41-1525

41-1525. Tax incentives; definitions

(Rpld. 7/1/11)

A. The owner of a business or an insurer located in an enterprise zone before July
1, 2011 is eligible for an income tax credit under section 43-1074 or 43-1161 or a
premium tax credit under section 20-224.03 for net increases in qualified employment
positions, except employment positions at a zone location where more than ten per cent of
the business conducted at the location consists of retail sales of tangible personal
property, measured either by the number of employees assigned to retail sales or the
square footage of the facility used for retail sales activities at the location in the
zone. Retail sales and retail sales activities do not include:

1. Food and beverage for consumption on the premises solely by employees and
occasional guests of employees at the location.

2. Promotional products not available for sale and displaying the company logo or
trademark.

3. Products sold to company employees.

B. To qualify for a tax credit, the owner must:

1. Certify to the department of revenue or the department of insurance, as
applicable, on or before the due date of the tax return, including any extensions for the
year for which the credit is claimed, in a form prescribed by the department of revenue
including electronic media, information that the department of revenue may require,
including the ownership interests of co-owners of the business if the business is a
partnership, limited liability company or an S corporation, and the following information
for each employee in the zone location:

(a) The date of initial employment.

(b) The number of hours worked during the year.

(c) Whether the position was full-time.

(d) The residence of the employee.

(e) Whether the residence was in or outside the zone.

(f) If the residence was in the zone, where in the zone it is located.

(g) The employee's annual compensation.

(h) The total cost of health insurance for the employee and the cost paid by the
employer.

(i) If the employee had been previously employed, the last date of previous
employment.

2. Report and certify to the department of commerce the following information, and
provide supporting documentation, on a form and in a manner approved by the department of
commerce and, as specified in subsection C of this section, for each year in which the
taxpayer earned and claimed or used credits or is carrying forward amounts from
previously earned and claimed credits:

(a) The business name and mailing address and any other contact information
requested by the department of commerce.

(b) The business location and the name of the zone in which the business is
located.

(c) The average hourly wage and the total amount of compensation paid to employees
qualified for the credit and for all employees at the zone location.

(d) The total number of qualified employment positions and the amount of income tax
or premium tax credits qualified for in the tax year.

(e) The estimated amount of tax credits to be used in the tax year to offset tax
liability.

(f) The estimated amount of tax credits to be available for carryforward in the tax
year and the tax year in which the credits expire.

(g) The number of jobs and the amount of credits earned and claimed on the prior
year's income tax or insurance premium tax returns.

(h) The amount of credits used to offset tax liabilities on the prior year's income
tax or insurance premium tax return.

(i) The amount of credits available for carryforward as reported on the prior
year's tax return and the tax year the credits expire.

(j) Capital investment made in the zone during the tax year and the preceding tax
year.

(k) That each qualified employment position meets all of the following
requirements:

(i) The position is at least one thousand seven hundred fifty hours per year of
full-time permanent employment.

(ii) All credits that are being claimed are for wages for job duties performed
primarily at the zone locations of the business.

(iii) The employment includes health insurance coverage for the employee for which
the employer pays at least fifty per cent of the premium or membership cost. If the
taxpayer is self-insured, the employer pays at least fifty per cent of a predetermined
fixed cost per employee for an insurance program that is payable whether or not the
employee has filed claims.

(iv) The employer pays compensation at least equal to the wage offer by county as
computed annually by the department of economic security research administration
division.

(l) That the only retail sales activities engaged in at the zone location were as
specified in subsection A of this section.

(m) Other information necessary for the management and reporting of the incentives
under this section.

3. For any year in which the taxpayer is claiming first year credits, report and
certify the following additional information and provide supporting documentation to the
department of commerce on a form and in a manner approved by the department, and as
specified in subsection C of this section:

(a) That thirty-five per cent of the employees with respect to whom a credit is
claimed for the first year of employment resided on the date of employment in an
enterprise zone that is located in the same county in which the business is located.

(b) That the increase in the number of qualified employment positions for which
credit is sought is the least of:

(i) The total number of filled qualified employment positions created at the zone
location during the tax year.

(ii) The difference between the average number of full-time employees at a zone
location in the current tax year and the average number of full-time employees during the
immediately preceding tax year.

(iii) Two hundred qualified employment positions per taxpayer each year.

(c) That all employees filling a qualified employment position were employed for at
least ninety days during the first taxable year.

(d) That none of the employees filling qualified employment positions were employed
by the taxpayer during the twelve months before the current date of hire.

(e) That all employees for whom second and third year credits are claimed are in
qualified employment positions for which first year credits were allowed and claimed by
the taxpayer on the original first and second year tax returns. For the purposes of this
subsection, the requirement to claim the credit on the original tax return does not apply
to qualified employment positions created before January 1, 2002 and certified to the
department of commerce.

(f) That all employees for whom credits are taken performed their job duties
primarily at the zone locations of the business.

C. To qualify for first year credits, the report and certification prescribed by
subsection B, paragraphs 2 and 3 of this section must be filed with the department of
commerce by the earlier of six months after the end of the tax year in which the
qualified employment positions were created or by the date the tax return is filed for
the tax year in which the qualified employment positions were created. To qualify for
second year credits, the report and certification prescribed by subsection B, paragraph 2
of this section must be filed with the department of commerce by the earlier of six
months after the end of the taxable year or the date the tax return is filed for the tax
year in which the second year credits are allowable. To qualify for third year credits,
the report and certification prescribed by subsection B, paragraph 2 of this section must
be filed with the department of commerce by the earlier of six months after the end of
the tax year or the date the tax return is filed for the tax year in which the third year
credits are allowable.

D. Any information submitted to the department of commerce under subsection B,
paragraph 2, subdivisions (e) through (i) of this section is exempt from the provisions
of title 39, chapter 1, article 2 and considered to be confidential and is not subject to
disclosure except:

1. To the extent that the person or organization that provided the information
consents to the disclosure.

2. To the department of revenue for use in tax administration.

E. Real and personal property within an enterprise zone which is owned or used by a
small manufacturing business that is certified by the department pursuant to section
41-1525.01 before July 1, 2011 shall be assessed as class six property as provided by
section 42-12006.

F. Documents filed with the department of commerce, the department of insurance and
the department of revenue under subsection B of this section shall contain either a sworn
statement or certification, signed by an officer of the company under penalty of perjury,
that the information contained is true and correct according to the best belief and
knowledge of the person submitting the information after a reasonable investigation of
the facts. If the document contains information that is materially false, the taxpayer
is ineligible for the tax incentives under subsection A of this section and is subject to
recovery of the amount of tax incentives allowed in preceding taxable years based on the
false information, plus penalties and interest.

G. The department of commerce may make site visits to a taxpayer's facilities if it
is necessary to further document or clarify reported information. The taxpayer must
freely provide the access.

H. The department by rule may prescribe additional reporting requirements for
taxpayers who claim tax benefits pursuant to this section.

I. For the purposes of this section:

1. "Assigned to retail" means working more than twenty-five per cent of an
employee's time in one or more retail sales activities.

2. "Retail sales" means the sale of tangible personal property to an ultimate
consumer.

3. "Retail sales activities" means all activities persons operating a retail
business normally engage in, including taking orders, filling orders, billing orders,
receiving and processing payment and shipping, stocking and delivering tangible personal
property to the ultimate consumer, except drop shipments by a company acting on behalf of
an unrelated company that has made a sale to a final consumer.

4. "Zone location" means a single parcel or contiguous parcels of owned or leased
land, the structures and personal property contained on the land or any part of the
structures occupied by a taxpayer.