Kentucky Statutes 154.26-090 – Revitalization agreement — Amended agreement — Tax credits — Occupational license fee termination — Assessment fee — Effect of excess in assessments
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(1) The authority, upon adoption of its final approval, may enter into, with any approved company, an agreement with respect to its project or a supplemental project agreement with respect to its supplemental project. The terms and provisions of each agreement and supplemental project agreement, including the amount of approved costs and any limitations the authority may deem necessary, shall be determined by negotiations between the authority and the approved company, except that each agreement and supplemental project agreement shall include the following provisions:
(a) The amount the approved company may recover through inducements under this subchapter shall not exceed seventy-five percent (75%) of approved costs;
(b) The date by which the approved company will have completed the original project and supplemental project. Within three (3) months of the completion date of the original project or supplemental project, the approved company shall document the actual cost of the project or supplemental project in a manner acceptable to the authority. The authority may employ an independent consultant or utilize technical resources to verify the cost of the project or supplemental project. The approved company shall reimburse the authority for the cost of the consultant;
(c) In consideration of the execution of the agreement or supplemental project agreement, the approved company may be permitted, during a period not to exceed ten (10) years commencing on the date of the agreement or supplemental project agreement and during which the agreement or supplemental project agreement is in effect, the following inducements:
1. A credit against the Kentucky tax imposed by KRS § 141.020 or 141.040 on the income of the approved company generated by or arising out of the economic revitalization project or supplemental project, and a credit against the limited liability entity tax imposed by KRS § 141.0401 on Kentucky gross profits or Kentucky gross receipts as determined under KRS § 141.403. The ordering of credits shall be as provided in KRS
141.0205; and
2. The aggregate assessment withheld by the approved company in each year;
(d) The tax credits allowed to the approved company shall be equal to the lesser of the total amount of the tax liability or the amount that the company may recover under paragraph (a) of this subsection that has not yet been recovered, reduced by any recovery through the collection of assessments and appropriations made under any appropriation agreement. The credit shall be allowed for each fiscal year of the approved company during the term of the agreement and for which a tax return of the approved company is filed until the amount that the company may recover under paragraph (a) of this subsection has been received through a combination of credits, assessments, if
assessments are elected to be imposed, and appropriations made under any appropriation agreement. The approved company shall not be required to pay estimated tax payments as prescribed under KRS § 141.044 or 141.305 on income, Kentucky gross profits or Kentucky gross receipts from the economic revitalization project. Ninety (90) days after the filing of the tax return of the approved company, the Department of Revenue of the Commonwealth shall certify to the authority for the preceding fiscal year of an approved company for which a return was filed with respect to an economic revitalization project of the approved company the state tax liability of the approved company receiving inducements under KRS § 154.26-015 to KRS § 154.26-100 and the amount of any tax credits taken pursuant to this section;
(e) The agreement shall provide that the term shall not be longer than the earlier of:
1. The date on which the approved company has received inducements or withheld assessments equal to the amount that the company may recover under paragraph (a) of this subsection; or
2. Ten (10) years from the date of the execution of the later of the agreement or supplemental project agreement;
(f) Prior to execution of the agreement or supplemental project agreement, the eligible company shall secure from all local governmental authorities responsible for collecting local occupational license fees one (1) of the following:
1. A resolution or order of the local governmental entities acknowledging and consenting to the termination or partial termination of the receipt of local occupational license fees paid by the approved company on behalf of its employees to the local government entities resulting from the execution of the agreement or supplemental project agreement; or
2. In lieu of the credit against the local occupational license fee, an appropriation agreement with the authority and the local governmental entities by which the local governmental entities will appropriate funds in an amount equal to the amount of the credit of the local occupational license fee for the benefit of the approved company in a manner consistent with the applicable state laws;
(g) If more than one (1) local occupational license fee is imposed upon the employees of the approved company, the assessment imposed upon the employees shall be credited against the local occupational license fee and shall be apportioned to each local occupational license fee according to each local occupational license fee’s proportion to the total of all local occupational license fees for such employees. No credit, or portion thereof shall be allowed against any local occupational license fee imposed by or dedicated solely to a local board of education;
(h) If in any fiscal year of the approved company during which the agreement or supplemental project agreement is in effect the total of the tax credits granted to the approved company plus the assessment collected from the wages of the
employees exceeds the expended portion of the amount that the approved company may recover under paragraph (a) of this subsection, the approved company shall pay the excess to the Commonwealth as income tax;
(i) If in any fiscal year of the approved company during which the agreement or supplemental project agreement is in effect the assessment collected from the wages of the employees exceeds the expended portion of the amount that the approved company may recover under paragraph (a) of this subsection, the assessment collected from the wages of the employees shall cease for the remainder of that fiscal year of the approved company, the approved company shall resume normal personal income tax and occupational license fee withholdings from the employees’ wages for the remainder of that fiscal year, and the approved company shall remit to the Commonwealth and applicable local jurisdictions their respective shares of the excess assessment collected on the withholding filing date for employees’ wages next succeeding the first date when the approved company collected excess assessments; and
(j) All proceeds of any loan or other financing incurred in connection with the economic revitalization project shall be expended by the approved company within five (5) years from the date of the agreement. In the event that all proceeds of any loan or other financing incurred in connection with the economic revitalization project are not fully expended within the five (5) year period, the authorized inducements shall automatically be reduced to and shall not be greater than the amount of proceeds actually expended by the approved company within the five (5) year period.
(2) If the approved company elects to utilize the assessment as prescribed in KRS
154.26-100, it shall not assess the wages of an employee who is party to an individual employment contract with the approved company.
(3) Neither the appropriation agreement, nor the agreement, nor the supplemental project agreement shall be transferable or assignable by the approved company without the expressed written consent of the authority.
(4) In addition to the inducements permitted by this section, an approved company with a supplemental project agreement executed pursuant to this section may also qualify for the sales and use tax exemption established by KRS § 139.480 for its purchase and use of any property to be incorporated into the construction, rebuilding, modification, or expansion of a blast furnace or any of its components or appurtenant equipment or structures as part of the approved supplemental project.
Effective: July 15, 2014
History: Amended 2014 Ky. Acts ch. 129, sec. 4, effective July 15, 2014. — Amended
2012 Ky. Acts ch. 119, sec. 3, effective July 12, 2012. — Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 57, effective June 28, 2006. — Amended 2005 Ky. Acts ch.
85, sec. 582, effective June 20, 2005. — Amended 2004 Ky. Acts ch. 18, sec. 1, effective July 13, 2004; and ch. 105, sec. 12, effective July 13, 2004. — Amended
2000 Ky. Acts ch. 547, sec. 3, effective July 14, 2000. — Amended 1996 Ky. Acts ch.
194, sec. 47, effective July 15, 1996. — Amended 1994 Ky. Acts ch. 450, sec. 25, effective July 15, 1994. – Created 1992 Ky. Acts ch. 359, sec. 10, effective July 14,
1992.
Legislative Research Commission Note (7/12/2012). 2012 Ky. Acts ch. 119, sec. 4, provides that this statute, as amended by 2012 Ky. Acts ch. 119, sec. 3, “shall apply to taxable years beginning on or after January 1, 2014.”
Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that “unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007.”
(a) The amount the approved company may recover through inducements under this subchapter shall not exceed seventy-five percent (75%) of approved costs;
Terms Used In Kentucky Statutes 154.26-090
- Appropriation: The provision of funds, through an annual appropriations act or a permanent law, for federal agencies to make payments out of the Treasury for specified purposes. The formal federal spending process consists of two sequential steps: authorization
- Appropriation: means an authorization by the General Assembly to expend, from public funds, a sum of money not in excess of the sum specified, for the purposes specified in the authorization and under the procedure prescribed in KRS Chapter 48. See Kentucky Statutes 446.010
- Approved costs: means :
(a) Obligations incurred for labor and to vendors, contractors, subcontractors, builders, suppliers, deliverymen, and materialmen in connection with the acquisition, construction, equipping, rehabilitation, and installation of an economic revitalization project. See Kentucky Statutes 154.26-010 - Authority: means the Kentucky Economic Development Finance Authority created by KRS §. See Kentucky Statutes 154.26-010
- Commonwealth: means the Commonwealth of Kentucky. See Kentucky Statutes 154.26-010
- Company: may extend and be applied to any corporation, company, person, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Contract: A legal written agreement that becomes binding when signed.
- Eligible company: means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity:
(a) Employing or intending to employ full-time a minimum of twenty-five (25) persons engaged in manufacturing or agribusiness operations at the same facility, whether acquired, owned, or leased, located and operating within the Commonwealth on a permanent basis for a reasonable period of time preceding the request for approval by the authority of an economic revitalization project, including facilities where manufacturing or agribusiness operations has been temporarily suspended and which meets the standards promulgated by the authority pursuant to KRS §. See Kentucky Statutes 154.26-010 - Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Inducements: means the Kentucky tax credit and the job revitalization assessment fee as prescribed in KRS §. See Kentucky Statutes 154.26-010
- Project: includes but is not limited to agribusiness, agricultural or forestry production, harvesting, storage, or processing facilities or equipment. See Kentucky Statutes 154.1-010
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
- State: means the Commonwealth of Kentucky. See Kentucky Statutes 154.1-010
- Statute: A law passed by a legislature.
- Supplemental project: means an additional investment in an approved economic revitalization project proposed during, or within sixty (60) months after the expiration of, the initial term of an agreement, and which may be approved by the authority for additional inducements as set forth in KRS §. See Kentucky Statutes 154.26-010
- Supplemental project agreement: means an agreement, entered into pursuant to KRS §. See Kentucky Statutes 154.26-010
- Year: means calendar year. See Kentucky Statutes 446.010
(b) The date by which the approved company will have completed the original project and supplemental project. Within three (3) months of the completion date of the original project or supplemental project, the approved company shall document the actual cost of the project or supplemental project in a manner acceptable to the authority. The authority may employ an independent consultant or utilize technical resources to verify the cost of the project or supplemental project. The approved company shall reimburse the authority for the cost of the consultant;
(c) In consideration of the execution of the agreement or supplemental project agreement, the approved company may be permitted, during a period not to exceed ten (10) years commencing on the date of the agreement or supplemental project agreement and during which the agreement or supplemental project agreement is in effect, the following inducements:
1. A credit against the Kentucky tax imposed by KRS § 141.020 or 141.040 on the income of the approved company generated by or arising out of the economic revitalization project or supplemental project, and a credit against the limited liability entity tax imposed by KRS § 141.0401 on Kentucky gross profits or Kentucky gross receipts as determined under KRS § 141.403. The ordering of credits shall be as provided in KRS
141.0205; and
2. The aggregate assessment withheld by the approved company in each year;
(d) The tax credits allowed to the approved company shall be equal to the lesser of the total amount of the tax liability or the amount that the company may recover under paragraph (a) of this subsection that has not yet been recovered, reduced by any recovery through the collection of assessments and appropriations made under any appropriation agreement. The credit shall be allowed for each fiscal year of the approved company during the term of the agreement and for which a tax return of the approved company is filed until the amount that the company may recover under paragraph (a) of this subsection has been received through a combination of credits, assessments, if
assessments are elected to be imposed, and appropriations made under any appropriation agreement. The approved company shall not be required to pay estimated tax payments as prescribed under KRS § 141.044 or 141.305 on income, Kentucky gross profits or Kentucky gross receipts from the economic revitalization project. Ninety (90) days after the filing of the tax return of the approved company, the Department of Revenue of the Commonwealth shall certify to the authority for the preceding fiscal year of an approved company for which a return was filed with respect to an economic revitalization project of the approved company the state tax liability of the approved company receiving inducements under KRS § 154.26-015 to KRS § 154.26-100 and the amount of any tax credits taken pursuant to this section;
(e) The agreement shall provide that the term shall not be longer than the earlier of:
1. The date on which the approved company has received inducements or withheld assessments equal to the amount that the company may recover under paragraph (a) of this subsection; or
2. Ten (10) years from the date of the execution of the later of the agreement or supplemental project agreement;
(f) Prior to execution of the agreement or supplemental project agreement, the eligible company shall secure from all local governmental authorities responsible for collecting local occupational license fees one (1) of the following:
1. A resolution or order of the local governmental entities acknowledging and consenting to the termination or partial termination of the receipt of local occupational license fees paid by the approved company on behalf of its employees to the local government entities resulting from the execution of the agreement or supplemental project agreement; or
2. In lieu of the credit against the local occupational license fee, an appropriation agreement with the authority and the local governmental entities by which the local governmental entities will appropriate funds in an amount equal to the amount of the credit of the local occupational license fee for the benefit of the approved company in a manner consistent with the applicable state laws;
(g) If more than one (1) local occupational license fee is imposed upon the employees of the approved company, the assessment imposed upon the employees shall be credited against the local occupational license fee and shall be apportioned to each local occupational license fee according to each local occupational license fee’s proportion to the total of all local occupational license fees for such employees. No credit, or portion thereof shall be allowed against any local occupational license fee imposed by or dedicated solely to a local board of education;
(h) If in any fiscal year of the approved company during which the agreement or supplemental project agreement is in effect the total of the tax credits granted to the approved company plus the assessment collected from the wages of the
employees exceeds the expended portion of the amount that the approved company may recover under paragraph (a) of this subsection, the approved company shall pay the excess to the Commonwealth as income tax;
(i) If in any fiscal year of the approved company during which the agreement or supplemental project agreement is in effect the assessment collected from the wages of the employees exceeds the expended portion of the amount that the approved company may recover under paragraph (a) of this subsection, the assessment collected from the wages of the employees shall cease for the remainder of that fiscal year of the approved company, the approved company shall resume normal personal income tax and occupational license fee withholdings from the employees’ wages for the remainder of that fiscal year, and the approved company shall remit to the Commonwealth and applicable local jurisdictions their respective shares of the excess assessment collected on the withholding filing date for employees’ wages next succeeding the first date when the approved company collected excess assessments; and
(j) All proceeds of any loan or other financing incurred in connection with the economic revitalization project shall be expended by the approved company within five (5) years from the date of the agreement. In the event that all proceeds of any loan or other financing incurred in connection with the economic revitalization project are not fully expended within the five (5) year period, the authorized inducements shall automatically be reduced to and shall not be greater than the amount of proceeds actually expended by the approved company within the five (5) year period.
(2) If the approved company elects to utilize the assessment as prescribed in KRS
154.26-100, it shall not assess the wages of an employee who is party to an individual employment contract with the approved company.
(3) Neither the appropriation agreement, nor the agreement, nor the supplemental project agreement shall be transferable or assignable by the approved company without the expressed written consent of the authority.
(4) In addition to the inducements permitted by this section, an approved company with a supplemental project agreement executed pursuant to this section may also qualify for the sales and use tax exemption established by KRS § 139.480 for its purchase and use of any property to be incorporated into the construction, rebuilding, modification, or expansion of a blast furnace or any of its components or appurtenant equipment or structures as part of the approved supplemental project.
Effective: July 15, 2014
History: Amended 2014 Ky. Acts ch. 129, sec. 4, effective July 15, 2014. — Amended
2012 Ky. Acts ch. 119, sec. 3, effective July 12, 2012. — Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 57, effective June 28, 2006. — Amended 2005 Ky. Acts ch.
85, sec. 582, effective June 20, 2005. — Amended 2004 Ky. Acts ch. 18, sec. 1, effective July 13, 2004; and ch. 105, sec. 12, effective July 13, 2004. — Amended
2000 Ky. Acts ch. 547, sec. 3, effective July 14, 2000. — Amended 1996 Ky. Acts ch.
194, sec. 47, effective July 15, 1996. — Amended 1994 Ky. Acts ch. 450, sec. 25, effective July 15, 1994. – Created 1992 Ky. Acts ch. 359, sec. 10, effective July 14,
1992.
Legislative Research Commission Note (7/12/2012). 2012 Ky. Acts ch. 119, sec. 4, provides that this statute, as amended by 2012 Ky. Acts ch. 119, sec. 3, “shall apply to taxable years beginning on or after January 1, 2014.”
Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that “unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007.”