Chapter 334
2004 -- H 8694
SUBSTITUTE A
Enacted 07/02/04
A N A C T
RELATING
TO TAXATION -- PASSIVE INVESTMENT TREATMENT
Introduced
By: Representative Steven M. Costantino
Date
Introduced: June 23, 2004
It is
enacted by the General Assembly as follows:
SECTION
1. Chapter 44-11 of the General Laws entitled "Business Corporation
Tax" is
hereby
amended by adding thereto the following sections:
44-11-43.
Passive investment treatment. – (a) Notwithstanding any amendments
or
revisions
to, or the repeal of, section 44-11-1(1)(vii) of the general laws, or any other
law, or new
legislative
action that shall serve to repeal or limit the benefits conferred therein, the
provisions of
that
statute as in effect on the date of passage of this section shall continue to
be applicable until
December
31, 2014 for a "qualifying business" that meets the requirements set
forth herein.
(b)
A "qualifying business" for the purposes of this chapter shall mean a
business which
meets
the terms and conditions imposed by the board of directors of the Rhode Island
economic
development
corporation and is designated as such upon a finding of fact that:
(1)
The business has committed to relocate from outside the state to a Rhode Island
location
no less than an annual tax year average of two hundred and fifty (250)
full-time
employees
with a combined payroll of no less than twelve million dollars ($12,000,000)
annually
within
twenty-eight (28) months following such designation; for the purposes of this
section "full-
time
employee" means any employee of the qualified business who works a minimum
of thirty
(30)
hours per week within the state;
(2)
The business would not relocate such jobs to the state but for such a
designation of a
qualifying
business; and
(3)
The annual salary of each employee counted in section 44-11-43(1)(b) shall be
no less
than
twenty-five thousand dollars ($25,000) per year, plus benefits typical to the
industry.
(c)
The division of taxation shall require annual reports from a qualified
business, which
shall
include, but not be limited to, the number of individuals employed by the
company within
the
state, the job descriptions, and the annual salaries. The division of taxation
shall verify these
annual
reports and certify that they are correct. The certification shall be sent to
the board of
directors
of the economic development corporation, president of the senate, speaker of
the house,
the
chairperson of the senate finance committee, the chairperson of the house
finance committee,
the
senate fiscal advisor, and the house fiscal advisor. If the division of
taxation finds that the
qualified
business no longer meets the criteria set forth in section 44-11-43(b)(1) or
(3), and if,
sixty
(60) days after receipt of written notice from the division of taxation
describing such finding
in
detail, the business has reasonably cured the noticed violations, then such
business will
continue
to receive the benefits offered under the provisions of subsection 44-11-43(f)
as if such
violation
had not occurred, otherwise that business shall no longer be considered a
qualified
business
and shall no longer be entitled to any further benefits under any agreement
made under
the
provisions of subsection 44-11-43(f) and such provisions shall become null and
void.
Notwithstanding
the foregoing, upon a finding the violation was caused by natural
disaster,
acts of terrorism, acts of war, or other similar events reasonably beyond the
control of
the
business, the division of taxation may extend the cure period hereunder for up
to twelve
months.
(d)
The economic development corporation shall certify only one company pursuant to
this
section, and such certification shall be issued prior to August 31, 2004.
(e)
The economic development corporation shall be authorized to enter into such
agreements
as it may deem necessary or prudent in order to memorialize and effect the
intent of
the
provisions of this section. The terms of such agreements shall not extend
beyond December
31,
2014. Any such agreement shall include provisions for recapture of some portion
of lost tax
revenue,
if any, resulting from the conveyance of the benefits contemplated hereunder,
if the
division
of taxation finds that the qualified business has failed to maintain its
qualified status
pursuant
to subsection (c) above. Such recapture provisions shall be in place for the
first five (5)
years
of the agreement, and shall require the recapture of the value of any tax
revenue lost in the
last
tax year that the company was a qualified company. Such recapture shall only
apply to tax
revenue
lost through the amendment or revision to, or the repeal of, section 44-11-1(1)(vii)
of the
general
laws, or any other law, or new legislative action that shall serve to repeal or
limit the
benefits
conferred therein, and the subsequent avoidance of such newly imposed tax by
the
company
through the function of this section 44-11-43 of the general laws. Calculation
of any
amount
recaptured shall take into account other preferential tax treatments, credits,
or other
benefits
in order to assure that the company is treated no less favorably under the
recapture
calculation
than they would have been if they had not become a qualifying company under the
provisions
of this section. The corporation may, within the terms of the contract, include
as a
condition
of default the failure to maintain employment criteria more rigorous than the
criteria set
forth
in section 44-11-43(b)(1) or (3); however, a default for violation such higher
contractual
standards
shall not necessitate a recapture of lost revenues as contemplated herein.
SECTION
2. This act shall take effect upon passage.
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LC03746/SUB
A
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