It is enacted by the General Assembly as follows:

SECTION 1. Sections 42-64.3-3, 42-64.3-6, 42-64.3-7 and 42-64.3-7.1 of the General Laws in Chapter 64.3 entitled "Enterprise Zones" are hereby amended to read as follows:

{ADD 42-64.3-3. Definitions. -- ADD} As used in this chapter, the following words and terms shall have the following meanings unless the context shall indicate another or different meaning or intent:

(a) "Council" or "Enterprise Zone Council" means the governmental agency created pursuant to section 42-64.3-3.1.

{DEL (b) "Enterprise worker" or "qualified zone employee(s)" means a lower income employee of a qualified business who is a domiciled resident of the state and who meets certain income requirements as set forth by the council. DEL}

{DEL (c) DEL} {ADD (b) ADD} "Enterprise zone", "economic revitalization zone" or "zone" means an economically distressed United States bureau of the census division or delineation in need of expansion of business and industry, and the creation of jobs which is designated to be eligible for the benefits of this chapter.

{DEL (d) DEL} {ADD (c) ADD} "Governing authority" means the governing body of a state, city or town within which a qualified United States bureau of the census division or delineation lies.

{DEL (e) DEL} {ADD (d) ADD} "Qualified business" or "business facility" means any business corporation, sole proprietorship, {DEL or DEL} partnership {ADD , or limited partnership or limited liability company ADD} which; {DEL after the effective date of zone designation pursuant to section 42-64.4-4 creates new or additional jobs and meets certain requirements as set forth by the council and has received certification and annual recertification from the council pursuant to the rules and regulations promulgated by the council. DEL}

{ADD (1) After the effective date of certification or annual recertification, creates and hires a minimum of five percent (5%) new or additional enterprise jobs or in the case of a company having twenty (20) employees or less, this requirement shall be that the company create and hire one (1) new or additional enterprise job, in the respective zone during the same certification year; and

(2) Whose total Rhode Island wages including those Rhode Island wages for said additional enterprise jobs exceeds the total Rhode Island wages paid to its employees in the prior calendar year; and

(3) Obtains certificates of good standing from the Rhode Island division of taxation, the corporations division of the Rhode Island secretary of state and the appropriate municipal tax collector at the time of certification or annual recertification; and

(4) Provides the council an affidavit stating under oath that the entity seeking certification as a qualified business has not within the preceeding twelve (12) months from the date of application for certification changed its legal status for the purpose of gaining favorable treatment under the provisions of section 42-64.3 et seq.; and

(5) Meets certain other requirements as set forth by the council; and

(6) Has received certification and annual recertification from the council pursuant to the rules and regulations promulgated by the council.

(e) "Enterprise job employees" means those full-time employees whose business activity originates and terminates from within the enterprise zone business and facility on a daily basis and who are domiciled residents of the state and hired and employed by the qualified business in the enterprise zone after the effective date of certification or annual recertification in excess of those full-time employees employed by the qualified business in any Rhode Island enterprise zone in the prior calendar year. An employee who is hired and terminated in the same certification period does not constitute an enterprise job employee.

(f) "Wages" means wages, tips and other compensation as defined in the Internal Revenue Code of 1986. ADD}

{ADD 42-64.3-6. Business tax credits. -- ADD} {DEL A taxpayer who owns and operates a DEL} {ADD A ADD} qualified business {DEL facility DEL} in an enterprise zone {DEL and whose business workforce averages for the taxable year at minimum twenty-five percent (25%) enterprise workers pursuant to the provisions of this chapter DEL} shall be allowed a credit against the tax imposed pursuant to chapter {ADD s ADD} 11 {ADD , 14, 17 and 30 ADD} of title 44 as hereinafter provided:

(a) During the first five (5) years of {DEL operation within the zone, DEL} {ADD zone designation ADD} a credit equal to fifty percent (50%) of the total amount of wages {DEL and salaries DEL} as are paid to {DEL qualified zone DEL} {ADD those enterprise job ADD} employees {DEL in excess of payroll paid to such employees DEL} {ADD comprising the five percent (5%) new jobs referenced in section 42-64.3-3(d) ADD} {ADD the wages subject to the credit shall be reduced by any direct state or federal wage assistance ADD} in the taxable year {ADD . ADD} {DEL prior to such designation, except that such credit shall be increased by two percent (2%) for each one percent (1%) that the workforce exceeds the minimum twenty-five percent (25%) annual average of workers. DEL} The maximum credit allowed per taxable year under the provisions of this subsection shall be ten thousand dollars, ($10,000) per employee. {ADD A taxpayer who takes this business tax credit shall not be eligible for the resident business owner modification pursuant to section 42-64.3-7. ADD}

(b) Any tax credit as hereinbefore provided in subdivision (a), shall not offset any tax liability in taxable years other than the year in which the taxpayer qualifies for the credit. The credit shall not reduce the tax below the minimum tax. The credit shall be used to offset tax liability pursuant to the provisions of either chapters 11 {ADD , 14, 17 ADD} or 30 of title 44, but not {DEL both DEL} {ADD more than one chapter ADD}.

(c) In the case of a corporation, the credit allowed under this section shall only be allowed against the tax of that corporation included in a consolidated return that qualifies for the credit and not against the tax of other corporations that may join in the filing of a consolidated tax return.

(d) In the case of multiple business owners, the credit hereinbefore provided in subdivision (a) shall be apportioned according to the ownership interests of the qualified business.

{ADD 42-64.3-7. Resident business owner tax modification. -- ADD} (a) In computing his or her annual tax liability pursuant to the provisions of chapter 11 or 30 of title 44 of the general laws, a domiciliary of an enterprise zone who owns and operates a qualified business facility in that zone and which business is not required to file under chapter 11, 13, 14 or 17 of title 44 may:

(1) During the first three (3) years of operation within the zone, deduct fifty thousand dollars ($50,000.00) per year as a modification reducing federal adjusted gross income; and

(2) During the fourth and fifth years of operation within the zone, deduct twenty-five thousand dollars ($25,000.00) per year as a modification reducing federal adjusted gross income.

(b) Any modification as hereinbefore provided in subdivisions (1) and (2) of subsection (a), shall not be available in taxable years other than the year in which the taxpayer qualifies for tax modification.

(c) In the case of multiple business owners, the modifications hereinbefore provided in subdivisions (1) and (2) of subsection (a) shall be apportioned according to the ownership interests of the domiciliary owners of the qualified business.

{ADD (d) A taxpayer who elects this modification shall not be eligible for the business tax credits under section 42-64.3-6. ADD}

{ADD 42-64.3-7.1. Tax credit for donations. -- ADD} Any taxpayer shall be allowed a credit of twenty percent (20%) against the tax imposed by chapter {ADD s ADD} 11, 13, 14, 17 or 30 of title 44 for {DEL cash DEL} donations to public supported improvement projects in the zone, provided:

(a) The taxpayer obtain certification from the city or town that the project is an endorsed zone capital improvement project as defined {ADD and endorsed ADD} by the council;

(b) The taxpayer shall be allowed a maximum credit of ten thousand dollars ($10,000) per taxable year;

(c) Any tax credit as herein provided shall not offset any tax liability in taxable years other than the year in which the taxpayer qualifies for the credit. The credit shall not reduce the tax below the minimum. The credit shall be used to offset tax liability pursuant to the provisions of only one of the aforementioned chapters of title 44; and

(d) In the case of a corporation, the credit allowed under this section shall only be allowed against the tax of that corporation included in a consolidated return that qualifies for the credit and not against the tax of other corporations that may join in the filing of a consolidated tax return.

{ADD (e) The donation(s) for such a public supported improvement project in the zone shall be only those donations to the respective enterprise zone to the extent allowed and claimed as a charitable contribution on the donor's federal tax return for the tax year in which the donation is made. ADD}

SECTION 2. Section 42-64.3-8 of the General Laws in Chapter 42-64.3 entitled "Enterprise Zones" is hereby repealed in its entirety.

{DEL 42-64.3-8. Enterprise worker tax modification. -- DEL} {DEL In addition to any other modifications allowed under the provisions of chapter 30 of title 44, each qualified enterprise worker who earns or receives in excess of ninety percent (90%) of his or her gross income directly from a qualified business located within an enterprise zone established pursuant to the provisions of this chapter, shall be allowed a modification reducing federal adjustable gross income of an amount equal to the lesser of five thousand dollars ($5,000) or the amount earned per year for a period of two (2) taxable years. DEL}

SECTION 3. Chapter 42-64.3 of the General Laws entitled "Enterprise Zones" is hereby amended by adding thereto the following section:

{ADD 42-64.3-12. Penalty for failure to comply. -- ADD} {ADD Any qualified business, officer or employee of a qualified business who willfully fails to comply with the provisions of this chapter or otherwise submits false or misleading information shall be guilty of a misdemeanor. Upon conviction thereof said qualified business, officer or employee of a qualified business shall be fined an amount not to exceed three (3) times the amount of tax credits received by said company or be imprisoned for a period not exceeding one (1) year or both. ADD}

SECTION 4. This act shall take effect January 1, 1995.