|
REFERENCE TITLE: research; development; tax credits |
|
State of Arizona Senate Fifty-sixth Legislature First Regular Session 2023
|
|
SB 1562 |
|
|
|
Introduced by Senators Kaiser: Bennett, Carroll, Gabaldón, Miranda, Shope
|
An Act
amending section 41-1507, Arizona revised statues; amending title 41, chapter 10, article 1, Arizona Revised Statutes, by adding section 41-1507.02; repealing section 41-1507.02, Arizona Revised Statutes; appropriating monies; relating to tax credits.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 41-1507, Arizona Revised Statutes, is amended to read:
41-1507. Tax credit for increased research activity; qualification for refund
A. The authority shall receive applications and evaluate and certify taxpayers who otherwise qualify for income tax credits for increased research activities to further qualify for income tax refunds.
B. An application for a refund of the taxpayer's credit must include:
1. The taxpayer's name, address and taxpayer identification number and a telephone number and e-mail email address of a person who is responsible for the application.
2. A general description of the taxpayer's business and the research activities conducted by the taxpayer.
3. The number of full-time employees on the taxpayer's payroll on the last day of the taxpayer's taxable year. Only taxpayers employing fewer than one hundred fifty full-time employees qualify for a refund of the taxpayer's income tax credit.
4. The amount of the taxpayer's income tax credit for the taxable year.
5. Any other information required by the authority.
C. Each application shall include a processing fee equal to one per cent percent of the taxpayer's tax credit being refunded.
D. The authority shall process and evaluate each application and within thirty days after receiving the application either:
1. Issue to the applicant a certificate of qualification for the refund.
2. Notify the applicant of denial of the application with specific reasons for the denial. A denial of the application does not preclude a subsequent application if the applicant is able to correct any error or deficiency.
E. The authority shall not approve refunds exceeding a total of five million dollars $10,000,000 in any calendar year. Refunds are allowed on a first come first-come, first served first-served basis, according to the date of application. An approved amount applies against the dollar limit for the year in which the application was submitted. If, at the end of any year, an unused balance occurs under the dollar limit prescribed by this subsection, the balance shall be reallocated for the purposes of this section in the following year.
F. The authority, with the cooperation of the department of revenue, shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of this section.
Sec. 2. Title 41, chapter 10, article 1, Arizona Revised Statutes, is amended by adding section 41-1507.02, to read:
41-1507.02. Reinvestment of unused income tax credits; economic analysis; report
A. Notwithstanding any other law, the authority shall receive applications from and evaluate and certify taxpayers that carry forward an unused balance of income tax credits for increased research activities under section 43-1074.01 or 43-1168 to further qualify for reinvestment of a portion of the taxpayer's unused balance of the tax credit to be used for the purposes prescribed in Subsection F of this section.
B. the authority may approve a portion of the unused balance of income tax credits for reinvestment subject to the following conditions:
1. The tax credit must not have expired.
2. The amount of the income tax credit reinvestment is $.75 per dollar of unused income tax credits under section 43-1074.01 or 43-1168, as applicable, not to exceed $10,000,000 per year per applicant or the applicant's current unused balance of income tax credits under section 43-1074.01 or 43-1168, whichever is less.
3. The amount of the taxpayer's unused balance of income tax credits under section 43-1074.01 or 43-1168, as applicable, shall be reduced by the amount of income tax credits converted under this section.
C. A taxpayer must apply to the authority on or before december 31 of each taxable year for income tax credit reinvestment on a form that is prescribed By the authority and that includes all of the following information:
1. The taxpayer's name, address and taxpayer identification number and a telephone number and email address of a person who is responsible for the application.
2. A general description of the taxpayer's business and the activities described in subsection F of this section that the taxpayer will conduct with the potential income tax credit reinvestment monies.
3. The amount of the taxpayer's outstanding tax credits under section 43-1074.01 or 43-1168, as applicable, to be converted under this section.
D. The authority shall process and evaluate each application and, within ninety days after receiving a complete and correct application, shall notify the applicant either that:
1. The application was approved. On approval, the authority shall provide a portion of the applicant's unused balance of income tax credits for reinvestment to the applicant, subject to the terms and conditions of this section.
2. The application was not approved and shall provide the applicant with specific reasons for the disapproval. A disapproval of the application does not preclude a subsequent application if the applicant is able to correct the error or deficiency.
E. The authority may not approve income tax credit reinvestments exceeding a total of $50,000,000 in any fiscal year. Income tax reinvestments are allowed on a first-come, first-served basis according to the date the application is filed with the authority. An approved amount applies against the dollar limit for the fiscal year in which the authority received the complete and correct application.
F. Monies distributed by the Authority may be used only for any of the following purposes in this state:
1. Sustainability or water capital projects.
2. A capital expenditure project between the taxpayer and an institution of higher learning or a career technical education district.
3. A workforce development project between the taxpayer and an institution of higher learning or a career technical education district, including:
(a) tuition reimbursement.
(b) hiring employees for the institution of higher learning.
(c) apprenticeships.
G. The authority may not distribute income tax reinvestment monies to a taxpayer before the authority reviews and approves the project.
H. In 2028 and 2031, the AUTHORITY shall conduct an economic analysis regarding the reinvestment of income tax credits pursuant to this section. The authority shall submit a report of its analysis to the governor, the president of the senate and the speaker of the house of representatives and shall provide a copy of this report to the secretary of state.
I. The authority shall:
1. communicate the taxpayer's credit status with the department of revenue.
2. Adopt rules and publish forms as prescribed by this section.
J. The department of revenue shall provide information related to the taxpayer's unused tax credits to the authority on request.
K. If the taxpayer does not comply with this section, the authority may recapture all or part of the unused tax credit reinvestment that is distributed to the taxpayer.
Sec. 3. Delayed Repeal
Section 41-1507.02, Arizona Revised Statutes, as added by this act, is repealed from and after June 30, 2033.
Sec. 4. Appropriation; Arizona commerce authority; exemption
A. The sum of $50,075,000 is appropriated from the state general fund in fiscal year 2023-2024 to the Arizona commerce authority. The Arizona commerce authority shall allocate the monies as follows:
1. $50,000,000 to implement section 41-1507.02, Arizona Revised Statutes, as added by this act.
2. $75,000 to administer section 41-1507.02, Arizona Revised Statutes, as added by this act.
B. The appropriation made in subsection A of this section is exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations.
Sec. 5. Retroactivity
Section 41-1507.02, Arizona Revised Statutes, as added by this act, applies retroactively to from and after June 30, 2023.
Sec. 6. Short title
Section 41-1507.02, Arizona Revised Statutes, as added by this act, may be cited as the "Arizona Reinvestment Fund Act".