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ARIZONA HOUSE OF REPRESENTATIVESFifty-fifth Legislature First Regular Session |
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HB 2247: forest products; processing; tax credit.
Sponsor: Representative Griffin, LD 14
Committee on Natural Resources, Energy & Water
Overview
Establishes a tax credit for processing qualifying forest products in calendar years 2022-2031 and caps the amount that can be claimed under this tax credit at $2 million annually.
History
The Arizona Commerce Authority's Healthy Forest Enterprise Initiatives is designed to promote forest health by identifying and certifying certain businesses that could qualify for tax incentives. Businesses that qualify must be engaged in qualifying projects that involve harvesting, transporting or processing qualifying forest products such as fallen timber and brush from federal, state and other public forest lands and private lands. Once certified by the Arizona Commerce Authority, a business retains that certification for 60 months and can reapply at the end of that period (A.R.S. § 41-1516).
Certified businesses can claim an individual income tax credit for increases in qualified employment positions in calendar years 2005-2024. The maximum credit per qualified employment position is $500 for the first year, $1,000 for the second year and $1,500 for the third year of continuous employment (A.R.S. § 43-1076). They can also claim exemptions from transaction privilege and uses taxes for:
· Fuel used in off-road vehicles that harvest, process, and transport qualifying forest products (A.R.S. §§ 42-5061(A)(54) and 42-5159(A)(51));
· Repair parts for equipment that is directly used to harvest, process and transport qualifying forest products (A.R.S. §§ 42-5061(A)(55) and 42-5159(A)(52)); and
· Qualifying equipment that that is purchased for harvesting or processing qualifying forest products (A.R.S. §§ 42-5061(B)(21) and 42-5075(B)(18)).
Provisions
Tax credits (Sec. 2 and 3)
1. Establishes an individual and corporate income tax credit for processing qualifying forest products for which a taxpayer is eligible provided:
a) The taxpayer has a current Healthy Forest Enterprise Incentive certification and a memorandum of understanding with the Arizona Commerce Authority.
b) The taxpayer processes qualifying forest products from a qualifying project between December 31, 2021 and December 31, 2031.
c) The facility processing the qualifying forest products is in Arizona.
2. Declares that the taxpayer is only eligible for this tax credit in the calendar year in which the qualifying project processed qualifying forest products.
3. Allows the taxpayment to carry forward the amount of the claim for no more than five consecutive taxable years income tax liability when the allowable credit exceeds the taxes due for the claimant's income or if there are no taxes due.
4. Specifies that this tax credit is based on the tons of qualifying forest products that the taxpayer processes during a calendar year, subject to the following limits each calendar year:
a) $10,000 for the first 20,000 tons; and
b) $5,000 for every subsequent 10,0000 tons.
5. Stipulates that for taxpayers who file on a fiscal year basis, the credit must be claimed on the return for the taxable year in which the calendar year ends.
6. Directs a taxpayer to apply to the Department of Revenue to be eligible for this tax credit.
7. Requires the Department of Revenue to accept applications from January 2 through January 31 of the following calendar year for which the credit is being requested.
8. Requires the application to include information about the taxpayer, the location of the facility that processes qualifying forest products, the amount of credit claimed, the date the taxpayer began processing commercially marketable amounts of qualifying forest products and any additional information.
9. Instructs the Department to review each application and certify the amount of the credit authorized.
10. Caps the amount of credit that can be claimed each calendar year at:
a) $500,000 per taxpayer who processes qualifying forest products; or
b) $2 million in aggregate.
11. Specifies that these credits are available on a first-come, first-served basis.
12. Establishes a process for the Department of Revenue to record the taxpayer's name to a credit authorization list and clarifies that the taxpayer will remain in this position until the taxpayer does not submit a timely application (or does not comply with statute), or the end of the tax credit.
13. Specifies that a taxpayer who is removed from the credit authorization list can establish a new position on this list by reapplying.
14. Stipulates that when the Department of Revenue receives an application that would cause it to exceed the $2 million cap for this credit, it must only grant the applicant the remaining amount of credit that would not exceed this limit.
15. Directs the Department of Revenue to deny any subsequent applications once it has authorized $2 million in tax credits in that calendar year.
16. Prohibits the Department of Revenue from authorizing additional tax credits that exceed the $2 million limit even if amounts that have been certified to any taxpayer were not claimed or the taxpayer failed to comply with the requirements to claim the additional credit.
17. Allows co-owners of a facility that processes qualifying forest products to claim a pro rata share of this tax credit.
18. Instructs the Department of Revenue to adopt rules and publish and prescribe forms and procedures to implement this tax credit.
19. Defines processed, processing, qualifying forest products, and qualifying project.
Miscellaneous
20.
Directs the Joint Legislative Income Tax
Credit Review Committee to review these tax credits in years ending in 1 and 6.
(Sec. 1)
21. Contains a legislative intent clause. (Sec. 4).
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25. HB 2247
26. Initials PAB Page 0 Natural Resources, Energy & Water
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