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.

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.