20-224.03. Premium tax credit for increased employment in enterprise zones; definition

(Rpld. 7/1/11)

A. A tax credit is allowed against the premium tax liability incurred by an insurer pursuant to section 20-224, 20-837, 20-1010, 20-1060 or 20-1097.07 for net increases in qualified employment positions of residents of this state by an insurer that is located in an enterprise zone established under title 41, chapter 10, article 2. A tax credit is not allowed for the portion of the tax payable to the fire fighters' relief and pension fund pursuant to section 20-224 or the portion of the tax payable to the public safety personnel retirement system pursuant to section 20-224.01. Subject to subsection D of this section, the amount of the tax credit is equal to:

1. One-fourth of the taxable wages paid to an employee in a qualified employment position, not to exceed five hundred dollars, in the first year or partial year of employment.

2. One-third of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand dollars per qualified employment position, in the second year of continuous employment.

3. One-half of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand five hundred dollars per qualified employment position, in the third year of continuous employment.

B. To qualify for a credit under this section:

1. All of the employees with respect to whom a credit is claimed must reside in this state.

2. Thirty-five per cent of the employees with respect to whom a credit is claimed for the first year of employment must reside on the date of hire in an enterprise zone that is located in the same county in which the insurer is located. If an employee for whom a credit was allowed in the first year of employment leaves employment during the second or third year, the taxpayer may substitute another employee who meets the requirements of paragraph 3 of this subsection and who was hired during the same year as the original employee. If the original employee was counted toward the residency requirement under this paragraph, the substitute employee must also have resided in a zone at the time the substitute was hired.

3. A qualified employment position must meet all of the following requirements:

(a) The position must be a minimum of one thousand seven hundred fifty hours per year of full-time and permanent employment.

(b) The job duties must be performed primarily at the zone locations of the business. If an eligible employee in a qualified employment position is transferred or assigned to work in the taxpayer's workplace at a different location that is also located in an enterprise zone and qualifies as a zone location, it may be considered to be continuous employment if it continues to meet all qualified employment position requirements.

(c) The employment must include 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 taxpayer must pay 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.

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

(e) The employee must have been employed for at least ninety days during the first taxable year. An employee who is hired during the last ninety days of the taxable year shall be considered a new employee during the next taxable year. A qualified employment position that is filled during the last ninety days of the taxable year is considered to be a new qualified employment position for the next taxable year.

(f) The employee has not been previously employed by the taxpayer within twelve months before the current date of hire.

C. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was allowed in the first year.

D. The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created in the zone during the tax year or the difference between the average number of full-time employees in the zone in the current tax year and the average number of full-time employees during the immediately preceding taxable year. The net increase in the number of qualified employment positions computed under this subsection may not exceed two hundred qualified employment positions per taxpayer each year.

E. A taxpayer who claims a credit under section 20-224.04 shall not claim a credit under this section with respect to the same employees.

F. Pursuant to subsection A of this section, if the allowable tax credit exceeds the state premium tax liability, the amount of the claim not used as an offset against the state premium tax liability may be carried forward as a tax credit against subsequent years' state premium tax liability for the period, not to exceed five taxable years, provided that the insurer remains in an enterprise zone.

G. If a person purchases an insurance business in a zone or if an insurance business in a zone changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for one or more qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete. If a person purchases a taxpayer that had qualified for first or second year credits or if an insurance business changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section. Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.

H. An insurer that claims a tax credit against state premium tax liability is not required to pay any additional retaliatory tax imposed pursuant to section 20-230 as a result of claiming that tax credit.

I. A failure to timely report and certify to the department of commerce the information prescribed by section 41-1525, subsection B, paragraphs 1, 2 and 3 and in the manner prescribed by section 41-1525, subsection C, disqualifies the insurer from the credit under this section. The department of insurance shall require written evidence of the timely report to the department of commerce.

J. The termination of an enterprise zone does not affect the credit under this section with respect to:

1. Insurers that have employees in the second and third years of employment in qualified employment positions under subsection A, paragraphs 2 and 3 of this section if the business remains in the location that was in the enterprise zone.

2. Amounts carried forward into subsequent taxable years under subsection F of this section.

K. The department may adopt rules necessary for the administration of this section.

L. For the purposes of this section, "insurer" means any entity that is subject to premium tax liability pursuant to section 20-224, 20-837, 20-1010, 20-1060 or 20-1097.07.

20-224.03. Premium tax credit for increased employment in enterprise zones; definition

(Rpld. 7/1/11)

A. A tax credit is allowed against the premium tax liability incurred by an insurer pursuant to section 20-224, 20-837, 20-1010, 20-1060 or 20-1097.07 for net increases in qualified employment positions of residents of this state by an insurer that is located in an enterprise zone established under title 41, chapter 10, article 2. A tax credit is not allowed for the portion of the tax payable to the fire fighters' relief and pension fund pursuant to section 20-224 or the portion of the tax payable to the public safety personnel retirement system pursuant to section 20-224.01. Subject to subsection D of this section, the amount of the tax credit is equal to:

1. One-fourth of the taxable wages paid to an employee in a qualified employment position, not to exceed five hundred dollars, in the first year or partial year of employment.

2. One-third of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand dollars per qualified employment position, in the second year of continuous employment.

3. One-half of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand five hundred dollars per qualified employment position, in the third year of continuous employment.

B. To qualify for a credit under this section:

1. All of the employees with respect to whom a credit is claimed must reside in this state.

2. Thirty-five per cent of the employees with respect to whom a credit is claimed for the first year of employment must reside on the date of hire in an enterprise zone that is located in the same county in which the insurer is located. If an employee for whom a credit was allowed in the first year of employment leaves employment during the second or third year, the taxpayer may substitute another employee who meets the requirements of paragraph 3 of this subsection and who was hired during the same year as the original employee. If the original employee was counted toward the residency requirement under this paragraph, the substitute employee must also have resided in a zone at the time the substitute was hired.

3. A qualified employment position must meet all of the following requirements:

(a) The position must be a minimum of one thousand seven hundred fifty hours per year of full-time and permanent employment.

(b) The job duties must be performed primarily at the zone locations of the business. If an eligible employee in a qualified employment position is transferred or assigned to work in the taxpayer's workplace at a different location that is also located in an enterprise zone and qualifies as a zone location, it may be considered to be continuous employment if it continues to meet all qualified employment position requirements.

(c) The employment must include 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 taxpayer must pay 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.

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

(e) The employee must have been employed for at least ninety days during the first taxable year. An employee who is hired during the last ninety days of the taxable year shall be considered a new employee during the next taxable year. A qualified employment position that is filled during the last ninety days of the taxable year is considered to be a new qualified employment position for the next taxable year.

(f) The employee has not been previously employed by the taxpayer within twelve months before the current date of hire.

C. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was allowed in the first year.

D. The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created in the zone during the tax year or the difference between the average number of full-time employees in the zone in the current tax year and the average number of full-time employees during the immediately preceding taxable year. The net increase in the number of qualified employment positions computed under this subsection may not exceed two hundred qualified employment positions per taxpayer each year.

E. A taxpayer who claims a credit under section 20-224.04 shall not claim a credit under this section with respect to the same employees.

F. Pursuant to subsection A of this section, if the allowable tax credit exceeds the state premium tax liability, the amount of the claim not used as an offset against the state premium tax liability may be carried forward as a tax credit against subsequent years' state premium tax liability for the period, not to exceed five taxable years, provided that the insurer remains in an enterprise zone.

G. If a person purchases an insurance business in a zone or if an insurance business in a zone changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for one or more qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete. If a person purchases a taxpayer that had qualified for first or second year credits or if an insurance business changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section. Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.

H. An insurer that claims a tax credit against state premium tax liability is not required to pay any additional retaliatory tax imposed pursuant to section 20-230 as a result of claiming that tax credit.

I. A failure to timely report and certify to the department of commerce the information prescribed by section 41-1525, subsection B, paragraphs 1, 2 and 3 and in the manner prescribed by section 41-1525, subsection C, disqualifies the insurer from the credit under this section. The department of insurance shall require written evidence of the timely report to the department of commerce.

J. The termination of an enterprise zone does not affect the credit under this section with respect to:

1. Insurers that have employees in the second and third years of employment in qualified employment positions under subsection A, paragraphs 2 and 3 of this section if the business remains in the location that was in the enterprise zone.

2. Amounts carried forward into subsequent taxable years under subsection F of this section.

K. The department may adopt rules necessary for the administration of this section.

L. For the purposes of this section, "insurer" means any entity that is subject to premium tax liability pursuant to section 20-224, 20-837, 20-1010, 20-1060 or 20-1097.07.