2013 -- S 0392

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LC01631

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TAXATION

     Introduced By: Senators Cote, Sheehan, E O`Neill, Satchell, and Archambault

     Date Introduced: February 26, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

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adding thereto the following chapter:

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     CHAPTER 68

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JOB CREATION INCENTIVE ACT

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     44-68-1. Short title. -- This chapter shall be known and may be cited as “The Job

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Creation Incentive Act”.

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     44-68-2. Tax incentives. --There are established tax incentives, which shall be computed

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in accordance with section 44-68-4.1, for newly established businesses in the state of Rhode

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Island that hire and retain a minimum of two (2) employees (not including the owner of the

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business).

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     44-68-3. Definitions. -- For purposes of this chapter:

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     (1) “Business” or “Businesses” mean any corporation, limited liability company,

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partnership, individual, sole proprietorship, joint stock company, joint venture, or any other legal

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entity through which business is legally conducted or any successors or assigns of the legal entity.

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(2) “Tax incentive or “incentives” means a deduction or modification in computed taxes

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owed by a claimant’s business, as provided in section 44-68-5.

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     44-68-4. Criteria for tax incentives. -- (a) A business who meets the following criteria

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as certified by the tax administrator shall be entitled to a tax incentive in the amount of five

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percent (5%) for the first three (3) years of the claimant’s allowable expenses for wages and

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benefits and a tax incentive in the amount of two and one-half percent (2.5%) for the next three

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(3) years of the claimant’s allowable expenses for wages and benefits:

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     (1) In order to avail itself of the incentive, the business must file for the incentive with the

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tax administrator within thirty (30) days from the date the business hires its second (2nd)

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employee.

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     (2) An employee cannot be a relative of any controlling shareholder, director, or officer

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of the claimant corporation, nor controlling shareholder, officer, or manager of the claimant

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limited liability company, nor partner or owner of any claimant partnership, joint venture, sole

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proprietorship or any other type of legal business entity claiming the incentive under this chapter.

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     44-68-5. Incentive provisions.-- (a) The deduction or modification is not refundable but

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may be used by the claimant business for the tax against it pursuant to this chapter in the

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following manner:

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     (1) A deduction for purposes of computing the corporate income tax in accordance with

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chapter 11 of this title;

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     (2) A deduction from gross earnings for purposes of computing the public service

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corporation tax in accordance with chapter 13 of this title;

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     (3) A deduction for the purposes of computing deposits in accordance with chapter 15 of

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this title;

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     (4) A deduction for the purposes of computing gross premiums in accordance with

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chapter 17 of this title; or

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     (5) A modification reducing federal adjusted gross income in accordance with chapter 30

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of this title.

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     (b) The modification allowed under this chapter for any taxable year shall not reduce the

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tax due for that year to below the minimum tax imposed under the applicable chapter of this title.

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Any amount of modification not used in that taxable year may not be carried over to the

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following year.

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     (c) In the event that the claimant business is electing a subchapter S corporation, limited

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liability company, partnership, or a joint venture, the incentive shall be divided as income.

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(d) In the event that the taxpayer is liable for taxes imposed under both chapters 14 and

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15 of this title, the taxpayer must elect the tax against which it wishes to claim the incentive. This

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election shall be made as part of the taxpayer’s filings in accordance with sections 44-14-6 and

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44-15-5. The taxpayer may not divide the incentive for any year between the two (2) tax

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liabilities for which it is liable.

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     (e) In the event that the hiring of the employees is used to obtain any other tax incentive

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or tax benefit for the business, then the business will not be eligible for the incentive available in

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this chapter.

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     44-68-6. Administration. -- The tax administrator shall make available suitable forms

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with instructions for claiming the incentive. The claim shall be in a form the tax administrator

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may prescribe. The tax administrator may also prescribe rules and regulations, not inconsistent

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with law, to carry into effect the provisions of this chapter.

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     SECTION 2. This act would take effect upon passage.

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LC01631

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION

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     This act would provide a tax incentive to newly created Rhode Island businesses that hire

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two or more employees.

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     This act would take effect upon passage.

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LC01631

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