Source: https://www.ncleg.net/Sessions/2005/Bills/House/HTML/H947v1.html
Timestamp: 2018-01-18 22:01:31
Document Index: 228797319

Matched Legal Cases: ['§ 105', '§ 105', '§ 1904', '§ 105', '§ 105', '§ 105', '§ 2101', '§ 105', '§ 105', '§ 105', '§ 105', '§ 105', '§ 105', '§ 143']

House Bill 947-First Edition
Short Title: Business Growth and Investment Act of 2005.
Representatives Owens, Gibson, Daughtridge (Primary Sponsors); LaRoque, Steen, Wray, Goforth, and Glazier.
Commerce, if favorable, Finance.
AN ACT to replace the tax credits generally available under the William S. lee Quality jobs and business expansion act with more narrowly focused credits for job creation and business investment; and to extend the job development investment grant program.
Part I. Replace Bill Lee Act
SECTION 1. Chapter 105 of the General Statutes is amended by adding a new Article to read:
"Article 3H.
"Tax Credits for Growing Businesses.
"§ 105-129.70. Legislative findings.
(1) It is the policy of the State of North Carolina to stimulate economic activity and to create new jobs for the citizens of the State by encouraging and promoting the expansion of existing business and industry within the State and by recruiting and attracting new business and industry to the State.
(2) Both short-term and long-term economic trends at the State, national, and international levels have made the successful implementation of the State's economic development policy and programs both more critical and more challenging; and the decline in the State's traditional industries, and the resulting adverse impact upon the State and its citizens, have been exacerbated in recent years by adverse national and State economic trends that contribute to the reduction in the State's industrial base and that inhibit the State's ability to sustain or attract new and expanding businesses.
(3) The economic condition of the State is not static and recent changes in the State's economic condition have created economic distress that requires a reevaluation of certain existing State programs and the enactment of a new program as provided in this Article that is designed to stimulate new economic activity and to create new jobs within the State.
(4) The enactment of this Article is necessary to stimulate the economy and create new jobs in North Carolina; and this Article will promote the general welfare and confer, as its primary purpose and effect, benefits on citizens throughout the State through the creation of new jobs, an enlargement of the overall tax base, an expansion and diversification of the State's industrial base, and an increase in revenue to the State and its political subdivisions.
(5) The purpose of this Article is to stimulate economic activity and to create new jobs within the State.
(6) The State is in need of a focused tax credit program that encourages and facilitates economic growth and development within the State.
(7) The resources of the State are not evenly distributed throughout the State and different communities have different abilities and needs in attracting and maintaining new and expanding business and industry.
"§ 105-129.71. Definitions.
(1) Aircraft maintenance and repair. - The provision of specialized maintenance or repair services for commercial aircraft or the rebuilding of commercial aircraft.`
(2) Air courier services. - The furnishing of air delivery of individually addressed letters and packages for compensation, in interstate commerce, except by the United States Postal Service.
(3) Business property. - Tangible personal property used in a business that is capitalized under the Code.
(4) Cost. - In the case of property owned by the taxpayer, cost is determined pursuant to regulations adopted under section 1012 of the Code. In the case of property the taxpayer leases from another, cost is value as determined pursuant to G.S. 105-130.4(j)(2).
(5) Customer service call center. - The provision of support service by a business to its customers by telephone to support products or services of the business.
(6) Development tier. -The classification assigned to an area pursuant to G.S. 105-129.73.
(7) Electronic shopping and mail order houses. - An industry in electronic shopping and mail order houses industry group 4541 as defined by NAICS.
(8) Establishment. - Defined in 29 C.F.R § 1904.46, as it existed on January 1, 2002.
(9) Full-time job. - A position that requires at least 1,600 hours of work per year and is intended to be held by one employee during the entire year. A full-time employee is an employee who holds a full-time job.
(10) Information technology and services. - An industry in one of the following:
a. Internet service providers, web search portals, and data processing subsector 518 as defined by NAICS.
b. Software publishers industry group 5112 as defined by NAICS.
c. Computer systems design and related services industry group 5415 as defined by NAICS.
(11) Manufacturing. - An industry in manufacturing sectors 31 through 33, as defined by NAICS, but not including quick printing or retail bakeries.
(12) Motorsports racing team. - A professional or semiprofessional racing team primarily engaged in the research and development, design, manufacture, repair, maintenance, and operation of motor vehicles used in live motorsports racing events before a paying audience.
(13) NAICS. - The North American Industry Classification System adopted by the United States Office of Management and Budget as of December 31, 2002.
(14) New job. - A full-time job that represents a net increase in the number of the taxpayer's employees statewide. A new employee is an employee who holds a new job. The term does not include a job currently located in this State that is transferred to the business from a related member of the business.
(15) Overdue tax debt. - Defined in G.S. 105-243.1.
(16) Purchase. - Defined in section 179 of the Code.
(17) Related entity. - Defined in G.S. 105-130.7A.
(18) Research and development. - An industry in scientific research and development services industry group 5417 as defined by NAICS.
(19) Warehousing. - An industry in warehousing and storage subsector 493 as defined by NAICS.
(20) Wholesale trade. - An industry in wholesale trade sector 42 as defined by NAICS.
"§ 105-129.72. Sunset; studies.
(a) Sunset. - This Article is repealed effective for business activities that occur on or after January 1, 2010.
(b) Equity Study. - The Department of Commerce shall study the effect of the tax incentives provided in this Article on tax equity. This study shall include the following:
(1) Reexamining the formula in G.S. 105-129.73(b) used to define development tiers, to include consideration of alternative measures for more equitable treatment of counties in similar economic circumstances.
(2) Considering whether the assignment of tiers and the applicable thresholds are equitable for smaller counties, for example those under 50,000 in population.
(3) Compiling any available data on whether expanding North Carolina businesses receive fewer benefits than out-of-State businesses that locate to North Carolina.
(c) Impact Study. - The Department of Commerce shall study the effectiveness of the tax incentives provided in this Article. This study shall include:
(1) Studying the distribution of tax incentives across new and expanding businesses and industries.
(2) Examining data on economic recruitment for the period from 2004 through the most recent year for which data are available by county, by industry type, by size of investment, and by number of jobs, and other relevant information to determine the pattern of business locations and expansions before and after the enactment of this Article.
(3) Measuring the direct costs and benefits of the tax incentives.
(4) Compiling available information on the current use of incentives by other states and whether that use is increasing or declining.
(d) Report. - The Department of Commerce shall report the results of these studies and its recommendations to the General Assembly biennially with the first report due by April 1, 2007.
"§ 105-129.73. Development tier designation.
(a) Tiers Defined. - A development tier one area is a county whose development factor is one of the 40 highest in the State. A development tier two area is a county whose development factor is one of the next 40 highest in the State. A development tier three area is a county that is not in a lower-numbered development tier.
(b) Annual Designation. - Each year, on or before November 30, the Secretary of Commerce shall assign to each county in the State a development factor that is the sum of the following:
(1) The county's rank in a ranking of counties by average rate of unemployment from lowest to highest, for the preceding 12 months.
(2) The county's rank in a ranking of counties by median household income from highest to lowest, for the preceding 12 months.
(3) The county's rank in a ranking of counties by percentage growth in population from highest to lowest, for the preceding 36 months.
(4) The county's rank in a ranking of counties by assessed property value per capita, from highest to lowest, for the most recent taxable year.
The Secretary of Commerce shall then rank all the counties within the State according to their development factor from highest to lowest, identify all the areas of the State by development tier, and publish this information. A development tier designation is effective only for the calendar year following the designation.
(c) Data. - In measuring rates of unemployment and median household income, the Secretary shall use the latest available data published by a State or federal agency generally recognized as having expertise concerning the data. In measuring population and population growth, the Secretary shall use the most recent estimates of population certified by the State Budget Officer. In measuring assessed property value, the Secretary shall use the tax records prepared in each county.
(d) Exception for Development Tier One Areas. - Notwithstanding the provisions of this section, a county designated as a development tier one area may not be redesignated as a higher-numbered development tier area until it has been in its development tier area for at least two consecutive years.
"§ 105-129.74. Eligibility; forfeiture.
(a) Eligible Business. - A taxpayer is eligible for a credit under this Article only with respect to activities occurring at an establishment whose primary activity is listed in this subsection. The primary activity of an establishment is determined based on the establishment's principal product or group of products produced or distributed, or services rendered
(1) Aircraft maintenance and repair.
(2) Air courier services.
(3) Customer service call centers, if at least sixty percent (60%) of the center's calls are incoming.
(4) Electronic shopping and mail order houses.
(5) Information technology and services.
(6) Manufacturing.
(7) Motorsports racing team.
(8) Research and development.
(9) Warehousing
(10) Wholesale trade.
(b) Wage Standard. - A taxpayer is eligible for a credit under this Article in a development tier two or three area if the taxpayer satisfies a wage standard. Jobs satisfy the wage standard if they pay an average weekly wage that is at least equal to the lesser of one hundred ten percent (110%) of the average wage for all insured private employers in the State and one hundred percent (100%) of the average wage for all insured private employers in the county. The Department of Commerce must annually publish the wage standard for each county.
In making the wage calculation, the taxpayer must include any jobs that were filled for at least 1,600 hours during the calendar year the taxpayer engages in the activity that qualifies for the credit even if those jobs are not filled at the time the taxpayer claims the credit. For a taxpayer with a taxable year other than a calendar year, the taxpayer must use the wage standard for the calendar year in which the taxable year begins. Only full-time jobs are included when making the wage calculation.
(c) Health Insurance. - A taxpayer is eligible for a credit under this Article if the taxpayer provides health insurance for all of the full-time jobs at the location with respect to which the credit is claimed when the taxpayer engages in the activity that qualifies for the credit. For the purposes of this subsection, a taxpayer provides health insurance if it pays at least fifty percent (50%) of the premiums for health care coverage that equals or exceeds the minimum provisions of the basic health care plan of coverage recommended by the Small Employer Carrier Committee pursuant to G.S. 58-50-125.
Each year that a taxpayer claims a credit or carryforward of a credit allowed under this Article, the taxpayer must provide with the tax return the taxpayer's certification that the taxpayer continues to provide health insurance for all the jobs at the location with respect to which the credit was claimed. If the taxpayer ceases to provide health insurance for the jobs during a taxable year, the credit expires and the taxpayer may not take any remaining installment or carryforward of the credit.
(d) Environmental Impact. - A taxpayer is eligible for a credit allowed under this Article only if the taxpayer certifies that, at the time the taxpayer claims the credit, the taxpayer has no pending administrative, civil, or criminal enforcement action based on alleged significant violations of any program implemented by an agency of the Department of Environment and Natural Resources, and has had no final determination of responsibility for any significant administrative, civil, or criminal violation of any program implemented by an agency of the Department of Environment and Natural Resources within the last five years. A significant violation is a violation or alleged violation that does not satisfy any of the conditions of G.S. 143-215.6B(d). The Secretary of Environment and Natural Resources must notify the Department of Revenue annually of every person that currently has any of these pending actions and every person that has had any of these final determinations within the last five years.
(e) Safety and Health Programs. - A taxpayer is eligible for a credit allowed under this Article only if the taxpayer certifies that, as of the time the taxpayer claims the credit, at the business location with respect to which the credit is claimed, the taxpayer has no citations under the Occupational Safety and Health Act that have become a final order within the past three years for willful serious violations or for failing to abate serious violations. For the purposes of this subsection, "serious violation" has the same meaning as in G.S. 95-127. The Commissioner of Labor must notify the Department of Revenue annually of all employers who have had these citations become final orders within the past three years.
(f) Overdue Tax Debts. - A taxpayer is not eligible for a credit allowed under this Article if, at the time the taxpayer claims the credit or an installment or carryforward of the credit, the taxpayer has received a notice of an overdue tax debt and that overdue tax debt has not been satisfied or otherwise resolved.
(g) Forfeiture. - A taxpayer forfeits a credit allowed under this Article if the taxpayer was not eligible for the credit for the calendar year in which the taxpayer engaged in the activity for which the credit was claimed. In addition, a taxpayer forfeits a credit for investment in real property under G.S. 105-129.80 if the taxpayer fails to timely create the number of required new jobs or to timely make the required level of investment required under G.S. 105-129.80(b). A taxpayer that forfeits a credit under this Article is liable for all past taxes avoided as a result of the credit plus interest at the rate established under G.S. 105-241.1(i), computed from the date the taxes would have been due if the credit had not been allowed. The past taxes and interest are due 30 days after the date the credit is forfeited; a taxpayer that fails to pay the past taxes and interest by the due date is subject to the penalties provided in G.S. 105-236.
(h) Change in Ownership of Business. - As used in this subsection, the term 'business' means a taxpayer or an establishment. The sale, merger, consolidation, conversion, acquisition, or bankruptcy of a business, or any transaction by which an existing business reformulates itself as another business, does not create new eligibility in a succeeding business with respect to credits for which the predecessor was not eligible under this Article. A successor business may, however, take any credit or carried-over portion of a credit that its predecessor could have taken if it had a tax liability. The acquisition of a business is a new investment that creates new eligibility in the acquiring taxpayer under this Article if either of the following conditions is met:
(1) The business closed before it was acquired.
(2) The business was required to file a notice of plant closing or mass layoff under the federal Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101, before it was acquired.
(i) Advisory Ruling. - A taxpayer may request in writing from the Secretary of Revenue specific advice regarding eligibility for a credit under this Article. G.S. 105-264 governs the effect of this advice. A taxpayer may not legally rely upon advice offered by any other State or local government official or employee acting in an official capacity regarding eligibility for a credit under this Article.
(j) Planned Expansion. - A taxpayer that signs a letter of commitment with the Department of Commerce, after the Department has calculated the development tier designations for the next year but before the beginning of that taxable year, to undertake specific activities at a specific site within the next taxable year may calculate the credit for which it qualifies based on the location's development tier designation in the year in which the letter of commitment was signed by the taxpayer.
"§ 105-129.75. Tax election; cap; carryforwards; limitations.
(a) Tax Election. - The credits provided in this Article are allowed against the franchise tax levied in Article 3 of this Chapter, the income taxes levied in Article 4 of this Chapter, and the gross premiums tax levied in Article 8B of this Chapter. The taxpayer may divide a credit between the taxes against which it is allowed. Carryforwards of a credit may be divided between the taxes against which it is allowed without regard to the original election.
(b) Cap. - The credits allowed under this Article may not exceed fifty percent (50%) of the cumulative amount of taxes against which they are claimed for the taxable year, reduced by the sum of all other credits allowed against those taxes, except tax payments made by or on behalf of the taxpayer. This limitation applies to the cumulative amount of credit, including carryforwards, claimed by the taxpayer under this Article against the taxes for the taxable year. Credits that may eliminate only a portion of the taxpayer's liability must be taken before credits that may eliminate all of a taxpayer's liability, which in turn must be taken before any credits that are refundable.
(c) Carryforward. - Any unused portion of a credit under this Article may be carried forward for the succeeding five years.
(d) Statute of Limitations. - Notwithstanding Article 9 of this Chapter, a taxpayer must claim a credit under this Article within six months after the date set by statute for the filing of the return, including any extensions of that date.
§ 105-129.76. Fees and reports.
(a) Fee. - When filing a return for a taxable year in which the taxpayer engaged in activity for which the taxpayer is eligible for a credit under this Article, the taxpayer must pay the Department of Revenue a fee of five hundred dollars ($500.00) for each credit the taxpayer claims or intends to claim. The fee is due at the time the return is due for the taxable year in which the taxpayer engaged in the activity for which the taxpayer is eligible for a credit. No credit is allowed under this Article for a taxable year until all outstanding fees have been paid. The Secretary of Revenue shall retain three-fourths of the proceeds of the fee imposed in this section for the costs of administering and auditing the credits allowed in this Article. The Secretary of Revenue shall credit the remaining proceeds of the fee imposed in this section to the Department of Commerce for the costs of administering this Article. The proceeds of the fee are receipts of the Department to which they are credited.
(b) Reports. - The Department of Revenue shall publish by April 1 of each year the following information itemized by credit and by taxpayer for the 12-month period ending the preceding December 31:
(1) The number of claims for each credit allowed in this Article.
(2) The number and development tier area of new jobs with respect to which credits were claimed.
(3) The cost and development tier area of business property with respect to which credits were claimed.
(4) The cost and development tier area of real property investment with respect to which credits were claimed.
"§ 105-129.77. Substantiation.
(a) Records. - To claim a credit allowed by this Article, the taxpayer must provide any information required by the Secretary of Revenue. Every taxpayer claiming a credit under this Article shall maintain and make available for inspection by the Secretary of Revenue any records the Secretary considers necessary to determine and verify the amount of the credit to which the taxpayer is entitled. The burden of proving eligibility for the credit and the amount of the credit shall rest upon the taxpayer, and no credit shall be allowed to a taxpayer that fails to maintain adequate records or to make them available for inspection.
(b) Documentation. - Each taxpayer must provide with the tax return qualifying information for each credit claimed under this Article. The qualifying information must be in the form prescribed by the Secretary and must be signed and affirmed by the individual who signs the taxpayer's tax return. The information required by this subsection is information demonstrating that the taxpayer has met the conditions for qualifying for a credit and any carryforwards, and includes the following:
(1) The physical location of the jobs and investment with respect to which the credit is claimed, including the street address and the development tier designation of the location.
(2) The type of business with respect to which the credit is claimed and the average weekly wage at the facility with respect to which the credit is claimed.
(3) Any other qualifying information related to a specific credit allowed under this Article.
"§ 105-129.78. Credit for creating jobs.
(a) Credit. - A taxpayer that meets the eligibility requirements set out in G.S. 105-129.74 and satisfies the threshold requirement for new job creation in this State under subsection (b) of this section during the taxable year is allowed a credit for creating those new jobs. The amount of the credit for each new job created is set out in the table below and is based on the development tier designation of the county in which the job is located.
Area Development Tier Amount of Credit
Tier Two 5,000
Tier Three 500
(b) Threshold. - The applicable threshold is the appropriate amount set out in the following table based on the development tier designation of the county where the new jobs are created during the taxable year. If the taxpayer creates new jobs at more than one eligible establishment in a county during the taxable year, the threshold applies to the aggregate number of new jobs created at all eligible establishments within the county during that year. If the taxpayer creates new jobs at eligible establishments in different counties during the taxable year, the threshold applies separately to the aggregate number of new jobs created at eligible establishments in each county.
Area Development Tier Threshold
Tier One 5
Tier Two 10
Tier Three 50
(c) Calculation. - A job is located in a county if more than fifty percent (50%) of the employee's duties are performed in the county. The number of new jobs a taxpayer creates during the taxable year is determined by subtracting the average number of full-time employees the taxpayer had in this State during the 12-month period preceding the beginning of the taxable year from the average number of full-time employees the taxpayer has in this State during the taxable year.
(d) Installments. - The credit may not be taken in the taxable year in which the new jobs are created. Instead, the credit must be taken in equal installments over the four years following the taxable year in which the new jobs were created and is conditional upon the continued maintenance of those jobs by the taxpayer. If, in one of the four years in which the installment of a credit accrues, a job is no longer filled, the credit with respect to that job expires and the taxpayer may not take any remaining installment of the credit with respect to that job. If, in one of the years in which the installment of a credit accrues, the number of the taxpayer's full-time employees falls below the sum of the applicable threshold and the number of full-time employees the taxpayer had in the year before the year in which the taxpayer qualified for the credit, the credits with respect to all of the new jobs expire and the taxpayer may not take any remaining installments of the credits. When a credit expires under this subsection, the taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.75.
(e) Transferred Jobs. - Jobs transferred from one area in the State to another area in the State are not considered new jobs for purposes of this section. Jobs transferred to the taxpayer from a related member of the taxpayer are not considered new jobs for purposes of this section. If, in one of the four years in which the installment of a credit accrues, the jobs with respect to which the credit was claimed are moved to an area in a higher-numbered development tier, the remaining installments of the credit are allowed only to the extent they would have been allowed if the jobs were initially created in the area to which they were moved. If, in one of the years in which the installment of a credit accrues, the jobs are moved to an area in a lower-numbered development tier, the remaining installments of the credit must be calculated as if the jobs had been created initially in the area to which they were moved.
(f) Wage Standard. - For the purposes of this section, a taxpayer satisfies the wage standard requirement of G.S. 105-129.74 only if the taxpayer satisfies the requirement with respect to both the new jobs, considered collectively, for which a credit is claimed and all of the jobs at the establishment, considered collectively, with respect to which a credit is claimed.
(g) No Double Credit. - A taxpayer may not claim a credit under this section with respect to jobs for which a taxpayer claims a credit under G.S. 105-129.8.
"§ 105-129.79. Credit for investing in business property.
(a) General Credit. - A taxpayer that has purchased or leased business property and placed it in service in this State during the taxable year and that has satisfied the threshold requirements of subsection (c) of this section is allowed a credit equal to the applicable percentage of the eligible investment amount. Business property is eligible if it is not leased to another party. The credit may not be taken for the taxable year in which the business property is placed in service but shall be taken in equal installments over the four years following the taxable year in which it is placed in service. The applicable percentage is as follows:
Area Development Tier Applicable Percentage
Tier One 7%
Tier Two 5%
Tier Three 4%
(b) Eligible Investment Amount. - The eligible investment amount is the lesser of (i) the cost of the eligible business property and (ii) the amount by which the cost of all of the taxpayer's eligible business property that is in service in this State on the last day of the taxable year exceeds the cost of all of the taxpayer's eligible business property that was in service in this State on the last day of the base year. The base year is that year, of the three immediately preceding taxable years, in which the taxpayer had the most eligible business property in service in this State.
(c) Threshold. - The applicable threshold is the appropriate amount set out in the following table based on the development tier where the eligible business property is placed in service during the taxable year. If the taxpayer places eligible business property in service at more than one establishment in a county during the taxable year, the threshold applies to the aggregate amount of eligible business property placed in service during the taxable year at all establishments in the county. If the taxpayer places eligible business property in service at establishments in different counties, the threshold applies separately to the aggregate amount of eligible business property placed in service in each county.
Tier One $ -0-
Tier Two 1,000,000
Tier Three 10,000,000
(d) Expiration. - As used in this subsection, the term "disposed of" means disposed of, taken out of service, or moved out of State. If, in one of the four years in which the installment of a credit accrues, the business property with respect to which the credit was claimed is disposed of, the credit expires and the taxpayer may not take any remaining installment of the credit for that business property unless the cost of that business property is offset in the same taxable year by the taxpayer's new investment in eligible business property placed in service in the same county, as provided in this subsection. If, during the taxable year the taxpayer disposed of the business property for which installments remain, there has been a net reduction in the cost of all the taxpayer's eligible business property that are in service in the same county as the business property that was disposed of, and the amount of this reduction is greater than twenty percent (20%) of the cost of the business property that was disposed of, then the taxpayer forfeits the remaining installments of the credit for the business property that was disposed of. If the amount of the net reduction is equal to twenty percent (20%) or less of the cost of the business property that was disposed of, or if there is no net reduction, then the taxpayer does not forfeit the remaining installments of the expired credit. In determining the amount of any net reduction during the taxable year, the cost of business property the taxpayer placed in service during the taxable year and for which the taxpayer claims a credit under Article 3A or Article 3B of this Chapter may not be included in the cost of all the taxpayer's eligible business property that is in service. If in a single taxable year business property with respect to two or more credits in the same county are disposed of, the net reduction in the cost of all the taxpayer's eligible business property that is in service in the same county is compared to the total cost of all the business property for which credits expired in order to determine whether the remaining installments of the credits are forfeited.
The expiration of a credit does not prevent the taxpayer from taking the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.75.
If, in one of the four years in which the installment of a credit accrues, the business property with respect to which the credit was claimed is moved to a county in a higher-numbered development tier, the remaining installments of the credit are allowed only to the extent they would have been allowed if the business property had been placed in service initially in the county to which it was moved. If, in one of the four years in which the installment of a credit accrues, the business property with respect to which a credit was claimed is moved to a county in a lower-numbered development tier, the remaining installments of the credit must be calculated as if the business property had been placed in service initially in the county to which it was moved.
(e) Wage Standard. - For the purposes of this section, a taxpayer satisfies the wage standard requirement of G.S. 105-129.74 only if the taxpayer satisfies the requirement with respect to all of the jobs at the establishment, considered collectively, with respect to which a credit is claimed.
(f) No Double Credit. - A taxpayer may not claim a credit under this section with respect to business property for which the taxpayer claims a credit under G.S. 105-129.9 or G.S. 105-129.9A.
"§ 105-129.80. Credit for investment in real property.
(a) Credit. - If a taxpayer that has purchased or leased real property in a development tier one area begins to use the property in an eligible business during the taxable year, the taxpayer is allowed a credit equal to thirty percent (30%) of the eligible investment amount if all of the eligibility requirements of G.S. 105-129.74 and of subsection (b) of this section are met. For the purposes of this section, property is located in a development tier one area if the area the property is located in was a development tier one area at the time the taxpayer made a written application for the determination required under subsection (b) of this section. The eligible investment amount is the lesser of (i) the cost of the property and (ii) the amount by which the cost of all of the real property the taxpayer is using in this State in an eligible business on the last day of the taxable year exceeds the cost of all of the real property the taxpayer was using in this State in an eligible business on the last day of the base year. The base year is that year, of the three immediately preceding taxable years, in which the taxpayer was using the most real property in this State in an eligible business. In the case of property that is leased, the cost of the property is not determined as provided in G.S. 105-129.71 but is considered to be the taxpayer's lease payments over a seven-year period, plus any expenditures made by the taxpayer to improve the property before it is used by the taxpayer if the expenditures are not reimbursed or credited by the lessor. The entire credit may not be taken for the taxable year in which the property is first used in an eligible business but shall be taken in equal installments over the seven years following the taxable year in which the property is first used in an eligible business. When part of the property is first used in an eligible business in one year and part is first used in an eligible business in a later year, separate credits may be claimed for the amount of property first used in an eligible business in each year. The basis in any real property for which a credit is allowed under this section shall be reduced by the amount of credit allowable.
(b) Determination by the Secretary of Commerce. - A taxpayer is eligible for the credit allowed under this section with respect to a location only if the Secretary of Commerce makes a written determination that the taxpayer is expected to purchase or lease and use in an eligible business at that location within a three-year period at least ten million dollars ($10,000,000) of real property and that the location that is the subject of the credit will create at least 200 new jobs within two years of the time that the property is first used in an eligible business. If the taxpayer fails to timely make the required level of investment or fails to timely create the required number of new jobs, the taxpayer forfeits the credit as provided in G.S. 105-129.74.
(c) Mixed Use Property. - If the taxpayer uses only part of the property in an eligible business, the amount of the credit allowed under this section is reduced by multiplying it by a fraction, the numerator of which is the square footage of the property used in an eligible business and the denominator of which is the total square footage of the property.
(d) Expiration. - If, in one of the seven years in which the installment of a credit accrues, the property with respect to which the credit was claimed is no longer used in an eligible business, the credit expires and the taxpayer may not take any remaining installment of the credit. If, in one of the seven years in which the installment of a credit accrues, part of the property with respect to which the credit was claimed is no longer used in an eligible business, the remaining installments of the credit shall be reduced by multiplying it by the fraction described in subsection (c) of this section. If, in one of the years in which the installment of a credit accrues and by which the taxpayer is required to have created 200 new jobs at the property, the total number of employees the taxpayer employs at the property with respect to which the credit is claimed is less than 200, the credit expires and the taxpayer may not take any remaining installment of the credit.
In each of these cases, the taxpayer may nonetheless take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105-129.75.
(f) No Double Credit. - A taxpayer may not claim a credit under this section with respect to real property for which a credit is claimed under G.S. 105-129.12 or G.S. 105-129.12A."
SECTION 1.2. This part is effective for taxable years beginning on or after January 1, 2006, and applies to business activities occurring on or after that date.
Part II. Extend JDIG
SECTION 2.1. G.S. 143B-437.62 reads as rewritten:
"§ 143B-437.62. Expiration.
The authority of the Committee to enter into new agreements expires January 1, 2006.2008."
SECTION 2.2. This part is effective when it becomes law.