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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
COMMITTEE SUBSTITUTE
FOR ENGROSSED
SENATE BILL NO. 337 By: Bergstrom of the Senate
and
Kendrix of the House
COMMITTEE SUBSTITUTE
An Act relating to small business incubato rs;
amending 74 O.S. 2021, Section s 5078 and 5079, which
relate to state income tax exemption and annual
reports; requiring certain period of occupancy for
tenant to receive certain subsequent exemption;
requiring tenant to submit certain information to
receive certain exemption; requiring the Oklahoma
Department of Commerce to prescribe certain form;
requiring certain information to be included in
annual report provided by the Department; and
providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 74 O.S. 2021, Section 5078, is
amended to read as follows:
Section 5078. A. For a period of up to ten (10) years from the
date of tenant’s occupancy in an incubator, income earne d by the
tenant as a result of activi ties conducted as an occupant in an
incubator, including incom e distributed to partners, shareholders of
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a corporation for which a Subchapter S election is in effect , and to
the members of a limited liability company, s hall be exempt from
state income tax. The If the tenant remains an occupant of an
incubator for at least one (1) year, the exemption provided by th is
section shall remain in effect for such the activities by such the
tenant after the date the tena nt is no longer an occupant in an
incubator, but not to exceed a total duration o f ten (10) years for
any tenant.
B. For tax years ending before January 1, 2020, in order to
qualify for the income tax exemption for the sixth through tenth
year as authorized by this section, the tenant must make a t least
seventy-five percent (75%) of i ts gross sales constituting the
principal business activity of the business to buyers located
outside the state or t o buyers whose principal business activity is
conducted outside the state or to the federal governmen t or to
buyers located within the state if the product or service is re sold
to an out-of-state customer or buyer f or ultimate use. Provided, if
a tenant does not achieve the qualifying percentage for any one of
the above tax years, the tenant shall not be disqualified for
subsequent tax years in which the qualifying percenta ge is achieved.
C. For tax year 2024 and subsequent tax years, following the
first tax year a tenant is provided the exemption pursuant to
subsection A of this section, in order to continue to qualify for
the exemption, the tenant shall submit information on a form
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prescribed by the Oklahoma Department of Commerce which shall
include but not be limited to the following:
1. Employment levels, including full-time-equivalent levels and
the ratio of part-time employees to full-time employees;
2. Interns employed;
3. Payments to subcontractors and th eir purpose;
4. Estimated gross annual revenues;
5. Estimated annual costs for property and services;
6. A statement of any additional financial assistance,
incentives, credits, or exemptions provided by this s tate or any
political subdivision of this s tate; and
7. A statement of any taxable income exempted pur suant to this
subsection in the previous tax year.
The Oklahoma Tax Commission sha ll promulgate rules to implement
the provisions of this section.
SECTION 2. AMENDATORY 7 4 O.S. 2021, Section 5079, is
amended to read as follows:
Section 5079. On or before December 31 of each year, the
Director of the Oklahoma D epartment of Commerce shall provide a
report to both the Speaker of the House of Representatives and the
President Pro Tempore of the Senate whic h shall include, but not be
limited to:
1. The number of application s for incubators submitted;
2. The number of applications for incubators approve d;
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3. The number of incubators created under this act;
4. The number of tenants occupying each incubator ;
5. The number of jobs provided by each incubator and tenants of
each incubator; and
6. The number of firms still operating in the state after
ending their tenancy in incubators a nd the number of jobs they have
provided; and
7. Beginning calendar year 2025, t he total taxable income
exempted pursuant to subsection A of S ection 5078 of this title for
the previous tax year.
SECTION 3. This act shall become effective November 1, 2023.
59-1-8126 LRB 04/05/23