381	381	be included in the calculation notwithstanding paid wages of less
382	382	than Seven Thousand Dollars ($7,000.00) if the employee was hired in
383	383	the last three quarters of the tax year, has wages or salary which
384	384	will result in annual paid wages in exce ss of Seven Thousand Dollars
385	385	($7,000.00) and the taxpayer submits an affidavit st ating that the
386	386	employee’s position will be retained in the following tax year and
387	387	will result in the payment of wages in excess of Seven Thousand
388	388	Dollars ($7,000.00). The num ber of new employees shall be
389	389	determined by comparing the monthly average number of full-time
390	390	employees subject to Oklahoma income tax withholding for the final
391	391
392	392
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442	442	quarter of the taxable year with the corresponding period of the
443	443	prior taxable year, as substan tiated by such reports as may be
444	444	required by the Tax Commission.
445	445	G. The credit allowed by subsection A of this section shall be
446	446	the greater amount of either:
447	447	1. One percent (1%) of the cost of the qualified property in
448	448	the year the property is placed in service; or
449	449	2. Five Hundred Dollars ($500.00) for each new employee. No
450	450	credit shall be allowed in any taxable year for a net increase in
451	451	the number of full-time-equivalent employees if such increase is a
452	452	result of an investment in qualified depreciable property for which
453	453	an income tax credit has been allowed as authorized by this se ction.
454	454	H. The credit allowed by subsection B of this section shall be
455	455	the greater amount of either:
456	456	1. Two percent (2%) of the cost of the qualified property in
457	457	the year the property is placed in service; or
458	458	2. One Thousand Dollars ($1,000.00) for each new employee.
459	459	No credit shall be allowed in any taxable year for a net
460	460	increase in the number of full -time-equivalent employees if such
461	461	increase is a result of an investment i n qualified depreciable
462	462	property for which an income tax credit has been allowed as
463	463	authorized by this section.
464	464
465	465
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515	515	I. Except as provided by subsection G of Section 3658 of this
516	516	title, any credits allowed but not used in any taxable year may be
517	517	carried over in order as follows:
518	518	1. To each of the four (4) years following the year of
519	519	qualification;
520	520	2. To For property placed in service before January 1, 2024, or
521	521	a net increase in the numb er of full-time-equivalent employees in a
522	522	manufacturing operation , to the extent not used in those years in
523	523	order to each of the fifteen (15) years followi ng the initial five-
524	524	year period;
525	525	3. If a C corporation that otherwise qualified for the c redits
526	526	under subsection A of this section subsequently changes its
527	527	operating status to that of a pass-through entity which is being
528	528	treated as the same entity for fed eral tax purposes, the credits
529	529	will continue to be available as if the pass -through entity had
530	530	originally qualified for the credits subject to the limitations of
531	531	this section;
532	532	4. To the extent not used in paragraphs 1 and 2 of this
533	533	subsection, such credit s from qualified depreciable property placed
534	534	in service on or after January 1, 2000 and before January 1, 2024,
535	535	may be utilized in any subsequent tax years after the initial
536	536	twenty-year period; and
537	537	5. To the extent not used in paragraph 1 of this subsecti on,
538	538	credits from qualified depreciable property place d in service on or
539	539
540	540
541	541	Req. No. 168 Page 8 1
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590	590	after January 1, 2024, may be carried forward in order to each of
591	591	the seven (7) years, following the initial five-year period, upon
592	592	the filing of a claim on a form prescribed by the Tax Commission for
593	593	each year the credit is carried forward . The form prescribed shall
594	594	require the claimant to attest whether the property is still in use ;
595	595	and
596	596	6. Provided, for tax years beginning on or aft er January 1,
597	597	2016, and ending on or before Decembe r 31, 2018, the amount of
598	598	credits available as an offset in a taxable year sh all be limited to
599	599	the percentage calculated by the Tax Commission pursuant to the
600	600	provisions of subsection L of this section.
601	601	J. No credit otherwise authorized by the provisions of this
602	602	section may be claimed for any event, transaction, investment,
603	603	expenditure, or other act occurring on or after July 1, 2010, for
604	604	which the credit would otherwise be al lowable until the provisions
605	605	of this subsection shall cease to be operative on Ju ly 1, 2012.
606	606	Beginning July 1, 2012, the credit authorized by this section may be
607	607	claimed for any event, transaction, investment, expenditure , or
608	608	other act occurring on or aft er July 1, 2010, according to the
609	609	provisions of this section; provided, credits a ccrued during the
610	610	period from July 1, 2010, through June 30, 2012, shall be lim ited to
611	611	a period of two (2) taxable years. The credit shall be limited in
612	612	each taxable year to fifty percent (50%) of the tot al amount of the
613	613	accrued credit. Any tax credits w hich accrue during the period of
614	614
615	615
616	616	Req. No. 168 Page 9 1
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665	665	July 1, 2010, through June 30, 2012, may not b e claimed for any
666	666	period prior to the taxable year beginning January 1, 2012. No
667	667	credits which accrue during the period of Ju ly 1, 2010, through June
668	668	30, 2012, may be used to f ile an amended tax return for any taxable
669	669	year prior to the taxable year beginn ing January 1, 2012.
670	670	K. Beginning January 1, 2017, except with respect to tax
671	671	credits allowed from investment or job creation occurring prior to
672	672	January 1, 2017, the credits au thorized by this section shall not be
673	673	allowed for investment or job creation in electric power generation
674	674	by means of wind as described by the North American Industry
675	675	Classification System, No. 221119.
676	676	L. For tax years beginning on or after January 1, 201 6, and
677	677	ending on or before December 31, 2018, the total amount of credits
678	678	authorized by this section used to offset tax shall be adjusted
679	679	annually to limit the annual amount o f credits to Twenty-five
680	680	Million Dollars ($25,000,000.00). The Tax Commission sh all annually
681	681	calculate and publish a percentage by which the credits authorized
682	682	by this section shall be reduced so the total amount of credits used
683	683	to offset tax does not exc eed Twenty-five Million Dollars
684	684	($25,000,000.00) per year. The formula to be use d for the
685	685	percentage adjustment shall be Twenty -five Million Dollars
686	686	($25,000,000.00) divided by the credits used to offset tax in the
687	687	second preceding year.
688	688
689	689
690	690	Req. No. 168 Page 10 1
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738	738
739	739	M. Pursuant to subsection L of this section, i n the event the
740	740	total tax credits authorized by thi s section exceed Twenty -five
741	741	Million Dollars ($25,000,000.00) in any calendar y ear, the Tax
742	742	Commission shall permit any excess over Twenty -five Million Dollars
743	743	($25,000,000.00) but shall factor such excess into the percentage
744	744	adjustment formula for subsequ ent years.
745	745	N. The credit provided for in subsections A and B of this
746	746	section, for qualified deprecia ble property placed in service on or
747	747	after January 1, 2024, shall not be claimed unless an application
748	748	for the credit is approved by the Oklahoma Departmen t of Commerce.
749	749	The application shall be submitted to the Department on a form
750	750	prescribed by the Department within sixty (60) days of the property
751	751	placement in service. The Department shall notify the Tax
752	752	Commission upon approval of the application that the taxpayer is
753	753	eligible to claim the cre dit.
754	754	SECTION 2. This act shall become effective November 1, 2023.
755	755
756	756	59-1-168 QD 1/12/2023 5:54:42 PM

Oklahoma 2023 Regular Session

Oklahoma Senate Bill SB305 Compare Versions