Chapter
358
2004 -- S 2989 SUBSTITUTE B
Enacted 07/02/04
A N A C T
RELATING TO TAXATION -- PASSIVE
INVESTMENT TREATMENT
Introduced By: Senators
DaPonte, J Montalbano, F Caprio, Bates, and Ruggerio
Date
Introduced: March 24, 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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LC03003/SUB B
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